##### 





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
   Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended December 31, 2007oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from               to   Commission File
    Number: 333-84068
  
 Crum & Forster
    Holdings Corp.
 (Exact Name of Registrant as
    Specified in its Charter)
  Delaware

04-3611900(State or Other Jurisdiction
    of
    Incorporation or Organization)

(I.R.S. Employer
    Identification Number)305 Madison Avenue, Morristown, New Jersey 07962(Address of principal
    executive office)(973) 490-6600(Registrants telephone
    number, including area code)   Securities
    registered pursuant to Section 12(b) of the Act:
   Securities
    registered pursuant to Section 12(g) of the Act:
   FORM 10-K
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
 Large accelerated
    filer o

Accelerated
    filer oNon-accelerated
    filer þ (Do
    not check if a smaller reporting company)

Smaller reporting
    company o
   Rule 12b-2 o þ
      Class

Number of Shares Outstanding at February 28, 2008Common Stock, $.01 Par Value

100   Documents
    Incorporated by Reference




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##### 





CRUM &
    FORSTER HOLDINGS CORP.
  Form 10-K
  Index
  STATEMENTS REGARDING FORWARD-LOOKING INFORMATION


5PART IITEM 1.


BUSINESS


6Overview


6Corporate Structure


6Lines of Business


8Geographic Distribution


11Business Development and Methods of Distribution


12Pricing and Underwriting


13Catastrophe Management


14Reinsurance


15Claims Management


21Reserves


22Asbestos, Environmental and Other Latent Exposures


25Investments


25Competition


27Ratings


28Insurance Regulatory Matters


28Employees


34ITEM 1A.


RISK FACTORS


35ITEM 1B.


UNRESOLVED STAFF COMMENTS


45ITEM 2.


PROPERTIES


45ITEM 3.


LEGAL PROCEEDINGS


45Litigation


45Insurance Industry Investigations


46ITEM 4.


SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS


47PART IIITEM 5.


MARKET FOR REGISTRANTS COMMON EQUITY, RELATED
    STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES


47ITEM 6.


SELECTED FINANCIAL DATA


47ITEM 7.


MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
    CONDITION AND RESULTS OF OPERATIONS


49Critical Accounting Policies and Estimates


49Summary of Operations


60Results of Operations


62Liquidity and Capital Resources


72Contractual Obligations


74Regulatory Issues


75Off-Balance Sheet Arrangements


76 2




---



##### 



ITEM 7A.


QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


76Interest Rate Risk


76Equity Price Risk


77Foreign Currency Exchange Rate Risk


77ITEM 8.


FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


78Index to Consolidated Financial Statements


78Report of Independent Registered Public Accounting Firm


79Consolidated Balance Sheets at December 31, 2007 and 2006


80Consolidated Statements of Income for the Years Ended
    December 31, 2007, 2006 and 2005


81Consolidated Statements of Shareholders Equity for the
    Years Ended December 31, 2007, 2006 and 2005


82Consolidated Statements of Comprehensive Income for the Years
    Ended December 31, 2007, 2006 and 2005


83Consolidated Statements of Cash Flows for the Years Ended
    December 31, 2007, 2006 and 2005


84Notes to Consolidated Financial Statements


86ITEM 9.


CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
    AND FINANCIAL DISCLOSURE


122ITEM 9A(T).


CONTROLS AND PROCEDURES


122Evaluation of Disclosure Controls and Procedures


122Managements Report on Internal Control Over Financial
    Reporting


122ITEM 9B.


OTHER INFORMATION


122PART IIIITEM 10.


DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE


123Directors and Executive Officers


123Key Employee of the Operating Companies


124Corporate Governance


124Audit Committee and Audit Committee Financial Expert


124Compensation Committee


124Compensation of Directors


125Code of Ethics


125ITEM 11.


EXECUTIVE COMPENSATION


125ITEM 12.


SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
    MANAGEMENT AND RELATED STOCKHOLDER MATTERS


125ITEM 13.


CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
    INDEPENDENCE


125ITEM 14.


PRINCIPAL ACCOUNTANT FEES AND SERVICES


125Audit Fees


125Audit-Related Fees


126Tax Fees


126All Other Fees


126Audit Committee Pre-Approval Policies and Procedures


126 3




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##### 



PART IVITEM 15.


EXHIBITS AND FINANCIAL STATEMENT SCHEDULES


126Financial Statement Schedules


126Exhibits


127SIGNATURES


130POWER OF ATTORNEY


130INDEX TO FINANCIAL STATEMENTS AND RELATED FINANCIAL STATEMENT
    SCHEDULES


131Report of Independent Registered Public Accounting Firm on
    Financial Statement Schedules


132Schedule I  Summary of Investments Other Than
    Investments in Related Parties


133Schedule II  Condensed Balance Sheets of Crum
    & Forster Holdings Corp. at December 31, 2007 and 2006
    (Parent Company Only)


134Schedule II  Condensed Statements of Income of
    Crum & Forster Holdings Corp. for the Years Ended
    December 31, 2007, 2006 and 2005 (Parent Company Only)


135Schedule II  Condensed Statements of Cash Flows
    of Crum & Forster Holdings Corp. for the Years Ended
    December 31, 2007, 2006 and 2005 (Parent Company Only)


136Schedule II  Note to Condensed Financial
    Statements


137Schedule V  Valuation and Qualifying Accounts


138EXHIBITS


139  4




---



##### 



Form 10-K
  (973) 490-6600. http://www.cfins.com. Form 10-K, Form 10-Q, Form 8-K
 STATEMENTS
    REGARDING FORWARD-LOOKING INFORMATION   
    Lowering or loss of one of the Companys financial strength
    ratings;
    Insufficient loss reserves, including reserves for asbestos,
    environmental and other latent claims;
    Occurrence of natural or man-made catastrophic events;
    Competitive conditions in the insurance market;
    Inability to realize the Companys investment objectives;
    Recent credit market events could adversely affect the
    Companys financial results;
    Inability to obtain reinsurance coverage on reasonable terms and
    prices, particularly property catastrophe reinsurance;
    Changes in the business or regulatory environment in which the
    Company operates as a result of recent insurance industry
    investigations by government authorities and other parties;
    SEC requests for information from the Company;
    Loss of key producers;
    Exposure to emerging claims and coverage issues;
    Exposure to credit risk, in the event reinsurers or
    policyholders fail to pay the Company amounts owed to it;
    Restrictions on the ability of the Companys insurance
    subsidiaries to pay dividends;
    Subordination of debt securities to the obligations and
    liabilities of the Companys insurance subsidiaries;
    Adverse developments in the prospects or results of operations
    of Fairfax or its affiliates;
    Changes in governmental regulations; and
    Exposure to credit risks on novated policies. 5




---



##### 



PART I  ITEM 1.
    BUSINESS Overview         Corporate
    Structure    6




---



##### 



7




---



##### 



Lines of
    Business   Years Ended December 31,(dollars in millions)

2007


2006


2005$


%


$


%


$


%Workers compensation

$
258.9



20.8
%

$
277.1



20.5
%

$
275.3



25.1
%General liability


251.5



20.2



296.0



21.9



262.8



24.1Commercial automobile


203.4



16.3



222.5



16.5



192.6



17.5Property


285.2



22.9



375.6



27.8



296.9



27.0Commercial multi-peril


88.2



7.1



83.8



6.2



51.0



4.6Accident and health


127.6



10.3



64.3



4.7







Other1


30.2



2.4



32.3



2.4



19.2



1.7Total gross premiums written

$
1,245.0



100.0
%

$
1,351.6



100.0
%

$
1,097.8



100.0
%     1
    Other includes personal automobile,
    homeowners and surety lines of business in 2007 and 2006. In
    2005, other includes the surety line of business only.  Workers compensation
  
    guaranteed cost products;
    large deductible policies; and
    retrospectively rated policies.    
    the applicable premium rate, which varies according to the
    employees duties and the business of the employer;
    the policyholders experience modification factor; and
    the policyholders payroll.   8




---



##### 



Years Ended December 31,2007


2006


2005Guaranteed cost


91.0
%


87.7
%


84.7
%Large deductible


7.7



9.8



12.8Retrospectively rated


1.3



2.5



2.5Total workers compensation


100.0
%


100.0
%


100.0
%     General liability
    Years Ended December 31,2007


2006


2005Umbrella liability


42.2
%


36.6
%


33.7
%Products liability


22.7



25.0



22.1Directors and officers liability


7.2



7.1



8.0Employment practices liability


2.6



2.8



3.6All other general liability


25.3



28.5



32.6Total general liability


100.0
%


100.0
%


100.0
%   Commercial automobile
 9




---



##### 



Property
    Years Ended December 31,2007


2006


2005Fire and allied lines


78.7
%


82.7
%


82.9
%Inland marine


10.2



8.4



11.3Earthquake


6.5



6.6



4.9Other


4.6



2.3



0.9Total property


100.0
%


100.0
%


100.0
%   Commercial multi-peril
  Accident and health
    Years Ended December 31,2007


2006Student medical


29.7
%


36.9
%Travel


24.7



13.4Employer stop loss


21.8



28.1Other medical


13.7



20.3Pet insurance


10.1



1.3Total accident and health


100.0
%


100.0
%  10




---



##### 



Other and/or
    Years Ended December 31,2007


2006


2005Bail bonds


43.4
%


36.0
%


23.6
%Personal automobile


31.3



35.4



Homeowners


22.2



21.9



Contract and commercial bonds


3.1



6.7



76.4Total other


100.0
%


100.0
%


100.0
%  Geographic
    Distribution   Years Ended December 31,2007


2006


2005California


14.5
%


16.7
%


20.1
%Florida


9.9



10.7



10.9New York


9.0



9.4



10.0Texas


8.9



9.6



7.5New Jersey


7.2



8.2



8.6Pennsylvania


4.5



5.0



5.4Hawaii


4.5



1.4



0.2Illinois


3.6



3.3



3.5Massachusetts


3.4



3.3



3.4Georgia


3.0



3.1



2.1All other
    states1


31.5



29.3



28.3Total direct premiums written


100.0
%


100.0
%


100.0
%     1
    No other state comprised more than
    2% of total direct premiums written in 2006 or 2005.   11




---



##### 



Business
    Development and Methods of Distribution     agreed-upon
      Years Ended December 31,2007


2006


2005Wholesale brokers


41.5
%


43.5
%


40.1
%Independent regional retail firms


38.5



34.4



31.0National brokers


20.0



22.1



28.9Total direct premiums written


100.0
%


100.0
%


100.0
%  12




---



##### 



Years Ended December 31,(dollars in millions)

2007


2006


2005Wholesale brokers

$
173.4


$
264.0


$
210.0Independent regional retail firms


105.5



106.9



91.1National brokers


53.8



91.7



84.3Total gross premiums written from new business

$
332.7


$
462.6


$
385.4     Certain business practices of the insurance industry have
    become the subject of investigations by government authorities
    and other parties and the subject of class action
    litigation
 Pricing
    and Underwriting       and/or
 13




---



##### 



The
    Company bears credit risk with respect to its reinsurers and
    certain policyholders, and if one or more of them fails to pay,
    the Company could experience losses which would reduce its net
    income
         Catastrophe
    Management  14




---



##### 



250-year 100-year
   Reinsurance     Maximum Reinsured(dollars in millions)

Maximum Retention


Limits1General liability:Umbrella


$5.0


$
20.0Directors and officers liability  primary
    policies


$2.0


$
8.0Directors and officers liability  excess
    policies


Variable Quota
    Share2


$
8.0Property3


$5.0


$
20.0     1
    Represents the amount of loss
    protection above the net retention on an excess of loss basis,
    unless otherwise noted. Certain layers within these reinsured
    limits are subject to aggregate limits and reinstatement
    provisions.2
    The Company retains 40% of policies
    with limits up to $5 million and 20% of policies with
    limits in excess of $5 million up to $10 million.3
    The Companys retention on its
    property per risk treaty is $5 million with maximum
    reinsured limits up to $20 million. The $5 million
    excess of $5 million layer is 100% reinsured by Wentworth
    Insurance Company Ltd (Wentworth), a Fairfax
    affiliate. 15




---



##### 



The Company may be unable to obtain reinsurance coverage at
    reasonable prices or on terms that adequately protect
    it
      Terrorism Risk Insurance Program
    Reauthorization Act of 2007 Catastrophic events could cause
    unanticipated losses and reduce net income
    16




---



##### 



At December 31, 2007A.M. Best


Security


Reinsurance


% of(dollars in millions)

Rating1


Provided


Recoverable


TotalInter-Ocean Reinsurance Company Limited


2


$
399.9
3

$
386.7



25.1
%North American Specialty Insurance Company


A+



218.9
4


369.0



24.0TIG Insurance Company
    (TIG)5,8


B+







133.1



8.6Swiss Reinsurance America Corporation


A+







69.5



4.5nSpire8


2



48.2
6


42.8



2.8Fairmont Specialty Insurance
    Company8


B++







34.7



2.3General Reinsurance Corporation


A++



0.1



30.1



2.0Hannover Ruckversicherungs-Aktiengesellschaft


A



2.1
7


22.0



1.4Federal Insurance Company


A++



20.1



21.8



1.4Munich Reinsurance America Inc.


A







21.4



1.4Other






141.7
9


408.7
10,11


26.5Total reinsurance recoverable





$
831.0


$
1,539.8



100.0
%     1
    The A.M. Best rating system
    includes ratings of A++ and A+ (which
    are Superior ratings), A and
    A− (which are Excellent ratings),
    B++ and B+ (which are Very
    Good ratings) and nine lower ratings categories. Ratings
    are as of February 28, 2008.2
    Not rated.3
    Includes the value of Delaware Reg.
    1003 compliant trust accounts (Trusts) at
    December 31, 2007 in the amount of $361.8 million and
    $38.1 million in letters of credit.4
    Funds held at December 31,
    2007. The funds held in respect of North America Specialty
    Insurance Company are also effectively guaranteed by an upstream
    affiliated insurer in the Swiss Re Group.5
    Effective December 16, 2002,
    International Insurance Company merged with TIG, a Fairfax
    subsidiary. TIG had statutory capital and surplus at
    December 31, 2007 of $738.4 million. These recoverable
    balances arise principally from a restructuring in 1993, prior
    to Fairfaxs acquisition of Crum & Forster. For
    further discussion, see Note 9 to the consolidated
    financial statements included in Item 8. Financial
    Statements and Supplementary Data.6
    Held in Trusts.7
    Held in letters of credit.8
    Fairfax affiliate.9
    Includes $112.9 million in
    letters of credit, $11.6 million in funds held and
    $17.2 million in Trusts.  10
    Includes reserves for uncollectible
    reinsurance of $50.0 million.11
    83% of these gross recoverable
    balances are from companies having an A.M. Best rating of
    A− or better.  Affiliated
    Reinsurers
   17




---



##### 



At December 31, 2007TotalReinsurance


Paid


Outstanding(dollars in millions)

Recoverable


Recoverable


Reserves1


CollateralTIG

$
133.1


$
1.1


$
132.0


$
nSpire


42.8



2.0



40.8



48.2Fairmont Specialty Insurance Company


34.7



0.3



34.4



Odyssey America Reinsurance Corporation


9.2



1.2



8.0



Wentworth


6.0



0.1



5.9



13.1Clearwater Insurance Company


1.8







1.8



Other


2.0



0.1



1.9



2.4Total affiliated reinsurance recoverable balances

$
229.6


$
4.8


$
224.8


$
63.7     1
    Includes case and incurred but not
    reported (IBNR) reserves.    Corporate
    Aggregate Reinsurance
         18




---



##### 



Years Ended December 31,(dollars in millions)

2007


2006


2005Premiums earned

$



$



$
Investment income


(16.1
)


(8.4
)


(19.9
)Losses and LAE


(13.7
)


(10.3
)


(8.1
)(Loss) income before income taxes

$
(2.4
)

$
1.9


$
(11.8
)   1
  (dollars in millions)2000 accident year prospective aggregate stop loss contract

$
28.71998 prospective aggregate stop loss contract


367.5
21998 aggregate stop loss contract amendment


19.32000 retroactive adverse development contract


369.0Total

$
784.5     1
    Total amounts recognized as a
    reduction of losses and LAE include the $389.0 million
    below, $28.7 million on the 2000 accident year prospective
    aggregate stop loss contract and $76.3 million of
    amortization of deferred gains on the retroactive reinsurance
    contracts.2
    Includes $389.0 million, which
    has been recognized as a reduction of losses and LAE less
    $21.5 million for additional premiums due on
    retrospectively rated insurance policies that inure to the
    benefit of the reinsurer.  Prospective
    Corporate Aggregate Reinsurance
    Years Ended December 31,(dollars in millions)

2007


2006


2005Ceded losses and LAE

$



$



$
Less: ceded premiums written and earned










Less: funds held interest charged to investment income


2.3



3.0



4.5Income before income taxes

$
(2.3
)

$
(3.0
)

$
(4.5
)      19




---



##### 



Retroactive
    Corporate Aggregate Reinsurance
    Years Ended December 31,(dollars in millions)

2007


2006


2005Decrease in reinsurance recoverable due from reinsurers

$
(3.6
)

$
(37.0
)

$
(26.7
)Less: related premiums paid


(1.3
)


(33.4
)


4.1Decrease in income deferred during the year


(2.3
)


(3.6
)


(30.8
)Amortization of deferred income


(13.7
)


(12.9
)


(8.1
)Decrease in deferred income


(16.0
)


(16.5
)


(38.9
)Deferred income on retroactive reinsurance  beginning
    of year


168.0



184.5



223.4Deferred income on retroactive reinsurance  end of
    year

$
152.0


$
168.0


$
184.5Funds held interest charged during the year

$
13.8


$
5.4


$
15.4          20




---



##### 



Claims
    Management   
    maintenance of timely and adequate reserves for claims and the
    cost-effective delivery of claims services by controlling losses
    and LAE;
    financial integrity through the employment of investigative
    specialists who attempt to limit fraudulent claims activity and
    a program to pursue appropriate subrogation and recovery
    opportunities; and
    exceptional customer service whereby the Company applies its
    resources toward pursuing timely investigation and resolution of
    customer claims and reducing claims costs.      At December 31,Pending Claims

2007


2006


2005Workers
    compensation1


10,301



10,974



11,265General liability


3,614



4,086



4,603Commercial automobile


5,125



5,223



5,590All
    other2


2,387



2,539



3,278Total pending claims


21,427



22,822



24,736     1
    Excludes medical only claim counts.2
    The decrease in the all other
    category in 2006 as compared to 2005 was due to lower property
    claims. 2005 included claims associated with the 2005 and 2004
    hurricanes.  21




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##### 



Years Ended December 31,New Claims

2007


2006


2005Workers
    compensation1


7,169



7,307



7,803General liability


3,923



3,635



4,656Commercial automobile


15,935



15,502



12,264All other


3,541



3,384



4,005Total new claims


30,568



29,828



28,728     1
    Excludes medical only claim counts
    of 13,628, 13,947 and 15,093 for the years ended
    December 31, 2007, 2006 and 2005, respectively.   Reserves            22




---



##### 



At December 31, 2007Low End of


High End of(dollars in millions)

Reserves


Actuarial Range


Actuarial RangeWorkers compensation

$
746.1


$
643.0


$
822.0General liability


676.2



483.4



792.5Asbestos, environmental and other latent


442.8



328.7



558.3Commercial automobile


239.7



217.4



267.6Property


144.3



97.4



145.4Other


225.9



200.0



227.3Net of per risk reinsurance, gross of corporate aggregate
    reinsurance


2,475.0



1,969.9



2,813.1Corporate aggregate reinsurance


494.0



427.6



500.2Total reserves, net of per risk reinsurance and corporate
    aggregate reinsurance


1,981.0


$
1,542.3


$
2,312.9Ceded unpaid losses and LAE


1,197.5Gross unpaid losses and LAE

$
3,178.5       Years Ended December 31,(dollars in millions)

2007


2006


2005Workers compensation

$
(65.4
)

$
(58.5
)

$
(1.4
)General liability


(20.2
)


(31.9
)


(48.0
)Commercial multi-peril


(18.6
)


(22.8
)


(20.2
)Commercial automobile


(6.6
)


(10.9
)


(19.5
)Property


(0.9
)


1.6



(40.7
)Asbestos, environmental and other latent


54.5



33.9



44.6Other


7.0



2.7



24.7Total favorable development, net of per risk reinsurance


(50.2
)


(85.9
)


(60.5
)Amortization of deferred gain on retroactive corporate aggregate
    reinsurance


(13.7
)


(12.9
)


(8.1
)Other corporate aggregate reinsurance activity






2.6



Total favorable development, net of per risk and corporate
    aggregate reinsurance


(63.9
)


(96.2
)


(68.6
)Add back: Per risk and corporate aggregate reinsurance


(37.1
)


(16.2
)


88.7Total (favorable) adverse development, gross of reinsurance

$
(101.0
)

$
(112.4
)

$
20.1   Losses and Loss Adjustment
    Expenses
   23




---



##### 



Ten-year
    analysis of consolidated loss and LAE development presented net
    of reinsurance with supplemental gross data
  At December 31,(dollars in millions)

1997


1998


1999


2000


2001


2002


2003


2004


2005


2006


2007Reserves for unpaid losses and LAE (net of reinsurance
    recoverable)

$
2,420


$
2,532


$
2,225


$
1,770


$
1,577


$
1,494


$
1,873


$
2,010


$
1,990


$
2,016


$
1,981Paid (cumulative) as of:One year later


580



680



757



676



454



160



460



481



482



571Two years later


1,076



1,246



1,300



1,026



533



521



809



815



852Three years later


1,508



1,654



1,565



1,097



824



795



1,065



1,084Four years later


1,797



1,922



1,626



1,328



1,049



988



1,277Five years later


2,005



1,919



1,850



1,504



1,208



1,162Six years later


1,953



2,084



2,023



1,637



1,360Seven years later


2,087



2,237



2,153



1,763Eight years later


2,223



2,350



2,277Nine years later


2,329



2,460Ten years later


2,432Liability re-estimated as of:One year later


2,588



2,546



2,258



1,953



1,596



1,611



1,942



1,941



1,894



1,952Two years later


2,592



2,536



2,445



1,969



1,749



1,718



1,932



1,855



1,840Three years later


2,583



2,600



2,460



2,093



1,857



1,702



1,862



1,830Four years later


2,597



2,614



2,584



2,203



1,836



1,643



1,877Five years later


2,613



2,735



2,680



2,180



1,787



1,660Six years later


2,743



2,801



2,676



2,148



1,804Seven years later


2,820



2,809



2,652



2,152Eight years later


2,832



2,801



2,660Nine years later


2,835



2,814Ten years later


2,852Cumulative (deficiency)/redundancy


(432
)


(282
)


(435
)


(382
)


(227
)


(166
)


(4
)


180



150



64Gross liability  end of year


3,600



3,637



3,529



3,340



3,454



3,250



3,194



3,371



3,673



3,371



3,178Reinsurance recoverable


1,180



1,105



1,304



1,570



1,877



1,756



1,321



1,361



1,683



1,355



1,197Net liability  end of year


2,420



2,532



2,225



1,770



1,577



1,494



1,873



2,010



1,990



2,016



1,981Gross re-estimated liability at December 31, 2007


4,198



4,213



4,203



3,872



3,691



3,408



3,238



3,210



3,466



3,270Re-estimated reinsurance recoverable at December 31, 2007


1,346



1,399



1,543



1,720



1,887



1,748



1,361



1,380



1,626



1,318Net re-estimated liability at December 31, 2007


2,852



2,814



2,660



2,152



1,804



1,660



1,877



1,830



1,840



1,952Cumulative gross (deficiency)/redundancy


(598
)


(576
)


(674
)


(532
)


(237
)


(158
)


(44
)


161



207



101  24




---



##### 



Asbestos,
    Environmental and Other Latent Exposures       Years Ended December 31,2007


2006


2005(dollars in millions)

Gross


Net


Gross


Net


Gross


NetUnpaid latent losses and allocated LAE (ALAE),
    beginning of the year

$
586.2


$
443.5


$
617.6


$
475.1


$
681.4


$
516.0Latent losses and ALAE incurred during the year


55.9



54.5



66.0



33.9



80.1



44.6Latent losses and ALAE paid during the year


62.0



55.2



97.4



65.5



143.9



85.5Unpaid latent losses and ALAE, end of the year

$
580.1


$
442.8


$
586.2


$
443.5


$
617.6


$
475.1       Asbestos

Environmental

Other Latent

Total LatentNumber of policyholders open at December 31, 2005


428


268


201


897Opened during the year


68


47


67


182Closed during the year


96


72


80


248Number of policyholders open at December 31, 2006


400


243


188


831Opened during the year


48


47


66


161Closed during the year


47


29


50


126Number of policyholders open at December 31, 2007


401


261


204


866   Losses and Loss Adjustment Expenses
 Investments  25




---



##### 



At December 31,Rating

2007


2006AAA/Aaa


94.0
%


92.0
%AA/Aa2






A/A2






BBB/Baa2






BB/Ba2






B/B2






CCC/Caa or lower, or not rated


6.0



8.0Total fixed income securities


100.0
%


100.0
%    26




---



##### 



Investment
    Results
 Competition            The Company
    operates in a highly competitive environment, which makes it
    more difficult to attract and retain business
 27




---



##### 



Ratings     Insurance
    Regulatory Matters   General
      Possible
    Legislative and Regulatory Changes
   28




---



##### 



and/or and/or
    Certain business practices of the insurance industry have
    become the subject of investigations by government authorities
    and other parties and the subject of class action
    litigation
    Recent
    Regulatory Examinations
     29




---



##### 



Producer
    Compensation Investigations
    Certain business practices of the insurance industry have
    become the subject of investigations by government authorities
    and other parties and the subject of class action
    litigation
  Regulation
    of Dividends and Other Payments from the Companys
    Insurance Subsidiaries
       30




---



##### 



10-day 30-day 12-month
  12-month
        Capital
    Adequacy
   31




---



##### 



NAIC
    IRIS Ratios
    Investment
    Regulation
    Guaranty
    Funds
     32




---



##### 



Shared
    Markets
      state-by-state
  Insurance
    Regulation Concerning Change or Acquisition of
    Control
   33




---



##### 



Terrorism
    Risk Insurance Program Reauthorization Act of 2007
          Catastrophic
    events could cause unanticipated losses and reduce net
    income
 Employees   34




---



##### 



ITEM 1A.
    RISK
    FACTORS  Form 10-K,
  If
    there are any negative changes in the financial strength ratings
    of the Companys insurance subsidiaries, especially in the
    ratings issued by A.M. Best, it could be very difficult for the
    Company to write quality new or renewal business, secure
    adequate reinsurance on acceptable terms and retain its key
    management and employees.
        The
    Company may incur a reduction in its net income if its reserves
    are insufficient.
    Losses and Loss Adjustment
    Expenses
 35




---



##### 



Reserves
    for asbestos, environmental and other latent claims may be
    insufficient.
         36




---



##### 



Losses and Loss Adjustment Expenses
  Catastrophic
    events could cause unanticipated losses and reduce net
    income.
           37




---



##### 



The
    Company operates in a highly competitive environment, which
    makes it more difficult to attract and retain
    business.
        Results
    in the property and casualty insurance industry are subject to
    fluctuations and uncertainty, which may adversely affect
    managements ability to write policies.
    If the
    Company is unable to realize its investment objectives, its net
    income and financial condition may be adversely
    affected.
   38




---



##### 



Recent
    credit market events could adversely affect the Companys
    financial results.
      If the Company
    is unable to realize its investment objectives, its net income
    and financial condition may be adversely affected Derivatives and Hybrid Financial Instruments
    Valuation
     39




---



##### 



3 8 3 4
  The
    Company may be unable to obtain reinsurance coverage at
    reasonable prices or on terms that adequately protect
    it.
         40




---



##### 



Certain
    business practices of the insurance industry have become the
    subject of investigations by government authorities and other
    parties and the subject of class action
    litigation.
    Securities and
    Exchange Commission (SEC) requests for information
    may adversely affect the Company
  Securities
    and Exchange Commission (SEC) requests for
    information may adversely affect the Company.
     41




---



##### 



The
    loss of any of the Companys key producers could have an
    adverse effect on the Companys ability to generate
    business.
    The
    effects of emerging claim and coverage issues on the
    Companys business are uncertain.
    The
    Company bears credit risk with respect to its reinsurers and
    certain policyholders, and if one or more of them fails to pay,
    the Company could experience losses, which would reduce its net
    income.
       42




---



##### 



The
    Company is a holding company and is dependent on dividends from
    its insurance subsidiaries to pay its obligations, including
    interest and principal on its debt securities.
      The
    Companys debt securities are effectively subordinate to
    all of the obligations of the Companys insurance
    subsidiaries, including all of the Companys liabilities
    with respect to insurance policies that the Company has written
    or will write in the future.
    Control
    of the Companys corporate actions is retained by Fairfax,
    which may have interests that are different from the interests
    of holders of the Companys debt securities.
    
    electing members of the Companys board of directors and
    appointment of members of the audit committee;
    adopting amendments to the Companys charter documents;
    approving a merger or consolidation, liquidation or sale, of
    all, or substantially all, of the Companys assets;
    approving transactions that would result in a change of control;
    funding its or its affiliates requirements or losses by
    causing the Company to distribute additional amounts to it,
    whether by requiring the Company to incur additional
    indebtedness or otherwise engage in financial or other
    reinsurance, investment, tax sharing or other transactions with
    Fairfax or its affiliates; and
    entering into transactions with Fairfax or its affiliates. 43




---



##### 



The
    Company is subject to extensive government regulation, which may
    limit the rates it can charge or otherwise adversely affect its
    business.
        If
    certain policies with respect to which other insurance companies
    have assumed liability from Crum & Forster have not
    been effectively novated, the Company could be subject to
    increased liabilities that are not reflected on the balance
    sheet, including with respect to asbestos, environmental or
    other latent exposures.
   44




---



##### 



ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES    ITEM 3.
    LEGAL
    PROCEEDINGS Litigation    45




---



##### 



and/or and/or
     Insurance
    Industry Investigations  46




---



##### 



Securities and Exchange Commission (SEC) requests
    for information may adversely affect the Company Certain business
    practices of the insurance industry have become the subject of
    investigations by government authorities and other parties and
    the subject of class action litigation
  ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS  Form 10-K.
 PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES    ITEM 6.
    SELECTED
    FINANCIAL DATA      47




---



##### 



Years Ended December 31,(dollars in thousands)

2007


2006


2005


2004


2003GAAP STATEMENT OF INCOME DATA:Gross premiums written

$
1,245,021


$
1,351,631


$
1,097,756


$
1,138,961


$
1,104,211Net premiums written

$
1,099,635


$
1,166,532


$
868,966


$
918,300


$
890,823Premiums earned

$
1,186,144


$
1,084,023


$
894,173


$
907,709


$
768,872Investment income and realized investment gains and
    losses1

$
377,503


$
392,818


$
215,310


$
164,638


$
338,062Losses and LAE

$
752,969


$
666,079


$
615,505


$
761,512


$
652,334Policy acquisition costs and other underwriting expenses

$
340,196


$
314,403


$
254,452


$
252,987


$
225,261Income before equity in earnings of investees, net of tax

$
269,882


$
299,121


$
138,743


$
11,717


$
134,178Equity in earnings of investees, net of tax

$
23,300


$
13,162


$
17,193


$
12,478


$
1,567Net income

$
293,182


$
312,283


$
155,936


$
24,195


$
135,745   At December 31,(dollars in thousands)

2007


2006


2005


2004


2003GAAP BALANCE SHEET DATA:Total investments (including cash and cash equivalents and
    assets pledged for short-sale
    obligations)2

$
4,547,529


$
3,926,276


$
3,720,538


$
3,495,509


$
3,168,389Total assets

$
6,612,812


$
6,443,554


$
6,482,879


$
6,031,641


$
5,587,398Unpaid losses and LAE

$
3,178,506


$
3,371,549


$
3,673,034


$
3,370,936


$
3,193,920Long term debt

$
313,220


$
293,170


$
292,470


$
291,841


$
291,257Shareholders equity

$
1,293,459


$
1,093,055


$
961,193


$
881,189


$
906,115   Years Ended December 31,2007


2006


2005


2004


2003SELECTED FINANCIAL RATIOS BASED 
    ON GAAP DATA:Loss and LAE ratio


63.5
%


61.5
%


68.8
%


83.9
%


84.8
%Underwriting expense ratio


28.7



29.0



28.5



27.9



29.3Combined ratio


92.2
%


90.5
%


97.3
%


111.8
%


114.1
%Ratio of earnings to fixed
    charges3


9.1
x


11.0
x


4.4
x


1.3
x


6.2
x   Years Ended December 31,(dollars in thousands)

2007


2006


2005


2004


2003SELECTED COMBINED STATUTORY DATA:Loss and LAE ratio


64.1
%


61.9
%


69.4
%


86.1
%


84.5
%Underwriting expense ratio


30.0



28.0



28.4



27.7



27.3Combined ratio


94.1
%


89.9
%


97.8
%


113.8
%


111.8
%Policyholders surplus

$
1,639,751


$
1,406,822


$
1,313,988


$
1,206,547


$
1,107,435Ratio of net premiums written to policyholders surplus


0.67
x


0.83
x


0.66
x


0.76
x


0.80
x     1
    Includes $40,725 of gains in 2003
    from the sale of Hub International Limited securities to an
    affiliate.2
    Includes $1,043,436, $535,594,
    $496,903 and $277,899 of assets pledged for short-sale
    obligations at December 31, 2007, 2006, 2005 and 2004,
    respectively.3
    For purposes of determining the
    ratio of earnings to fixed charges, earnings includes income
    before income taxes, adjusted for undistributed income or loss
    from equity method investees and fixed charges. Fixed charges
    consist of interest expense, amortization of capitalized
    expenses related to indebtedness and an estimate of implicit
    interest included in rent expense. The calculation of the ratio
    of earnings to fixed charges is filed as an exhibit to this Form
    10-K. 48




---



##### 



ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS   Critical
    Accounting Policies and Estimates     Unpaid
    Losses and Loss Adjustment Expenses
           49




---



##### 



year-on-year
               50




---



##### 



Change inUltimate Lossand ALAELine of business

Accident Years

($ millions)Workers Compensation


2000-2007

$
34.4General
    Liability1


2000-2007

$
35.9Commercial Automobile


2006-2007

$
8.1     1 Excludes
    asbestos, environmental and other latent.
    ground-up ground-up policyholder-by-policyholder
         51




---



##### 



Asbestos
    Reserves
       52




---



##### 



At December 31, 2007Attachment Point

Estimated% of


Estimated% of(dollars in millions)

Total Policies


Total Policy Limits$0 to $1


73.2
%


21.3
%$1 to $10


19.5



60.7$10 to $20


2.5



12.5$20 to $50


2.8



4.8Above $50


2.0



0.7Total policies with asbestos claims


100.0
%


100.0
%        53




---



##### 



At December 31, 2007Number of

Remaining(dollars in millions)

Bankruptcies

Policy LimitsNo insurance coverage issued to policyholder


57

$
Resolved


18


Potential future exposure


3


22Total


78

$
22   policyholder-by-policyholder ground-up,
  policyholder-by-policyholder
        At December 31,(dollars in millions)

2007Net unpaid losses and ALAE

$
333.63-year
    average net paid losses and ALAE

$
51.23-year
    survival ratios


6.5  54




---



##### 



Amount

% of
    Total1Crum & Forster (dollars in millions)Paid losses and ALAE at December 31, 2007

$
458.5


57.9
%Net unpaid losses and ALAE (case and IBNR) at December 31,
    2007


333.6


42.1Ultimate losses and ALAE at December 31, 2007

$
792.1


100.0
%Industry, as represented by A.M. Best Company
    (A.M. Best)2
    (dollars in millions)Paid losses and ALAE at December 31, 2006

$
39,500


60.8
%Net unpaid losses and ALAE (case and IBNR) at December 31,
    2006


25,500


39.2Ultimate losses and ALAE at December 31, 2006

$
65,000


100.0
%     1
    Net of per risk reinsurance, but
    before the benefit of corporate aggregate reinsurance.2
    Extracted from an A.M. Best
    report dated November 26, 2007.       55




---



##### 



Environmental
    Reserves
           56




---



##### 



At December 31,(dollars in millions)

2007Net unpaid losses and ALAE

$
85.03-year
    average net paid losses and ALAE

$
12.93-year
    environmental survival ratio


6.6     Other
    Latent Reserves
    Summary
     57




---



##### 



Other
    than Temporary Declines in Value of Investments
  ,
        Derivatives
    and Hybrid Financial Instruments Valuation
   58




---



##### 



Reinsurance
    Recoverable
          Deferred
    income tax assets
    and/or
  Income
    Taxes
 59




---



##### 



Summary
    of Operations          60




---



##### 



61




---



##### 



Results
    of Operations   Years Ended December 31,(dollars in millions)

2007


2006


2005Gross premiums written

$
1,245.0


$
1,351.6


$
1,097.8Net premiums written

$
1,099.6


$
1,166.5


$
869.0Premiums earned

$
1,186.1


$
1,084.0


$
894.2Losses and LAE


752.9



666.1



615.5Underwriting expenses


340.2



314.4



254.5Underwriting profit


93.0



103.5



24.2Investment income and realized investment gains


377.5



392.8



215.3Interest and other expense


39.4



41.0



35.5Costs related to early retirement of debt


21.2







Income before income taxes and equity in earnings of investees


409.9



455.3



204.0Income tax expense


140.0



156.2



65.3Income before equity in earnings of investees


269.9



299.1



138.7Equity in earnings of investees, net of tax


23.3



13.2



17.2Net income

$
293.2


$
312.3


$
155.9Combined ratio


92.2
%


90.5
%


97.3
%       Losses
    and Loss Adjustment Expenses Investment Results
 62




---



##### 



78-9, Accounting for Investments in Real Estate Ventures Accounting for Derivative Instruments
    and Hedging Activities Business Combinations
    Underwriting
    Results
  Gross
    Premiums Written
    Years Ended December 31,2007





2006Increase/





Increase/(dollars in millions)

2007


2006


(Decrease)


2005


(Decrease)Workers compensation

$
258.9


$
277.1


$
(18.2
)

$
275.3


$
1.8General liability


251.5



296.0



(44.5
)


262.8



33.2Commercial automobile


203.4



222.5



(19.1
)


192.6



29.9Property


285.2



375.6



(90.4
)


296.9



78.7Commercial multi-peril


88.2



83.8



4.4



51.0



32.8Accident and health


127.6



64.3



63.3







64.3Other


30.2



32.3



(2.1
)


19.2



13.1Total gross premiums written

$
1,245.0


$
1,351.6


$
(106.6
)

$
1,097.8


$
253.8     Years Ended December 31,(dollars in millions)

2007


2006


2005Surety

$
14.0


$
13.8


$
19.2Personal automobile


9.5



11.4



Homeowners


6.7



7.1



Total gross premiums written in other

$
30.2


$
32.3


$
19.2  63




---



##### 



Casualty
    Gross Premiums Written
        Property
    Gross Premiums Written
     64




---



##### 



Other
    Gross Premiums Written
      Net
    Premiums Written
    Years Ended December 31,2007


2006


2005(dollars in millions)

$


%1


$


%1


$


%1Workers compensation

$
252.6



97.6
%

$
272.0



98.2
%

$
266.7



96.9
%General liability


213.2



84.8
%


247.8



83.7
%


208.6



79.4
%Commercial automobile


199.7



98.2
%


219.4



98.6
%


189.0



98.1
%Property


219.1



76.8
%


276.0



73.5
%


145.8



49.1
%Commercial multi-peril


81.5



92.4
%


78.0



93.1
%


45.7



89.6
%Accident and health


103.9



81.4
%


43.9



68.3
%






Other


29.6



98.0
%


29.4



91.0
%


13.2



68.6
%Total net premiums written

$
1,099.6



88.3
%

$
1,166.5



86.3
%

$
869.0



79.2
%     1
    Percentage represents the
    percentage of net premiums written to gross premiums written.     65




---



##### 



Premiums
    Earned
    Years Ended December 31,(dollars in millions)

2007


2006


2005Workers compensation

$
258.0


$
278.8


$
285.8General liability


229.0



227.7



203.7Commercial automobile


210.4



203.9



186.6Property


273.3



246.2



151.6Commercial multi-peril


80.5



61.9



45.6Accident and health


103.9



43.9



Other


31.0



21.6



20.9Total premiums earned

$
1,186.1


$
1,084.0


$
894.2       Losses
    and Loss Adjustment Expenses
    Years Ended December 31,2007


2006


2005(dollars in millions)

Losses


Ratio


Losses


Ratio


Losses


RatioAccident year, as reported

$
816.8



68.9
%

$
762.3



70.3
%

$
684.1



76.5
%(Favorable) adverse development of prior years losses and
    LAE before impact of corporate aggregate reinsurance:Accident year 2006


(10.2
)














Accident year 2005


(26.9
)






(10.2
)






Accident year 2004


(41.7
)






(15.9
)






(59.2
)Accident year 2003


(1.0
)






(11.3
)






5.6Accident year 2002


1.2







(10.0
)






4.5Accident year 2001 and prior


28.4







(38.5
)






(11.4
)Total (favorable) adverse development


(50.2
)


(4.2
)


(85.9
)


(7.9
)


(60.5
)


(6.8
)Impact of corporate aggregate reinsurance:Amortization of deferred gain


(13.7
)






(12.9
)






(8.1
)Other activity










2.6







Total impact of corporate aggregate reinsurance


(13.7
)


(1.2
)


(10.3
)


(0.9
)


(8.1
)


(0.9
)Incurred losses and LAE

$
752.9



63.5
%

$
666.1



61.5
%

$
615.5



68.8
%  66




---



##### 



Accident Years Ended December 31,2007


2006


2005Workers compensation


76.3
%


69.6
%


58.0
%General liability


66.6
%


64.3
%


68.5
%Commercial automobile


68.6
%


71.2
%


64.7
%Property


68.2
%


79.0
%


116.7
%Commercial multi-peril


64.3
%


48.6
%


43.4
%Accident and health


69.4
%


67.3
%


Other


41.8
%


56.3
%


115.4
%Accident year loss and LAE ratio


68.9
%


69.4
%


72.4
%    67




---



##### 



Unpaid Losses and Loss Adjustment
    Expenses
  Underwriting
    Expenses
    Years Ended December 31,2007


2006


2005Policy acquisition ratio


15.0
%


14.3
%


14.1
%Other underwriting expense ratio


13.7



14.7



14.4Underwriting expense ratio


28.7
%


29.0
%


28.5
%      68




---



##### 



Investment
    Results
    Years Ended December 31,(dollars in millions)

2007


2006


2005Average investments, including cash and cash equivalents, at
    book
    value1

$
4,157.9


$
3,780.9


$
3,618.0Investment income

$
143.4


$
220.0


$
131.1Realized investment gains


234.1



172.8



84.2Pre-tax equity in earnings of investees


35.8



20.2



26.5Change in unrealized investment gains and losses and foreign
    currency translation


139.2



(139.0
)


(3.7
)Total return on investments

$
552.5


$
274.0


$
238.1Gross investment
    yield2


5.1
%


7.2
%


5.5
%Net investment
    yield2


4.3
%


6.4
%


4.4
%Total return on investments


13.3
%


7.2
%


6.6
%     1
    Includes book value of assets
    pledged for short-sale obligations of $1,047.4 million,
    $540.9 million and $497.9 million at December 31,
    2007, 2006 and 2005, respectively.2
    Including pre-tax equity in
    earnings of investees.       69




---



##### 



70




---



##### 



Interest
    and Other Expense
      Income
    Taxes
     71




---



##### 



Liquidity
    and Capital Resources Holding
    Company
        3 4 3 8
        Insurance
    Subsidiaries
   72




---



##### 



Year Ended December 31,2007


2006


2005Premiums collected

$
1,162.7


$
1,199.6


$
950.4Net paid losses


(826.1
)


(707.0
)


(666.2
)Commissions and other underwriting expenses paid


(355.0
)


(329.7
)


(298.5
)Cash underwriting (loss) income


(18.4
)


162.9



(14.3
)Investment income received


131.0



142.2



138.6Interest and other expense paid


(41.6
)


(37.7
)


(21.0
)Income taxes paid


(76.9
)


(178.0
)


(77.8
)Cash flow from operations

$
(5.9
)

$
89.4


$
25.5              73




---



##### 



Years Ended December 31,(dollars in millions)

2007


2006


2005Combined policyholders surplus

$
1,639.8


$
1,406.8


$
1,314.0Statutory operating leverage


0.67
x


0.83
x


0.66
x    Contractual
    Obligations    (dollars in millions)

Total


2008


2009 to 2010


2011 to 2012


2013 and beyondUnpaid losses and LAE

$
3,178.5


$
1,153.8


$
1,341.3


$
505.4


$
178.0Long-term debt, including interest payments


579.7



26.0



52.0



52.0



449.7Operating leases


88.6



13.8



23.6



14.5



36.7Short-sale obligations


718.7



718.7











Other long-term liabilities


61.1



4.1



25.2



14.3



17.5Total contractual obligations

$
4,626.6


$
1,916.4


$
1,442.1


$
586.2


$
681.9   Unpaid
    Losses and Loss Adjustment Expenses
  The Company may incur a reduction in its
    net income if its reserves are insufficient Unpaid Losses and Loss Adjustment
    Expenses
 74




---



##### 



Long-Term
    Debt, including Interest Payments
  3 4 3 8 Holding Company
  Operating
    Leases
    Short-Sale
    Obligations
  Investment Results
  Other
    Long-Term Liabilities
       Regulatory
    Issues  75




---



##### 



Off-Balance
    Sheet Arrangements Regulation S-K.
  ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK     Interest
    Rate Risk   At December 31, 2007


At December 31, 2006Fair Value of








Fair Value ofFixed Income








Fixed IncomeAnd Hybrid


Hypothetical


Hypothetical


And Hybrid


Hypothetical


Hypothetical(dollars in millions)

Securities


$ Change


% Change


Securities


$ Change


% Change200 basis point decline

$
2,717.9


$
564.9



26.2
%

$
2,681.1


$
566.7



26.8
%100 basis point decline

$
2,411.9


$
258.9



12.0
%

$
2,373.1


$
258.7



12.2
%Base scenario

$
2,153.0










$
2,114.4







100 basis point increase

$
1,936.2


$
(216.8
)


(10.1
)%

$
1,899.4


$
(215.0
)


(10.2
)%200 basis point increase

$
1,750.9


$
(402.1
)


(18.7
)%

$
1,716.8


$
(397.6
)


(18.8
)%      76




---



##### 



Equity
    Price Risk    Foreign
    Currency Exchange Rate Risk  77




---



##### 



ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS  PageNumberReport of Independent Registered Public Accounting Firm


79Consolidated Balance Sheets at December 31, 2007 and 2006


80Consolidated Statements of Income for the Years Ended
    December 31, 2007, 2006 and 2005


81Consolidated Statements of Shareholders Equity for the
    Years Ended December 31, 2007, 2006 and 2005


82Consolidated Statements of Comprehensive Income for the Years
    Ended December 31, 2007, 2006 and 2005


83Consolidated Statements of Cash Flows for the Years Ended
    December 31, 2007, 2006 and 2005


84Notes to Consolidated Financial Statements


86  78




---



##### 



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM         
 79




---



##### 



CRUM &
    FORSTER HOLDINGS CORP.
  CONSOLIDATED BALANCE SHEETS
  (Dollars in thousands, except per share amounts)
  At December 31,2007


2006ASSETSInvestments:Fixed income securities, at fair value (amortized cost of
    $1,741,750 and $2,087,065 in 2007 and 2006, respectively)

$
1,718,637


$
1,984,242Equity securities, at fair value (cost of $661,289 and $640,880
    in 2007 and 2006, respectively)


684,457



667,718Other invested assets


631,507



357,849Hybrid financial instruments, at fair value


125,848



Short-term investments at cost, which approximates fair value


196,138



14,130Total investments


3,356,587



3,023,939Cash and cash equivalents


147,506



366,743Assets pledged for short-sale obligations


1,043,436



535,594Accrued investment income


37,201



34,581Premiums receivable


213,488



249,913Reinsurance recoverable


1,310,192



1,479,331Reinsurance recoverable from affiliates


229,591



254,595Prepaid reinsurance premiums


21,848



25,430Deferred income taxes


93,161



285,902Deferred policy acquisition costs


72,282



83,964Other assets


87,520



103,562Total assets

$
6,612,812


$
6,443,554LIABILITIESUnpaid losses and loss adjustment expenses

$
3,178,506


$
3,371,549Unearned premiums


486,091



576,182Funds held under reinsurance contracts


250,697



243,316Accounts payable and other liabilities


220,142



298,101Deferred income on retroactive reinsurance


152,041



168,018Short-sale obligations


718,656



400,163Long-term debt


313,220



293,170Total liabilities


5,319,353



5,350,499Commitments and contingencies (Note 11)SHAREHOLDERS EQUITYCommon stock, $0.01 par value; 1,000 shares
    authorized; 100 issued and outstanding






Additional paid-in capital


740,993



740,993Accumulated other comprehensive income (loss), net of tax


44,479



(36,978
)Retained earnings


507,987



389,040Total shareholders equity


1,293,459



1,093,055Total liabilities and shareholders equity

$
6,612,812


$
6,443,554   The accompanying notes are an integral part of the
    consolidated financial statements.
 80




---



##### 



CRUM &
    FORSTER HOLDINGS CORP.
  CONSOLIDATED STATEMENTS OF INCOME
  (Dollars in thousands)
  Years Ended December 31,2007


2006


2005REVENUESPremiums earned

$
1,186,144


$
1,084,023


$
894,173Investment income


143,418



220,044



131,123Realized investment gains


234,085



172,774



84,187Total revenues


1,563,647



1,476,841



1,109,483EXPENSESLosses and loss adjustment expenses


752,969



666,079



615,505Policy acquisition costs


177,408



154,513



125,804Other underwriting expenses


162,788



159,890



128,648Interest expense


29,850



32,986



32,915Costs related to early retirement of debt


21,187







Other expense


9,576



8,096



2,548Total expenses


1,153,778



1,021,564



905,420Income before income taxes and equity in earnings of investees


409,869



455,277



204,063Income tax expense


139,987



156,156



65,320Income before equity in earnings of investees


269,882



299,121



138,743Equity in earnings of investees, net of tax


23,300



13,162



17,193NET INCOME

$
293,182


$
312,283


$
155,936   The accompanying notes are an integral part of the
    consolidated financial statements.
 81




---



##### 



CRUM &
    FORSTER HOLDINGS CORP.
  CONSOLIDATED STATEMENTS OF SHAREHOLDERS
    EQUITY
  (Dollars in thousands)
  Years Ended December 31,2007


2006


2005COMMON STOCKBalance, beginning and end of year

$



$



$
ADDITIONAL PAID-IN CAPITALBalance, beginning and end of year


740,993



740,993



740,993ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAXBalance, beginning of year


(36,978
)


53,443



55,875Unrealized investment gains and losses, net of transfers to
    realized investment gains and losses


71,285



(91,652
)


(3,326
)Foreign currency translation


19,236



1,286



894Change in funded status of defined benefit postretirement plans


1,082







Cumulative effect of adoption of Statement of Financial
    Accounting Standards No. 155


(10,146
)






Impact of initial adoption of Statement of Financial Accounting
    Standards No. 158






(55
)


Balance, end of year


44,479



(36,978
)


53,443RETAINED EARNINGSBalance, beginning of year


389,040



166,757



84,321Cumulative effect of adoption of Statement of Financial
    Accounting Standards No. 155 and equity method investee
    adoption of Financial Accounting Standards Board Interpretation
    No. 48


9,465







Net income


293,182



312,283



155,936Dividends to shareholder


(183,700
)


(90,000
)


(73,500
)Balance, end of year


507,987



389,040



166,757TOTAL SHAREHOLDERS EQUITY

$
1,293,459


$
1,093,055


$
961,193    The accompanying notes are an integral part of the
    consolidated financial statements.
 82




---



##### 



CRUM &
    FORSTER HOLDINGS CORP.
  CONSOLIDATED STATEMENTS OF COMPREHENSIVE
    INCOME
  (Dollars in thousands)
  Years Ended December 31,2007


2006


2005NET INCOME

$
293,182


$
312,283


$
155,936Change in components of other comprehensive income for the year,
    before tax:Unrealized investment gains and losses


109,638



(141,004
)


(5,116
)Foreign currency translation


29,594



1,979



1,375Change in funded status of defined benefit postretirement plans


1,664







Other comprehensive income (loss) for the year before tax


140,896



(139,025
)


(3,741
)Deferred income tax (expense) benefit for the year:Deferred income tax (expense) benefit from unrealized investment
    gains and losses


(38,353
)


49,352



1,790Deferred income tax expense from foreign currency translation


(10,358
)


(693
)


(481
)Deferred income tax expense from change in funded status of
    defined benefit postretirement plans


(582
)






Total deferred income tax (expense) benefit for the year


(49,293
)


48,659



1,309Other comprehensive income (loss) for the year, net of tax


91,603



(90,366
)


(2,432
)COMPREHENSIVE INCOME

$
384,785


$
221,917


$
153,504    The accompanying notes are an integral part of the
    consolidated financial statements.
 83




---



##### 



CRUM &
    FORSTER HOLDINGS CORP.
  CONSOLIDATED STATEMENTS OF CASH FLOWS
  (Dollars in thousands)
  Years Ended December 31,2007


2006


2005OPERATING ACTIVITIESNet income

$
293,182


$
312,283


$
155,936Adjustments to reconcile net income to net cash from operating
    activities:Net accretion of discount on fixed income securities


(7,313
)


(9,951
)


(4,554
)Realized investment gains


(234,085
)


(172,774
)


(84,187
)Earnings of equity method investees, net of dividends


(30,528
)


(15,136
)


(21,685
)Earnings of investment companies and similar equity method
    investees


(12,985
)


(87,762
)


(19,017
)Depreciation and amortization


3,272



3,174



3,460Deferred income tax expense (benefit)


143,814



(62,007
)


60Non-cash costs related to early retirement of debt


9,216







Other non-cash net income adjustments


9,313



3,748



20,161Changes in:Accrued investment income


(2,620
)


3,199



(5
)Premiums receivable


37,426



(6,465
)


16,525Reinsurance recoverable


175,094



321,169



(362,654
)Prepaid reinsurance premiums


3,582



5,878



3,834Deferred policy acquisition costs


11,682



(13,157
)


4,199Other assets


(3,247
)


5,169



10,344Unpaid losses and loss adjustment expenses


(193,043
)


(301,485
)


302,097Unearned premiums


(90,091
)


76,631



(29,041
)Accounts payable and other liabilities


(118,615
)


26,840



29,992Net cash (used in) provided by operating activities


(5,946
)


89,354



25,465INVESTING ACTIVITIESPurchases of fixed income securities


(149,314
)


(518,443
)


(1,556,386
)Proceeds from sales of fixed income securities


209,202



529,466



1,498,385Proceeds from maturities of fixed income securities


2,395



62,305



16,791Purchases of equity securities


(254,035
)


(590,158
)


(240,099
)Proceeds from sales of equity securities


239,458



635,348



211,902Purchases of other invested assets


(46,090
)


(58,137
)


(87,017
)Proceeds from sales of other invested assets


83,294



143,542



34,890Purchases of hybrid financial instruments


(2,500
)






Proceeds from hybrid financial instruments


2,259







Purchases of short-term investments


(335,404
)


(14,130
)


Proceeds from sales of short-term investments


153,396







Proceeds from short-sale obligations


357,363



24,931



100,013Cash paid to close out short-sale obligations


(23,489
)






Net change in cash collateral


(329,484
)


(91,120
)


(113,604
)Purchases of fixed assets


(1,875
)


(1,656
)


(604
)Net cash (used in) provided by investing activities


(94,824
)


121,948



(135,729
)  The accompanying notes are an integral part of the
    consolidated financial statements.
  84




---



##### 



CRUM &
    FORSTER HOLDINGS CORP.
  CONSOLIDATED STATEMENTS OF CASH FLOWS
  (Dollars in thousands)
  Years Ended December 31,2007


2006


2005FINANCING ACTIVITIESDividends to shareholder


(128,825
)


(90,000
)


(73,500
)Issuance of
    73/4%
    long-term debt


330,000







Repayment of
    103/8%
    long-term debt


(295,730
)






New debt issuance costs


(23,912
)






Net cash used in financing activities


(118,467
)


(90,000
)


(73,500
)Net change in cash and cash equivalents


(219,237
)


121,302



(183,764
)Cash and cash equivalents, beginning of year


366,743



245,441



429,205Cash and cash equivalents, end of year

$
147,506


$
366,743


$
245,441SUPPLEMENTAL CASH FLOW INFORMATIONCash paid for interest

$
24,907


$
31,125


$
31,125Cash paid to parent for income taxes

$
76,906


$
178,063


$
77,808SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIESNote received from parent in partial settlement of the
    Companys tax net operating losses

$
41,882


$



$
Note received from parent in settlement of the sale of a common
    stock investment

$
12,993


$



$
In-kind dividend payment to parent representing cancellation of
    the aforementioned notes

$
54,875


$



$
  85




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
    (Dollars in thousands)  1.
    Organization
    and Basis of Presentation      A-
    2.  Summary
    of Significant Accounting Policies
    Investments
   86




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
        Derivatives
    and Hybrid Financial Instruments
    Accounting for Derivative Instruments and Hedging Activities Accounting for Certain Hybrid Financial
    Instruments  an amendment of FASB Statements Nos. 133
    and 140 instrument-by-instrument
 87




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
    Cash
    and Cash Equivalents
    Deferred
    Policy Acquisition Costs
    Goodwill
    Unpaid
    Losses and Loss Adjustment Expenses
     88




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
  Reinsurance
        Funds
    held under Reinsurance Contracts
    Income
    Taxes
       89




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
  Accounting for Uncertainty in Income Taxes  an
    interpretation of FASB Statement No. 109 Accounting for Income Taxes
  Premiums
    Foreign
    Currency
  Foreign Currency
    Translation
  Accumulated
    Other Comprehensive Income, Net of Tax
  Employers Accounting for
    Defined Benefit Pension and Other Postretirement
    Plans  an amendment of FASB Statements No. 87,
    88, 106, and 132(R)
 90




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
  Recent
    Accounting Pronouncements Not Yet Adopted
  The
    Fair Value Option for Financial Assets and Financial
    Liabilities  Including an Amendment of FASB Statement
    No. 115 instrument-by-instrument The Equity Method of Accounting
    for Investments in Common Stock
  Fair Value Measurements
 91




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
  3.
    Investments    Available-For-Sale
    Securities
    At December 31, 2007Cost or


Gross


GrossAmortized


Unrealized


UnrealizedCost


Gains


Losses


Fair ValueFixed income securities:United States government and government agencies and
    authorities1

$
2,046,766


$
19,240


$
45,884


$
2,020,122States, municipalities and political subdivisions


2,527



22



12



2,537Other corporate


4,896



28



466



4,458Total fixed income securities


2,054,189



19,290



46,362



2,027,117Equity securities:Common stocks


653,199



58,211



34,301



677,109Preferred stocks


8,090







742



7,348Total equity securities


661,289



58,211



35,043



684,457Total available-for-sale securities

$
2,715,478


$
77,501


$
81,405


$
2,711,574     1
    
    Includes U.S. Treasury securities
    pledged for short-sale obligations at a fair value of $308,480
    (amortized cost of $312,439).    At December 31, 2006Cost or


Gross


GrossAmortized


Unrealized


UnrealizedCost


Gains


Losses


Fair ValueFixed income securities:United States government and government agencies and
    authorities1

$
2,015,975


$
65


$
129,717


$
1,886,323States, municipalities and political subdivisions


4,892



23



2



4,913Other corporate


201,645



21,483







223,128Total fixed income securities


2,222,512



21,571



129,719



2,114,364Equity securities:Common stocks


632,790



37,633



11,096



659,327Preferred stocks


8,090



301







8,391Total equity securities


640,880



37,934



11,096



667,718Total available-for-sale securities

$
2,863,392


$
59,505


$
140,815


$
2,782,082     1
    
    Includes U.S. Treasury securities
    pledged for short-sale obligations at a fair value of $130,122
    (amortized cost of $135,447). 92




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
     At December 31, 2007Amortized Cost


Fair ValueDue in one year or less

$
1,363


$
1,368Due after one year through five years


224,001



228,281Due after five years through ten years


52,473



54,701Due after ten years through twenty years


733,069



732,974Due after twenty years


1,043,283



1,009,793Total fixed income securities

$
2,054,189


$
2,027,117       At December 31, 2007Less Than 12 Months


12 Months or More


TotalUnrealized





Unrealized





UnrealizedFair Value


Loss


Fair Value


Loss


Fair Value


LossFixed income securities:United States government and government agencies and authorities

$
41,056


$
171


$
1,301,404


$
45,713


$
1,342,460


$
45,884States, municipalities and political subdivisions


668



12











668



12Other corporate


3,810



466











3,810



466Total fixed income securities


45,534



649



1,301,404



45,713



1,346,938



46,362Equity securities:Common stocks


243,115



34,300











243,115



34,300Preferred stocks


7,347



743











7,347



743Total equity securities


250,462



35,043











250,462



35,043Total securities in an unrealized loss position

$
295,996


$
35,692


$
1,301,404


$
45,713


$
1,597,400


$
81,405      93




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
    At December 31, 2006Less Than 12 Months


12 Months or More


TotalUnrealized





Unrealized





UnrealizedFair Value


Loss


Fair Value


Loss


Fair Value


LossFixed income securities:United States government and government agencies and authorities

$
280,147


$
2,856


$
1,603,624


$
126,861


$
1,883,771


$
129,717States, municipalities and political subdivisions


645



2











645



2Total fixed income securities


280,792



2,858



1,603,624



126,861



1,884,416



129,719Equity securities:Common stocks


252,533



11,096











252,533



11,096Total equity securities


252,533



11,096











252,533



11,096Total securities in an unrealized loss position

$
533,325


$
13,954


$
1,603,624


$
126,861


$
2,136,949


$
140,815     At December 31, 2007Fair Value


Unrealized LossDue in one year or less

$



$
Due after one through five years


3,810



467Due after five through ten years


111



Due after ten years through twenty years


333,224



12,405Due after twenty years


1,009,793



33,490Total fixed income securities in an unrealized loss position

$
1,346,938


$
46,362   Investment
    Income
    Years Ended December 31,2007


2006


2005Interest on fixed income securities

$
102,905


$
106,391


$
112,788Dividends from equity securities


21,713



17,181



20,679Income from other invested assets


12,985



90,351



19,026Other, primarily interest on cash and cash
    equivalents1


40,030



39,561



18,990Gross investment income


177,633



253,484



171,483Interest on funds held under reinsurance contracts


(16,125
)


(8,427
)


(19,904
)Investment expenses


(18,090
)


(25,013
)


(20,456
)Investment income

$
143,418


$
220,044


$
131,123     1
    
    Includes interest of $25,609,
    $16,893 and $8,923 in 2007, 2006 and 2005, respectively, on cash
    collateral pledged for short-sale obligations, as well as
    interest on short-term investments. 94




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
     Investment
    Gains and Losses
    Years Ended December 31,2007


2006


2005Fixed income securities:Gains

$
5,347


$
62,769


$
87,318Losses


(3,994
)


(1,491
)


(786
)Net


1,353



61,278



86,532Equity securities:Gains


33,952



194,129



51,490Losses


(28,562
)


(15,857
)


(7,039
)Net


5,390



178,272



44,451Derivative transactions, short-sale obligations and hybrid
    financial instruments:Gains


270,292



1,998



25Losses


(54,545
)


(75,459
)


(49,292
)Net


215,747



(73,461
)


(49,267
)Other invested assets:Gains


11,735



6,828



3,128Losses


(140
)


(143
)


(657
)Net


11,595



6,685



2,471Total realized investment gains and losses:Gains


321,326



265,724



141,961Losses


(87,241
)


(92,950
)


(57,774
)Net

$
234,085


$
172,774


$
84,187   Derivative Transactions,
    Short-Sale Obligations and Hybrid Financial
    Instruments
 95




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
    Years Ended December 31,2007


2006


2005Fixed income securities

$
97,148


$
(24,795
)

$
(59,925
)Equity securities


(3,670
)


(65,164
)


15,447Other invested assets


16,160



(51,045
)


39,362Change in unrealized investment gains and losses, net of
    transfers to realized investment gains and losses, before income
    taxes1


109,638



(141,004
)


(5,116
)Deferred income taxes


(38,353
)


49,352



1,790Net change in unrealized investment gains and losses, net of
    transfers to realized investment gains and losses

$
71,285


$
(91,652
)

$
(3,326
)     1
    
    The amounts are net of transfers to
    realized investment gains and losses, of $21,904, $108,045 and
    $12,383 in 2007, 2006 and 2005, respectively.  Investments
    in Related Parties
    Ownership PercentageAt December 31, 2007


At December 31, 2006


at December 31, 2007Cost


Carrying Value


Cost


Carrying Value


Crum & Forster


FairfaxNorthbridge

$
75,055


$
200,484


$
75,055


$
148,298



15.5
%


60.2
%HWIC Asia Fund

$
35,228


$
82,813


$
41,638


$
62,495



29.5
%


93.0
%TPF, L.P.

$
27,000


$
25,635


$
7,000


$
8,042



38.6
%


38.6
%TPF, L.P. convertible debenture

$
2,500


$
2,500


$



$




N/A



N/AAdvent1

$
15,996


$
15,996


$
17,870


$
22,146



8.1
%


44.5
%Dalton Greater China Fund

$
13,266


$
20,733


$
13,266


$
17,338



19.2
%


32.2
%Odyssey Re Holdings Corp. preferred shares

$
8,090


$
7,347


$
8,090


$
8,391



N/A



N/AOdyssey Re Holdings Corp. common shares

$



$



$
17,824


$
22,337







TRG Holding Corporation

$
5,025


$
8,314


$
5,025


$
8,089



1.4
%


100.0
%Rutland Fund A

$
4,928


$
5,982


$
4,538


$
5,922



12.7
%


25.4
%MFXchange Holdings Inc.

$
3,725


$
2,405


$
3,725


$
2,218



9.3
%


100.0
%Chou Associates Management Fund

$



$



$
25,362


$
26,631







     1
    
    At December 31, 2007 and 2006,
    cost has been reduced by an other than temporary impairment
    charge of $7,253 and $5,379, respectively.   96




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
                      Equity
    Method Investees
      At December 31,2007


2006Cash and investments

$
721,210


$
590,389Total assets

$
1,032,542


$
947,285Total liabilities

$
644,417


$
635,244Shareholders equity or partners
    capital1

$
388,125


$
312,041     1
    
    The difference between the
    Companys aggregate share of shareholders equity or
    partners capital and the carrying value on the
    consolidated balance sheets is primarily due to purchase
    accounting adjustments. 97




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
     Years Ended December, 312007


2006


2005Total revenues

$
217,052


$
360,264


$
228,960Total expenses

$
150,715


$
195,442


$
170,143Net income

$
48,831


$
108,011


$
45,477     Northbridge
    Financial Corporation
    HWIC Asia
    Fund
    Cost
    Method Investments
    Derivative
    Transactions, Short-Sale Obligations and Hybrid Financial
    Instruments
   98




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
               99




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
    Years Ended December 31,2007


2006


2005Credit default swaps

$
229,739


$
(23,854
)

$
(30,245
)SPDRs short-sales


(11,118
)


(45,818
)


(12,349
)Common stocks short-sales


26,498



326



S&P Index call options


5,274



1,667



(4,254
)Hybrid financial instruments


(30,904
)


(4,590
)


Other derivatives


(3,742
)


(1,192
)


(2,419
)Total realized investment gains (losses)

$
215,747


$
(73,461
)

$
(49,267
)     Credit


SPDRs


Common


S&P


HybridDefault


Short-


Stock


Index Call


Financial


OtherSwaps1


Sales


Short-Sales


Options


Instruments


Derivatives


TotalRealized gains on disposal

$
19,296


$



$
26,454


$
12,637


$
653


$



$
59,040Reversal of mark-to-market (gains) losses recognized in prior
    years


2,263







(326
)


(5,808
)


(445
)






(4,316
)Mark-to-market gains (losses) recognized in 2007


208,180



(11,118
)


370



(1,555
)


(31,112
)


(3,742
)


161,023Net gains (losses)

$
229,739


$
(11,118
)

$
26,498


$
5,274


$
(30,904
)

$
(3,742
)

$
215,747     1
    
    The notional amount and related
    proceeds of the credit default swaps sold in 2007 was $121,290
    and $22,400, respectively.    Regulatory
    and Other Deposits
     100




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
  4.
    Unpaid
    Losses and Loss Adjustment Expenses    Years Ended December 31,2007


2006


2005Gross unpaid losses and LAE, beginning of year

$
3,371,549


$
3,673,034


$
3,370,936Less ceded unpaid losses and LAE


1,355,253



1,682,768



1,360,996Net unpaid losses and LAE, beginning of year


2,016,296



1,990,266



2,009,940Losses and LAE incurred related to:Current year


816,823



762,241



684,069Prior years


(63,854
)


(96,162
)


(68,564
)Total losses and LAE incurred


752,969



666,079



615,505Losses and LAE paid related to:Current year


217,261



158,000



154,381Prior years


570,994



482,049



480,798Total losses and LAE paid


788,255



640,049



635,179Net unpaid losses and LAE, end of year


1,981,010



2,016,296



1,990,266Add ceded unpaid losses and LAE


1,197,496



1,355,253



1,682,768Gross unpaid losses and LAE, end of year

$
3,178,506


$
3,371,549


$
3,673,034     2007


2006Ceded unpaid losses and LAE in the table above

$
1,197,496


$
1,355,253Reconciling items:Reinsurance receivable on paid losses and LAE


51,797



70,933Unamortized retroactive reinsurance recoverable


312,000



329,250Loss sensitive
    cession1


(21,510
)


(21,510
)Reinsurance recoverable on the consolidated balance sheets

$
1,539,783


$
1,733,926     1
    
    Equals additional premiums due on
    retrospectively rated insurance policies that inure to the
    benefit of the reinsurer.     101




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
             102




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
  5.
    Asbestos
    and Environmental Losses and Loss Adjustment Expenses    Years Ended December 31,2007


2006


2005AsbestosGross unpaid losses and allocated LAE (ALAE), 
    beginning of year

$
443,055


$
469,199


$
522,685Less ceded unpaid losses and ALAE


94,817



92,418



113,891Net unpaid losses and ALAE, beginning of year


348,238



376,781



408,794Net losses and ALAE incurred


24,342



22,700



31,550Less: Net paid losses and ALAE


38,938



51,243



63,563Net unpaid losses and ALAE, end of year


333,642



348,238



376,781Add ceded unpaid losses and ALAE


94,497



94,817



92,418Gross unpaid losses and ALAE, end of year

$
428,139


$
443,055


$
469,199   Years Ended December 31,2007


2006


2005EnvironmentalGross unpaid losses and ALAE, beginning of year

$
110,636


$
111,536


$
123,353Less ceded unpaid losses and ALAE


37,103



37,293



38,190Net unpaid losses and ALAE, beginning of year


73,533



74,243



85,163Net losses and ALAE incurred


22,185



9,898



6,635Less: Net paid losses and ALAE


10,675



10,608



17,555Net unpaid losses and ALAE, end of year


85,043



73,533



74,243Add ceded unpaid losses and ALAE


32,725



37,103



37,293Gross unpaid losses and ALAE, end of year

$
117,768


$
110,636


$
111,536    103




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
    Years Ended December 31,2007


2006


2005Other LatentGross unpaid losses and ALAE, beginning of year

$
32,463


$
36,838


$
35,357Less ceded unpaid losses and ALAE


10,705



12,794



13,333Net unpaid losses and ALAE, beginning of year


21,758



24,044



22,024Net losses and ALAE incurred


8,020



1,299



6,461Less: Net paid losses and ALAE


5,650



3,585



4,441Net unpaid losses and ALAE, end of year


24,128



21,758



24,044Add ceded unpaid losses and ALAE


10,109



10,705



12,794Gross unpaid losses and ALAE, end of year

$
34,237


$
32,463


$
36,838     6.
    Reinsurance    Years Ended December 31,2007


2006


2005Premiums written:Direct

$
1,205,545


$
1,202,296


$
1,078,670Assumed from other companies, pools and associations


39,476



149,335



19,086Ceded to other companies, pools and associations


(145,386
)


(185,099
)


(228,790
)Net premiums written

$
1,099,635


$
1,166,532


$
868,966Premiums earned:Direct

$
1,260,828


$
1,157,562


$
1,108,690Assumed from other companies, pools and associations


74,292



117,438



18,106Ceded to other companies, pools and associations


(148,976
)


(190,977
)


(232,623
)Premiums earned

$
1,186,144


$
1,084,023


$
894,173     At December 31,2007


2006Reinsurance recoverable on unpaid losses and LAE

$
1,487,986


$
1,662,993Reinsurance receivable on paid losses and LAE


51,797



70,933Total reinsurance recoverable

$
1,539,783


$
1,733,926  104




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
      Corporate
    Aggregate Reinsurance
        Years Ended December 31,2007


2006


2005Investment income

$
(16,125
)

$
(8,427
)

$
(19,904
)Losses and LAE


(13,673
)


(10,289
)


(8,058
)Income before income taxes

$
(2,452
)

$
1,862


$
(11,846
)  105




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
  1
  2000 accident year prospective aggregate stop loss contract

$
28,7191998 prospective aggregate stop loss contract


367,500
21998 aggregate stop loss contract amendment


19,2482000 retroactive adverse development contract


369,000Total

$
784,467     1
    
    Total amounts recognized as a
    reduction of losses and LAE include the $389,010 below, $28,719
    on the 2000 accident year prospective aggregate stop loss
    contract and $76,248 of amortization of deferred gains on the
    retroactive reinsurance contracts.2
    
    Includes $389,010 which has been
    recognized as a reduction of losses and LAE less $21,510 for
    additional premiums due on retrospectively rated insurance
    policies that inure to the benefit of the reinsurer.  Prospective
    Corporate Aggregate Reinsurance
    Years Ended December 31,2007


2006


2005Ceded losses and LAE

$



$



$
Less: ceded premiums written and earned










Less: funds held interest charged to investment income


2,348



3,055



4,509Income before income taxes

$
(2,348
)

$
(3,055
)

$
(4,509
)      106




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
  Retroactive
    Corporate Aggregate Reinsurance
    Years Ended December 31,2007


2006


2005Decrease in reinsurance recoverable due from reinsurers

$
(3,577
)

$
(36,983
)

$
(26,699
)Less: related premiums paid


(1,273
)


(33,392
)


4,105Decrease in income deferred during the year


(2,304
)


(3,591
)


(30,804
)Amortization of deferred income


(13,673
)


(12,889
)


(8,058
)Decrease in deferred income


(15,977
)


(16,480
)


(38,862
)Deferred income on retroactive reinsurance  beginning
    of year


168,018



184,498



223,360Deferred income on retroactive reinsurance  end of
    year

$
152,041


$
168,018


$
184,498Funds held interest charged during the year

$
13,777


$
5,372


$
15,395        107




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
      7.
    Long-Term
    Debt    At December 31,2007


200673/4% Senior
    Notes due 2017

$
309,036


$
103/8% Senior
    Notes due 2013


4,184



293,170Total

$
313,220


$
293,170   3 4 Form S-4
  3 8
    2012

103.875%2013

102.583%2014

101.292%2015 and after

100.000%  108




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
    2008

105.188%2009

103.458%2010

101.729%2011 and after

100.000%           8.
    Income
    Taxes    Years Ended December 31,2007


2006


2005Current

$
8,721


$
225,250


$
74,518Deferred


131,266



(69,094
)


(9,198
)Total income tax expense

$
139,987


$
156,156


$
65,320      109




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
    At December 31,2007


2006Deferred tax assets:Deferred income on retroactive reinsurance

$
53,215


$
58,807Unpaid losses and LAE


52,630



53,624Unearned premiums


35,301



41,357Employee benefit plans


18,005



13,772Investments






60,550Net operating loss carryforwards






57,584Unrealized net depreciation of investments and currency
    translation






19,881Other


15,816



18,199Deferred tax assets


174,967



323,774Deferred tax liabilities:Deferred policy acquisition costs


25,299



29,387Unrealized net appreciation of investments and currency
    translation


23,950



Investments


16,173



Capitalized debt costs


7,826



Other


8,558



8,485Deferred tax liabilities


81,806



37,872Total net deferred tax assets

$
93,161


$
285,902       Years Ended December 31,2007


2006


2005% of





% of





% ofPre-tax





Pre-tax





Pre-taxAmount


Income


Amount


Income


Amount


IncomeIncome taxes computed on pre-tax operating income

$
143,454



35.0
%

$
159,347



35.0
%

$
71,422



35.0
%(Decrease) increase in income taxes resulting from:Dividends received deduction and tax-exempt income


(3,422
)


(0.8
)


(3,264
)


(0.7
)


(3,903
)


(1.9
)Prior year audit adjustment


















(1,653
)


(0.8
)Other, net


(45
)






73







(546
)


(0.3
)Total income tax expense

$
139,987



34.2
%

$
156,156



34.3
%

$
65,320



32.0
%    110




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
  Accounting for Income Taxes
      9.
    Related
    Party Transactions  Reinsurance
    At December 31,2007


2006


2005Statements of income:Net premiums written

$
(17,566
)

$
92,472


$
(52,895
)Premiums earned

$
14,876


$
56,990


$
(54,575
)Losses and LAE

$
(2,836
)

$
31,338


$
(130,596
)Balance sheets:Premiums receivable

$
644


$
7,249


$
136Reinsurance recoverable from affiliates

$
229,591


$
254,595


$
304,033Prepaid reinsurance premiums

$
8,246


$
9,611


$
11,199Unpaid losses and LAE

$
54,790


$
52,193


$
6,858Unearned premiums

$
92


$
33,958


$
64Accounts payable and other liabilities

$
5,589


$
8,779


$
18,855      111




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
             112




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
        Investment
    Agreements and Related Party Transactions
            Other
    Agreements
   113




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
                      10.
    Employee
    Benefits   114




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
      At December 31,2007


2006Changes in benefit obligation:Benefit obligation at beginning of year

$
10,946


$
11,398Service cost


1



1Interest cost


514



591Plan participants contributions


1,105



1,298Actuarial gain


(1,249
)


(18
)Benefits paid


(1,870
)


(2,324
)Benefit obligation at end of year

$
9,447


$
10,946Change in fair value of plan assets:Fair value of plan assets at beginning of year

$



$
Employer contributions


765



1,026Plan participants contributions


1,105



1,298Benefits paid


(1,870
)


(2,324
)Fair value of assets at end of year

$



$
Funded status of the plan at end of year

$
(9,447
)

$
(10,946
)     At December 31,2007


2006Net actuarial gain

$
5,033


$
4,186Transition obligation


(3,453
)


(4,270
)Total

$
1,580


$
(84
)     Years Ended December 31,2007


2006


2005Service cost

$
1


$
1


$
Interest cost


514



591



645Amortization of transition obligation


817



817



817Recognized net actuarial gain


(402
)


(288
)


(327
)Net periodic benefit cost

$
930


$
1,121


$
1,135  115




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
            Including


ExcludingMedicare


MedicareSubsidy


Subsidy2008

$
1,030


$
1,3722009

$
1,007


$
1,3612010

$
965


$
1,3242011

$
899


$
1,2572012

$
817


$
1,1722013 -2017

$
3,619


$
4,463        116




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
  11.
    Commitments
    and Contingencies  20-year
  2008

$
13,7512009


12,6022010


10,9852011


8,6992012


5,8492013 and thereafter


36,674Total minimum annual rentals

$
88,560            117




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
  and/or and/or
    12.
    Dividend
    Restrictions, Statutory Information and Capitalization        Years Ended December 31,2007


2006


2005Net income

$
191,699


$
253,324


$
151,924Policyholders surplus

$
1,639,751


$
1,406,822


$
1,313,988  118




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
      13.
    Segment
    Reporting    Years Ended December 31,2007


2006


2005Workers compensation

$
257,971


$
278,761


$
285,775General liability


228,973



227,740



203,703Commercial automobile


210,490



203,862



186,601Property


273,306



246,255



151,578Commercial multi-peril


80,511



61,885



45,653Accident and health


103,910



43,875



Other


30,983



21,645



20,863Total premiums earned

$
1,186,144


$
1,084,023


$
894,173     Years Ended December 31,2007


2006


2005Amount


Ratio


Amount


Ratio


Amount


RatioAccident year loss and LAE ratios:Workers compensation

$
196,816



76.3
%

$
200,242



71.8
%

$
211,027



73.8
%General liability


152,556



66.6
%


150,810



66.2
%


140,650



69.0
%Commercial automobile


144,308



68.6
%


147,116



72.2
%


118,624



63.6
%Property


186,379



68.2
%


187,773



76.3
%


170,852



112.7
%Commercial multi-peril


51,736



64.3
%


36,785



59.4
%


26,989



59.2
%Accident and health


72,068



69.4
%


29,262



66.7
%






Other


12,960



41.8
%


10,253



47.4
%


15,927



76.2
%Total accident year losses and LAE


816,823



68.9
%


762,241



70.3
%


684,069



76.5
%Prior years loss development


(63,854
)


(5.4
)


(96,162
)


(8.8
)


(68,564
)


(7.7
)Calendar year losses and LAE

$
752,969



63.5
%

$
666,079



61.5
%

$
615,505



68.8
%    119




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
  14.
    Accounting
    Adjustments in Respect of Certain Investments Related to Prior
    Periods  78-9, Accounting for Investments in Real Estate Ventures Business Combinations
  Considering the Effects of Prior
    Year Misstatements when Quantifying Misstatements in Current
    Year Financial Statements
   120




---



##### 



NOTES TO
    THE CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands)
  15.
    Quarterly
    Financial Data    Three Months Ended(Unaudited)December 31,


September 30,


June 30,


March 31,2007


20063


2007


2006


2007


2006


2007


2006Premiums earned

$
292,241


$
292,845


$
293,375


$
279,631


$
306,821


$
264,828


$
293,707


$
246,719Investment
    income1,2

$
202,579


$
50,399


$
119,979


$
72,514


$
34,189


$
109,014


$
56,602


$
181,140Losses and
    LAE3

$
165,351


$
124,929


$
192,468


$
190,457


$
201,690


$
181,681


$
193,460


$
169,012Net
    income2,3

$
148,767


$
82,272


$
82,857


$
45,865


$
18,705


$
67,783


$
42,853


$
116,363Combined
    ratio3


86.2
%


71.0
%


95.1
%


97.4
%


92.6
%


98.5
%


94.7
%


97.0
%     1
    
    Investment income includes realized
    investment gains and losses and pre-tax equity in earnings of
    investees. The increase in investment income in the third and
    fourth quarters of 2007 as compared to the first two quarters
    was primarily attributable to significant gains on the credit
    default swaps.2
    
    2006 data includes adjustments
    described in Note 14 to the consolidated financial
    statements.3
    
    Based on its loss reserves reviews
    as of September 30, 2007 and 2006, the Company recognized
    approximately $24.5 ($15.9 million after-tax) and
    $71.5 million ($46.5 million after-tax), respectively,
    of favorable loss and LAE development in the fourth quarters of
    each year. 121




---



##### 



ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A(T).
    CONTROLS
    AND PROCEDURES Evaluation
    of Disclosure Controls and Procedures Rules 13a-15(e) 15d-15(e) Form 10-K.
 Managements
    Report on Internal Control over Financial Reporting Rules 13a-15(f) 15d-15(f)
        Form 10-K
  ITEM 9B.
    OTHER
    INFORMATION   122




---



##### 



PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Directors
    and Executive Officers   Name

Age

PositionV. Prem Watsa


57


ChairmanNikolas Antonopoulos


54


President and Chief Executive OfficerMary Jane Robertson


54


Executive Vice President, Chief Financial Officer and TreasurerJoseph F. Braunstein, Jr.


55


Vice ChairmanAnthony F.
    Griffiths1,2


77


DirectorRobert J.
    Gunn1


61


DirectorBradley P. Martin


47


DirectorPaul
    Murray1,3


76


Director     1
    
    Audit committee and compensation
    committee member.2
    
    Chairman of the compensation
    committee.3
    
    Chairman of the audit committee.  V. Prem Watsa
  Nikolas Antonopoulos
  Mary Jane Robertson
  Joseph F. Braunstein, Jr.
  Anthony F. Griffiths
 123




---



##### 



Robert J. Gunn 1998-2001.
  Bradley P. Martin
  Paul Murray
 Key
    Employee of the Operating Companies Douglas M. Libby
 Corporate
    Governance  Audit
    Committee and Audit Committee Financial Expert    Compensation
    Committee  124




---



##### 



Compensation
    of Directors  Code of
    Ethics Form 10-K.
  ITEM 11.
    EXECUTIVE
    COMPENSATION  Form 10-K.
  ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS  Form 10-K.
  ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
    INDEPENDENCE  Form 10-K.
  ITEM 14.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES    Years Ended December 31,(dollars in millions)

2007


2006Audit fees

$
1,470.5


$
1,248.6Audit-related fees


993.0



1,103.8Tax fees


9.5



11.0All other fees


1.7



1.7Total fees billed by principal accountants

$
2,474.7


$
2,365.1  Audit
    Fees Form 10-Q
 125




---



##### 



Audit-Related
    Fees 3 8
 Tax
    Fees  All Other
    Fees  Audit
    Committee Pre-Approval Policies and Procedures pre-approved
 PART IV  ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES Financial
    Statement Schedules  126




---



##### 



Exhibits  ExhibitNumber

Exhibit

Location*3
.1

Certificate of Incorporation

Exhibit 3.1 to the Registration Statement on Form S-4 (No.
    333-107722) of the Company filed on August 7, 2003.3
.2

Amended and Restated By-Laws

Exhibit 3.2 to the Registration Statement on Form S-4 (No.
    333-107722) of the Company filed on August 7, 2003.4
.1

Indenture between Crum & Forster Funding Corp. and The
    Bank of New York effective as of June 5, 2003

Exhibit 4.1 to the Registration Statement on Form S-4 (No.
    333-107722) of the Company filed on August 7, 2003.4
.2

First Supplemental Indenture among the Company, Crum &
    Forster Funding Corp. and The Bank of New York effective as of
    June 30, 2003

Exhibit 4.2 to the Registration Statement on Form S-4 (No.
    333-107722) of the Company filed on August 7, 2003.4
.3

Second Supplemental Indenture between the Company and the Bank
    of New York dated as of May 7, 2007

Exhibit 4.1 to the form 8-K of the Company filed on May 10, 20074
.4

Indenture between the Company and the Bank of New York dated as
    of May 7, 2007

Exhibit 4.2 to the form 8-K of the Company filed on May 10, 200710
.1

Investment Agreement among Hamblin Watsa, Fairfax and North
    River effective as of January 8, 2004

Exhibit 10.1 to the Form 10-K of the Company for the year ended
    December 31, 2004, filed on March 7, 2005.10
.2

Investment Agreement among Hamblin Watsa, Fairfax and CF
    Insurance effective as of January 8, 2004

Exhibit 10.2 to Amendment No. 3 to the Registration Statement on
    Form S-4 (No. 333-107722) of the Company filed on February 24,
    2004.10
.3

Investment Agreement among Hamblin Watsa, Fairfax and Seneca
    Specialty effective as of January 1, 2002

Exhibit 10.3 to the Form 10-K of the Company for the year ended
    December 31, 2004, filed on March 7, 2005.10
.4

Master Repurchase Agreement between North River and Fairfax
    effective as of January 8, 2004

Exhibit 10.4 to Amendment No. 3 to the Registration Statement on
    Form S-4 (No. 333-107722) of the Company filed on February 24,
    2004.10
.5

Master Repurchase Agreement between CF Insurance and Fairfax
    effective as of January 8, 2004

Exhibit 10.5 to Amendment No. 3 to the Registration Statement on
    Form S-4 (No. 333-107722) of the Company filed on February 24,
    2004.10
.6

Investment Management Agreement among Hamblin Watsa, Fairfax and
    the Company effective as of December 21, 2004

Exhibit 10.6 to the Form 10-K of the Company for the year ended
    December 31, 2004, filed on March 7, 2005.10
.7

Investment Agreement among Hamblin Watsa, Fairfax and US Fire
    effective as of October 1, 2002

Exhibit 10.7 to the Registration Statement on Form S-4 (No.
    333-107722) of the Company filed on August 7, 2003.10
.8

Investment Agreement among Hamblin Watsa, Fairfax and Seneca
    effective as of January 1, 2002

Exhibit 10.8 to the Registration Statement on Form S-4 (No.
    333-107722) of the Company filed on August 7, 2003.10
.9

Investment Agreement among Hamblin Watsa, Fairfax and CF
    Indemnity effective as of January 1, 2002

Exhibit 10.9 to the Registration Statement on Form S-4 (No.
    333-107722) of the Company filed on August 7, 2003.10
.10

Investment Agreement among Hamblin Watsa, Fairfax and CF
    Specialty effective as of January 1, 2002

Exhibit 10.10 to the Registration Statement on Form S-4 (No.
    333-107722) of the Company filed on August 7, 2003.10
.11

Intentionally left blank10
.12

Tax Allocation Agreement between Fairfax Inc. and the Company
    effective as of June 5, 2003

Exhibit 10.12 to the Registration Statement on Form S-4 (No.
    333-107722) of the Company filed on August 7, 2003.10
.13

Intercompany Tax Allocation Agreement between Fairfax Inc. and
    US Fire and CF Indemnity and Seneca effective as of
    December 15, 2000

Exhibit 10.13 to the Registration Statement on Form S-4 (No.
    333-107722) of the Company filed on August 7, 2003.10
.14

Tax Allocation Agreement among the Company, Fairfax Inc.,
    Odyssey Re Holdings Corp., RiverStone Group, LLC and TIG
    Holdings, Inc. effective as of January 1, 2000

Exhibit 10.14 to the Registration Statement on Form S-4 (No.
    333-107722) of the Company filed on August 7, 2003. 127




---



##### 



ExhibitNumber

Exhibit

Location*10
.15

Master Repurchase Agreement between CF Indemnity and Fairfax
    effective as of July 1, 2000

Exhibit 10.15 to the Registration Statement on Form S-4 (No.
    333-107722) of the Company filed on August 7, 2003.10
.16

Master Repurchase Agreement between US Fire and Fairfax
    effective as of July 1, 2000

Exhibit 10.16 to the Registration Statement on Form S-4 (No.
    333-107722) of the Company filed on August 7, 2003.10
.17

Addendum to the Tax Sharing Agreement between Fairfax Inc. and
    Crum & Forster Holding Inc., effective as of
    January 1, 2005.

Exhibit 10.17 to the Form 10-Q of the Company for the period
    ended September 30, 2005, filed on October 28, 2005.10
.18

Administrative Services Agreement between US Fire and Fairfax
    Information Technology Services, Inc. effective as of
    January 1, 2001

Exhibit 10.18 to the Registration Statement on Form S-4 (No.
    333-107722) of the Company filed on August 7, 2003.10
.19

Services Agreement between TIG Insurance Company and US Fire
    effective as of January 1, 2000

Exhibit 10.19 to the Registration Statement on Form S-4 (No.
    333-107722) of the Company filed on August 7, 2003.10
.20

Services Agreement between TIG Insurance Company and CF
    Indemnity effective as of January 1, 2000

Exhibit 10.20 to the Registration Statement on Form S-4 (No.
    333-107722) of the Company filed on August 7, 2003.10
.22

Claims Service and Management Agreement between US Fire and
    International Insurance Company effective as of October 1,
    2001

Exhibit 10.22 to the Registration Statement on Form S-4 (No.
    333-107722) of the Company filed on August 7, 2003.10
.23

Put Agreement between US Fire, ORC Re Limited and Fairfax
    effective as of June 28, 2002

Exhibit 10.23 to the Registration Statement on Form S-4 (No.
    333-107722) of the Company filed on August 7, 2003.10
.24

Standby Credit Facility Note between the Company and Fairfax
    effective as of June 30, 2003

Exhibit 10.24 to the Registration Statement on Form S-4 (No.
    333-107722) of the Company filed on August 7, 2003.10
.25

Intentionally left blank10
.27

Intentionally left blank10
.28

Intentionally left blank10
.30

Aggregate Stop Loss Reinsurance Treaty between the Company and
    ORC Re Limited effective as of January 1, 2001

Exhibit 10.30 to the Registration Statement on Form S-4 (No.
    333-107722) of the Company filed on August 7, 2003.10
.36

Addendum to the Tax Sharing Agreement between Fairfax Inc. and
    the Company effective as of January 1, 2005

Exhibit 10.36 to the Form 10-Q of the Company for the period
    ended September 30, 2005, filed on October 28, 2005.10
.37

Amendment Number 1 to the Investment Agreement among Hamblin
    Watsa, Fairfax and CF Specialty effective as of January 1,
    2005

Exhibit 10.37 to the Form 10-Q of the Company for the period
    ended September 30, 2005, filed on October 28, 2005.10
.38

Amendment Number 1 to the Investment Agreement among Hamblin
    Watsa, Fairfax and Seneca effective as of January 1, 2005

Exhibit 10.38 to the Form 10-Q of the Company for the period
    ended September 30, 2005, filed on October 28, 2005.10
.40

Amendment Number 1 to the Investment Agreement among Hamblin
    Watsa, Fairfax and North River effective as of January 1,
    2005

Exhibit 10.40 to the Form 10-Q of the Company for the period
    ended March 31, 2007, filed on May 3, 2007.10
.41

Amendment Number 1 to the Investment Agreement among Hamblin
    Watsa, Fairfax and CF Insurance Company effective as of
    January 1, 2005

Exhibit 10.41 to the Form 10-Q of the Company for the period
    ended March 31, 2007, filed on May 3, 2007.10
.42

Amendment Number 1 to the Investment Agreement among Hamblin
    Watsa, Fairfax and US Fire Company effective as of April 1,
    2007

Exhibit 10.42 to the Form 10-Q of the Company for the period
    ended June 30, 2007, filed on August 3, 2007.10
.43

Amendment Number 1 to the Investment Agreement among Hamblin
    Watsa, Fairfax and CF Indemnity effective as of April 1,
    2007

Exhibit 10.43 to the Form 10-Q of the Company for the period
    ended June 30, 2007, filed on August 3, 2007. 128




---



##### 



ExhibitNumber

Exhibit

Location*10
.45

Fairfax Inc. and Crum & Forster Holdings Corp.
    Inter-Company Tax Allocation Agreement effective as of
    January 1, 2007

Exhibit 10.44 to the Form 10-Q of the Company for the period
    ended September 30, 2007, filed on November 1, 2007.12
.1

Statement Regarding Calculation of Ratio of Consolidated
    Earnings to Consolidated Fixed Charges

Filed herewith.14
.1

Code of Ethics for Senior Financial Officers

Exhibit 14.1 to the Form 10-K of the Company for the year ended
    December 31, 2004, filed on March 7, 2005.24
.1

Power of Attorney

Included on the signature page hereof.31
.1

Certification of President and Chief Executive Officer pursuant
    to Section 302 of the Sarbanes-Oxley Act of 2002

Filed herewith.31
.2

Certification of Executive Vice President, Chief Financial
    Officer and Treasurer pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002

Filed herewith.32
.1

Certification of President and Chief Executive Officer pursuant
    to Section 906 of the Sarbanes-Oxley Act of 2002

Filed herewith.32
.2

Certification of Executive Vice President, Chief Financial
    Officer and Treasurer pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002

Filed herewith.     *
    Exhibits not filed herewith are
    incorporated herein by reference to documents previously filed
    with the Securities and Exchange Commission. 129




---



##### 



SIGNATURES    CRUM & FORSTER HOLDINGS CORP.
 (Registrant)
   /s/  Nikolas
    Antonopoulos
      /s/  Mary
    Jane Robertson
       POWER OF
    ATTORNEY  Form 10-K
    Signature

Title

DateBy:  /s/  V.
    Prem Watsa          V.
    Prem Watsa

Chairman of the Board

February 28, 2008By:  /s/  Nikolas
    Antonopoulos          Nikolas
    Antonopoulos

President and Chief Executive Officer

February 28, 2008By:  /s/  Mary
    Jane Robertson          Mary
    Jane Robertson

Executive Vice President,
    Chief Financial Officer and Treasurer

February 28, 2008By:  /s/  Joseph
    F. Braunstein, Jr.          Joseph
    F. Braunstein, Jr.

Vice Chairman of the Board

February 28, 2008By:  /s/  Anthony
    F. Griffiths          Anthony
    F. Griffiths

Director

February 28, 2008By:  /s/  Robert
    J. Gunn          Robert
    J. Gunn

Director

February 28, 2008By:  /s/  Bradley
    P. Martin          Bradley
    P. Martin

Director

February 28, 2008By:  /s/  Paul
    Murray          Paul
    Murray

Director

February 28, 2008  130




---



##### 



INDEX TO
    FINANCIAL STATEMENTS AND RELATED FINANCIAL STATEMENT
    SCHEDULES  PageNumberConsolidated Financial Statements

78Financial Statement SchedulesReport of Independent Registered Public Accounting Firm on
    Financial Statement Schedules

132Schedule I  Summary of Investments Other Than
    Investments in Related Parties

133Schedule II  Condensed Balance Sheets of
    Crum & Forster Holdings Corp. at December 31,
    2007 and 2006 (Parent Company Only)

134Schedule II  Condensed Statements of Income of
    Crum & Forster Holdings Corp. for the Years Ended
    December 31, 2007, 2006 and 2005 (Parent Company Only)

135Schedule II  Condensed Statements of Cash Flows of
    Crum & Forster Holdings Corp. for the Years Ended
    December 31, 2007, 2006 and 2005 (Parent Company Only)

136Schedule II  Note to Condensed Financial Statements

137Schedule III  Supplementary Insurance Information

*Schedule IV  Reinsurance

*Schedule V  Valuation and Qualifying Accounts

138Schedule VI  Supplementary Insurance Information

*     *
    Schedule omitted as required
    information is contained within the consolidated financial
    statements included in Item 8. Financial Statements
    and Supplementary Data. 131




---



##### 



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON

FINANCIAL STATEMENT SCHEDULES    Form 10-K Form 10-K.
      132




---



##### 



SCHEDULE I   CRUM &
    FORSTER HOLDINGS CORP.
    SUMMARY OF INVESTMENTS OTHER THAN INVESTMENTS IN RELATED
    PARTIES
 (Dollars in thousands)
  At December 31, 2007Cost or





Amount at whichAmortized


Estimated


Shown in theCost


Fair Value


Balance
    Sheet1Fixed income securities:United States government and government agencies and authorities

$
2,046,766


$
2,020,122


$
2,020,122States, municipalities and political subdivisions


2,527



2,537



2,537Other


4,896



4,458



4,458Total fixed income securities


2,054,189



2,027,117



2,027,117Hybrid financial instruments


143,237



123,348



123,348Equity securities  common stocks


637,203



661,109



661,109Other invested assets


285,048



xxx,xxx



285,141Total investments

$
3,119,677



x,xxx,xxx


$
3,096,715     1
    
    Excludes investments in related
    parties at fair value of $372,214 at December 31, 2007. 133




---



##### 



SCHEDULE II   CRUM &
    FORSTER HOLDINGS CORP. (PARENT COMPANY ONLY)
  CONDENSED
    FINANCIAL INFORMATION OF CRUM & FORSTER HOLDINGS
    CORP.
 BALANCE
    SHEETS
 (Dollars in thousands)
  At December 31,2007


2006ASSETSCash and cash equivalents

$
2,561


$
1,680Short-term investments at cost, which approximates fair value


9,652



Investments in and advances to/from consolidated subsidiaries


1,617,566



1,323,775Other invested assets






9,925Current income taxes


2,140



Deferred income taxes






48,588Accrued investment income


34



2Other assets


5,984



7,465Total assets

$
1,637,937


$
1,391,435LIABILITIESAccounts payable and other liabilities

$
14,882


$
5,210Deferred income taxes


16,376



Long-term debt


313,220



293,170Total liabilities


344,478



298,380SHAREHOLDERS EQUITYCommon stock, $0.01 par value; 1,000 shares
    authorized; 100 issued and outstanding






Additional paid-in capital


740,993



740,993Accumulated other comprehensive income (loss), net of tax


44,479



(36,978
)Retained earnings


507,987



389,040Total shareholders equity


1,293,459



1,093,055Total liabilities and shareholders equity

$
1,637,937


$
1,391,435    The condensed financial
    statements should be read in conjunction with the consolidated
    financial statements and notes thereto.
  134




---



##### 



SCHEDULE II   CRUM &
    FORSTER HOLDINGS CORP. (PARENT COMPANY ONLY)
  CONDENSED
    FINANCIAL INFORMATION OF CRUM & FORSTER HOLDINGS
    CORP.
 STATEMENTS
    OF INCOME
 (Dollars in thousands)
  Years Ended December 31,2007


2006


2005REVENUESEquity in earnings of subsidiaries

$
326,962


$
337,879


$
181,904Investment income


1,592



702



1,096Realized investment gains (losses)


8,612



1,667



(4,254
)Total revenues


337,166



340,248



178,746EXPENSESInterest expense


29,850



32,986



32,915Costs related to early retirement of debt


21,187







Other expense, net


11,135



8,762



3,878Total expenses


62,172



41,748



36,793Income before income taxes


274,994



298,500



141,953Income tax benefit


(18,188
)


(13,783
)


(13,983
)NET INCOME

$
293,182


$
312,283


$
155,936    The condensed financial
    statements should be read in conjunction with the consolidated
    financial statements and notes thereto.
  135




---



##### 



SCHEDULE II   CRUM &
    FORSTER HOLDINGS CORP. (PARENT COMPANY ONLY)
  CONDENSED
    FINANCIAL INFORMATION OF CRUM & FORSTER HOLDINGS
    CORP.
 STATEMENTS
    OF CASH FLOWS
 (Dollars in thousands)
  Years Ended December 31,2007


2006


2005OPERATING ACTIVITIESNet income

$
293,182


$
312,283


$
155,936Adjustments to reconcile net income to net cash from operating
    activities:Equity in earnings of subsidiaries, net of dividends and other
    payments to/receipts from
    subsidiaries1


(213,135
)


(208,978
)


(86,287
)Realized investment (gains) losses


(8,612
)


(1,667
)


4,254Amortization and accretion


1,958



1,861



1,792Deferred income tax expense (benefit)


66,321



(13,783
)


(13,983
)Other non-cash net income adjustments


8,259







Changes in:Other assets


(2,129
)


(192
)


16,300Accounts payable and other liabilities


(32,211
)


2,351



(1,342
)Net cash provided by operating activities


113,633



91,875



76,670INVESTING ACTIVITIESPurchases of short-term investments


(9,652
)






Purchases of other invested assets


(13,143
)


(1,900
)


(2,217
)Proceeds from sales of other invested assets


28,510







Net cash provided by (used in) investing activities


5,715



(1,900
)


(2,217
)FINANCING ACTIVITIESIssuance of
    73/4%
    long-term debt


330,000







Repayment of
    103/8%
    long-term debt


(295,730
)






New debt issuance costs


(23,912
)






Dividends paid to shareholder


(128,825
)


(90,000
)


(73,500
)Net cash used in financing activities


(118,467
)


(90,000
)


(73,500
)Net change in cash and cash equivalents


881



(25
)


953Cash and cash equivalents, beginning of year


1,680



1,705



752Cash and cash equivalents, end of year

$
2,561


$
1,680


$
1,705SUPPLEMENTAL CASH FLOW INFORMATIONCash paid for interest

$
24,907


$
31,125


$
31,125Cash refund received for income taxes

$
(40,487
)

$



$
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIESNote received from parent in partial settlement of the
    Companys tax net operating losses

$
41,882


$



$
Note received from parent in settlement of the sale of a common
    stock investment

$
12,993


$



$
In-kind dividend payment to parent representing cancellation of
    the aforementioned notes

$
54,875


$



$
     1
    
    Includes dividends received from
    subsidiaries of $129,200, $127,000 and $93,400 in 2007, 2006 and
    2005, respectively  The condensed financial
    statements should be read in conjunction with the consolidated
    financial statements and notes thereto.
 136




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##### 



SCHEDULE II   CRUM &
    FORSTER HOLDINGS CORP. (PARENT COMPANY ONLY)
    NOTE TO CONDENSED FINANCIAL STATEMENTS OF CRUM &
    FORSTER HOLDINGS CORP.
   137




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##### 



SCHEDULE V  CRUM & FORSTER HOLDINGS CORP.
 VALUATION AND QUALIFYING ACCOUNTS
 (Dollars in thousands)
  ChargesBalance at


to Costs


Charged to





Balance atBeginning of


and


Other





End ofYear


Description

Year


Expenses


Accounts


Deductions


Year2007


Reserve for uncollectible premiums

$
25,331







(1,000
)1


(1,796
)2

$
22,5352006


Reserve for uncollectible premiums

$
24,437







2,347
1


(1,453
)2

$
25,3312005


Reserve for uncollectible premiums

$
23,859







1,509
1


(931
)2

$
24,4372007


Reserve for uncollectible reinsurance

$
42,777



8,000
3






(756
)4

$
50,0212006


Reserve for uncollectible reinsurance

$
34,441



9,500
3






(1,164
)4

$
42,7772005


Reserve for uncollectible reinsurance

$
40,930



7,206
3






(13,695
)4

$
34,4412007


Reserve for uncollectible loss deductibles

$
8,811



4,008
5






(39
)6

$
12,7802006


Reserve for uncollectible loss deductibles

$
10,003



(1,192
)5









$
8,8112005


Reserve for uncollectible loss deductibles

$
7,061



3,000
5






(58
)6

$
10,003     1
    
    Represents (decreases) increases to
    the reserve for uncollectible premiums charged against premiums
    earned.2
    
    Represents uncollectible premiums
    written off to the reserve.3
    
    Represents increases to the reserve
    for uncollectible reinsurance charged to losses and LAE.4
    
    Represents uncollectible
    reinsurance recoverable balances written off to the reserve.5
    
    Represents increases (decreases) to
    the reserve for uncollectible loss deductibles charged to losses
    and LAE.6
    
    Represents uncollectible loss
    deductibles written off to the reserve. 138