FAIRFAX FINANCIAL HOLDINGS
    LIMITED
   Managements
    Responsibility for the Financial Statements      (Form 40-F)
      Managements
    Report on Internal Control over Financial Reporting
          -s- V. Prem Watsa

-s- Greg TaylorV. Prem Watsa

Greg TaylorChairman and Chief Executive Officer

Vice President and Chief Financial Officer




---



##### 



Independent
    Auditors Report      Consolidated
    financial statements
        Internal
    control over financial reporting
  Internal Control 
    Integrated Framework




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
   Consolidated
    Financial Statements  Consolidated
    Balance Sheets
 as at December 31, 2009
    and 2008
  2009


2008(US$ millions)AssetsHolding company cash, short term investments and marketable
    securities (including assets pledged for short sale and
    derivative obligations  $78.9; 2008  $19.7)


1,251.6



1,564.2Accounts receivable and other


1,855.4



1,688.7Recoverable from reinsurers (including recoverables on paid
    losses  $255.1; 2008  $298.9)


3,809.1



4,234.26,916.1



7,487.1Portfolio investmentsSubsidiary cash and short term investments (cost $3,230.6;
    2008  $5,492.3)


3,244.8



5,508.5Bonds (cost $10,742.0; 2008  $8,302.1)


10,918.3



8,425.8Preferred stocks (cost $292.4; 2008  $41.2)


292.8



38.2Common stocks (cost $4,040.4; 2008  $3,964.1)


4,853.1



3,816.9Investments, at equity (fair value $646.2; 2008 
    $575.3)


475.4



219.3Derivatives and other invested assets (cost $122.5;
    2008  $157.3)


142.7



398.0Assets pledged for short sale and derivative obligations (cost
    $149.2; 2008  $8.3)


151.5



8.320,078.6



18,415.0Deferred premium acquisition costs


332.3



321.9Future income taxes


318.7



699.4Premises and equipment


168.6



133.1Goodwill and intangible assets


438.8



123.2Other assets


149.7



125.728,402.8



27,305.4         -s- V. P. Watsa
    Director

-s- Alan Horn
    Director




---



##### 



2009


2008(US$ millions)LiabilitiesSubsidiary indebtedness


12.1



21.1Accounts payable and accrued liabilities


1,202.2



1,326.5Income taxes payable


70.9



656.3Short sale and derivative obligations (including at the holding
    company  $8.9; 2008  $9.2)


57.2



29.4Funds withheld payable to reinsurers


354.9



355.11,697.3



2,388.4Provision for claims


14,747.1



14,728.4Unearned premiums


1,920.1



1,890.6Long term debt  holding company borrowings


1,236.9



869.6Long term debt  subsidiary company borrowings


891.3



889.1Other long term obligations  holding company


173.5



187.718,968.9



18,565.4Non-controlling interests


117.6



1,382.8Contingencies (note 14)Shareholders EquityCommon stock


3,058.6



2,124.9Treasury stock, at cost


(28.7
)


(22.7
)Preferred stock


227.2



102.5Retained earnings


3,468.8



2,871.9Accumulated other comprehensive income (loss)


893.1



(107.8
)7,619.0



4,968.828,402.8



27,305.4




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
   Consolidated Statements of Earnings
 for the years ended December 31, 2009, 2008 and 2007
  2009


2008


2007(US$ millions exceptper share amounts)RevenueGross premiums written


5,094.0



5,061.4



5,214.5Net premiums written


4,286.1



4,332.2



4,498.4Net premiums earned


4,422.0



4,529.1



4,648.8Interest and dividends


712.7



626.4



761.0Net gains on
    investments(1)


944.5



2,570.7



1,665.9Other revenue


556.4



99.4



434.56,635.6



7,825.6



7,510.2ExpensesLosses on
    claims(1)


3,186.9



3,559.1



3,160.7Operating
    expenses(1)


831.7



835.8



817.8Commissions, net


701.1



729.8



760.3Interest expense


166.3



158.6



209.5Other expenses


544.0



98.0



401.55,430.0



5,381.3



5,349.8Earnings from operations before income taxes


1,205.6



2,444.3



2,160.4Income taxes


214.9



755.6



711.1Net earnings before non-controlling interests


990.7



1,688.7



1,449.3Non-controlling interests


(133.9
)


(214.9
)


(353.5
)Net earnings


856.8



1,473.8



1,095.8Net earnings per share

$
43.99


$
80.38


$
61.20Net earnings per diluted share

$
43.75


$
79.53


$
58.38Cash dividends paid per share

$
8.00


$
5.00


$
2.75Shares outstanding (000)(weighted average)


18,301



18,037



17,700   (1)
    
    Reflects certain reclassifications of foreign exchange gains
    and losses in the years ended December 31, 2008 and 2007 as
    described in note 2.




---



##### 



Consolidated
    Statements of Comprehensive Income
 for the years ended December 31, 2009, 2008 and 2007
  2009


2008


2007(US$ millions)Net earnings


856.8



1,473.8



1,095.8Other comprehensive income (loss),net of income taxesChange in net unrealized gains (losses) on available for sale
    securities(1)


804.5



(548.0
)


293.0Reclassification of net realized (gains) losses to net
    earnings(2)


(37.9
)


248.6



(95.4
)Change in unrealized foreign currency translation gains
    (losses)(3)


227.0



(186.6
)


114.9Reclassification of foreign currency translation (gains) losses
    on disposition of investee company






24.9



(13.7
)Change in gains and losses on hedges of net investment in
    foreign
    subsidiary(4)


(25.5
)


(7.2
)


Other comprehensive income (loss), net of income taxes


968.1



(468.3
)


298.8Comprehensive income


1,824.9



1,005.5



1,394.6   (1)
    
    Net of income tax expense of $353.9 (2008  income
    tax recovery of $213.4; 2007  income tax expense of
    $142.2).(2)
    
    Net of income tax recovery of $43.8 (2008  income
    tax expense of $86.1; 2007  income tax recovery of
    $35.3).(3)
    
    Net of income tax recovery of $12.4 (2008  income
    tax expense of $45.3; 2007  income tax recovery
    of $7.6).(4)
    
    Net of income tax recovery of $2.8 (2008  $2.8;
    2007  nil).




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
    Consolidated
    Statements of Shareholders Equity
 for the years ended December 31, 2009, 2008 and 2007
  2009


2008


2007(US$ millions)Common stock Subordinate voting shares  beginning of year


2,121.1



2,063.6



2,068.1Issuances during the year


989.3







Issuances on conversion of convertible senior debentures






192.3



Purchases for cancellation


(55.6
)


(134.8
)


(4.5
)Subordinate voting shares  end of year


3,054.8



2,121.1



2,063.6Multiple voting shares  beginning and end of year


3.8



3.8



3.8Common stock


3,058.6



2,124.9



2,067.4Other paid in capital beginning of year






57.9



57.9Conversion of convertible senior debentures






(57.9
)


Other paid in capital end of year










57.9Treasury shares (at cost) beginning of year


(22.7
)


(22.6
)


(18.3
)Net acquisitions


(6.0
)


(0.1
)


(4.3
)Treasury shares (at cost) end of year


(28.7
)


(22.7
)


(22.6
)Preferred stock Series A  beginning of year


38.4



51.2



51.2Purchases for cancellation


(38.4
)


(12.8
)


Series A  end of year






38.4



51.2Series B  beginning of year


64.1



85.4



85.4Purchases for cancellation


(64.1
)


(21.3
)


Series B  end of year






64.1



85.4Series C  beginning of year










Issuances during the year


227.2







Series C  end of year


227.2







Preferred stock


227.2



102.5



136.6Retained earnings beginning of year


2,871.9



1,658.2



596.6Transition adjustment  financial instruments










29.8Net earnings for the year


856.8



1,473.8



1,095.8Excess over stated value of common shares purchased for
    cancellation


(67.3
)


(147.2
)


(2.5
)Excess over stated value of preferred shares purchased for
    cancellation


(41.3
)


(13.9
)


Common share dividends


(140.8
)


(88.9
)


(49.0
)Preferred share dividends


(10.5
)


(10.1
)


(12.5
)Retained earnings end of year


3,468.8



2,871.9



1,658.2Accumulated other comprehensive income (loss) beginning of year


(107.8
)


360.5



12.2Application of the equity method of accounting


32.8







Transition adjustment  financial instruments










49.5Other comprehensive income (loss)


968.1



(468.3
)


298.8Accumulated other comprehensive income (loss) end of year


893.1



(107.8
)


360.5Retained earnings and accumulated other comprehensive income
    (loss)


4,361.9



2,764.1



2,018.7Total shareholders equity


7,619.0



4,968.8



4,258.0




---



##### 



2009


2008


2007Number of shares outstandingCommon stock Subordinate voting shares  beginning of year


16,738,055



16,918,020



16,981,970Issuances during the year


2,881,844







Issuances on conversion of convertible senior debentures






886,888



Purchases for cancellation


(360,100
)


(1,066,601
)


(38,600
)Net treasury shares acquired


(19,699
)


(252
)


(25,350
)Subordinate voting shares  end of year


19,240,100



16,738,055



16,918,020Multiple voting shares  beginning and end of year


1,548,000



1,548,000



1,548,000Interest in shares held through ownership interest in
    shareholder  beginning and end of year


(799,230
)


(799,230
)


(799,230
)Common stock effectively outstanding  end of year


19,988,870



17,486,825



17,666,790Preferred stock Series A  beginning of year


2,250,000



3,000,000



3,000,000Purchases for cancellation


(2,250,000
)


(750,000
)


Series A  end of year






2,250,000



3,000,000Series B  beginning of year


3,750,000



5,000,000



5,000,000Purchases for cancellation


(3,750,000
)


(1,250,000
)


Series B  end of year






3,750,000



5,000,000Series C  beginning of year










Issuances during the year


10,000,000







Series C  end of year


10,000,000












---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
    Consolidated
    Statements of Cash Flows
 for the years ended December 31, 2009, 2008 and 2007
  2009


2008


2007(US$ millions)Operating activitiesEarnings before non-controlling interests


990.7



1,688.7



1,449.3Amortization of premises and equipment and intangible assets


35.8



22.4



27.0Net bond discount amortization


(29.5
)


(3.9
)


(17.6
)(Earnings) losses on investments, at equity


(23.3
)


49.4



(7.7
)Future income taxes


12.8



(342.9
)


323.5Net losses on significant commutations


3.6



84.2



Net (gains) losses on available for sale securities


(111.2
)


386.2



(95.5
)Other net gains on investments


(833.3
)


(2,956.9
)


(1,570.4
)45.6



(1,072.8
)


108.6Changes in operating assets and liabilities (note 22)


(764.8
)


1,192.7



(353.4
)Cash provided by (used in) operating activities


(719.2
)


119.9



(244.8
)Investing activitiesNet sales of assets and liabilities classified as held for
    trading


320.4



3,157.3



482.6Net sales (purchases) of securities designated as held for
    trading


(2,657.0
)


(3,814.6
)


40.9Available for sale securities  purchases


(7,048.6
)


(15,306.1
)


(6,959.9
) sales


10,363.0



16,443.9



4,001.8Net decrease (increase) in restricted cash and cash equivalents


38.9



196.3



(107.9
)Net sales (purchases) of investments, at equity


(58.4
)


(54.2
)


381.3Net sales of other invested assets










7.6Net purchases of premises and equipment and intangible assets


(49.1
)


(23.7
)


(18.0
)Proceeds on partial disposition of investee company










60.0Sale (purchase) of subsidiaries, net of cash acquired


(1,643.6
)


(11.0
)


1.8Cash provided by (used in) investing activities


(734.4
)


587.9



(2,109.8
)Financing activitiesSubsidiary indebtednessIssuances


8.2







6.9Repayment


(21.0
)


(13.2
)


(73.4
)Long term debt  holding companyIssuances


362.0







Debt issuance costs


(3.4
)






(15.0
)Repayment


(13.8
)


(62.1
)


(107.8
)Long term debt  subsidiary companiesIssuances






3.3



330.0Debt issuance costs










(23.4
)Repayment


(1.4
)


(118.6
)


(295.7
)Other long term obligations  holding
    company  repayment


(10.9
)


(4.9
)


(4.5
)Net repurchases of subsidiary securities


(96.6
)


(419.5
)


(121.5
)




---



##### 



2009


2008


2007(US$ millions)Subordinate voting sharesIssuances


1,000.0







Issuance costs


(17.0
)






Repurchases


(122.9
)


(282.0
)


(7.0
)Preferred sharesIssuances


232.3







Issuance costs


(7.3
)






Repurchases


(143.8
)


(48.0
)


Purchase of shares for treasury


(12.8
)


(0.2
)


(4.4
)Common share dividends


(140.8
)


(88.9
)


(49.0
)Preferred share dividends


(10.5
)


(10.1
)


(12.5
)Dividends paid to non-controlling interests


(7.3
)


(25.6
)


(27.3
)Cash provided by (used in) financing activities


993.0



(1,069.8
)


(404.6
)Foreign currency translation


91.8



(224.8
)


107.9Increase (decrease) in cash and cash equivalents


(368.8
)


(586.8
)


(2,651.3
)Cash and cash equivalents  beginning of year


2,525.7



3,112.5



5,763.8Cash and cash equivalents  end of year


2,156.9



2,525.7



3,112.5     December 31,2009


2008


2007(US$ millions)Holding company cash and short term investments


139.9



293.8



31.3Subsidiary cash and short term investments


2,093.3



2,338.8



2,164.8Subsidiary cash and short term investments pledged for short
    sale and derivative obligations






8.3



1,244.2Subsidiary restricted cash and short term investments


(76.3
)


(115.2
)


(327.8
)2,156.9



2,525.7



3,112.5Supplementary informationInterest paid


148.5



160.2



184.3Taxes paid


823.3



483.8



266.2




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
    Notes
    to Consolidated Financial Statementsfor
    the years ended December 31, 2009, 2008 and 2007
    (in US$ and $millions except per share amounts and as otherwise
    indicated) 1.
    Business
    Operations    2.
    Summary
    of Significant Accounting Policies    Principles
    of consolidation
    Canadian Insurance
  
  U.S. Insurance
  
  Asian Insurance
  Fairfax Asia consists of:
      
  Other
  
    Reinsurance
      
  which underwrites business in:
      Runoff




---



##### 



2009


2008


2007Cunningham Lindsey Group Limited (CLGL)


43.6
%


45.7
%


44.6
%ICICI Lombard


26.0
%


26.0
%


26.0
%Falcon Insurance PLC (Falcon Thailand)


40.5
%


24.9
%


24.9
%International Coal Group, Inc. (ICG)


27.7
%


19.7
%


13.8
%Singapore Reinsurance Corporation Limited (Singapore
    Re)


20.0
%


8.7
%


6.1
%The Brick Group Income Fund (The Brick)


12.8
%


13.0
%


10.4
%Polskie Towarzystwo Ubezpieczen S.A. (PTU)


22.7
%






     Investments
   Held for trading
  Available for sale
  Held to maturity




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
    Other than temporary impairments
  Pricing
  Recognition
    Other
  Derivative
    financial instruments




---



##### 



Cash
    and cash equivalents
   Loans
    and receivables and other financial liabilities
   Insurance
    contracts
 Revenue recognition
  Provision for claims
    Reinsurance




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
          Deferred premium acquisition costs
  Business
    combinations, goodwill and other intangible assets
       Income
    taxes




---



##### 



Pensions
   (i)
    Actuarial valuations of benefit liabilities for pension and post
    retirement benefit plans are performed as at December 31 of each
    year for all benefit plans using the projected benefit method
    prorated on service, based on managements assumptions on
    the discount rate, rate of compensation increase, retirement
    age, mortality and the trend in the health care cost rate. The
    discount rate is determined by management with reference to
    market conditions at year end. Other assumptions are determined
    with reference to long-term expectations.(ii)
    Expected return on plan assets is calculated based on the fair
    value of those assets.(iii)
    Actuarial gains (losses) arise from the difference between the
    actual long term rate of return and the expected long term rate
    of return on plan assets for that period or from changes in
    actuarial assumptions used to determine the benefit obligation.
    Only gains or losses in excess of 10% of the greater of the
    benefit obligations or the fair value of plan assets are
    amortized over the average remaining service period of active
    employees.(iv)
    Prior service costs arising from plan amendments are amortized
    on the straight line basis over the average remaining service
    period of employees active at the date of amendment.(v)
    When a restructuring of a benefit plan gives rise to both a
    curtailment and a settlement of obligations, the curtailment is
    accounted for prior to the settlement.  Translation
    of foreign currencies
     Net
    investment hedge
   Comprehensive
    income (loss)




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
      Animal
    nutrition products
   first-in,
  Non-controlling
    interest
   Comparative
    figures
   Change in Presentation of Foreign Currency Gains
    (Losses) 
  2009


2008


2007Net gains (losses) on investments:Underwriting activities


14.3



(147.9
)


26.4Investing activities


(31.9
)


102.5



111.1Foreign currency gains (losses) included in pre-tax net earnings


(17.6
)


(45.4
)


137.5Other comprehensive income:Investing activities foreign currency gains (losses)


(39.3
)


41.6



(45.2
)(56.9
)


(3.8
)


92.3   Application
    of the Equity Method of Accounting




---



##### 



Singapore Re


The Brick


ICG


TotalDate equity method commenced:


December 24, 2009



November 28, 2009



February 20, 2009Portfolio investments:Investments, at equity


19.6



4.2



119.3



143.1Common stocks


(22.8
)


(8.7
)


(55.5
)


(87.0
)Future income taxes


1.0



1.4



(21.0
)


(18.6
)Non-controlling interests


(1.2
)






5.9



4.7Accumulated other comprehensive income (loss)


(1.0
)


(3.1
)


36.9



32.8   Change
    in accounting policies
 Current
    year
 Financial
    Instruments




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
      Goodwill
    and Intangible Assets
   Credit
    Risk
   Prior
    year
   Accounting
    pronouncements to be adopted in the future
 Financial
    Instruments
   Business
    Combinations and Non-controlling Interests
   International
    Financial Reporting Standards (IFRS)




---



##### 



3.
    Cash and
    Investments    December 31, 2009


December 31, 2008Classified


Designated


Classified








Classified


Designated


Classifiedas


as


as





Total


as


as


as





Totalheld for


held for


available





carrying


held for


held for


available





carryingtrading


trading


for sale


Other


value


trading


trading


for sale


Other


valueHolding company:Cash and short term investments


115.4



227.5



28.5







371.4



275.4







521.1







796.5Cash and short term investments pledged for short sale and
    derivative obligations


24.5



30.0



24.4







78.9



18.4







1.3







19.7Bonds






368.5



34.7







403.2







216.6



12.2







228.8Preferred stocks






64.8











64.8











12.1







12.1Common stocks






1.7



234.1







235.8











424.3







424.3Derivatives


97.5















97.5



82.8















82.8237.4



692.5



321.7







1,251.6



376.6



216.6



971.0







1,564.2Short sale and derivative obligations


(8.9
)














(8.9
)


(9.2
)














(9.2
)228.5



692.5



321.7







1,242.7



367.4



216.6



971.0







1,555.0Portfolio investments:Cash and short term investments


2,093.3



803.8



347.7







3,244.8



2,338.8



355.2



2,814.5







5,508.5Bonds






6,628.2



4,290.1







10,918.3







4,463.3



3,962.5







8,425.8Preferred stocks






261.1



31.7







292.8











38.2







38.2Common stocks






90.4



4,762.7







4,853.1







80.7



3,736.2







3,816.9Investments, at equity














475.4



475.4















219.3



219.3Derivatives


127.7















127.7



372.7















372.7Other invested assets














15.0



15.0















25.3



25.32,221.0



7,783.5



9,432.2



490.4



19,927.1



2,711.5



4,899.2



10,551.4



244.6



18,406.7Assets pledged for short sale and derivative obligations:Cash and short term investments






4.6











4.6



8.3















8.3Bonds






84.1



62.8







146.9























88.7



62.8







151.5



8.3















8.32,221.0



7,872.2



9,495.0



490.4



20,078.6



2,719.8



4,899.2



10,551.4



244.6



18,415.0Short sale and derivative obligations


(48.3
)














(48.3
)


(20.2
)














(20.2
)2,172.7



7,872.2



9,495.0



490.4



20,030.3



2,699.6



4,899.2



10,551.4



244.6



18,394.8




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
       December 31,2009


2008Regulatory deposits


1,424.9



1,549.2Security for reinsurance and other


794.3



777.92,219.2



2,327.1   Available
    For Sale Securities
   December 31, 2009


December 31, 2008Cost or


Gross


Gross


Total


Cost or


Gross


Gross


Totalamortized


unrealized


unrealized


carrying


amortized


unrealized


unrealized


carryingcost


gains


losses


value


cost


gains


losses


valueHolding company:Short term
    investments:(1)Canadian government


24.4











24.4



136.7







(1.4
)


135.3U.S. treasury


28.5











28.5



387.1











387.152.9











52.9



523.8







(1.4
)


522.4Bonds:U.S. treasury


















12.0











12.0U.S. states and municipalities


22.5



0.8







23.3















Corporate and other


10.9



0.5







11.4



0.4







(0.2
)


0.233.4



1.3







34.7



12.4







(0.2
)


12.2Preferred stocks:Canadian


















11.8



0.3







12.1Common stocks:Canadian


39.5



18.9







58.4



58.4







(11.1
)


47.3U.S.


80.7



44.2



(1.5
)


123.4



397.2



12.4



(56.8
)


352.8Other


38.2



14.1







52.3



20.0



4.2







24.2158.4



77.2



(1.5
)


234.1



475.6



16.6



(67.9
)


424.3Portfolio investments:Short term investments:Canadian government


15.5



0.5







16.0



196.9







(0.1
)


196.8U.S. treasury


192.5











192.5



2,307.9







(3.4
)


2,304.5Other government


125.5



13.7







139.2



297.1



16.1







313.2333.5



14.2







347.7



2,801.9



16.1



(3.5
)


2,814.5Bonds:Canadian government


596.6



39.6



(0.1
)


636.1



928.1



57.0







985.1U.S. treasury


490.1



12.3



(41.4
)


461.0



739.2



140.4







879.6U.S. states and municipalities


938.6



38.0



(3.3
)


973.3



999.7



12.7



(32.7
)


979.7Other government


848.8



21.5



(27.6
)


842.7



856.8



24.3



(66.6
)


814.5Corporate and other


1,239.7



138.3



(1.0
)


1,377.0



315.0



7.2



(18.6
)


303.64,113.8



249.7



(73.4
)


4,290.1



3,838.8



241.6



(117.9
)


3,962.5Preferred stocks:Canadian


















10.2











10.2U.S.


0.1











0.1



0.6







(0.5
)


0.1Other


31.2



0.4







31.6



30.4







(2.5
)


27.931.3



0.4







31.7



41.2







(3.0
)


38.2Common stocks:Canadian


476.9



230.8







707.7



535.8



43.6



(66.4
)


513.0U.S.


2,716.2



398.5







3,114.7



2,731.1



95.8



(250.9
)


2,576.0Other


756.9



188.8



(5.4
)


940.3



616.5



44.2



(13.5
)


647.23,950.0



818.1



(5.4
)


4,762.7



3,883.4



183.6



(330.8
)


3,736.2Assets pledged for short sale and derivative obligations:Bonds:Canadian government


1.0



0.1







1.1















U.S. treasury


0.4











0.4















Other government


54.1



1.7







55.8















Corporate and other


5.0



0.5







5.5















60.5



2.3







62.8















   (1)
    Includes $24.4 (2008  $1.3) of short term
    investments included in assets pledged for short sale and
    derivative obligations.




---



##### 



December 31,
    2009
  Less than 12 Months


Greater than 12 Months


TotalGross








Gross








GrossFair


unrealized


Number of


Fair


unrealized


Number of


Fair


unrealized


Number ofvalue


losses


securities


value


losses


securities


value


losses


securitiesBonds:Canadian government


11.9



(0.1
)


1















11.9



(0.1
)


1U.S. treasury


196.1



(41.4
)


14















196.1



(41.4
)


14U.S. states and municipalities


115.9



(3.2
)


4



1.6



(0.1
)


1



117.5



(3.3
)


5Other government


61.4



(2.0
)


12



260.3



(25.6
)


5



321.7



(27.6
)


17Corporate and other


129.1



(1.0
)


4















129.1



(1.0
)


4514.4



(47.7
)


35



261.9



(25.7
)


6



776.3



(73.4
)


41Common stocks:U.S.


23.6



(1.5
)


1















23.6



(1.5
)


1Other


75.9



(5.4
)


12















75.9



(5.4
)


1299.5



(6.9
)


13















99.5



(6.9
)


13613.9



(54.6
)


48



261.9



(25.7
)


6



875.8



(80.3
)


54   December 31,
    2008
  Less than 12 Months


Greater than 12 Months


TotalGross








Gross








GrossFair


unrealized


Number of


Fair


unrealized


Number of


Fair


unrealized


Number ofvalue


losses


securities


value


losses


securities


value


losses


securitiesBonds:U.S. states and municipalities


541.1



(32.7
)


30















541.1



(32.7
)


30Other government


327.1



(66.6
)


8















327.1



(66.6
)


8Corporate and other


127.7



(18.8
)


8















127.7



(18.8
)


8995.9



(118.1
)


46















995.9



(118.1
)


46Preferred stocks:U.S.


0.1



(0.5
)


2















0.1



(0.5
)


2Other


27.9



(2.5
)


4















27.9



(2.5
)


428.0



(3.0
)


6















28.0



(3.0
)


6Common stocks:Canadian


303.3



(77.5
)


5















303.3



(77.5
)


5U.S.


1,214.6



(307.7
)


13















1,214.6



(307.7
)


13Other


284.3



(13.5
)


20















284.3



(13.5
)


201,802.2



(398.7
)


38















1,802.2



(398.7
)


382,826.1



(519.8
)


90















2,826.1



(519.8
)


90




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
        Securities
    Classified or Designated as Held for Trading
       Fixed
    Income Maturity Profile
   December 31, 2009


December 31, 2008Amortized

Fair


Amortized

Faircost

value


cost

valueDue in 1 year or less

779.5


726.3


804.7


825.7Due after 1 year through 5 years

2,445.5


2,199.3


2,048.0


1,567.0Due after 5 years through 10 years

5,412.7


6,039.4


5,099.5


5,235.4Due after 10 years

2,476.9


2,503.4


943.6


1,026.511,114.6


11,468.4


8,895.8


8,654.6Effective interest rate




5.8
%




5.5
%     Investments
    at Equity
   December 31, 2009


December 31, 2008Fair


Carrying


Fair


Carryingvalue


value


value


valuePortfolio investments:Investments, at equityICICI Lombard General Insurance Company Limited


204.4



75.9



428.5



73.1Cunningham Lindsey Group Limited


159.5



134.8



83.9



83.9International Coal Group, Inc.


173.9



163.0







Singapore Reinsurance Corporation Limited


22.9



20.9







The Brick Group Income Fund


8.9



4.2







Partnerships, trusts and other


76.6



76.6



62.9



62.3646.2



475.4



575.3



219.3




---



##### 



2009


2008


2007ICICI Lombard General Insurance Company Limited


(4.7
)


(4.7
)


7.4Cunningham Lindsey Group Limited


4.8



7.0



International Coal Group, Inc.


11.2







Advent Capital (Holdings) PLC






1.6



(24.2
)Hub International Limited (Hub)










9.2Partnerships, trusts and other


12.0



(53.3
)


15.323.3



(49.4
)


7.7       Fair
    Value Disclosures
 and/or
      over-the-counter




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED




---



##### 



December 31, 2009


December 31, 2008Significant











Significantother


Significant








other


SignificantTotal fair


Quoted


observable


unobservable


Total fair


Quoted


observable


unobservablevalue asset


prices


inputs


inputs


value asset


prices


inputs


inputs(liability)


(Level 1)


(Level 2)


(Level 3)


(liability)


(Level 1)


(Level 2)


(Level 3)Cash and cash equivalents


2,233.2



2,233.2











2,640.9



2,640.9







Short term investments:Canadian government


71.8



71.8











334.9



334.9







U.S. treasury


1,196.5



1,196.5











2,947.5



2,946.7



0.8



Other government


177.2



135.0



42.2







409.7



381.4



28.3



Corporate and other


21.0







21.0



















1,466.5



1,403.3



63.2







3,692.1



3,663.0



29.1



Bonds:Canadian government


1,538.5







1,538.5







1,726.3







1,726.3



U.S. treasury


541.4







541.4







985.0







985.0



U.S. states and municipalities


5,497.8







5,497.8







4,104.6







4,104.6



Other government


919.7







919.7







853.4







852.4



1.0Corporate and other


2,689.3







2,672.2



17.1



833.6







819.7



13.9Mortgage backed securities  residential


281.7







251.6



30.1



151.7











151.711,468.4







11,421.2



47.2



8,654.6







8,488.0



166.6Preferred
    stocks:(1)Canadian


110.4







110.4







10.1



10.1







U.S.


215.6







215.6







0.1







0.1



Other


31.6







31.6







28.0







28.0



357.6







357.6







38.2



10.1



28.1



Common
    stocks:(1)Canadian


755.5



740.2



15.3







560.3



548.0



12.3



U.S.


3,226.6



3,187.6



38.6



0.4



2,798.0



2,750.6



47.4



Other


980.8



710.3



267.1



3.4



705.8



518.1



183.9



3.84,962.9



4,638.1



321.0



3.8



4,064.1



3,816.7



243.6



3.8Derivatives and other invested assets


240.2



41.6



198.6







480.8



39.4



441.4



Short sale and derivative obligations


(57.2
)






(57.2
)






(29.4
)


(20.1
)


(9.3
)


Holding company cash, short term investments and marketable
    securities and portfolio investments measured at fair value


20,671.6



8,316.2



12,304.4



51.0



19,541.3



10,150.0



9,220.9



170.4100.0
%


40.2
%


59.5
%


0.3
%


100.0
%


51.9
%


47.2
%


0.9
%   (1)
    Excluded from these totals are available for sale investments
    of $66.4 (nil at December 31, 2008), nil ($12.1 at
    December 31, 2008) and $59.6 ($177.1 at
    December 31, 2008) in common shares, preferred stocks
    and partnership trusts respectively which are carried at cost as
    they do not have quoted market values in active markets.




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
       December 31, 2009


December 31, 2008Common








CommonBonds


stocks


Total


Bonds


stocks


TotalBalance  beginning of year


166.6



3.8



170.4



23.3



10.6



33.9Total realized and unrealized gains (losses)Included in net gains (losses) on investments


(12.5
)






(12.5
)


(35.9
)


7.9



(28.0
)Included in other comprehensive income (loss)


1.1



(0.9
)


0.2



(1.5
)






(1.5
)Purchases


44.2



0.9



45.1



188.1



4.8



192.9Sales


(56.7
)






(56.7
)


(7.4
)


(17.0
)


(24.4
)Transfer out of category


(95.5
)






(95.5
)






(2.5
)


(2.5
)Balance  end of year


47.2



3.8



51.0



166.6



3.8



170.4




---



##### 



Investment
    Income
   2009


2008Classified


Designated


Classified








Classified


Designated


Classifiedas


as


as








as


as


asheld for


held for


available








held for


held for


availabletrading


trading


for sale


Other


Total


trading


trading


for sale


Other


TotalInterest income:Cash and short term investments


11.0



7.9



7.7







26.6



100.4







30.8







131.2Bonds






315.6



225.5







541.1







81.9



372.7







454.6Derivatives and other


(5.3
)










2.9



(2.4
)


14.8











6.4



21.25.7



323.5



233.2



2.9



565.3



115.2



81.9



403.5



6.4



607.0Dividends:Preferred stocks






3.1



2.8







5.9











1.5







1.5Common stocks










131.6







131.6











74.5







74.5



3.1



134.4







137.5











76.0







76.0Earnings (losses) from investments, at equity














23.3



23.3















(49.4
)


(49.4
)Investment expenses














(13.4
)


(13.4
)














(7.2
)


(7.2
)5.7



326.6



367.6



12.8



712.7



115.2



81.9



479.5



(50.2
)


626.4Net gains (losses) on investments:Bonds:Gains






691.7



248.1







939.8











602.9







602.9Losses










(5.0
)






(5.0
)






(350.0
)


(20.1
)






(370.1
)



691.7



243.1







934.8







(350.0
)


582.8







232.8Preferred stocks:Gains






24.3



2.6







26.9











3.0







3.0Losses










(0.3
)






(0.3
)






















24.3



2.3







26.6











3.0







3.0Common stocks:Gains






35.3



285.9







321.2











54.5







54.5Losses










(82.1
)






(82.1
)






(21.3
)


(15.0
)






(36.3
)



35.3



203.8







239.1







(21.3
)


39.5







18.2Financial instruments classified as held for trading


37.5















37.5



3,428.5















3,428.5Foreign currency gains (losses) on investing activities


18.2



(1.1
)


(14.7
)


8.3



10.7



(70.6
)


66.2



49.6



24.0



69.2Foreign currency gains (losses) on underwriting activities














14.3



14.3















(147.9
)


(147.9
)Foreign currency translation loss on disposition of investee
    company


































(24.9
)


(24.9
)Repurchase of debt














9.0



9.0



















Other






(4.2
)


2.0



14.7



12.5







1.2



0.3



2.1



3.6Other than temporary impairments of investments










(340.0
)






(340.0
)










(1,011.8
)






(1,011.8
)55.7



746.0



96.5



46.3



944.5



3,357.9



(303.9
)


(336.6
)


(146.7
)


2,570.761.4



1,072.6



464.1



59.1



1,657.2



3,473.1



(222.0
)


142.9



(196.9
)


3,197.1




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
    2007Classified


Designated


Classifiedas


as


asheld for


held for


availabletrading


trading


for sale


Other


TotalInterest income:Cash and short term investments


182.8







29.6







212.4Bonds






47.4



399.4







446.8Derivatives and other


20.8















20.8203.6



47.4



429.0







680.0Dividends:Preferred stocks










1.2







1.2Common stocks










80.5







80.5







81.7







81.7Earnings from investments, at equity














7.7



7.7Investment expenses














(8.4
)


(8.4
)203.6



47.4



510.7



(0.7
)


761.0Net gains (losses) on investments:Bonds:Gains










64.3







64.3Losses






(55.9
)


(1.2
)






(57.1
)



(55.9
)


63.1







7.2Common stocks:Gains










178.7







178.7Losses










(39.9
)






(39.9
)







138.8







138.8Investments, at equity














220.5



220.5Financial instruments classified as held for trading


1,277.5















1,277.5Foreign currency gains on investing activities


17.7



13.9



44.7



37.6



113.9Foreign currency gains on underwriting activities














26.4



26.4Repurchase of debt














1.8



1.8Other










2.6



(3.6
)


(1.0
)Other than temporary impairments of investments










(109.0
)


(10.2
)


(119.2
)1,295.2



(42.0
)


140.2



272.5



1,665.91,498.8



5.4



650.9



271.8



2,426.9




---



##### 



Designated asClassified as held for trading


held for tradingCommon

















Preferredstock and


Credit














andequity index


default


Equity











commonshort positions


swaps


warrants


Other


Total


Bonds


stocks


TotalFor the year ended December 31, 2009Inception-to-date
    realized gains (losses) on positions closed in the year


(15.5
)


185.4



172.7



(26.1
)


316.5



58.8



9.2



68.0Mark-to-market
    (gains) losses recognized in prior years on positions closed in
    the year


0.1



(139.2
)






(18.8
)


(157.9
)


28.8







28.8Mark-to-market
    gains (losses) arising on positions remaining open at year end


8.8



(160.8
)


58.2



(27.3
)


(121.1
)


604.1



50.4



654.5Net gains (losses)


(6.6
)


(114.6
)


230.9



(72.2
)


37.5



691.7



59.6



751.3For the year ended December 31, 2008Inception-to-date
    realized gains (losses) on positions closed in the year


1,994.2



1,801.5







62.4



3,858.1



(2.0
)






(2.0
)Mark-to-market
    (gains) losses recognized in prior years on positions closed in
    the year


84.7



(754.0
)






2.9



(666.4
)


0.1







0.1Mark-to-market
    gains (losses) arising on positions remaining open at year end


(0.2
)


238.9







(1.9
)


236.8



(348.1
)


(21.3
)


(369.4
)Net gains (losses)


2,078.7



1,286.4







63.4



3,428.5



(350.0
)


(21.3
)


(371.3
)For the year ended December 31, 2007Inception-to-date
    realized gains (losses) on positions closed in the year


106.9



174.0







(1.4
)


279.5



18.9







18.9Mark-to-market
    (gains) losses recognized in prior years on positions closed in
    the year


(15.4
)


11.1







(2.1
)


(6.4
)


(12.2
)






(12.2
)Mark-to-market
    gains (losses) arising on positions remaining open at year end


58.0



956.2







(9.8
)


1,004.4



(62.6
)






(62.6
)Net gains (losses)


149.5



1,141.3







(13.3
)


1,277.5



(55.9
)






(55.9
)   4.
    Short
    Sale and Derivative Transactions    December 31, 2009


December 31, 2008Notional


Fair value





Notional


Fair valueCost


value


Assets


Liabilities


Cost


value


Assets


LiabilitiesEquity derivatives:Equity index total return swaps  short positions






1,582.7



9.2



















Equity total return swaps  short positions






232.2







1.2







1.3







Equity total return swaps  long positions






214.6



8.7



7.7















Equity and equity index call options


46.2



79.3



46.0







0.1



518.4







Warrants


10.1



127.5



71.6



















Credit derivatives:Credit default swaps


114.8



5,926.2



71.6







161.5



8,873.0



415.0



Warrants


15.8



340.2



2.8







19.2



342.6



0.6



Foreign exchange forward contracts










1.6



48.0











39.4



20.1Other










13.7



0.3











0.5



9.3Total










225.2



57.2











455.5



29.4   and/or




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
      Equity
    contracts




---



##### 



Credit
    contracts
   mark-to-market
    December 31, 2009


December 31, 2008Notional value


Fair value


Notional value


Fair valueExpiring in 1 year or less


2,112.3



3.7



60.0



2.1Expiring after 1 year through 5 years


3,778.0



66.3



7,208.8



315.6Expiring after 5 years through 10 years


35.9



1.6



1,604.2



97.35,926.2



71.6



8,873.0



415.0     Foreign
    exchange forward contracts
   Counterparty
    risk




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
        Hedge of
    net investment
     5.
    Goodwill
    and Intangible Assets    Intangible assets notGoodwill


Intangible assets subject to amortization


subject to amortization


TotalCustomer andbroker


Computer





Brand2009




relationships


software


Other


names


OtherBalance  beginning of year


71.5







29.7



9.4



2.9



9.7



123.2Additions


167.3



107.5



7.5



0.4



21.2







303.9Disposals


(2.8
)










(5.0
)










(7.8
)Amortization charge






(5.4
)


(4.5
)


(1.2
)










(11.1
)Impairment charge


(2.6
)






















(2.6
)Foreign exchange effect


15.9



13.5



1.5







1.9



0.4



33.2Balance  end of year


249.3



115.6



34.2



3.6



26.0



10.1



438.8Gross carrying amount


251.9



121.5



70.6



11.7



26.0



10.1



491.8Accumulated amortization






(5.9
)


(27.8
)


(8.1
)










(41.8
)Accumulated impairment


(2.6
)






(8.6
)














(11.2
)249.3



115.6



34.2



3.6



26.0



10.1



438.8




---



##### 



Intangible assets notGoodwill


Intangible assets subject to amortization


subject to amortization


TotalCustomer andbroker


Computer





Brand2008




relationships


software


Other


names


OtherBalance  beginning of year


53.8







29.3



0.5







5.8



89.4Additions


20.5







12.7



10.9



2.9



5.2



52.2Disposals


(0.2
)










(0.2
)










(0.4
)Amortization charge










(4.3
)


(1.8
)










(6.1
)Impairment charge










(6.4
)














(6.4
)Foreign exchange effect


(2.6
)






(1.6
)










(1.3
)


(5.5
)Balance  end of year


71.5







29.7



9.4



2.9



9.7



123.2Gross carrying amount


71.5







61.6



15.7



2.9



9.7



161.4Accumulated amortization










(23.3
)


(6.3
)










(29.6
)Accumulated impairment










(8.6
)














(8.6
)71.5







29.7



9.4



2.9



9.7



123.2     6.
    Provision
    for Claims      December 31,2009


2008


2007Provision for claims  beginning of year 
    net


11,008.5



10,624.8



10,633.8Foreign exchange effect of change in provision for claims


393.3



(580.3
)


328.8Provision for claims occurring:In the current year


3,091.8



3,405.4



3,122.5In the prior years


30.3



55.4



22.8Paid on claims during the year related to:The current year


(729.9
)


(835.5
)


(786.3
)The prior years


(2,424.9
)


(2,034.2
)


(2,696.8
)Provision for claims of companies acquired during the year at
    December 31


68.4



372.9



Provision for claims at December 31 before the undernoted


11,437.5



11,008.5



10,624.8CTR Life


27.6



34.9



21.5Provision for claims  end of year  net


11,465.1



11,043.4



10,646.3Reinsurers share of provision for claims


3,282.0



3,685.0



4,401.8Provision for claims  end of year  gross


14,747.1



14,728.4



15,048.1




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
      Fair
    value
     December 31, 2009

December 31, 2008Fair value

Carrying value

Fair value

Carrying valueInsurance and reinsurance contracts


16,127.1



16,667.2



16,372.0



16,619.0Ceded reinsurance contracts


3,250.3



3,534.3



3,663.7



3,909.9       December 31, 2009


December 31, 2008Fair value of


Fair value of


Fair value of


Fair value ofinsurance and


ceded


insurance and


cededreinsurance


reinsurance


reinsurance


reinsuranceChange in interest rates

contracts


contracts


contracts


contracts100 basis point increase


15,641.6



3,156.9



15,793.9



3,524.9100 basis point decrease


16,537.2



3,356.4



16,917.6



3,805.2




---



##### 



7.
    Significant
    Commutations      8.
    Reinsurance          2009


2008


2007Earned premiums ceded to reinsurers


(814.5
)


(713.5
)


(725.0
)Commissions earned on ceded reinsurance premiums


145.4



144.9



147.3Claims incurred ceded to
    reinsurers(1)


391.3



439.3



235.9Provision for uncollectible reinsurance


(59.7
)


(15.0
)


(46.2
)Net impact of ceded reinsurance transactions (pre-tax)


(337.5
)


(144.3
)


(388.0
)   (1)
    In 2009 included a net $3.6 pre-tax loss on TIGs
    commuted reinsurance contracts. In 2008 included an $84.2
    pre-tax loss on Crum & Forsters commutation of
    an aggregate stop loss contract.




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
        2009


2008Balance, beginning of year


370.2



424.3Write-off of recoverables against provision


(49.4
)


(67.4
)Provision for credit losses


74.9



40.0Release of provision for credit losses


(15.2
)


(25.0
)Foreign currency movements


0.6



(1.7
)Balance, end of year


381.1



370.2




---



##### 



9.
    Subsidiary
    Indebtedness and Long Term Debt  December 31, 2009


December 31, 2008Total





Totalcarrying





carryingPrincipal


value(a)


Principal


value(a)Subsidiary indebtedness consists of the following balances:Ridley secured revolving term facility:Cdn $30.0 or U.S. dollar equivalent at floating rate due
    October 31,
    2011(2)


11.4



11.2



14.7



14.4U.S. $20.0 at floating rate due October 31,
    2011(2)


1.0



0.9



7.0



6.712.4



12.1



21.7



21.1Long term debt consists of the following balances:Fairfax unsecured notes:7.75% due April 15,
    2012(1)


180.6



178.1



181.6



177.48.25% due October 1,
    2015(3)


90.9



90.6



90.9



90.67.75% due June 15,
    2017(4)


282.6



266.1



282.6



263.97.375% due April 15,
    2018(3)


144.2



143.7



144.2



143.77.50% due August 19, 2019
    (Cdn$400.0)(1)


381.6



377.0







8.30% due April 15,
    2026(3)


91.8



91.3



91.8



91.37.75% due July 15,
    2037(3)


91.3



90.1



91.3



89.9Other debt  secured loan at 6.15% due
    January 28,
    2009(1)










12.8



12.8Long term debt  holding company borrowings


1,263.0



1,236.9



895.2



869.6OdysseyRe unsecured senior notes:7.65% due November 1,
    2013(5)


225.0



224.0



225.0



223.76.875% due May 1,
    2015(6)


125.0



123.8



125.0



123.6Series A, floating rate due March 15,
    2021(7)


50.0



49.7



50.0



49.7Series B, floating rate due March 15,
    2016(7)


50.0



49.7



50.0



49.7Series C, floating rate due December 15,
    2021(8)


40.0



39.8



40.0



39.8Crum & Forster unsecured senior notes:7.75% due May 1,
    2017(9)


330.0



307.5



330.0



305.2Advent subordinated notes:floating rate due June 3,
    2035(2)


34.0



33.0



34.0



32.912.0 million, floating rate due June 3,
    2035(2)


17.2



16.8



16.7



16.2Advent unsecured senior notes:floating rate due January 15,
    2026(2)


26.0



25.0



26.0



25.0floating rate due December 15,
    2026(2)


20.0



19.4



20.0



19.3Ridley economic development loan at 1% due August 10,
    2019(2)


0.7



0.6



0.8



0.7MFXchange, equipment loans at 7.3% due April 1, 2011


2.0



2.0



3.3



3.3Long term debt  subsidiary company borrowings


919.9



891.3



920.8



889.12,182.9



2,128.2



1,816.0



1,758.7   (a)
    Principal net of unamortized issue costs and discounts.(1)
    During 2009, the company or one of its subsidiaries completed
    the following transactions with respect to its debt:  (a)
    On September 25, 2009, the company purchased $1.0
    principal amount of its senior notes due 2012 for cash
    consideration of $1.0.(b)
    On August 18, 2009, the company completed a public debt
    offering of Cdn$400.0 principal amount of 7.50% unsecured senior
    notes due August 19, 2019 at an issue price of $99.639 for
    net proceeds after discount, commissions




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
    and expenses of $358.6 (Cdn$394.8). Commissions and expenses
    of $3.4 (Cdn$3.7) were included as part of the carrying value of
    the debt. The notes are redeemable at the companys option
    at any time at the greater of a specified redemption price based
    upon the then current yield of a Government of Canada bond with
    a term to maturity equal to the remaining term to
    August 19, 2019 and par. The company has designated these
    senior notes as a hedge of a portion of its net investment in
    Northbridge.  (c)
    On the maturity date, January 28, 2009, the company
    repaid the outstanding $12.8 of its 6.15% secured loan.  (2)
    During 2008, the company or one of its subsidiaries completed
    the following transactions with respect to its debt:  (a)
    Effective November 4, 2008, the company consolidated the
    revolving term facilities and long term debt of Ridley pursuant
    to the transactions described in note 18. The interest
    rates on the revolving term facilities are the bankers
    acceptance rate for Canadian dollar debt and LIBOR for U.S.
    dollar debt plus a margin of 1.00% to 1.50% based on a specific
    debt ratio. Subsequent to its acquisition by the company, Ridley
    repaid $13.2 of its secured revolving term facilities.(b)
    Effective September 11, 2008, the company consolidated
    the long term debt of Advent pursuant to the transaction
    described in note 18. The interest rates and call features
    of Advents long term debt are as follows: U.S. dollar
    notes at the three month LIBOR plus 3.90% and euro subordinated
    notes at the three month EURIBOR plus 3.85% due June 3,
    2035 may be called at par after June 3, 2010; U.S.
    dollar unsecured senior notes at the three month LIBOR plus
    4.50% due January 15, 2026 may be called at par after
    January 16, 2011; and U.S. dollar unsecured senior notes
    due December 15, 2026 at the three month LIBOR plus 4.15%
    may be called at par after December 15, 2011.  (c)
    On June 16, 2008, Crum & Forster redeemed for
    cash all $4.3 principal amount of its outstanding notes due 2013
    for total consideration of $4.5.  (d)
    On June 16, 2008, Cunningham Lindsey repaid the
    outstanding Cdn$125.0 of its Series B debentures which
    matured on that date. This transaction decreased subsidiary
    company borrowings by $118.6, net of $8.1 of these debentures
    owned by the company.  (e)
    On April 15, 2008, the company repaid the outstanding
    $62.1 principal amount of its notes which matured on that
    date.  (f)
    On January 9, 2008, the company called for redemption
    all of its 5.0% convertible senior debentures due 2023. On
    February 13, 2008, $188.5 principal amount of these
    debentures were converted by their holders into 886,888
    subordinate voting shares of the company and the company paid a
    nominal amount of cash to redeem the unconverted debentures and
    in lieu of fractional shares. The conversion was recorded as a
    $192.3 increase of common stock and a $134.4 and $57.9 reduction
    of long term debt and other paid in capital respectively.  (3)
    
    During 2002, the company closed out the swaps for this debt
    and deferred the resulting gain which is amortized to earnings
    over the remaining term to maturity. The unamortized balance at
    December 31, 2009 is $31.3 (2008  $33.3).(4)
    
    Redeemable at Fairfaxs option at any time on or after
    June 15, 2012, June 15, 2013, June 15, 2014 and
    June 15, 2015 at $103.9, $102.6, $101.3 and $100.0 per
    bond, respectively.(5)
    
    Redeemable at OdysseyRes option at any time at a price
    equal to the greater of (a) 100% of the principal amount to
    be redeemed or (b) the sum of the present values of the
    remaining scheduled payments of principal and interest thereon
    (exclusive of interest accrued to the date of redemption)
    discounted to the redemption date on a semi-annual basis at the
    treasury rate plus 50 basis points, plus, in each case,
    accrued interest thereon to the date of redemption.(6)
    
    Redeemable at OdysseyRes option at any time at a price
    equal to the greater of (a) 100% of the principal amount to
    be redeemed or (b) the sum of the present values of the
    remaining scheduled payments of principal and interest thereon
    (exclusive of interest accrued to the date of redemption)
    discounted to the redemption date on a semi-annual basis at the
    treasury rate plus 40 basis points, plus, in each case,
    accrued interest thereon to the date of redemption.(7)
    
    The Series A and Series B notes are callable by
    OdysseyRe in 2011 at their par value plus accrued and unpaid
    interest. The interest rate on each series of debentures is
    equal to three month LIBOR, which is calculated on a quarterly
    basis, plus 2.20%.(8)
    
    The Series C notes are due in 2021 and are callable by
    OdysseyRe in 2011 at their par value plus accrued and unpaid
    interest. The interest rate is equal to three month LIBOR plus
    2.5% and is reset after every payment date.(9)
    
    Redeemable at Crum & Forsters option at any
    time beginning May 1, 2012 at specified redemption
    prices.




---



##### 



December 31,


December 31,2009


2008Carrying


Fair


Carrying


Fairvalue


value


value


valueLong term debt  holding company borrowings


1,236.9



1,317.4



869.6



711.1Long term debt  subsidiary company borrowings


891.3



917.4



889.1



748.72,128.2



2,234.8



1,758.7



1,459.8     2010


1.82011


0.42012


180.62013


225.12014


0.1Thereafter


1,774.9   10.
    Other
    Long Term Obligations  Holding Company    December 31,


December 31,2009


2008Carrying


Fair


Carrying


Fairvalue


value


value


valuePurchase consideration payable


164.4



164.4



169.8



169.8Trust preferred securities of subsidiaries


9.1



6.9



17.9



11.4173.5



171.3



187.7



181.2




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
     11.
    Shareholders
    Equity    Authorized
    capital
    Issued
    capital
      Treasury
    shares
    Capital
    transactions
  Subsequent
    to December 31, 2009
      Year
    ended December 31, 2009




---



##### 



Year
    ended December 31, 2008
      Dividends
      Accumulated
    Other Comprehensive Income (Loss)
    December 31, 2009


December 31, 2008Income tax








Income taxPre-tax


(expense)


After-tax


Pre-tax


(expense)


After-taxamount


recovery


amount


amount


recovery


amountNet unrealized gains (losses) on available for sale securities:Bonds


181.2



(60.5
)


120.7



133.5



(41.8
)


91.7Common stocks and other


877.5



(251.1
)


626.4



(199.7
)


55.7



(144.0
)1,058.7



(311.6
)


747.1



(66.2
)


13.9



(52.3
)Currency translation account


153.9



(7.9
)


146.0



(32.4
)


(23.1
)


(55.5
)1,212.6



(319.5
)


893.1



(98.6
)


(9.2
)


(107.8
)   12.
    Income
    Taxes    2009


2008


2007Current


202.1



1,098.5



387.6Future


12.8



(342.9
)


323.5214.9



755.6



711.1




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
      2009


2008


2007Provision for income taxes at the statutory income tax rate


397.9



818.9



780.3Non-taxable investment income


(78.0
)


(1.3
)


(6.9
)Non-taxable portion of sale (2007  Hub)










(11.9
)Tax rate differential on (income) and losses incurred outside
    Canada


(48.5
)


(3.7
)


(50.8
)Foreign exchange


25.5



(33.5
)


8.8Change in tax rate for future income taxes


2.1



3.5



(2.9
)Recovery relating to prior years


(48.2
)


(15.8
)


(44.6
)Change in unrecorded tax benefit of losses


(47.7
)


(12.6
)


46.6Other including permanent differences


11.8



0.1



(7.5
)Provision for income taxes


214.9



755.6



711.1         December 31,2009


2008Operating and capital losses


207.8



196.7Claims discount


298.6



294.8Unearned premium reserve


58.2



65.5Deferred premium acquisition cost


(50.3
)


(62.7
)Allowance for doubtful accounts


16.0



19.6Investments and other


(29.6
)


350.5500.7



864.4Valuation allowance


(182.0
)


(165.0
)Future income taxes


318.7



699.4




---



##### 



2009U.S.


Canada


Ireland


U.K.


TotalLess than 1 year






9.5











9.5From 1 to 5 years






50.4











50.4From 6 to 10 years


















From 11 to 20 years


50.4



50.2











100.6No expiration date










255.1



421.2



676.350.4



110.1



255.1



421.2



836.8       13.
    Statutory
    Requirements    December 31, 2009Northbridge


263.2
(1)Crum & Forster


163.8OdysseyRe


351.3778.3    (1)
    
    Subject to prior regulatory approval.  14.
    Contingencies
    and Commitments  Lawsuits
  (a)
    During 2006, several lawsuits seeking class action status were
    filed against Fairfax and certain of its officers and directors
    in the United States District Court for the Southern District of
    New York. The Court made an order consolidating the various
    pending lawsuits and granted the single remaining motion for
    appointment as lead plaintiffs. The Court also issued orders
    approving scheduling stipulations filed by the parties to the
    consolidated lawsuit. On February 8, 2007, the lead
    plaintiffs filed an amended consolidated complaint (the
    Amended Consolidated Complaint), which states that
    the lead plaintiffs seek to represent a class of all purchasers
    and acquirers of securities of Fairfax between May 21, 2003
    and March 22, 2006 inclusive. The Amended Consolidated
    Complaint names as defendants Fairfax, certain of its officers
    and




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
    directors, OdysseyRe and Fairfaxs auditors. The Amended
    Consolidated Complaint alleges that the defendants violated
    U.S. federal securities laws by making material
    misstatements or failing to disclose certain material
    information regarding, among other things, Fairfaxs and
    OdysseyRes assets, earnings, losses, financial condition,
    and internal financial controls. The Amended Consolidated
    Complaint seeks, among other things, certification of the
    putative class; unspecified compensatory damages (including
    interest); unspecified monetary restitution; unspecified
    extraordinary, equitable
    and/or
    injunctive relief; and costs (including reasonable
    attorneys fees). These claims are at a preliminary stage.
    Pursuant to the scheduling stipulations, the various defendants
    filed their respective motions to dismiss the Amended
    Consolidated Complaint, the lead plaintiffs filed their
    oppositions thereto, the defendants filed their replies to those
    oppositions and the motions to dismiss were argued before the
    Court in December 2007. The Court has not yet issued a ruling on
    these motions. In November 2009, the Court granted a motion by
    the lead plaintiffs to withdraw as lead plaintiffs, and allowed
    other prospective lead plaintiffs 60 days to file motions
    seeking appointment as replacement lead plaintiff. Two entities
    filed such motions and subsequently asked the Court to appoint
    them as co-lead plaintiffs. These motions remain pending. The
    ultimate outcome of any litigation is uncertain and should the
    consolidated lawsuit continue and be successful, the defendants
    may be subject to an award of significant damages, which could
    have a material adverse effect on Fairfaxs business,
    results of operations and financial condition. The consolidated
    lawsuit, if it continues, may require significant management
    attention, which could divert managements attention away
    from the companys business. In addition, the company could
    be materially adversely affected by negative publicity related
    to this lawsuit. Any of the possible consequences noted above,
    or the perception that any of them could occur, could have an
    adverse effect upon the market price for the companys
    securities. Fairfax, OdysseyRe and the named officers and
    directors intend to vigorously defend against the consolidated
    lawsuit and the companys financial statements include no
    provision for loss.  (b)
    On July 26, 2006, Fairfax filed a lawsuit seeking
    $6 billion in damages from a number of defendants who, the
    complaint (as subsequently amended) alleges, participated in a
    stock market manipulation scheme involving Fairfax shares. The
    complaint, filed in Superior Court, Morris County, New Jersey,
    alleges violations of various state laws, including the New
    Jersey Racketeer Influenced and Corrupt Organizations Act,
    pursuant to which treble damages may be available. The
    defendants removed this lawsuit to the District Court for the
    District of New Jersey but pursuant to a motion filed by
    Fairfax, the lawsuit was remanded to Superior Court, Morris
    County, New Jersey. Most of the defendants filed motions to
    dismiss the lawsuit, all of which were denied during a Court
    hearing in September 2007. In October 2007, defendants filed a
    motion for leave to appeal to the Appellate Division from the
    denial of their motions to dismiss. In December 2007, that
    motion for leave was denied. Subsequently, two of the defendants
    filed a motion seeking leave to appeal certain limited issues to
    the New Jersey Supreme Court. That motion for leave was denied
    in February 2008. In December 2007, two defendants who were
    added to the action after its initial filing filed motions to
    dismiss the claims against them. Those motions were granted in
    February 2008, with leave being granted to Fairfax to replead
    the claims against those two defendants. Fairfax filed an
    amended complaint in March 2008, which again asserted claims
    against those defendants. Those defendants filed a motion to
    dismiss the amended complaint, which motion was denied in August
    2008. In September 2008, those two defendants also filed a
    counterclaim against Fairfax, as well as third-party claims
    against certain Fairfax executives, OdysseyRe, Fairfaxs
    outside legal counsel and PricewaterhouseCoopers. Fairfax has
    not been served with this counterclaim. In December 2007, an
    individual defendant filed a counterclaim against Fairfax.
    Fairfaxs motion to dismiss that counterclaim was denied in
    August 2008. Fairfax intends to vigorously defend against these
    counterclaims. In September 2008, the Court granted a motion for
    summary judgment brought by two defendants, and dismissed
    Fairfaxs claims against those defendants without
    prejudice. Discovery in this action is ongoing. The ultimate
    outcome of any litigation is uncertain and the companys
    financial statements include no provision for loss on the
    counterclaim.  Financial
    guarantee




---



##### 



Other
              Number of shares2009


2008


2007Restricted stock awards outstanding  beginning of year


412,258



425,648



435,763Granted during the year


29,022



7,546



8,426Exercised during the year


(88,109
)


(18,253
)


(12,197
)Forfeited during the year


(3,507
)


(2,683
)


(6,344
)Restricted stock awards outstanding  end of year


349,664



412,258



425,648




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
     15.
    Pensions        Defined benefit


Post retirementpension plans


benefit plansDecember 31,


December 31,2009


2008


2009


2008Fixed income securities


97.7



143.4







Equity securities


213.8



76.1







Other


29.7



21.7







341.2



241.2







     December 31, 2009


December 31, 2008Significant











Significantother


Significant








other


SignificantTotal


Quoted


observable


inobservable


Total


Quoted


observable


inobservablefair value


prices


inputs


inputs


fair value


prices


inputs


inputsasset


(Level 1)


(Level 2)


(Level 3)


asset


(Level 1)


(Level 2)


(Level 3)Fixed income securities


97.7



36.2



61.5







143.4



143.0



0.4



Equity securities


213.8



209.6



4.2







76.1



27.7



48.4



Other


29.7



19.9



3.2



6.6



21.7



21.7







341.2



265.7



68.9



6.6



241.2



192.4



48.8








---



##### 



Defined benefit


Post retirementpension plans


benefit plansDecember 31,


December 31,2009


2008


2009


2008Change in benefit obligation:Balance  beginning of year


305.2



369.5



56.1



67.5Cost of benefits earned in the year


12.4



14.9



2.6



4.1Interest cost on benefit obligation


19.8



19.4



3.5



3.7Actuarial (gains) losses


32.0



(43.5
)


6.8



(8.2
)Benefits paid


(15.7
)


(14.2
)


(2.3
)


(5.2
)Settlements and other






(8.8
)


(4.6
)


(3.4
)Change in foreign currency exchange rate


32.1



(59.5
)


3.2



(4.8
)Business acquisition  Ridley (note 18)






27.4







2.4Balance  end of year


385.8



305.2



65.3



56.1Change in fair value of plan assets:Balance  beginning of year


241.2



269.4







Actual return on plan assets


61.5



(10.8
)






Company contributions


24.7



35.7



2.3



4.0Plan participant contributions














1.2Benefits paid


(15.7
)


(14.2
)


(2.3
)


(5.2
)Settlements and other






(7.8
)






Change in foreign currency exchange rate


29.5



(49.7
)






Business acquisition  Ridley (note 18)






18.6







Balance  end of year


341.2



241.2







Funded status of plans  surplus (deficit)


(44.6
)


(64.0
)


(65.3
)


(56.1
)Unrecognized net actuarial loss


28.8



39.3



2.6



(5.0
)Unrecognized prior service costs


1.7



1.6



(5.3
)


(5.3
)Unrecognized transitional (asset) obligation


(3.6
)


(3.9
)






3.9Net accrued liability  end of year


(17.7
)


(27.0
)


(68.0
)


(62.5
)Amounts recognized in the consolidated balance sheet consists
    of:Other assets


14.5



6.3







Accounts payable and accrued liabilities


(32.2
)


(33.3
)


(68.0
)


(62.5
)Net accrued liability  end of year


(17.7
)


(27.0
)


(68.0
)


(62.5
)Weighted average assumptions used to determine benefit
    obligations:Discount rate


6.0
%


6.2
%


5.9
%


6.6
%Rate of compensation increase


4.4
%


4.4
%


4.0
%


4.0
%Assumed overall health care cost trend










9.1
%


9.6
%




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
       Defined benefit


Post retirementpension plans


benefit plansDecember 31,


December 31,2009


2008


2007


2009


2008


2007Cost of benefits earned in the year, net of employee
    contributions


12.4



14.9



17.5



2.6



2.9



3.3Interest cost on benefit obligation


19.8



19.4



30.9



3.5



3.7



3.8Actual return on plan assets


(61.5
)


10.8



(15.6
)










Actuarial (gains) losses on benefit obligation


32.0



(43.5
)


(38.7
)


6.8



(8.2
)


(9.5
)Settlements and other






1.6







(0.2
)






Annual defined benefit pension and post retirement benefit
    expense if all costs and benefits were recognized as they arose


2.7



3.2



(5.9
)


12.7



(1.6
)


(2.4
)Adjustments to recognize the long term nature of employee future
    benefits costs:(Excess) shortfall of:Actual returns over expected returns on plan assets


45.3



(25.9
)


(14.8
)










Actuarial (gains) losses amortized over actuarial (gains) losses
    arising


(32.0
)


46.0



41.5



(7.5
)


8.4



10.0Prior service costs amortized over plan amendment cost arising


0.1



0.3



0.2



(0.5
)


(0.3
)


(0.3
)Amortization of the transitional (asset) obligation


(0.9
)


(1.0
)


(1.4
)


0.2



1.0



1.112.5



19.4



25.5



(7.8
)


9.1



10.8Annual defined benefit pension and post retirement benefit
    expense recognized in the consolidated statement of earnings


15.2



22.6



19.6



4.9



7.5



8.4Defined contribution benefit expense recognized


17.4



21.1



25.6











Total benefit expense recognized


32.6



43.7



45.2



4.9



7.5



8.4Weighted average assumptions used to determine benefit
    expenseDiscount rate


6.3
%


5.5
%


5.1
%


6.7
%


5.9
%


5.4
%Expected long term rate of return on plan assets


5.8
%


5.9
%


6.2
%










Rate of compensation increase


4.4
%


4.4
%


4.5
%


4.0
%


4.0
%


4.0
%




---



##### 



Defined benefit

Post retirementpension plans

benefit plans2010


13.2



2.92011


12.1



3.12012


14.7



3.42013


15.5



3.62014


17.1



3.82015-2019


110.3



22.5   16.
    Operating
    Leases    2010


51.72011


42.52012


24.42013


18.82014


17.5Thereafter


79.4   17.
    Earnings
    per Share    2009


2008


2007Net earnings


856.8



1,473.8



1,095.8Preferred share dividends


(10.5
)


(10.1
)


(12.5
)Excess over stated value of preferred shares purchased for
    cancellation


(41.3
)


(13.9
)


Net earnings available to common shareholders  basic


805.0



1,449.8



1,083.3Interest expense on convertible debt, net of tax






0.3



7.0Net earnings available to common shareholders  diluted


805.0



1,450.1



1,090.3Weighted average common shares outstanding  basic


18,301,133



18,036,670



17,700,393Effect of dilutive shares:Convertible debt






104,197



886,888Options to purchase treasury stock acquired


96,765



91,890



87,944Total effect of dilutive shares


96,765



196,087



974,832Weighted average common shares outstanding  diluted


18,397,898



18,232,757



18,675,225Net earnings per common share  basic

$
43.99


$
80.38


$
61.20Net earnings per common share  diluted

$
43.75


$
79.53


$
58.38




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
     18.
    Acquisitions
    and Divestitures  Subsequent
    to December 31, 2009
    Year
    ended December 31, 2009
  Establishment
    of New Brazilian Insurer
    Privatization
    of OdysseyRe
    Privatization
    of Advent
    Privatization
    of Northbridge
    Acquisition
    of Polish Re




---



##### 



OdysseyRe


Advent


Northbridge


Polish ReStep 1 acquisition


Step 2 acquisition


TotalAcquisition date


October 21, 2009



September 2, 2009



January 13, 2009



February 20, 2009







January 7, 2009Percentage of common shares acquired


27.4
%


36.5
%


24.8
%


11.6
%


36.4
%


100
%Cash purchase consideration


1,017.0



59.5



374.0



172.4



546.4



57.0Fair value of assets acquired:Tangible
    assets(1)


3,028.7



368.3



1,070.2



496.0



1,566.2



141.0Intangible assets:Customer and broker relationships


27.9







53.5



26.1



79.6



Brand names


10.0







7.5



3.7



11.2



Goodwill


64.6







51.5



29.1



80.6



13.8Total fair value of assets acquired


3,131.2



368.3



1,182.7



554.9



1,737.6



154.8Total fair value of liabilities assumed


(2,114.2
)


(308.8
)


(808.7
)


(382.5
)


(1,191.2
)


(97.8
)Net assets acquired


1,017.0



59.5



374.0



172.4



546.4



57.0   (1)
    Of the $141.0 of tangible assets acquired in the Polish Re
    transaction, $31.9 comprised cash and cash equivalents.  Other
  Investment
    in Alltrust
      Year
    ended December 31, 2008
  Acquisition
    of Ridley




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
      Acquisition
    of Advent
    Acquisition
    of CropUSA Insurance Agency, Inc.
    (CropUSA)
    Cunningham
    Lindsey
    Other
    Year
    ended December 31, 2007
  Cunningham
    Lindsey




---



##### 



Other
      Repurchases
    of shares
        19.
    Financial
    Risk Management  Risk
    Management




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
          Underwriting
    Risk




---



##### 



Credit
    Risk
      December 31,2009


2008Gross recoverable from reinsurers


3,809.1



4,234.2Bonds:U.S., Canadian and other government


2,999.6



3,564.7U.S. states and municipalities


5,497.8



4,104.6Corporate and other and mortgage backed securities 
    residential


2,971.0



985.3Derivatives (2008  primarily credit default swaps)


225.2



455.5Accounts receivable


1,855.4



1,688.7Cash and short term investments


3,699.7



6,333.0Total gross exposure


21,057.8



21,366.0   Investments
    in Debt Instruments
        December 31, 2009


December 31, 2008Carrying





CarryingIssuer Credit Rating

value


%


value


%AAA/Aaa


5,748.9



50.1



6,512.5



75.2AA/Aa


1,695.4



14.8



1,377.8



15.9A/A


1,468.5



12.8



194.9



2.3BBB/Baa


970.8



8.5



2.1



0.0BB/Ba


253.5



2.2



10.0



0.1B/B


291.9



2.5



232.0



2.7Lower than B/B and unrated


1,039.4



9.1



325.3



3.8Total


11,468.4



100.0



8,654.6



100.0




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
          Balances
    due from Counterparties to Derivative Contracts
        Reinsurance
    Recoverables and Receivables




---



##### 



December 31, 2009


December 31, 2008Gross


Outstanding


Net unsecured


Gross


Outstanding


Net unsecuredreinsurance


balances for


reinsurance


reinsurance


balances for


reinsurancerecoverable


which security is


recoverable and


recoverable and


which security is


recoverable andA.M. Best Rating

and receivable


held


receivable


receivable


held


receivableA++


124.0



8.4



115.6



187.1



10.9



176.2A+


871.4



76.1



795.3



1,825.2



301.6



1,523.6A


1,837.4



470.3



1,367.1



1,041.0



208.3



832.7A-


352.8



143.5



209.3



341.1



94.6



246.5B++


39.6



9.9



29.7



37.1



4.2



32.9B+


60.7



41.3



19.4



47.8



19.0



28.8B or lower


17.6



0.3



17.3



117.3



4.3



113.0Not rated


806.0



235.7



570.3



925.2



352.9



572.3Pools & associations


80.7



45.7



35.0



82.6



26.2



56.44,190.2



1,031.2



3,159.0



4,604.4



1,022.0



3,582.4Provision for uncollectible reinsurance


381.1







381.1



370.2







370.23,809.1







2,777.9



4,234.2







3,212.2     December 31, 2009


For the Year Ended December 31, 2009OthercomprehensiveExposure/


Carrying


income


Net earnings


Net equitynotional value


value


(pre-tax)


(pre-tax)


(pre-tax)Credit risk exposures:Bonds:U.S., Canadian and other government


2,999.6



2,999.6











U.S. states and municipalities


5,497.8



5,497.8



65.3



308.6



373.9Corporate and other and mortgage backed securities-residential


2,971.0



2,971.0



185.4



599.1



784.5Derivatives and other invested assets:Receivable from counterparties to derivatives


225.2



225.2







3.1



3.1Accounts receivable and other


1,855.4



1,855.4







(1.9
)


(1.9
)Recoverable from reinsurers


3,809.1



3,809.1







(59.7
)


(59.7
)Cash and short term investments


3,699.7



3,699.7











21,057.8



21,057.8



250.7



849.2



1,099.9Hedging instruments:Derivatives and other invested assets:Credit default swaps


(5,926.2
)


(71.6
)






(114.6
)


(114.6
)Net exposure and financial effects


15,131.6



20,986.2



250.7



734.6



985.3




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
    December 31, 2008


For the Year Ended December 31, 2008OthercomprehensiveExposure/


Carrying


income


Net earnings


Net equitynotional value


value


(pre-tax)


(pre-tax)


(pre-tax)Credit risk exposures:Bonds:U.S., Canadian and other government


3,564.7



3,564.7











U.S. states and municipalities


4,104.6



4,104.6



(26.2
)


157.9



131.7Corporate and other and mortgage backed securities-residential


985.3



985.3



(23.2
)


(543.9
)


(567.1
)Derivatives and other invested assets:Receivable from counterparties to derivatives (primarily credit
    default swaps)


455.5



455.5







(14.1
)


(14.1
)Accounts receivable and other


1,688.7



1,688.7







(4.1
)


(4.1
)Recoverable from reinsurers


4,234.2



4,234.2







(15.0
)


(15.0
)Cash and short term investments


6,333.0



6,333.0











21,366.0



21,366.0



(49.4
)


(419.2
)


(468.6
)Hedging instruments:Derivatives and other invested assets:Credit default swaps


(8,873.0
)


(415.0
)






1,286.4



1,286.4Net exposure and financial effects


12,493.0



20,951.0



(49.4
)


867.2



817.8     Liquidity
    Risk




---



##### 



December 31,
    2009
  Less than


1 to 3


3 months








More than1 month


months


to 1 year


1 - 3 years


3 - 5 years


5 years


TotalSubsidiary indebtedness  principal and interest










0.1



12.6











12.7Accounts payable and accrued
    liabilities(1)


179.9



134.6



440.6



163.3



58.6



160.9



1,137.9Income taxes payable






70.9



















70.9Funds withheld payable to reinsurers


0.8



6.1



33.3



25.1



25.1



264.5



354.9Gross claims liability


300.4



575.7



2,536.6



4,240.0



2,343.0



4,751.4



14,747.1Long term debt obligations  principal










1.8



181.0



225.2



1,774.9



2,182.9Long term debt obligations  interest


3.9



16.3



136.6



306.3



268.0



647.8



1,378.9Other long term liabilities  principal






1.5



4.6



10.8



9.5



147.1



173.5Other long term liabilities  interest


0.4



3.6



11.0



28.3



26.7



44.0



114.0Operating leases  obligations


2.4



6.0



43.3



66.9



36.3



79.4



234.3487.8



814.7



3,207.9



5,034.3



2,992.4



7,870.0



20,407.1   December 31,
    2008
  Less than


1 to 3


3 months








More than1 month


months


to 1 year


1 - 3 years


3 - 5 years


5 years


TotalSubsidiary indebtedness  principal and interest






0.1



0.4



22.0











22.5Accounts payable and accrued
    liabilities(1)


386.3



138.2



391.4



156.4



59.9



148.0



1,280.2Income taxes payable






656.3



















656.3Funds withheld payable to reinsurers


0.9



6.1



33.4



25.1



25.1



264.5



355.1Gross claims liability


283.1



574.8



2,353.0



4,314.3



2,518.3



4,684.9



14,728.4Long term debt obligations  principal


13.0



0.3



1.1



2.0



406.7



1,392.9



1,816.0Long term debt obligations  interest


3.0



13.0



116.0



263.7



236.7



625.7



1,258.1Other long term liabilities  principal


0.4



0.8



3.4



12.8



8.7



161.6



187.7Other long term liabilities  interest


0.8



3.7



11.7



30.9



29.0



67.4



143.5Operating leases  obligations


2.3



5.6



40.5



73.3



32.5



76.4



230.6689.8



1,398.9



2,950.9



4,900.5



3,316.9



7,421.4



20,678.4   (1)
    Excludes accrued interest, deferred revenue, deferred costs
    and unrecognized balances relating to defined benefit pension
    and other post retirement benefit plans.




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
        December 31,
    2009
  Less than


1 to


3 months








More than1 month


3 months


to 1 year


1 - 3 years


3 - 5 years


5 years


TotalShort sale and derivative obligations:Equity total return swaps  short positions






1.2



















1.2Equity total return swaps  long


7.7























7.7Foreign exchange forward contracts


0.7



7.2



40.1















48.0Other














0.3











0.38.4



8.4



40.1



0.3











57.2   December 31,
    2008
  Less than


1 to


3 months








More than1 month


3 months


to 1 year


1 - 3 years


3 - 5 years


5 years


TotalShort sale and derivative obligations:Foreign exchange forward contracts










8.5



11.6











20.1Other


9.3























9.39.3







8.5



11.6











29.4   Market
    Risk
  and/or
  Interest
    Rate Risk




---



##### 



Hypothetical $ change effect on:Fair value of


OtherDecember 31, 2009

fixed income


comprehensive


Net


HypotheticalChange in Interest Rates

portfolio


income


earnings


% change200 basis point increase


9,689.3



(448.6
)


(752.3
)


(15.5
)100 basis point increase


10,535.9



(241.5
)


(389.4
)


(8.1
)No change


11,468.4











100 basis point decrease


12,434.0



268.9



384.1



8.4200 basis point decrease


13,521.5



585.7



806.0



17.9   Hypothetical $ change effect on:Fair value of


OtherDecember 31, 2008

fixed income


comprehensive


Net


HypotheticalChange in Interest Rates

portfolio


income


earnings


% change200 basis point increase


7,275.6



(275.4
)


(474.9
)


(15.9
)100 basis point increase


7,887.2



(154.1
)


(262.5
)


(8.9
)No change


8,654.6











100 basis point decrease


9,507.0



162.3



294.9



9.8200 basis point decrease


10,309.6



342.4



542.0



19.1     Market
    Price Fluctuations




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
        December 31, 2009


For the Year Ended December 31, 2009OthercomprehensiveExposure/


Carrying


income


Net earnings


Net equitynotional value


value


(pre-tax)


(pre-tax)


(pre-tax)Equity exposures:Common stocks


5,088.9



5,088.9



1,207.5



(91.5
)


1,116.0Investments, at equity


646.2



475.4



3.3



23.3



26.6Derivatives and other invested assets:Equity total return swaps  long positions


214.6



1.0







84.4



84.4Equity and equity index call options


79.3



46.0







8.6



8.6Equity warrants


127.5



71.6







230.9



230.9Total equity and equity related holdings


6,156.5



5,682.9



1,210.8



255.7



1,466.5Hedging instruments:Derivatives and other invested assets:Equity total return swaps  short positions


(232.2
)


1.2







(26.8
)


(26.8
)Equity index total return swaps  short positions


(1,582.7
)


(9.2
)






(72.8
)


(72.8
)(1,814.9
)


(8.0
)






(99.6
)


(99.6
)Net exposure and financial effects


4,341.6



5,674.9



1,210.8



156.1



1,366.9




---



##### 



December 31, 2008


For the Year Ended December 31, 2008OthercomprehensiveExposure/


Carrying


income


Net earnings


Net equitynotional value


value


(pre-tax)


(pre-tax)


(pre-tax)Equity exposures:Common stocks


4,241.2



4,241.2



(484.8
)


(970.3
)


(1,455.1
)Investments, at equity


575.3



219.3







(49.4
)


(49.4
)Total equity and equity related holdings


4,816.5



4,460.5



(484.8
)


(1,019.7
)


(1,504.5
)Hedging instruments:Derivatives and other invested assets:Equity index total return swaps  short positions














1,349.4



1,349.4Equity total return swaps  short positions


(1.3
)










731.6



731.6S&P 500 index call options


(518.4
)










(2.3
)


(2.3
)(519.7
)










2,078.7



2,078.7Net exposure and financial effects


4,296.8



4,460.5



(484.8
)


1,059.0



574.2     one-to-one
  2009


2008Effect on other


Effect on


Effect on other


Effect oncomprehensive income


net earnings


comprehensive income


net earningsChange in global equity
    markets10% increase


333.1



(89.5
)


242.5



4.510% decrease


(333.1
)


93.5



(242.5
)


(4.5
)




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
    Foreign
    Currency Risk
        Non-U.S. dollar
    non-U.S. dollar




---



##### 



Capital
    Management
   December 31,2009


2008Holding company cash, short term investments and marketable
    securities,
    net of short sale and derivative obligations


1,242.7



1,555.0Holding company debt


1,236.9



869.6Subsidiary debt


903.4



910.2Other long term obligations  holding company


173.5



187.7Total debt


2,313.8



1,967.5Net debt


1,071.1



412.5Common shareholders equity


7,391.8



4,866.3Preferred equity


227.2



102.5Non-controlling interests


117.6



1,382.8Total equity and non-controlling interests


7,736.6



6,351.6Net debt/total equity and non-controlling interests


13.8
%


6.5
%Net debt/net total
    capital(1)


12.2
%


6.1
%Total debt/total
    capital(2)


23.0
%


23.7
%Interest
    coverage(3)


8.2
x


16.4x   (1)
    Net total capital is calculated by the company as the sum of
    total shareholders equity, non-controlling interests and
    net debt.




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
     (2)
    Total capital is calculated by the company as the sum of
    total shareholders equity, non-controlling interests and
    total debt.(3)
    Interest coverage is calculated by the company as the sum of
    earnings (loss) from operations before income taxes and interest
    expense divided by interest expense.        20.
    Segmented
    Information    Insurance
        Reinsurance




---



##### 



Runoff
      Other
    Corporate
    and Other
    Reporting
    Segment
    2009
  Insurance


Reinsurance














EliminationsCrum &


Fairfax








Ongoing








Corporate


andNorthbridge


Forster


Asia


OdysseyRe


Other


Operations


Runoff


Other


and other


Adjustments


ConsolidatedNet premiums earned


969.2



781.3



116.0



1,927.4



628.1



4,422.0



















4,422.0Underwriting expenses


(1,026.3
)


(813.3
)


(95.8
)


(1,863.1
)


(616.2
)


(4,414.7
)


















(4,414.7
)Underwriting profit (loss)


(57.1
)


(32.0
)


20.2



64.3



11.9



7.3



















7.3Interest income


96.8



90.6



10.2



258.9



38.9



495.4



55.0







14.9







565.3Dividends


24.9



34.4



5.6



52.0



2.5



119.4



11.4







6.7







137.5Earnings (losses) on investments, at equity


0.1



4.7



(4.6
)


6.5



0.4



7.1











16.2







23.3Investment expenses


(8.8
)


(15.8
)


(2.2
)


(33.8
)


(4.3
)


(64.9
)


(12.0
)






(1.4
)


64.9



(13.4
)Interest and dividends


113.0



113.9



9.0



283.6



37.5



557.0



54.4







36.4



64.9



712.7OtherRevenue






























556.4



64.9



(64.9
)


556.4Expenses


























(152.4
)


(544.0
)










(696.4
)























(152.4
)


12.4



64.9



(64.9
)


(140.0
)Operating income (loss) before:


55.9



81.9



29.2



347.9



49.4



564.3



(98.0
)


12.4



101.3







580.0Net gains (losses) on investments


94.4



229.1



17.8



353.6



(25.8
)


669.1



129.2







147.3



(1.1
)


944.5Interest expense






(27.8
)






(31.0
)


(5.1
)


(63.9
)






(1.0
)


(101.4
)






(166.3
)Corporate overhead and other


(19.8
)


(3.3
)


(2.3
)


(25.8
)


(13.1
)


(64.3
)










(88.3
)






(152.6
)Pre-tax income (loss)


130.5



279.9



44.7



644.7



5.4



1,105.2



31.2



11.4



58.9



(1.1
)


1,205.6Income taxes










































(214.9
)Non-controlling interests










































(133.9
)Net earnings










































856.8




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
    2008
  Insurance


Reinsurance














EliminationsCrum &


Fairfax








Ongoing








Corporate


andNorthbridge


Forster


Asia


OdysseyRe


Other


operations


Runoff


Other


and other


adjustments


ConsolidatedNet premiums earned


1,076.1



1,005.0



84.6



2,076.4



269.6



4,511.7



















4,511.7Underwriting expenses


(1,114.0
)


(1,182.2
)


(77.7
)


(2,104.1
)


(314.6
)


(4,792.6
)


















(4,792.6
)Underwriting profit (loss)


(37.9
)


(177.2
)


6.9



(27.7
)


(45.0
)


(280.9
)


















(280.9
)Interest income


94.4



107.4



5.6



256.2



30.1



493.7



71.2







42.1







607.0Dividends


23.0



23.8



2.1



31.1



1.1



81.1



10.0







(15.1
)






76.0Earnings (losses) on investments, at equity


0.6



(32.2
)


(4.9
)


(13.2
)


1.4



(48.3
)


(4.2
)






3.1







(49.4
)Investment expenses


(10.1
)


(12.8
)


(1.2
)


(23.8
)


(2.5
)


(50.4
)


(8.8
)






(1.3
)


53.3



(7.2
)Interest and dividends


107.9



86.2



1.6



250.3



30.1



476.1



68.2







28.8



53.3



626.4OtherRevenue


























17.4



99.4



53.3



(53.3
)


116.8Expenses


























(192.8
)


(98.0
)










(290.8
)























(175.4
)


1.4



53.3



(53.3
)


(174.0
)Operating income (loss) before:


70.0



(91.0
)


8.5



222.6



(14.9
)


195.2



(107.2
)


1.4



82.1







171.5Net gains (losses) on investments


25.7



605.7



3.0



740.1



28.1



1,402.6



499.8







689.1



(20.8
)


2,570.7Interest expense






(28.3
)






(34.2
)


(2.6
)


(65.1
)






(0.4
)


(93.1
)






(158.6
)Corporate overhead and other


(14.5
)


(8.8
)


(5.5
)


(13.9
)


(1.9
)


(44.6
)










(94.7
)






(139.3
)Pre-tax income (loss)


81.2



477.6



6.0



914.6



8.7



1,488.1



392.6



1.0



583.4



(20.8
)


2,444.3Income taxes










































(755.6
)Non-controlling interests










































(214.9
)Net earnings










































1,473.8   2007
  Insurance


Reinsurance














EliminationsCrum &


Fairfax








Ongoing








Corporate


andNorthbridge


Forster


Asia


OdysseyRe


Other


operations


Runoff


Other


and other


adjustments


ConsolidatedNet premiums earned


1,017.1



1,187.4



68.7



2,120.5



258.4



4,652.1



















4,652.1Underwriting expenses


(981.1
)


(1,110.4
)


(48.4
)


(2,025.8
)


(247.5
)


(4,413.2
)


















(4,413.2
)Underwriting profit


36.0



77.0



20.3



94.7



10.9



238.9



















238.9Interest income


105.1



116.8



9.7



298.4



32.8



562.8



89.8







27.4







680.0Dividends


19.1



20.9



1.2



21.6



0.5



63.3



11.3







7.1







81.7Earnings (losses) on investments, at equity


3.9



3.7



7.3



10.5



(3.4
)


22.0



(1.1
)






(13.2
)






7.7Investment expenses


(8.9
)


(8.0
)


(0.8
)


(21.2
)


(4.8
)


(43.7
)


(8.4
)






(2.0
)


45.7



(8.4
)Interest and dividends


119.2



133.4



17.4



309.3



25.1



604.4



91.6







19.3



45.7



761.0OtherRevenue


























(3.3
)


434.5



45.7



(45.7
)


431.2Expenses


























(177.5
)


(401.5
)










(579.0
)























(180.8
)


33.0



45.7



(45.7
)


(147.8
)Operating income (loss) before:


155.2



210.4



37.7



404.0



36.0



843.3



(89.2
)


33.0



65.0







852.1Net gains (losses) on investments


230.2



250.3







553.4



8.9



1,042.8



276.8



(7.6
)


371.2



(17.3
)


1,665.9Interest expense






(51.0
)






(37.7
)






(88.7
)






(15.7
)


(105.1
)






(209.5
)Corporate overhead and other


(12.4
)


(9.6
)


(3.5
)


(12.6
)






(38.1
)










(110.0
)






(148.1
)Pre-tax income (loss)


373.0



400.1



34.2



907.1



44.9



1,759.3



187.6



9.7



221.1



(17.3
)


2,160.4Income taxes










































(711.1
)Non-controlling interests










































(353.5
)Net earnings










































1,095.8     2009


2008


2007Revenues for reporting segmentsNet premiums earned


4,422.0



4,511.7



4,652.1Interest and dividends


712.7



626.4



761.0Other revenue per reportable segment


556.4



116.8



431.2Net gains on investments


944.5



2,570.7



1,665.9Total consolidated revenues


6,635.6



7,825.6



7,510.2




---



##### 



Reporting
    Segment
    Depreciation ofpremises &Earnings (losses)


equipment &


Impairment offrom investments,


amortization of


available for saleat equity


intangible assets


securities2009


2008


2007


2009


2008


2007


2009


2008


2007Insurance

 Canada (Northbridge)


0.1



0.6



3.9



8.8



3.5



6.8



54.1



279.0



19.5 U.S. (Crum & Forster)


4.7



(32.2
)


3.7



4.3



3.8



1.3



106.1



198.0



26.5 Asia (Fairfax Asia)


(4.6
)


(4.9
)


7.3



0.5



0.7



0.5



1.1



1.9



Reinsurance

 OdysseyRe


6.5



(13.2
)


10.5



4.6



6.6



9.5



119.1



370.1



59.7 Other


0.4



1.4



(3.4
)


0.1











19.0



8.9



Ongoing operations


7.1



(48.3
)


22.0



18.3



14.6



18.1



299.4



857.9



105.7Runoff








(4.2
)


(1.1
)


1.2



1.7



2.1



29.8



76.5



3.3Other
















8.5



0.7



4.3











Corporate and other


16.2



3.1



(13.2
)


7.8



5.4



2.5



10.8



77.4



Consolidated




23.3



(49.4
)


7.7



35.8



22.4



27.0



340.0



1,011.8



109.0       Additions








Investments,to goodwill


Segment assets


at equity2009


2008


2009


2008


2009


2008Insurance

 Canada (Northbridge)


80.6







5,235.2



4,383.2



5.8



2.5 U.S. (Crum & Forster)










5,039.7



5,363.9



53.4



17.4 Asia (Fairfax Asia)










807.6



641.8



93.5



75.4Reinsurance

 OdysseyRe


72.9



3.8



10,831.2



9,961.1



115.8



36.7 Other


13.8







2,004.0



1,538.4



5.2



Ongoing operations


167.3



3.8



23,917.7



21,888.4



273.7



132.0Runoff












4,913.7



5,483.6



39.4



Other








16.7



205.1



227.8







Corporate and other and eliminations and adjustments










(633.7
)


(294.4
)


162.3



87.3Consolidated


167.3



20.5



28,402.8



27,305.4



475.4



219.3   Product
    Line
    Property


Casualty


Automobile


General liability2009


2008


2007


2009


2008


2007


2009


2008


2007


2009


2008


2007Net premiums earnedInsurance

 Canada (Northbridge)


249.6



256.1



227.6















439.6



498.3



477.6



197.0



234.6



238.7 U.S. (Crum & Forster)


115.9



242.8



342.9



130.2



117.7



103.9



126.3



187.2



210.7



184.8



196.5



227.8 Asia (Fairfax Asia)


9.5



10.7



10.7



11.3



11.0



9.0



26.7



9.4



6.4



11.8



6.4



5.9Reinsurance

 OdysseyRe


375.4



368.1



359.9







0.4



(0.1
)


182.5



186.0



211.3



413.3



583.0



591.0 Other


133.3



35.8



26.5



3.7



0.8







130.3



73.8



81.3



70.9



78.9



103.9Ongoing operations


883.7



913.5



967.6



145.2



129.9



112.8



905.4



954.7



987.3



877.8



1,099.4



1,167.3Runoff




(0.1
)


(0.8
)


(0.2
)


(0.4
)


(0.5
)


0.3



(1.2
)


0.2



0.5



0.1



4.8



(0.1
)Total net premiums earned


883.6



912.7



967.4



144.8



129.4



113.1



904.2



954.9



987.8



877.9



1,104.2



1,167.2




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
    Workers


Marine and


Insurance


Reinsurancecompensation


aerospace


Other


non-proportional


Total2009


2008


2007


2009


2008


2007


2009


2008


2007


2009


2008


2007


2009


2008


2007Net premiums earnedInsurance

 Canada (Northbridge)














74.2



77.9



64.4



8.9



9.1



8.7



(0.1
)


0.1



0.1



969.2



1,076.1



1,017.1 U.S. (Crum & Forster)


188.3



219.8



261.0



17.2



20.0



21.7



18.6



21.0



19.4















781.3



1,005.0



1,187.4 Asia (Fairfax Asia)


12.6



18.0



18.6



37.2



23.8



13.9



6.9



5.3



4.2















116.0



84.6



68.7Reinsurance

 OdysseyRe


0.5



3.7



18.1



105.6



113.9



124.7



65.8



69.8



74.2



784.3



751.5



741.4



1,927.4



2,076.4



2,120.5 Other


0.1



(1.7
)


3.8



35.7



8.8



2.0



14.9



8.3



10.1



239.2



64.9



30.8



628.1



269.6



258.4Ongoing operations


201.5



239.8



301.5



269.9



244.4



226.7



115.1



113.5



116.6



1,023.4



816.5



772.3



4,422.0



4,511.7



4,652.1Runoff




1.5



12.4



(4.1
)






0.8











0.4



0.3



0.1



0.1











17.4



(3.3
)Total net premiums earned


203.0



252.2



297.4



269.9



245.2



226.7



115.1



113.9



116.9



1,023.5



816.6



772.3



4,422.0



4,529.1



4,648.8Interest and dividends


















































712.7



626.4



761.0Net gains on investments


















































944.5



2,570.7



1,665.9Other




















































556.4



99.4



434.5Total consolidated revenues


















































6,635.6



7,825.6



7,510.2   Geographic
    Region
    Canada


United States


International


Total2009


2008


2007


2009


2008


2007


2009


2008


2007


2009


2008


2007Net premiums earnedInsurance

 Canada (Northbridge)


910.9



1,024.5



974.5



58.3



51.3



40.7







0.3



1.9



969.2



1,076.1



1,017.1 U.S. (Crum & Forster)














781.3



1,005.0



1,187.4















781.3



1,005.0



1,187.4 Asia (Fairfax Asia)


























116.0



84.6



68.7



116.0



84.6



68.7Reinsurance

 OdysseyRe


38.6



41.2



42.7



1,094.4



1,154.1



1,227.9



794.4



881.1



849.9



1,927.4



2,076.4



2,120.5 Other


178.7



161.5



204.1



241.8



88.3



49.3



207.6



19.8



5.0



628.1



269.6



258.4Ongoing operations


1,128.2



1,227.2



1,221.3



2,175.8



2,298.7



2,505.3



1,118.0



985.8



925.5



4,422.0



4,511.7



4,652.1Runoff




0.2



(0.2
)






(0.2
)


17.6



(3.3
)


















17.4



(3.3
)1,128.4



1,227.0



1,221.3



2,175.6



2,316.3



2,502.0



1,118.0



985.8



925.5



4,422.0



4,529.1



4,648.8Interest and dividends






































712.7



626.4



761.0Net gains on investments






































944.5



2,570.7



1,665.9Other








































556.4



99.4



434.5Total consolidated revenues






































6,635.6



7,825.6



7,510.2Allocation of revenue


25.5
%


27.1
%


26.3
%


49.2
%


51.1
%


53.8
%


25.3
%


21.8
%


19.9
%




---



##### 



21.
    US
    GAAP Reconciliation    Consolidated
    Statements of Net Earnings and Comprehensive Income
    2009


2008


2007Net earnings, Canadian GAAP


856.8



1,473.8



1,095.8Non-controlling
    interests(a)


133.9



214.9



353.5Recoveries on retroactive
    reinsurance(b)


14.9



30.8



16.0Equity
    accounting(c)


3.6



(7.2
)


Repurchase of subsidiary
    securities(d)


(16.9
)






Northbridge step
    acquisitions(e)


(1.9
)






OdysseyRe step
    acquisition(f)


17.0







Other
    differences(g)






8.8



(11.1
)Tax
    effects(h)


(11.0
)


(9.6
)


(2.5
)Net earnings, US GAAP


996.4



1,711.5



1,451.7Net earnings attributable to non-controlling interests, US GAAP


(136.1
)


(216.2
)


(353.0
)Net earnings attributable to parent company, US GAAP


860.3



1,495.3



1,098.7Earnings per share, US GAAP

$
44.18


$
81.57


$
61.37Earnings per diluted share, US GAAP

$
43.95


$
80.71


$
58.54Other comprehensive income (loss), Canadian GAAP


968.1



(468.3
)


298.8Non-controlling
    interests(a)


106.2



(77.1
)


66.1Equity
    accounting(c)


(3.7
)






Northbridge step
    acquisitions(e)


(7.1
)






OdysseyRe step
    acquisition(f)


(18.3
)






Pension liability
    adjustment(i)


(8.3
)


32.1



28.9Other differences










2.4Tax effects


(3.8
)


(6.8
)


(6.3
)Other comprehensive income (loss), US GAAP


1,033.1



(520.1
)


389.9Other comprehensive (income) loss attributable to
    non-controlling interests, US GAAP


(104.5
)


77.1



(66.1
)Other comprehensive income (loss) attributable to parent
    company, US GAAP


928.6



(443.0
)


323.8Net earnings, US GAAP


996.4



1,711.5



1,451.7Other comprehensive income (loss), US GAAP


1,033.1



(520.1
)


389.9Comprehensive income, US GAAP


2,029.5



1,191.4



1,841.6Comprehensive (income) loss attributable to non-controlling
    interests, US GAAP


(240.6
)


(139.1
)


(419.1
)Comprehensive income attributable to parent company, US GAAP


1,788.9



1,052.3



1,422.5




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
      (a)
    Under Canadian GAAP, consolidated net earnings and consolidated
    other comprehensive income do not include the portions
    attributable to the non-controlling interests. Under US GAAP,
    consolidated net earnings and consolidated other comprehensive
    income include the portions attributable to both the parent and
    non-controlling interests. Separate disclosure of the portions
    attributable to the parent and to the non-controlling interests
    is required.  810-10, 810-10)). 810-10 810-10
  (b)
    Under Canadian GAAP, recoveries on certain stop loss reinsurance
    treaties are recorded at the same time as the claims incurred
    are ceded. Under US GAAP, these recoveries, which are considered
    to be retroactive reinsurance, are recorded up to the amount of
    the premium paid with the excess of the ceded liabilities over
    the premium paid recorded as a deferred gain. The deferred gain
    is amortized to income over the estimated settlement period over
    which the company expects to receive the recoveries and is
    recorded in accounts payable and accrued liabilities.      (c)
    Under Canadian GAAP, certain of the companys investments
    in partnership trusts that do not have a quoted price in an
    active market are accounted for on the cost basis. Canadian GAAP
    requires the use of the equity method of accounting when the
    company is deemed to exert significant influence over the
    investee, whereas US GAAP requires the use of the equity method
    to account for such investments when the equity interest is more
    than minor. As a result of these differing requirements, a
    pre-tax income of $3.6 was recognized in 2009 (2008 
    pre-tax loss of $7.2) under US GAAP for companys
    investments in certain partnership trusts, whereas under
    Canadian GAAP, these investments were recorded at cost.(d)
    Under Canadian GAAP, the repurchase by OdysseyRe of its common
    shares during 2009 as described in note 18 was accounted
    for as a step acquisition. Under US GAAP, pursuant to the
    adoption by the company on January 1, 2009 of FASB ASC
    810-10,
    changes in ownership interests of a subsidiary that do not
    result in a loss or acquisition of control are accounted for as
    equity transactions. Under Canadian GAAP, the excess of the fair
    value of net assets acquired over the cost of the acquisition is
    recognized in consolidated net earnings. As a result, the gain
    of $16.9 recognized in connection with the repurchase of common
    shares by OdysseyRe under Canadian GAAP was charged to
    cumulative reduction in retained earnings under US GAAP.




---



##### 



(e)
    Under Canadian GAAP, the privatization of Northbridge was
    accounted for as two separate step acquisitions of the
    outstanding common shares of Northbridge. Under US GAAP,
    pursuant to the adoption by the company on January 1, 2009
    of FASB ASC
    810-10,
    changes in ownership interests of a subsidiary that do not
    result in a loss or acquisition of control are accounted for as
    equity transactions. Under Canadian GAAP, the step acquisition
    accounting for the privatization of Northbridge recognized fair
    value adjustments to the assets and liabilities acquired
    (note 18) which are generally released or amortized
    into comprehensive income in the future. These fair value
    adjustments to assets and liabilities are not recognized under
    US GAAP. Fair value adjustments of $1.9 and $7.1 which increased
    pre-tax net earnings and other comprehensive income under
    Canadian GAAP for the year ended December 31, 2009 are not
    recognized in comprehensive income under US GAAP.(f)
    Under Canadian GAAP, the privatization of OdysseyRe was
    accounted for as a step acquisition of the outstanding common
    shares of OdysseyRe. Under US GAAP, pursuant to the adoption by
    the company on January 1, 2009 of FASB ASC
    810-10,
    changes in ownership interests of a subsidiary that do not
    result in a loss or acquisition of control are accounted for as
    equity transactions. Under Canadian GAAP, the step acquisition
    for the privatization of OdysseyRe recognized fair value
    adjustments to the assets and liabilities acquired
    (note 18) which are generally released or amortized
    into comprehensive income in the future. These fair value
    adjustments to assets and liabilities are not recognized under
    US GAAP. Fair value adjustments of $17.0 which decreased pre-tax
    net earnings and $18.3 which increased pre-tax other
    comprehensive income under Canadian GAAP for the year ended
    December 31, 2009 are not recognized in comprehensive
    income under US GAAP.(g)
    Included in other differences for the year ended
    December 31, 2008 is income of $5.2 related to the release
    of a reserve for an uncertain tax provision established on
    January 1, 2007 which was resolved at December 31,
    2008.    (h)
    Differences between consolidated net earnings under Canadian
    GAAP and consolidated net earnings under US GAAP are shown net
    of the following provision for income taxes for the years ended
    December 31:  2009


2008


2007Recoveries on retroactive
    reinsurance(b)


(5.2
)


(10.7
)


(5.6
)Northbridge step acquisitions


0.2







OdysseyRe step acquisitions


(5.9
)






Equity
    accounting(c)


(0.1
)


1.1



Other
    differences(f)










3.1(11.0
)


(9.6
)


(2.5
)
   (i)
    Effective December 31, 2006, US GAAP required the
    recognition of a net liability or asset to report the funded
    status of a companys defined benefit pension and other
    post retirement benefit plans on its balance sheet with an
    offsetting adjustment to accumulated other comprehensive income
    in shareholders equity. This adjustment records the change
    in pension balances for the years ended December 31, 2009,
    2008 and 2007.




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
     Consolidated
    Balance Sheets
    December 31, 2009


December 31, 2008Canadian








CanadianGAAP


Differences


US GAAP


GAAP


Differences


US GAAPAssetsHolding company cash, short term investments and marketable
    securities(i)


1,251.6



(1.7
)


1,249.9



1,564.2







1,564.2Portfolio investments:Common
    stocks(i)


4,853.1



(144.9
)


4,708.2



3,816.9



(257.8
)


3,559.1Investments, at
    equity(i)


475.4



124.8



600.2



219.3



251.9



471.2All other portfolio investments


14,750.1







14,750.1



14,378.8







14,378.8Future income
    taxes(ii)


318.7



89.3



408.0



699.4



56.1



755.5Goodwill and intangible
    assets(iii)(vi)(vii)


438.8



(265.4
)


173.4



123.2



29.6



152.8All other assets


6,315.1







6,315.1



6,503.6







6,503.628,402.8



(197.9
)


28,204.9



27,305.4



79.8



27,385.2LiabilitiesAccounts payable and accrued
    liabilities(iv)


1,202.2



130.8



1,333.0



1,326.5



152.0



1,478.5All other liabilities


19,299.6







19,299.6



19,457.5







19,457.520,501.8



130.8



20,632.6



20,784.0



152.0



20,936.0Mandatorily redeemable shares of TRG


164.4







164.4



169.8







169.8Non-controlling
    interests(v)


117.6



(117.6
)






1,382.8



(1,382.8
)


282.0



(117.6
)


164.4



1,552.6



(1,382.8
)


169.8Equity


7,619.0



(211.1
)


7,407.9



4,968.8



1,310.6



6,279.428,402.8



(197.9
)


28,204.9



27,305.4



79.8



27,385.2     December 31, 2009


December 31, 2008Non -








Non -Parent


controlling





Parent


controllingTotal


company


interests


Total


company


interestsShareholders equity based on Canadian GAAP


7,619.0



7,619.0







4,968.8



4,968.8



Non-controlling
    interests(v)


117.6







117.6



1,382.8







1,382.8Accumulated other comprehensive loss


(60.6
)


(58.9
)


(1.7
)


(19.4
)


(19.4
)


Cumulative reduction in retained earnings under US GAAP


(268.1
)


(268.1
)






(52.8
)


(50.6
)


(2.2
)Equity based on US GAAP


7,407.9



7,292.0



115.9



6,279.4



4,898.8



1,380.6




---



##### 



December 31, 2009


December 31, 2008Non -








Non -Parent


controlling





Parent


controllingTotal


company


interests


Total


company


interestsPension liability adjustment


(37.6
)


(35.1
)


(2.5
)


(29.3
)


(29.3
)


Northbridge step
    acquisitions(iii)


(7.1
)


(7.1
)














OdysseyRe step
    acquisition(vi)


(18.3
)


(18.3
)














Equity accounting


(3.7
)


(3.7
)














Related deferred income taxes


6.1



5.3



0.8



9.9



9.9



(60.6
)


(58.9
)


(1.7
)


(19.4
)


(19.4
)


    December 31, 2009


December 31, 2008Non -








Non -Parent


controlling





Parent


controllingTotal


company


interests


Total


company


interestsNet actuarial loss


(44.7
)


(41.6
)


(3.1
)


(34.3
)


(34.3
)


Prior service costs


3.5



2.9



0.6



3.7



3.7



Transitional amounts


3.6



3.6







1.3



1.3



Total


(37.6
)


(35.1
)


(2.5
)


(29.3
)


(29.3
)


     December 31, 2009


December 31, 2008Non -








Non -Parent


controlling





Parent


controllingTotal


company


interests


Total


company


interestsNorthbridge step
    acquisitions(iii)


(150.4
)


(150.4
)














OdysseyRe step
    acquisition(vi)


(78.1
)


(78.1
)














Recoveries on retroactive reinsurance


(69.2
)


(69.2
)






(78.9
)


(78.9
)


Equity accounting


(2.6
)


(2.6
)






(6.1
)


(3.9
)


(2.2
)Purchase price allocation on the acquisition of TIG Re (now part
    of OdysseyRe) in
    1999(vii)


32.2



32.2







32.2



32.2



(268.1
)


(268.1
)






(52.8
)


(50.6
)


(2.2
)   (i)
    Under Canadian GAAP, the companys investment of $54.5
    (2008  $177.1) in partnership trusts that do not have
    a quoted price in an active market are accounted for on the cost
    basis, whereas US GAAP requires use of the equity method to
    account for such investments.  Under Canadian GAAP, the companys investment of $92.1
    (2008  $80.7) in limited partnerships whose fair
    value can be reliably measured are recorded in the consolidated
    balance sheet as common stocks designated as held for trading,
    whereas US GAAP requires use of the equity method to account for
    such investments.  (ii)
    The difference is comprised principally of deferred tax
    adjustments related to: the unamortized deferred gain on
    retroactive reinsurance contracts of $37.2 (2008 
    $42.4); the Northbridge step acquisitions of $29.3
    (2008  nil) ; the OdysseyRe step acquisitions of
    $13.3 (2008  nil); and the pension liability
    adjustment of $5.9 (2008  $9.9).(iii)
    Under Canadian GAAP, the privatization of Northbridge was
    accounted for as two separate step acquisitions of the
    outstanding common shares of Northbridge. Under US GAAP,
    pursuant to the adoption by the company on January 1, 2009
    of FASB ASC
    810-10,
    changes in ownership interests of a subsidiary that do not
    result in a loss or acquisition of control are accounted for as
    equity transactions. Under Canadian GAAP, the step acquisition
    accounting for the privatization of Northbridge recognized fair
    value adjustments to the assets and liabilities acquired and
    goodwill (note 18). These fair value adjustments to assets
    and liabilities




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
    and goodwill are not recognized under US GAAP. As a result, an
    amount of $147.9 was charged to the cumulative reduction in
    retained earnings under US GAAP representing the excess of the
    cost of the acquisition of $546.4 over the carrying value of the
    non-controlling interest of $398.5.  (iv)
    The difference is comprised of the unamortized deferred gain on
    retroactive reinsurance contracts of $106.4 (2008 
    $121.3) and the pension liability adjustment of $24.4
    (2008  $30.7).(v)
    Under Canadian GAAP, non-controlling interests are presented
    between liabilities and shareholders equity on the
    consolidated balance sheet. Under US GAAP, pursuant to the
    adoption by the company on January 1, 2009 of FASB ASC
    810-10,
    non-controlling interests are presented within equity, but
    separately from the parents equity.(vi)
    Under Canadian GAAP, the privatization of OdysseyRe was
    accounted for as a step acquisition of the outstanding common
    shares of OdysseyRe. Under US GAAP, pursuant to the adoption by
    the company on January 1, 2009 of FASB ASC
    810-10,
    changes in ownership interests of a subsidiary that do not
    result in a loss or acquisition of control are accounted for as
    equity transactions. Under Canadian GAAP, the step acquisition
    accounting for the privatization of OdysseyRe recognized fair
    value adjustments to the assets and liabilities acquired and
    goodwill (note 18). These fair value adjustments to assets
    and liabilities and goodwill are not recognized under US GAAP.
    As a result, an amount of $89.2 was charged to the cumulative
    reduction in retained earnings under US GAAP representing the
    excess of the cost of the acquisition of $1,017.0 and
    liabilities assumed related to the amendment of OdysseyRes
    employee compensation plans of $22.4 over the carrying value of
    the non-controlling interest of $950.2.(vii)
    Under Canadian GAAP, foreign exchange losses realized on foreign
    exchange contracts that hedged the acquisition funding for TIG
    Re in 1999 (now part of OdysseyRe) were included in the purchase
    price equation and recorded as goodwill. Under U.S. GAAP these
    foreign exchange contracts were not considered a hedge and as a
    result, the goodwill recognized under Canadian GAAP has been
    reclassified as a cumulative reduction in retained earnings
    under US GAAP.  Statements
    of Cash Flows
    Year Ended December 31, 2009CanadianGAAP


Differences


US GAAPOperating activitiesCash provided by (used in) operating activities


(719.2
)






(719.2
)Investing activitiesPurchases of subsidiaries, net of cash
    acquired(i)


(1,643.6
)


1,618.5



(25.1
)All other investing activities


909.2







909.2Cash provided by (used in) investing activities


(734.4
)


1,618.5



884.1Financing activitiesPurchases of subsidiaries, net of cash
    acquired(i)






(1,618.5
)


(1,618.5
)All other financing activities


993.0







993.0Cash provided by (used in) financing activities


993.0



(1,618.5
)


(625.5
)Foreign currency translation


91.8







91.8Increase (decrease) in cash and equivalents


(368.8
)






(368.8
)Cash and cash equivalents  beginning of period


2,525.7







2,525.7Cash and cash equivalents  end of period


2,156.9







2,156.9   (i)
    Under Canadian GAAP, the privatizations of Northbridge,
    OdysseyRe and Advent were accounted for as investing activities.
    Under US GAAP, pursuant to the adoption by the company on
    January 1, 2009 of FASB




---



##### 



ASC 810-10,
    changes in ownership interests of a subsidiary that do not
    result in a loss or acquisition of control are accounted for as
    equity transactions and presented in the statement of cash flows
    as a financing activity. There were no significant differences
    between the consolidated statements of cash flows prepared under
    Canadian GAAP compared to US GAAP for the years ended
    December 31, 2008 and 2007.  Other
    accounting pronouncements adopted in 2009
  715-20, 715-20)). 715-20 820-10). 715-20
  No. 2009-05, 2009-05). 2009-05 2009-05
  No. 2009-04, 2009-04). 2009-04 2009-04
  105-10, 105-10)). 105-10 105-10
  855-10, 855-10)),
    (i)
    FSP
    FAS 115-2
    and
    FAS 124-2,
    Recognition and Presentation of Other Than Temporary Impairments
    (now known as FASB ASC
    320-10,
    Investments  Debt and Equity Securities (FASB
    ASC
    320-10))
    amends the other than temporary impairment guidance in US GAAP
    for debt securities to make the guidance more




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
    operational and to improve the presentation and disclosure of
    other than temporary impairments on debt and equity securities
    in the financial statements. The recognition provision within
    FASB ASC
    320-10
    applies only to debt securities that are other than temporarily
    impaired. If the company intends to sell or it is more likely
    than not that it will be required to sell a security in an
    unrealized loss position prior to recovery of its cost basis,
    the security is other than temporarily impaired and the full
    amount of the impairment is recognized as a loss through
    earnings. If the company asserts that it does not intend to sell
    and it is more likely than not that it will not be required to
    sell an other than temporarily impaired security before recovery
    of its cost basis, the impairment must be separated into credit
    and non-credit components with the credit portion of the other
    than temporary impairment recognized as a loss through earnings
    and the non-credit portion recognized in other comprehensive
    income.  320-10 320-10 320-10
  (ii)
    FSP
    FAS 157-4,
    Determining Fair Value When the Volume and Level of Activity for
    the Asset or Liability Have Significantly Decreased and
    Identifying Transactions That Are Not Orderly (now known as FASB
    ASC 820-10,
    Fair Value Measurements and Disclosures (FASB ASC
    820-10))
    provides additional guidance on estimating the fair value of an
    asset or liability when the volume and level of activity for the
    asset or liability have significantly decreased and on
    identifying transactions that are not orderly. FASB ASC
    820-10 is
    effective for interim and annual reporting periods ending after
    June 15, 2009. The adoption of FASB ASC
    820-10
    effective April 1, 2009 did not have any significant impact
    on the companys consolidated financial position, results
    of operations and disclosures under US GAAP.(iii)
    FSP
    FAS 107-1
    and Accounting Principles Board (APB)
    28-1,
    Interim Disclosures about Fair Value Measurement, which amends
    FASB Statement No. 107, Disclosures about Fair Value of
    Financial Instruments, and APB Opinion No. 28, Interim
    Financial Reporting, (now known as FASB ASC
    825-10,
    Financial Instruments (FASB ASC
    825-10))
    requires disclosures about the fair value of financial
    instruments for interim reporting periods. FASB ASC
    825-10 also
    requires companies to disclose the methods and significant
    assumptions used to estimate the fair value of financial
    instruments in financial statements on an interim basis and to
    describe any changes during the period. FASB ASC
    825-10 is
    effective for interim and annual reporting periods ending after
    June 15, 2009. The adoption of FASB ASC
    825-10
    effective April 1, 2009 did not have any significant impact
    on the companys consolidated financial position, results
    of operations and disclosures under US GAAP. The fair value of
    the companys long term debt and other long term
    obligations is disclosed in note 9.  805-10, 805-10)), 805-10 805-10
  805-10, 805-10) 805-20,




---



##### 



805-20)), 805-10 805-20
  815-10, ASC 815-10)) ASC 815-10 ASC 815-10 ASC 815-10 ASC 815-10 FASB ASC 815-10
  14-1, 470-20, 470-20), 815-15, 815-15) 825-10, 825-10)),
  Recent
    accounting pronouncements
  810-10, 810-10)), 810-10 810-10




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
     22.
    Changes
    in Operating Assets and Liabilities    2009


2008


2007Provision for claims


(661.3
)


24.8



(952.9
)Unearned premiums


(135.4
)


(200.0
)


(172.4
)Accounts receivable and other


50.0



292.1



19.9Recoverable from reinsurers


514.7



582.5



665.2Funds withheld payable to reinsurers


(0.2
)


(25.6
)


(28.3
)Accounts payable and accrued liabilities


12.5



(146.0
)


67.1Income taxes payable


(579.4
)


614.0



67.8Other


34.3



50.9



(19.8
)Change in operating assets and liabilities


(764.8
)


1,192.7



(353.4
)