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                                                                   EXHIBIT 10.12

                 FAIRFAX, INC. AND CRUM & FORSTER HOLDINGS CORP.
                            TAX ALLOCATION AGREEMENT

         The purpose of this agreement (the "Agreement") is to determine the
amount of federal and (where applicable) state income tax allocated between
Fairfax, Inc. and Crum & Forster Holdings Corp. This Agreement is between
Fairfax, Inc., a Wyoming corporation ("Parent"), and Crum & Forster Holdings
Corp., a Delaware corporation ("Subsidiary"). Parent and the Subsidiary are
sometimes hereafter collectively referred to as "Group".

         1.       Group are affiliated corporations and have elected to file a
consolidated federal income tax return under the provisions of Section 1501, et
seq., of the Internal Revenue Code of 1986, as amended, (the "Code"). Under the
Agreement, Subsidiary will remit to Parent Subsidiary's federal income tax
liability. Parent will then prepare, or cause to be prepared, and will file the
consolidated federal income tax return and pay the tax for Group. Parent and
Subsidiary shall review the accuracy of the accounting and methodology of the
consolidated federal income tax return and make any necessary adjustments no
less than thirty (30) days prior to the filing of the return.

         2.       Subsidiary's federal income tax liability shall be computed as
if Subsidiary filed a separate return. Subsidiary shall have first use of all of
its respective current operating losses and credits. The calculation of
Subsidiary's separate federal income tax liability shall be made pursuant to the
Code and its regulations, as well as applicable cases, rulings, etc., and shall
be determined by utilizing the maximum applicable corporate income tax rate.

         3.       Subsidiary shall pay its tax liability to Parent by no later
than the applicable due date or dates that such payments would have been
required by the Internal Revenue Service if Subsidiary had filed a separate
return, or as soon thereafter as possible.

         4.       If Subsidiary's income tax liability results in a claim for
refund of federal income

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taxes, the Parent shall make the payment to Subsidiary by no later than the
applicable due date or dates that payment would have been made by the Internal
Revenue Service if Subsidiary had filed a timely claim for refund, or as soon
thereafter as possible.

         5.       If Group is required or has elected to file a unitary or
combined state income tax return (hereafter called a "State Group"), Parent will
compute, report and pay State Group's state income tax liability in accordance
with the applicable state laws and regulations and will file State Group's
required annual return. Within thirty (30) days from the filing of State Group's
annual return, Parent will calculate and assess Subsidiary its share of State
Group's state income tax liability based on (i) the methodology required or
established by state income tax law or, (ii) if none, the percentage of
Subsidiary's separate income or tax divided by the total separate income or tax
of State Group. Within thirty (30) days of such assessment, Subsidiary will pay
to Parent its share of the state income tax liability.

         6.       If after the filing of a return it is determined that the
liability computed hereunder is incorrect, whether by reason of an Internal
Revenue Service or state audit, discovery of error, the learning of new
information, or otherwise, appropriate payments shall be made promptly to
reflect the payments that should have been made.

         7.       In lieu of actual payments, adjustments to intercompany
payables and receivables may be made, and any net balances due will be paid
within 30 days of each adjustment. All payments under this Agreement, including
subsequent changes in the amount of Subsidiary's tax liability or reimbursement
payment, shall be considered an intercompany payable or receivable, as the case
may be, until such adjustment is paid, and shall not be considered a dividend or
surplus contribution.

         8.       Parent agrees to indemnify and reimburse Subsidiary for any
and all claims, demands and expenses in the event that the Internal Revenue
Service levies upon the assets of

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Subsidiary for unpaid taxes, including penalties and interest, in excess of that
amount for which Subsidiary may be liable pursuant to the terms of this
Agreement.

         9.       This Agreement shall be applicable only with respect to
periods for which the parties are members of the same affiliated group filing a
consolidated federal income tax return. No adjustments hereunder shall be made
with respect to periods for which either Parent or Subsidiary filed a separate
return or is a member of another affiliated group filing a consolidated federal
income tax return.

         10.      This Agreement shall take effect as of June 5, 2003 and shall
continue until terminated by the mutual written agreement of all of the parties.
In the event any party ceases to be affiliated with the Group, this Agreement
automatically terminates. This Agreement shall also terminate if the Group fails
to file a consolidated federal income tax return for any tax year of this
Agreement. Notwithstanding the termination of this Agreement, its provisions
will remain in effect, with respect to any period of time during the tax year in
which termination occurs, for which the income of the terminating party must be
included in the consolidated federal income tax return.

         11.      This Agreement may, from time to time, be amended, modified,
and supplemented in such manner as may be mutually agreed upon by the parties,
subject to the approval of any regulatory authorities as required by law. Any
amendment, modification or supplement to this Agreement shall be in writing and
shall be executed by a duly appointed representative of each of the parties.

         12.      Every article, term, condition and provision of this Agreement
is declared to be independent of and severable from all other articles, terms,
conditions and provisions of the Agreement. Invalidation, whether judicial or
otherwise, of any article, term, condition or provision contained in this
Agreement shall in no way affect any other provisions of this

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Agreement, all of which shall remain in full force and effect.

         13.      The books, accounts, tax returns and records of Parent and
Subsidiary shall be maintained so as to clearly and adequately disclose the
precise nature and details of the obligations and liabilities under this
Agreement. All materials relating to the tax returns, including but not limited
to the returns, supporting schedules, work papers, and correspondence, shall be
available for inspection at any time during normal business hours by Parent or
Subsidiary. Each party to this Agreement shall maintain, at its principal or
home office, records of all tax allocations, and any subsequent Internal Revenue
Service or state review or adjustment. The provisions of this section shall
survive termination of this Agreement.

         14.      This Agreement has been approved by the Board of Directors of
each party to this Agreement.

         15.      This Agreement is not assignable by any party without the
prior written consent of the other parties.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by duly authorized officers to be effective June 5, 2003.

                                    Fairfax, Inc.

                                    By:    /s/ ERIC P. SALSBERG
                                           --------------------
                                    Name:  Eric P. Salsberg
                                    Title: Vice President

                                    Crum & Forster Holdings Corp.

                                    By:    /s/ MARY JANE ROBERTSON
                                           -----------------------
                                    Name:  Mary Jane Robertson
                                    Title: Senior Executive Vice President,
                                           Chief Financial Officer and Treasurer

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