FAIRFAX FINANCIAL HOLDINGS
    LIMITED


Corporate
    Profile  Fairfax Financial Holdings Limited
  Canadian
    insurance
  Northbridge Financial
  U.S.
    insurance
  Crum & Forster (C&F)
  Asian
    insurance
  First Capital
  Falcon Insurance
  Reinsurance
  OdysseyRe
  Advent
  Polish Re
  Group Re




---



##### 



Runoff
    The Resolution Group (TRG) the RiverStone Group
  Other
  Hamblin Watsa Investment Counsel
  Notes:
  (1)
    
    All companies are wholly owned.
    Northbridge Financial became wholly owned in February 2009,
    Advent in September 2009 and OdysseyRe in October
    2009.(2)
    
    The foregoing lists all of
    Fairfaxs operating subsidiaries. The Fairfax corporate
    structure also includes a 26% interest in ICICI Lombard (an
    Indian property and casualty insurance company), a 40.5%
    interest in Falcon Thailand, a 22.7% interest in PTU S.A. (a
    Polish property and casualty insurance company), a 20.0%
    interest in Singapore Re, an approximate 20% interest in Arab
    Orient Insurance (a Jordanian company), an approximate 20%
    interest in Alliance Insurance (a Dubai, U. A. E. company), and
    investments in International Coal Group (27.7%), The Brick
    (12.8%), Cunningham Lindsey (43.6%) and Ridley (71.0%). The
    other companies in the Fairfax corporate structure, principally
    investment or intermediate holding companies (including
    companies located in various jurisdictions outside North
    America), are not part of these operating groups; these other
    companies had no insurance, reinsurance, runoff or other
    operations.




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
    To Our
    Shareholders:  1
  per
    share
  (1999-2005),
    10-year
     Return onNet


AverageCombined


Earnings


ShareholdersRatio


after Tax


EquityNorthbridge


105.9%



91.8



7.0%Crum & Forster


104.1%



212.7



17.7%OdysseyRe


96.7%



486.9



15.1%Fairfax Asia


82.6%



38.3



13.3%       1 Amounts

    in this letter are in U.S. dollars unless specified otherwise.
    Numbers in the tables in this letter are in U.S. dollars and
    $millions except as otherwise indicated.




---



##### 



2001  2009Annual CompoundGrowth RateNorthbridge


18.6%Crum & Forster


19.0%OdysseyRe


22.7%Fairfax Asia


24.8%
*   *
    
    2002  2009 as Fairfax Asia began in 2002 with the
    purchase of First Capital.      Interest anddividendincome


Per share1985


3.4


$
0.701990


17.7



2.352000


534.0



40.542009


712.7



38.94       Realized andunrealizedgains (losses)


Per share1985


0.5


$
0.101990


(26.5
)


(3.52
)2000


843.2



64.012009


2,021.2



110.44




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
     Earnings (loss) per share


Book value/shareFirst quarter

$
(3.55
)

$
255


($278 as of December 31, 2008)Second quarter


15.56



316Third quarter


30.88



372Fourth quarter


1.65



370         As of December 31, 2009Shares owned


Cost per


Amount


Market(millions)


share


invested


valueWells Fargo


20.0


$
19.36



388



540Johnson & Johnson


7.6



61.00



463



488US Bancorp


15.9



16.27



258



356Kraft Foods


10.7



26.55



285



291           sub-branches




---



##### 



The
    Insurance Cycle
    Insurance
    and Reinsurance Operations
  Net PremiumsCombined Ratio


WrittenYear Ended December 31,


% Change in2009


2008


2007


2009Northbridge


105.9
%


103.5
%


96.5
%


(15.5
)%Crum & Forster


104.1
%


117.6
%


93.5
%


(18.4
)%Fairfax Asia


82.6
%


91.8
%


70.4
%


47.9
%OdysseyRe


96.7
%


101.3
%


95.5
%


(6.7
)%Other reinsurance


98.1
%


116.6
%


95.8
%


174.1
%Consolidated


99.8
%


106.2
%


94.9
%


(1.1
)%




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
   but not small-to-medium
  NetPremiumsWritten/Net Premiums


Statutory


StatutoryWritten


Surplus


SurplusNorthbridge


928.7



1,411.3



0.7Crum & Forster


716.4



1,628.2



0.4OdysseyRe


1,893.8



3,512.8



0.5Fairfax Asia


127.9



327.8
(1)


0.4   (1)
    
    Canadian GAAP shareholders equity    Average LongBenefit


Term CanadaUnderwriting


Average


(Cost)


Treasury BondYear

Profit (Loss)


Float


of Float


Yield1986


2.5



21.6



11.6
%


9.6
%(Up and Down Arrow)2005


(437.5
)


7,323.9



(6.0
)%


4.4
%2006


212.6



8,212.9



2.6
%


4.3
%2007


238.9



8,617.7



2.8
%


4.3
%2008


(280.9
)


8,917.8



(3.1
)%


4.1
%2009


7.3



9,449.1



0.1
%


3.9
%Weighted average since inception










(2.3
)%


5.0
%      TotalInsuranceCanadian


U.S.


Asian





andInsurance


Insurance


Insurance


Reinsurance


Reinsurance


Runoff


Total2005


1,461.8



1,884.9



120.2



4,501.1



7,968.0



788.6



8,756.62006


1,586.0



1,853.8



85.4



4,932.6



8,457.8



2,061.0



10,518.82007


1,887.4



1,812.8



86.9



4,990.4



8,777.5



1,770.5



10,548.02008


1,739.1



2,125.1



68.9



5,125.0



9,058.1



1,783.8



10,841.92009


2,052.8



2,088.9



125.7



5,572.7



9,840.1



1,733.2



11,573.3




---



##### 



2009


2008UnderwritingInsurance      Canada
    (Northbridge)


(57.1
)


(37.9
) U.S.
    (Crum & Forster)


(32.0
)


(177.2
) Asia
    (Fairfax Asia)


20.2



6.9Reinsurance  OdysseyRe


64.3



(27.7
) Other


11.9



(45.0
)Underwriting income (loss)


7.3



(280.9
)Interest and dividends


557.0



476.1Operating income


564.3



195.2Net gains on investments


668.0



1,381.8Runoff


31.2



392.6Other


12.4



1.4Interest expense


(166.3
)


(158.6
)Corporate overhead and other


96.0



631.9Pre-tax income


1,205.6



2,444.3Income taxes


(214.9
)


(755.6
)Non-controlling interests


(133.9
)


(214.9
)Net earnings


856.8



1,473.8     Reserving




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
   Financial
    Position
  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


12.2%


6.1%Total debt/total capital


23.0%


23.7%Interest coverage


8.2x


16.4x   10-year
  Investments
    5 Years


10 Years


15 YearsCommon stocks (with equity hedging)


17.1
%


19.9
%


18.3
%S&P 500


0.4
%


(1.0
)%


8.0
%Bonds


11.8
%


12.1
%


10.6
%Merrill Lynch U.S. corporate (1-10 year) index


4.5
%


6.4
%


6.8
%




---



##### 



Excess of SaleProceeds OverOriginal





OriginalNotional


Acquisition


Sale


AcquisitionAmount


Cost


Proceeds


CostFY 2007


965.5



25.7



199.3



173.6FY 2008


11,629.8



245.8



2,048.7



1,802.9Q1 2009


2,902.6



45.5



223.0



177.5Q2 2009


140.3



1.4



8.6



7.2Q3 2009














Q4 2009














Cumulative sales since inception


15,638.2



318.4



2,479.6



2,161.2Remaining credit default swap positions at December 31, 2009


5,926.2



114.8



71.6
(1)


(43.2
)(2)Cumulative realized and unrealized from inception


21,564.4



433.2



2,551.2



2,118.0   (1)
    
    Market value as of December 31, 2009(2)
    
    Unrealized loss (measured using original acquisition cost) as
    of December 31, 2009      2008/2009Other than temporary impairments (OTTI)


1,351.8Mark-to-market losses


704.2Realized losses


306.0     but




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
     Cost at


As of December 31, 2009purchase


Market value


GainH&R REIT


190.8



366.7



175.9Canadian Western Bank


57.2



94.9



37.7Mullen Group


56.0



99.3



43.3GMP Capital


12.0



31.1



19.1           mark-to-market
    2009


2008Bonds


179.9



123.5Preferred stocks


0.4



(2.7
)Common stocks


888.4



(198.5
)Investments, at equity


170.8



356.01,239.5



278.3




---



##### 



2009United States


3,275.7Canada


766.0Other


1,047.25,088.9     Miscellaneous
    www.odysseyre.com




---



##### 



FAIRFAX FINANCIAL HOLDINGS
    LIMITED
             March 5, 2010
  
 V. Prem Watsa
 Chairman and Chief Executive
    Officer