# EDGAR Filing Document

**Accession Number:** 0000915191
**File Stem:** 0001104659-23-031240
**Filing Date:** 2023-3
**Character Count:** 874828
**Document Hash:** 75f17dbcc68957d6963c4af819d48ece
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001104659-23-031240.hdr.sgml**: 20230310

**ACCESSION NUMBER**: 0001104659-23-031240

**CONFORMED SUBMISSION TYPE**: 40-F

**PUBLIC DOCUMENT COUNT**: 200

**CONFORMED PERIOD OF REPORT**: 20221231

**FILED AS OF DATE**: 20230310

**DATE AS OF CHANGE**: 20230310

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** FAIRFAX FINANCIAL HOLDINGS LTD/ CAN
- **CENTRAL INDEX KEY:** 0000915191
- **STANDARD INDUSTRIAL CLASSIFICATION:** FIRE, MARINE & CASUALTY INSURANCE [6331]
- **IRS NUMBER:** 101728897
- **STATE OF INCORPORATION:** Z4
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 40-F
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-31556
- **FILM NUMBER:** 23724459

**BUSINESS ADDRESS:**
- **STREET 1:** FAIRFAX FINANCIAL HOLDINGS LTD
- **STREET 2:** 95 WELLINGTON ST WEST STE 800
- **CITY:** TORONTO
- **STATE:** A6
- **ZIP:** M5J 2N7
- **BUSINESS PHONE:** 4163674941

**MAIL ADDRESS:**
- **STREET 1:** FAIRFAX FINANCIAL HOLDINGS LTD
- **STREET 2:** 95 WELLINGTON ST WEST STE 800
- **CITY:** TORONTO
- **STATE:** A6
- **ZIP:** M5J 2N7

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** FAIRFAX FINANCIAL HOLDINGS LTD
- **DATE OF NAME CHANGE:** 19931122

?xml version='1.0' encoding='UTF-8'?

------

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**Form 40-F**

---

| | | |
|:---|:---|:---|
| [Check one] |  |  |
| ☐ | Registration statement pursuant to Section 12 of the Securities Exchange Act of 1934 | Registration statement pursuant to Section 12 of the Securities Exchange Act of 1934 |
| or | or | or |
| ☒ | Annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 | Annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 |
| For the fiscal year ended **December 31, 2022** | For the fiscal year ended **December 31, 2022** | Commission File Number: **1-31556** |

---

**FAIRFAX FINANCIAL HOLDINGS LIMITED**

(Exact name of Registrant as specified in its charter)

**Not applicable**

(Translation of Registrant's name into English (if applicable))

**Canada**

(Province or other jurisdiction of incorporation or organization)

**6331**

(Primary Standard Industrial Classification Code Number (if applicable))

**Not Applicable**

(I.R.S. Employer Identification Number (if applicable))

**95 Wellington Street West**

**Suite 800**

**Toronto, Ontario Canada**

**M5J 2N7**

**(416) 367-4941**

(Address and telephone number of Registrant's principal executive offices)

**CT Corporation System**

**111 Eighth Avenue, 13**<sup>th</sup> **Floor**

**New York, NY 10011**

**U.S.A.**

**(212) 894-8700**

(Name, address (including zip code) and telephone number (including area code)

of agent for service in the United States)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

---

| | | |
|:---|:---|:---|
| Title of each class | Trading<br>Symbol(s) | Name of each exchange on which registered |
| **None** | **N/A** | **N/A** |

---

Securities registered or to be registered pursuant to Section 12(g) of the Act.

**Subordinate Voting Shares**

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

**None**

(Title of Class)

For annual reports, indicate by check mark the information filed with this form:

☒ Annual information form ☒ Audited annual financial statements

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.

---

| | |
|:---|:---|
| **Subordinate Voting Shares** | **22,576,535** |
| **Multiple Voting Shares** | **1,548,000** |

---

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.

---

| | | | |
|:---|:---|:---|:---|
| Yes | ☒ | No | ☐ |

---

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

---

| | | | |
|:---|:---|:---|:---|
| Yes | ☒ | No | ☐ |

---

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 12b-2 of the Exchange Act. Emerging growth company ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

† The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

------

**PRINCIPAL DOCUMENTS**

The following documents have been filed by Fairfax Financial Holdings Limited (the "Registrant") as part of this Annual Report on Form 40-F:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Annual Information Form dated March 10, 2023 attached as Exhibit 99.1 hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Audited Consolidated Financial Statements of the Registrant as of December 31, 2022 and 2021 and for the two years in the period ended December 31, 2022 and the related notes, Management's Report on Internal Control over Financial Reporting and the Report of Independent Registered Public Accounting Firm, attached as Exhibit 99.2 hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Management's Discussion and Analysis of Financial Condition and Results of Operations dated March 10, 2023 attached as Exhibit 99.3 hereto.

**CERTIFICATIONS**

The certifications required by (i) Rule 13a-14(a) or Rule 15d-14(a) and (ii) Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code are included in Exhibits 99.6 and 99.7 hereto, respectively.

**DISCLOSURE CONTROLS AND PROCEDURES**

The Registrant's chief executive officer and its chief financial officer, after evaluating the effectiveness of the Registrant's disclosure controls and procedures, as of the end of the period covered by this annual report on Form 40-F, have concluded, based upon such evaluation, that the Registrant's disclosure controls and procedures were effective as of the end of such period.

**MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING**

Management's Report on Internal Control over Financial Reporting is included in Exhibit 99.2 hereto and is incorporated by reference herein.

**ATTESTATION REPORT OF THE REGISTERED PUBLIC ACCOUNTING FIRM**

The effectiveness of the Registrant's internal control over financial reporting as at December 31, 2022 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included in Exhibit 99.2 hereto and is incorporated by reference herein.

**CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING**

There was no change in the Registrant's internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting.

The design of any system of controls and procedures is based in part upon certain assumptions about the likelihood of future events. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

**NOTICES PURSUANT TO REGULATION BTR**

The Registrant was not required by Rule 104 of Regulation BTR to send any notice to any of its directors or executive officers during the year ended December 31, 2022.

**AUDIT COMMITTEE FINANCIAL EXPERT**

The Registrant's board of directors determined that it has at least one audit committee financial expert serving on its audit committee. Mr. R. William McFarland has been determined to be such an audit committee financial expert and is independent as that term is defined by the New York Stock Exchange's listing standards. The U.S. Securities and Exchange Commission has indicated that the designation of Mr. McFarland as an audit committee financial expert does not make Mr. McFarland an "expert" for any purpose, impose any duties, obligations or liability on Mr. McFarland that are greater than those imposed on members of the audit committee and board of directors who do not carry this designation or affect the duties, obligations or liability of any other members of the audit committee or board of directors.

**CODE OF ETHICS**

The disclosure provided under "Statement of Corporate Governance Practices" in the Registrant's Management Proxy Circular, included as Exhibit 99.4 hereto, is incorporated by reference herein.

**PRINCIPAL ACCOUNTANT FEES AND SERVICES**

For details on the Registrant's principal accountant fees payable to PricewaterhouseCoopers LLP (Toronto, Canada; PCAOB Firm ID: 271) and its member firms for the years ended December 31, 2022 and December 31, 2021, as well as a description of the nature of each category of fees, see the information under "Audit Committee" in the Registrant's Annual Information Form dated March 10, 2023, included as Exhibit 99.1 hereto.

*Pre-Approval Policies and Procedures*

The Registrant's Audit Committee has adopted a pre-approval policy with respect to permitted audit and non-audit services. Non-audit services are expected to relate primarily to securities offerings, tax advisory services and other recurring services. Under the policy, non-audit service requests and associated estimated fees payable by the Registrant and its subsidiaries must be submitted prior to the initiation of the services in advance of each financial quarter for pre-approval by the Registrant's Audit Committee. Requests by the Registrant or its subsidiaries for pre-approval of non-audit services (other than those with estimated fees payable in immaterial amounts discussed below) within any financial quarter must be submitted to the Registrant's chief financial officer and pre-approved by the Chair of the Audit Committee and must be presented to the Audit Committee at its next meeting. The Audit Committee has pre-approved in principle certain types of immaterial, non-audit services and during any quarter, the Registrant's chief financial officer may approve requests for such services of less than US $75,000 per item subject to an aggregate quarterly limit of US $250,000.

For the year ended December 31, 2022, none of the services described above were approved by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

**OFF-BALANCE SHEET ARRANGEMENTS**

The Registrant and its subsidiaries have certain security arrangements and commitments that have financial implications. These arrangements are described in Note 20 to the Registrant's audited consolidated financial statements for the year ended December 31, 2022, included as Exhibit 99.2 hereto.

**CONTRACTUAL AND OTHER OBLIGATIONS**

The Registrant's material cash requirements from known contractual and other obligations as at December 31, 2022, including provisions for claim liability, long term debt principal and interest payments, purchase obligation and other liabilities payments and operating lease payments, are described in Notes 8, 15, 22, 23 and 24 of the Registrant's audited consolidated financial statements for the year ended December 31, 2022, included as Exhibit 99.2 hereto.

**MINE SAFETY DISCLOSURE**

The Registrant is not currently required to disclose the information required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

**FORWARD-LOOKING INFORMATION**

A number of statements in the documents incorporated by reference in this Form 40-F constitute "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Please refer to the paragraph under the heading "Forward-Looking Statements" in the Management's Discussion and Analysis of Financial Condition and Results of Operations dated March 10, 2023, including Management's Report on Internal Control over Financial Reporting incorporated by reference herein, attached as Exhibit 99.3 hereto and forming an integral part of this document, for a discussion of risks, uncertainties and assumptions that could cause actual results to vary from those forward-looking statements.

**UNDERTAKING AND CONSENT TO SERVICE OF PROCESS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**A.** **Undertaking.** 

The Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by Securities and Exchange Commission (the "Commission") staff, and to furnish promptly, when requested to do so by the Commission staff, information relating to: the securities registered pursuant to Form 40-F; the securities in relation to which the obligation to file an annual report on Form 40-F arises; or transactions in said securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**B.** **Consent to Service of Process.** 

The Registrant has previously filed with the Commission a Form F-X in connection with the class of securities in relation to which the obligation to file this report arises.

**SIGNATURES**

Pursuant to the requirements of the Exchange Act, the registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this annual report to be signed on its behalf by the undersigned, thereto duly authorized.

---

| | | | |
|:---|:---|:---|:---|
|  | **FAIRFAX FINANCIAL HOLDINGS LIMITED** | **FAIRFAX FINANCIAL HOLDINGS LIMITED** | **FAIRFAX FINANCIAL HOLDINGS LIMITED** |
| Date: March 10, 2023 | By: | /s/ Eric P. Salsberg | /s/ Eric P. Salsberg |
|  |  | Name: | Eric P. Salsberg |
|  |  | Title: | Vice President and Corporate Secretary |

---

**EXHIBIT INDEX**

---

| | |
|:---|:---|
| 99.1 | [Annual Information Form dated March 10, 2023](ffh-20221231xex99d1.htm) |
| 99.2 | [Audited Consolidated Financial Statements of the Registrant as of December 31, 2022 and 2021 and for the two years in the period ended December 31, 2022 and the related notes, Management's Report on Internal Control over Financial Reporting and the Report of Independent Registered Public Accounting Firm](ffh-20221231xex99d2.htm) |
| 99.3 | [Management's Discussion and Analysis of Financial Condition and Results of Operations dated March 10, 2023](ffh-20221231xex99d3.htm) |
| 99.4 | [The information under "Statement of Corporate Governance Practices" in the Registrant's Management Proxy Circular, dated March 10, 2023 in connection with the annual meeting of shareholders to be held on April 20, 2023, is incorporated herein by reference to Exhibit 99.1 to the Registrant's Report on Form 6-K furnished to the Securities and Exchange Commission on March 10, 2023](https://www.sec.gov/Archives/edgar/data/915191/000110465923031138/tm232389d2_ex99-1.htm) |
| 99.5 | [Consent of PricewaterhouseCoopers LLP](ffh-20221231xex99d5.htm) |
| 99.6 | [Rule 13a-14(a)/15d-14(a) Certifications:](ffh-20221231xex99d6.htm) |
|  | &nbsp;&nbsp;[Certification of Registrant's Chief Executive Officer](ffh-20221231xex99d6.htm)  |
|  | &nbsp;&nbsp;[Certification of Registrant's Chief Financial Officer](ffh-20221231xex99d6.htm) |
| 99.7\* | [Section 1350 Certifications:](ffh-20221231xex99d7.htm) |
|  | &nbsp;&nbsp;[Certification of Registrant's Chief Executive Officer](ffh-20221231xex99d7.htm)  |
|  | &nbsp;&nbsp;[Certification of Registrant's Chief Financial Officer](ffh-20221231xex99d7.htm) |
| 101 | Interactive Data File (formatted as Inline XBRL) |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |

---

\* Such certifications are not deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. Such certifications will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.

## Exhibit 99.1

[**Table of Contents**](#TOC)

**Exhibit 99.1**

**ANNUAL INFORMATION FORM**

FOR THE YEAR ENDED DECEMBER 31, 2022

![Graphic](ffh-20221231xex99d1001.jpg)

**March 10, 2023**

**Fairfax Financial Holdings Limited**

**95 Wellington Street West, Suite 800**

**Toronto, Ontario, Canada, M5J 2N7**

------

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### FAIRFAX FINANCIAL HOLDINGS LIMITED — 2022 ANNUAL INFORMATION FORM

#### **TABLE OF CONTENTS** AND INFORMATION INCORPORATED BY REFERENCE

---

| | | | |
|:---|:---|:---|:---|
|  | **Page Reference** | **Page Reference** | **Page Reference** |
|  | **Annual**<br>**Information Form** | **2022**<br>**Annual Report**<sup>(1)</sup> | **Management**<br>**Proxy Circular**<sup>(2)</sup> |
| CORPORATE STRUCTURE | 3 |  |  |
| DESCRIPTION OF THE BUSINESS | 5 | 2-4, 47-125, 127-201 |  |
| GENERAL DEVELOPMENT OF THE BUSINESS | 6 | 6-34, 82-88, 94-97 |  |
| RISK FACTORS | 6 | 97-114, 187-201 |  |
| DIVIDENDS | 7 |  |  |
| CAPITAL STRUCTURE | 7 |  |  |
| MARKET FOR SECURITIES | 10 |  |  |
| DIRECTORS AND OFFICERS | 14 |  |  |
| LEGAL PROCEEDINGS | 17 | 91-92 |  |
| INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS | 17 |  |  |
| TRANSFER AGENTS AND REGISTRARS | 17 |  |  |
| MATERIAL CONTRACTS | 17 |  |  |
| INTERESTS OF EXPERTS | 17 |  |  |
| AUDIT COMMITTEE | 17 |  | 22 |
| ADDITIONAL INFORMATION | 18 |  |  |

---

------

*(1)Incorporated by reference from the Fairfax Financial Holdings Limited 2022 Annual Report (the "2022 Annual Report").*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Incorporated by reference from the Fairfax Financial Holdings Limited Management Proxy Circular dated March 10, 2023 (the "Management Proxy Circular").* 

Except as otherwise noted, all information given is at, or for the fiscal year ended, December 31, 2022. As the majority of our operations are in the United States or conducted in U.S. dollars, we report our consolidated financial statements in U.S. dollars. All comparative financial information, financial data and other monetary data in this Annual Information Form are reported in U.S. dollars unless otherwise noted.

Copies of this Annual Information Form, as well as copies of the 2022 Annual Report and the Management Proxy Circular (parts of which are incorporated herein by reference), may be obtained from our Corporate Secretary at 95 Wellington Street West, Suite 800, Toronto, Ontario, M5J 2N7. These documents may also be found on our website at <u>www.fairfax.ca</u> or on SEDAR at <u>www.sedar.com</u>. See "Additional Information".

------

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### CORPORATE STRUCTURE

#### Name, Address and Incorporation
Fairfax Financial Holdings Limited ("Fairfax") is a holding company which, through its subsidiaries, is primarily engaged in property and casualty insurance and reinsurance and the associated investment management. Fairfax was incorporated under the *Canada Corporations Act* on March 13, 1951 and continued under the *Canada Business Corporations Act* in 1976. Our original name of Markel Service of Canada Limited was subsequently changed to Markel Financial Holdings Limited and, in May 1987, to our current name of Fairfax Financial Holdings Limited. Our registered and head office is located at 95 Wellington Street West, Suite 800, Toronto, Ontario, M5J 2N7.

#### Intercorporate Relationships
The following is a list of our principal subsidiaries. Indented companies are subsidiaries of the non-indented company which precedes them. All subsidiaries were wholly-owned, directly or through another subsidiary, as of December 31, 2022 unless otherwise noted.

---

| | |
|:---|:---|
| **Name** | **Jurisdiction of Incorporation** |
| **Canadian insurance subsidiaries** |  |
| Northbridge Financial Corporation | Canada |
| &nbsp;&nbsp;Federated Insurance Company of Canada | Canada |
| &nbsp;&nbsp;Northbridge General Insurance Corporation | Canada |
| &nbsp;&nbsp;&nbsp;&nbsp;Verassure Insurance Company | Canada |
| **U.S. insurance subsidiaries** |  |
| Crum & Forster Holdings Corp. | Delaware |
| &nbsp;&nbsp;United States Fire Insurance Company | Delaware |
| &nbsp;&nbsp;&nbsp;&nbsp;First Mercury Insurance Company | Delaware |
| &nbsp;&nbsp;&nbsp;&nbsp;The North River Insurance Company | New Jersey |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Seneca Insurance Company, Inc. | New York |
| Zenith National Insurance Corp. | Delaware |
| &nbsp;&nbsp;Zenith Insurance Company | California |
| **Asian insurance subsidiaries** |  |
| Falcon Insurance Company (Hong Kong) Limited | Hong Kong |
| Fairfirst Insurance Limited (78.00% owned) | Sri Lanka |
| PT Asuransi Multi Artha Guna Tbk (80.31% owned) | Indonesia |
| The Pacific Insurance Berhad (85.00% owned) | Malaysia |
| **Other insurance subsidiaries** |  |
| Bryte Insurance Company Ltd | South Africa |
| Colonnade Insurance S.A. | Luxembourg |
| Eurolife FFH General Insurance Single Member S.A. (80.00% owned) | Greece |
| Eurolife FFH Life Insurance Single Member S.A. (80.00% owned) | Greece |
| Fairfax Brasil Seguros Corporativos S.A. | Brazil |
| Fairfax Latin America Ltd. | Canada |
| &nbsp;&nbsp;SBS Seguros Colombia S.A. | Colombia |
| &nbsp;&nbsp;Southbridge Compañía de Seguros Generales S.A. | Chile |
| &nbsp;&nbsp;La Meridional Compañía Argentina de Seguros S.A. (99.99% owned) | Argentina |
| &nbsp;&nbsp;SBI Seguros Uruguay S.A. | Uruguay |
| Limited Liability Company "FFH Ukraine Holdings" (69.97% owned) | Ukraine |
| &nbsp;&nbsp;ARX Insurance Company Private Joint Stock Company (99.98% owned)<sup>(a)</sup> | Ukraine |
| &nbsp;&nbsp;ARX Life Insurance Company Additional Liability Company (99.98% owned)<sup>(a)</sup> | Ukraine |
| &nbsp;&nbsp;Private Joint-Stock Company "Insurance Company "Universalna" (99.99% owned)<sup>(a)</sup> | Ukraine |

---

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[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

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| | |
|:---|:---|
| **Name** | **Jurisdiction of Incorporation** |
| **Reinsurance and insurance subsidiaries** |  |
| Allied World Assurance Company Holdings, Ltd (82.87% owned) | Bermuda |
| &nbsp;&nbsp;&nbsp;&nbsp;Allied World Assurance Company, Ltd | Bermuda |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Allied World Assurance Company (Europe) dac | Ireland |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Allied World Assurance Company, AG | Switzerland |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Allied World Assurance Holdings (U.S.) Inc. | Delaware |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Allied World National Assurance Company | New Hampshire |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Allied World Insurance Company | New Hampshire |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Allied World Assurance Company (U.S.) Inc. | Delaware |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Allied World Specialty Insurance Company | Delaware |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Allied World Surplus Lines Insurance Company | Arkansas |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Vantapro Specialty Insurance Company | Arkansas |
| Brit Limited (86.20% owned) | England and Wales |
| &nbsp;&nbsp;Brit Insurance Holdings Limited | England and Wales |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Brit Reinsurance (Bermuda) Limited | Bermuda |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Brit Syndicates Limited | England and Wales |
| CRC Reinsurance Limited | Barbados |
| Connemara Reinsurance Company Ltd. | Barbados |
| Odyssey Group Holdings, Inc. (90.01% owned) | Delaware |
| &nbsp;&nbsp;Odyssey Reinsurance Company | Connecticut |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Greystone Insurance Company | Connecticut |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Hudson Insurance Company | Delaware |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Newline Holdings UK Limited | England and Wales |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Newline Corporate Name Limited | England and Wales |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Newline Insurance Company Limited | England and Wales |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Newline Europe Versicherung AG | Germany |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Odyssey Re Europe Holdings S.A.S. | France |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Odyssey Re Europe S.A. | France |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Odyssey Reinsurance (Barbados) Ltd. | Barbados |
| Polskie Towarzystwo Reasekuracji Spólka Akcyjna | Poland |
| Singapore Reinsurance Corporation Limited | Singapore |
| Wentworth Insurance Company Ltd. | Barbados |
| **Runoff subsidiaries** |  |
| TIG Insurance Company | California |
| **Investment management subsidiary** |  |
| Hamblin Watsa Investment Counsel Ltd. | Canada |
| **Other non-insurance and non-reinsurance subsidiaries** |  |
| AGT Food and Ingredients Inc. (59.56% owned) | Ontario |
| Boat Rocker Media Inc.<sup>(b)</sup> | Ontario |
| Dexterra Group Inc. (48.72% owned) | Alberta |
| FAIRVentures Inc. | Canada |
| Fairfax India Holdings Corporation<sup>(c)</sup> | Canada |
| &nbsp;&nbsp;National Commodities Management Services Limited (89.49% owned) | India |
| Farmers Edge Inc. (61.29% owned) | Manitoba |
| Grivalia Hospitality S.A. (78.40% owned) | Greece |
| Helios Fairfax Partners Corporation<sup>(d)</sup> | Canada |
| Kitchen Stuff Plus, Inc. (55.00% owned) | Ontario |
| McEwan Enterprises Inc. (55.00% owned) | Ontario |
| Praktiker Hellas Trading Single Member SA | Greece |
| Recipe Unlimited Corporation (84.03% owned) <sup>(e)</sup> | Ontario |
| Sporting Life Group Limited (88.52% owned) | Canada |

---

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[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

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| | |
|:---|:---|
| **Name** | **Jurisdiction of Incorporation** |
| &nbsp;&nbsp;Golf Town Limited | Canada |
| &nbsp;&nbsp;Sporting Life Inc. | Ontario |
| Thomas Cook (India) Limited (73.35% owned) | India |
| &nbsp;&nbsp;Sterling Holiday Resorts Limited | India |
| Trooh Media Inc. (65.00% owned) | Delaware |
| William Ashley China Corporation | Canada |

---

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(a)* *The remaining shares of this company are held by other wholly-owned subsidiaries of Fairfax.* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(b)* *The multiple voting shares of Boat Rocker Media Inc. ("Boat Rocker") held by Fairfax represent approximately 56.09% of the voting rights and 44.93% of the equity interest in Boat Rocker.* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(c)* *The multiple voting shares of Fairfax India Holdings Corporation ("Fairfax India") held by Fairfax represent approximately 94.98% of the voting rights and 41.64% of the equity interest in Fairfax India. Inclusive of applicable shares held through Fairfax's investment in Asset Value Loan Notes entered into with RiverStone (Barbados) Ltd. and further described in Note 23 (Acquisitions and Divestitures) to our consolidated financial statements in our 2022 Annual Report and our 2021 Annual Report.* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(d)* *The multiple voting shares of Helios Fairfax Partners Corporation ("Helios Fairfax") (formerly Fairfax Africa Holdings Corporation) held by Fairfax represent approximately 53.35% of the voting rights and 34.48% of the equity interest in Helios Fairfax. Inclusive of applicable shares held through Fairfax's investment in Asset Value Loan Notes entered into with RiverStone (Barbados) Ltd. and further described in Note 23 (Acquisitions and Divestitures) to our consolidated financial statements in our 2022 Annual Report and our 2021 Annual Report.* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(e)* Inclusive of applicable shares held through Fairfax's investment in Asset Value Loan Notes entered into with RiverStone (Barbados) Ltd. and further described in Note 23 (Acquisitions and Divestitures) to our consolidated financial statements in our 2022 Annual Report and our 2021 Annual Report.

#### DESCRIPTION OF THE BUSINESS

#### Overview
Fairfax is a holding company which, through its subsidiaries, is primarily engaged in property and casualty insurance and reinsurance and the associated investment management. Fairfax's corporate objective is to achieve a high rate of return on invested capital and build long term shareholder value. We seek to differentiate ourselves by combining disciplined underwriting with the investment of our assets on a total return basis.

The financial performance of a property and casualty company is determined by two principal factors: (i) the operating results of the insurance operations, which is determined by the level of premiums collected in relation to claims and operating costs, and (ii) the returns generated by the investment portfolios of the insurers.

Our insurance and reinsurance companies operate on a decentralized basis, with autonomous management teams applying a focused underwriting strategy to their markets. Our subsidiaries provide a full range of property and casualty products, maintaining a diversified portfolio of risks across all classes of business, geographic regions, and types of insureds.

Our investments are centrally managed for all the Fairfax group of companies by Hamblin Watsa Investment Counsel Ltd. ("Hamblin Watsa"), a wholly-owned subsidiary of Fairfax. Hamblin Watsa emphasizes a conservative value investment philosophy, seeking to invest assets on a total return basis, which includes realized and unrealized gains over the long term.

Since 2011, we have acquired companies that are in industries other than insurance and reinsurance where the companies met our investment criteria. Such companies are run on a decentralized basis with autonomous management.

For a full description of our business see our corporate profile, the notes to our consolidated financial statements and management's discussion and analysis of financial condition and results of operations, all in our 2022 Annual Report.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Competition
The property and casualty insurance industry and the reinsurance industry are both highly competitive, and we believe that they will remain highly competitive for the foreseeable future. Competition in our industry is based on many factors, including premiums charged and other terms and conditions offered, products and services provided, commission structure, financial ratings assigned by independent rating agencies, speed of claims payment, reputation, selling efforts, perceived financial strength and the experience of the insurer or reinsurer in the line of insurance or reinsurance to be written. We compete, and will continue to compete, with major U.S. and non-U.S. insurers and reinsurers, as well as certain underwriting syndicates, some of which have greater financial, marketing and management resources than we do. We also are aware that other financial institutions, such as banks, are now able to offer services similar to those offered by our insurance subsidiaries. In addition, in recent years we have seen the creation of alternative products from capital markets participants that are intended to compete with reinsurance products.

#### Cycles of Insurance
Demand for insurance and reinsurance is influenced significantly by the underwriting results of primary insurers and prevailing general economic conditions. Factors such as changes in the level of employment, wages, consumer spending, business investment and government spending, the volatility and strength of the global capital markets and inflation or deflation all affect the business and economic environment and, ultimately, the demand for insurance and reinsurance products.

The property and casualty insurance business historically has been characterized by periods of intense price competition due to excess underwriting capacity, known as a soft insurance market, when companies may underprice business to gain market share. Such inadequate pricing reduces underwriting margins. When excess capital is removed from the industry, it leads to periods when shortages of underwriting capacity have permitted attractive premium levels. This is known as a hard insurance market. We expect to continue to experience the effects of this cyclicality.

In the reinsurance industry, the supply of reinsurance is related to prevailing prices and levels of surplus capacity that, in turn, may fluctuate in response to changes in rates of return being realized. It is possible that premium rates or other terms and conditions of trade could vary in the future, that the present level of demand will not continue because the larger insurers may require less reinsurance or that the present level of supply of reinsurance could increase as a result of capital provided by recent or future market entrants or by existing reinsurers.

#### Employees
As at December 31, 2022, Fairfax (the holding company) had 40 employees and our subsidiaries had in aggregate approximately 47,000 full-time employees.

#### GENERAL DEVELOPMENT OF THE BUSINESS
Over the past three completed financial years our total assets have increased from $74.1 billion as at December 31, 2020 to $92.1 billion as at December 31, 2022. Common shareholders' equity was $12.5 billion, $15.0 billion and $15.3 billion as at December 31, 2020, 2021 and 2022, respectively. For the year ended December 31, 2020, Fairfax had income of $19.8 billion and net earnings attributable to shareholders of Fairfax of $218.4 million. For the year ended December 31, 2021, Fairfax had income of $26.5 billion and net earnings attributable to shareholders of Fairfax of $3.4 billion. For the year ended December 31, 2022, Fairfax had income of $28.1 billion and net earnings attributable to shareholders of Fairfax of $1.1 billion.

For a description of the recent developments of our company, see our Chairman's letter to shareholders in our 2022 Annual Report. For a description of our acquisitions and divestitures over the last three years, see Note **23** (Acquisitions and Divestitures) to our consolidated financial statements in our 2022 Annual Report and our 2021 Annual Report. For a description of our capital transactions, see Note **16** (Total Equity) to our consolidated financial statements in our 2022 Annual Report and our 2021 Annual Report. For a description of our debt profile, see Note **15** (Borrowings) to our consolidated financial statements in our 2022 Annual Report and our 2021 Annual Report.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### RISK FACTORS
We have identified certain risks and uncertainties to which our business, operations and financial condition are subject, which are described under "Issues and Risks" on pages 189-201 of our 2022 Annual Report. Additional risks and uncertainties not known to us or that we currently believe are not reasonably likely to materially affect us may also impair our business, results of operations and financial condition. An explanation of our risk management approach can be found in Note **24** (Financial Risk Management) to our consolidated financial statements in our 2022 Annual Report.

#### DIVIDENDS
We have declared the following dividends since 2020 on our subordinate voting shares and multiple voting shares (collectively, the "Equity Shares"):

● On January 3, 2020, we declared a dividend of $10.00 per Equity Share, payable on January 28, 2020.

● On January 5, 2021, we declared a dividend of $10.00 per Equity Share, payable on January 28, 2021.

● On January 5, 2022, we declared a dividend of $10.00 per Equity Share, payable on January 27, 2022.

● On January 4, 2023, we declared a dividend of $10.00 per Equity Share, payable on January 26, 2023.

The dividends were payable in U.S. dollars. Future dividends on our Equity Shares, if any, are expected to be paid in U.S. currency.

Dividends of CDN$1.17725 per Series C preferred share were paid to holders of our Series C preferred shares during each of 2020, 2021 and 2022, respectively.

Dividends of CDN$1.02017, CDN$0.81743 and CDN$1.13169 per Series D preferred share were paid to holders of our Series D preferred shares during each of 2020, 2021 and 2022, respectively.

Dividends of CDN$0.778694, CDN$0.795752 and CDN$0.795752 per Series E preferred share were paid to holders of our Series E preferred shares during each of 2020, 2021 and 2022, respectively.

Dividends of CDN$0.77201, CDN$0.56992 and CDN$0.88487 per Series F preferred share were paid to holders of our Series F preferred shares during each of 2020, 2021 and 2022, respectively.

Dividends of CDN$0.80725, CDN$0.74050 and CDN$0.74050 per Series G preferred share were paid to holders of our Series G preferred shares during each of 2020, 2021 and 2022, respectively.

Dividends of CDN$0.87227, CDN$0.66992 and CDN$0.9846 per Series H preferred share were paid to holders of our Series H preferred shares during each of 2020, 2021 and 2022, respectively.

Dividends of CDN$0.927, CDN$0.831752 and CDN$0.831752 per Series I preferred share were paid to holders of our Series I preferred shares during each of 2020, 2021 and 2022, respectively.

Dividends of CDN$0.94497, CDN$0.74242 and CDN$1.0569 per Series J preferred share were paid to holders of our Series J preferred shares during each of 2020, 2021 and 2022, respectively.

Dividends of CDN$1.167752, CDN$1.167752 and CDN$1.237877 per Series K preferred share were paid to holders of our Series K preferred shares during each of 2020, 2021 and 2022, respectively.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

Dividends of CDN$1.234939, CDN$1.250752 and CDN$1.250752 per Series M preferred share were paid to holders of our Series M preferred shares during each of 2020, 2021 and 2022, respectively.

The declaration and payment of dividends are at the sole discretion of our board of directors and depend on, among other things, our financial condition, general business conditions, legal restrictions regarding the payment of dividends by us and other factors which the board of directors may in the future consider to be relevant. As a holding company with no direct operations, we rely on cash dividends and other payments from our subsidiaries and our own cash balances to pay dividends to our shareholders.

#### CAPITAL STRUCTURE

#### General Description
For a general description of our capital structure please see "Description of Subordinate Voting Shares and Preferred Shares" on pages 54-65 of our short form base shelf prospectus dated October 8, 2021 filed with the Canadian securities regulatory authorities and incorporated herein by reference.

For a general description of each series of our preferred shares see our prospectus supplements referenced below, each of which has been filed with the Canadian securities regulatory authorities and is incorporated herein by reference:

● For the Series C preferred shares, see "Description of the Series C Shares" at pages S-11 to S-15 of our prospectus supplement dated September 29, 2009;

● For the Series D preferred shares, see "Description of the Series D Shares" at pages S-15 to S-19 of our prospectus supplement dated September 29, 2009;

● For the Series E preferred shares, see "Description of the Series E Shares" at pages S-11 to S-14 of our prospectus supplement dated January 25, 2010;

● For the Series F preferred shares, see "Description of the Series F Shares" at pages S-15 to S-18 of our prospectus supplement dated January 25, 2010;

● For the Series G preferred shares, see "Description of the Series G Shares" at pages S-12 to S-15 of our prospectus supplement dated July 21, 2010;

● For the Series H preferred shares, see "Description of the Series H Shares" at pages S-16 to S-19 of our prospectus supplement dated July 21, 2010;

● For the Series I preferred shares, see "Description of the Series I Shares" at pages S-12 to S-15 of our prospectus supplement dated September 28, 2010;

● For the Series J preferred shares, see "Description of the Series J Shares" at pages S-15 to S-19 of our prospectus supplement dated September 28, 2010;

● For the Series K preferred shares, see "Description of the Series K Shares" at pages S-13 to S-17 of our prospectus supplement dated March 14, 2012; and

● For the Series M preferred shares, see "Description of the Series M Shares" at pages S-21 to S-25 of our prospectus supplement dated February 24, 2015.

Our short form base shelf prospectus and prospectus supplements are available on SEDAR at <u>www.sedar.com</u>.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

As at December 31, 2022, we had the following classes and series of shares issued and outstanding:

---

| | |
|:---|:---|
|  | **Securities Outstanding** |
| Multiple Voting Shares | 1548000 |
| Subordinate Voting Shares | 24598380 |
| Series C Preferred Shares | 7515642 |
| Series D Preferred Shares | 2484358 |
| Series E Preferred Shares | 5440132 |
| Series F Preferred Shares | 2099046 |
| Series G Preferred Shares | 7719843 |
| Series H Preferred Shares | 2280157 |
| Series I Preferred Shares | 10420101 |
| Series J Preferred Shares | 1579899 |
| Series K Preferred Shares | 9500000 |
| Series M Preferred Shares | 9200000 |

---

#### Ratings
*Long Term Debt*

As of the date hereof, our senior, unsecured long term debt has been assigned a rating of BBB with a stable outlook by Standard & Poor's Ratings Services ("S&P"). Moody's Investors Service ("Moody's") has assigned a Baa3 rating with a stable outlook on our senior unsecured long term debt. DBRS Morningstar ("DBRS") has assigned a BBB (high) rating with a positive outlook on our senior unsecured long term debt. A.M. Best ("A.M. Best") has assigned a rating of bbb with a positive outlook on our senior unsecured long term debt.

S&P's credit ratings are on a long term debt rating scale that ranges from AAA to D, which represents the range from highest to lowest quality of such securities rated. A rating of BBB by S&P is the fourth highest of ten categories and indicates that the obligation exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to weaken the obligor's capacity to meet its financial commitments on the obligation. The addition of a plus (+) or minus (-) designation after a rating indicates the relative standing within a particular rating category.

Moody's credit ratings are on a long term debt rating scale that ranges from Aaa to C, which represents the range from highest to lowest quality of such securities rated. A rating of Baa3 by Moody's is the fourth highest of nine categories and is assigned to debt securities that are subject to moderate credit risk. They are considered medium-grade and as such may possess speculative characteristics. The addition of a 1, 2 or 3 modifier after a rating indicates the relative standing within a particular rating category. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category, the modifier 2 indicates a mid-range ranking and the modifier 3 indicates a ranking in the lower end of its generic rating category.

The DBRS credit ratings are on a long term debt rating scale that ranges from AAA to D, which represents the range from highest to lowest quality of such securities rated. A rating of BBB (high) is in the fourth highest category of ten categories and is assigned to debt that is considered to be of adequate credit quality. The capacity for the payment of financial obligations is considered acceptable, but the entity may be vulnerable to future events. All rating categories other than AAA and D also contain subcategories "(high)" and "(low)". The absence of either a "(high)" or "(low)" designation indicates the rating is in the middle of the category.

A.M. Best credit ratings are on a long term debt rating scale that ranges from aaa to c, which represents the range from highest to lowest quality of such securities rated. A rating of bbb is the fourth highest category of nine categories and is assigned to debt where there is a good ability to meet the terms of the obligation; however, the issue is more susceptible to changes in economic or other conditions. The assignment of a plus (+) or minus (-) designation after a rating indicates whether the credit quality is near the top or bottom of a particular rating category.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

*Preferred Shares*

Our preferred shares have been assigned the following ratings:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Series of Preferred Shares** | **S&P Rating** | **DBRS Rating** | **Moody's Rating** | **AM Best Rating** |
| Series C preferred shares | P-3 (High) | Pfd-3 (high) | Ba2 (hyb) | bb+ |
| Series D preferred shares | P-3 (High) | Pfd-3 (high) | Ba2 (hyb) | bb+ |
| Series E preferred shares | P-3 (High) | Pfd-3 (high) | Ba2 (hyb) | bb+ |
| Series F preferred shares | P-3 (High) | Pfd-3 (high) | Ba2 (hyb) | bb+ |
| Series G preferred shares | P-3 (High) | Pfd-3 (high) | Ba2 (hyb) | bb+ |
| Series H preferred shares | P-3 (High) | Pfd-3 (high) | Ba2 (hyb) | bb+ |
| Series I preferred shares | P-3 (High) | Pfd-3 (high) | Ba2 (hyb) | bb+ |
| Series J preferred shares | P-3 (High) | Pfd-3 (high) | Ba2 (hyb) | bb+ |
| Series K preferred shares | P-3 (High) | Pfd-3 (high) | Ba2 (hyb) | bb+ |
| Series M preferred shares | P-3 (High) | Pfd-3 (high) | Ba2 (hyb) | bb+ |

---

S&P's preferred share rating scale is a forward-looking opinion about the creditworthiness of an obligor with respect to a specific preferred share obligation issued in the Canadian market relative to preferred shares issued by other issuers in the Canadian market. There is a direct correspondence between the specific ratings assigned on the Canadian preferred share scale and the various rating levels on the global debt rating scale. The rating scale ranges from P-1 to D, which represents the range from highest to lowest quality of such securities rated. A rating of P-3 (High) by S&P is the third highest of eight categories and indicates that the obligation is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions that could lead to the obligor's inadequate capacity to meet its financial commitments on the obligation. The ratings from P-1 to P-5 may be modified by a "High" or "Low" designation which indicate relative standing within the major rating categories.

The DBRS preferred share rating scale reflects an opinion on the risk that an issuer will not fulfill its full obligations with respect to both dividend and principal commitments in respect of preferred shares issued in the Canadian securities market in accordance with the terms under which the relevant preferred shares have been issued. The Pfd-3 (high) rating is the third highest of six categories used by DBRS for preferred shares and is assigned to securities of adequate credit quality. While the protection of dividends and principal is considered acceptable, the issuing entity is more susceptible to adverse changes in financial and economic conditions, and there may be other adverse conditions present which detract from debt protection. "High" or "low" grades are used to indicate the relative standing within a rating category. The absence of either a "high" or "low" designation indicates the rating is in the middle of the category.

The Ba2 rating is the fifth highest of the nine categories used by Moody's for hybrid securities and is assigned to securities judged to be speculative and subject to substantial credit risk. The modifier "2" indicates that the obligation ranks in the middle of the "Ba" rating category. The "hyb" indicator is appended to ratings of hybrid securities to signal their allowance for the omission of scheduled dividends, interest, or principal payments, which can potentially result in impairments if such an omission occurs.

The bb+ rating is the fifth highest category used by A.M. Best for hybrid securities and is assigned to issues with fair credit characteristics, generally due to a moderate margin of principal and interest payment protection or other issue-specific concerns that may be exacerbated by a vulnerability to economic changes or other conditions. The assignment of a plus (+) or minus (-) designation after a rating indicates whether the credit quality is near the top or bottom of a category.

These credit ratings are intended to provide investors with an independent measure of credit quality of any issue of securities. The credit ratings accorded to our debt and preferred shares by the rating agencies are not recommendations to purchase, hold or sell any security in as much as such ratings do not comment as to market price or suitability for a particular investor. Any rating may not remain in effect for any given period of time or may be revised or withdrawn entirely by a rating agency in the future if in its judgment circumstances so warrant, and if any such rating is so revised or withdrawn, Fairfax is under no obligation to update this disclosure. We have paid customary rating fees to S&P, Moody's, DBRS and A.M. Best in connection with the above-mentioned ratings. In addition, we have made customary payments in respect of certain other services provided to us by S&P, Moody's and A.M. Best during the last two years.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### MARKET FOR SECURITIES

#### Trading Price and Volume
Our subordinate voting shares are listed for trading on the Toronto Stock Exchange (the "TSX") and trade in Canadian dollars under the symbol "FFH" and in U.S. dollars under the symbol "FFH.U". Our Series C preferred shares are listed on the TSX under the symbol "FFH.PR.C", our Series D preferred shares are listed on the TSX under the symbol "FFH.PR.D", our Series E preferred shares are listed on the TSX under the symbol "FFH.PR.E", our Series F preferred shares are listed on the TSX under the symbol "FFH.PR.F", our Series G preferred shares are listed on the TSX under the symbol "FFH.PR.G", our Series H preferred shares are listed on the TSX under the symbol "FFH.PR.H", our Series I preferred shares are listed on the TSX under the symbol "FFH.PR.I", our Series J preferred shares are listed on the TSX under the symbol "FFH.PR.J", our Series K preferred shares are listed on the TSX under the symbol "FFH.PR.K", and our Series M preferred shares are listed on the TSX under the symbol "FFH.PR.M". The following table sets out the market price range in CDN$ and aggregate trading volume of our subordinate voting shares and preferred shares on the TSX for the periods indicated:

#### Subordinate Voting Shares

---

| | | | | |
|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;**Month** | **High** | **Low** | **Close** | **Trading Volume** |
| January, 2022 | 649.50 | 585.36 | 613.80 | 3943259 |
| February, 2022 | 700.00 | 601.14 | 614.45 | 1268718 |
| March, 2022 | 685.98 | 569.62 | 682.03 | 1405609 |
| April, 2022 | 716.59 | 666.47 | 705.87 | 986380 |
| May, 2022 | 709.93 | 653.00 | 701.97 | 1016850 |
| June, 2022 | 704.00 | 623.54 | 682.10 | 967112 |
| July, 2022 | 707.91 | 651.18 | 689.80 | 645757 |
| August, 2022 | 693.83 | 640.00 | 654.74 | 953266 |
| September, 2022 | 664.55 | 612.00 | 630.89 | 912018 |
| October, 2022 | 678.36 | 612.00 | 669.09 | 653355 |
| November, 2022 | 786.00 | 657.62 | 771.78 | 885833 |
| December, 2022 | 815.01 | 763.74 | 802.07 | 859183 |

---

#### Series C Preferred Shares

---

| | | | | |
|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;**Month** | **High** | **Low** | **Close** | **Trading Volume** |
| January, 2022 | 24.09 | 23.00 | 23.46 | 87734 |
| February, 2022 | 23.97 | 23.00 | 23.62 | 115445 |
| March, 2022 | 23.53 | 22.83 | 23.08 | 198956 |
| April, 2022 | 23.15 | 20.36 | 21.24 | 109897 |
| May, 2022 | 22.22 | 20.71 | 22.22 | 136394 |
| June, 2022 | 22.65 | 19.75 | 20.55 | 113014 |
| July, 2022 | 20.85 | 19.76 | 20.65 | 73885 |
| August, 2022 | 21.92 | 20.37 | 21.25 | 60802 |
| September, 2022 | 21.36 | 19.01 | 19.14 | 78702 |
| October, 2022 | 19.41 | 18.12 | 18.99 | 87707 |
| November, 2022 | 19.01 | 17.41 | 17.59 | 125882 |
| December, 2022 | 18.54 | 17.10 | 17.40 | 159465 |

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Series D Preferred Shares

---

| | | | | |
|:---|:---|:---|:---|:---|
| &nbsp;&nbsp;**Month** | **High** | **Low** | **Close** | **Trading Volume** |
| January, 2022 | 22.95 | 22.15 | 22.51 | 18065 |
| February, 2022 | 23.45 | 22.55 | 22.71 | 22488 |
| March, 2022 | 23.35 | 22.55 | 22.90 | 24536 |
| April, 2022 | 23.01 | 20.85 | 21.03 | 16491 |
| May, 2022 | 21.71 | 21.03 | 21.40 | 6920 |
| June, 2022 | 22.15 | 20.85 | 21.40 | 24206 |
| July, 2022 | 21.49 | 19.91 | 20.29 | 13052 |
| August, 2022 | 21.48 | 20.00 | 21.48 | 15296 |
| September, 2022 | 21.49 | 19.60 | 19.60 | 6742 |
| October, 2022 | 19.98 | 18.81 | 19.31 | 15150 |
| November, 2022 | 19.25 | 18.54 | 18.80 | 22468 |
| December, 2022 | 19.15 | 17.60 | 18.30 | 45064 |

---

#### Series E Preferred Shares

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Month** | **High** | **Low** | **Close** | **Trading Volume** |
| January, 2022 | 18.70 | 17.73 | 18.01 | 36428 |
| February, 2022 | 18.18 | 17.65 | 17.68 | 17697 |
| March, 2022 | 18.05 | 17.10 | 17.80 | 29475 |
| April, 2022 | 17.70 | 15.69 | 16.38 | 30466 |
| May, 2022 | 16.64 | 15.71 | 16.51 | 104747 |
| June, 2022 | 16.91 | 15.28 | 15.80 | 20557 |
| July, 2022 | 15.80 | 14.28 | 14.79 | 13981 |
| August, 2022 | 15.78 | 14.85 | 15.40 | 15881 |
| September, 2022 | 15.40 | 14.41 | 14.41 | 32455 |
| October, 2022 | 14.51 | 14.00 | 14.43 | 35364 |
| November, 2022 | 14.88 | 13.81 | 14.00 | 87034 |
| December, 2022 | 14.29 | 13.15 | 13.22 | 102731 |

---

#### Series F Preferred Shares

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Month** | **High** | **Low** | **Close** | **Trading Volume** |
| January, 2022 | 17.99 | 17.21 | 17.50 | 26098 |
| February, 2022 | 17.65 | 17.12 | 17.30 | 25500 |
| March, 2022 | 17.75 | 16.81 | 17.75 | 52815 |
| April, 2022 | 17.80 | 16.20 | 16.70 | 44737 |
| May, 2022 | 16.70 | 16.28 | 16.61 | 40720 |
| June, 2022 | 17.35 | 16.10 | 16.60 | 50984 |
| July, 2022 | 16.69 | 15.53 | 16.03 | 43891 |
| August, 2022 | 17.00 | 16.01 | 17.00 | 10394 |
| September, 2022 | 17.35 | 16.30 | 16.30 | 68260 |
| October, 2022 | 16.39 | 16.15 | 16.15 | 63505 |
| November, 2022 | 16.50 | 15.76 | 16.20 | 26300 |
| December, 2022 | 16.34 | 15.64 | 16.09 | 39900 |

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Series G Preferred Shares

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Month** | **High** | **Low** | **Close** | **Trading Volume** |
| January, 2022 | 19.63 | 18.65 | 18.96 | 52975 |
| February, 2022 | 19.40 | 18.34 | 18.40 | 110147 |
| March, 2022 | 19.05 | 17.77 | 18.58 | 75275 |
| April, 2022 | 18.62 | 16.09 | 16.50 | 103617 |
| May, 2022 | 16.93 | 15.87 | 16.75 | 185605 |
| June, 2022 | 17.41 | 15.60 | 15.89 | 193367 |
| July, 2022 | 15.90 | 14.85 | 15.55 | 60075 |
| August, 2022 | 16.50 | 15.50 | 16.10 | 86221 |
| September, 2022 | 15.95 | 14.76 | 14.90 | 100519 |
| October, 2022 | 14.98 | 14.32 | 14.68 | 59171 |
| November, 2022 | 14.78 | 13.55 | 14.15 | 56865 |
| December, 2022 | 14.69 | 13.35 | 13.60 | 249530 |

---

#### Series H Preferred Shares

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Month** | **High** | **Low** | **Close** | **Trading Volume** |
| January, 2022 | 19.25 | 18.68 | 19.11 | 53946 |
| February, 2022 | 19.53 | 19.00 | 19.00 | 66996 |
| March, 2022 | 19.98 | 18.60 | 19.56 | 38218 |
| April, 2022 | 19.65 | 17.90 | 18.20 | 59145 |
| May, 2022 | 18.39 | 17.81 | 18.20 | 113419 |
| June, 2022 | 19.29 | 17.80 | 18.29 | 23783 |
| July, 2022 | 18.30 | 17.60 | 17.63 | 4211 |
| August, 2022 | 19.19 | 16.96 | 19.00 | 24100 |
| September, 2022 | 19.50 | 17.26 | 17.99 | 17889 |
| October, 2022 | 18.11 | 17.41 | 17.55 | 28345 |
| November, 2022 | 17.50 | 16.94 | 17.10 | 13394 |
| December, 2022 | 17.45 | 16.15 | 16.71 | 85936 |

---

#### Series I Preferred Shares

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Month** | **High** | **Low** | **Close** | **Trading Volume** |
| January, 2022 | 20.88 | 19.99 | 20.35 | 126982 |
| February, 2022 | 20.62 | 19.27 | 19.63 | 88646 |
| March, 2022 | 20.03 | 19.00 | 19.72 | 143005 |
| April, 2022 | 19.70 | 17.00 | 17.85 | 208750 |
| May, 2022 | 18.30 | 17.06 | 18.30 | 222660 |
| June, 2022 | 18.89 | 16.79 | 17.21 | 78466 |
| July, 2022 | 17.30 | 15.85 | 16.70 | 80732 |
| August, 2022 | 17.80 | 16.50 | 17.30 | 120311 |
| September, 2022 | 17.40 | 15.51 | 15.65 | 69967 |
| October, 2022 | 15.88 | 15.00 | 15.59 | 87316 |
| November, 2022 | 15.65 | 14.78 | 14.95 | 64844 |
| December, 2022 | 15.70 | 14.26 | 14.47 | 356528 |

---

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Series J Preferred Shares

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Month** | **High** | **Low** | **Close** | **Trading Volume** |
| January, 2022 | 20.97 | 20.02 | 20.55 | 20425 |
| February, 2022 | 21.20 | 20.47 | 20.77 | 29230 |
| March, 2022 | 21.80 | 20.20 | 21.50 | 42060 |
| April, 2022 | 21.65 | 19.60 | 20.10 | 83612 |
| May, 2022 | 20.25 | 19.80 | 20.15 | 36260 |
| June, 2022 | 21.50 | 19.49 | 20.15 | 35559 |
| July, 2022 | 20.03 | 18.70 | 18.90 | 18222 |
| August, 2022 | 20.00 | 18.70 | 20.00 | 11194 |
| September, 2022 | 20.53 | 18.53 | 18.70 | 16772 |
| October, 2022 | 18.70 | 17.50 | 17.90 | 17154 |
| November, 2022 | 18.09 | 17.51 | 17.71 | 19875 |
| December, 2022 | 17.91 | 17.11 | 17.35 | 28137 |

---

#### Series K Preferred Shares

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Month** | **High** | **Low** | **Close** | **Trading Volume** |
| January, 2022 | 24.93  | 24.33 | 24.59 | 90175 |
| February, 2022 | 24.85  | 24.15 | 24.55 | 211551 |
| March, 2022 | 24.64  | 23.85 | 24.30 | 510259 |
| April, 2022 | 24.44  | 20.30 | 21.80 | 126392 |
| May, 2022 | 22.60  | 21.22 | 22.58 | 108490 |
| June, 2022 | 23.30  | 19.80 | 20.75 | 271964 |
| July, 2022 | 21.20  | 20.00 | 21.15 | 98716 |
| August, 2022 | 22.16  | 21.00 | 21.56 | 106293 |
| September, 2022 | 21.62  | 19.10 | 19.10 | 73179 |
| October, 2022 | 19.90  | 18.20 | 19.06 | 104199 |
| November, 2022 | 19.30  | 18.35 | 18.78 | 142830 |
| December, 2022 | 19.69  | 17.90 | 18.40 | 181324 |

---

#### Series M Preferred Shares

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Month** | **High** | **Low** | **Close** | **Trading Volume** |
| January, 2022 | 25.51 | 24.96 | 25.42 | 143485 |
| February, 2022 | 25.65 | 24.95 | 25.30 | 92845 |
| March, 2022 | 25.63 | 24.70 | 25.28 | 156316 |
| April, 2022 | 25.30 | 22.50 | 23.19 | 103449 |
| May, 2022 | 24.04 | 22.55 | 24.01 | 66801 |
| June, 2022 | 24.64 | 21.50 | 22.42 | 100770 |
| July, 2022 | 22.99 | 21.00 | 22.92 | 93728 |
| August, 2022 | 23.80 | 22.50 | 23.30 | 52942 |
| September, 2022 | 23.34 | 20.81 | 20.90 | 51157 |
| October, 2022 | 21.64 | 20.00 | 20.48 | 79175 |
| November, 2022 | 21.00 | 20.11 | 20.85 | 95431 |
| December, 2022 | 21.35 | 19.23 | 19.60 | 191908 |

---

#### Prior Sales
On August 16, 2022, we completed the sale of US$750 million aggregate principal amount of 5.625% Senior Notes due 2032 at an issue price of 99.856%.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### DIRECTORS AND OFFICERS

#### Name, Occupation and Security Holding
*Directors*

Each director holds office until the next annual meeting of shareholders or until a successor is elected or appointed.

---

| | | |
|:---|:---|:---|
| **Name and municipality of residence** | **Principal occupation during the last five years** | **Date first elected** |
| Robert J. Gunn<sup>(a)(b)(c)</sup> Toronto, Ontario | Independent Business Consultant and Corporate Director | 2007 |
| The Rt. Hon. David L. Johnston Ashton, Ontario | Independent Business Consultant and Corporate Director | 2020 |
| Karen L. Jurjevich Toronto, Ontario | Principal, Branksome Hall and Chief Executive Officer, Branksome Hall Global | 2017 |
| R. William McFarland<sup>(a)(d)</sup> Richmond Hill, Ontario | Chairman, The Conference Board of Canada. From July 2011 to June 2018, Chief Executive Officer and Senior Partner, PricewaterhouseCoopers LLP (Canada) | 2019 |
| Christine N. McLean Toronto, Ontario | Portfolio Manager, Fairbank Investment Management Limited. From July 2020 to February 2023, Corporate Director. From January 2018 to June 2020, Director of Research, Sprucegrove Investment Management Ltd. | 2018 |
| Timothy R. Price<sup>(a)(c)</sup> Toronto, Ontario | Chairman, Brookfield Funds, a division of Brookfield Corporation (formerly Brookfield Asset Management Inc.) | 2010 |
| Brandon W. Sweitzer<sup>(b)(c)</sup> Stuart, Florida, U.S.A. | Dean, Maurice R. Greenberg School of Risk Management, Insurance and Actuarial Science,St. John's University  | 2004 |

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

---

| | | |
|:---|:---|:---|
| **Name and municipality of residence** | **Principal occupation during the last five years** | **Date first elected** |
| Lauren C. Templeton<sup>(a)(b)</sup> Lookout Mountain, Tennessee, U.S.A. | Founder and President, Templeton and Phillips Capital Management, LLC | 2017 |
| Benjamin P. Watsa Toronto, Ontario | Founder and Chief Executive Officer, Marval Capital Ltd. | 2015 |
| V. Prem Watsa Toronto, Ontario | Chairman and Chief Executive Officer; Vice Chairman, Hamblin Watsa Investment Counsel Ltd.; Founder and Chairman, Fairfax India Holdings Corporation. From December 2016 to March 2021, Chairman, Helios Fairfax Partners Corporation (formerly Fairfax Africa Holdings Corporation). From July 1984 to September 2019, Vice President, Hamblin Watsa Investment Counsel Ltd. | 1985 |
| William C. Weldon North Palm Beach, Florida, U.S.A. | Corporate Director | 2020 |

---

Notes:

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(a)* *Member of the Audit Committee (Chair — R. William McFarland)* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(b)* *Member of the Compensation Committee (Chair – Robert Gunn)* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(c)* *Member of the Governance and Nominating Committee (Chair – Robert Gunn)* 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*(d)* *Lead Director* 

*Officers*

---

| | | |
|:---|:---|:---|
| **Name and municipality of residence** | **Principal occupation during the last five years (office is with Fairfax, unless otherwise specified)** | **Office held** |
| Jennifer Allen Ajax, Ontario | Vice President and Chief Financial Officer; Chief Financial Officer and Treasurer, Hamblin Watsa Investment Counsel Ltd.; Vice President, Fairfax India. From August 2019 to December 2020, Vice President, Fairfax Africa Holdings Corporation (currently, Helios Fairfax). From April 2018 to August 2019, Vice President. From August 2016 to August 2019, Chief Financial Officer, Fairfax India. From August 2018 to August 2019, Chief Financial Officer, Fairfax Africa Holdings Corporation (currently, Helios Fairfax) | Vice President and Chief Financial Officer |
| Bryan Bailey Toronto, Ontario | Vice President, Tax. From April 2017 to March 2022, Associate Vice President, Taxation | Vice President, Tax |
| Derek Bulas Toronto, Ontario | Vice President and Chief Legal Officer. From May 2015 to January 2023, General Counsel | Vice President and Chief Legal Officer |

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

---

| | | |
|:---|:---|:---|
| Peter Clarke Richmond Hill, Ontario | President and Chief Operating Officer; Senior Managing Director and Chief Risk Officer, Hamblin Watsa Investment Counsel Ltd. From February 2019 to February 2022, Vice President and Chief Operating Officer. From December 2006 to February 2019, Vice President and Chief Risk Officer. From March 2018 to September 2019, Vice President and Chief Risk Officer, Hamblin Watsa Investment Counsel Ltd. | President and Chief Operating Officer |
| Jean Cloutier Toronto, Ontario | Vice President, International Operations | Vice President and Chairman International |
| Vinodh Loganadhan Toronto, Ontario | Vice President, Administrative Services | Vice President, Administrative Services |
| Bradley Martin Toronto, Ontario | Vice President, Strategic Investments | Vice President, Strategic Investments |
| Olivier Quesnel Toronto, Ontario | Vice President and Chief Actuary. From January 2019 to June 2020, Chief Actuary. From May 2017 to January 2019, Associate Vice President, Corporate Actuary | Vice President and Chief Actuary |
| Thomas Rowe Toronto, Ontario | Vice President, Corporate Affairs. From January 2021 to January 2023, Senior Legal Counsel. From July 2016 to December 2020, Senior Legal Counsel, FairVentures Inc. | Vice President, Corporate Affairs |
| Eric Salsberg Toronto, Ontario | Vice President and Corporate Secretary. From January 1989 to January 2023, Vice President, Corporate Affairs | Vice President and Corporate Secretary |
| John Varnell Caledon, Ontario | Vice President, Corporate Development; Vice President, Corporate Affairs, Fairfax India Holdings Corporation. From May to August 2019, Interim Chief Financial Officer | Vice President, Corporate Development |
| Michael Wallace Oakville, Ontario | Vice President, Insurance Operations. From June 2015 to June 2020, President of Insurance, Pethealth Inc. | Vice President, Insurance Operations |
| V. Prem Watsa Toronto, Ontario | Chairman and Chief Executive Officer; Vice Chairman, Hamblin Watsa Investment Counsel Ltd.; Founder and Chairman, Fairfax India Holdings Corporation. From December 2016 to March 2021, Chairman, Helios Fairfax Partners Corporation (formerly Fairfax Africa Holdings Corporation). From July 1984 to September 2019, Vice President, Hamblin Watsa Investment Counsel Ltd. | Chairman and Chief Executive Officer |

---

*Directors and Officers — Ownership of Securities*

As at December 31, 2022, to our knowledge, the directors and officers of Fairfax beneficially owned, directly or indirectly, or exercised control or direction over, approximately 888,973 of our subordinate voting shares (3.9%) and 1,548,000 of our multiple voting shares (100%). As at such date, V. Prem Watsa, our Chairman and Chief Executive Officer, controlled shares representing 43.8% of the total votes attached to all classes of our shares (100% of the total votes attached to the multiple voting shares and 3.5% of the total votes attached to the subordinate voting shares). As of December 31, 2022, to our knowledge, the directors and officers of Fairfax beneficially owned, directly or indirectly, or exercised control or direction over, approximately 8,900 of subordinate voting shares (0.03%) of Boat Rocker. As of December 31, 2022, to our knowledge, the directors and officers of Fairfax beneficially owned, directly or indirectly, or exercised control or direction over, approximately 258,689 of subordinate voting shares (0.3%) of Dexterra Group Inc. As of December 31, 2022, to our knowledge, the directors and officers of Fairfax beneficially owned, directly or indirectly, or exercised control or direction over, approximately 366,013 of the subordinate voting shares (0.3%) of Fairfax India. As of December 31, 2022, to our knowledge, the directors and officers of Fairfax beneficially owned, directly or indirectly, or exercised control or direction over, approximately 111,340 of subordinate voting shares (0.3%) of Farmers Edge Inc. As of December 31, 2022, to our knowledge, the directors and officers of Fairfax beneficially owned, directly or indirectly, or exercised control or direction over, approximately 116,630 of the subordinate voting shares (0.2%) of Helios Fairfax.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

*Conflicts of Interest*

Each of R. William McFarland, Lauren C. Templeton, Benjamin P. Watsa and V. Prem Watsa, each a Director (and, in the case of V. Prem Watsa, a Director of Hamblin Watsa) and a Director of Fairfax India, will be required to disclose the nature and extent of his or her interest in, and is not entitled to vote on, any resolution to approve, any material contract or transaction or any proposed material contract or transaction between Fairfax and Fairfax India (or, in the case of V. Prem Watsa, between Fairfax and Hamblin Watsa) or any of their affiliates or any other entity in which Mr. McFarland, Ms. Templeton, Mr. Benjamin P. Watsa or Mr. V. Prem Watsa has an interest (unless the contract or transaction relates to his or her remuneration or an indemnity on liability insurance).

#### LEGAL PROCEEDINGS
A description of the legal proceedings to which we are a party during 2022 is included in Note **20** (Contingencies and Commitments) in our 2022 Annual Report.

#### INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
During the three-year period ending December 31, 2022 and during the current financial year up to the date hereof, none of our directors, executive officers, 10 percent shareholders or any of their associates or affiliates had a material interest in any transaction that has materially affected or will materially affect Fairfax on a consolidated basis.

#### TRANSFER AGENTS AND REGISTRARS
The transfer agent and registrar for our subordinate voting shares in Canada is Computershare Trust Company of Canada, 100 University Avenue, 8<sup>th</sup> Floor, Toronto, Ontario, M5J 2Y1, and in the United States is Computershare Trust Company, N.A., 150 Royall Street, Canton, Massachusetts, 02021. The transfer agent and registrar for our Series C preferred shares, Series D preferred shares, Series E preferred shares, Series F preferred shares, Series G preferred shares, Series H preferred shares, Series I preferred shares, Series J preferred shares, Series K preferred shares and Series M preferred shares is Computershare Trust Company of Canada, 100 University Avenue, 8<sup>th</sup> Floor, Toronto, Ontario, M5J 2Y1.

#### MATERIAL CONTRACTS
There are no contracts which are material to Fairfax, on a consolidated basis.

#### INTERESTS OF EXPERTS
Our independent registered public accounting firm is PricewaterhouseCoopers LLP, Chartered Professional Accountants, Licensed Public Accountants, who has issued a Report of Independent Registered Public Accounting Firm dated March 10, 2023 in respect of Fairfax's consolidated financial statements as at December 31, 2022 and 2021 and for the two years in the period ended December 31, 2022 and on the effectiveness of internal control over financial reporting as at December 31, 2022. PricewaterhouseCoopers LLP has advised that they are independent with respect to Fairfax within the meaning of the Rules of Professional Conduct of the Chartered Professional Accountants of Ontario and have complied with the rules of the US Securities and Exchange Commission (SEC) and the Public Company Accounting Oversight Board (PCAOB) on auditor independence.

#### AUDIT COMMITTEE
A copy of our Audit Committee Charter is attached as Schedule A. The members of our Audit Committee are R. William McFarland (Chair), Robert J. Gunn, Timothy R. Price and Lauren C. Templeton. All of the members of our Audit Committee are independent and financially literate pursuant to the meanings of such terms in National Instrument 52-110 — *Audit Committees*. Additional information concerning our Audit Committee, including the education and experience of each Audit Committee member and the procedures that we have adopted for the engagement of non-audit services, can be found in our Management Proxy Circular dated March 10, 2023 under the heading "Audit Committee".

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

Fees payable for the years ended December 31, 2022 and December 31, 2021 to our external auditor, PricewaterhouseCoopers LLP, and its member firms by us and our subsidiaries were CDN$48.0 million and CDN$44.7 million, respectively. The fees payable to PricewaterhouseCoopers LLP in 2022 and 2021 are detailed below.

---

| | | |
|:---|:---|:---|
|  | **Year ended <br>December 31, 2022** | **Year ended <br>December 31, 2021** |
|  | **(CDN $millions)** | **(CDN $millions)** |
| Audit fees | $38.4 | $35.8 |
| Audit-related fees | 4.7 | 5.3 |
| Tax fees | 4.4 | 2.8 |
| All other fees | 0.5 | 0.8 |
| Total | $48.0 | $44.7 |

---

The nature of each category of fees is described below.

#### Audit Fees
Audit fees were paid for professional services rendered for the audits of our consolidated financial statements and the effectiveness of internal control over financial reporting of Fairfax and statutory and subsidiary audits, issuance of comfort letters, consents and assistance with review of documents filed with regulatory authorities.

#### Audit-Related Fees
Audit-related fees include services that are (1) assurance and related services; and (2) reasonably related to the performance of the audit or review of Fairfax's financial statements. Audit-related services include, among others: employee pension and benefit plan audits, accounting consultations,early audit work on IFRS 17 adoption and assurance services that are not required by statute or regulation, and services related to prospectus filings and special actuarial reviews.

#### Tax Fees
Tax fees were paid for services related to tax compliance, tax advice and tax planning professional services. These services consisted primarily of tax compliance including the review of original and amended tax returns, assistance with questions regarding tax audits and tax planning and advisory services relating to common forms of domestic and international taxation (e.g., income tax, capital tax and Value Added Tax).

#### All Other Fees
Fees disclosed in the table above under the item "all other fees" were paid for services other than the audit fees, audit-related fees and tax fees described above. These services consisted primarily of consulting fees related to assistance with respect to regulatory compliance matters and French translation of our continuous disclosure documents.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### ADDITIONAL INFORMATION
Additional information about our company may be found on SEDAR at <u>www.sedar.com</u>.

Additional information, including directors' and officers' remuneration and indebtedness, principal holders of our securities and options to purchase securities is contained in our Management Proxy Circular dated March 10, 2023. Additional financial information is provided in our consolidated financial statements and management's discussion and analysis of financial condition and results of operations for the year ended December 31, 2022 and in pages 2-4 and 6-34 of our 2022 Annual Report.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

**Schedule A**

#### FAIRFAX FINANCIAL HOLDINGS LIMITED

#### AUDIT COMMITTEE CHARTER
**Approved by the Board of Directors on February 17, 2005, except**

**the Addition of Paragraph 21 of Section 4 was**

**Approved by the Board of Directors on May 30, 2014**

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### FAIRFAX FINANCIAL HOLDINGS LIMITED

#### AUDIT COMMITTEE CHARTER
**1.**Statement of Purpose

The Audit Committee of Fairfax Financial Holdings Limited has been established by the Board for the purposes of overseeing the accounting and financial reporting processes of Fairfax, including the audit of the financial statements of Fairfax.

The Committee is responsible for assisting with the Board's oversight of (1) the quality and integrity of Fairfax's financial statements and related disclosure, (2) Fairfax's compliance with legal and regulatory requirements, (3) the independent auditor's qualifications, performance and independence and (4) the integrity of the internal controls at Fairfax (including at its publicly traded subsidiaries).

**2.**Committee Membership

#### Members
The Committee will consist of as many members of the Board as the Board may determine but in any event, not less than three members. Members of the Committee will be appointed by the Board, taking into account any recommendation that may be made by the Governance and Nominating Committee. Any member of the Committee may be removed and replaced at any time by the Board, and will automatically cease to be a member if he or she ceases to meet the qualifications set out below. The Board will fill vacancies on the Committee by appointment from among qualified members of the Board, taking into account any recommendation that may be made by the Governance and Nominating Committee. If a vacancy exists, the remaining members of the Committee may exercise all of its powers so long as there is a quorum and subject to any legal requirements regarding the minimum number of members of the Committee.

#### Chair
The Board will designate one of the members of the Committee to be the Chair of the Committee, taking into account any recommendation that may be made by the Governance and Nominating Committee.

#### Qualifications
All of the members of the Committee must be independent and financially literate, as determined in accordance with the rules of applicable stock exchanges and securities regulatory authorities, with at least one of the members having financial expertise, as determined in accordance with those rules. Members must also have suitable experience and must be familiar with the financial reporting practices of public companies.

#### Ex Officio Members and Management Attendance
The Committee may invite, at its discretion, members of management to attend a meeting of the Committee. Any member of management will attend a Committee meeting if invited by the Committee. The Lead Director, if not already a member of the Committee, will be entitled to attend each meeting of the Committee as an observer.

**3.**Committee Operations

#### Frequency of Meetings
The Chair, in consultation with the other members of the Committee, will determine the schedule and frequency of meetings of the Committee, provided that the Committee will meet at least once per quarter.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Agenda and Reporting to the Board
The Chair will establish the agenda for meetings in consultation with the other members of the Committee, the Chairman of the Board and the Lead Director. To the maximum extent possible, the agenda and meeting materials will be circulated to the members in advance to ensure sufficient time for study prior to the meeting. The Committee will report to the Board at the next meeting of the Board following each Committee meeting.

#### Secretary
The Corporate Secretary of Fairfax will, subject to any contrary direction of the Committee, act as secretary of the Committee.

#### Minutes
The secretary of the Committee will keep regular minutes of Committee proceedings and will circulate them to all Committee members, the Chairman of the Board and the Lead Director (and to any other director that requests that they be sent to him or her) on a timely basis.

#### Quorum
A quorum at any meeting will be a simple majority.

#### Procedure
The procedure at meetings will be determined by the Committee.

#### Transaction of Business
The powers of the Committee may be exercised at a meeting where a quorum is present or by resolution in writing signed by all members of the Committee.

#### Absence of Chair
In the absence of the Chair, the Committee may appoint one of its other members to act as Chair of that meeting.

#### Exercise of Power Between Meetings
Between meetings, and subject to any applicable law, the Chair of the Committee, or any member of the Committee designated for this purpose, may, if required in the circumstance, exercise any power delegated by the Committee. The Chair or other designated member will promptly report to the other Committee members in any case in which this interim power is exercised.

**4.**Committee Duties and Responsibilities

The Committee is responsible for performing the duties set out below and any other duties that may be assigned to it by the Board and performing any other functions that may be necessary or appropriate for the performance of its duties.

#### Independent Auditor's Qualifications and Independence
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. The Committee must recommend to the Board at all appropriate times the independent auditor to be nominated or appointed for the purpose of preparing or issuing an auditor's report or performing other audit, review or attest services for Fairfax and approve the compensation to be paid to the independent auditor.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. The Committee is directly responsible for overseeing the work of the independent auditor engaged for the purpose of preparing or issuing an auditor's report or performing other audit, review or attest services for Fairfax, including the resolution of disagreements between management and the independent auditor regarding financial reporting. The independent auditor will report directly to the Committee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. The Committee must pre-approve any permitted non-audit services to be provided by the independent auditor to Fairfax or its subsidiaries. The Committee may delegate to one or more of its members the authority to pre-approve those permitted non-audit services provided that any such pre-approval must be presented to the Committee at its next meeting and that the Committee may not delegate pre-approval of any non-audit internal control related services. The Committee may also adopt specific policies and procedures relating to pre-approval of permitted non-audit services to satisfy the pre-approval requirement provided that the procedures are detailed as to the specific service, the Committee is informed of each non-audit service and the procedures do not include the delegation of the Committee's responsibilities to management or pre-approval of non-audit internal control related services. The Committee will review with the lead audit partner whether any of the audit team members receive any discretionary compensation from the audit firm with respect to non-audit services performed by the independent auditor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The Committee will obtain and review with the lead audit partner and a more senior representative of the independent auditor, annually or more frequently as the Committee considers appropriate, a report by the independent auditor describing: (a) the independent auditor's internal quality-control procedures; (b) any material issues raised by the most recent internal quality-control review, or peer review, of the independent auditor, or by any inquiry, review or investigation by governmental, professional or other regulatory authorities, within the preceding five years, respecting independent audits carried out by the independent auditor, and any steps taken to deal with these issues; and (c) in order to assess the independent auditor's independence, all relationships between the independent auditor and Fairfax and the independent auditor's objectivity and independence in accordance with the rules, policies and standards applicable to auditors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. After reviewing the report referred to above and the independent auditor's performance throughout the year, the Committee will evaluate the independent auditor's qualifications, performance and independence. The evaluation will include a review and evaluation of the lead partner of the independent auditor. In making its evaluation, the Committee will take into account the opinions of management and Fairfax's internal auditors (or other personnel responsible for the internal audit function). The Committee will also consider whether, in order to assure continuing auditor independence, there should be a rotation of the audit firm itself. The Committee will present its conclusions to the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. The Committee will review with the Board any issues that arise with respect to the performance and independence of the independent auditor and where issues arise make recommendations about whether Fairfax should continue with that independent auditor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. The Committee will ensure the regular rotation of members of the independent auditor's team as required by law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. The Committee will establish hiring policies for employees and former employees of its independent auditor.

#### Financial Statements and Financial Review
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. The Committee will review the annual audited financial statements and quarterly financial statements with management and the independent auditor, including MD&A, before their release and their filing with securities regulatory authorities, including the filing of Form 40-F or Form 6-K, as applicable. The Committee will also review all news releases relating to annual and interim financial results prior to their public release. The Committee will also consider, establish, and periodically review policies with respect to the release or distribution of any other financial information, including earnings guidance and any financial information provided to ratings agencies and analysts, and review that information prior to its release.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. The Committee will meet separately and periodically with management, the internal auditors (or other personnel responsible for the internal audit function) and the independent auditor.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. The Committee will oversee management's design and implementation of an adequate and effective system of internal controls at Fairfax (including at its publicly traded subsidiaries), including ensuring adequate internal audit functions. The Committee will review the processes for complying with internal control reporting and certification requirements and for evaluating the adequacy and effectiveness of specified controls. The Committee will review the annual and interim conclusions of the effectiveness of Fairfax's disclosure controls and procedures and internal controls and procedures (including the independent auditor's attestation that is required to be filed with securities regulators).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12. The Committee will review with management and the independent auditor: (A) major issues regarding accounting principles and financial statement presentations, including critical accounting principles and practices used and any significant changes to Fairfax's selection or application of accounting principles, and major issues as to the adequacy of Fairfax's internal controls and any special audit steps adopted in light of material control deficiencies; (B) analyses prepared by management and/or the independent auditor setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including analysis of the effects of alternative GAAP methods on the financial statements of Fairfax and the treatment preferred by the independent auditor; (C) the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on the financial statements of Fairfax; and (D) the type and presentation of information to be included in earnings press releases (including any use of "pro forma" or "adjusted" non-GAAP information).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13. The Committee will regularly review with the independent auditor any difficulties the auditor encountered in the course of its audit work, including any restrictions on the scope of the independent auditor's activities or on access to requested information, and any significant disagreements with management. The Committee will also review with the independent auditor any material communications with the independent auditor, including any management letter or schedule of unadjusted differences.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14. The Committee will review with management, and any outside professionals as the Committee considers appropriate, important trends and developments in financial reporting practices and requirements and their effect on Fairfax's financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15. The Committee will review with management and the independent auditor the scope, planning and staffing of the proposed audit for the current year. The Committee will also review the organization, responsibilities, plans, results, budget and staffing of the internal audit departments. In addition, management of Fairfax's subsidiaries will consult with the Committee, or in the case of Fairfax's publicly traded subsidiaries, the audit committees of those subsidiaries, on the appointment, replacement, reassignment or dismissal of personnel in the respective internal audit departments.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16. The Committee will meet with management to discuss guidelines and policies governing the process by which Fairfax and its subsidiaries assess and manage exposure to risk and to discuss Fairfax's major financial risk exposures and the steps management has taken to monitor and control such exposures.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17. The Committee will review with management, and any internal or external counsel as the Committee considers appropriate, any legal matters (including the status of pending litigation) that may have a material impact on Fairfax and any material reports or inquiries from regulatory or governmental agencies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18. The Committee will review with the Board any issues that arise with respect to the quality or integrity of Fairfax's financial statements, compliance with legal or regulatory requirements, or the performance of the internal audit function.

#### Additional Oversight
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19. The Committee will establish procedures for (a) the receipt, retention and treatment of complaints received by Fairfax regarding accounting, internal accounting controls, auditing matters or potential violations of law and (b) the confidential, anonymous submission by employees of Fairfax of concerns regarding questionable accounting, internal accounting controls or auditing matters or potential violations of law. This will include the establishment of a whistleblower policy and an employee "hotline" for making anonymous submissions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20. The Committee will annually review the expenses of the CEO and the CFO.

------

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;21. The Committee will participate in the oversight of Fairfax's insurance subsidiaries that are subject to the NAIC Model Audit Rules, as adopted by the respective insurers' states of domicile, including through its interaction with their designated audit committees. If material weaknesses or significant deficiencies in internal control and/or significant solvency concerns are identified in such a subsidiary, at thresholds appropriate for the subsidiary, regardless of their materiality at the consolidated Fairfax level, the Committee will be involved in addressing these issues and will oversee their remediation. If any additional review and oversight responsibilities not included above are required to be performed by independent committees of the boards of directors of Fairfax's insurance subsidiaries under state laws and regulations applicable to such insurers in their states or provinces of domicile were such insurers not part of Fairfax, and if any such subsidiary or its designated audit committee notifies the Committee of such required performance, then regardless of the materiality of the subject matter involved at the consolidated Fairfax level, the Committee will perform such additional review and oversight responsibilities.

**5.** **Access to Advisors**

The Committee may, in its sole discretion, retain counsel, auditors or other advisors in connection with the execution of its duties and responsibilities and may determine the fees of any advisors so retained. Fairfax will provide the Committee with appropriate funding for payment of compensation to such counsel, auditors or other advisors and for ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.

**6.**The Committee Chair

In addition to the responsibilities of the Chair described above, the Chair has the primary responsibility for monitoring developments with respect to financial reporting in general, and reporting to the Committee on any significant developments.

**7.**Committee Evaluation

The performance of the Committee will be evaluated by the Governance and Nominating Committee as part of its annual evaluation of the Board committees.

------

## Exhibit 99.2

?xml version='1.0' encoding='UTF-8'?

[**Table of Contents**](#TOC)

**Exhibit 99.2**

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

**Management's Responsibility for the Financial Statements** 

The preparation and presentation of the accompanying consolidated financial statements, Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") and all financial information are the responsibility of management and have been approved by the Board of Directors (the "Board").

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. Financial statements, by nature, are not precise since they include certain amounts based upon estimates and judgments. When alternative methods exist, management has chosen those it deems to be the most appropriate in the circumstances.

We, as Fairfax's Chief Executive Officer and Chief Financial Officer, have certified Fairfax's annual disclosure documents filed with the Canadian Securities Administrators and the United States Securities and Exchange Commission (Form 40-F) in accordance with Canadian securities legislation and the United States Sarbanes-Oxley Act of 2002, respectively.

The Board is responsible for ensuring that management fulfills its responsibilities for financial reporting and is ultimately responsible for reviewing and approving the consolidated financial statements and MD&A. The Board carries out this responsibility principally through its Audit Committee which is independent from management.

The Audit Committee is appointed by the Board and reviews the consolidated financial statements and MD&A; considers the report of the independent registered public accounting firm; assesses the adequacy of the internal controls of the company, including management's assessment described below; examines the fees and expenses for audit services; and recommends to the Board the independent registered public accounting firm for appointment by the shareholders. The independent registered public accounting firm has full access to the Audit Committee and meet with it to discuss their audit work, Fairfax's internal control over financial reporting and financial reporting matters. The Audit Committee reports its findings to the Board for consideration when approving the consolidated financial statements for issuance to the shareholders and management's assessment of the internal control over financial reporting.

**Management's Report on Internal Control over Financial Reporting**

Management is responsible for establishing and maintaining adequate internal control over financial reporting.

Management has assessed the effectiveness of the company's internal control over financial reporting as of December 31, 2022 using criteria established in *Internal Control - Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on this assessment, management concluded that the company's internal control over financial reporting was effective as of December 31, 2022.

The effectiveness of the company's internal control over financial reporting as of December 31, 2022 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.

March 10, 2023

---

| | |
|:---|:---|
| ![Graphic](ffh-20221231xex99d2001.jpg) | ![Graphic](ffh-20221231xex99d2002.jpg) |
| V. Prem Watsa | Jennifer Allen |
| *Chairman and Chief Executive Officer* | *Vice President and Chief Financial Officer* |

---

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

**Report of Independent Registered Public Accounting Firm**

To the Shareholders and Board of Directors of Fairfax Financial Holdings Limited

**Opinions on the Financial Statements and Internal Control over Financial Reporting**

We have audited the accompanying consolidated balance sheets of Fairfax Financial Holdings Limited and its subsidiaries (together, the Company) as of December 31, 2022 and 2021, and the related consolidated statements of earnings, comprehensive income, changes in equity and cash flows for the years then ended, including the related notes (collectively referred to as the consolidated financial statements). We also have audited the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in *Internal Control – Integrated Framework* (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and its financial performance and its cash flows for the years then ended in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in *Internal Control – Integrated Framework* (2013) issued by the COSO.

**Basis for Opinions**

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on the Company's consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

**Definition and Limitations of Internal Control over Financial Reporting**

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

**Critical Audit Matters**

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

*Estimation of reserves for incurred but not reported losses*

As described in Notes 3, 4 and 8 to the consolidated financial statements, insurance contract liabilities include property and casualty reserves for incurred but not reported losses, net of reinsurance (IBNR reserves), of $18,139.4 million as at December 31, 2022. IBNR reserves are estimated by management based on Canadian accepted actuarial practices, which are designed to ensure the Company establishes an appropriate reserve on its consolidated balance sheet to cover insured losses and related claims expenses. Management determines the IBNR reserves based on undiscounted projected future cash flows of claims using significant assumptions that represent best estimates of possible outcomes aimed at evaluating the expected ultimate cost to settle unpaid claims that occurred on or before the consolidated balance sheet date but have not yet been reported. Management has applied varying actuarial projection methodologies in the estimation of IBNR reserves, based on product line, type and extent of coverage. These methodologies require management to develop significant assumptions including expected loss ratios and loss development patterns.

The principal considerations for our determination that performing procedures relating to the estimation of IBNR reserves is a critical audit matter are (1) the significant judgment by management to determine the IBNR reserves and (2) a high degree of auditor judgment, subjectivity and effort in evaluating audit evidence relating to the appropriateness of management's actuarial projection methodologies and significant assumptions including the expected loss ratios and loss development patterns. In addition, the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the Company's estimation of IBNR reserves, including controls over the selection of actuarial projection methodologies and the development of significant assumptions. These procedures also included, among others, the involvement of professionals with specialized skill and knowledge to assist in testing a significant portion of the IBNR reserves by developing independent estimates and comparing the independent estimates to management's actuarially determined reserves, with the remaining portion subjected to other procedures. Developing independent estimates involved (i) selecting the actuarial projection methodologies; (ii) developing significant assumptions based on data provided by management; (iii) where there was limited historical data, considering market views and peer company benchmarking to further inform independent development of significant assumptions; and (iv) testing the completeness and accuracy of the data provided by management.

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

*Valuation of private placement debt securities and private company preferred shares*

As described in Notes 3, 4 and 5 to the consolidated financial statements, the Company holds financial instruments categorized as private placement debt securities measured at fair value of $834.2 million and private company preferred shares measured at fair value of $1,798.3 million as at December 31, 2022. Valuation of private placement debt securities and private company preferred shares use valuation techniques that depend on the nature of the investment. Management uses unobservable inputs to develop assumptions for which market data is limited or unavailable. These investments are valued by management as follows: (i) private placement debt securities are valued primarily using industry accepted discounted cash flow models that incorporate credit spreads of issuers as a significant unobservable input, and (ii) private company preferred shares are valued using industry accepted discounted cash flow models that incorporate discount rates and long-term growth rates as significant unobservable inputs. The fair value determined using the discounted cash flow models are compared to recent market transactions, where applicable.

The principal considerations for our determination that performing procedures relating to the valuation of private placement debt securities and private company preferred shares is a critical audit matter are (1) the significant judgment by management in selecting the appropriate discounted cash flow models to determine or corroborate the fair value of these investments, which included significant unobservable inputs related to the credit spreads, discount rates and long-term growth rates of the issuers and (2) a high degree of auditor subjectivity, judgment and effort to evaluate the audit evidence related to the valuation. In addition, the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the valuation of private placement debt securities and private company preferred shares, including controls over the Company's selection and preparation of the discounted cash flow models and determination of significant unobservable inputs. For a sample of private placement debt securities, these procedures included, among others, the involvement of professionals with specialized skill and knowledge to (i) assist in developing independent estimates using industry-accepted valuation models and (ii) independently develop assumptions such as credit spreads by considering, as applicable, current and past performance of the particular investment, relevant external market and industry data and evidence obtained in other areas of the audit. These procedures also included testing the completeness and accuracy of the underlying data supporting the independent estimates and comparing the independent estimates to management's valuation. For private company preferred shares, these procedures included, among others, (i) evaluating the reasonableness of the significant unobservable inputs used, including discount rates and long-term growth rates; (ii) testing the completeness and accuracy of the underlying data; and (iii) involving professionals with specialized skill and knowledge to assist in evaluating the appropriateness of the models used, the reasonableness of the discount rates and long-term growth rates and considering external market and industry data. This includes comparing management's estimate to the fair value implied by recent market transactions.

![Graphic](ffh-20221231xex99d2003.jpg)

Chartered Professional Accountants, Licensed Public Accountants

Toronto, Canada

March 10, 2023

We have served as the Company's auditor since at least 1985. We have not been able to determine the specific year we began serving as auditor of the Company.

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

**Consolidated Financial Statements**

#### Consolidated Balance Sheets
*as at December 31, 2022 and December 31, 2021*

---

| | | | |
|:---|:---|:---|:---|
|  |  | **December 31,**  | **December 31,**  |
|  | **Notes** | **2022** | **2021** |
|  |  | *(US$ millions)* | *(US$ millions)* |
| **Assets** |  |  |  |
| Holding company cash and investments (including assets pledged for derivative obligations – $104.6; December 31, 2021 – $111.0) | 5, 27 | 1345.8  | 1478.3  |
| Insurance contract receivables | 10 | 7907.5  | 6883.2  |
| *Portfolio investments* |  |  |  |
| Subsidiary cash and short term investments (including restricted cash and cash equivalents – $854.4; December 31, 2021 – $1,246.4) | 5, 27 | 9368.2  | 21799.5  |
| Bonds (cost $29,534.4; December 31, 2021 – $13,836.3) | 5 | 28578.5  | 14091.2  |
| Preferred stocks (cost $808.3; December 31, 2021 – $576.6) | 5 | 2338.0  | 2405.9  |
| Common stocks (cost $5,162.6; December 31, 2021 – $4,717.2) | 5 | 5124.3  | 5468.9  |
| Investments in associates (fair value $6,772.9; December 31, 2021 – $5,671.9) | 5, 6 | 6091.3  | 4755.1  |
| Derivatives and other invested assets (cost $869.8; December 31, 2021 – $888.2) | 5, 7 | 828.5  | 991.2  |
| Assets pledged for derivative obligations (cost $52.4; December 31, 2021 – $119.6) | 5, 7 | 51.3  | 119.6  |
| Fairfax India cash, portfolio investments and associates (fair value $3,079.6; December 31, 2021 – $3,336.4) | 5, 6, 23, 27 | 1942.8  | 2066.0  |
|  |  | 54322.9  | 51697.4  |
| Deferred premium acquisition costs | 11 | 2170.3  | 1924.1  |
| Recoverable from reinsurers (including recoverables on paid losses – $1,454.2; December 31, 2021 – $884.3) | 8, 9 | 13115.8  | 12090.5  |
| Deferred income tax assets | 18 | 492.1  | 522.4  |
| Goodwill and intangible assets | 12 | 5689.0  | 5928.2  |
| Other assets | 13 | 7081.7  | 6121.3  |
| Total assets |  | 92125.1  | 86645.4  |

---

See accompanying notes.

Signed on behalf of the Board

---

| | |
|:---|:---|
| ![Graphic](ffh-20221231xex99d2001.jpg) | ![Graphic](ffh-20221231xex99d2005.jpg) |
| Director | Director |

---

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

---

| | | | |
|:---|:---|:---|:---|
|  |  | **December 31,**  | **December 31,**  |
|  | **Notes** | **2022** | **2021** |
|  |  | *(US$ millions)* | *(US$ millions)* |
| **Liabilities** |  |  |  |
| Accounts payable and accrued liabilities | 14 | 5215.2  | 4985.4  |
| Derivative obligations (including at the holding company – $19.4; December 31, 2021 – $32.1) | 5, 7 | 191.0  | 152.9  |
| Deferred income tax liabilities | 18 | 496.7  | 598.8  |
| Insurance contract payables | 10 | 5061.9  | 4493.5  |
| Insurance contract liabilities | 8 | 52199.6  | 47346.5  |
| Borrowings – holding company and insurance and reinsurance companies | 15 | 6621.0  | 6129.3  |
| Borrowings – non-insurance companies | 15 | 2003.9  | 1623.7  |
| Total liabilities |  | 71789.3  | 65330.1  |
| **Equity** | 16 |  |  |
| Common shareholders' equity |  | 15340.7  | 15049.6  |
| Preferred stock |  | 1335.5  | 1335.5 |
| Shareholders' equity attributable to shareholders of Fairfax |  | 16676.2  | 16385.1  |
| Non-controlling interests |  | 3659.6  | 4930.2  |
| Total equity |  | 20335.8  | 21315.3 |
|  |  | 92125.1  | 86645.4  |

---

See accompanying notes.

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Consolidated Statements of Earnings
*for the years ended December 31, 2022 and 2021*

---

| | | | |
|:---|:---|:---|:---|
|  | **Notes** | **2022** | **2021** |
|  |  | *(US$ millions except per share amounts)* | *(US$ millions except per share amounts)* |
| **Income** |  |  |  |
| &nbsp;&nbsp;Gross premiums written | 10, 25 | 27912.6  | 23910.2  |
| &nbsp;&nbsp;Net premiums written | 25 | 22271.7  | 18278.1  |
| &nbsp;&nbsp;Gross premiums earned |  | 26454.9  | 21786.8  |
| &nbsp;&nbsp;Premiums ceded to reinsurers |  | (5448.8) | (5228.8) |
| &nbsp;&nbsp;Net premiums earned | 25 | 21006.1  | 16558.0  |
| &nbsp;&nbsp;Interest and dividends | 5 | 961.8  | 640.8  |
| &nbsp;&nbsp;Share of profit of associates | 6 | 1014.7  | 402.0  |
| &nbsp;&nbsp;Net gains (losses) on investments | 5 | (1733.9) | 3445.1  |
| &nbsp;&nbsp;Gain on sale and consolidation of insurance subsidiaries | 23 | 1219.7  | 264.0  |
| &nbsp;&nbsp;Other revenue | 25 | 5581.6  | 5158.0  |
|  |  | 28050.0  | 26467.9  |
| **Expenses** |  |  |  |
| &nbsp;&nbsp;Losses on claims, gross | 8 | 17509.5  | 14200.7  |
| &nbsp;&nbsp;Losses on claims, ceded to reinsurers | 9 | (3657.6) | (3460.2) |
| &nbsp;&nbsp;Losses on claims, net | 26 | 13851.9  | 10740.5  |
| &nbsp;&nbsp;Operating expenses | 26 | 3057.5  | 2946.1  |
| &nbsp;&nbsp;Commissions, net | 9 | 3454.9  | 2787.9  |
| &nbsp;&nbsp;Interest expense | 15 | 452.8  | 513.9  |
| &nbsp;&nbsp;Other expenses | 25, 26 | 5520.9  | 5086.9  |
|  |  | 26338.0  | 22075.3  |
| **Earnings before income taxes** |  | 1712.0  | 4392.6  |
| Provision for income taxes | 18 | 425.2  | 726.0  |
| **Net earnings** |  | 1286.8  | 3666.6  |
| **Attributable to:** |  |  |  |
| Shareholders of Fairfax |  | 1147.2  | 3401.1  |
| Non-controlling interests | 16 | 139.6  | 265.5  |
|  |  | 1286.8  | 3666.6  |
| **Net earnings per share** | 17 | $46.62 | $129.33  |
| **Net earnings per diluted share** | 17 | $43.49 | $122.25  |
| **Cash dividends paid per share** | 16 | $10.00 | $10.00 |
| **Shares outstanding (000) (weighted average)** | 17 | 23638  | 25953 |

---

See accompanying notes.

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Consolidated Statements of Comprehensive Income
*for the years ended December 31, 2022 and 2021*

---

| | | | |
|:---|:---|:---|:---|
|  | **Notes** | **2022** | **2021** |
|  |  | *(US$ millions)* | *(US$ millions)* |
| **Net earnings** |  | 1286.8  | 3666.6  |
| **Other comprehensive income (loss),** net of income taxes | 16 |  |  |
| &nbsp;&nbsp;**Items that may be subsequently reclassified to net earnings**  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net unrealized foreign currency translation losses on foreign subsidiaries |  | (673.7) | (199.5) |
| &nbsp;&nbsp;&nbsp;&nbsp;Gains (losses) on hedge of net investment in Canadian subsidiaries | 7 | 149.5  | (16.7) |
| &nbsp;&nbsp;&nbsp;&nbsp;Gains on hedge of net investment in European operations | 7 | 51.8  | 63.9  |
| &nbsp;&nbsp;&nbsp;&nbsp;Share of other comprehensive loss of associates, excluding net gains on defined benefit plans | 6 | (132.0) | (75.1) |
| &nbsp;&nbsp;&nbsp;&nbsp;Other |  | 2.2  |  |
|  |  | (602.2) | (227.4) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net unrealized foreign currency translation losses on foreign subsidiaries reclassified to net earnings  | 23 | 19.7  | 6.7  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net unrealized foreign currency translation gains on associates reclassified to net earnings | 6 | (4.3) | (45.2) |
|  |  | (586.8) | (265.9) |
| &nbsp;&nbsp;**Items that will not be subsequently reclassified to net earnings** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net gains on defined benefit plans | 21 | 121.7  | 88.2  |
| &nbsp;&nbsp;&nbsp;&nbsp;Share of net gains on defined benefit plans of associates | 6 | 59.4  | 67.0  |
| &nbsp;&nbsp;&nbsp;&nbsp;Other |  |  | 13.8  |
|  |  | 181.1  | 169.0  |
| **Other comprehensive income (loss),** net of income taxes |  | (405.7) | (96.9) |
| **Comprehensive income**  |  | 881.1  | 3569.7  |
| **Attributable to:** |  |  |  |
| Shareholders of Fairfax |  | 939.8  | 3377.6  |
| Non-controlling interests |  | (58.7) | 192.1  |
|  |  | 881.1  | 3569.7  |

---

See accompanying notes.

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Consolidated Statements of Changes in Equity
*for the years ended December 31, 2022 and 2021*

*(US$ millions)*

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  | **Share-** |  |  |  |  | **Equity** |  |  |
|  |  |  | **based** |  | **Accumulated** |  |  | **attributable** |  |  |
|  |  | **Treasury** | **payments** |  | **other** | **Common** |  | **to** | **Non-** |  |
|  | **Common** | **shares** | **and other** | **Retained** | **comprehensive** | **shareholders'** | **Preferred** | **shareholders** | **controlling** | **Total**  |
|  | **shares**<sup>(1)</sup> | **at cost** | **reserves** | **earnings** | **income (loss)** | **equity** | **shares** | **of Fairfax** | **interests** | **equity** |
| **Balance as of January 1, 2022** | 6182.4 | (808.1) | 504.8 | 9972.2 | (801.7) | 15049.6 | 1335.5 | 16385.1 | 4930.2 | 21315.3 |
| Net earnings for the year |  |  |  | 1147.2 |  | 1147.2 |  | 1147.2 | 139.6 | 1286.8 |
| Other comprehensive income (loss), net of income taxes: |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net unrealized foreign currency translation losses on foreign operations |  |  |  |  | (479.7) | (479.7) |  | (479.7) | (194.0) | (673.7) |
| &nbsp;&nbsp;&nbsp;&nbsp;Gains on hedge of net investment in Canadian subsidiaries |  |  |  |  | 149.5 | 149.5 |  | 149.5 |  | 149.5 |
| &nbsp;&nbsp;&nbsp;&nbsp;Gains on hedge of net investment in European operations |  |  |  |  | 51.8 | 51.8 |  | 51.8 |  | 51.8 |
| &nbsp;&nbsp;&nbsp;&nbsp;Share of other comprehensive loss of associates, excluding net gains on defined benefit plans |  |  |  |  | (120.7) | (120.7) |  | (120.7) | (11.3) | (132.0) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net unrealized foreign currency translation losses on foreign subsidiaries reclassified to net earnings |  |  |  |  | 19.7 | 19.7 |  | 19.7 |  | 19.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net unrealized foreign currency translation gains on associates reclassified to net earnings |  |  |  |  | (3.9) | (3.9) |  | (3.9) | (0.4) | (4.3) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net gains on defined benefit plans |  |  |  |  | 116.9 | 116.9 |  | 116.9 | 4.8 | 121.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;Share of net gains on defined benefit plans of associates |  |  |  |  | 57.8 | 57.8 |  | 57.8 | 1.6 | 59.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other |  |  |  |  | 1.2 | 1.2 |  | 1.2 | 1.0 | 2.2 |
| Issuances for share-based payments |  | 62.4 | (70.2) |  |  | (7.8) |  | (7.8) | 5.3 | (2.5) |
| Purchases and amortization for share-based payments (note 16) |  | (148.2) | 146.1 |  |  | (2.1) |  | (2.1) | (20.3) | (22.4) |
| Purchases for cancellation (note 16) | (96.1) |  |  | (103.5) |  | (199.6) |  | (199.6) |  | (199.6) |
| Common share dividends (note 16) |  |  |  | (249.9) |  | (249.9) |  | (249.9) | (263.2) | (513.1) |
| Preferred share dividends (note 16) |  |  |  | (45.2) |  | (45.2) |  | (45.2) |  | (45.2) |
| Acquisitions of subsidiaries (note 23) |  |  |  |  |  |  |  |  | 111.5 | 111.5 |
| Net changes in capitalization (note 16 and note 23) |  |  | 37.6 | (211.2) |  | (173.6) |  | (173.6) | (1070.9) | (1244.5) |
| Other |  | 2.6 | (2.6) |  | 29.5 | 29.5 |  | 29.5 | 25.7 | 55.2 |
| **Balance as of December 31, 2022** | 6086.3 | (891.3) | 615.7 | 10509.6 | (979.6) | 15340.7 | 1335.5 | 16676.2 | 3659.6 | 20335.8 |
| **Balance as of January 1, 2021** | 6712.0 | (732.8) | 248.4 | 7092.5 | (799.0) | 12521.1 | 1335.5 | 13856.6 | 3670.7 | 17527.3 |
| Net earnings for the year |  |  |  | 3401.1 |  | 3401.1 |  | 3401.1 | 265.5 | 3666.6 |
| Other comprehensive income (loss), net of income taxes: |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net unrealized foreign currency translation losses on foreign operations |  |  |  |  | (123.3) | (123.3) |  | (123.3) | (76.2) | (199.5) |
| &nbsp;&nbsp;&nbsp;&nbsp;Losses on hedge of net investment in Canadian subsidiaries |  |  |  |  | (16.7) | (16.7) |  | (16.7) |  | (16.7) |
| &nbsp;&nbsp;&nbsp;&nbsp;Gains on hedge of net investment in European operations |  |  |  |  | 63.9 | 63.9 |  | 63.9 |  | 63.9 |
| &nbsp;&nbsp;&nbsp;&nbsp;Share of other comprehensive loss of associates, excluding net gains (losses) on defined benefit plans |  |  |  |  | (65.2) | (65.2) |  | (65.2) | (9.9) | (75.1) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net unrealized foreign currency translation losses on foreign subsidiaries reclassified to net earnings |  |  |  |  | 3.1 | 3.1 |  | 3.1 | 3.6 | 6.7 |
| &nbsp;&nbsp;&nbsp;&nbsp;Net unrealized foreign currency translation (gains) losses on associates reclassified to net earnings |  |  |  |  | (45.6) | (45.6) |  | (45.6) | 0.4 | (45.2) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net gains on defined benefit plans |  |  |  |  | 82.8 | 82.8 |  | 82.8 | 5.4 | 88.2 |
| &nbsp;&nbsp;&nbsp;&nbsp;Share of net gains (losses) on defined benefit plans of associates |  |  |  |  | 68.3 | 68.3 |  | 68.3 | (1.3) | 67.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other |  |  |  |  | 9.2 | 9.2 |  | 9.2 | 4.6 | 13.8 |
| Issuances for share-based payments |  | 57.3 | (56.1) |  |  | 1.2 |  | 1.2 | (3.0) | (1.8) |
| Purchases and amortization for share-based payments (note 16) |  | (132.6) | 104.1 |  |  | (28.5) |  | (28.5) | 6.8 | (21.7) |
| Purchases for cancellation (note 16) | (529.6) |  |  | (528.5) |  | (1058.1) |  | (1058.1) |  | (1058.1) |
| Common share dividends (note 16) |  |  |  | (272.1) |  | (272.1) |  | (272.1) | (155.4) | (427.5) |
| Preferred share dividends (note 16) |  |  |  | (44.5) |  | (44.5) |  | (44.5) |  | (44.5) |
| Acquisitions of subsidiaries (note 23) |  |  |  |  |  |  |  |  | 7.5 | 7.5 |
| Deconsolidation of subsidiaries (note 23) |  |  |  |  |  |  |  |  | (15.4) | (15.4) |
| Net changes in capitalization (note 16 and note 23) |  |  | 208.4 | 323.7 | 20.8 | 552.9 |  | 552.9 | 1226.9 | 1779.8 |
| **Balance as of December 31, 2021** | 6182.4 | (808.1) | 504.8 | 9972.2 | (801.7) | 15049.6 | 1335.5 | 16385.1 | 4930.2 | 21315.3 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Includes multiple voting shares with a carrying value of $3.8 at January 1, 2021, December 31, 2021 and December 31, 2022.* 

See accompanying notes.

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Consolidated Statements of Cash Flows
*for the years ended December 31, 2022 and 2021*

---

| | | | |
|:---|:---|:---|:---|
|  | **Notes** | **2022** | **2021** |
|  |  | *(US$ millions)* | *(US$ millions)* |
| **Operating activities** |  |  |  |
| &nbsp;&nbsp;Net earnings |  | 1286.8 | 3666.6 |
| &nbsp;&nbsp;Depreciation, amortization and impairment charges | 26 | 683.6 | 930.4 |
| &nbsp;&nbsp;Net bond premium (discount) amortization |  | (34.2) | 65.0 |
| &nbsp;&nbsp;Amortization of share-based payment awards |  | 146.1 | 104.1 |
| &nbsp;&nbsp;Share of profit of associates | 6 | (1014.7) | (402.0) |
| &nbsp;&nbsp;Net deferred income taxes | 18 | (181.6) | 339.0 |
| &nbsp;&nbsp;Net (gains) losses on investments | 5, 23 | 1733.9 | (3445.1) |
| &nbsp;&nbsp;Gain on sale and consolidation of insurance subsidiaries | 23 | (1219.7) | (264.0) |
| &nbsp;&nbsp;Loss on repurchase of borrowings | 15 |  | 45.7 |
| &nbsp;&nbsp;Net (purchases) sales of investments classified at FVTPL | 27 | (9640.2) | 2614.4 |
| &nbsp;&nbsp;Changes in operating assets and liabilities | 27 | 3820.1 | 2986.9 |
| Cash provided by (used in) operating activities |  | (4419.9) | 6641.0 |
| **Investing activities** |  |  |  |
| &nbsp;&nbsp;Sales of investments in associates | 6 | 192.9 | 809.2 |
| &nbsp;&nbsp;Purchases of investments in associates | 6 | (363.5) | (175.4) |
| &nbsp;&nbsp;Net purchases of premises and equipment and intangible assets |  | (418.9) | (353.9) |
| &nbsp;&nbsp;Net sales of investment property |  | 84.7 | 27.0 |
| &nbsp;&nbsp;Purchases of subsidiaries, net of cash acquired | 23 | (229.9) | 1259.5 |
| &nbsp;&nbsp;Proceeds from sale of insurance subsidiaries, net of cash divested | 23 | 1109.0 | 85.4 |
| &nbsp;&nbsp;Proceeds from sale of non-insurance subsidiaries, net of cash divested | 23 | 10.5 | 186.8 |
| Cash provided by investing activities |  | 384.8 | 1838.6 |
| **Financing activities** |  |  |  |
| &nbsp;&nbsp;Borrowings - holding company and insurance and reinsurance companies: | 15 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds, net of issuance costs  |  | 743.4 | 1250.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;Repayments |  | (0.3) | (932.9) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net repayments on holding company credit facility |  |  | (700.0) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net repayments on other revolving credit facilities |  | (35.0) | (84.3) |
| &nbsp;&nbsp;Borrowings - non-insurance companies: | 15 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Proceeds, net of issuance costs |  | 47.0 | 499.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;Repayments |  | (25.3) | (593.9) |
| &nbsp;&nbsp;&nbsp;&nbsp;Net borrowings (repayments) on revolving credit facilities and short term loans |  | 304.1 | (262.0) |
| &nbsp;&nbsp;Principal payments on lease liabilities - holding company and insurance and reinsurance companies |  | (68.5) | (64.6) |
| &nbsp;&nbsp;Principal payments on lease liabilities - non-insurance companies |  | (138.9) | (162.8) |
| &nbsp;&nbsp;Subordinate voting shares: | 16 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchases for treasury |  | (148.2) | (132.6) |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchases for cancellation |  | (199.6) | (1058.1) |
| &nbsp;&nbsp;Common share dividends | 16 | (249.9) | (272.1) |
| &nbsp;&nbsp;Preferred share dividends | 16 | (45.2) | (44.5) |
| &nbsp;&nbsp;Subsidiary shares: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Issuances to non-controlling interests, net of issuance costs | 23 | 167.5 | 1603.2 |
| &nbsp;&nbsp;&nbsp;&nbsp;Purchases of non-controlling interests | 23 | (1384.7) | (233.0) |
| &nbsp;&nbsp;&nbsp;&nbsp;Sales to non-controlling interests |  |  | 174.8 |
| &nbsp;&nbsp;&nbsp;&nbsp;Dividends paid to non-controlling interests | 16 | (261.0) | (175.6) |
| Cash used in financing activities |  | (1294.6) | (1189.3) |
| **Increase (decrease) in cash and cash equivalents** |  | (5329.7) | 7290.3 |
| &nbsp;&nbsp;Cash and cash equivalents – beginning of year |  | 11685.4 | 4467.1 |
| &nbsp;&nbsp;Foreign currency translation |  | (236.1) | (72.0) |
| **Cash and cash equivalents – end of year** | 27 | 6119.6 | 11685.4 |

---

See accompanying notes.

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Index to Notes to Consolidated Financial Statements

---

| | | |
|:---|:---|:---|
| [1.](#a1BusinessOperations_297893) | [Business Operations](#a1BusinessOperations_297893) | 12 |
| [2.](#a2BasisofPresentation_261451) | [Basis of Presentation](#a2BasisofPresentation_261451) | 12 |
| [3.](#a3SummaryofSignificantAccountingPolicies) | [Summary of Significant Accounting Policies](#a3SummaryofSignificantAccountingPolicies) | 12 |
| [4.](#a4CriticalAccountingEstimatesandJudgment) | [Critical Accounting Estimates and Judgments](#a4CriticalAccountingEstimatesandJudgment) | 28 |
| [5.](#a5CashandInvestments_41282) | [Cash and Investments](#a5CashandInvestments_41282) | 30 |
| [6.](#InvestmentsinAssociates_863506) | [Investments in Associates](#InvestmentsinAssociates_863506) | 37 |
| [7.](#a7Derivatives_710291) | [Derivatives](#a7Derivatives_710291) | 41 |
| [8.](#a8InsuranceContractLiabilities_958446) | [Insurance Contract Liabilities](#a8InsuranceContractLiabilities_958446) | 43 |
| [9.](#a9Reinsurance_269659) | [Reinsurance](#a9Reinsurance_269659) | 46 |
| [10.](#a10InsuranceContractReceivablesandPayabl) | [Insurance Contract Receivables and Payables](#a10InsuranceContractReceivablesandPayabl) | 48 |
| [11.](#a11DeferredPremiumAcquisitionCosts_75534) | [Deferred Premium Acquisition Costs](#a11DeferredPremiumAcquisitionCosts_75534) | 49 |
| [12.](#GoodwillandIntangibleAssets_866192) | [Goodwill and Intangible Assets](#GoodwillandIntangibleAssets_866192) | 49 |
| [13.](#a13OtherAssets_317712) | [Other Assets](#a13OtherAssets_317712) | 51 |
| [14.](#a14AccountsPayableandAccruedLiabilities_) | [Accounts Payable and Accrued Liabilities](#a14AccountsPayableandAccruedLiabilities_) | 52 |
| [15.](#a15Borrowings_338944) | [Borrowings](#a15Borrowings_338944) | 53 |
| [16.](#a16TotalEquity_943444) | [Total Equity](#a16TotalEquity_943444) | 55 |
| [17.](#a17EarningsperShare_553620) | [Earnings per Share](#a17EarningsperShare_553620) | 59 |
| [18.](#a18IncomeTaxes_880791) | [Income Taxes](#a18IncomeTaxes_880791) | 59 |
| [19.](#a19StatutoryRequirements_560625) | [Statutory Requirements](#a19StatutoryRequirements_560625) | 62 |
| [20.](#a20ContingenciesandCommitments_221394) | [Contingencies and Commitments](#a20ContingenciesandCommitments_221394) | 62 |
| [21.](#a21PensionsandPostRetirementBenefits_434) | [Pensions and Post Retirement Benefits](#a21PensionsandPostRetirementBenefits_434) | 63 |
| [22.](#a22Leases_902304) | [Leases](#a22Leases_902304) | 64 |
| [23.](#a23AcquisitionsandDivestitures_489738) | [Acquisitions and Divestitures](#a23AcquisitionsandDivestitures_489738) | 65 |
| [24.](#a24FinancialRiskManagement_703862) | [Financial Risk Management](#a24FinancialRiskManagement_703862) | 69 |
| [25.](#a25SegmentedInformation_787883) | [Segmented Information](#a25SegmentedInformation_787883) | 86 |
| [26.](#a26Expenses_630349) | [Expenses](#a26Expenses_630349) | 93 |
| [27.](#a27SupplementaryCashFlowInformation_1049) | [Supplementary Cash Flow Information](#a27SupplementaryCashFlowInformation_1049) | 94 |
| [28.](#a28RelatedPartyTransactions_812768) | [Related Party Transactions](#a28RelatedPartyTransactions_812768) | 95 |
| [29.](#a29Subsidiaries_671950) | [Subsidiaries](#a29Subsidiaries_671950) | 97 |

---

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Notes to Consolidated Financial Statements
*for the years ended December 31, 2022 and 2021*

*(in US$ and $ millions except per share amounts and as otherwise indicated)*

&nbsp;&nbsp;&nbsp;&nbsp;1. **Business Operations** 

Fairfax Financial Holdings Limited ("the company" or "Fairfax") is a holding company which, through its subsidiaries, is primarily engaged in property and casualty insurance and reinsurance and the associated investment management. The holding company is federally incorporated and domiciled in Ontario, Canada.

&nbsp;&nbsp;&nbsp;&nbsp;2. **Basis of Presentation** 

The company's consolidated financial statements for the year ended December 31, 2022 are prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). The consolidated financial statements have been prepared on a historical cost basis, except for derivative financial instruments, investment property and fair value through profit and loss ("FVTPL") financial assets and liabilities that have been measured at fair value.

The consolidated balance sheets of the company are presented on a non-classified basis. Assets expected to be realized and liabilities expected to be settled within the company's normal operating cycle of one year are considered current, including the following balances: cash, short term investments, insurance contract receivables, deferred premium acquisition costs, derivative obligations and insurance contract payables. The following balances are considered non-current: deferred income tax assets, goodwill and intangible assets and deferred income tax liabilities. All other balances are comprised of current and non-current amounts.

The holding company has significant liquid resources that are generally not restricted by insurance regulators. The subsidiary insurance and reinsurance companies are often subject to a wide variety of insurance and other laws and regulations that vary by jurisdiction and are intended to protect policyholders rather than investors. These laws and regulations may limit the ability of the insurance and reinsurance companies to pay dividends or make distributions to parent companies. The company's consolidated balance sheet and consolidated statement of cash flows therefore make a distinction in classification between the holding company and the insurance and reinsurance companies for cash and investments to provide additional insight into the company's liquidity, financial leverage and capital structure.

These consolidated financial statements were approved for issue by the company's Board of Directors on March 10, 2023.

&nbsp;&nbsp;&nbsp;&nbsp;3. **Summary of Significant Accounting Policies** 

The principal accounting policies applied to the presentation of these consolidated financial statements and the methods of computation have been consistently applied to all periods presented unless otherwise stated, and are as set out below.

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Consolidation
**Subsidiaries** - The company's consolidated financial statements include the assets, liabilities, equity, income, expenses and cash flows of the holding company and its subsidiaries. A subsidiary is an entity that the company controls. The company controls an entity when it has power over the entity, is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Assessment of control is based on the substance of the relationship between the company and the entity and includes consideration of both existing voting rights and, if applicable, potential voting rights that are currently exercisable or convertible. The operating results of subsidiaries acquired are included in the consolidated financial statements from the date control is acquired (typically the acquisition date), and the operating results of subsidiaries divested are included up to the date control ceased. Any difference between the fair value of the consideration received and the carrying value of a divested subsidiary is recognized in the consolidated statement of earnings, and foreign currency translation gains (losses) of that subsidiary are recycled from accumulated other comprehensive income (loss) to the consolidated statement of earnings.

The consolidated financial statements were prepared as of December 31, 2022 and 2021 based on individual holding companies' and subsidiaries' financial statements at those dates. Accounting policies of subsidiaries have been aligned with those of the company where necessary. The company's significant operating subsidiaries are identified in note 29.

**Non-controlling interests** - Subsequent to initial recognition in a business combination, the carrying value of non-controlling interests is adjusted for the non-controlling interest's share of the subsidiary's comprehensive income (loss) and equity transactions. A non-controlling interest's share of such adjustments is based on its present ownership interest in the subsidiary after consideration of any applicable shareholders' agreements and other contractual arrangements. Effects of transactions with non-controlling interests are recorded in common shareholders' equity if there is no change in control.

#### Business combinations
Business combinations are accounted for using the acquisition method of accounting whereby the consideration transferred is measured at fair value at the date of acquisition. This consideration may include cash paid and the fair value at the date of exchange of assets given, liabilities assumed and equity instruments issued by the company or its subsidiaries. Directly attributable acquisition-related costs are recorded in operating expenses or other expenses in the consolidated statement of earnings as incurred. At the date of acquisition, the company recognizes the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquired business. The identifiable assets acquired and liabilities assumed are initially recognized at fair value. For each business combination the company determines whether to initially record non-controlling interest at fair value or as the proportionate share of the identifiable net assets of the acquired subsidiary. If the consideration transferred is less than the fair value of identifiable net assets acquired, the excess is recognized in the consolidated statement of earnings.

An existing equity interest in an acquired subsidiary is remeasured to fair value at the date of the business combination with any gain or loss recognized in net gains (losses) on investments or in gain on sale and consolidation of insurance subsidiaries in the consolidated statement of earnings.

#### Goodwill and intangible assets
**Goodwill** - Goodwill is recorded as the excess of consideration transferred over the fair value of the identifiable net assets acquired in a business combination, less accumulated impairment charges, and is allocated to the cash-generating units expected to benefit from the acquisition for impairment testing. Goodwill is assessed annually for impairment or more frequently if there are indicators of impairment by comparing the carrying value of a cash-generating unit, inclusive of its allocated goodwill, to its recoverable amount, with any goodwill impairment measured as the excess of the carrying amount over the recoverable amount. An impairment loss is recorded in operating expenses or other expenses in the consolidated statement of earnings. Goodwill is derecognized on disposal of a cash-generating unit to which goodwill was previously allocated.

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

**Intangible assets** - Intangible assets are comprised primarily of customer and broker relationships, brand names, Lloyd's participation rights, computer software (including enterprise systems) and other acquired identifiable non-monetary assets without physical form.

Intangible assets are initially recognized at cost, or at fair value when acquired through a business combination. Intangible assets with a finite life are subsequently measured at cost less accumulated amortization and impairment, where amortization is calculated using the straight-line method over the estimated useful life, and carrying value is re-assessed when there are indicators of impairment. Indefinite-lived intangible assets are not subject to amortization and are assessed annually for impairment or more frequently if there are indicators of impairment. When the carrying value of an intangible asset exceeds its recoverable amount, an impairment loss is recorded in operating expenses or other expenses in the consolidated statement of earnings.

The estimated useful lives of the company's intangible assets are as follows:

---

| | |
|:---|:---|
| Customer and broker relationships | 8 to 20 years |
| Brand names and Lloyd's participation rights | Indefinite |
| Computer software | 3 to 15 years |

---

Brand names and Lloyd's participation rights are considered to be indefinite-lived based on their strength, history and expected future use.

#### Investments in associates
Investments in associates are accounted for using the equity method and are comprised of investments in corporations, limited partnerships and trusts where the company has the ability to exercise significant influence but not control. An investment in associate is initially recognized at cost and adjusted thereafter for the post-acquisition change in the company's share of net assets of the associate. The company's share of profit (loss) and share of other comprehensive income (loss) of associates are reported in the corresponding lines in the consolidated statement of earnings and consolidated statement of comprehensive income, respectively. An existing equity interest in an acquired associate is remeasured to fair value at the date significant influence is obtained and included in the carrying value of the associate.

The fair value of associates is estimated at each reporting date using valuation techniques consistent with those applied to the company's other investments in equity instruments. See "Determination of fair value" under the heading of "Investments" in this note for further details. If there is objective evidence that the carrying value of an associate is impaired, it is written down to its recoverable amount, being the higher of the associate's fair value and value-in-use. The unrealized impairment loss is recognized in share of profit (loss) of associates in the consolidated statement of earnings. An impairment loss is reversed in future periods if the circumstances that led to the impairment no longer exist. The reversal is limited to restoring the carrying value to what it would have been had no impairment loss been recognized in prior periods.

Upon loss of significant influence, any retained equity interest classified as a financial asset is remeasured to fair value and all amounts previously recognized in other comprehensive income (loss) are recycled to the consolidated statement of earnings except those related to defined benefit pension or post retirement plans which are reclassified to retained earnings. Gains and losses on loss of significant influence or disposition of an associate are recognized in net gains (losses) on investments in the consolidated statement of earnings.

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Investments in joint ventures
Investments in joint ventures are accounted for using the equity method (as described in the preceding paragraphs) and are comprised of investments in corporations and limited partnerships where the company has joint control together with one or more third parties by contractual agreement. Joint control requires the unanimous consent of all parties sharing control to make decisions regarding the joint venture's relevant activities. When a subsidiary constituting a business is contributed to a joint venture, any gain or loss on derecognition of the subsidiary, including recycling of applicable amounts in accumulated other comprehensive income (loss) and remeasurement to fair value of any retained interest in the subsidiary, is recognized in the consolidated statement of earnings. Upon loss of joint control, any retained equity interest classified as a financial asset is remeasured to fair value and all amounts previously recognized in other comprehensive income (loss) are reclassified to the consolidated statement of earnings except those related to defined benefit pension or post retirement plans which are reclassified to retained earnings. Gains and losses on loss of joint control or disposition of a joint venture are recognized in net gains (losses) on investments in the consolidated statement of earnings. Investments in joint ventures and all related activity are presented with investments in associates in these consolidated financial statements.

#### Consolidated statement of cash flows
The company's consolidated statement of cash flows is prepared in accordance with the indirect method, classifying cash flows by operating, investing and financing activities.

**Cash and cash equivalents** - Cash and cash equivalents consist of holding company, subsidiary and Fairfax India cash on hand, demand deposits with banks and other short term highly liquid investments with maturities of three months or less when purchased, and exclude cash and short term highly liquid investments that are restricted.

#### Investments
Investments include cash and cash equivalents, short term investments, bonds, equity instruments, investments in associates, derivative assets, other invested assets (primarily investment property) and derivative obligations. Management determines the appropriate classifications of investments at their acquisition date.

**Classification -** Short term investments, bonds, preferred stocks, common stocks, and derivatives are classified at FVTPL. The company manages these investments on a fair value basis, using fair value information to assess investment performance and to make investment decisions. The company has not elected to irrevocably designate any of its common stocks or preferred stocks at fair value through other comprehensive income. The company classifies its short term investments and bonds based on both the company's business model for managing those financial assets and their contractual cash flow characteristics. While the contractual cash flows of certain of the company's short term investments and bonds are solely principal and interest, those investments are neither held for the purpose of collecting contractual cash flows nor held both for collecting contractual cash flows and for sale. The collection of contractual cash flows is incidental to the company's business model of maximizing total investment return on a fair value basis.

**Recognition and measurement -** The company recognizes purchases and sales of investments on the trade date, the date on which the company commits to purchase or sell the investment. Transactions pending settlement are reflected on the consolidated balance sheet in other assets or in accounts payable and accrued liabilities. Investments classified at FVTPL are initially recognized at fair value with transaction costs recorded as investment expenses (a component of interest and dividends) in the consolidated statement of earnings.

Subsequent to initial recognition, investments classified at FVTPL are measured at fair value with changes in fair value reported in the consolidated statement of earnings as income, comprised of interest and dividends and net gains (losses) on investments. Interest and dividends represent interest income on short term investments and bonds calculated using the effective interest method, and dividends received on holdings of common stocks and preferred stocks, net of investment expenses. All other changes in fair value are reported in net gains (losses) on investments in the consolidated statement of earnings. For short term investments and bonds, the sum of their interest income and net gains (losses) on investments is equal to their total change in fair value for the reporting period.

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

For investments classified at FVTPL, the company further disaggregates net gains (losses) on investments into realized and unrealized components in note 5. Where a financial instrument continues to be held by the company at the end of a reporting period, changes in the fair value of that instrument during the reporting period, excluding those changes reported as interest and dividends, are presented in net change in unrealized gains (losses). On disposition or as a result of a change in accounting for that financial instrument, its inception-to-date net gain (loss), excluding those changes previously reported as interest and dividends, is presented as net realized gains (losses). The cumulative unrealized net gain (loss) recognized in prior periods on that financial instrument is then reversed in net change in unrealized gains (losses). The sum of the inception-to-date net gain (loss) and the cumulative reversal of prior period net unrealized gains (losses) equals that financial instrument's net gain (loss) on investment for the current reporting period as presented in the consolidated statement of earnings.

Interest and dividends and net gains (losses) on investments are reported as operating activities in the consolidated statement of cash flows.

**Derecognition** - An investment is derecognized when the rights to receive cash flows from the investment have expired or have been transferred and when the company has transferred substantially the risks and rewards of ownership.

**Short term investments** - Highly liquid debt instruments with maturity dates between three months and twelve months when purchased are classified as short term investments.

**Bonds** - Debt instruments with maturity dates greater than twelve months when purchased, or illiquid debt instruments with maturity dates of twelve months or less when purchased, are classified as bonds.

**Derivatives** - Derivatives may include interest rate, credit default, currency and total return swaps, futures, forwards, warrants and consumer price index linked ("CPI-linked") and option contracts, all of which derive their value primarily from changes in underlying interest rates, foreign exchange rates, credit ratings, commodity values, inflation indexes or equity instruments. A derivative contract may be traded on an exchange or over-the-counter ("OTC"). Exchange-traded derivatives are standardized and include futures and certain warrants and option contracts. OTC derivative contracts are individually negotiated between contracting parties and may include the company's forwards, CPI-linked derivatives and total return swaps.

The company uses derivatives for investment purposes and to mitigate financial risks arising from its investment holdings and reinsurance recoverables, and monitors its derivatives for effectiveness in achieving their risk management objectives where applicable.

The fair value of derivatives in a gain position are presented on the consolidated balance sheet in holding company cash and investments, and in portfolio investments as derivatives and other invested assets. The fair value of derivatives in a loss position are presented on the consolidated balance sheet in derivative obligations. The initial premium paid for a derivative contract, if any, is recorded as a derivative asset and subsequently adjusted for changes in the fair value of the contract at each reporting date. Changes in the fair value of derivatives are recorded as net gains (losses) on investments in the consolidated statement of earnings.

Cash received from counterparties as collateral for derivative contracts is recognized on the consolidated balance sheet in holding company cash and investments or subsidiary cash and short term investments, and a corresponding liability is recognized in accounts payable and accrued liabilities. Securities received from counterparties as collateral are not recorded as assets.

Cash and securities delivered to counterparties as collateral for derivative contracts continue to be reflected as assets on the consolidated balance sheet in holding company cash and investments or in portfolio investments as assets pledged for derivative obligations. The portion of the collateral related to changes in fair value of derivative contracts may be repledged by the counterparties holding the collateral.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

**Determination of fair value** - Fair values for substantially all of the company's financial instruments are measured using market or income approaches. Considerable judgment may be required in interpreting market data used to develop estimates of fair value. Accordingly, actual values realized in future market transactions may differ from the estimates presented in these consolidated financial statements. The use of different market assumptions and/or valuation methodologies may have a material effect on the estimated fair values. The fair values of financial instruments are based on bid prices for financial assets and ask prices for financial liabilities. The company categorizes its fair value measurements using a three-level fair value hierarchy in accordance with IFRS as described below:

Level 1 - Inputs represent unadjusted quoted prices for identical instruments exchanged in active markets. The fair values of the majority of the company's common stocks, equity call options and certain warrants are based on published quotes in active markets.

Level 2 - Inputs include directly or indirectly observable inputs (other than Level 1 inputs) such as quoted prices for similar financial instruments exchanged in active markets, quoted prices for identical or similar financial instruments exchanged in inactive markets and other market observable inputs. The fair value of the vast majority of the company's investments in bonds are priced based on information provided by independent pricing service providers while much of the remainder, along with most derivative contracts (including total return swaps, U.S. treasury bond forward contracts and certain warrants) are based primarily on non-binding third party broker-dealer quotes that are prepared using Level 2 inputs. Where third party broker-dealer quotes are used, typically one quote is obtained from a broker-dealer with particular expertise in the instrument being priced. Preferred stocks are priced using a combination of independent pricing service providers and internal valuation models that rely on directly or indirectly observable inputs.

The fair values of investments in certain limited partnerships classified as common stocks on the consolidated balance sheet are based on the net asset values received from the general partner, adjusted for liquidity as required and are classified as Level 2 when they may be liquidated or redeemed within three months or less of providing notice to the general partner. All other such investments in limited partnerships are classified as Level 3.

Level 3 - Inputs include unobservable inputs that management uses to develop assumptions for which market data is limited or unavailable at the measurement date. In some instances, such as for private company preferred shares, management will use limited recent market transactions that are corroborated by industry accepted discounted cash flow models that incorporate one or more unobservable inputs.

Transfers between fair value hierarchy levels are considered effective from the beginning of the annual reporting period in which the transfer is identified.

Valuation techniques used by the company's independent pricing service providers and third party broker-dealers include use of prices from similar instruments where observable market prices exist, discounted cash flow analysis, option pricing models, and other valuation techniques commonly used by market participants. The company assesses the reasonableness of pricing received from these third party sources by comparing the fair values received to recent transaction prices for similar assets where available, to industry accepted discounted cash flow models (that incorporate estimates of the amount and timing of future cash flows and market observable inputs such as credit spreads and discount rates) and to option pricing models (that incorporate market observable inputs including the quoted price, volatility and dividend yield of the underlying security and the risk free rate).

The company employs specialist personnel for the valuation of its investment portfolio. Detailed valuations are prepared for those financial instruments that are priced internally, while external pricing received from independent pricing service providers and third party broker-dealers are evaluated by the company for reasonableness. The company's Chief Financial Officer oversees the valuation function and regularly reviews valuation processes and results, including at each quarterly reporting period. Significant valuation matters, particularly those requiring extensive judgment, are communicated to the company's Audit Committee.

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#### Foreign currency translation
**Functional and presentation currency** - The consolidated financial statements are presented in U.S. dollars which is the holding company's functional currency and the presentation currency of the consolidated group.

**Foreign currency transactions** - Foreign currency transactions are translated into the functional currencies of the holding company and its subsidiaries using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the consolidated statement of earnings. Non-monetary items carried at cost are translated using the exchange rate at the date of the transaction. Non-monetary items carried at fair value are translated using the exchange rate at the date the fair value is determined.

**Translation of foreign subsidiaries** - The functional currency of some of the company's subsidiaries (principally in Canada, Europe, India and other parts of Asia) differ from the consolidated group's U.S. dollar presentation currency. Assets and liabilities of these foreign subsidiaries (including goodwill and fair value adjustments arising on their acquisition, where applicable) are translated on consolidation using exchange rates at the balance sheet date. Income and expenses are translated at average exchange rates for the period. The net unrealized gain or loss resulting from this translation is recognized in accumulated other comprehensive income (loss), and recycled to the consolidated statement of earnings upon loss of control of a foreign subsidiary.

#### Hedging
At the inception of a hedge transaction the company documents the economic relationship between the hedged item and hedging instrument, and its risk management objective and strategy for undertaking the hedge.

**Net investment hedge** - The company has designated the principal amount of its Canadian dollar denominated borrowings as a hedge of its net investment in its Canadian subsidiaries with a Canadian dollar functional currency, and has designated the principal amount of its euro denominated borrowings as a hedge of its net investment in its European operations with a euro functional currency. Unrealized gains or losses relating to the effective portions of the hedges are initially recognized in other comprehensive income (loss), and recycled from accumulated other comprehensive income (loss) to the consolidated statement of earnings upon disposal of an investment in a hedged foreign subsidiary or associate. Gains and losses relating to any ineffective portion of the hedges are recorded in net gains (losses) on investments in the consolidated statement of earnings.

#### Comprehensive income (loss)
Comprehensive income (loss) consists of net earnings (loss) and other comprehensive income (loss) and includes all changes in total equity during a reporting period, except for those resulting from investments by owners or distributions to owners. Unrealized foreign currency translation amounts arising from the translation of foreign subsidiaries and associates and the effective portion of changes in the fair value of hedging instruments on hedges of net investments in foreign subsidiaries and associates are recognized in other comprehensive income (loss) and included in accumulated other comprehensive income (loss) until recycled to the consolidated statement of earnings on disposal of an investment in a foreign subsidiary or associate. Actuarial gains and losses and changes in asset limitation amounts on defined benefit pension and post retirement plans are recorded in other comprehensive income (loss) and included in accumulated other comprehensive income (loss) without recycling to the consolidated statement of earnings. Upon settlement of the defined benefit plan or disposal of the related subsidiary or associate, those amounts are reclassified directly to retained earnings. Accumulated other comprehensive income (loss), net of income taxes, is included on the consolidated balance sheet as a component of common shareholders' equity.

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#### Property and casualty insurance contracts
Insurance contracts are those contracts that have significant insurance risk at the inception of the contract. Insurance risk arises when the company agrees to compensate a policyholder if a specified uncertain future event adversely affects the policyholder, with the possibility of paying (including variability in timing of payments) significantly more in a scenario where the insured event occurs than when it does not occur. Contracts not meeting the definition of an insurance contract under IFRS are classified as investment contracts, derivative contracts or service contracts, as appropriate.

**Revenue recognition** - Premiums written are deferred as unearned premiums and recognized as premiums earned, net of premiums ceded, over the coverage terms of the underlying policies in accordance with the level of protection provided. Certain reinsurance premiums are estimated at the individual contract level, based on historical patterns and experience from the ceding companies for contracts where reports from ceding companies for the period are not contractually due until after the balance sheet date. The cost of reinsurance purchased by the company (premiums ceded) is included in recoverable from reinsurers and is amortized over the contract period in proportion to the amount of insurance protection provided. Unearned premium represents the portion of premiums written relating to periods of insurance and reinsurance coverage subsequent to the balance sheet date. Impairment losses on insurance premiums receivable are included in operating expenses in the consolidated statement of earnings.

**Deferred premium acquisition costs** - Certain costs of acquiring insurance contracts, consisting of broker commissions and premium taxes, are deferred and charged to earnings as the related premiums are earned. Deferred premium acquisition costs are limited to their estimated realizable value based on the related unearned premium, which considers anticipated losses and loss adjustment expenses and estimated remaining costs of servicing the business based on historical experience. The ultimate recoverability of deferred premium acquisition costs is determined without regard to investment income. Broker commissions are included in commissions, net, in the consolidated statement of earnings. Premium taxes and impairment losses on deferred premium acquisition costs are included in operating expenses in the consolidated statement of earnings.

**Provision for losses and loss adjustment expenses** - The company is required by applicable insurance laws, regulations and Canadian accepted actuarial practice to establish reserves for payment of losses and loss adjustment expenses that arise from the company's general insurance and reinsurance products and its run-off operations. These reserves are based on assumptions that represent the best estimates of possible outcomes aimed at evaluating the expected ultimate cost to settle unpaid claims that occurred on or before the balance sheet date. The company establishes its reserves by product line, type and extent of coverage and year of occurrence. Loss reserves fall into two categories: reserves for reported losses (case reserves) and reserves for incurred but not reported ("IBNR") losses. Those reserves include amounts for loss adjustment expenses, such as the estimated legal and other expenses expected to be incurred to finalize the settlement of the losses. Losses and loss adjustment expenses are charged to losses on claims, gross, in the consolidated statement of earnings.

The company's reserves for reported losses and loss adjustment expenses are based on estimates of future payments to settle reported general insurance and reinsurance claims and claims from its run-off operations. Case reserve estimates are based on the facts available at the time the reserves are established and for reinsurance, based on reports and individual case reserve estimates received from ceding companies. The company establishes these reserves on an undiscounted basis to recognize the estimated costs of bringing pending claims to final settlement, taking into account inflation, as well as other factors that can influence the amount of reserves required, some of which are subjective and some of which are dependent on future events. In determining the level of reserves, the company considers historical trends and patterns of loss payments, pending levels of unpaid claims and types of coverage. In addition, court decisions, economic conditions and public attitudes may affect the ultimate cost of settlement and, as a result, the company's estimation of reserves. Between the reporting and final settlement of a claim, circumstances may change, which may result in changes to established reserves. Items such as changes in law and interpretations of relevant case law, results of litigation, changes in medical costs, as well as costs of vehicle and building repair materials and labour rates can substantially impact ultimate settlement costs. Accordingly, the company regularly reviews and re-evaluates case reserves. Any resulting adjustments are included in the current period consolidated statement of earnings in losses on claims, gross, and in losses on claims, ceded to reinsurers, as applicable. Amounts ultimately paid for losses and loss adjustment expenses can vary significantly from the level of reserves originally set or currently recorded.

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The company also establishes reserves for IBNR losses on an undiscounted basis to recognize the estimated final settlement cost for loss events which have already occurred but which have not yet been reported. Historical information and statistical models, based on product line, type and extent of coverage, as well as reported claims trends, severities and frequencies, inflation, exposure changes and other factors are relied upon to estimate IBNR reserves. These estimates are revised as additional information becomes available and as claims are actually reported and paid.

**Estimation techniques** - Provisions for losses and loss adjustment expenses and provisions for unearned premiums are determined based upon previous claims experience, knowledge of events, the terms and conditions of the relevant policies and on interpretation of circumstances. Particularly relevant is experience with similar cases and historical claims payment trends. The approach also includes consideration of the development of loss payment trends, the potential longer term significance of large events, the levels of unpaid claims, legislative changes, judicial decisions and economic and political conditions.

Where possible the company applies several commonly accepted actuarial projection methodologies in estimating required provisions to give greater insight into the trends inherent in the data being projected. These include methods based upon the following: the development of previously settled claims, where payments to date are extrapolated for each prior year; estimates based upon a projection of number of claims and average cost; notified claims development, where notified claims to date for each year are extrapolated based upon observed development of earlier years; and, expected loss ratios. In addition, the company uses other techniques such as aggregate benchmarking methods for specialist classes of business. In selecting its best estimate, the company considers the appropriateness of the methods to the individual circumstances of the line of business and accident or underwriting year.

Large claims affecting each relevant line of business are generally assessed separately, being measured either at the face value of the loss adjuster's estimate or projected separately in order to allow for the future development of large claims.

Provisions for losses and loss adjustment expenses are calculated gross of any reinsurance recoveries. A separate estimate is made of the amounts that will be recoverable from reinsurers based upon the gross provisions and with due regard to collectability.

The provisions for losses and loss adjustment expenses are subject to review at the subsidiary level by subsidiary actuaries and at the corporate level by the company's Chief Actuary. In addition, for major classes of business where the risks and uncertainties inherent in the provisions are greatest, ad hoc detailed reviews are undertaken by internal and external actuaries who are able to draw upon their specialist expertise and a broader knowledge of current industry trends in claims development. The results of these reviews are considered when establishing the appropriate levels of provisions for losses and loss adjustment expenses and unexpired risks.

#### Life insurance contracts
The company, through Eurolife (which was consolidated on July 14, 2021 as described in note 23), writes life, disability, accident, health and critical illness insurance in addition to offering life annuities and insurance related investment products, both on an individual and group basis. Premiums for most life insurance contracts are generally recognized as revenue when due. The provision for policy benefits is calculated in compliance with local regulatory requirements and IFRS using actuarial principles consistent with those applied where life insurance policies are written. The provision for policy benefits is determined based on the discounting of projected future cash flows of claims and premiums using assumptions that include mortality, morbidity, lapse rates, discount rates, investment returns, inflation, and future expenses. These assumptions can vary by contract type and reflect current and expected future experience and represent the best estimates to settle outstanding claims, estimated future benefits and expenses on in-force insurance contracts. Certain insurance contracts written by Eurolife transfer the market risk associated with the underlying investment performance, which supports the benefit payments, to the policyholder ("unit-linked"). For these unit-linked contracts or funds, the company measures the underlying investments at fair value and presents them in other assets on the consolidated balance sheet. A corresponding liability is presented in insurance contract payables on the consolidated balance sheet. A change in the fair value of the investments of the unit-linked funds result in a corresponding change to the related liabilities, with both changes recorded together in the consolidated statement of earnings such that there is no effect on income, expenses or net earnings.

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#### Reinsurance
Reinsurance does not relieve the originating insurer of its liability and is reflected on the consolidated balance sheet on a gross basis to indicate the extent of credit risk related to reinsurance and the obligations of the insurer to its policyholders. Reinsurance assets include balances due from reinsurance companies for paid and unpaid losses and loss adjustment expenses and ceded unearned premiums. Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured policy. Reinsurance is recorded gross on the consolidated balance sheet unless a legal right to offset against a liability owing to the same reinsurer exists.

Ceded premiums and losses are recorded in the consolidated statement of earnings in premiums ceded to reinsurers and losses on claims, ceded to reinsurers respectively and in recoverable from reinsurers on the consolidated balance sheet. Commission income earned on premiums ceded to reinsurers is included in commissions, net, in the consolidated statement of earnings. Unearned premiums are reported on the consolidated balance sheet before reduction for premiums ceded to reinsurers. Reinsurers' portion of unearned premiums is included in recoverable from reinsurers on the consolidated balance sheet together with estimates of reinsurers' share of provision for claims determined on a basis consistent with the related claims liabilities.

**Impairment** - Reinsurance assets are assessed regularly for any events that may trigger impairment, including legal disputes with third parties, changes in capital or other financial metrics that may affect the credit worthiness of a counterparty, and historic experience regarding collectability from specific reinsurers. If there is objective evidence that a reinsurance asset is impaired, the carrying amount of the asset is reduced to its recoverable amount by recording a provision for uncollectible reinsurance in operating expenses in the consolidated statement of earnings.

**Risk transfer** - Reinsurance contracts are assessed to ensure that insurance risk is transferred by the ceding or assuming company to or from the reinsurer. Contracts that do not transfer insurance risk are accounted for using the deposit method whereby a deposit asset or liability is recognized based on the consideration paid or received less any explicitly identified premiums or fees to be retained by the ceding company.

**Premiums** - Premiums payable for reinsurance ceded are recognized on the consolidated balance sheet in the period in which the reinsurance contract is entered into and include estimates for contracts in force which have not yet been finalized. Premiums ceded are recognized in the consolidated statement of earnings over the period of the reinsurance contract.

#### Income taxes
The provision for income taxes for the period comprises current and deferred income tax. Income taxes are recognized in the consolidated statement of earnings, except when related to items recognized in other comprehensive income (loss) or in equity. In those cases, the income taxes are also recognized in other comprehensive income (loss) or in equity, respectively, except for dividends where the income taxes are recognized in earnings, other comprehensive income (loss) or equity according to where the transactions that generated the distributable profits were recognized.

Current income tax is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the company's subsidiaries and associates operate and generate taxable income.

Deferred income tax is calculated under the liability method whereby deferred income tax assets and liabilities are recognized for temporary differences between the financial statement carrying amounts of assets and liabilities and their respective income tax bases at current substantively enacted tax rates. With the exception of initial recognition of deferred income tax arising from business combinations, changes in deferred income tax associated with components of other comprehensive income (loss) are recognized in other comprehensive income (loss) while all other changes in deferred income tax are included in the provision for income taxes in the consolidated statement of earnings.

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Deferred income tax assets are recognized to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilized. Carry forwards of unused losses or unused tax credits are tax effected and recognized as deferred tax assets when it is probable that future taxable profits will be available against which these losses or tax credits can be utilized.

Deferred income tax is not recognized on unremitted earnings of subsidiaries where the company has determined it is not probable those earnings will be repatriated in the foreseeable future.

Current and deferred income tax assets and liabilities are offset when the income taxes are levied by the same taxation authority and there is a legally enforceable right of offset.

#### Investment property
Investment property consists of real estate held by the company for capital appreciation, rental income, or both, and is initially recorded at cost, including transaction costs, and subsequently measured at fair value. On the consolidated balance sheet investment property is included in portfolio investments by the insurance and reinsurance companies and in other assets by the non-insurance companies. In the consolidated statement of earnings, insurance and reinsurance companies record investment property rental income and direct expenses in interest and dividends, and changes in fair value in net gains (losses) on investments, while non-insurance companies record investment property rental income and changes in fair value in other revenue, and direct expenses in other expenses.

#### Other assets
Other assets primarily consist of premises and equipment, right-of-use assets associated with leases, assets associated with unit-linked insurance products, inventories, sales receivables and finance lease receivables of the non-insurance companies, prepaid expenses, accrued interest and dividends, income taxes refundable, receivables for securities sold, pension assets, prepaid losses on claims, and other miscellaneous receivables. Receivables are initially recognized at fair value less a provision for expected lifetime credit losses, and subsequently measured at amortized cost.

**Premises and equipment** – Premises and equipment is recorded at historical cost less accumulated amortization and any accumulated impairment losses. The company reviews premises and equipment for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. The cost of premises and equipment is depreciated on a straight-line basis over the asset's estimated useful life. In the consolidated statement of earnings depreciation expense is charged to operating expenses by the insurance and reinsurance companies, and to other expenses by the non-insurance companies.

#### Other revenue
Other revenue is primarily comprised of revenue earned by the non-insurance companies. Revenue from restaurant and retail sales is recognized when the company provides goods to the customer and receives payment. Revenue from the sale of other goods is typically recognized when shipped to the customer, with payment received in advance of shipment. The shipping and handling performance obligation is recorded as a contract liability and recognized as revenue once the services have been performed. Revenue from providing travel, hospitality and other non-insurance services is recognized over time based on measured progress towards complete satisfaction of the related performance obligations. Payment is usually received at the time of initial booking for travel and hospitality services, and received in installments for other services. Unconditional payments due from customers for satisfied performance obligations are recorded as sales receivables within other assets on the consolidated balance sheet. Customer prepayments are recorded as deferred revenue within accounts payable and accrued liabilities on the consolidated balance sheet and are not recognized as revenue until the shipment of goods or provision of services occurs. Certain contracts include multiple deliverables which are accounted for as separate performance obligations, with the transaction price allocated to the performance obligations based on their individual selling prices.

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#### Other expenses
Other expenses is primarily comprised of the cost of inventories sold or services provided and the operating expenses of the non-insurance companies.

#### Accounts payable and accrued liabilities
Accounts payable and accrued liabilities primarily consist of leases liabilities, trade payables of the non-insurance companies, accrued amounts for salaries and employee benefits, deferred revenue of the non-insurance companies, pension and post retirement liabilities, amounts withheld and accrued taxes, income taxes payable, and other administrative costs. Accounts payable and accrued liabilities are initially recognized at fair value and subsequently measured at amortized cost.

#### Borrowings
Borrowings are initially recognized at fair value, net of incremental and directly attributable transaction costs, and subsequently measured at amortized cost. Interest expense on borrowings is recognized in the consolidated statement of earnings using the effective interest rate method. Borrowings are derecognized when extinguished, with any gain or loss on extinguishment or modification recognized in interest expense in the consolidated statement of earnings.

#### Equity
Common stock issued by the company is classified as equity when there is no contractual obligation to transfer cash or other financial assets to the holder of the shares. Incremental costs directly attributable to the issue or repurchase of equity instruments are recognized in equity, net of tax.

Treasury shares are equity instruments repurchased by the company which have not been canceled and are deducted from equity on the consolidated balance sheet, irrespective of the objective of the purchase. The company acquires its own subordinate voting shares on the open market for its share-based payment awards. No gain or loss is recognized in the consolidated statement of earnings on the purchase, sale, issue or cancellation of treasury shares. Consideration paid or received is recognized directly in equity.

Dividends and other distributions to holders of the company's equity instruments are recognized directly in equity.

#### Share-based payments
The company has restricted share plans or equivalent for management of the holding company and its subsidiaries with vesting periods of up to fifteen years from the date of grant. The fair value of restricted share awards on the grant date is amortized to compensation expense over the vesting period, with a corresponding increase in the share-based payments equity reserve. At each balance sheet date, the company reviews its estimates of the number of restricted share awards expected to vest.

#### Net earnings per share attributable to shareholders of Fairfax
**Net earnings (loss) per share** - Basic net earnings (loss) per share is calculated by dividing the net earnings (loss) attributable to shareholders of Fairfax, after the deduction of preferred share dividends declared and the excess over stated value of preferred shares purchased for cancellation, by the weighted average number of subordinate and multiple voting shares issued and outstanding during the period, excluding subordinate voting shares purchased by the company and held as treasury shares.

**Net earnings (loss) per diluted share** - Diluted net earnings (loss) per share is calculated in the same manner as basic net earnings (loss) per share except that the weighted average number of subordinate and multiple voting shares outstanding during the period is adjusted for the dilutive effect, if any, of share-based payments.

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#### Pensions and post retirement benefits
The company's subsidiaries have a number of arrangements in Canada, the United States, the United Kingdom and certain other jurisdictions that provide pension and post retirement benefits to retired and current employees. The holding company has no such arrangements or plans. Pension arrangements of the subsidiaries include defined benefit statutory pension plans and supplemental arrangements that provide pension benefits in excess of statutory limits. These plans are a combination of defined benefit plans and defined contribution plans. The assets of these plans are held separately from the company's general assets in separate pension funds and invested principally in equities, high quality fixed income securities and cash and short term investments. Certain of the company's post retirement benefit plans covering medical care and life insurance are internally funded.

**Defined contribution plan** - A defined contribution plan is a pension plan under which the company pays fixed contributions. These contributions are charged to operating expenses by the insurance and reinsurance companies and to other expenses by the non-insurance companies in the period in which the employment services qualifying for the benefit are provided. The company has no further payment obligations once the contributions have been paid.

**Defined benefit plan** - A defined benefit plan is a plan that defines an amount of pension or other post retirement benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and salary. Actuarial valuations of benefit liabilities for the majority of pension and post retirement benefit plans are performed each year using the projected benefit method prorated on service, based on management's assumptions.

Defined benefit obligations, net of the fair value of plan assets, and adjusted for pension asset limitations, if any, are accrued on the consolidated balance sheet in accounts payable and accrued liabilities (note 14). Plans in a net asset position, subject to any minimum funding requirements, are recognized in other assets (note 13).

Defined benefit expense recognized in the consolidated statement of earnings includes the net interest on the net defined benefit liability (asset) calculated using a discount rate based on market yields on high quality bonds, past service costs arising from plan amendments or curtailments and gains or losses on plan settlements.

Remeasurements, consisting of actuarial gains and losses on plan liabilities, the actual return on plan assets (excluding the net interest component) and any change in asset limitation amounts, are recognized in other comprehensive income (loss) and subsequently included in accumulated other comprehensive income (loss). Remeasurements are not recycled to the consolidated statement of earnings and are reclassified to retained earnings upon settlement of the plan or disposal of the related subsidiary.

#### Leases
**Lessees** - The company, primarily through its non-insurance companies, is a lessee under various leases related principally to premises, automobiles and equipment.

A right-of-use asset and a lease liability are recognized at the commencement date of a lease. Right-of-use assets are initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made before the commencement date, and any initial direct costs incurred. Lease liabilities are initially measured at the present value of lease payments, discounted using the interest rate implicit in the lease, or if that rate cannot be readily determined, the company's incremental borrowing rate. The company typically uses its incremental borrowing rate. Right-of-use assets are included in other assets and lease liabilities are included in accounts payable and accrued liabilities on the consolidated balance sheet.

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Subsequent to initial recognition, right-of-use assets are depreciated using the straight-line method over the shorter of the lease term and the right-of-use asset's useful life, with depreciation expense recorded as operating expenses or other expenses in the consolidated statement of earnings, and lease liabilities are measured at amortized cost using the effective interest method, with accretion of lease liabilities recorded as interest expense in the consolidated statement of earnings. Each lease payment is allocated between principal and interest expense to produce a constant periodic rate of interest on the remaining balance of the lease liability. The interest and principal portions of cash payments on lease liabilities are reported as operating activities and financing activities respectively in the consolidated statement of cash flows.

Right-of-use assets and lease liabilities are not recognized for short-term leases that have a lease term of twelve months or less, or for low value leases, which principally relate to office equipment, furniture and fixtures. Payments for short-term and low value leases are recorded on a straight-line basis over the lease term in the consolidated statement of earnings and reported as operating activities in the consolidated statement of cash flows.

**Lessors** - The company, primarily through its non-insurance companies, holds certain head leases where it acts as an intermediate lessor in a sub-lease. Interests in head leases and sub-leases are accounted for separately.

Classification of a sub-lease is determined with reference to the right-of-use asset arising from the head lease, and not with reference to the underlying leased asset. If substantially all of the risk and rewards of ownership of the right-of-use asset are transferred, then the sub-lease is classified as a finance lease, where the right-of-use asset is derecognized, a finance lease receivable is recorded, representing the present value of future lease payments to be received, and any difference is recorded in the consolidated statement of earnings. Finance lease receivables are included in other assets on the consolidated balance sheet. Interest revenue earned on finance lease receivables is included in other revenue in the consolidated statement of earnings.

Sub-leases classified as operating leases do not result in any change to the amounts initially recognized on the head lease. Payments received from operating leases are recorded on a straight-line basis over the lease term as other revenue in the consolidated statement of earnings.

#### New accounting pronouncements adopted in 2022
*Onerous Contracts — Cost of Fulfilling a Contract (Amendments to IAS 37)* 

The amendments to IAS 37 *Provisions, Contingent Liabilities and Contingent Assets* clarify the types of costs an entity includes in determining the cost of fulfilling a contract when assessing whether a contract is onerous. Adoption of the amendments on January 1, 2022 in accordance with the applicable transition provisions did not have a significant impact on the company's consolidated financial statements.

*Reference to the Conceptual Framework (Amendments to IFRS 3)*

The amendments to IFRS 3 *Business Combinations* replace a reference to the previous *Framework for the Preparation and Presentation of Financial Statements* with a reference to the current *Conceptual Framework for Financial Reporting* that was issued in March 2018. The amendments also add an exception to the recognition principle of IFRS 3 for liabilities and contingent liabilities within the scope of IAS 37 *Provisions, Contingent Liabilities and Contingent Assets* or IFRIC 21 *Levies* and further clarify that an acquirer does not recognize contingent assets acquired in a business combination. Prospective adoption of these amendments on January 1, 2022 did not have a significant impact on the company's consolidated financial statements.

*Annual Improvements to IFRS Standards 2018 – 2020*

Amendments to certain IFRS Standards as a result of the IASB's annual improvements project included an amendment to IFRS 9 *Financial Instruments* to clarify which fees are considered when assessing whether to derecognize a financial liability. Prospective adoption of this amendment on January 1, 2022 did not have a significant impact on the company's consolidated financial statements.

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***New accounting pronouncements issued but not yet effective***

The following new standards and amendments have been issued by the IASB and were not yet effective for the fiscal year beginning January 1, 2022. The company does not expect to adopt them in advance of their effective dates.

*IFRS 17 Insurance Contracts ("IFRS 17")*

On May 18, 2017 the IASB issued IFRS 17, a comprehensive standard for the recognition, measurement, presentation and disclosure of insurance contracts with amendments issued on June 25, 2020 that included targeted improvements and the deferral of the effective date to January 1, 2023. IFRS 17 requires entities to measure insurance contracts using current estimates of fulfillment cash flows, which includes all future cash flows associated with insurance contracts, using one of three measurement models. The company has assessed that the majority of its insurance contracts will be eligible for the simplified measurement model, the Premium Allocation Approach, with the remainder of the company's insurance contracts primarily using the General Measurement Model. The measurement of insurance contracts under the Premium Allocation Approach is similar to that under IFRS 4 and is available for contracts with a coverage period of one year or less, or where the measurement of the liability for remaining coverage is not expected to differ materially had the General Measurement Model been applied. Under IFRS 17, the carrying amount of a group of insurance contracts at each reporting date is measured as the sum of the liability for remaining coverage, comprised principally of unearned premium and deferred premium acquisition costs under IFRS 4, and the liability for incurred claims, comprised principally of future cash flows and a risk adjustment for non-financial risks of losses on claims and expenses that have been incurred but not yet paid. The measurement of insurance contracts under IFRS 17 introduces new requirements, the most notable being that the measurement reflect both the time value of money and an explicit risk adjustment for non-financial risk, whereas the company's current measurement under IFRS 4 reflects neither. IFRS 17 must be applied retrospectively with restatement of comparatives unless impracticable.

IFRS 17 will bring considerable changes to the recognition, measurement, presentation and disclosure of insurance contracts within the company's consolidated financial statements. It will not, however, affect the company's underwriting strategy, its actuarial practice to establish management's best estimate of the reserves, or the company's cash flows. Insurance contracts will be presented differently, including differentiating in the consolidated statement of earnings between the insurance service result, which includes insurance revenue and insurance service expenses, and insurance finance income or expenses, which includes the effects of discounting and changes in discount rates.

In 2022, the company finalized the implementation and testing of information technology systems across its insurance and reinsurance subsidiaries and completed its analysis and documentation of key accounting policy decisions. Additionally, the company has prepared and continues to refine its draft IFRS 17 opening balance sheet as at January 1, 2022 and continues the preparation of its comparative quarterly information. The company determined that it will apply IFRS 17 to the majority of its insurance contracts on a full retrospective basis, and on a modified retrospective basis where a full retrospective basis is impracticable, which is primarily for insurance contracts acquired in past business combinations. When applying the modified retrospective approach, simplifications and modifications will be used only to the extent required, as permitted by the standard.

Upon adoption of IFRS 17, the company anticipates recording a transition adjustment to increase opening common shareholders' equity as at January 1, 2022 which is not expected to exceed 2.5% of common shareholders' equity as at December 31, 2021, primarily reflecting a decrease to insurance contract liabilities from the introduction of discounting claims reserves and the deferral of additional insurance acquisition costs which were previously expensed as incurred (as a result of IFRS 17's broader definition of insurance acquisition costs compared with the company's current policy under IFRS 4), partially offset by a new risk adjustment for uncertainty related to the timing and amount of cash flows arising from non-financial risks. The company does not anticipate material changes to the measurement of net revenue (currently presented as net premiums earned in the consolidated statement of earnings and will be presented differently under IFRS 17) or the selection of actuarial projection methodologies and the development of significant assumptions to determine management's best estimate of reserves on adoption of IFRS 17.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

*Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12)*

On May 7, 2021 the IASB issued amendments to IAS 12 *Income Taxes* to clarify how companies account for deferred tax on transactions that give rise to equal taxable and deductible temporary differences, such as lease transactions under IFRS 16 *Leases* that require recognition of a lease liability and a corresponding right-of-use asset at the commencement date of a lease. The amendments preclude the use of the initial recognition exemption on such transactions and are effective for annual periods beginning on or after January 1, 2023 with early application permitted. Upon adoption, the amendments require the deferred tax asset and liability on temporary differences associated with lease balances to be recognized from the beginning of the earliest comparative period presented, with any cumulative effect of initially applying the amendments recorded as an adjustment to opening equity. The amendments are not expected to have a significant impact on the company's consolidated financial statements.

*Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)*

On February 12, 2021 the IASB issued amendments to IAS 1 *Presentation of Financial Statements* and IFRS Practice Statement 2 *Making Materiality Judgements* to help entities decide which accounting policies to disclose in their financial statements. The amendments are applied prospectively on or after January 1, 2023 and are not expected to have a significant impact on the company's consolidated financial statements.

*Definition of Accounting Estimates (Amendments to IAS 8)*

On February 12, 2021 the IASB issued amendments to IAS 8 *Accounting Policies, Changes in Accounting Estimates and Errors* to help entities distinguish between accounting policies and accounting estimates. The amendments are applied prospectively to changes in accounting estimates and changes in accounting policies occurring on or after January 1, 2023 and are not expected to have a significant impact on the company's consolidated financial statements.

*Classification of Liabilities as Current or Non-current (Amendments to IAS 1)*

*On January 23, 2020 the IASB issued amendments to IAS 1 Presentation of Financial Statements to clarify the criteria for classifying a liability as non-current. The amendments were to be applied retrospectively to annual periods beginning on or after January 1, 2023, however on October 31, 2022 the IASB deferred the effective date by one year to January 1, 2024. The company is currently evaluating the expected impact of the amendments on its consolidated financial statements.*

*Non-current Liabilities with Covenants (Amendments to IAS 1)*

On October 31, 2022 the IASB issued amendments to IAS 1 *Presentation of Financial Statements* to clarify that only covenants with which an entity is required to comply on or before the reporting date affect the classification of a liability as current or non-current. The amendments also require an entity to disclose information in the notes that enables users of financial statements to understand the risk that non-current liabilities with covenants could become repayable within twelve months. The amendments are applied retrospectively on or after January 1, 2024 with early application permitted. The company is currently evaluating the expected impact of the amendments on its consolidated financial statements.

*Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)*

On September 22, 2022 the IASB issued amendments to IFRS 16 *Leases* to clarify how a seller-lessee subsequently measures sale and leaseback transactions that satisfy the requirements in IFRS 15 *Revenue from Contracts with Customers* to be accounted for as a sale. The amendments are applied retrospectively on or after January 1, 2024, with early application permitted, to sale and leaseback transactions entered into after the date of initial application, and are not expected to have a significant impact on the company's consolidated financial statements.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

***Comparatives***

On April 1, 2022 the company revised its property and casualty insurance and reinsurance reporting segments as described in note 25. Certain prior period comparatives have been reclassified to conform with the current period's reporting segments presentation.

&nbsp;&nbsp;&nbsp;&nbsp;4. **Critical Accounting Estimates and Judgments** 

In the preparation of the company's consolidated financial statements, management has made a number of critical accounting estimates and judgments as described below, and in certain notes to the consolidated financial statements: determination of fair value for financial instruments in note 5; carrying value of goodwill and intangibles in note 12; and contingencies in note 20. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable.

#### Provision for losses and loss adjustment expenses
Property and casualty insurance and reinsurance provisions for losses and loss adjustment expenses are estimated based on Canadian accepted actuarial practices, which are designed to ensure the company establishes an appropriate reserve on the consolidated balance sheet to cover insured losses and related claims expenses for both reported claims and IBNR claims as of each balance sheet date. The assumptions underlying the estimation of provisions for losses and loss adjustment expenses, the most significant of which are expected loss ratios, loss development patterns, claim frequencies and severities, exposure changes and expected reinsurance recoveries, are regularly reviewed and updated by the company to reflect recent and emerging trends in experience and changes in the risk profile of the business. The estimation techniques employed by the company in determining provisions for losses and loss adjustment expenses and the inherent uncertainties associated with insurance contracts are described in the "Property and casualty insurance contracts" section of note 3 and the "Underwriting Risk" section of note 24, and the historic development of the company's insurance liabilities are presented in note 8.

#### Determination of fair value for financial instruments classified as Level 3 in the fair value hierarchy
Fair values for substantially all of the company's financial instruments are measured using market or income approaches. Considerable judgment may be required in developing estimates of fair value, particularly for financial instruments classified as Level 3 in the fair value hierarchy as such estimates incorporate unobservable inputs that require management to use its own assumptions. In particular, for private placement debt securities and private company preferred shares the company uses industry accepted discounted cash flow models to respectively, value the instruments directly, and to corroborate fair values implied by limited market activity. Significant judgments and assumptions are required to determine the discounted cash flows, including discount rates, long term growth rates and credit spreads, as applicable, and the effects of economic uncertainty caused by increased inflationary pressures that have resulted in central banks across the world simultaneously raising interest rates to address inflation. See note 5 for details of the company's Level 3 financial instruments and the valuation assumptions applied.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Impairment assessments of goodwill and indefinite-lived intangible assets
Goodwill and indefinite-lived intangible assets are assessed annually for impairment, or more frequently if there are indicators of impairment, by comparing the carrying value of the cash-generating unit ("CGU") or group of CGUs to which these assets are allocated to their recoverable amounts. The company principally uses discounted cash flows to estimate the recoverable amount of a CGU or group of CGUs to which goodwill or indefinite-lived intangible assets have been allocated, and market approaches inclusive of a control premium are used when applicable. Significant judgments and assumptions are required to determine the discounted cash flows, including discount rates, long term growth rates, working capital requirements and the effects of increased inflationary pressures and interest rates, and also (i) for goodwill, premiums, investment returns, revenues and expenses, and (ii) for indefinite-lived intangible assets, premiums, revenues and royalty rates. Discounted cash flows are subject to sensitivity analysis given the uncertainty in preparing forecasts. Details of goodwill and indefinite-lived intangible assets, including the results of annual impairment tests, are presented in note 12.

#### Determination of significant influence, joint control and control
The determination of whether an investment is an associate, a joint arrangement or a subsidiary requires consideration of all facts and circumstances, and typically begins with an analysis of the company's proportion of the investee's voting rights. Judgment may be required to determine the existence of significant influence, joint control or control when it involves elements such as contractual arrangements between shareholders, currently exercisable potential voting rights through warrants or convertible instruments, significant shareholdings relative to other third party shareholders, and regulatory restrictions on board representation, voting rights, or relevant activities of the investee. De facto control over an investee without holding the majority of its voting rights may occur due to dispersion of third party shareholdings and other factors. Conversely, having significant influence over an investee when holding the majority of its voting rights may occur due to regulatory and other restrictions that limit the application of voting and other rights. The company's investments in associates and joint ventures are presented in note 6, business combinations and divestitures are presented in note 23 and subsidiaries are presented in note 29. The company exercised judgment in determining it had obtained significant influence over Stelco during 2022, and over Gulf Insurance through arrangements related to its sale of RiverStone Barbados during 2021, pursuant to the transactions described in note 6.

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

&nbsp;&nbsp;&nbsp;&nbsp;5. **Cash and Investments** 

Presented in the table below are holding company cash and investments and portfolio investments, net of derivative obligations, all of which are classified at FVTPL except for investments in associates and other invested assets.

---

| | | |
|:---|:---|:---|
|  | **December 31,**  | **December 31,**  |
|  | **2022** | **2021** |
| **Holding company** |  |  |
| Cash and cash equivalents | 552.1 | 465.9 |
| Short term investments | 126.6 | 216.9 |
| Bonds | 243.2 | 242.6 |
| Preferred stocks | 11.1 | 14.0 |
| Common stocks<sup>(1)</sup> | 75.4 | 137.5 |
| Derivatives (note 7) | 232.8 | 290.5 |
|  | 1241.2 | 1367.4 |
| Assets pledged for derivative obligations: |  |  |
| Cash equivalents | 40.6 | 46.8 |
| Short term investments | 64.0 | 64.1 |
|  | 104.6 | 110.9 |
| Holding company cash and investments as presented on the consolidated balance sheet | 1345.8 | 1478.3 |
| Derivative obligations (note 7) | (19.4) | (32.1) |
|  | 1326.4 | 1446.2 |
| **Portfolio investments** |  |  |
| Cash and cash equivalents<sup>(2)</sup> | 6203.3 | 12283.2 |
| Short term investments | 3164.9 | 9516.3 |
| Bonds | 28578.5 | 14091.2 |
| Preferred stocks | 2338.0 | 2405.9 |
| Common stocks<sup>(1)</sup> | 5124.3 | 5468.9 |
| Investments in associates (note 6) | 6091.3 | 4755.1 |
| Derivatives (note 7) | 235.0 | 291.3 |
| Other invested assets<sup>(3)</sup> | 593.5 | 699.9 |
|  | 52328.8 | 49511.8 |
| Assets pledged for derivative obligations: |  |  |
| Cash equivalents |  | 74.0 |
| Short term investments |  | 45.6 |
| Bonds | 51.3 |  |
|  | 51.3 | 119.6 |
| Fairfax India cash, portfolio investments and associates: |  |  |
| Cash and cash equivalents<sup>(2)</sup> | 184.8 | 76.5 |
| Short term investments | 49.7 | 6.2 |
| Bonds | 128.2 | 199.8 |
| Common stocks | 237.5 | 434.6 |
| Investments in associates (note 6) | 1342.6 | 1348.9 |
|  | 1942.8 | 2066.0 |
| Portfolio investments as presented on the consolidated balance sheet | 54322.9 | 51697.4 |
| Derivative obligations (note 7) | (171.6) | (120.8) |
|  | 54151.3 | 51576.6 |
| **Total cash and investments, net of derivative obligations** | 55477.7 | 53022.8 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Includes aggregate investments in limited partnerships with a carrying value at December 31, 2022 of $1,982.5 (December 31, 2021 – $1,971.0).* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Includes aggregate restricted cash and cash equivalents at December 31, 2022 of $861.2 (December 31, 2021 – $1,261.0). See note 27.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *Comprised primarily of investment property.* 

Restricted cash and cash equivalents at December 31, 2022 of $861.2 (December 31, 2021 – $1,261.0) was comprised primarily of amounts required to be maintained on deposit with various regulatory authorities to support the operations of the insurance and reinsurance subsidiaries. Refer to note 27 for details of restricted cash and cash equivalents presented on the consolidated balance sheet.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

The company's subsidiaries have pledged cash and investments, inclusive of trust funds and regulatory deposits, as security for their own obligations to pay claims or make premium payments (these pledges are either direct or collateral for letters of credit). In order to write insurance business in certain jurisdictions (primarily U.S. states) the company's subsidiaries must deposit funds with local insurance regulatory authorities to provide security for future claims payments as ultimate protection for the policyholder. Additionally, some of the company's subsidiaries provide reinsurance to primary insurers, for which funds must be posted as security for losses that have been incurred but not yet paid. These pledges are in the normal course of business and are generally released when the payment obligation is fulfilled.

The table that follows summarizes assets pledged to third parties by the nature of the pledge requirement (excluding assets pledged in favour of Lloyd's (note 20), for derivative obligations and for certain intercompany reinsurance arrangements). Pledged assets primarily consist of cash and cash equivalents, short term investments and bonds within portfolio investments on the consolidated balance sheet.

---

| | | |
|:---|:---|:---|
|  | **December 31,**  | **December 31,**  |
|  | **2022** | **2021** |
| Regulatory deposits | 5,724.2 | 5,147.1 |
| Security for reinsurance and other | 1,611.0 | 1,434.9 |
|  | 7,335.2 | 6,582.0 |

---

#### Fixed Income Maturity Profile
Bonds are summarized by their earliest contractual maturity date in the table below. Actual maturities may differ from maturities shown below due to the existence of call and put features. At December 31, 2022 bonds containing call, put and both call and put features represented $5,933.7, $30.9 and $427.7 respectively (December 31, 2021 - $4,063.0, $77.2 and $467.8) of the total fair value of bonds. The table below does not reflect the impact of U.S. treasury bond forward contracts with a notional amount at December 31, 2022 of $183.7 (December 31, 2021 - $1,691.3) that economically hedge the company's exposure to interest rate risk as described in note 7. The increase in the company's holdings of bonds due in 1 year or less was primarily due to net purchases of Canadian government bonds, Canadian provincial bonds and first mortgage loans of $779.0, $207.6 and $870.2 respectively and debentures received on the sale of Crum & Forster's Pet Insurance Group and Pethealth as described in note 23. The increase in the company's holdings of bonds due after 1 year through 3 years was primarily due to net investments of existing cash and proceeds from sales and maturities of U.S. treasury and Canadian provincial short term investments into U.S. treasury and Canadian government bonds with 1 to 3 year terms of $8,287.0 and $609.3, and short-dated high quality corporate bonds of $2,202.6. The increase in the company's holdings of bonds due after 3 years through 5 years was primarily due to net purchases of U.S. treasury bonds with 3 to 5 year terms of $2,905.1.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  | **Amortized** | **Fair** | **Amortized** | **Fair** |
|  | **cost**<sup>(1)</sup> | **value**<sup>(1)</sup> | **cost**<sup>(1)</sup> | **value**<sup>(1)</sup> |
| Due in 1 year or less<sup>(2)</sup> | 8506.5 | 8192.5 | 6022.8 | 5946.5 |
| Due after 1 year through 3 years<sup>(2)</sup> | 16077.6 | 15686.2 | 3933.5 | 4206.0 |
| Due after 3 years through 5 years | 4205.8 | 4116.6 | 2740.7 | 2744.1 |
| Due after 5 years through 10 years | 318.8 | 291.1 | 534.0 | 531.3 |
| Due after 10 years | 859.9 | 714.8 | 990.1 | 1105.7 |
|  | 29968.6 | 29001.2 | 14221.1 | 14533.6 |
| Pre-tax effective interest rate |  | 3.6% |  | 2.7% |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Includes bonds held by the holding company and Fairfax India.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Includes the company's investments in first mortgage loans at December 31, 2022 of $2,500.7 (December 31, 2021 - $1,659.4) secured by real estate predominantly in the U.S., Europe and Canada.* 

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Fair Value Disclosures
The company's use of quoted market prices (Level 1), valuation models with significant observable market information as inputs (Level 2) and valuation models with significant unobservable information as inputs (Level 3) in the valuation of securities and derivative contracts by type of issuer was as follows:

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  |  | **Significant** |  |  |  | **Significant** |  |  |
|  |  | **other** | **Significant** |  |  | **other** | **Significant** |  |
|  | **Quoted** | **observable** | **unobservable** | **Total fair** | **Quoted** | **observable** | **unobservable** | **Total fair** |
|  | **prices** | **inputs** | **inputs** | **value asset** | **prices** | **inputs** | **inputs** | **value asset** |
|  | **(Level 1)** | **(Level 2)** | **(Level 3)** | **(liability)** | **(Level 1)** | **(Level 2)** | **(Level 3)** | **(liability)** |
| Cash and cash equivalents<sup>(1)</sup> | 6980.8 |  |  | 6980.8 | 12946.4 |  |  | 12946.4 |
| Short term investments: |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Canadian government | 91.8 |  |  | 91.8 | 16.2 |  |  | 16.2 |
| &nbsp;&nbsp;Canadian provincials | 38.1 |  |  | 38.1 | 535.8 |  |  | 535.8 |
| &nbsp;&nbsp;U.S. treasury | 1574.5 |  |  | 1574.5 | 7608.8 |  |  | 7608.8 |
| &nbsp;&nbsp;Other government | 164.3 | 1238.5 |  | 1402.8 | 283.5 | 1140.9 |  | 1424.4 |
| &nbsp;&nbsp;Corporate and other |  | 298.0 |  | 298.0 |  | 263.9 |  | 263.9 |
|  | 1868.7 | 1536.5 |  | 3405.2 | 8444.3 | 1404.8 |  | 9849.1 |
| Bonds: |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Canadian government |  | 1923.5 |  | 1923.5 |  | 614.6 |  | 614.6 |
| &nbsp;&nbsp;Canadian provincials |  | 284.1 |  | 284.1 |  | 45.0 |  | 45.0 |
| &nbsp;&nbsp;U.S. treasury |  | 14378.8 |  | 14378.8 |  | 3957.9 |  | 3957.9 |
| &nbsp;&nbsp;U.S. states and municipalities |  | 262.7 |  | 262.7 |  | 387.2 |  | 387.2 |
| &nbsp;&nbsp;Other government |  | 2700.2 |  | 2700.2 |  | 2655.0 |  | 2655.0 |
| &nbsp;&nbsp;Corporate and other<sup>(2)</sup> |  | 5986.6 | 3465.3 | 9451.9 |  | 4078.1 | 2795.8 | 6873.9 |
|  |  | 25535.9 | 3465.3 | 29001.2 |  | 11737.8 | 2795.8 | 14533.6 |
| Preferred stocks: |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Canadian | 10.4 | 9.2 | 13.2 | 32.8 |  | 16.6 | 93.6 | 110.2 |
| &nbsp;&nbsp;U.S. |  |  | 233.6 | 233.6 |  |  | 40.6 | 40.6 |
| &nbsp;&nbsp;Other<sup>(3)</sup> | 13.2 | 269.2 | 1800.3 | 2082.7 | 13.5 | 288.0 | 1967.6 | 2269.1 |
|  | 23.6 | 278.4 | 2047.1 | 2349.1 | 13.5 | 304.6 | 2101.8 | 2419.9 |
| Common stocks: |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Canadian | 624.3 | 192.3 | 427.8 | 1244.4 | 1104.2 | 188.4 | 303.7 | 1596.3 |
| &nbsp;&nbsp;U.S. | 691.0 | 26.1 | 1087.2 | 1804.3 | 597.9 | 32.0 | 1155.3 | 1785.2 |
| &nbsp;&nbsp;Other | 1097.8 | 254.1 | 1036.6 | 2388.5 | 1438.0 | 276.7 | 944.8 | 2659.5 |
|  | 2413.1 | 472.5 | 2551.6 | 5437.2 | 3140.1 | 497.1 | 2403.8 | 6041.0 |
| Derivatives and other invested assets |  | 341.8 | 719.5 | 1061.3 | 0.1 | 175.4 | 1106.2 | 1281.7 |
| Derivative obligations (note 7) |  | (151.8) | (39.2) | (191.0) |  | (88.5) | (64.4) | (152.9) |
| Holding company cash and investments and portfolio investments measured at fair value | 11286.2 | 28013.3 | 8744.3 | 48043.8 | 24544.4 | 14031.2 | 8343.2 | 46918.8 |
|  | 23.5% | 58.3% | 18.2% | 100.0% | 52.3% | 29.9% | 17.8% | 100.0% |
| Investments in associates (note 6)<sup>(4)</sup> | 4693.8 | 95.3 | 4463.2 | 9252.3 | 4188.8 | 106.8 | 3995.6 | 8291.2 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Includes restricted cash and cash equivalents of $861.2 at December 31, 2022 (December 31, 2021 – $1,261.0). See note 27.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Included in Level 3 are the company's investments in first mortgage loans at December 31, 2022 of $2,500.7 (December 31, 2021 – $1,659.4) secured by real estate predominantly in the U.S., Europe and Canada.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *Primarily comprised of the company's investment in compulsory convertible preferred shares of Go Digit Infoworks Services Limited ("Digit"),which is described in footnote (2) of the following table. The company also holds a 49.0% equity interest in Digit as described in note 6.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(4)* *The fair value of investments in associates is presented separately as such investments are measured using the equity method of accounting. Also included is the fair value of Resolute Forest Products which was held for sale at December 31, 2022 as described in note 6.* 

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

In the preceding table certain limited partnerships included in common stocks are classified as Level 3 because their net asset values are unobservable or because they contractually require greater than three months to liquidate or redeem. During 2022 and 2021 there were no significant transfers of financial instruments between Level 1 and Level 2, and there were no significant transfers of financial instruments in or out of Level 3 as a result of changes in the observability of valuation inputs except as described in the following table which summarizes changes in Level 3 financial assets measured at fair value on a recurring basis.

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** |
|  | **Private** | **Private** |  |  |  | **Derivatives** |  |
|  | **placement** | **company** | **Limited** | **Private** |  | **and other** |  |
|  | **debt** | **preferred** | **partnerships** | **equity** | **Common** | **invested**  |  |
|  | **securities** | **shares** | **and other**<sup>(1)</sup> | **funds**<sup>(1)</sup> | **shares** | **assets** | **Total** |
| Balance - January 1 | 2795.8 | 2101.8 | 1789.1 | 107.7 | 507.0 | 1041.8 | 8343.2 |
| &nbsp;&nbsp;Net realized and unrealized gains (losses) included in the consolidated statement of earnings<sup>(2)</sup> | (378.8) | (247.4) | 143.0 | (1.4) | 61.9 | (95.8) | (518.5) |
| &nbsp;&nbsp;Purchases<sup>(3)</sup> | 1456.0 | 286.4 | 113.1 |  | 102.7 | 67.4 | 2025.6 |
| &nbsp;&nbsp;Sales and distributions<sup>(3)</sup> | (382.4) | (88.1) | (207.0) | (4.2) | (14.3) | (303.8) | (999.8) |
| &nbsp;&nbsp;Transfer out of category |  |  |  |  | (2.7) |  | (2.7) |
| &nbsp;&nbsp;Unrealized foreign currency translation losses on foreign subsidiaries included in other comprehensive income (loss) | (25.3) | (5.6) | (14.0) | (4.6) | (24.7) | (29.3) | (103.5) |
| Balance - December 31 | 3465.3  | 2047.1  | 1824.2  | 97.5  | 629.9  | 680.3  | 8744.3  |

---

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| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
|  | **Private** | **Private** |  |  |  | **Derivatives** |  |
|  | **placement** | **company** | **Limited** | **Private** |  | **and other** |  |
|  | **debt** | **preferred** | **partnerships** | **equity** | **Common** | **invested**  |  |
|  | **securities** | **shares** | **and other**<sup>(1)</sup> | **funds**<sup>(1)</sup> | **shares** | **assets** | **Total** |
| Balance - January 1 | 1774.2 | 587.4 | 1766.9 | 110.8 | 239.9 | 697.6 | 5176.8 |
| &nbsp;&nbsp;Net realized and unrealized gains included in the consolidated statement of earnings<sup>(2)</sup> | 69.1 | 1489.3 | 450.6 | 2.4 | 53.7 | 297.4 | 2362.5 |
| &nbsp;&nbsp;Purchases<sup>(3)(4)(5)</sup> | 1241.5 | 32.0 | 254.3 |  | 216.9 | 115.5 | 1860.2 |
| &nbsp;&nbsp;Acquisitions of subsidiaries (note 23) | 47.5 |  |  |  |  | 27.4 | 74.9 |
| &nbsp;&nbsp;Transfer into category<sup>(6)</sup> | 139.6 |  |  |  | 10.9 |  | 150.5 |
| &nbsp;&nbsp;Sales and distributions<sup>(3)</sup> | (476.6) | (7.2) | (580.9) | (5.9) | (2.5) | (91.8) | (1164.9) |
| &nbsp;&nbsp;Transfer out of category |  |  | (102.0) |  | (10.7) |  | (112.7) |
| &nbsp;&nbsp;Unrealized foreign currency translation gains (losses) on foreign subsidiaries included in other comprehensive income (loss) | 0.5 | 0.3 | 0.2 | 0.4 | (1.2) | (4.3) | (4.1) |
| Balance - December 31 | 2795.8 | 2101.8 | 1789.1 | 107.7 | 507.0 | 1041.8 | 8343.2 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Included in common stocks in the fair value hierarchy table presented on the previous page and in holding company cash and investments or common stocks on the consolidated balance sheets.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *During June 2021, the company's associate Go Digit Infoworks Services Private Limited ("Digit") entered into agreements with certain third party investors for its general insurance subsidiary Go Digit Insurance Limited ("Digit Insurance") to raise approximately $200 (14.9 billion Indian rupees) of new equity shares, valuing Digit Insurance at approximately $3.5 billion (259.5 billion Indian rupees) (the "transaction fair value"). Digit Insurance subsequently closed the majority of the $200 raise in the fourth quarter of 2021 and first half of 2022.* 

*At December 31, 2021, the company estimated the fair value of Digit Insurance using the transaction fair value, which was supported by an internal discounted cash flow analysis, resulting in the company recording a net unrealized gain of $1,490.3 in 2021 (inclusive of foreign exchange losses) on its investment in Digit compulsory convertible preferred shares.* 

*At December 31, 2022, the company estimated the fair value of Digit Insurance using an internal discounted cash flow analysis that continues to approximate the transaction fair value, resulting in the company recording a net unrealized loss of $167.2 in 2022, principally related to foreign exchange losses on its investment in Digit compulsory convertible preferred shares. The company also holds a 49.0% equity accounted interest in Digit as described in note 6.*

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *Private placement debt securities include net purchases of first mortgage loans of $870.2 (2021 - $826.9).* 

&nbsp;&nbsp;&nbsp;&nbsp;*(4)* *Common shares include non-voting shares of the RiverStone Barbados holding company as described in note 23.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(5)* *Derivatives and other invested assets include a monthly royalty on future revenues of Toys "R" Us Canada as described in note 23.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(6)* *Private placement debt securities include Mosaic Capital 25-year debentures as described in note 23.* 

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

The table below presents the valuation techniques and unobservable inputs used to estimate fair values for the company's significant Level 3 financial assets at December 31, 2022:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  |  | **Effect on fair** |
|  |  |  |  |  |  | **value if input** |
|  | **Carrying** |  |  | **Input range used** | **Input range used** | **value is**  |
| **Asset class** | **value** | **Valuation technique** | **Significant unobservable input** | **Low** | **High** | **increased**<sup>(a)</sup> |
| Bonds<sup>(b)</sup>: |  |  |  |  |  |  |
| &nbsp;&nbsp;Private placement debt securities<sup>(1)</sup> | 834.2 | Discounted cash flow | Credit spread | 2.8% | 12.7% | Decrease |
| &nbsp;&nbsp;Mortgage loans<sup>(2)</sup> | 2500.7 | Market approach | Recent transaction price | N/A | N/A | Increase |
|  |  | Discounted cash flow | Credit spread | 2.1% | 6.4% | Decrease |
| &nbsp;&nbsp;Other | 130.4 | Various | Various | N/A | N/A | N/A |
|  | 3465.3 |  |  |  |  |  |
| Preferred stocks<sup>(c)</sup>: |  |  |  |  |  |  |
| &nbsp;&nbsp;Private company preferred shares<sup>(3)</sup> | 1798.3 | Discounted cash flow | Discount rate | 10.9% | 10.9% | Decrease |
|  |  |  | Long term growth rate | 6.3% | 6.3% | Increase |
| &nbsp;&nbsp;Private placement preferred shares | 156.7 | Discounted cash flow | Credit spread | 5.8% | 5.8% | Decrease |
| &nbsp;&nbsp;Other | 92.1 | Various | Various | N/A | N/A | N/A |
|  | 2047.1 |  |  |  |  |  |
| Common stocks<sup>(d)</sup>: |  |  |  |  |  |  |
| &nbsp;&nbsp;Limited partnerships and other<sup>(4)</sup> | 1824.2 | Net asset value | Net asset value | N/A | N/A | Increase |
| &nbsp;&nbsp;Common shares | 261.6 | Market approach | Recent transaction price | N/A | N/A | Increase |
| &nbsp;&nbsp;Other | 465.8 | Various | Various | N/A | N/A | N/A |
|  | 2551.6 |  |  |  |  |  |
| Derivatives and other invested assets<sup>(e)</sup>: |  |  |  |  |  |  |
| &nbsp;&nbsp;Investment property<sup>(5)</sup> | 437.3 | Income capitalization | Terminal capitalization rate | 6.0% | 8.0% | Decrease |
|  |  |  | Discount rate | 6.9% | 9.3% | Decrease |
|  |  |  | Market rent growth rate | 2.6% | 3.0% | Increase |
|  | 66.0 | Sales comparison | Price per acre (Cdn$ thousands) | 30.0 | 150.0 | Increase |
| &nbsp;&nbsp;Other | 177.0 | Various | Various | N/A | N/A | N/A |
|  | 680.3 |  |  |  |  |  |
| Total | 8744.3 |  |  |  |  |  |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(a)* *Decreasing the input value would have the opposite effect on the estimated fair value.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(b)* *Included in holding company cash and investments or bonds on the consolidated balance sheet.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(c)* *Included in preferred stocks on the consolidated balance sheet.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(d)* *Included in holding company cash and investments or common stocks on the consolidated balance sheet.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(e)* *Included in holding company cash and investments or derivatives and other invested assets, net of derivative obligations, on the consolidated balance sheet.* 

&nbsp;&nbsp;&nbsp;&nbsp;(1) At December 31, 2022 these private placement debt securities were valued using industry accepted discounted cash flow models that incorporated unobservable credit spreads of the issuers, and consisted of 10 investments, the largest being $285.0 (software and services) (December 31, 2021 - 12 investments, the largest being $535.1 (software and services)). By increasing (decreasing) the credit spreads applied at December 31, 2022 by 100 basis points, the fair value of this asset class would collectively decrease by $23.2 (increase by $24.5).

&nbsp;&nbsp;&nbsp;&nbsp;(2) At December 31, 2022 these mortgage loans consisted of 50 investments, the largest being $250.0 (December 31, 2021 – 36 investments, the largest being $149.4). By increasing (decreasing) the credit spreads applied at December 31, 2022 by 100 basis points, the fair value of this asset class would not change significantly primarily due to the short term nature of these instruments.

&nbsp;&nbsp;&nbsp;&nbsp;(3) These private company preferred shares relate to the company's investment in Digit compulsory convertible preferred shares which were valued using an industry accepted discounted cash flow model that incorporated an unobservable discount rate and long term growth rate. By increasing (decreasing) the discount rate applied at December 31, 2022 by 1.0% , the fair value of the preferred shares would decrease by $308.2 (increase by $591.8); by increasing (decreasing) the long term growth rate applied at December 31, 2022 by 0.5% , the fair value of the preferred shares would increase by $175.8 (decrease by $141.7).

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

&nbsp;&nbsp;&nbsp;&nbsp;(4) Limited partnerships and other are investment funds managed by third party fund managers and general partners that invest in a diverse range of industries and geographies. These investment funds were valued primarily using net asset value statements provided by those third party fund managers and general partners. The fair values in those statements are determined using quoted prices of the underlying assets, and to a lesser extent, observable inputs where available and unobservable inputs, in conjunction with industry accepted valuation models, where required. In some instances, such investments are classified as Level 3 if they require at least three months' notice to liquidate or redeem. At December 31, 2022 limited partnerships and other consisted of 45 investments, the three largest being $374.8 (oil and gas extraction), $189.5 (industrials) and $176.1 (industrials) (December 31, 2021 - 47 investments, the three largest being $258.2 (industrials), $252.1 (oil and gas extraction) and $192.0 (primarily household appliance manufacturing)). By increasing (decreasing) net asset values at December 31, 2022 by 10% , the fair value of limited partnerships and other would collectively increase (decrease) by $182.4 .

&nbsp;&nbsp;&nbsp;&nbsp;(5) These investment property were primarily valued by third party appraisers using an industry accepted income capitalization approach that incorporated unobservable capitalization rates, discount rates and market rent growth rates. Certain investment property were valued using an industry accepted direct sales comparison approach that incorporated unobservable recent sale prices per acre for comparable properties in similar locations.

#### Investment Income
An analysis of investment income for the years ended December 31 follows:

#### Interest and dividends and share of profit of associates

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Interest income: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Cash and short term investments | 101.5  | 26.8  |
| &nbsp;&nbsp;&nbsp;&nbsp;Bonds | 753.1  | 488.5  |
| &nbsp;&nbsp;&nbsp;&nbsp;Derivatives and other invested assets | 18.9  | 53.1  |
|  | 873.5  | 568.4  |
| Dividends: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Preferred stocks | 39.7  | 14.1  |
| &nbsp;&nbsp;&nbsp;&nbsp;Common stocks | 100.7  | 94.1  |
|  | 140.4  | 108.2  |
| Investment expenses | (52.1) | (35.8) |
| Interest and dividends | 961.8  | 640.8  |
| Share of profit of associates (note 6) | 1014.7  | 402.0  |

---

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Net gains (losses) on investments

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2022** | **2021** | **2021** | **2021** |
|  |  | **Net change in** | **Net gains** |  | **Net change in** | **Net gains** |
|  | **Net realized** | **unrealized** | **(losses) on** | **Net realized** | **unrealized** | **(losses) on** |
|  | **gains (losses)** | **gains (losses)** | **investments** | **gains (losses)** | **gains (losses)** | **investments** |
| &nbsp;&nbsp;Common stocks | 364.5<br> <sup>(1)</sup> | (607.2)<br> <sup>(1)</sup> | (242.7) | 483.4 | 850.0 | 1333.4 |
| &nbsp;&nbsp;Preferred stocks - convertible | 1.4 | (5.8) | (4.4) | 0.7 | 2.1 | 2.8 |
| &nbsp;&nbsp;Bonds - convertible | 10.2 | (247.2) | (237.0) | 0.2 | 101.1 | 101.3 |
| &nbsp;&nbsp;Other equity derivatives<sup>(2)(3)</sup> | 331.7<br> <sup>(4)</sup> | (140.9)<br> <sup>(4)</sup> | 190.8 | 461.5 | 170.1 | 631.6 |
| &nbsp;&nbsp;Disposition of non-insurance associates | 45.1 |  | 45.1 | 52.7<br> <sup>(5)</sup> |  | 52.7 |
| &nbsp;&nbsp;Deconsolidation of non-insurance subsidiaries | 4.4 |  | 4.4 | 190.3<br> <sup>(6)</sup> |  | 190.3 |
| Long equity exposures and financial effects | 757.3 | (1001.1) | (243.8) | 1188.8 | 1123.3 | 2312.1 |
| &nbsp;&nbsp;Bonds | (183.6) | (1064.9) | (1248.5) | 338.0<br> <sup>(7)</sup> | (624.6)<br> <sup>(7)</sup> | (286.6) |
| &nbsp;&nbsp;U.S. treasury bond forward contracts | 163.0 | (0.6) | 162.4 | 26.0 | (0.3) | 25.7 |
| Total bonds | (20.6) | (1065.5) | (1086.1) | 364.0 | (624.9) | (260.9) |
| &nbsp;&nbsp;Preferred stocks | 12.9 | (101.1) | (88.2) | 1.5 | 1507.4<br> <sup>(8)</sup> | 1508.9 |
| &nbsp;&nbsp;Other derivative contracts | (62.0) | 86.6 | 24.6 | (157.2) | 181.3 | 24.1 |
| &nbsp;&nbsp;Foreign currency<sup>(9)</sup> | 105.8 | (410.1) | (304.3) | (64.5) | (28.6) | (93.1) |
| &nbsp;&nbsp;Other | (36.3) | 0.2 | (36.1) | 130.4 | (176.4) | (46.0) |
| **Net gains (losses) on investments** | 757.1 | (2491.0) | (1733.9) | 1463.0 | 1982.1 | 3445.1 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *On August 31, 2022 Stelco. repurchased 5.1 million of its outstanding common shares under its substantial issuer bid which resulted in the loss of a certain right held by another investor and the company's ownership interest in Stelco increasing to 20.5% . Accordingly, the company commenced applying the equity method of accounting to its interest in Stelco at that date, resulting in unrealized gains of $151.9 being reclassified to realized with a net impact of nil in the consolidated statement of earnings, as described in note 6.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Other equity derivatives include long equity total return swaps, equity warrants and options and the Asset Value Loan Notes ("AVLNs") entered with RiverStone Barbados as described in note 23. Net change in unrealized gains (losses) in 2022 included $100.6 in unrealized gains (2021 - $91.8) on the company's investment in long equity total return swaps on Fairfax subordinate voting shares, with the fair value of $196.3 at December 31, 2022 (December 31, 2021 - $95.7) recorded in holding company cash and investments, as described in note 7.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *Amounts recorded in net realized gains (losses) include net gains (losses) on total return swaps where the counterparties are generally required to cash-settle monthly or quarterly the market value movement since the previous reset date notwithstanding that the total return swap positions remain open subsequent to the cash settlement. Net realized gains (losses) in 2022 included $154.8 in realized gains (2021 - $130.9) on the company's investment in long equity total return swaps on Fairfax subordinate voting shares, which represented cash-settlement amounts recorded in holding company cash and investments.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(4)* *On April 6, 2022 the company acquired 25.0 million Atlas common shares by exercising its Atlas equity warrants with a strike price of $8.05 per share for aggregate cash consideration of $201.3 and recognized a net loss on investment of $37.2 (realized gains of $58.6 , of which $95.8 was recorded as unrealized gains in prior years) on derecognition of the equity warrants as described in note 6.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(5)* *During 2021 the company sold a portion of its investment in IIFL Finance for cash proceeds of $113.7 (8.6 billion Indian rupees) and recorded a net realized gain of $42.0 in the consolidated statement of earnings as described in note 6.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(6)* *Principally comprised of the sale of Toys "R" Us Canada and Fairfax India's sale of Privi during 2021.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(7)* *Includes the derecognition of Seaspan Corporation debentures that were exchanged for Atlas Corp. preferred shares and Seaspan Corporation debentures that were redeemed as described in note 6.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(8)* *Includes net unrealized gains of $1,490.3 (inclusive of foreign exchange losses) on Digit compulsory convertible preferred shares during 2021 described earlier in this note.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(9)* *Foreign currency net losses on investing activities during 2022 primarily related to the strengthening of the U.S. dollar relative to the company's investments denominated in the Indian rupee, Canadian dollar, Egyptian pound, Sri Lankan rupee and British pound, partially offset by foreign currency net gains on U.S. dollar denominated investments held by subsidiaries with a Canadian dollar or British pound functional currency as the U.S. dollar strengthened relative to those currencies. Foreign currency net losses on investing activities during 2021 primarily related to euro and Indian rupee denominated investments held by subsidiaries with a U.S. dollar functional currency as the U.S. dollar strengthened relative to those currencies.* 

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

**6.** **Investments in Associates**

The company's investments in associates are as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | |
|  |  |  | **Carrying value** | **Carrying value** | **Carrying value** | **Year ended** <br>**December 31,**<br>**2022** |
|  |  |  | **Associates** |  |  | **Share of** |
|  | **Ownership** | **Fair** | **and joint** | **Fairfax India** |  | **profit** |
|  | **percentage**<sup>(a)</sup> | **value**<sup>(b)</sup> | **ventures** | **associates**<sup>(c)</sup> | **Total** | **(loss)** |
| **Insurance and reinsurance:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Gulf Insurance Group K.S.C.P. ("Gulf Insurance") | 43.7% | 415.8 | 403.4 |  | 403.4 | 53.0 |
| &nbsp;&nbsp;&nbsp;Go Digit Infoworks Services Private Limited ("Digit")<sup>(1)</sup> | 49.0% | 479.3 | 104.4 |  | 104.4 | (11.0) |
| &nbsp;&nbsp;&nbsp;Other  |  | 173.9 | 139.5 |  | 139.5 | (11.6) |
|  |  | 1069.0 | 647.3 |  | 647.3 | 30.4 |
| **Non-insurance:** |  |  |  |  |  |  |
| *India* |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Bangalore International Airport Limited ("Bangalore Airport") | 54.0% | 1233.7 |  | 521.1 | 521.1 | (5.7) |
| &nbsp;&nbsp;&nbsp;Quess Corp Limited ("Quess") | 30.9% | 228.3 | 459.6<br> <sup>(d)</sup> |  | 459.6 | 6.8 |
| &nbsp;&nbsp;&nbsp;IIFL Finance Limited ("IIFL Finance") | 22.3% | 493.3 |  | 242.8 | 242.8 | 36.5 |
| &nbsp;&nbsp;&nbsp;Sanmar Chemicals Group ("Sanmar") | 42.9% | 337.8 |  | 159.8 | 159.8 | 36.4 |
| &nbsp;&nbsp;&nbsp;CSB Bank Limited ("CSB Bank") | 49.7% | 223.3 |  | 194.5 | 194.5 | 40.8 |
| &nbsp;&nbsp;&nbsp;IIFL Securities Limited ("IIFL Securities") | 37.1% | 87.9 | 35.3 | 97.9 | 133.2 | 14.6 |
| &nbsp;&nbsp;&nbsp;Seven Islands Shipping Limited ("Seven Islands") | 48.5% | 96.9 |  | 97.9 | 97.9 | 9.8 |
| &nbsp;&nbsp;&nbsp;Other |  | 38.0 | 10.8 | 28.6 | 39.4 | 3.3 |
|  |  | 2739.2 | 505.7 | 1342.6 | 1848.3 | 142.5 |
| *Real estate* |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;KWF Real Estate Ventures Limited Partnerships ("KWF LPs") |  | 101.1 | 101.1<br> <sup>(d)</sup> |  | 101.1 | 16.5 |
| &nbsp;&nbsp;&nbsp;Other<sup>(6)</sup> |  | 61.3 | 63.3 |  | 63.3 | 2.8 |
|  |  | 162.4 | 164.4 |  | 164.4 | 19.3 |
| *Other* |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Eurobank Ergasias Services & Holdings S.A ("Eurobank") | 32.2% | 1344.5 | 1507.6 |  | 1507.6 | 263.0 |
| &nbsp;&nbsp;&nbsp;Atlas Corp. ("Atlas", formerly Seaspan Corporation)<sup>(7)</sup> | 43.2% | 1864.7 | 1506.3 |  | 1506.3 | 258.2 |
| &nbsp;&nbsp;&nbsp;Resolute Forest Products Inc. ("Resolute")<sup>(8)</sup> | 32.2% | 508.5 | 508.5 |  | 508.5 | 159.0 |
| &nbsp;&nbsp;&nbsp;Stelco Holdings Inc. ("Stelco")<sup>(9)</sup> | 23.6% | 423.3 | 304.8 |  | 304.8 |  |
| &nbsp;&nbsp;&nbsp;EXCO Resources Inc. ("EXCO") | 44.4% | 544.8 | 288.4 |  | 288.4 | 81.9 |
| &nbsp;&nbsp;&nbsp;Helios Fairfax Partners Corporation ("HFP") | 34.4% | 104.1 | 183.2 |  | 183.2 | (23.9) |
| &nbsp;&nbsp;&nbsp;Peak Achievement Athletics ("Peak Achievement") | 42.6% | 195.3 | 124.4<br> <sup>(d)</sup> |  | 124.4 | 7.7 |
| &nbsp;&nbsp;&nbsp;Partnerships, trusts and other |  | 296.5 | 350.7 |  | 350.7 | 76.6 |
|  |  | 5281.7 | 4773.9 |  | 4773.9 | 822.5 |
|  |  | 8183.3 | 5444.0 | 1342.6 | 6786.6 | 984.3 |
| Investments in associates |  | 9252.3 | 6091.3 | 1342.6 | 7433.9 | 1014.7 |
| As presented on the consolidated balance sheet: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Investments in associates |  | 6772.9 |  |  | 6091.3 |  |
| &nbsp;&nbsp;&nbsp;Fairfax India investments in associates |  | 2479.4 |  |  | 1342.6 |  |
|  |  | 9252.3 |  |  | 7433.9 |  |

---

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | |
|  |  |  | **Carrying value** | **Carrying value** | **Carrying value** | **Year ended** <br>**December 31,** <br>**2021** |
|  |  |  | **Associates** |  |  | **Share of** |
|  | **Ownership** | **Fair** | **and joint** | **Fairfax India** |  | **profit** |
|  | **percentage**<sup>(a)</sup> | **value**<sup>(b)</sup> | **ventures** | **associates**<sup>(c)</sup> | **Total** | **(loss)** |
| **Insurance and reinsurance:** |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Gulf Insurance Group K.S.C.P. ("Gulf Insurance")<sup>(2)</sup> | 43.7% | 409.5 | 380.0 |  | 380.0 | 55.5 |
| &nbsp;&nbsp;&nbsp;Go Digit Infoworks Services Private Limited ("Digit") | 49.0% | 498.3 | 79.1 |  | 79.1 | 5.3 |
| &nbsp;&nbsp;&nbsp;Other<sup>(3)(4)(5)</sup> |  | 191.3 | 148.3 |  | 148.3 | 11.8 |
|  |  | 1099.1 | 607.4 |  | 607.4 | 72.6 |
| **Non-insurance:** |  |  |  |  |  |  |
| *India* |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Bangalore International Airport Limited ("Bangalore Airport")<sup>(13)</sup> | 54.0% | 1372.2 |  | 585.8 | 585.8 | (45.8) |
| &nbsp;&nbsp;&nbsp;Quess Corp Limited ("Quess") | 31.0% | 528.5 | 506.3<br> <sup>(d)</sup> |  | 506.3 | (1.4) |
| &nbsp;&nbsp;&nbsp;IIFL Finance Limited ("IIFL Finance")<sup>(10)</sup> | 22.3% | 318.1 |  | 198.8 | 198.8 | 40.6 |
| &nbsp;&nbsp;&nbsp;Sanmar Chemicals Group ("Sanmar") | 42.9% | 421.2 |  | 124.2 | 124.2 | (2.4) |
| &nbsp;&nbsp;&nbsp;CSB Bank Limited ("CSB Bank") | 49.7% | 227.6 |  | 180.8 | 180.8 | 27.6 |
| &nbsp;&nbsp;&nbsp;IIFL Securities Limited ("IIFL Securities") | 37.2% | 138.0 | 35.0 | 101.0 | 136.0 | 14.0 |
| &nbsp;&nbsp;&nbsp;Seven Islands Shipping Limited ("Seven Islands") | 48.5% | 105.9 |  | 98.5 | 98.5 | (0.5) |
| &nbsp;&nbsp;&nbsp;Other |  | 84.8 | 10.9 | 59.8 | 70.7 | 0.5 |
|  |  | 3196.3 | 552.2 | 1348.9 | 1901.1 | 32.6 |
| *Real estate* |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;KWF Real Estate Ventures Limited Partnerships ("KWF LPs") |  | 76.3 | 76.3<br> <sup>(d)</sup> |  | 76.3 | (9.0) |
| &nbsp;&nbsp;&nbsp;Other |  | 139.6 | 140.5 |  | 140.5 | (1.7) |
|  |  | 215.9 | 216.8 |  | 216.8 | (10.7) |
| *Other* |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Eurobank Ergasias Services & Holdings S.A ("Eurobank") | 32.2% | 1210.3 | 1298.5 |  | 1298.5 | 162.3 |
| &nbsp;&nbsp;&nbsp;Atlas Corp. ("Atlas", formerly Seaspan Corporation)<sup>(11)</sup> | 36.7% | 1285.8 | 922.1 |  | 922.1 | 69.5 |
| &nbsp;&nbsp;&nbsp;Resolute Forest Products Inc. ("Resolute") | 32.3% | 377.1 | 275.8 |  | 275.8 | 75.9 |
| &nbsp;&nbsp;&nbsp;EXCO Resources Inc. ("EXCO") | 43.3% | 267.2 | 195.4 |  | 195.4 | (41.2) |
| &nbsp;&nbsp;&nbsp;Helios Fairfax Partners Corporation ("HFP")<sup>(12)</sup> | 34.4% | 116.2 | 206.1 |  | 206.1 | (1.2) |
| &nbsp;&nbsp;&nbsp;Peak Achievement Athletics ("Peak Achievement") | 42.6% | 181.2 | 140.5<br> <sup>(d)</sup> |  | 140.5 | 13.3 |
| &nbsp;&nbsp;&nbsp;Partnerships, trusts and other |  | 342.1 | 340.3 |  | 340.3 | 28.9 |
|  |  | 3779.9 | 3378.7 |  | 3378.7 | 307.5 |
|  |  | 7192.1 | 4147.7 | 1348.9 | 5496.6 | 329.4 |
| Investments in associates |  | 8291.2 | 4755.1 | 1348.9 | 6104.0 | 402.0 |
| As presented on the consolidated balance sheet: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Investments in associates |  | 5671.9 |  |  | 4755.1 |  |
| &nbsp;&nbsp;&nbsp;Fairfax India investments in associates |  | 2619.3 |  |  | 1348.9 |  |
|  |  | 8291.2 |  |  | 6104.0 |  |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(a)* *Ownership percentages include the effects of financial instruments that are considered in-substance equity.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(b)* *See note 5 for fair value hierarchy information.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(c)* *Fairfax India's associates are domiciled in India.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(d)* *These investments are joint ventures.* 

#### Insurance and reinsurance associates and joint ventures
&nbsp;&nbsp;&nbsp;&nbsp;(1) Digit Insurance and the company applied to the Insurance Regulatory and Development Authority of India ("IRDAI") for approval to convert the company's holdings in compulsory convertible preferred shares issued by Digit ("Digit CCPS") into equity shares of Digit. The IRDAI subsequently communicated that the application could not be considered in its current form as conversion of the Digit CCPS would result in Digit (currently classified as an "Indian promoter" of Digit Insurance) becoming a subsidiary of the company, which was, at such time, prohibited under the then prevailing Indian insurance regulations. Since then, the IRDAI has enacted new regulations that have introduced a definition of a "Foreign Promoter", which would permit an Indian insurance company (like Digit Insurance) to be a subsidiary of a "Foreign Promoter". However, Digit does not currently qualify as a "Foreign Promoter" under these new regulations. Digit, Digit Insurance and the company intend to continue to explore all avenues under applicable law to achieve the company's majority ownership of Digit through conversion of the company's Digit CCPS.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

&nbsp;&nbsp;&nbsp;&nbsp;(2) On February 8, 2021 the company entered into an arrangement to purchase (unless sold earlier) certain portfolio investments owned by RiverStone Barbados as described in note 23 and subsequently commenced applying the equity method of accounting to its interest in Gulf Insurance pursuant to that arrangement.

&nbsp;&nbsp;&nbsp;&nbsp;(3) On July 14, 2021 the company increased its interest in Eurolife to 80.0% and commenced consolidating Eurolife as described in note 23.

&nbsp;&nbsp;&nbsp;&nbsp;(4) On June 17, 2021 the company increased its equity interest in Singapore Re from 28.2% to 94.0% and commenced consolidating Singapore Re as described in note 23.

&nbsp;&nbsp;&nbsp;&nbsp;(5) On August 23, 2021 the company completed the sale of its joint venture interest in RiverStone Barbados, pursuant to the transactions described in note 23.

**Non-insurance associates and joint ventures**

&nbsp;&nbsp;&nbsp;&nbsp;(6) On July 5, 2022 the company increased its interest in Grivalia Hospitality S.A. ("Grivalia Hospitality") to 78.4% from 33.5% and commenced consolidating Grivalia Hospitality as described in note 23.

&nbsp;&nbsp;&nbsp;&nbsp;(7) On April 6, 2022 the company acquired 25.0 million Atlas common shares by exercising its equity warrants in Atlas with a strike price of $8.05 per share for aggregate cash consideration of $201.3 . On derecognition of the equity warrants, the company recorded a net loss on investment of $37.2 (realized gains of $58.6 , of which $95.8 was recorded as unrealized gains in prior years) and recorded the fair value of these shares of $335.3 as an addition to its equity accounted investment in Atlas. On October 4, 2022, the company increased its interest in Atlas to 43.2% through the purchase of Atlas common shares held through the company's investment in AVLNs entered with RiverStone Barbados (as described in note 23) for cash consideration of $84.8 .

On October 31, 2022 a consortium composed of the company, the Washington Family, David Sokol, Chairman of the Board of Directors of Atlas, and Ocean Network Express Pte. Ltd., a global container, transportation and shipping company (collectively, the "Consortium"), signed a definitive agreement to acquire all of the outstanding common shares of Atlas, other than those shares owned by the Consortium, at a cash purchase price of $15.50, plus payment of all ordinary course quarterly dividends up until closing of the transaction. Pursuant to the transaction, the company would transfer its approximate 45% interest in Atlas, inclusive of the company's interest through its holdings in Atlas equity warrants that were exercised on January 12, 2023 for cash consideration of $78.7, into Poseidon Acquisitions Corp. ("Poseidon", an entity formed by the Consortium), and is not obligated to purchase any additional interest not already owned by the Consortium. The other members of the Consortium have committed to fully fund the cash component of the transaction, and the company would continue its ownership in Atlas as part of the Consortium. Closing of the transaction is expected to be in the first half of 2023, and is subject to receipt of regulatory approvals and certain other customary closing conditions. The company expects to continue to apply the equity method of accounting to its interest in Atlas through its interest in Poseidon on closing of the transaction.

&nbsp;&nbsp;&nbsp;&nbsp;(8) On July 5, 2022 Domtar Corporation entered into a definitive agreement with Resolute to acquire all outstanding common shares of Resolute for a combination of cash consideration of $20.50 and a Contingent Value Right ("CVR") per Resolute common share. The CVR provides holders with the right to a share of any future softwood lumber duty deposit refunds. Pursuant to the transaction, on July 5, 2022 the company measured its investment in Resolute as held for sale and ceased applying the equity method of accounting, with the carrying value and fair value of the associate at December 31, 2022 equal to the fair value of the cash consideration of $508.5 or $20.50 per Resolute common share. The transaction closed on March 1, 2023.

&nbsp;&nbsp;&nbsp;&nbsp;(9) On August 31, 2022 Stelco Holdings Inc. repurchased 5.1 million of its outstanding common shares under its substantial issuer bid which resulted in the loss of a certain right held by another investor and the company's ownership interest in Stelco increasing to 20.5% . Accordingly, the company commenced applying the equity method of accounting to its interest in Stelco which had a fair value of $352.2 (Cdn $461.3) on that date. Stelco is a publicly listed independent steelmaker that produces flat-rolled, coated, and cold-rolled steel products for the construction, automotive, and energy industries in North America.

&nbsp;&nbsp;&nbsp;&nbsp;(10) During 2021 the company reduced its interest in IIFL Finance to 22.3% by selling a portion of its interest for cash proceeds of $113.7 (8.6 billion Indian rupees) and recorded a net realized gain of $42.0 in the consolidated statement of earnings.

&nbsp;&nbsp;&nbsp;&nbsp;(11) On June 11, 2021 the company entered into an exchange and amendment transaction with Atlas in relation to its investment in $575.0 principal amount of debentures issued by Seaspan Corporation ("Seaspan"), an operating subsidiary of Atlas, whereby the company exchanged $288.0

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

principal amount of those Seaspan debentures for newly-issued Atlas Series J preferred shares and equity warrants with an exercise price of $13.71 per share. The terms of the remaining Seaspan debentures were amended to primarily remove the company's mandatory put rights and discharge all outstanding guarantees and liens on collateral. The company derecognized the Seaspan debentures that were exchanged and recorded its investment in the Atlas preferred shares and warrants as preferred stocks and derivatives respectively on the consolidated balance sheet. On August 23, 2021 Atlas redeemed the remaining $287.0 principal amount of the Seaspan debentures.

&nbsp;&nbsp;&nbsp;&nbsp;(12) On March 31, 2021 the company invested $100.0 in $100.0 principal amount of Helios Fairfax Partners Corporation ("HFP") 3.0% unsecured debentures and warrants to purchase 3 million HFP subordinate voting shares exercisable at $4.90 per share any time prior to the fifth anniversary of closing. The debentures will mature on the third anniversary of closing or, at the company's option, on either the first or second anniversary. At redemption or maturity, if the fair value of certain Fairfax Africa legacy investments held by HFP are below their fair value at June 30, 2020 of $102.6 , the redemption price of the debentures will be reduced by that difference. The company recorded the debentures at their initial fair value of $78.0 and recorded the balance of $22.0 as an addition to its equity accounted investment in HFP.

*Fairfax India*

&nbsp;&nbsp;&nbsp;&nbsp;(13) On September 16, 2021 Fairfax India transferred 43.6% out of its 54.0% equity interest in Bangalore Airport to Anchorage Infrastructure Investments Holdings Limited ("Anchorage"), its wholly-owned holding company for investments in the airport sector of India, and sold an 11.5% equity interest in Anchorage to OMERS for gross proceeds of $129.2 (9.5 billion Indian rupees). Upon closing Fairfax India recorded a non-controlling interest in Anchorage and continued to equity account for its aggregate 54.0% equity interest in Bangalore Airport.

#### Annual changes in carrying value
Changes in the carrying value of investments in associates for the years ended December 31 were as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2022** | **2022** |
|  |  |  | **Fairfax India** |  |
|  | **Associates** | **Joint ventures** | **associates** | **Total** |
| Balance - January 1 | 3858.7 | 896.4 | 1348.9 | 6104.0 |
| Share of pre-tax comprehensive income (loss): |  |  |  |  |
| &nbsp;&nbsp;Share of profit | 856.6 | 26.1 | 132.0 | 1014.7 |
| &nbsp;&nbsp;Share of other comprehensive income (loss), excluding gains (losses) on defined benefit plans | (111.5) | (53.0) | 14.4 | (150.1) |
| &nbsp;&nbsp;Share of gains (losses) on defined benefit plans | 74.4 | 0.6 | (5.4) | 69.6 |
|  | 819.5 | (26.3) | 141.0 | 934.2 |
| Dividends and distributions received | (142.2) | (33.7) | (7.0) | (182.9) |
| Purchases and acquisitions | 429.1 | 88.6 | 10.1 | 527.8 |
| Divestitures and other net changes in capitalization | 9.9 | (11.9) | 34.4 | 32.4 |
| Reclassifications<sup>(1)</sup> | 352.2 | (114.3) | (40.4) | 197.5 |
| Foreign exchange effect and other | (16.8) | (17.9) | (144.4) | (179.1) |
| Balance - December 31 | 5310.4 | 780.9 | 1342.6 | 7433.9 |

---

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2021** | **2021** | **2021** | **2021** |
|  |  |  | **Fairfax India** |  |
|  | **Associates** | **Joint ventures** | **associates** | **Total** |
| Balance - January 1 | 3170.4 | 1940.9 | 1328.3 | 6439.6 |
| Share of pre-tax comprehensive income (loss): |  |  |  |  |
| &nbsp;&nbsp;Share of profit  | 375.8 | 6.0 | 20.2 | 402.0 |
| &nbsp;&nbsp;Share of other comprehensive income (loss), excluding gains (losses) on defined benefit plans | (67.7) | (20.5) | 0.3 | (87.9) |
| &nbsp;&nbsp;Share of gains (losses) on defined benefit plans | 89.1 | 0.1 | (9.4) | 79.8 |
|  | 397.2 | (14.4) | 11.1 | 393.9 |
| Dividends and distributions received | (153.8) | (23.6) | (4.6) | (182.0) |
| Purchases and acquisitions | 466.5 | 114.4 | 35.7 | 616.6 |
| Divestitures and other net changes in capitalization | (54.8) | (764.4) | 0.9 | (818.3) |
| Reclassifications<sup>(1)</sup> | 36.4 | (352.0) |  | (315.6) |
| Foreign exchange effect and other | (3.2) | (4.5) | (22.5) | (30.2) |
| Balance - December 31 | 3858.7 | 896.4 | 1348.9 | 6104.0 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Primarily reflects the consolidation of Grivalia Hospitality and the commencement of the equity method of accounting for Stelco in 2022, and the consolidation of Eurolife and Singapore Re and the commencement of the equity method of accounting for a limited partnership investment in 2021. See note 23.* 

&nbsp;&nbsp;&nbsp;&nbsp;7. **Derivatives** 

The following table summarizes the company's derivative financial instruments:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **Notional** |  | **Fair value** | **Fair value** | **Notional** |  | **Fair value** | **Fair value** |
|  | **amount** | **Cost** | **Assets** | **Liabilities** | **amount** | **Cost** | **Assets** | **Liabilities** |
| Equity derivative contracts<sup>(1)</sup> | 1946.5 | 68.0 | 258.1 | 19.4 | 1728.9 | 113.9 | 355.3 | 3.8 |
| RiverStone Barbados AVLNs (note 23) | 517.5 |  | 30.7 |  | 1250.1 |  | 103.8 |  |
| Foreign currency derivative contracts<sup>(2)</sup> |  |  | 49.0 | 106.8 |  |  | 58.4 | 77.4 |
| Other derivative contracts |  | 289.8 | 130.0 | 64.8 |  | 263.3 | 64.3 | 71.7 |
| Total |  |  | 467.8 | 191.0 |  |  | 581.8 | 152.9 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Includes the company's investment in Atlas warrants with a fair value at December 31, 2022 of $13.5 (December 31, 2021 - $200.1), which were subsequently exercised on January 12, 2023 as described in note 6.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Includes AGT's foreign currency forward and swap liabilities with a fair value at December 31, 2022 of $56.2 (December 31, 2021 - $47.6).* 

The company is exposed to significant market risk (comprised of foreign currency risk, interest rate risk and other price risk) through its investing activities. Derivative contracts entered into by the company, with limited exceptions, are considered investments or economic hedges and are not designated as hedges for financial reporting.

#### Equity derivative contracts
*Long equity total return swaps*

During 2022 the company entered into $217.4 notional amount of long equity total return swaps for investment purposes. At December 31, 2022 the company held long equity total return swaps on individual equities for investment purposes with an original notional amount of $1,012.6 (December 31, 2021 - $866.2), which included an aggregate of 1,964,155 Fairfax subordinate voting shares with an original notional amount of $732.5 (Cdn$935.0) or approximately $372.96 (Cdn $476.03) per share at December 31, 2022 and 2021.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

During 2022 the long equity total return swaps on Fairfax subordinate voting shares produced net gains of $255.4 (2021 - $222.7). Long equity total return swaps provide a return which is directly correlated to changes in the fair values of the underlying individual equities.

During 2022 the company received net cash of $238.2 (2021 - $439.6) in connection with the closures and reset provisions of its long equity total return swaps (excluding the impact of collateral requirements). During 2022 the company closed out $63.0 notional amount (2021 - $1,876.7) of its long equity total return swaps and recorded net realized losses on investments of $8.1 (2021 -net realized gains of $243.0).

*RiverStone Barbados Asset Value Loan Notes*

Pursuant to the sale of RiverStone Barbados in 2021 as described in note 23, the company, through financial instruments referred to as AVLNs, had guaranteed the then value of approximately $1.3 billion of certain securities held by the purchaser and certain affiliates thereof until such time that the securities are purchased by or sold at the direction of Hamblin Watsa, prior to the end of 2022. Should the company direct that the securities be sold, any difference between their fair value and guaranteed value will be settled in cash. On July 5, 2022 AVLNs with a guaranteed value of $543.4 were amended such that the underlying securities must be purchased by or sold at the direction of Hamblin Watsa prior to the end of 2023. The remainder of the AVLNs were unchanged and during 2022 all securities that were required to be purchased by or sold at the direction of Hamblin Watsa prior to the end of 2022 pursuant to the terms of the amended agreement were re-acquired, and in addition, certain of the amended AVLNs were purchased in the second half of 2022. At December 31, 2022 the fair value of the AVLNs was a derivative asset of $30.7 (December 31, 2021 – $103.8), with a remaining guaranteed value of $486.8.

#### Foreign currency derivative contracts

#### Foreign currency forward contracts
Long and short foreign currency forward contracts, primarily denominated in the euro, the British pound sterling and the Canadian dollar, are used to manage certain foreign currency exposures arising from foreign currency denominated transactions. These contracts have an average term to maturity of less than one year and may be renewed at market rates.

***Other derivative contracts***

*U.S. treasury bond forward contracts*

To reduce its exposure to interest rate risk (primarily exposure to certain long dated U.S. corporate bonds and U.S. state and municipal bonds held in its fixed income portfolio), the company held forward contracts to sell long dated U.S. treasury bonds with a notional amount at December 31, 2022 of $183.7 (December 31, 2021 - $1,691.3). The decrease in U.S. treasury bond forward contracts held primarily reflected the closing of certain contracts as interest rates increased during the second half of 2022 and from the corresponding decrease in the company's exposure to certain U.S. corporate bonds from sales completed in late 2021. These contracts have an average term to maturity of less than six months, and may be renewed at market rates. During 2022 the company recorded net gains on investments of $162.4 (2021 - $25.7) on its U.S. treasury bond forward contracts.

#### Counterparty collateral
*Collateral deposits on derivative contracts for the benefit of the company*

The company endeavours to limit counterparty risk through diligent selection of counterparties to its derivative contracts and through the terms of negotiated agreements. The fair value of collateral deposited for the benefit of the company at December 31, 2022 consisted of cash of $9.5 and government securities of $274.9 (December 31, 2021 - $14.3 and $125.7). The cash is recorded on the consolidated balance sheet in subsidiary cash and short term investments with a corresponding liability recorded in accounts payable and accrued

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

liabilities. The company had not exercised its right to sell or repledge collateral at December 31, 2022. The company's exposure to counterparty risk and the management thereof are discussed in note 24.

*Collateral deposits on derivative contracts for the benefit of the derivative counterparties*

At December 31, 2022 the fair value of collateral deposited for the benefit of derivative counterparties included in holding company cash and investments and in assets pledged for derivative obligations was $155.9 (December 31, 2021 - $230.5), comprised of collateral of $124.8 (December 31, 2021 - $221.2) required to be deposited to enter into such derivative contracts (principally related to total return swaps), and collateral of $31.1 (December 31, 2021 - $9.3) securing amounts owed to counterparties in respect of fair value changes since the most recent reset date.

#### Hedge of net investment in Canadian subsidiaries
At December 31, 2022 the company had designated the carrying value of Cdn$2,800.0 principal amount of its Canadian dollar denominated unsecured senior notes with a fair value of $1,926.8 (December 31, 2021 – principal amount of Cdn$2,800.0 with a fair value of $2,364.6) as a hedge of a portion of its net investment in subsidiaries with a Canadian dollar functional currency. During 2022 the company recognized pre-tax gains of $149.5 (2021 - pre-tax losses of $16.7) related to exchange rate movements on the Canadian dollar denominated unsecured senior notes in gains (losses) on hedge of net investment in Canadian subsidiaries in the consolidated statement of comprehensive income.

#### Hedge of net investment in European operations
At December 31, 2022 the company had designated the carrying value of €750.0 principal amount of its euro denominated unsecured senior notes with a fair value of $698.3 (December 31, 2021 – principal amount of €750.0 with a fair value of $926.3) as a hedge of its net investment in European operations with a euro functional currency. During 2022 the company recognized pre-tax gains of $51.8 (2021 – $63.9) related to exchange rate movements on the euro denominated unsecured senior notes in gains on hedge of net investment in European operations in the consolidated statement of comprehensive income.

&nbsp;&nbsp;&nbsp;&nbsp;8. **Insurance Contract Liabilities** 

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **Gross** | **Ceded** | **Net** | **Gross** | **Ceded** | **Net** |
| Provision for unearned premiums | 11691.8 | 2413.1 | 9278.7 | 10437.7 | 2260.0 | 8177.7 |
| Provision for losses and loss adjustment expenses | 38319.2 | 9245.9 | 29073.3 | 34422.8 | 8943.9 | 25478.9 |
| Property and casualty insurance contract liabilities | 50011.0 | 11659.0 | 38352.0 | 44860.5 | 11203.9 | 33656.6 |
| Provision for life policy benefits<sup>(1)(2)</sup> | 2188.6 | 2.6 | 2186.0 | 2486.0 | 2.3 | 2483.7 |
| Insurance contract liabilities | 52199.6 | 11661.6 | 40538.0 | 47346.5 | 11206.2 | 36140.3 |
| Current | 23807.9 | 5052.4 | 18755.5 | 20618.3 | 4740.3 | 15878.0 |
| Non-current | 28391.7 | 6609.2 | 21782.5 | 26728.2 | 6465.9 | 20262.3 |
|  | 52199.6 | 11661.6 | 40538.0 | 47346.5 | 11206.2 | 36140.3 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Eurolife was consolidated on July 14, 2021 as described in note 23.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Provision for life policy benefits includes gross and ceded provisions for unearned premiums of $18.2 and $0.4 (2021 - $16.5 and nil).* 

At December 31, 2022 the company's net provision for losses and loss adjustment expenses of $29,073.3 (December 31, 2021 - $25,478.9) was comprised of case reserves of $10,933.9 and IBNR of $18,139.4 (December 31, 2021 - $10,258.5 and $15,220.4).

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Provision for unearned premiums, gross
Changes in the property and casualty provision for unearned premiums for the years ended December 31 were as follows:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Provision for unearned premiums – January 1 | 10437.7 | 8397.5 |
| &nbsp;&nbsp;Gross premiums written | 27561.7 | 23796.0 |
| &nbsp;&nbsp;Less: gross premiums earned | (26106.7) | (21673.6) |
| &nbsp;&nbsp;Acquisitions of subsidiaries (note 23) |  | 64.1 |
| &nbsp;&nbsp;Divestiture of subsidiary |  | (62.9) |
| &nbsp;&nbsp;Foreign exchange effect and other | (200.9) | (83.4) |
| Provision for unearned premiums - December 31 | 11691.8 | 10437.7 |

---

#### Provision for losses and loss adjustment expenses, gross
Changes in the property and casualty provision for losses and loss adjustment expenses for the years ended December 31 were as follows:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Provision for losses and loss adjustment expenses – January 1 | 34422.8 | 30809.3 |
| &nbsp;&nbsp;Decrease in estimated losses and expenses for claims occurring in the prior years | (44.0) | (283.1) |
| &nbsp;&nbsp;Losses and expenses for claims occurring in the current year | 17300.2 | 14396.8 |
| &nbsp;&nbsp;Paid on claims occurring during: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;the current year | (3978.6) | (3148.6) |
| &nbsp;&nbsp;&nbsp;&nbsp;the prior years | (8734.7) | (7212.8) |
| &nbsp;&nbsp;Acquisitions of subsidiaries (note 23) | 3.8 | 297.3 |
| &nbsp;&nbsp;Divestiture of subsidiary  |  | (18.7) |
| &nbsp;&nbsp;Foreign exchange effect and other<sup>(1)</sup> | (650.3) | (417.4) |
| Provision for losses and loss adjustment expenses – December 31 | 38319.2 | 34422.8 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Foreign exchange effect and other principally reflected the decrease of reserves denominated in the Canadian dollar, British pound, euro and Argentinian peso which weakened against the U.S. dollar (2021 - principally reflected the decrease of reserves denominated in the euro, Chilean peso, Argentinian peso, Colombian peso and South African rand which weakened against the U.S. dollar).* 

#### Provision for life policy benefits
Changes in the provision for life policy benefits for the years ended December 31, following the acquisition of Eurolife on July 14, 2021, were as follows:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Provision for life policy benefits – January 1 | 2486.0 |  |
| &nbsp;&nbsp;Acquisition of subsidiary (note 23) |  | 2638.5 |
| &nbsp;&nbsp;New business and renewals | 275.9 | 78.1 |
| &nbsp;&nbsp;Surrenders, lapses, maturities and deaths | (359.4) | (121.0) |
| &nbsp;&nbsp;Foreign exchange effect and other<sup>(1)</sup> | (213.9) | (109.6) |
| Provision for life policy benefits – December 31 | 2188.6 | 2486.0 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Foreign exchange effect and other principally reflected the depreciation of euro denominated reserves against the U.S. dollar.* 

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Development of insurance losses, gross
The development of insurance liabilities illustrates the estimation uncertainty associated with these liabilities and provides a measure of the company's ability to estimate the ultimate value of claims. The loss development table below shows the provision for losses and loss adjustment expenses at the end of each calendar year, the cumulative payments made in respect of those reserves in subsequent years and the re-estimated amount of each calendar year's provision for losses and loss adjustment expenses as at December 31, 2022.

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Calendar year** | **Calendar year** | **Calendar year** | **Calendar year** | **Calendar year** | **Calendar year** | **Calendar year** | **Calendar year** | **Calendar year** | **Calendar year** |
|  | **2013** | **2014** | **2015** | **2016** | **2017** | **2018** | **2019** | **2020** | **2021** | **2022** |
| Property and casualty provision for losses and loss adjustment expenses | 19212.8  | 17749.1  | 19816.4  | 19481.8  | 28610.8  | 29081.7  | 28500.2  | 30809.3  | 34422.8  | 38319.2 |
| Less: CTR Life<sup>(1)</sup> | 17.9  | 15.2  | 14.2  | 12.8  | 8.7  | 8.0  | 7.0  | 5.5  | 4.4  | 4.4 |
|  | 19194.9  | 17733.9  | 19802.2  | 19469.0  | 28602.1  | 29073.7  | 28493.2  | 30803.8  | 34418.4  | 38314.8 |
| Cumulative payments as of: |  |  |  |  |  |  |  |  |  |  |
| One year later | 4081.1  | 3801.6  | 4441.4  | 4608.0  | 7564.0  | 7732.0  | 7288.8  | 7180.7  | 8734.7  |  |
| Two years later | 6787.6  | 6364.5  | 7283.6  | 7631.4  | 12081.3  | 12313.5  | 11598.0  | 12501.3  |  |  |
| Three years later | 8775.5  | 8172.7  | 9466.5  | 9655.9  | 15222.3  | 15363.3  | 15475.2  |  |  |  |
| Four years later | 10212.4  | 9561.8  | 10914.2  | 11122.6  | 17378.8  | 18132.3  |  |  |  |  |
| Five years later | 11354.4  | 10496.4  | 12013.9  | 12233.4  | 13340.9  |  |  |  |  |  |
| Six years later | 12123.4  | 11202.2  | 12859.5  | 13196.6  |  |  |  |  |  |  |
| Seven years later | 12754.2  | 11793.5  | 13568.0  |  |  |  |  |  |  |  |
| Eight years later | 13283.6  | 12390.7  |  |  |  |  |  |  |  |  |
| Nine years later | 13840.6  |  |  |  |  |  |  |  |  |  |
| Reserves re-estimated as of: |  |  |  |  |  |  |  |  |  |  |
| One year later | 18375.6  | 16696.4  | 19169.3  | 19343.1  | 27580.6  | 28974.3  | 28225.5  | 30360.1  | 33931.1  |  |
| Two years later | 17475.0  | 16269.2  | 18973.6  | 18804.8  | 27565.9  | 28839.4  | 28165.4  | 30267.4  |  |  |
| Three years later | 17307.9  | 16114.0  | 18502.5  | 18752.8  | 27451.3  | 28990.4  | 28242.2  |  |  |  |
| Four years later | 17287.2  | 15938.9  | 18469.1  | 18743.9  | 27698.6  | 29284.5  |  |  |  |  |
| Five years later | 17203.5  | 16049.6  | 18490.5  | 19046.6  | 27977.0  |  |  |  |  |  |
| Six years later | 17340.1  | 16123.1  | 18759.5  | 19203.7  |  |  |  |  |  |  |
| Seven years later | 17420.0  | 16403.8  | 18866.6  |  |  |  |  |  |  |  |
| Eight years later | 17680.5  | 16595.5  |  |  |  |  |  |  |  |  |
| Nine years later | 17843.1  |  |  |  |  |  |  |  |  |  |
| Favourable (adverse) development | 1351.8  | 1138.4  | 935.6  | 265.3  | 605.1  | (210.8) | 251.0  | 536.4  | 487.3  |  |
| Favourable development comprised of: |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Effect of foreign currency translation | 522.8  | 326.8  | (129.1) | (84.5) | 759.2  | 395.7  | 452.9  | 425.6  | 443.3  |  |
| &nbsp;&nbsp;&nbsp;Favourable (adverse) loss reserve development | 829.0  | 811.6  | 1064.7  | 349.8  | (154.1) | 606.5  | (201.9) | 110.8  | 44.0  |  |
|  | 1351.8  | 1138.4  | 935.6  | 265.3  | 605.1  | (210.8) | 251.0  | 536.4  | 487.3  |  |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Guaranteed minimum death benefit retrocessional business written by Compagnie Transcontinentale de Réassurance ("CTR Life"), a wholly owned subsidiary of the company that was transferred to Wentworth and placed into run-off in 2002.* 

The effect of foreign currency translation in the table above primarily arose on translation to U.S. dollars of loss reserves of subsidiaries with functional currencies other than the U.S. dollar. The company's exposure to foreign currency risk and the management thereof are discussed in note 24.

Loss reserve development in the table above excludes the loss reserve development of a subsidiary in the year it is acquired whereas the consolidated statement of earnings includes the loss reserve development of a subsidiary from its acquisition date.

Favourable loss reserve development in calendar year 2022 of $44.0 in the table above was principally comprised of favourable loss emergence on accident years 2021, 2020 and 2019, partially offset by adverse development primarily related to asbestos and other latent claims liabilities.

#### Development of losses and loss adjustment expenses for asbestos
A number of the company's subsidiaries wrote general liability policies and reinsurance prior to their acquisition by the company under which policyholders continue to present asbestos-related injury claims. Substantially all of these claims are presented under policies written many years ago and reside primarily within U.S. Run-off.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

There is a great deal of uncertainty surrounding these types of claims, which affects the ability of insurers and reinsurers to estimate the ultimate amount of unpaid claims and related settlement expenses. The majority of these claims differ from most other types of claims because there is inconsistent precedent, if any at all, to determine what, if any, coverage exists or which, if any, policy years and insurers or reinsurers may be liable. These uncertainties are exacerbated by judicial and legislative interpretations of coverage that in some cases have eroded the clear and express intent of the parties to the insurance contracts, and in others have expanded theories of liability.

Changes in the company's provision for losses and loss adjustment expenses related to U.S. asbestos exposure on a gross and net basis for the years ended December 31 were as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2021** | **2021** |
|  | **Gross** | **Net** | **Gross** | **Net** |
| Provision for asbestos claims and loss adjustment expenses - January 1 | 1036.7  | 838.9  | 1030.6 | 840.0 |
| &nbsp;&nbsp;Losses and loss adjustment expenses incurred | 215.8 | 113.7 | 199.1 | 151.6 |
| &nbsp;&nbsp;Losses and loss adjustment expenses paid | (175.2) | (132.5) | (193.0) | (152.7) |
| Provision for asbestos claims and loss adjustment expenses - December 31 | 1077.3  | 820.1  | 1036.7 | 838.9 |

---

&nbsp;&nbsp;&nbsp;&nbsp;9. **Reinsurance** 

Reinsurers' share of insurance contract liabilities was comprised as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **Gross** | **Provision for** | **Recoverable** | **Gross** | **Provision for** | **Recoverable** |
|  | **recoverable from** | **uncollectible** | **from** | **recoverable from** | **uncollectible** | **from** |
|  | **reinsurers** | **reinsurance**<sup>(1)</sup> | **reinsurers** | **reinsurers** | **reinsurance**<sup>(1)</sup> | **reinsurers** |
| Provision for losses and loss adjustment expenses | 9274.8  | (26.7) | 9248.1 | 8989.3 | (43.1) | 8946.2 |
| Reinsurers' share of paid losses | 1599.4  | (145.2) | 1454.2 | 1019.9 | (135.6) | 884.3 |
| Provision for unearned premiums | 2413.5  |  | 2413.5 | 2260.0 |  | 2260.0 |
|  | 13287.7 | (171.9) | 13115.8 | 12269.2 | (178.7) | 12090.5 |
| Current |  |  | 6414.4 |  |  | 5572.4 |
| Non-current |  |  | 6701.4 |  |  | 6518.1 |
|  |  |  | 13115.8 |  |  | 12090.5 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Management of credit risk on reinsurance recoverables is discussed in note 24.* 

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

Changes in reinsurers' share of paid losses, unpaid losses and unearned premiums, and the provision for uncollectible reinsurance for the years ended December 31 were as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2022** | **2022** | **2022** |
|  |  |  |  | **Provision for** | **Recoverable** |
|  | **Paid** | **Unpaid** | **Unearned** | **uncollectible** | **from** |
|  | **losses** | **losses** | **premiums** | **reinsurance** | **reinsurers** |
| Balance – January 1 | 1019.9 | 8989.3 | 2260.0 | (178.7) | 12090.5 |
| &nbsp;&nbsp;Reinsurers' share of losses paid to insureds | 3142.8  | (3142.8) |  |  |  |
| &nbsp;&nbsp;Reinsurance recoveries received | (2551.0) |  |  |  | (2551.0) |
| &nbsp;&nbsp;Reinsurers' share of unpaid losses and premiums earned |  | 3642.0 | (5448.8) |  | (1806.8) |
| &nbsp;&nbsp;Premiums ceded to reinsurers |  |  | 5640.9 |  | 5640.9 |
| &nbsp;&nbsp;Foreign exchange effect and other | (12.3) | (213.7) | (38.6) | 6.8  | (257.8) |
| Balance – December 31 | 1599.4 | 9274.8 | 2413.5 | (171.9) | 13115.8 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **2021** | **2021** | **2021** | **2021** | **2021** |
|  |  |  |  | **Provision for** | **Recoverable** |
|  | **Paid** | **Unpaid** | **Unearned** | **uncollectible** | **from** |
|  | **losses** | **losses** | **premiums** | **reinsurance** | **reinsurers** |
| Balance – January 1 | 818.0 | 7971.7 | 1899.1 | (155.6) | 10533.2 |
| &nbsp;&nbsp;Reinsurers' share of losses paid to insureds | 2360.3 | (2360.3) |  |  |  |
| &nbsp;&nbsp;Reinsurance recoveries received | (2152.8) |  |  |  | (2152.8) |
| &nbsp;&nbsp;Reinsurers' share of unpaid losses and premiums earned<sup>(1)</sup> |  | 3479.0 | (5228.8) |  | (1749.8) |
| &nbsp;&nbsp;Premiums ceded to reinsurers<sup>(1)</sup> |  |  | 5632.1 |  | 5632.1 |
| &nbsp;&nbsp;Acquisitions of subsidiaries (note 23) | 0.3 | 82.7 | 16.7 |  | 99.7 |
| &nbsp;&nbsp;Divestiture of subsidiary | (3.3) | (6.4) | (10.6) |  | (20.3) |
| &nbsp;&nbsp;Foreign exchange effect and other | (2.6) | (177.4) | (48.5) | (23.1) | (251.6) |
| Balance – December 31 | 1019.9 | 8989.3 | 2260.0 | (178.7) | 12090.5 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Effective October 1, 2021 Brit completed a loss portfolio transfer with a third party to reinsure loss reserves for a portfolio of risks predominantly comprised of U.S. casualty and discontinued lines of business relating to prior accident years. Pursuant to this transaction Brit ceded net insurance contract liabilities of $379.1 for consideration of $344.1 and recorded net favourable reserve development of $35.0 .* 

Commission income earned on premiums ceded to reinsurers in 2022 of $1,184.4 (2021 - $1,007.8) is included in commissions, net in the consolidated statement of earnings.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

&nbsp;&nbsp;&nbsp;&nbsp;10. **Insurance Contract Receivables and Payables** 

Insurance contract receivables were comprised as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,**  | **December 31,**  |
|  | **2022** | **2021** |
| Insurance premiums receivable | 4972.7 | 4247.1 |
| Reinsurance premiums receivable | 2114.6 | 1863.9 |
| Funds withheld receivable | 550.6 | 574.0 |
| Other | 269.6 | 198.2 |
|  | 7907.5 | 6883.2 |
| Current | 7330.0 | 6170.0 |
| Non-current | 577.5 | 713.2 |
|  | 7907.5 | 6883.2 |

---

Changes in insurance premiums receivable and reinsurance premiums receivable for the years ended December 31 were as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Insurance**  | **Insurance**  | **Reinsurance**  | **Reinsurance**  |
|  | **premiums receivable** | **premiums receivable** | **premiums receivable** | **premiums receivable** |
|  | **2022** | **2021** | **2022** | **2021** |
| Balance – January 1 | 4247.1 | 3665.6 | 1863.9 | 1385.3 |
| &nbsp;&nbsp;Gross premiums written | 20516.3 | 18118.6 | 7396.3 | 5791.6 |
| &nbsp;&nbsp;Premiums collected | (17571.5) | (15703.6) | (5366.6) | (3963.7) |
| &nbsp;&nbsp;Amounts due to brokers and agents | (2089.4) | (1770.1) | (1806.1) | (1332.3) |
| &nbsp;&nbsp;Foreign exchange effect and other | (129.8) | (63.4) | 27.1  | (17.0) |
| Balance – December 31 | 4972.7 | 4247.1 | 2114.6 | 1863.9 |

---

Insurance contract payables were comprised as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,**  | **December 31,**  |
|  | **2022** | **2021** |
| Payable to reinsurers | 2289.1 | 2333.7 |
| Payables associated with unit-linked life insurance products (note 3 and note 23) | 662.5 | 621.7 |
| Ceded deferred premium acquisition costs | 564.6 | 510.3 |
| Funds withheld payable to reinsurers | 193.5 | 274.0 |
| Amounts payable to agents and brokers | 112.5 | 142.4 |
| Accrued premium taxes | 105.7 | 124.1 |
| Accrued commissions | 157.8 | 100.8 |
| Other insurance contract payables | 976.2 | 386.5 |
|  | 5061.9 | 4493.5 |
| Current | 4101.0 | 3503.4 |
| Non-current | 960.9 | 990.1 |
|  | 5061.9 | 4493.5 |

---

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

&nbsp;&nbsp;&nbsp;&nbsp;11. **Deferred Premium Acquisition Costs** 

Changes in deferred premium acquisition costs for the years ended December 31 were as follows:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Balance – January 1 | 1,924.1 | 1,543.7 |
| &nbsp;&nbsp;Premium acquisition costs deferred | 5,212.5 | 4,502.4 |
| &nbsp;&nbsp;Amortization | (4,932.2) | (4,098.1) |
| &nbsp;&nbsp;Foreign exchange effect and other | (34.1) | (23.9) |
| Balance – December 31 | 2,170.3 | 1,924.1 |

---

**12.** **Goodwill and Intangible Assets**

Goodwill and intangible assets were comprised as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Goodwill** | **Intangible assets** | **Intangible assets** | **Intangible assets** | **Intangible assets** | **Total** |
|  |  | **Lloyd's**  | **Customer** |  | **Computer**  |  |
|  |  | **participation** | **and broker** | **Brand**  | **software**  |  |
|  |  | **rights**<sup>(1)</sup> | **relationships** | **names**<sup>(1)</sup> | **and other**<sup>(1)</sup> |  |
| Balance - January 1, 2022 | 3084.8  | 503.2  | 760.9  | 1087.3  | 492.0  | 5928.2  |
| &nbsp;&nbsp;Additions | 152.0 |  | 25.9 | (0.3) | 267.6 | 445.2 |
| &nbsp;&nbsp;Disposals<sup>(2)</sup> | (81.9) |  | (31.6) | (8.5) | (3.2) | (125.2) |
| &nbsp;&nbsp;Amortization |  |  | (91.7) |  | (134.9) | (226.6) |
| &nbsp;&nbsp;Impairments<sup>(3)</sup> | (137.0) |  |  |  | (0.9) | (137.9) |
| &nbsp;&nbsp;Foreign exchange effect and other | (90.4) |  | (9.6) | (60.2) | (34.5) | (194.7) |
| Balance - December 31, 2022 | 2927.5  | 503.2  | 653.9  | 1018.3  | 586.1  | 5689.0  |
| Gross carrying amount | 3161.8 | 503.2 | 1279.0 | 1060.1 | 1594.2 | 7598.3 |
| Accumulated amortization |  |  | (631.6) |  | (988.3) | (1619.9) |
| Accumulated impairment and other  | (234.3) |  | 6.5 | (41.8) | (19.8) | (289.4) |
|  | 2927.5 | 503.2 | 653.9 | 1018.3 | 586.1 | 5689.0 |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Goodwill** | **Intangible assets** | **Intangible assets** | **Intangible assets** | **Intangible assets** | **Total** |
|  |  | **Lloyd's**  | **Customer** |  | **Computer**  |  |
|  |  | **participation**  | **and broker** | **Brand**  | **software**  |  |
|  |  | **rights**<sup>(1)</sup> | **relationships** | **names**<sup>(1)</sup> | **and other**<sup>(1)</sup> |  |
| Balance - January 1, 2021 | 3126.3 | 503.2 | 867.5 | 1153.3 | 578.8 | 6229.1 |
| &nbsp;&nbsp;Additions | 60.7 |  | 17.8 | 27.9 | 264.3 | 370.7 |
| &nbsp;&nbsp;Disposals<sup>(2)</sup> | (28.9) |  | (25.1) | (64.0) | (7.5) | (125.5) |
| &nbsp;&nbsp;Amortization |  |  | (96.6) |  | (342.8) | (439.4) |
| &nbsp;&nbsp;Impairments<sup>(3)</sup> | (52.1) |  |  | (33.1) | (0.1) | (85.3) |
| &nbsp;&nbsp;Foreign exchange effect and other | (21.2) |  | (2.7) | 3.2 | (0.7) | (21.4) |
| Balance - December 31, 2021 | 3084.8 | 503.2 | 760.9 | 1087.3 | 492.0 | 5928.2 |
| Gross carrying amount | 3214.1 | 503.2 | 1338.5 | 1139.2 | 1427.0 | 7622.0 |
| Accumulated amortization |  |  | (577.4) |  | (915.4) | (1492.8) |
| Accumulated impairment | (129.3) |  | (0.2) | (51.9) | (19.6) | (201.0) |
|  | 3084.8 | 503.2 | 760.9 | 1087.3 | 492.0 | 5928.2 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Indefinite-lived intangible assets not subject to amortization had an aggregate carrying value at December 31, 2022 of $1,613.6 (December 31, 2021 - $1,686.2).* 

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *During 2022 the company sold its interests in the Crum & Forster Pet Insurance Group and Pethealth. During 2021 the company sold the operations of Toys "R" Us Canada and Fairfax India sold its 48.8% equity interest in Privi. See note 23.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *Non-cash impairment charges recorded in operating expenses and in other expenses in the consolidated statement of earnings by the insurance and reinsurance companies and Non-insurance companies reporting segment, respectively. During 2022 the company recognized non-cash goodwill impairment charges of $133.4 on Farmers Edge.* 

Goodwill and intangible assets were allocated to the company's cash-generating units ("CGUs") as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  |  | **Intangible** |  |  | **Intangible** |  |
|  | **Goodwill** | **assets** | **Total** | **Goodwill** | **assets** | **Total** |
| **Insurance and reinsurance companies** |  |  |  |  |  |  |
| Allied World | 940.0 | 519.8 | 1459.8 | 940.0 | 565.8 | 1505.8 |
| Brit | 214.6 | 565.5 | 780.1 | 215.6 | 580.5 | 796.1 |
| Zenith National | 317.6 | 77.7 | 395.3 | 317.6 | 84.4 | 402.0 |
| Northbridge | 81.6 | 133.5 | 215.1 | 94.9 | 121.3 | 216.2 |
| Crum & Forster | 132.6 | 57.8 | 190.4 | 189.1 | 91.0 | 280.1 |
| Odyssey Group | 119.7 | 50.8 | 170.5 | 119.7 | 54.9 | 174.6 |
| All other<sup>(1)</sup> | 85.1 | 108.3 | 193.4 | 95.9 | 116.3 | 212.2 |
|  | 1891.2 | 1513.4 | 3404.6 | 1972.8 | 1614.2 | 3587.0 |
| **Non-insurance companies** |  |  |  |  |  |  |
| Recipe | 298.9 | 902.2 | 1201.1 | 321.2 | 980.5 | 1301.7 |
| Boat Rocker | 86.4 | 184.8 | 271.2 | 89.1 | 90.2 | 179.3 |
| AGT | 147.6 | 49.6 | 197.2 | 154.4 | 34.9 | 189.3 |
| Thomas Cook India | 127.7 | 48.4 | 176.1 | 142.1 | 54.5 | 196.6 |
| Farmers Edge | 63.3 | 11.4 | 74.7 | 208.3 | 16.0 | 224.3 |
| All other<sup>(2)</sup> | 312.4 | 51.7 | 364.1 | 196.9 | 53.1 | 250.0 |
|  | 1036.3 | 1248.1 | 2284.4 | 1112.0 | 1229.2 | 2341.2 |
|  | 2927.5 | 2761.5 | 5689.0 | 3084.8 | 2843.4 | 5928.2 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Comprised primarily of balances related to AMAG Insurance, Eurolife and Pacific Insurance.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Comprised primarily of balances related to Dexterra Group, Fairfax India's subsidiaries (principally from the 2022 acquisitions of Maxop and Jaynix), Grivalia Hospitality (consolidated on July 5, 2022) and Sterling Resorts, and in 2021 included Pethealth (deconsolidated on October 31, 2022).* 

Impairment tests for goodwill and indefinite-lived intangible assets were completed during 2022 and it was concluded that no significant impairments had occurred, other than non-cash goodwill impairment charges on Farmers Edge of $133.4 which were recognized in 2022. When testing for impairment, the recoverable amount of each CGU or group of CGUs was based on the higher of (i) fair value less costs of disposal, determined using market prices inclusive of a control premium or discounted cash flow models, and (ii) value-in-use, determined using discounted cash flow models.

In preparing discounted cash flow models, cash flow projections typically covering a five year period were derived from financial budgets approved by management. Cash flows beyond the projected periods were extrapolated using estimated growth rates which do not exceed the long term average historic growth rate for the business in which each CGU operates. A number of other assumptions and estimates including premiums, investment returns, revenues, expenses, royalty rates and working capital requirements were required to be incorporated into the discounted cash flow models. The forecasts were based on best estimates of future premiums or revenues and operating expenses using historical trends, general geographical market conditions, industry trends and forecasts and other available information. These assumptions and estimates were reviewed by the applicable CGU's management and by Fairfax management. The cash flow forecasts were adjusted by applying appropriate discount rates within a range of 9.3% to 13.7% for insurance and reinsurance subsidiaries, and 10.5% to 16.9% for non-insurance subsidiaries. A long term investment return of 5.0% was applied to the investment portfolios of insurance and reinsurance subsidiaries. The long term growth rates used to extrapolate cash flows beyond five years for the majority of the CGUs ranged from 3.0% to 3.7%.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

**13.**Other Assets

Other assets were comprised as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **Insurance** |  |  | **Insurance** |  |  |
|  | **and** | **Non-** |  | **and** | **Non-** |  |
|  | **reinsurance** | **insurance** |  | **reinsurance** | **insurance** |  |
|  | **companies**<sup>(1)</sup> | **companies** | **Total** | **companies**<sup>(1)</sup> | **companies** | **Total** |
| Premises and equipment, right-of-use assets (note 22) and non-insurance companies' investment property<sup>(2)</sup> | 684.0 | 2199.7 | 2883.7 | 725.6 | 1558.4 | 2284.0 |
| Assets associated with unit-linked insurance products (note 3 and note 23) | 676.5 |  | 676.5 | 637.1 |  | 637.1 |
| Inventories |  | 668.2 | 668.2 |  | 547.3 | 547.3 |
| Other revenue receivables |  | 638.9 | 638.9 |  | 508.4 | 508.4 |
| Accrued interest and dividends | 313.7 | 3.5 | 317.2 | 211.4 | 3.7 | 215.1 |
| Income tax, sales tax and subsidies receivable | 71.3 | 204.6 | 275.9 | 61.6 | 170.3 | 231.9 |
| Prepaid expenses | 111.0 | 134.8 | 245.8 | 110.9 | 94.9 | 205.8 |
| Finance lease receivables (note 22) | 8.8 | 218.0 | 226.8 | 9.4 | 256.7 | 266.1 |
| Prepaid losses on claims | 168.9 |  | 168.9 | 129.4 |  | 129.4 |
| Pension surplus (note 21) | 144.5 |  | 144.5 | 113.8 |  | 113.8 |
| Receivable for securities sold but not yet settled | 11.2 |  | 11.2 | 135.4 |  | 135.4 |
| Other<sup>(3)</sup> | 738.5 | 85.6 | 824.1 | 791.1 | 55.9 | 847.0 |
|  | 2928.4 | 4153.3 | 7081.7 | 2925.7 | 3195.6 | 6121.3 |
| Current | 993.9 | 1632.6 | 2626.5 | 989.9 | 1343.7 | 2333.6 |
| Non-current | 1934.5 | 2520.7 | 4455.2 | 1935.8 | 1851.9 | 3787.7 |
|  | 2928.4 | 4153.3 | 7081.7 | 2925.7 | 3195.6 | 6121.3 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Includes Life insurance and Run-off, and Corporate and Other.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *The increase during 2022 principally reflected the consolidation of Grivalia Hospitality and its hospitality real estate as described in note 23.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *Principally comprised of other receivables, deposits and deferred compensation plans.*  

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

**14.**Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities were comprised as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **Insurance** |  |  | **Insurance** |  |  |
|  | **and** | **Non-** |  | **and** | **Non-** |  |
|  | **reinsurance** | **insurance** |  | **reinsurance** | **insurance** |  |
|  | **companies**<sup>(1)</sup> | **companies** | **Total** | **companies**<sup>(1)</sup> | **companies** | **Total** |
| Lease liabilities (note 22) | 364.1 | 729.9 | 1094.0 | 384.2 | 756.5 | 1140.7 |
| Payables related to cost of sales |  | 814.3 | 814.3 |  | 580.9 | 580.9 |
| Salaries and employee benefit liabilities | 500.5 | 98.5 | 599.0 | 482.6 | 85.6 | 568.2 |
| Amounts withheld and accrued taxes | 455.8 | 30.7 | 486.5 | 453.9 | 23.8 | 477.7 |
| Deferred gift card, hospitality and other revenue | 37.8 | 392.0 | 429.8 | 35.4 | 318.5 | 353.9 |
| Income taxes payable | 347.0 | 14.0 | 361.0 | 163.8 | 11.2 | 175.0 |
| Pension and post retirement liabilities (note 21) | 132.9 | 12.8 | 145.7 | 237.4 | 16.5 | 253.9 |
| Administrative and other<sup>(2)</sup> | 946.6 | 338.3 | 1284.9 | 1150.9 | 284.2 | 1435.1 |
|  | 2784.7 | 2430.5 | 5215.2 | 2908.2 | 2077.2 | 4985.4 |
| Current | 1528.4 | 1553.3 | 3081.7 | 1538.7 | 1177.2 | 2715.9 |
| Non-current | 1256.3 | 877.2 | 2133.5 | 1369.5 | 900.0 | 2269.5 |
|  | 2784.7 | 2430.5 | 5215.2 | 2908.2 | 2077.2 | 4985.4 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Includes Life insurance and Run-off and Corporate and Other.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Principally comprised of accrued operating expenses, advances from customers and liabilities related to business acquisitions .* 

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

**15.**Borrowings

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **Principal** | **Carrying**  | **Fair**  | **Principal** | **Carrying**  | **Fair**  |
|  |  | **value**<sup>(a)</sup> | **value**<sup>(b)</sup> |  | **value**<sup>(a)</sup> | **value**<sup>(b)</sup> |
| **Borrowings - holding company** |  |  |  |  |  |  |
| Fairfax unsecured notes<sup>(d)</sup>: |  |  |  |  |  |  |
| &nbsp;&nbsp;4.875% due August 13, 2024 | 282.5 | 281.6 | 277.0 | 282.5 | 281.1 | 301.7 |
| &nbsp;&nbsp;4.95% due March 3, 2025 (Cdn$350.0) | 258.3 | 257.2 | 255.2 | 277.1 | 275.4 | 299.6 |
| &nbsp;&nbsp;8.30% due April 15, 2026<sup>(e)</sup> | 91.8 | 91.7 | 98.2 | 91.8 | 91.7 | 113.3 |
| &nbsp;&nbsp;4.70% due December 16, 2026 (Cdn$450.0) | 332.1 | 331.0 | 323.7 | 356.3 | 354.8 | 387.9 |
| &nbsp;&nbsp;4.25% due December 6, 2027 (Cdn$650.0) | 479.7 | 478.6 | 455.8 | 514.6 | 513.1 | 551.4 |
| &nbsp;&nbsp;2.75% due March 29, 2028 (€750.0) | 800.5 | 792.2 | 698.3 | 852.9 | 842.4 | 926.3 |
| &nbsp;&nbsp;4.85% due April 17, 2028 | 600.0 | 596.9 | 568.1 | 600.0 | 596.3 | 668.5 |
| &nbsp;&nbsp;4.23% due June 14, 2029 (Cdn$500.0) | 369.0 | 367.7 | 342.7 | 395.8 | 394.2 | 424.4 |
| &nbsp;&nbsp;4.625% due April 29, 2030 | 650.0 | 646.4 | 591.1 | 650.0 | 645.9 | 730.0 |
| &nbsp;&nbsp;3.375% due March 3, 2031 | 600.0 | 586.8 | 492.8 | 600.0 | 585.1 | 620.7 |
| &nbsp;&nbsp;3.95% due March 3, 2031(Cdn$850.0) | 627.4 | 623.2 | 549.4 | 672.9 | 668.0 | 701.3 |
| &nbsp;&nbsp;5.625% due August 16, 2032<sup>(1)</sup>  | 750.0 | 743.6 | 707.1 |  |  |  |
| &nbsp;&nbsp;7.75% due July 15, 2037<sup>(e)</sup> | 91.3 | 90.7 | 95.2 | 91.3 | 90.6 | 125.4 |
| Revolving credit facility<sup>(2)</sup> |  |  |  |  |  |  |
|  | 5932.6 | 5887.6 | 5454.6 | 5385.2 | 5338.6 | 5850.5 |
| **Borrowings - insurance and reinsurance companies** |  |  |  |  |  |  |
| Allied World 4.35% senior notes due October 29, 2025 | 500.0 | 502.9 | 477.7 | 500.0 | 503.9 | 536.9 |
| Allied World revolving credit facility and other borrowings | 16.8 | 19.8 | 16.9 | 17.4 | 20.6 | 21.1 |
| Zenith National 8.55% debentures due August 1, 2028<sup>(d)</sup> | 38.5 | 38.3 | 38.5 | 38.5 | 38.3 | 38.3 |
| Brit 3.6757% subordinated notes due December 9, 2030 (£135.0) | 162.4 | 162.4 | 120.6 | 182.9 | 182.9 | 174.5 |
| Brit floating rate revolving credit facility | 10.0 | 10.0 | 10.0 | 45.0 | 45.0 | 45.0 |
|  | 727.7 | 733.4 | 663.7 | 783.8 | 790.7 | 815.8 |
| **Borrowings - non-insurance companies**<sup>(c)</sup> |  |  |  |  |  |  |
| Fairfax India 5.00% unsecured senior notes due 2028 | 441.6 | 438.9 | 400.7 | 441.6 | 438.4 | 440.3 |
| Fairfax India subsidiary borrowings | 122.6 | 122.2 | 122.2 | 91.9 | 91.3 | 91.3 |
| AGT credit facilities, senior notes and loans<sup>(3)</sup> | 511.9 | 508.4 | 498.8 | 491.8 | 488.9 | 488.9 |
| Recipe term loans and credit facilities<sup>(4)</sup> | 464.0 | 461.5 | 436.7 | 359.0 | 356.9 | 356.9 |
| Boat Rocker demand loans and revolving credit facilities | 155.4 | 155.2 | 155.4 | 93.8 | 93.1 | 93.1 |
| Loans and revolving credit facilities primarily at floating rates<sup>(5)</sup> | 317.7 | 317.7 | 317.7 | 155.2 | 155.1 | 155.1 |
|  | 2013.2 | 2003.9 | 1931.5 | 1633.3 | 1623.7 | 1625.6 |
| **Total debt** | 8673.5 | 8624.9 | 8049.8 | 7802.3 | 7753.0 | 8291.9 |

---

&nbsp;&nbsp;&nbsp;&nbsp;***(a)***  ***Principal net of unamortized issue costs and discounts (premiums).*** 

&nbsp;&nbsp;&nbsp;&nbsp;*(b)* *Based principally on quoted market prices with the remainder based on discounted cash flow models using market observable inputs (Levels 1 and 2 respectively in the fair value hierarchy).* 

&nbsp;&nbsp;&nbsp;&nbsp;*(c)* *These borrowings are non-recourse to the holding company.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(d)* *Issuer may redeem any time at prices specified in the instrument's offering document, except those disclosed in footnote (e) below.* 

*(e) Not redeemable prior to the contractual maturity date.*

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

During 2022 the company and its subsidiaries completed the following debt transactions:

#### Holding company
&nbsp;&nbsp;&nbsp;&nbsp;(1) On August 16, 2022 the company completed an offering of $750.0 principal amount of 5.625% unsecured senior notes due August 16, 2032 for net proceeds of $743.4 after discount, commissions and expenses. Commissions and expenses of $5.5 were included in the carrying value of the notes.

&nbsp;&nbsp;&nbsp;&nbsp;(2) On June 29, 2022 the company amended and restated its $2.0 billion unsecured revolving credit facility with a syndicate of lenders on substantially the same terms which extended the expiry from June 29, 2026 to June 29, 2027. At December 31, 2022 and 2021, the revolving credit facility was undrawn and the company was in compliance with its financial covenants. Non-insurance companies

&nbsp;&nbsp;&nbsp;&nbsp;(3) On December 28, 2022 AGT extended the maturity of its credit facilities to March 17, 2024.

&nbsp;&nbsp;&nbsp;&nbsp;(4) Recipe increased its borrowings during 2022 principally as a result of the privatization transaction described in note 23.

&nbsp;&nbsp;&nbsp;&nbsp;(5) On July 5, 2022 the company consolidated Grivalia Hospitality as described in note 23, including its borrowings of $111.3 at December 31, 2022.

Changes in the carrying values of borrowings for the years ended December 31 were as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2022** | **2022** | **2021** | **2021** | **2021** | **2021** |
|  |  | **Insurance** |  |  |  | **Insurance** |  |  |
|  |  | **and** | **Non-** |  |  | **and** | **Non-** |  |
|  | **Holding** | **reinsurance** | **insurance** |  | **Holding** | **reinsurance** | **insurance** |  |
|  | **company** | **companies** | **companies** | **Total** | **company** | **companies** | **companies** | **Total** |
| Balance – January 1 | 5338.6 | 790.7 | 1623.7 | 7753.0 | 5580.6 | 1033.4 | 2200.0 | 8814.0 |
| &nbsp;&nbsp;Cash inflows from issuances | 743.4 |  | 47.0 | 790.4 | 1250.0 |  | 499.1 | 1749.1 |
| &nbsp;&nbsp;Cash outflows from repayments |  | (0.3) | (25.3) | (25.6) | (801.2) | (131.7) | (593.9) | (1526.8) |
| &nbsp;&nbsp;Net cash inflows (outflows) from credit facilities and short term loans |  | (35.0) | 304.1 | 269.1 | (700.0) | (84.3) | (262.0) | (1046.3) |
| &nbsp;&nbsp;Non-cash changes: |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Acquisition of subsidiaries (note 23) |  |  | 137.1 | 137.1 |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Deconsolidation of subsidiary (note 23) |  |  |  |  |  | (22.5) | (187.4) | (209.9) |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss on redemption |  |  |  |  | 45.7 |  | (0.1) | 45.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;Foreign exchange effect and other | (194.4) | (22.0) | (82.7) | (299.1) | (36.5) | (4.2) | (32.0) | (72.7) |
| Balance – December 31 | 5887.6 | 733.4 | 2003.9 | 8624.9 | 5338.6 | 790.7 | 1623.7 | 7753.0 |

---

Principal repayments on borrowings are due as follows:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2023** | **2024** | **2025** | **2026** | **2027** | **Thereafter** | **Total** |
| Holding company |  | 282.5 | 258.3 | 423.9 | 479.7 | 4488.2 | 5932.6 |
| Insurance and reinsurance companies | 0.3 | 0.3 | 510.3 | 0.3 | 0.3 | 216.2 | 727.7 |
| Non-insurance companies | 371.8 | 748.2 | 33.7 | 30.9 | 30.4 | 798.2 | 2013.2 |
| Total | 372.1 | 1031.0 | 802.3 | 455.1 | 510.4 | 5502.6 | 8673.5 |

---

#### Interest Expense
Interest expense in 2022 of $452.8 (2021 – $513.9) was comprised of interest on borrowings by the holding company and the insurance and reinsurance companies of $316.1 (2021 - $356.8, inclusive of a loss on redemption of holding company unsecured senior notes of $45.7), interest on borrowings by the non-insurance companies (which are non-recourse to the holding company) of $89.8 (2021 – $99.2) and accretion of lease liabilities of $46.9 (2021 - $57.9).

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

**16.**Total Equity

#### Equity attributable to shareholders of Fairfax
*Authorized capital*

The authorized share capital of the company consists of an unlimited number of preferred shares issuable in series, an unlimited number of multiple voting shares (cumulatively carrying 41.8% voting power) and an unlimited number of subordinate voting shares carrying one vote per share.

*Issued capital*

Issued capital at December 31, 2022 was comprised of 1,548,000 multiple voting shares and 24,598,380 subordinate voting shares without par value prior to deducting 2,021,845 subordinate voting shares reserved in treasury for share-based payment awards (December 31, 2021 – 1,548,000, 24,986,170 and 1,869,340 respectively). The multiple voting shares are not traded.

*Common stock*

The number of shares outstanding was as follows:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Subordinate voting shares – January 1 | 23116830 | 25427736 |
| &nbsp;&nbsp;Purchases for cancellation | (387790) | (2137923) |
| &nbsp;&nbsp;Treasury shares acquired | (295474) | (293197) |
| &nbsp;&nbsp;Treasury shares reissued | 142969 | 120214 |
| Subordinate voting shares – December 31 | 22576535  | 23116830 |
| Multiple voting shares – beginning and end of year | 1548000  | 1548000 |
| Interest in multiple and subordinate voting shares held through ownership interest in shareholder – beginning and end of year | (799230) | (799230) |
| Common stock effectively outstanding – December 31 | 23325305  | 23865600 |

---

During 2022 the company purchased for cancellation 387,790 subordinate voting shares (2021 - 137,923) under the terms of its normal course issuer bids at a cost of $199.6 (2021 – $58.1), of which $103.5 (2021 – $23.9) was charged to retained earnings.

During 2022 the company purchased for treasury 295,474 subordinate voting shares at a cost of $148.2 (2021 - 293,197 subordinate voting shares at a cost of $132.6) on the open market for use in its share-based payment awards.

On December 29, 2021 the company completed a substantial issuer bid pursuant to which it purchased for cancellation 2,000,000 subordinate voting shares at a price of $500.00 per share, for aggregate cash consideration of $1.0 billion, of which $504.6 was charged to retained earnings representing the excess value paid over the company's paid-up capital of $495.4 that was recorded in common shares, purchases for cancellation, in the consolidated statement of changes in equity.

Dividends paid by the company on its outstanding multiple voting and subordinate voting shares were as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Date of declaration** | **Date of record** | **Date of payment** | **Dividend per share** | **Total cash payment** |
| January 4, 2023 | January 19, 2023 | January 26, 2023 | $10.00 | $245.2 |
| January 5, 2022 | January 20, 2022 | January 27, 2022 | $10.00 | $249.9 |
| January 5, 2021 | January 21, 2021 | January 28, 2021 | $10.00 | $272.1 |

---

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

*Preferred stock*

The terms of the company's cumulative five-year rate reset preferred shares at December 31, 2022 were as follows:

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Next possible** |  |  |  |  |  |  |  |  |
|  | **redemption and** | **Number of** |  |  |  | **Liquidation** | **Liquidation** | **Fixed dividend** | **Floating** |
|  | **conversion**  | **shares** | **Carrying** |  |  | **preference per** | **preference per** | **rate per** | **dividend rate** |
|  | **date**<sup>(1)(2)</sup> | **outstanding**<sup>(3)</sup> | **value**<sup>(3)</sup> | **Stated capital**<sup>(3)</sup> | **Stated capital**<sup>(3)</sup> | **share** | **share** | **annum** | **per annum**<sup>(4)</sup> |
| Series C | December 31, 2024 | 7515642 | $170.8  | Cdn $ | 187.9  | Cdn $ | 25.00 | 4.71% |  |
| Series D | December 31, 2024 | 2484358 | $56.4  | Cdn $ | 62.1  | Cdn $ | 25.00 |  | 7.28% |
| Series E | March 31, 2025 | 5440132 | $124.5  | Cdn $ | 136.0  | Cdn $ | 25.00 | 3.18% |  |
| Series F | March 31, 2025 | 2099046 | $48.1  | Cdn $ | 52.5  | Cdn $ | 25.00 |  | 6.29% |
| Series G | September 30, 2025 | 7719843 | $182.1  | Cdn $ | 193.0  | Cdn $ | 25.00 | 2.96% |  |
| Series H | September 30, 2025 | 2280157 | $53.8  | Cdn $ | 57.0  | Cdn $ | 25.00 |  | 6.69% |
| Series I | December 31, 2025 | 10420101 | $250.5  | Cdn $ | 260.5  | Cdn $ | 25.00 | 3.33% |  |
| Series J | December 31, 2025 | 1579899 | $38.0  | Cdn $ | 39.5  | Cdn $ | 25.00 |  | 6.98% |
| Series K | March 31, 2027 | 9500000 | $231.7  | Cdn $ | 237.5  | Cdn $ | 25.00 | 4.67% |  |
| Series M | March 31, 2025 | 9200000 | $179.6  | Cdn $ | 230.0  | Cdn $ | 25.00 | 5.00% |  |
|  |  |  | $1335.5  | Cdn $ | 1456.0  |  |  |  |  |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Fixed and floating rate cumulative preferred shares are redeemable by the company at each stated redemption date and on each subsequent five-year anniversary date at Cdn$25.00 per share.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Holders of Series C, Series E, Series G, Series I, Series K and Series M fixed rate cumulative preferred shares will have the option to convert their shares into Series D, Series F, Series H, Series J, Series L and Series N floating rate cumulative preferred shares respectively, at the specified conversion dates, and on each subsequent five-year anniversary date. Holders of Series D, Series F, Series H and Series J floating rate cumulative preferred shares will have the option to convert their shares into Series C, Series E, Series G and Series I fixed rate cumulative preferred shares respectively, at the specified conversion dates, and on each subsequent five-year anniversary date.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *For each series of preferred shares, the number of shares outstanding, carrying value and stated capital remained unchanged during 2022 and 2021.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(4)* *The Series D, Series F, Series H, and Series J preferred shares, and the Series L and Series N preferred shares (of which none are currently issued), have a floating dividend rate equal to the three-month Government of Canada treasury bill yield plus 3.15% , 2.16% , 2.56% , 2.85% , 3.51% and 3.98% respectively, with rate resets at the end of each calendar quarter.* 

During 2022 the company paid preferred share dividends of $45.2 (2021 - $44.5).

*Accumulated other comprehensive income (loss)*

Accumulated other comprehensive income (loss) attributable to shareholders of Fairfax was comprised as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  |  | **Income tax** | **After-tax** | **Pre-tax** | **Income tax** | **After-tax** |
|  | **Pre-tax amount** | **(expense) recovery** | **amount** | **amount** | **recovery** | **amount** |
| **Items that may be subsequently reclassified to net earnings** |  |  |  |  |  |  |
| &nbsp;&nbsp;Foreign currency translation losses | (904.7) | 34.4  | (870.3) | (636.2) | 24.6 | (611.6) |
| &nbsp;&nbsp;Share of accumulated other comprehensive loss of associates, excluding net gains (losses) on defined benefit plans | (221.6) | 17.6  | (204.0) | (79.8) | 0.4 | (79.4) |
|  | (1126.3) | 52.0  | (1074.3) | (716.0) | 25.0 | (691.0) |
| **Items that will not be subsequently reclassified to net earnings** |  |  |  |  |  |  |
| &nbsp;&nbsp;Net gains (losses) on defined benefit plans | 43.8  | (4.3) | 39.5  | (104.9) | 27.5 | (77.4) |
| &nbsp;&nbsp;Share of net gains (losses) on defined benefit plans of associates | 10.7  | (4.7) | 6.0  | (57.3) | 5.5 | (51.8) |
| &nbsp;&nbsp;Other | 43.5  | 5.7  | 49.2  | 8.4 | 10.1 | 18.5 |
|  | 98.0  | (3.3) | 94.7  | (153.8) | 43.1 | (110.7) |
| **Accumulated other comprehensive income (loss) attributable to shareholders of Fairfax** | (1028.3) | 48.7  | (979.6) | (869.8) | 68.1 | (801.7) |

---

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

**Income tax (expense) recovery included in other comprehensive income (loss)** 

Other comprehensive income (loss) in the consolidated statement of comprehensive income is presented net of the following income tax (expense) recovery amounts:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| **Income tax on items that may be subsequently reclassified to net earnings**  |  |  |
| &nbsp;&nbsp;Net unrealized foreign currency translation losses on foreign subsidiaries | 10.0 | 5.2 |
| &nbsp;&nbsp;Share of other comprehensive loss of associates, excluding net gains on defined benefit plans | 18.1 | 12.7 |
|  | 28.1 | 17.9 |
| **Income tax on items that will not be subsequently reclassified to net earnings**  |  |  |
| &nbsp;&nbsp;Net gains on defined benefit plans | (32.2) | (27.4) |
| &nbsp;&nbsp;Share of net gains on defined benefit plans of associates | (10.2) | (12.8) |
|  | (42.4) | (40.2) |
| **Total income tax expense included in other comprehensive income (loss)** | (14.3) | (22.3) |

---

#### Non-controlling interests
Details of non-controlling interests as at and for the years ended December 31 were as follows:

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  |  | **Net earnings (loss)**  | **Net earnings (loss)**  |
|  |  |  |  |  |  | **attributable to non-** | **attributable to non-** |
|  |  | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **controlling interests** | **controlling interests** |
|  | **Domicile** | **Voting**  | **Carrying**  | **Voting**  | **Carrying**  |  |  |
|  |  | **percentage**<sup>(7)</sup> | **value** | **percentage**<sup>(7)</sup> | **value** | **2022** | **2021** |
| **Insurance and reinsurance companies**<sup>(1)</sup> |  |  |  |  |  |  |  |
| Allied World<sup>(2)</sup> | Bermuda | 17.1% | 761.1 | 29.1% | 1419.6 | (5.6) | 117.8 |
| Brit<sup>(3)</sup> | United Kingdom | 13.8% | 658.8 | 13.8% | 559.3 | (23.2) | 14.0 |
| Odyssey Group<sup>(4)</sup> | United States | 9.99% | 499.2 | 9.99% | 550.0 | 19.6 |  |
| All other<sup>(5)</sup> |  |  | 50.1 |  | 402.5 | 12.0 | 89.4 |
|  |  |  | 1969.2 |  | 2931.4 | 2.8 | 221.2 |
| **Non-insurance companies** |  |  |  |  |  |  |  |
| Restaurants and retail<sup>(6)(7)</sup> |  |  | 208.1 |  | 494.3 | 32.7 | 11.8 |
| Fairfax India<sup>(7)(8)</sup> | Canada | 5.6% | 1080.2 | 6.1% | 1133.1 | 114.2 | 72.7 |
| Thomas Cook India | India | 26.7% | 61.3 | 33.2% | 56.3 | 1.1 | (16.8) |
| Other |  |  | 340.8 |  | 315.1 | (11.2) | (23.4) |
|  |  |  | 1690.4 |  | 1998.8 | 136.8 | 44.3 |
|  |  |  | 3659.6 |  | 4930.2 | 139.6 | 265.5 |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) Includes property and casualty insurance and reinsurance companies, Life insurance and Run-off, and Corporate and other.

&nbsp;&nbsp;&nbsp;&nbsp;(2) On September 27, 2022 the company increased its ownership interest in Allied World to 82.9% from 70.9% for total consideration of $733.5 , inclusive of the fair value of a call option exercised and an accrued dividend paid, and recorded a loss in retained earnings of $228.1 in net changes in capitalization in the consolidated statement of changes in equity. The decrease in carrying value of Allied World's non-controlling interests primarily reflected the company's increased ownership interest in Allied World, dividends paid and the non-controlling interests' share of Allied World's net loss. On April 28, 2022 Allied World paid a dividend of $126.4 (April 28, 2021 - $126.4) to its minority shareholders. The company has the option to purchase the remaining interests of the minority shareholders in Allied World at certain dates until September 2024.

&nbsp;&nbsp;&nbsp;&nbsp;(3) The increase in carrying value of Brit's non-controlling interests during 2022 primarily related to a third party investment of $152.0 in Brit's subsidiary Ki Insurance, partially offset by dividends paid to minority shareholders and non-controlling interests' share of Brit's net loss. The company has the option to purchase the interests of the minority shareholders in Brit at certain dates commencing in October 2023.

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

&nbsp;&nbsp;&nbsp;&nbsp;(4) The decrease in carrying value of Odyssey Group's non-controlling interests during 2022 primarily related to dividends paid to minority shareholders, partially offset by non-controlling interests' share of Odyssey Group's net earnings. The company has the option to purchase the interests of the minority shareholders in Odyssey Group at certain dates commencing in January 2025.

&nbsp;&nbsp;&nbsp;&nbsp;(5) The decrease in carrying value of All Other non-controlling interests primarily reflected the company's purchase of certain securities held through the company's investment in AVLNs entered with RiverStone Barbados as described in note 7. The remaining carrying value at December 31, 2022 principally related to Fairfax Asia.

&nbsp;&nbsp;&nbsp;&nbsp;(6) The decrease in carrying value of Restaurants and retail's non-controlling interests in 2022 principally related to the privatization of Recipe as described in note 23.

&nbsp;&nbsp;&nbsp;&nbsp;(7) At December 31, 2022 Fairfax India's non-controlling interest economic ownership percentage was 65.3% (December 31, 2021 - 69.9)% which differed from its non-controlling interest voting percentage of 5.6% (December 31, 2021 - 6.1)%. On February 15, 2022 the company had acquired an additional 5,416,000 subordinate voting shares of Fairfax India from non-controlling interests, which was recorded in net changes in capitalization in the consolidated statement of changes in equity. At December 31, 2021 Recipe's non-controlling interest economic ownership percentage was 61.5% which differed from its non-controlling interest voting percentage of 39.0% .

&nbsp;&nbsp;&nbsp;&nbsp;(8) The decrease in carrying value of Fairfax India's non-controlling interests during 2022 primarily reflected the non-controlling interests' share of Fairfax India's net unrealized foreign currency translation losses (weakening of the Indian rupee relative to the U.S. dollar), share repurchases by Fairfax India, and the acquisition by the company of additional subordinate voting shares of Fairfax India from non-controlling interests as described above in footnote (7), partially offset by non-controlling interests' share of Fairfax India's net earnings.

#### Net changes in capitalization
The impact on retained earnings and non-controlling interests of certain capital transactions and changes in ownership interests of the company's consolidated subsidiaries for the years ended December 31, 2022 and 2021 are included in net changes in capitalization in the consolidated statement of changes in equity as shown in the table below. See note 23 and under the heading "Non-controlling interests" earlier in this note for details of those transactions.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2021** | **2021** |
|  | **Common** | **Non-** | **Common** | **Non-** |
|  | **shareholders'** | **controlling** | **shareholders'** | **controlling** |
|  | **equity** | **interests** | **equity** | **interests** |
| Privatization of Recipe  | (66.1) | (276.2) |  |  |
| Acquisition of non-controlling interests in Allied World | (228.1) | (466.9) |  |  |
| Purchase of certain securities held through AVLNs entered with RiverStone Barbados (note 7) | 14.1 | (356.2) | 0.3 | (113.6) |
| Third party's investment in Brit's subsidiary Ki Insurance |  | 152.0  |  | 124.0 |
| Fairfax India share repurchases | (9.9) | (90.7) | (12.5) | (114.3) |
| Sale of non-controlling interests in Odyssey Group |  |  | 429.1 | 550.0 |
| Sale of non-controlling interests in Brit |  |  | 115.4 | 296.7 |
| Initial public offerings and related capital transactions at Farmers Edge and Boat Rocker |  |  | (3.1) | 242.6 |
| Fairfax India's sale of an equity interest in Anchorage (note 6) |  |  | 21.8 | 107.4 |
| Other | 116.4 | (32.9) | 1.9 | 134.1 |
| As presented in net changes in capitalization in the consolidated statement of changes in equity | (173.6) | (1070.9) | 552.9 | 1226.9 |

---

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

**17.**Earnings per Share

Net earnings per share is calculated using the weighted average common shares outstanding as follows:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Net earnings attributable to shareholders of Fairfax | 1147.2 | 3401.1 |
| Preferred share dividends | (45.2) | (44.5) |
| Net earnings attributable to common shareholders – basic and diluted | 1102.0 | 3356.6 |
| Weighted average common shares outstanding – basic | 23637824 | 25953114 |
| Share-based payment awards | 1702599 | 1503931 |
| Weighted average common shares outstanding – diluted | 25340423 | 27457045 |
| Net earnings per common share – basic | $46.62 | $129.33 |
| Net earnings per common share – diluted | $43.49 | $122.25 |

---

**18.**Income Taxes

The company's provision for income taxes for the years ended December 31 were comprised as follows:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Current income tax: |  |  |
| &nbsp;&nbsp;Current year expense | 616.8 | 401.6 |
| &nbsp;&nbsp;Adjustments to prior years' income taxes | (10.0) | (14.6) |
|  | 606.8 | 387.0 |
| Deferred income tax: |  |  |
| &nbsp;&nbsp;Origination and reversal of temporary differences | (197.1) | 313.5 |
| &nbsp;&nbsp;Adjustments to prior years' deferred income taxes | 11.7 | 18.9 |
| &nbsp;&nbsp;Other | 3.8 | 6.6 |
|  | (181.6) | 339.0 |
| Provision for income taxes | 425.2 | 726.0 |

---

A significant portion of the company's earnings (loss) before income taxes may be earned or incurred outside of Canada. The statutory income tax rates for jurisdictions outside of Canada generally differ from the Canadian statutory income tax rate, and may be significantly higher or lower. The company's earnings (loss) before income taxes by jurisdiction and the associated provision for (recovery of) income taxes for the years ended December 31 are summarized in the following table:

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2022** | **2022** | **2022** | **2021** | **2021** | **2021** | **2021** | **2021** |
|  | **Canada**<sup>(1)</sup> | **U.S.**<sup>(2)</sup> | **U.K.**<sup>(3)</sup> | **Other**<sup>(4)</sup> | **Total** | **Canada**<sup>(1)</sup> | **U.S.**<sup>(2)</sup> | **U.K.**<sup>(3)</sup> | **Other**<sup>(4)</sup> | **Total** |
| Earnings (loss) before income taxes | 399.2 | 1330.7 | (112.2) | 94.3 | 1712.0 | 858.8 | 974.5 | 157.3 | 2402.0 | 4392.6 |
| Provision for (recovery of) income taxes | 114.7 | 238.3 | (12.9) | 85.1 | 425.2 | 191.6 | 238.6 | 18.7 | 277.1 | 726.0 |
| Net earnings (loss) | 284.5 | 1092.4 | (99.3) | 9.2 | 1286.8 | 667.2 | 735.9 | 138.6 | 2124.9 | 3666.6 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Includes Fairfax India.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Principally comprised of Crum & Forster, Zenith National, Odyssey Group (notwithstanding that certain operations of Odyssey Group conduct business outside of the U.S.), U.S. Run-off and other associated holding company results.* 

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *Comprised of Brit.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(4)* *Primarily includes companies in India, Asia and Europe (excluding the U.K.), and Allied World, which has operations in multiple jurisdictions.* 

Decreased pre-tax profitability across all jurisdictions, except the U.S., in 2022 compared to 2021 primarily related to net unrealized investment losses in 2022, principally on the fixed income portfolio, partially offset by improved underwriting performance, interest and dividends and share of profit of associates. In 2022, pre-tax profitability in the U.S. included a gain on sale and consolidation of insurance subsidiaries of $1,213.2 recorded on the company's sale of its interests in the Crum & Forster Pet Insurance Group and Pethealth as described in note 23. In 2021, pre-tax profitability in Other included a net unrealized gain of $1,490.3 recorded in Asia on the company's investment in Digit compulsory convertible preferred shares as described in note 5.

Reconciliations of the provision for income taxes calculated at the Canadian statutory income tax rate to the provision for income taxes at the effective tax rate in the consolidated financial statements for the years ended December 31 are summarized in the following table:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Canadian statutory income tax rate | 26.5% | 26.5% |
| Provision for income taxes at the Canadian statutory income tax rate | 453.7 | 1164.0 |
| Non-taxable investment income | (25.6) | (149.4) |
| Tax rate differential on income and losses outside Canada | (50.9) | (399.1) |
| Change in unrecorded tax benefit of losses and temporary differences | 0.8 | 67.2 |
| Change in tax rate for deferred income taxes | 6.6 | 0.3 |
| Provision relating to prior years | 1.7 | 4.3 |
| Foreign exchange effect | (17.1) | (23.0) |
| Other including permanent differences | 56.0 | 61.7 |
| Provision for income taxes | 425.2 | 726.0 |

---

Non-taxable investment income of $25.6 in 2022 and $149.4 in 2021 were principally comprised of dividend income, non-taxable interest income and long term capital gains, and the 50% of net capital gains and losses which are not taxable or deductible in Canada. Non-taxable investment income in 2021 also included gains on the consolidation of Eurolife and the deconsolidation of Privi.

The tax rate differential on income and losses outside Canada of $50.9 in 2022 principally related to income taxed at lower rates in the U.S., Mauritius and Barbados, partially offset by losses tax effected at lower rates in Bermuda and Asia. The tax rate differential on income and losses outside Canada of $399.1 in 2021 principally related to income taxed at lower rates in Asia (principally related to the unrealized gain recorded on the company's investment in Digit compulsory convertible preferred shares), the U.S. and at Allied World.

Income taxes refundable and payable were as follows:

---

| | | |
|:---|:---|:---|
|  | **December 31,**  | **December 31,**  |
|  | **2022** | **2021** |
| Income taxes refundable | 67.1 | 58.3 |
| Income taxes payable | (361.0) | (175.0) |
| Net income taxes payable | (293.9) | (116.7) |

---

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

Changes in net income taxes (payable) refundable during the years ended December 31 were as follows:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Balance - January 1 | (116.7) | 24.2 |
| &nbsp;&nbsp;Amounts recorded in the consolidated statements of earnings | (606.8) | (387.0) |
| &nbsp;&nbsp;Payments made during the year | 416.4 | 288.7 |
| &nbsp;&nbsp;Acquisitions of subsidiaries (note 23) |  | (54.5) |
| &nbsp;&nbsp;Foreign exchange effect and other | 13.2 | 11.9 |
| Balance - December 31 | (293.9) | (116.7) |

---

Changes in the net deferred income tax asset (liability) during the years ended December 31 were as follows:

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** | **2022** |
|  |  | **Provision** |  |  |  |  |  |  |  |
|  | **Operating** | **for losses** | **Provision** | **Deferred** |  |  |  |  |  |
|  | **and** | **and loss** | **for** | **premium** |  |  |  |  |  |
|  | **capital** | **adjustment** | **unearned** | **acquisition** | **Intangible** |  | **Tax** |  |  |
|  | **losses** | **expenses** | **premiums** | **costs** | **assets** | **Investments** | **credits** | **Other** | **Total** |
| Balance - January 1 | 230.0 | 204.2 | 187.7 | (147.8) | (413.1) | (414.5) | 213.6 | 63.5 | (76.4) |
| &nbsp;&nbsp;Amounts recorded in the consolidated statement of earnings | (7.1) | 53.4 | 27.0 | (22.7) | 30.9 | 219.4 | (137.1) | 17.8 | 181.6 |
| &nbsp;&nbsp;Amounts recorded in total equity | 8.0 |  |  |  |  | 20.1 |  | (42.4) | (14.3) |
| &nbsp;&nbsp;Acquisitions of subsidiaries (note 23) | 3.3 |  |  |  | (1.9) | (11.4) |  | (52.6) | (62.6) |
| &nbsp;&nbsp;Deconsolidation of non-insurance subsidiaries (note 23) | (0.6) |  |  |  | 7.0  |  |  |  | 6.4  |
| &nbsp;&nbsp;Foreign exchange effect and other | (6.8) | (2.9) | 0.2 | (0.8) | 1.0 | 15.5 | (1.1) | (44.4) | (39.3) |
| Balance - December 31 | 226.8  | 254.7  | 214.9  | (171.3) | (376.1) | (170.9) | 75.4  | (58.1) | (4.6) |

---

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** | **2021** |
|  |  | **Provision** |  |  |  |  |  |  |  |
|  | **Operating** | **for losses** | **Provision** | **Deferred** |  |  |  |  |  |
|  | **and** | **and loss** | **for** | **premium** |  |  |  |  |  |
|  | **capital** | **adjustment** | **unearned** | **acquisition** | **Intangible** |  | **Tax** |  |  |
|  | **losses** | **expenses** | **premiums** | **costs** | **assets** | **Investments** | **credits** | **Other** | **Total** |
| Balance - January 1 | 236.3 | 168.8 | 141.7 | (116.1) | (389.5) | 23.9 | 174.8 | 117.6 | 357.5 |
| &nbsp;&nbsp;Amounts recorded in the consolidated statement of earnings | (3.5) | 35.6 | 46.0 | (39.4) | (19.5) | (339.2) | 32.3 | (51.3) | (339.0) |
| &nbsp;&nbsp;Amounts recorded in total equity | 17.5 |  |  |  |  | 0.8 |  | (37.5) | (19.2) |
| &nbsp;&nbsp;Acquisitions of subsidiaries (note 23) | (4.2) |  |  | 7.9 | (10.3) | (98.9) |  | 31.4 | (74.1) |
| &nbsp;&nbsp;Deconsolidation of non-insurance subsidiaries (note 23) | (7.5) |  |  |  | 7.8 |  |  | 2.3 | 2.6 |
| &nbsp;&nbsp;Foreign exchange effect and other | (8.6) | (0.2) |  | (0.2) | (1.6) | (1.1) | 6.5 | 1.0 | (4.2) |
| Balance - December 31 | 230.0 | 204.2 | 187.7 | (147.8) | (413.1) | (414.5) | 213.6 | 63.5 | (76.4) |

---

Management expects that recognized deferred income tax assets will be realized in the normal course of operations. The most significant temporary differences included in the net deferred income tax liability at December 31, 2022 related to intangible assets, deferred premium acquisition costs and investments (primarily related to net unrealized investment gains in Asia), partially offset by deferred income tax assets related to operating and capital losses, provision for losses and loss adjustment expenses, provision for unearned premiums and tax credits. In these consolidated financial statements, investment gains and losses are primarily recognized on a mark-to-market basis but are typically only recognized for income tax purposes when realized (particularly in the U.S. and several other jurisdictions). The provision for losses and loss adjustment expenses is recorded on an undiscounted basis in these consolidated financial statements but is recorded on a discounted basis in certain jurisdictions for income tax, resulting in temporary differences. Deferred income tax liabilities on intangible assets primarily relate to intangible assets recognized on acquisitions (principally Brit, Allied World and Recipe) that are typically not deductible in the determination of income taxes payable. The deferred income tax asset related to operating and capital losses arises primarily at Brit, Northbridge, and AGT. Tax credits are primarily in the U.S. and relate to foreign

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

taxes paid that will reduce U.S. taxes payable in the future. Other deferred income tax liabilities include temporary differences related to pensions and premises and equipment.

Management conducts ongoing reviews of the recoverability of the deferred income tax asset and adjusts, as necessary, to reflect its anticipated realization. At December 31, 2022 deferred income tax assets of $827.7 (December 31, 2021 - $875.9), which relate principally to operating and capital losses, have not been recorded. The losses for which deferred income tax assets have not been recorded are comprised of losses in Canada of $1,728.0 (December 31, 2021 - $2,089.3), losses in Europe of $552.1 (December 31, 2021 - $488.8), losses in the U.S. of $207.6 (December 31, 2021 - $109.4), and losses at Allied World of $295.6 across various jurisdictions (December 31, 2021 - $251.4). The losses in Canada expire between 2029 and 2042. The losses and foreign tax credits in the U.S. primarily expire between 2024 and 2042. Substantially all of the losses in Europe do not have an expiry date. Allied World's losses are primarily in the U.K. and Asia, with no expiry date, and in Switzerland which expire within seven years.

Deferred income tax has not been recognized for the withholding tax and other taxes that could be payable on the unremitted earnings of certain subsidiaries, which at December 31, 2022 amounted to approximately $9.9 billion (December 31, 2021 - approximately $7.6 billion) and are not likely to be repatriated in the foreseeable future.

**19.**Statutory Requirements

The retained earnings of the company are largely represented by retained earnings at the company's insurance and reinsurance subsidiaries. Those subsidiaries are subject to certain requirements and restrictions under their respective insurance company Acts including minimum capital requirements and dividend restrictions. The company's capital requirements and management thereof are discussed in note 24. The company's share of dividends paid in 2022 by the insurance and reinsurance subsidiaries, which are eliminated on consolidation, was $380.9 (2021 - $429.5). Crum & Forster also paid a special dividend of $940.0 to the company in 2022 as a result of the sale of its Pet Insurance Group and Pethealth as described in note 23.

Based on the surplus and net earnings (loss) of the primary insurance and reinsurance subsidiaries as at and for the year ended December 31, 2022, the maximum dividend capacity available in 2023 at each of those subsidiaries, payable to all shareholders (including non-controlling interests) is as follows:

---

| | |
|:---|:---|
|  | **December 31,**  |
|  | **2022** |
| Allied World | 1167.5 |
| Odyssey Group | 767.2 |
| Northbridge<sup>(1)</sup> | 422.2 |
| Crum & Forster | 204.6 |
| Zenith National | 91.4 |
|  | 2652.9 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Subject to prior regulatory approval.* 

When determining the amount of dividends to be paid from its insurance and reinsurance subsidiaries, the company considers regulatory capital requirements, and also rating agency capital tests, future capital levels required to support growth and tax planning matters, among other factors. In addition, the non-controlling interests in Allied World, Odyssey Group and Brit have a dividend in priority to the company.

**20.**Contingencies and Commitments

The company and its subsidiaries, in the ordinary course of their business, are or may be anticipated to be defendants, or named as third parties, in damage suits. The uninsured exposure to the company is not considered to be material to the company's financial position, financial performance or cash flows.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

Odyssey Group, Brit and Allied World ("the Lloyd's participants") underwrite in the Lloyd's of London insurance market through their participation in certain Lloyd's syndicates. The Lloyd's participants have pledged cash and cash equivalents of $233.6 and securities with a fair value of $1,670.7 at December 31, 2022 as capital to support those underwriting activities. Pledged securities primarily consist of short term investments, bonds and equity investments presented within portfolio investments on the consolidated balance sheet. The Lloyd's participants have the ability to substitute other securities for these pledged securities, subject to certain admissibility criteria. The Lloyd's participants' liability in respect of assets pledged as capital is limited to the aggregate amount of the pledged assets and their obligation to support these liabilities will continue until such liabilities are settled or are reinsured by a third party approved by Lloyd's. The company believes that the syndicates for which the Lloyd's participants are capital providers maintain sufficient liquidity and financial resources to support their ultimate liabilities and does not anticipate that the pledged assets will be utilized.

The company's maximum capital commitments for potential investments in common stocks, limited partnerships, associates and joint ventures at December 31, 2022 was $1,422.8. Additionally, pursuant to the sale of RiverStone Barbados as described in note 23, the company has guaranteed the remaining value of $486.8 at December 31, 2022 of certain securities that remain held by CVC and certain affiliates thereof until such time that the securities are purchased by or sold at the direction of Hamblin Watsa, prior to the end of 2023.

**21.**Pensions and Post Retirement Benefits

The funded status of the company's defined benefit pension and post retirement plans at December 31 were as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Defined benefit** | **Defined benefit** | **Defined benefit** | **Defined benefit** |
|  | **pension plans** | **pension plans** | **post retirement plans** | **post retirement plans** |
|  | **2022** | **2021** | **2022** | **2021** |
| Benefit obligation | (715.5) | (1070.9) | (66.8) | (83.9) |
| Fair value of plan assets | 784.7  | 1014.7 |  |  |
| Funded status of plans - surplus (deficit) | 69.2  | (56.2) | (66.8) | (83.9) |
| Impact of asset ceiling | (3.6) |  |  |  |
| Net accrued asset (liability)<sup>(1)</sup> | 65.6  | (56.2) | (66.8) | (83.9) |
| *Weighted average assumptions used to determine benefit obligations:* |  |  |  |  |
| Discount rate | 4.9% | 2.6% | 5.2% | 3.1% |
| Rate of compensation increase | 2.5% | 2.2% | 3.8% | 3.7% |
| Health care cost trend |  |  | 3.4% | 3.6% |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *The defined benefit pension plan net accrued asset at December 31, 2022 of $65.6 (December 31, 2021 - net accrued liability of $56.2) was comprised of pension surpluses of $144.5 , partially offset by pension deficits of $78.9 (December 31, 2021 - pension deficits of $170.0 , partially offset by pension surpluses of $113.8). See notes 13 and 14.* 

Pension and post retirement benefit expenses recognized in the consolidated statement of earnings for the years ended December 31 were as follows:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Defined benefit pension plan expense | 20.3 | 25.8 |
| Defined contribution pension plan expense | 62.2 | 57.8  |
| Defined benefit post retirement plan expense | 5.0 | 2.0 |
|  | 87.5 | 85.6 |

---

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

Pre-tax actuarial net gains (losses) recognized in the consolidated statement of comprehensive income for the years ended December 31 were comprised as follows:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Defined benefit pension plans |  |  |
| &nbsp;&nbsp;Actuarial net gains (losses) on plan assets and change in asset ceiling | (157.3) | 78.6 |
| &nbsp;&nbsp;Actuarial net gains on benefit obligations | 295.0 | 33.8 |
|  | 137.7 | 112.4 |
| Defined benefit post retirement plans - actuarial net gains on benefit obligations | 16.2 | 3.2 |
|  | 153.9 | 115.6 |

---

**22.**Leases

Changes in the company's right-of-use assets for the year ended December 31 were as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2022** | **2021** | **2021** | **2021** |
|  | **Insurance**  |  |  | **Insurance**  |  |  |
|  | **and**  | **Non-** |  | **and**  | **Non-** |  |
|  | **reinsurance**  | **insurance**  |  | **reinsurance**  | **insurance**  |  |
|  | **companies**<sup>(1)</sup> | **companies** | **Total** | **companies**<sup>(1)</sup> | **companies** | **Total** |
| Balance - January 1 | 328.8 | 431.0 | 759.8 | 396.1 | 611.9 | 1008.0 |
| &nbsp;&nbsp;Additions | 63.7 | 98.2 | 161.9 | 44.0 | 92.0 | 136.0 |
| &nbsp;&nbsp;Disposals | (7.5) | (8.4) | (15.9) | (41.2) | (19.8) | (61.0) |
| &nbsp;&nbsp;Depreciation<sup>(2)</sup> | (67.2) | (89.9) | (157.1) | (68.3) | (113.0) | (181.3) |
| &nbsp;&nbsp;Acquisitions of subsidiaries (note 23) |  | 56.7 | 56.7 | 0.9 | 14.1 | 15.0 |
| &nbsp;&nbsp;Deconsolidation of subsidiaries (note 23) | (1.1) | (2.9) | (4.0) | (1.4) | (146.7) | (148.1) |
| &nbsp;&nbsp;Foreign exchange effect and other | (9.5) | (23.4) | (32.9) | (1.3) | (7.5) | (8.8) |
| Balance - December 31 (note 13) | 307.2 | 461.3 | 768.5 | 328.8 | 431.0 | 759.8 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)*  ***Includes Life insurance and Run-off and Corporate and Other.*** 

*(2) Recorded in operating expenses and other expenses in the consolidated statement of earnings.*

The maturity profile of the company's lease liabilities was as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **Insurance** |  |  | **Insurance** |  |  |
|  | **and** | **Non-** |  | **and** | **Non-** |  |
|  | **reinsurance** | **insurance** |  | **reinsurance** | **insurance** |  |
|  | **companies**<sup>(1)</sup> | **companies** | **Total** | **companies**<sup>(1)</sup> | **companies** | **Total** |
| &nbsp;&nbsp;One year or less | 72.7 | 155.8 | 228.5 | 77.4 | 173.6 | 251.0 |
| &nbsp;&nbsp;One to two years | 66.5 | 142.4 | 208.9 | 67.6 | 148.1 | 215.7 |
| &nbsp;&nbsp;Two to three years | 60.3 | 127.7 | 188.0 | 58.6 | 129.8 | 188.4 |
| &nbsp;&nbsp;Three to four years | 55.9 | 108.0 | 163.9 | 52.0 | 115.4 | 167.4 |
| &nbsp;&nbsp;Four to five years | 45.5 | 86.5 | 132.0 | 45.1 | 96.3 | 141.4 |
| &nbsp;&nbsp;More than five years | 117.7 | 330.2 | 447.9 | 142.8 | 249.6 | 392.4 |
| Lease liabilities, undiscounted | 418.6 | 950.6 | 1369.2 | 443.5 | 912.8 | 1356.3 |
| Lease liabilities, discounted (note 14) | 364.1 | 729.9 | 1094.0 | 384.2 | 756.5 | 1140.7 |
| Weighted average incremental borrowing rate | 3.8% | 4.7% | 4.4% | 3.8% | 4.5% | 4.3% |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Includes Life insurance and Run-off and Corporate and Other.* 

During 2022 the company recognized in the consolidated statement of earnings interest expense on lease liabilities of $46.9 (2021 - $57.9) (note 15), and short-term, low value and other lease costs of $51.0 (2021 - $19.1) that included the benefit of COVID-19 lease

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

concessions and government rent subsidies of $1.7 (2021 - $28.9) primarily recorded in the Non-insurance companies reporting segment (note 26).

The maturity profile of the company's finance lease receivables was as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **Insurance**  |  |  | **Insurance**  |  |  |
|  | **and**  | **Non-** |  | **and**  | **Non-** |  |
|  | **reinsurance**  | **insurance**  |  | **reinsurance**  | **insurance**  |  |
|  | **companies**<sup>(1)</sup> | **companies** | **Total** | **companies**<sup>(1)</sup> | **companies** | **Total** |
| &nbsp;&nbsp;One year or less | 2.8 | 55.4 | 58.2 | 2.5 | 62.0 | 64.5 |
| &nbsp;&nbsp;One to two years | 1.8 | 48.5 | 50.3 | 2.3 | 53.0 | 55.3 |
| &nbsp;&nbsp;Two to three years | 1.4 | 42.7 | 44.1 | 1.3 | 44.7 | 46.0 |
| &nbsp;&nbsp;Three to four years | 1.1 | 36.7 | 37.8 | 1.0 | 39.3 | 40.3 |
| &nbsp;&nbsp;Four to five years | 0.7 | 27.8 | 28.5 | 1.0 | 33.3 | 34.3 |
| &nbsp;&nbsp;More than five years | 2.0 | 43.9 | 45.9 | 2.8 | 64.5 | 67.3 |
| Finance lease receivables, undiscounted | 9.8 | 255.0 | 264.8 | 10.9 | 296.8 | 307.7 |
| Unearned finance income | 1.0 | 37.0 | 38.0 | 1.5 | 40.1 | 41.6 |
| Finance lease receivables (note 13) | 8.8 | 218.0 | 226.8 | 9.4 | 256.7 | 266.1 |

---

*(1) Includes Life insurance and Run-off and Corporate and Other.*

**23.**Acquisitions and Divestitures

#### Subsequent to December 31, 2022

#### Sale of Ambridge Group by Brit
On January 7, 2023 Brit entered into an agreement to sell Ambridge Group, its Managing General Underwriter operations, to Amynta Group. The company will receive approximately $400 on closing, comprised principally of cash of $275.0 and a promissory note of approximately $125. An additional $100.0 may be receivable based on 2023 performance targets of Ambridge. Closing of the transaction is subject to customary closing conditions, including regulatory approvals, and is expected to occur in the next few months. On closing of the transaction, the company expects to deconsolidate assets and liabilities with carrying values at December 31, 2022 of approximately $284 and $160, and to record a pre-tax gain of approximately $275 (prior to ascribing any fair value to the additional receivable).

***Year ended December 31, 2022***

*Sale of Pet Insurance Operations and Investment in JAB Consumer Fund*

On October 31, 2022 the company sold its interests in the Crum & Forster Pet Insurance Group and Pethealth, including all of their worldwide operations, to Independence Pet Group and certain of its affiliates, which are majority owned by JAB Holding Company ("JAB"), for $1.4 billion, paid as $1.15 billion in cash and $250.0 in debentures. The company also committed to invest $200.0 in JCP V, a JAB consumer fund. As a result of the sale, the company recorded a pre-tax gain of $1,213.2, inclusive of foreign currency translation losses that were reclassified from accumulated other comprehensive income (loss) to the consolidated statement of earnings,

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

and selling expenses, in gain on sale and consolidation of insurance subsidiaries in the consolidated statement of earnings (an after-tax gain of $933.9), and deconsolidated assets and liabilities with carrying values of $149.1 and $32.0.

*Additional investment in Recipe Unlimited Corporation* 

On October 28, 2022 the company acquired all of the multiple voting shares ("MVS") and subordinate voting shares in the capital of Recipe, other than those shares owned by the company and 9,398,729 MVS owned by Cara Holdings Limited, at a cash purchase price of Cdn$20.73 per share or $342.3 (Cdn$465.9) in aggregate, comprised of cash consideration of $242.5 (Cdn$330.0) and an increase in borrowings by Recipe of $99.8 (Cdn$135.9). The company recorded a loss in retained earnings of $66.1 and a decrease in non-controlling interests of $276.2, both of which are presented in net changes in capitalization in the consolidated statement of changes in equity. The transaction increased the company's equity ownership in Recipe from 38.5% at December 31, 2021 to 75.7%, or 84.0% inclusive of Recipe shares held through the company's investment in AVLNs entered with RiverStone Barbados. Recipe was subsequently delisted from the Toronto Stock Exchange. On December 28, 2022 the company received $73.6 (Cdn$100.0) cash consideration from Recipe upon redemption of certain equity held by the company in connection with the closing of the transaction.

*Consolidation of Grivalia Hospitality S.A.*

On July 5, 2022 the company increased its interest in Grivalia Hospitality S.A. ("Grivalia Hospitality") to 78.4% from 33.5% by acquiring additional shares for cash consideration of $194.6 (€190.0) and commenced consolidating the assets, liabilities and results of operations of Grivalia Hospitality in the Non-insurance companies reporting segment. Grivalia Hospitality acquires, develops and manages hospitality real estate in Greece, Cyprus and Panama.

***Year ended December 31, 2021***

*Sale of non-controlling interest in Odyssey Group*

On December 15, 2021 Odyssey Group issued shares representing an aggregate 9.99% equity interest to a subsidiary of Canada Pension Plan Investment Board ("CPPIB") and OMERS, the pension plan for Ontario's municipal employees, for cash consideration of $900.0 which was subsequently paid by Odyssey Group as a dividend to Fairfax. The company recorded an aggregate equity gain of $429.1, principally comprised of a dilution gain and the fair value of a call option received, which was presented as net changes in capitalization in the consolidated statement of changes in equity. The company has the option to purchase the interests of CPPIB and OMERS in Odyssey Group at certain dates commencing in January 2025.

*Sale of non-controlling interest in Brit*

On August 27, 2021 Brit issued shares representing a 13.9% equity interest to OMERS for cash consideration of $375.0 which was subsequently paid by Brit as a dividend to Fairfax. The company recorded an aggregate equity gain of $115.4, principally comprised of a dilution gain and the fair value of a call option received, which was presented as net changes in capitalization in the consolidated statement of changes in equity. The company has the option to purchase OMERS' interest in Brit at certain dates commencing in October 2023.

*Sale of RiverStone Barbados*

On August 23, 2021 the company sold its 60.0% joint venture interest in RiverStone (Barbados) Ltd. ("RiverStone Barbados") to CVC Capital Partners ("CVC"). OMERS also sold its 40.0% joint venture interest in RiverStone Barbados to CVC as part of the transaction. The company received consideration of $695.7, principally comprised of cash of $462.0, non-voting shares of CVC's RiverStone Barbados holding company with a fair value of $200.0 (which will convert into a secured vendor loan note with a principal amount of $200.0 upon completion of certain regulatory undertakings by CVC) and a pension asset on assumption of RiverStone Barbados' closed pension plan, and recorded a net loss of $2.1 in net gains (losses) on investments in the consolidated statement of earnings, inclusive of foreign currency translation gains that were reclassified from accumulated other comprehensive income (loss) to the consolidated

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

statement of earnings. The company also received a contingent value instrument for potential future proceeds of up to $235.7 with a nominal fair value.

Prior to completion of the transaction, certain subsidiaries of RiverStone Barbados held investments in various Fairfax subsidiaries and certain other companies. Accordingly, CVC and certain affiliates thereof became the indirect owner of those securities upon completion of the transaction. As part of the transaction, on February 8, 2021 the company had entered into Asset Value Loan Notes ("AVLNs") to guarantee the then approximately $1.3 billion value of the securities to CVC and certain affiliates thereof until such time the securities are purchased by or sold at the direction of Hamblin Watsa, prior to the end of 2022. The company, through Hamblin Watsa, continues to manage and have direction over these securities, including their voting rights. The company recorded the AVLNs as derivative instruments whose fair value is the difference between the guaranteed value of the underlying securities and their fair value, which resulted in a derivative asset of $103.8 on the consolidated balance sheet at December 31, 2021, and a net gain on investments of $103.8 for the year then ended in the consolidated statement of earnings. During 2021 securities with a guaranteed value of $120.8 were sold or purchased by Hamblin Watsa, leaving securities with a guaranteed value of approximately $1.1 billion remaining under the AVLNs at December 31, 2021. Subsequently, as described in note 7, on July 5, 2022 an amendment to the AVLNs was completed, extending $543.4 of the underlying securities to be purchased or sold prior to the end of 2023. The remainder of the securities were purchased or sold during 2022; in addition, part of the amended AVLNs were purchased in the second half of 2022.

*Sale of Toys "R" Us Canada*

On August 19, 2021 the company sold the operations of Toys "R" Us Canada for consideration of $90.3 (Cdn$115.7), deconsolidated Toys "R" Us Canada from the Non-insurance companies reporting segment and recorded a net gain of $85.7 in net gains (losses) on investments in the consolidated statement of earnings. The consideration received was comprised principally of a monthly royalty on future revenue of Toys "R" Us Canada.

*Privatization of Mosaic Capital*

On August 5, 2021 Mosaic Capital completed a privatization arrangement with a third party purchaser pursuant to which the company exchanged its holdings of Mosaic Capital debentures and warrants, and cash of $10.7 (Cdn$13.3), for $130.8 (Cdn$163.3) of newly issued Mosaic Capital 25-year debentures, and invested $4.0 (Cdn$5.0) in the privatized company for a 20.0% equity interest. The company deconsolidated Mosaic Capital from the Non-insurance companies reporting segment, recorded the Mosaic Capital 25-year debentures at FVTPL and commenced applying the equity method of accounting to its interest in the purchaser.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

*Acquisition of Eurolife FFH Insurance Group Holdings S.A.*

On July 14, 2021 the company increased its interest in Eurolife FFH Insurance Group Holdings S.A. ("Eurolife") to 80.0% from 50.0% by exercising a call option valued at $127.3 to acquire the joint venture interest of OMERS for cash consideration of $142.7 (€120.7). The assets, liabilities and results of operations of Eurolife's life insurance business were consolidated in the Life insurance and Run-off segment and those of Eurolife's property and casualty insurance business were consolidated in the International Insurers and Reinsurers reporting segment, pursuant to which the company remeasured its 50.0% joint venture interest in Eurolife to its fair value of $450.0 and recorded a net gain of $130.5 in gain on sale and consolidation of insurance subsidiaries in the consolidated statement of earnings, inclusive of foreign currency translation gains that were reclassified from accumulated other comprehensive income (loss) to the consolidated statement of earnings. The remaining 20.0% equity interest in Eurolife continues to be owned by the company's associate Eurobank. Eurolife is a Greek insurer which distributes its life and property and casualty insurance products and services through Eurobank's network and other distribution channels.

---

| | |
|:---|:---|
|  | **Eurolife** |
| Acquisition date | July 14, 2021 |
| Percentage of common shares acquired | 80.0% <sup>(1)</sup> |
| Assets: |  |
| &nbsp;&nbsp;Insurance contract receivables | 11.6 |
| &nbsp;&nbsp;Portfolio investments | 3653.9<br> <sup>(2)</sup> |
| &nbsp;&nbsp;Recoverable from reinsurers | 18.6 |
| &nbsp;&nbsp;Deferred income tax assets | 32.6 |
| &nbsp;&nbsp;Intangible assets | 45.5<br> <sup>(3)</sup> |
| &nbsp;&nbsp;Other assets | 616.3<br> <sup>(4)</sup> |
|  | 4378.5 |
| Liabilities: |  |
| &nbsp;&nbsp;Accounts payable and accrued liabilities | 273.2<br> <sup>(5)</sup> |
| &nbsp;&nbsp;Insurance contract payables | 529.0 |
| &nbsp;&nbsp;Insurance contract liabilities | 2751.4 |
| &nbsp;&nbsp;Deferred income tax liabilities | 100.9 |
|  | 3654.5 |
| Purchase consideration | 720.0<br> <sup>(6)</sup> |
| Excess of fair value of net assets acquired over purchase consideration | 4.0 |
|  | 4378.5 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *The transaction was recorded as the acquisition of a 100% equity interest in Eurolife with the non-controlling interests represented by a redemption liability (described in footnote 5 below) that was included in the fair value of assets acquired and liabilities assumed.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Includes subsidiary cash and cash equivalents of $1,433.3 .* 

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *Principally an intangible asset of $29.0 related to a distribution agreement with Eurobank.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(4)* *Principally investment assets of $532.1 related to unit-linked life insurance contracts.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(5)* *Includes a redemption liability of $124.9 on non-controlling interests as the company's associate Eurobank may put its 20.0% equity interest in Eurolife to the company commencing in 2024 at the then fair value of that interest.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(6)* *Comprised of cash consideration of $142.7 , a call option exercised with a fair value of $127.3 and the company's 50.0% joint venture interest with a fair value of $450.0 .* 

*Additional investment in Singapore Reinsurance Corporation Limited*

On June 17, 2021 the company increased its ownership interest in Singapore Reinsurance Corporation Limited ("Singapore Re") from 28.2% to 94.0% for $102.9 (SGD 138.0) and subsequently increased its ownership interest to 100%. Singapore Re is a general property and casualty reinsurer that underwrites business primarily in southeast Asia.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

*Fairfax India's sale of Privi Speciality Chemicals Limited*

On April 29, 2021 Fairfax India sold its 48.8% equity interest in Privi Speciality Chemicals Limited ("Privi") to certain affiliates of Privi's founders for $164.8 (12.2 billion Indian rupees), deconsolidated the assets and liabilities of Privi and recorded a net realized gain on investment of $94.9 in the consolidated statement of earnings.

**24.**Financial Risk Management

#### Overview
The primary goals of the company's financial risk management are to ensure that the outcomes of activities involving elements of risk are consistent with the company's objectives and risk tolerance, while maintaining an appropriate balance between risk and reward and protecting the company's consolidated balance sheet from events that have the potential to materially impair its financial strength. The company's exposure to potential loss from its insurance and reinsurance operations and investment activities primarily relates to underwriting risk, credit risk, liquidity risk and various market risks. Balancing risk and reward is achieved through identifying risk appropriately, aligning risk tolerances with business strategy, diversifying risk, pricing appropriately for risk, mitigating risk through preventive controls and transferring risk to third parties. There were no significant changes in the types of the company's risk exposures or the processes used by the company for managing those risk exposures at December 31, 2022 compared to those identified at December 31, 2021, except as discussed below.

Financial risk management objectives are achieved through a two tiered system, with detailed risk management processes and procedures at the company's primary operating subsidiaries and its investment management subsidiary combined with the analysis of the company- wide aggregation and accumulation of risks at the holding company. In addition, although the company and its operating subsidiaries each have an officer with designated responsibility for risk management, the company regards each Chief Executive Officer as the chief risk officer of their company; each Chief Executive Officer is the individual ultimately responsible for risk management for his or her company and its subsidiaries.

The company's President and Chief Operating Officer reports on risk considerations to the company's Executive Committee and provides a quarterly report on key risk exposures to the company's Board of Directors. The Executive Committee, in consultation with the President and Chief Operating Officer, approves certain policies for overall risk management, as well as policies addressing specific areas such as investments, underwriting, catastrophe risk and reinsurance. The company's Investment Committee approves policies for the management of market risk (including currency risk, interest rate risk and other price risk) and the use of derivative and non-derivative financial instruments, and monitors to ensure compliance with relevant regulatory guidelines and requirements. A discussion of the company's risks and the management of those risks is an agenda item for every regularly scheduled meeting of the Board of Directors.

#### Underwriting Risk

#### Property and casualty insurance and reinsurance
Underwriting risk is the risk that the total cost of claims, claims adjustment expenses, commissions and premium acquisition costs will exceed premiums received and can arise as a result of numerous factors, including pricing risk, reserving risk and catastrophe risk. There were no significant changes to the company's exposure to underwriting risk, and there were no changes to the framework used to monitor, evaluate and manage underwriting risk at December 31, 2022 compared to December 31, 2021.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

*Principal lines of business*

The company's principal insurance and reinsurance lines of business and the significant insurance risks inherent therein are as follows:

● Property, which insures against losses to property from (among other things) fire, explosion, natural perils (for example, earthquake, windstorm and flood), terrorism and engineering problems (for example, boiler explosion, machinery breakdown and construction defects). Specific types of property risks underwritten by the company include automobile, commercial and personal property and crop;

● Casualty, which insures against accidents (including workers' compensation and automobile) and also includes employers' liability, accident and health, medical malpractice, professional liability and umbrella coverage; and

● Specialty, which insures against marine, aerospace and surety risk, and other various risks and liabilities that are not identified above.

An analysis of net premiums earned by line of business is included in note 25.

The table that follows shows the company's concentration of insurance risk by region and line of business based on gross premiums written prior to giving effect to ceded reinsurance premiums. The company's exposure to general insurance risk varies by geographic region and may change over time. Premiums ceded to reinsurers (including retrocessions) in 2022 by line of business was comprised of property of $1,938.5 (2021 - $1,717.4), casualty of $3,256.6 (2021 - $3,487.7) and specialty of $439.2 (2021 - $423.4).

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Canada** | **Canada** | **United States** | **United States** | **Asia**<sup>(1)</sup> | **Asia**<sup>(1)</sup> | **International**<sup>(2)</sup> | **International**<sup>(2)</sup> | **Total**<sup>(3)</sup> | **Total**<sup>(3)</sup> |
| **For the years ended December 31** | **2022** | **2021** | **2022** | **2021** | **2022** | **2021** | **2022** | **2021** | **2022** | **2021** |
| Property | 1343.7 | 1229.1  | 4966.1 | 3912.4  | 984.5 | 849.2  | 2418.2 | 2141.9  | 9712.5 | 8132.6  |
| Casualty | 1243.4 | 1159.0  | 12004.9 | 10364.0  | 606.6 | 549.8  | 1823.0 | 1659.5  | 15677.9 | 13732.3  |
| Specialty | 258.3 | 223.3  | 871.6 | 755.6  | 343.2 | 277.4  | 698.2 | 674.8  | 2171.3 | 1931.1  |
| Total | 2845.4 | 2611.4  | 17842.6 | 15032.0  | 1934.3 | 1676.4  | 4939.4 | 4476.2  | 27561.7 | 23796.0  |
| Insurance | 2686.2 | 2475.1  | 13080.8 | 11448.6  | 789.8 | 739.7  | 3608.6 | 3341.0  | 20165.4 | 18004.4  |
| Reinsurance | 159.2 | 136.3  | 4761.8 | 3583.4  | 1144.5 | 936.7  | 1330.8 | 1135.2  | 7396.3 | 5791.6  |
|  | 2845.4 | 2611.4  | 17842.6 | 15032.0  | 1934.3 | 1676.4  | 4939.4 | 4476.2  | 27561.7 | 23796.0  |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *The Asia geographic segment is primarily comprised of countries located throughout Asia, including China, Japan, India, Sri Lanka, Malaysia, Singapore, Indonesia and South Korea, and the Middle East.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *The International geographic segment is primarily comprised of countries located in South America, Europe, Africa and Oceania.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *Excludes Eurolife's life insurance operations' gross premiums written of $350.9 in 2022 and 114.2 in 2021. Eurolife was consolidated on July 14, 2021.* 

*Pricing risk*

Pricing risk arises because actual claims experience may differ adversely from the assumptions used in pricing insurance risk. Historically, the underwriting results of the property and casualty industry have fluctuated significantly due to the cyclical nature of the insurance market. Market cycles are affected by the frequency and severity of losses, levels of capacity and demand, general economic conditions, including inflationary pressures, and competition on rates and terms of coverage. The operating companies focus on profitable underwriting using a combination of experienced underwriting and actuarial staff, pricing models and price adequacy monitoring tools.

*Reserving risk*

Reserving risk arises because actual claims experience may differ adversely from the assumptions used in setting reserves, in large part due to the length of time between the occurrence of a loss, the reporting of the loss to the insurer and the ultimate resolution of the claim. The degree of uncertainty will vary by line of business according to the characteristics of the insured risks, with the ultimate cost of a

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

claim determined by the actual insured loss suffered by the policyholder. Claims provisions reflect expectations of the ultimate cost of resolution and administration of claims based on an assessment of facts and circumstances then known, a review of historical settlement patterns, estimates of trends in claim severity and frequency, developing case law and other factors.

The time required to learn of and settle claims is often referred to as the "tail" and is an important consideration in establishing the company's reserves. Short-tail claims are those for which losses are normally reported soon after the incident and are generally settled within months following the reported incident. This would include, for example, most property, automobile and marine and aerospace damage. Long-tail claims are considered by the company to be those that often take three years or more to develop and settle, such as asbestos, environmental pollution, workers' compensation, professional liability and product liability. Information concerning the loss event and ultimate cost of a long-tail claim may not be readily available, making the reserving analysis of long-tail lines of business more difficult and subject to greater uncertainties than for short-tail lines of business. In the extreme cases, long-tail claims involving asbestos and environmental pollution, it may take upwards of 40 years to settle. The company employs specialized techniques to determine such provisions using the extensive knowledge of both internal and external asbestos and environmental pollution experts and legal advisors.

The establishment of provisions for losses and loss adjustment expenses is an inherently uncertain process that can be affected by internal factors such as: the risk in estimating loss development patterns based on historical data that may not be representative of future loss payment patterns; assumptions built on industry loss ratios or industry benchmark development patterns that may not reflect actual experience; the intrinsic risk as to the homogeneity of the underlying data used in carrying out the reserve analyses; and external factors such as trends relating to jury awards; economic inflation; medical cost inflation; worldwide economic conditions; tort reforms; court interpretations of coverage; the regulatory environment; underlying policy pricing; claims handling procedures; inclusion of exposures not contemplated at the time of policy inception; and significant changes in severity or frequency of losses relative to historical trends. Due to the amount of time between the occurrence of a loss, the actual reporting of the loss and the ultimate settlement of the claim, provisions may ultimately develop differently from the actuarial assumptions made when initially estimating the provision for losses.

As a result of continued inflationary pressures felt throughout the economy in 2022 and the resulting changes to global monetary policy, the company has placed a renewed focus on inflationary assumptions used in both the pricing of new business and within the company's reserving process, specifically when setting initial loss estimates and projecting the ultimate costs to settle claims. The company has experienced inflationary pressures on its costs to settle claims throughout 2022, and both economic and social inflation remain a key consideration in the company's reserving methodology and form part of its determination in the selection of the company's ultimate cost to settle claims.

The diversity of insurance risk within the company's portfolio of issued policies makes it difficult to predict whether material prior year reserve development will occur and, if it does occur, the location and the timing of such an occurrence.

*Catastrophe risk*

Catastrophe risk arises from exposure to large losses caused by man-made or natural catastrophes that could result in significant underwriting losses. Weather-related catastrophe losses are also affected by climate change which increases the unpredictability of both frequency and severity of such losses. As the company does not establish reserves for catastrophes in advance of the occurrence of such events, these events may cause volatility in the levels of incurred losses and reserves, subject to the effects of reinsurance recoveries. This volatility may also be contingent upon political and legal developments after the occurrence of the event. The company evaluates potential catastrophic events and assesses the probability of occurrence and magnitude of these events predominantly through probable maximum loss ("PML") modeling techniques and through the aggregation of limits exposed. A wide range of events are simulated using the company's proprietary and commercial models, including single large events and multiple events spanning the numerous geographic regions in which the company assumes insurance risk.

Each operating company has developed and applies strict underwriting guidelines for the amount of catastrophe exposure it may assume as a standalone entity for any one risk and location, and those guidelines are regularly monitored and updated. Operating companies also manage catastrophe exposure by diversifying risk across geographic regions, catastrophe types and other lines of business, factoring in

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

levels of reinsurance protection, adjusting the amount of business written based on capital levels and adhering to risk tolerance guidelines. The company's head office aggregates catastrophe exposure company-wide and continually monitors the group's aggregate exposure. Independent exposure limits for each entity in the group are aggregated to produce an exposure limit for the group as there is presently no model capable of simultaneously projecting the magnitude and probability of loss in all geographic regions in which the company operates. Currently the company's objective is to limit its company-wide catastrophe loss exposure such that one year's aggregate pre-tax net catastrophe losses would not exceed one year's normalized net earnings before income taxes. The company takes a long term view and generally considers a 15% return on common shareholders' equity, adjusted to a pre-tax basis, to be representative of one year's normalized net earnings. The modeled probability of aggregate catastrophe losses in any one year exceeding this amount is generally more than once in every 250 years.

*Management of underwriting risk*

To manage exposure to underwriting risk, and the pricing, reserving and catastrophe risks contained therein, operating companies have established limits for underwriting authority and requirements for specific approvals of transactions involving new products or transactions involving existing products which exceed certain limits of size or complexity. The company's objective of operating with a prudent and stable underwriting philosophy with sound reserving is also achieved through the establishment of goals, delegation of authorities, financial monitoring, underwriting reviews and remedial actions to facilitate continuous improvement. The company's provision for claims is reviewed separately by, and must be acceptable to, internal actuaries at each operating company and the company's Chief Actuary. Additionally, independent actuaries are periodically engaged to review an operating company's reserves or reserves for certain lines of business. The company purchases reinsurance protection for risks assumed when it is considered prudent and cost effective to do so at the operating companies for specific exposures and, if needed, at the holding company for aggregate exposures. Steps are taken to actively reduce the volume of insurance and reinsurance underwritten on particular types of risks when the company desires to reduce its direct exposure due to inadequate pricing.

As part of its overall risk management strategy, the company cedes insurance risk through proportional, non-proportional and facultative reinsurance treaties. With proportional reinsurance, the reinsurer shares a pro rata portion of the company's losses and premium, whereas with non-proportional reinsurance, the reinsurer assumes payment of the company's loss above a specified retention, subject to a limit. Facultative reinsurance is the reinsurance of individual risks as agreed by the company and the reinsurer. The company follows a policy of underwriting and reinsuring contracts of insurance and reinsurance which, depending on the type of contract, generally limits the liability of an operating company on any policy to a maximum amount on any one loss. Reinsurance decisions are made by operating companies to reduce and spread the risk of loss on insurance and reinsurance written, to limit multiple claims arising from a single occurrence and to protect capital resources. The amount of reinsurance purchased can vary among operating companies depending on the lines of business written, their respective capital resources and prevailing or expected market conditions. Reinsurance is generally placed on an excess of loss basis and written in several layers, the purpose of which is to limit the amount of one risk to a maximum amount acceptable to the company and to protect from losses on multiple risks arising from a single occurrence. This type of reinsurance includes what is generally referred to as catastrophe reinsurance. The company's reinsurance does not, however, relieve the company of its primary obligation to the policyholder.

The majority of reinsurance contracts purchased by the company provide coverage for a one year term and are negotiated annually. The ability of the company to obtain reinsurance on terms and prices consistent with historical results reflects, among other factors, recent loss experience of the company and of the industry in general. The effects of low interest rates, increased catastrophes, uncertainty surrounding the impact of climate change on the nature of catastrophic losses and rising claims costs are elevating reinsurance pricing, which has affected the company's reinsurance cost for loss affected business and retroactive reinsurance. Notwithstanding the significant catastrophe losses suffered by the industry since 2017, capital adequacy within the reinsurance market remains strong with new capital entering the market and alternative forms of reinsurance capacity continuing to be available. The company remains opportunistic in its use of reinsurance including alternative forms of reinsurance, balancing capital requirements and the cost of reinsurance.

#### Life Insurance
Life insurance risk in the company arises principally through Eurolife's exposure to actual experience in the areas of mortality, morbidity, longevity, policyholder behaviour and expenses which is adverse to expectations. Exposure to underwriting risk is managed

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by uniform underwriting procedures that have been established at Eurolife to determine the insurability of applicants and to manage aggregate exposures for adverse deviations in assumptions. These underwriting requirements are regularly reviewed by Eurolife's actuaries.

#### Credit Risk
Credit risk is the risk of loss resulting from the failure of a counterparty to honour its financial obligations to the company. Credit risk arises predominantly on cash and short term investments, investments in debt instruments, insurance contract receivables, recoverable from reinsurers and receivables from counterparties to derivative contracts (primarily foreign currency forward contracts and total return swaps). There were no significant changes to the company's exposure to credit risk (except as set out in the discussion which follows) or the framework used to monitor, evaluate and manage credit risk at December 31, 2022 compared to December 31, 2021.

The company's gross credit risk exposure (without consideration of amounts held by the company as collateral) was comprised as follows:

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| | | |
|:---|:---|:---|
|  | **December 31,**  | **December 31,**  |
|  | **2022** | **2021** |
| Cash and short term investments | 10386.0 | 22795.5 |
| Investments in debt instruments: |  |  |
| &nbsp;&nbsp;U.S. sovereign government<sup>(1)</sup> | 14378.8 | 3957.9 |
| &nbsp;&nbsp;Other sovereign government rated AA/Aa or higher<sup>(1)(2)</sup> | 2413.5 | 1074.7 |
| &nbsp;&nbsp;All other sovereign government<sup>(3)</sup> | 2210.2 | 2194.9 |
| &nbsp;&nbsp;Canadian provincials | 284.1 | 45.0 |
| &nbsp;&nbsp;U.S. states and municipalities | 262.7 | 387.2 |
| &nbsp;&nbsp;Corporate and other<sup>(4)(5)</sup> | 9451.9 | 6873.9 |
| Receivable from counterparties to derivative contracts | 256.1 | 158.9 |
| Insurance contract receivables | 7907.5 | 6883.2 |
| Recoverable from reinsurers | 13115.8 | 12090.5 |
| Other assets<sup>(6)</sup> | 2024.6 | 1881.3 |
| Total gross credit risk exposure | 62691.2 | 58343.0 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Represented together 30.3% of the company's total investment portfolio at December 31, 2022 (December 31, 2021 - 9.5%) and considered by the company to have nominal credit risk.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Comprised primarily of bonds issued by the governments of Canada, the United Kingdom and Singapore with fair values at December 31, 2022 of $1,923.5 , $180.6 and $91.3 respectively (December 31, 2021 - $614.6 , $7.7 and $95.1).* 

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *Comprised primarily of bonds issued by the governments of Brazil, Greece, Spain and Poland with fair values at December 31, 2022 of $744.2 , $690.1 , $216.2 and $126.9 respectively (December 31, 2021 - $415.4 , $844.7 , $297.5 , and $78.5).* 

&nbsp;&nbsp;&nbsp;&nbsp;*(4)* *Represents 17.0% of the company's total investment portfolio at December 31, 2022 compared to 13.0% at December 31, 2021, with the increase principally related to net purchases of short to mid-dated high quality corporate bonds of $2,331.9 and net purchases of unrated first mortgage loans of $870.2 .* 

&nbsp;&nbsp;&nbsp;&nbsp;*(5)* *Includes the company's investments in first mortgage loans at December 31, 2022 of $2,500.7 (December 31, 2021 - $1,659.4) secured by real estate predominantly in the U.S., Europe and Canada as described in note 5.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(6)* *Excludes assets associated with unit-linked insurance products of $676.5 at December 31, 2022 (December 31, 2021 – $637.1) for which credit risk is not borne by the company, and income taxes refundable of $67.1 at December 31, 2022 (December 31, 2021 - $58.3) that are considered to have nominal credit risk.* 

*Cash and short term investments*

The company's cash and short term investments (including those of the holding company) are primarily held at major financial institutions in the jurisdictions in which the company operates. At December 31, 2022, 69.4% of these balances were held in Canadian and U.S. financial institutions, 24.8% in European financial institutions and 5.8% in other foreign financial institutions (December 31, 2021 - 82.7%, 14.9% and 2.4% respectively). The company monitors risks associated with cash and short term investments by regularly reviewing the financial strength and creditworthiness of these financial institutions and more frequently during periods of economic volatility. From these reviews, the company may transfer balances from financial institutions where it perceives heightened credit risk to others considered to be more stable.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

*Investments in debt instruments*

The company's risk management strategy for debt instruments is to invest primarily in those of high credit quality issuers and to limit the amount of credit exposure to any one corporate issuer. Management considers high quality debt instruments to be those with a S&P or Moody's issuer credit rating of BBB/Baa or higher. While the company reviews third party credit ratings, it also performs its own analysis and does not delegate the credit decision to rating agencies. The company endeavours to limit credit exposure by monitoring fixed income portfolio limits on individual corporate issuers and on credit quality and may, from time to time, initiate positions in certain types of derivatives to further mitigate credit risk exposure.

The composition of the company's investments in debt instruments classified according to the higher of each security's respective S&P and Moody's issuer credit rating is presented in the table that follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **Amortized** | **Fair** |  | **Amortized** | **Fair** |  |
| **Issuer Credit Rating** | **cost** | **value** | **%** | **cost** | **value** | **%** |
| AAA/Aaa | 17119.4 | 16721.6 | 57.7 | 5248.2 | 5237.3 | 36.1 |
| AA/Aa | 858.3 | 847.6 | 2.9 | 435.0 | 437.7 | 3.0 |
| A/A | 2409.6 | 2330.6 | 8.0 | 1838.4 | 1865.5 | 12.8 |
| BBB/Baa | 3410.3 | 3348.7 | 11.5 | 1749.9 | 1914.6 | 13.2 |
| BB/Ba | 2114.9 | 1917.2 | 6.6 | 1840.9 | 1808.3 | 12.4 |
| B/B | 48.2 | 49.6 | 0.2 | 115.0 | 114.8 | 0.8 |
| Lower than B/B | 79.7 | 80.0 | 0.3 | 58.4 | 62.9 | 0.4 |
| Unrated<sup>(1)(2)</sup> | 3928.2 | 3705.9 | 12.8 | 2935.3 | 3092.5 | 21.3 |
| Total | 29968.6 | 29001.2 | 100.0 | 14221.1 | 14533.6 | 100.0 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Comprised primarily of the fair value of the company's investments in Blackberry Limited of $285.0 (December 31, 2021 - $535.1), JAB Pet Holdings Ltd. of $239.1 (December 31, 2021 - nil) and Mosaic Capital of $81.7 (December 31, 2021 – $129.3).* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Includes the company's investments in first mortgage loans at December 31, 2022 of $2,500.7 (December 31, 2021 - $1,659.4) secured by real estate predominantly in the U.S., Europe and Canada, with weighted average loan-to-value ratio of approximately 60% , reducing the company's credit risk exposure related to these investments.* 

At December 31, 2022, 80.1% (December 31, 2021 – 65.1%) of the fixed income portfolio's carrying value was rated investment grade or better, with 60.6% (December 31, 2021 – 39.1%) rated AA or better (primarily consisting of government bonds). The increase in the fair value of bonds rated AAA/Aaa primarily reflected net purchases of U.S. treasury and Canadian government bonds with 1 to 5 year terms of $10,721.3 and $1,422.1. The increase in the fair value of bonds rated A/A and BBB/Baa was primarily due to net purchases of high quality corporate bonds of $515.1 and $1,852.4. The increase in the fair value of unrated bonds was primarily due to net purchases of first mortgage loans of $870.2 and debentures received on the sale of Crum & Forster's Pet Insurance Group and Pethealth as described in note 23.

At December 31, 2022 holdings of bonds in the ten issuers to which the company had the greatest exposure (excluding U.S., Canadian, U.K. and German sovereign government bonds) totaled $3,599.2 (December 31, 2021 - $3,444.5), which represented approximately 6.5% (December 31, 2021 – 6.5%) of the total investment portfolio. Exposure to the largest single issuer of corporate bonds at December 31, 2022 was the company's investment in BP Capital Markets America Inc. of $427.7 (December 31, 2021 – Blackberry Limited of $535.1), which represented approximately 0.8% (December 31, 2021 – 1.0%) of the total investment portfolio.

*Counterparties to derivative contracts*

Counterparty risk arises from the company's derivative contracts primarily in three ways: first, a counterparty may be unable to honour its obligation under a derivative contract and have insufficient collateral pledged in favour of the company to support that obligation; second, collateral deposited by the company to a counterparty as a prerequisite for entering into certain derivative contracts (also known as initial margin) may be at risk should the counterparty face financial difficulty; and third, excess collateral pledged in favour of a

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

counterparty may be at risk should the counterparty face financial difficulty (counterparties may hold excess collateral as a result of the timing of the settlement of the amount of collateral required to be pledged based on the fair value of a derivative contract).

The company endeavours to limit counterparty risk through diligent selection of counterparties to its derivative contracts and through the terms of negotiated agreements. Pursuant to these agreements, counterparties are contractually required to deposit eligible collateral in collateral accounts (subject to certain minimum thresholds) for the benefit of the company based on the daily fair value of the derivative contracts. The company's exposure to risk associated with providing initial margin is mitigated where possible through the use of segregated third party custodian accounts that only permit counterparties to take control of the collateral in the event of default by the company.

Agreements negotiated with counterparties provide for a single net settlement of all financial instruments covered by the agreement in the event of default by the counterparty, thereby permitting obligations owed by the company to a counterparty to be offset against amounts receivable by the company from that counterparty (the "net settlement arrangements"). The following table sets out the company's net derivative counterparty risk assuming all derivative counterparties are simultaneously in default:

---

| | | |
|:---|:---|:---|
|  | **December 31,**  | **December 31,**  |
|  | **2022** | **2021** |
| Total derivative assets<sup>(1)</sup> | 256.1 | 158.9 |
| Obligations that may be offset under net settlement arrangements | (33.0) | (9.6) |
| Fair value of collateral deposited for the benefit of the company<sup>(2)</sup> | (216.0) | (116.5) |
| Excess collateral pledged by the company in favour of counterparties | 4.6 | 4.8 |
| Net derivative counterparty exposure after net settlement and collateral arrangements | 11.7 | 37.6 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Excludes equity warrants, equity call options, AVLNs entered with RiverStone Barbados and other derivatives which are not subject to counterparty risk.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Excludes excess collateral pledged by counterparties of $68.4 at December 31, 2022 (December 31, 2021* - *$22.5).* 

Collateral deposited for the benefit of the company at December 31, 2022 consisted of cash of $9.5 and government securities of $274.9 (December 31, 2021 - $14.3 and $125.7). The company had not exercised its right to sell or repledge collateral at December 31, 2022.

*Recoverable from reinsurers*

Credit risk on the company's recoverable from reinsurers balance existed at December 31, 2022 to the extent that any reinsurer may be unable or unwilling to reimburse the company under the terms of the relevant reinsurance arrangements. The company is also exposed to the credit risk assumed in fronting arrangements and to potential reinsurance capacity constraints. The company regularly assesses the creditworthiness of reinsurers with whom it transacts business; internal guidelines generally require reinsurers to have strong A.M. Best ratings and to maintain capital and surplus in excess of $500.0. Where contractually provided for, the company has collateral for outstanding balances in the form of cash, letters of credit, guarantees or assets held in trust accounts. This collateral may be drawn on when amounts remain unpaid beyond contractually specified time periods for each individual reinsurer.

The company's reinsurance analysts conduct ongoing detailed assessments of current and potential reinsurers, perform annual reviews of impaired reinsurers, and provide recommendations for uncollectible reinsurance provisions for the group. The reinsurance analysts also collect and maintain individual operating company and group reinsurance exposures across the company. The company's single largest recoverable from a reinsurer (Munich Reinsurance Company) represented 8.2% of shareholders' equity attributable to shareholders of Fairfax at December 31, 2022 (December 31, 2021 - 7.5%) and is rated A+ by A.M. Best.

The company's gross exposure to credit risk from its reinsurers increased at December 31, 2022 compared to December 31, 2021, primarily reflecting an increase in reinsurers' share of unearned premiums and paid and unpaid losses due to increased business volumes. Changes that occurred in the provision for uncollectible reinsurance during the year are disclosed in note 9.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

The following table presents the gross recoverable from reinsurers classified according to the financial strength ratings of the reinsurers. Pools and associations are generally government or similar insurance funds with limited credit risk.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  |  | **Outstanding** |  |  | **Outstanding** |  |
|  | **Gross** | **balances for** | **Net unsecured** | **Gross** | **balances for** | **Net unsecured** |
|  | **recoverable** | **which security** | **recoverable** | **recoverable** | **which security** | **recoverable** |
| **A.M. Best Rating (or S&P equivalent)** | **from reinsurers** | **is held** | **from reinsurers** | **from reinsurers** | **is held** | **from reinsurers** |
| A++ | 600.3 | 24.2 | 576.1 | 568.2 | 27.2 | 541.0 |
| A+ | 6631.3 | 444.1 | 6187.2 | 5905.9 | 494.4 | 5411.5 |
| A | 3750.9 | 205.9 | 3545.0 | 3899.8 | 227.3 | 3672.5 |
| A- | 478.4 | 53.6 | 424.8 | 371.9 | 43.9 | 328.0 |
| B++ | 55.3 | 4.3 | 51.0 | 50.8 | 4.6 | 46.2 |
| B+ | 0.8 |  | 0.8 | 0.5 | 0.3 | 0.2 |
| B or lower | 10.6 |  | 10.6 | 20.2 | 0.1 | 20.1 |
| Not rated | 998.8 | 506.5 | 492.3 | 1004.0 | 576.7 | 427.3 |
| Pools and associations | 761.3 | 6.6 | 754.7 | 447.9 | 7.1 | 440.8 |
|  | 13287.7 | 1245.2 | 12042.5 | 12269.2 | 1381.6 | 10887.6 |
| Provision for uncollectible reinsurance | (171.9) |  | (171.9) | (178.7) |  | (178.7) |
| Recoverable from reinsurers | 13115.8 |  | 11870.6 | 12090.5 |  | 10708.9 |

---

#### Liquidity Risk
Liquidity risk is the potential for loss if the company is unable to meet financial commitments in a timely manner at reasonable cost as they fall due. The company's cash flows in the near term may be impacted by the need to provide capital to support growth in the insurance and reinsurance companies in a favourable pricing environment and to support fluctuations in their investment portfolios due to the economic uncertainty caused by increased inflationary pressures that have resulted in central banks across the world simultaneously raising interest rates to address inflation. The company's policy is to ensure that sufficient liquid assets are available to meet financial commitments, including liabilities to policyholders and debt holders, dividends on preferred shares and investment commitments. Cash flow analysis is performed regularly at both the holding company and operating companies to ensure that future cash needs are met or exceeded by cash flows generated by operating companies.

*Holding Company*

The holding company's known significant commitments for 2023 consist of payment of a common share dividend of $245.2 ($10.00 per common share, paid in January 2023), interest and corporate overhead expenses, preferred share dividends, income tax payments, potential payments on amounts borrowed from the revolving credit facility and other investment related activities. Additionally, pursuant to the sale of RiverStone Barbados as described in note 23, the company has guaranteed the remaining value of $486.8 at December 31, 2022 of certain securities that remain held by CVC and certain affiliates thereof until such time that the securities are purchased by or sold at the direction of Hamblin Watsa, prior to the end of 2023. Should the company direct that the securities be sold, any difference between their fair value and guaranteed value will be settled in cash (a derivative asset of $30.7 at December 31, 2022) as described in note 7.

The company believes that holding company cash and investments, net of holding company derivative obligations, at December 31, 2022 of $1,326.4 provides adequate liquidity to meet the holding company's known commitments in 2023. The holding company expects to continue to receive investment management and administration fees and dividends from its insurance and reinsurance subsidiaries, and investment income on its holdings of cash and investments. To further augment its liquidity, the holding company can borrow from its $2.0 billion unsecured revolving credit facility, which was undrawn at December 31, 2022.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

The holding company may experience cash inflows or outflows on occasion related to its derivative contracts, including collateral requirements. During 2022 the holding company received net cash of $269.1 (2021 - $262.7) in connection with long equity total return swaps contracts, principally related to the company's investment in long equity total return swaps on Fairfax subordinate voting shares of $154.8 (2021 - $130.9) (excluding the impact of collateral requirements).

On October 31, 2022, excluding the $250.0 in debentures, the holding company received net cash proceeds of $940.0 from the sale of the Crum & Forster Pet Insurance Group and Pethealth, including all of their worldwide operations, as described in note 23.

On August 16, 2022 the company completed an offering of $750.0 principal amount of 5.625% unsecured senior notes due August 16, 2032 for net proceeds of $743.4 after discount, commissions and expenses. On September 27, 2022 the company increased its ownership interest in Allied World to 82.9% from 70.9% for total consideration of $733.5, inclusive of the fair value of a call option exercised and an accrued dividend paid, and recorded a loss in retained earnings of $228.1 in net changes in capitalization in the consolidated statement of changes in equity.

*Insurance and reinsurance subsidiaries*

The liquidity requirements of the insurance and reinsurance subsidiaries principally relate to liabilities associated with underwriting, operating expenses, the payment of dividends to the holding company, contributions to their subsidiaries, payment of principal and interest on their outstanding debt obligations, income tax payments, investment commitments and certain derivative obligations (described below). Liabilities associated with underwriting include the payment of claims and direct commissions. Historically, the insurance and reinsurance subsidiaries have used cash inflows from operating activities (primarily the collection of premiums and reinsurance commissions) and investment activities (primarily repayments of principal on debt investments, sales of investment securities and investment income) to fund their liquidity requirements. The insurance and reinsurance subsidiaries may also receive cash inflows from financing activities (primarily distributions received from their subsidiaries).

The company's insurance and reinsurance subsidiaries, and the holding company at a consolidated level, focus on the stress that could be placed on liquidity requirements as a result of severe disruption or volatility in the capital markets or extreme catastrophe activity, or a combination of both. The insurance and reinsurance subsidiaries maintain investment strategies intended to provide adequate funds to pay claims or withstand disruption or volatility in the capital markets without forced sales of investments. The insurance and reinsurance subsidiaries hold highly liquid, high quality short-term investment securities and other liquid investment grade fixed maturity securities to fund anticipated claim payments, operating expenses and commitments related to investments. At December 31, 2022 portfolio investments, net of derivative obligations, was $54.2 billion (December 31, 2021 - $51.6 billion). Portfolio investments include investments that may lack liquidity or are inactively traded, including corporate debentures, first mortgage loans, preferred stocks, common stocks, limited partnership interests, other invested assets and investments in associates. At December 31, 2022 these asset classes represented approximately 14.1% (December 31, 2021 – 12.7%) of the carrying value of the insurance and reinsurance subsidiaries' portfolio investments. Fairfax India held investments that may lack liquidity or are inactively traded with a carrying value of $1,117.5 at December 31, 2022 (December 31, 2021 - $1,129.6).

The insurance and reinsurance subsidiaries may experience cash inflows or outflows on occasion related to their derivative contracts, including collateral requirements. During 2022 the insurance and reinsurance subsidiaries paid net cash of $30.9 in connection with long equity total return swaps, excluding the impact of collateral requirements (2021 – received net cash of $176.9).

*Non-insurance companies*

The non-insurance companies have principal repayments coming due in 2023 of $371.8, primarily related to AGT's credit facilities. Borrowings of the non-insurance companies are non-recourse to the holding company and are generally expected to be settled through a combination of refinancing and operating cash flows.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

*Maturity profile of the company's consolidated financial and insurance liabilities*

The following tables set out the maturity profile of the company's financial and insurance liabilities based on the expected undiscounted cash flows from the balance sheet date to the contractual maturity date or the settlement date:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
|  | **3 months** | **3 months** |  |  | **More than** |  |
|  | **or less** | **to 1 year** | **1 - 3 years** | **3 - 5 years** | **5 years** | **Total** |
| Accounts payable and accrued liabilities<sup>(1)</sup> | 1521.1 | 1158.4 | 1090.7 | 395.9 | 564.7 | 4730.8 |
| Insurance contract payables<sup>(2)</sup> | 939.9 | 2600.7 | 242.2 | 39.5 | 661.2 | 4483.5 |
| Provision for losses and loss adjustment expenses | 3428.6 | 8506.6 | 10944.1 | 5965.6 | 9474.3 | 38319.2 |
| Provision for life policy benefits | 45.5 | 161.0 | 455.6 | 631.8 | 1235.8 | 2529.7 |
| Borrowings - holding company and insurance and reinsurance companies: |  |  |  |  |  |  |
| &nbsp;&nbsp;Principal | 0.1 | 0.2 | 1051.4 | 904.2 | 4704.4 | 6660.3 |
| &nbsp;&nbsp;Interest | 84.3 | 209.2 | 567.0 | 462.2 | 598.9 | 1921.6 |
| Borrowings - non-insurance companies: |  |  |  |  |  |  |
| &nbsp;&nbsp;Principal | 254.5 | 117.3 | 781.9 | 61.3 | 798.2 | 2013.2 |
| &nbsp;&nbsp;Interest | 26.9 | 69.0 | 148.6 | 83.6 | 83.1 | 411.2 |
|  | 6300.9 | 12822.4 | 15281.5 | 8544.1 | 18120.6 | 61069.5 |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **3 months** | **3 months** |  |  | **More than** |  |
|  | **or less** | **to 1 year** | **1 - 3 years** | **3 - 5 years** | **5 years** | **Total** |
| Accounts payable and accrued liabilities<sup>(1)</sup> | 1586.6 | 821.6 | 1131.3 | 399.1 | 519.7 | 4458.3 |
| Insurance contract payables<sup>(2)</sup> | 1026.7 | 1970.0 | 346.4 | 16.1 | 611.6 | 3970.8 |
| Provision for losses and loss adjustment expenses | 2925.1 | 7033.9 | 10662.4 | 5391.2 | 8410.2 | 34422.8 |
| Provision for life policy benefits | 72.0 | 162.7 | 585.0 | 575.7 | 1280.4 | 2675.8 |
| Borrowings - holding company and insurance and reinsurance companies: |  |  |  |  |  |  |
| &nbsp;&nbsp;Principal | 0.1 | 0.2 | 283.1 | 1270.8 | 4614.8 | 6169.0 |
| &nbsp;&nbsp;Interest | 66.0 | 193.8 | 520.0 | 445.6 | 584.9 | 1810.3 |
| Borrowings - non-insurance companies: |  |  |  |  |  |  |
| &nbsp;&nbsp;Principal | 512.2 | 72.2 | 270.8 | 41.3 | 736.8 | 1633.3 |
| &nbsp;&nbsp;Interest | 38.3 | 35.9 | 99.8 | 78.9 | 114.9 | 367.8 |
|  | 6227.0 | 10290.3 | 13898.8 | 8218.7 | 16873.3 | 55508.1 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Excludes pension and post retirement liabilities (note 21), deferred gift card, hospitality and other revenue, accrued interest expense and other. The maturity profile of lease liabilities included in the table above is presented in note 22.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Excludes ceded deferred premium acquisition costs.* 

The timing of claims payments is not fixed and represents the company's best estimate. The payment obligations which are due beyond one year in insurance contract payables primarily relate to certain payables to brokers and reinsurers not expected to be settled in the short term.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

The following table provides a maturity profile of the company's derivative obligations based on the expected undiscounted cash flows from the balance sheet date to the contractual maturity date or the settlement date:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **3 months** | **3 months** | **More than** |  | **3 months** | **3 months** | **More than** |  |
|  | **or less** | **to 1 year** | **1 year** | **Total** | **or less** | **to 1 year** | **1 year** | **Total** |
| Equity total return swaps - long positions | 19.1 | 0.3 |  | 19.4 | 1.8  | 0.1  |  | 1.9  |
| Foreign currency forward and swap contracts | 51.1 | 5.0 | 50.7 | 106.8 | 26.4  | 5.0  | 46.0  | 77.4  |
| Other derivative contracts | 25.6 | 38.5 | 0.7 | 64.8 | 46.5  | 26.7  | 0.4  | 73.6  |
|  | 95.8 | 43.8 | 51.4 | 191.0 | 74.7  | 31.8  | 46.4  | 152.9  |

---

#### Market Risk
Market risk, comprised of foreign currency risk, interest rate risk and other price risk, is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The company is exposed to market risk principally in its investing activities, and also in its underwriting activities where those activities expose the company to foreign currency risk. The company's investment portfolios are managed with a long term, value-oriented investment philosophy emphasizing downside protection, with policies to limit and monitor individual issuer exposures and aggregate equity exposure at the subsidiary and consolidated levels. The following is a discussion of the company's primary market risk exposures and how those exposures are managed.

*Interest rate risk*

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Typically, as interest rates rise, the fair value of fixed income investments decline and, conversely, as interest rates decline, the fair value of fixed income investments rise. In each case, the longer the maturity of the financial instrument, the greater the consequence of a change in interest rates. The company's interest rate risk management strategy is to position its fixed income portfolio based on its view of future interest rates and the yield curve, balanced with liquidity requirements. The company may reposition the portfolio in response to changes in the interest rate environment. At December 31, 2022 the company's investment portfolio included fixed income securities with an aggregate fair value of approximately $29.0 billion (December 31, 2021 - $14.5 billion) that is subject to interest rate risk.

The company's exposure to interest rate risk increased during 2022 primarily due to net investments of existing cash and the proceeds from sales and maturities of U.S. treasury and Canadian provincial short term investments into U.S. treasury and Canadian government bonds with 1 to 5 year terms and short-dated high quality corporate bonds of $10,721.3, $1,422.1 and $2,202.6, respectively. To reduce its exposure to interest rate risk (primarily exposure to certain long-dated U.S. corporate bonds and U.S. state and municipal bonds held in its fixed income portfolio), the company held forward contracts to sell long-dated U.S. treasury bonds with a notional amount at December 31, 2022 of $183.7 (December 31, 2021 - $1,691.3) and maintained a relatively low duration on its bond portfolio. See note 5 for details of the company's fixed income maturity profile. The decrease in U.S.treasury bond forward contracts held primarily reflected the closing of certain contracts as interest rates increased during the second half of 2022 and from the corresponding decrease in the company's exposure to certain U.S. corporate bonds from sales completed in late 2021. There were no other significant changes to the company's framework used to monitor, evaluate and manage interest rate risk at December 31, 2022 compared to December 31, 2021.

Movements in the term structure of interest rates affect the level and timing of recognition in earnings of gains and losses on fixed income securities held. Generally, the company's investment income may be reduced during sustained periods of lower interest rates as higher yielding fixed income securities are called, mature, or sold, and the proceeds reinvested at lower interest rates. During periods of rising interest rates, the market value of the company's existing fixed income securities will generally decrease and gains on fixed income securities will likely be reduced. Losses are likely to be incurred following significant increases in interest rates. General economic conditions, political conditions and many other factors can also adversely affect the bond markets and, consequently, the value

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

of fixed income securities held. These risks are monitored by the company's senior portfolio managers and Chief Executive Officer, and taken into consideration when managing the consolidated bond portfolio.

The table below displays the potential impact of changes in interest rates on the company's fixed income portfolio based on parallel 200 basis points shifts up and down, in 100 basis points increments, which the company believes to be reasonably possible in the current economic environment given the continued uncertainty caused by increased inflationary pressures and interest rates. This analysis was performed on each individual security to determine the hypothetical effect on net earnings.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **Fair value of** | **Hypothetical** | **Hypothetical** | **Fair value of** | **Hypothetical** | **Hypothetical** |
|  | **fixed income** | **change in net** | **% change** | **fixed income** | **change in net** | **% change** |
|  | **portfolio** | **earnings**<sup>(1)</sup> | **in fair value**<sup>(1)</sup> | **portfolio** | **earnings**<sup>(1)</sup> | **in fair value**<sup>(1)</sup> |
| **Change in interest rates** |  |  |  |  |  |  |
| 200 basis point increase | 27944.0 | (852.9) | (3.7) | 13984.0  | (418.4) | (3.8) |
| 100 basis point increase | 28461.5 | (435.4) | (1.9) | 14239.6  | (224.3) | (2.0) |
| No change | 29001.2 |  |  | 14533.6  |  |  |
| 100 basis point decrease | 29616.2 | 496.4 | 2.1 | 14900.9  | 280.6  | 2.5  |
| 200 basis point decrease | 30289.0 | 1039.7 | 4.4 | 15327.9  | 607.5  | 5.5  |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Includes the impact of forward contracts to sell long dated U.S. treasury bonds with a notional amount at December 31, 2022 of $183.7 (December 31, 2021 - $1,691.3).* 

Certain shortcomings are inherent in the method of analysis presented above. Computations of the prospective effects of hypothetical interest rate changes are based on numerous assumptions, including the maintenance of the level and composition of fixed income securities at the indicated date, and should not be relied on as indicative of future results. Actual values may differ from the projections presented should market conditions vary from assumptions used in the calculation of the fair value of individual securities; such variations may include non-parallel shifts in the term structure of interest rates and changes in individual issuer credit spreads.

*Market price fluctuations*

Market price fluctuation is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or foreign currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or other factors affecting all similar financial instruments in the market. The company's risk management objective for market price fluctuations places primary emphasis on the preservation of invested capital. The company holds significant investments in equity and equity-related instruments. As discussed in the preceding sections, increased inflationary pressures and interest rates have increased market uncertainty and may adversely impact the fair values or future cash flows of the company's equity and equity-related holdings. The company's exposure to equity price risk through its equity and equity-related holdings increased at December 31, 2022 compared to December 31, 2021 as shown in the table below.

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

The company holds significant investments in equity and equity-related instruments. The market value and the liquidity of these investments are volatile and may vary dramatically either up or down in short periods, and their ultimate value will therefore only be known over the long term or on disposition. The following table summarizes the effect of the company's equity and equity-related holdings on the company's financial position as at December 31, 2022 and 2021 and results of operations for the years then ended. In that table the company considers its non-insurance investments in associates (note 6) with a fair value at December 31, 2022 of $8,183.3 (December 31, 2021 – $7,192.1) as a component of its equity and equity-related holdings when assessing its equity exposures.

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **Year ended** <br>**December 31,** <br>**2022** | **Year ended** <br>**December 31,** <br>**2021** |
|  | **Exposure/** |  | **Exposure/** |  | **Pre-tax** | **Pre-tax** |
|  | **Notional** | **Carrying** | **Notional** | **Carrying** | **earnings** | **earnings** |
|  | **amount** | **value** | **amount** | **value** | **(loss)** | **(loss)** |
| Long equity exposures: |  |  |  |  |  |  |
| &nbsp;&nbsp;Common stocks | 5234.4 | 5234.4 | 5845.5  | 5845.5  | (242.7) | 1333.4  |
| &nbsp;&nbsp;Preferred stocks – convertible<sup>(1)</sup> | 44.2 | 44.2 | 54.5  | 54.5  | (4.4) | 2.8  |
| &nbsp;&nbsp;Bonds – convertible | 414.5 | 414.5 | 583.4  | 583.4  | (237.0) | 101.3  |
| &nbsp;&nbsp;Investments in associates<sup>(1)(2)(3)</sup> | 8183.3 | 6786.6 | 7192.1  | 5496.6  | 45.1 | 52.7  |
| &nbsp;&nbsp;Sale and deconsolidation of non-insurance subsidiaries<sup>(4)</sup> |  |  |  |  | 4.4 | 190.3  |
| &nbsp;&nbsp;Equity derivatives<sup>(5)</sup> | 2076.0 | 269.4 | 2590.2  | 455.3  | 190.8 | 631.6  |
| Long equity exposures and financial effects | 15952.4 | 12749.1 | 16265.7  | 12435.3  | (243.8) | 2312.1  |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Excludes the company's insurance and reinsurance investments in associates and joint ventures and certain other equity and equity-related holdings which are considered long term strategic holdings. See note 6.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Pre-tax earnings (loss) excludes share of profit (loss) of associates, and includes gain (loss) on sale of non-insurance associates and joint ventures.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *During 2021 the company sold a portion of its investment in IIFL Finance for cash proceeds of $113.7 (8.6 billion Indian rupees) and recorded a net realized gain of $42.0 in the consolidated statement of earnings as described in note 6.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(4)* *Principally comprised of the sale of Toys "R" Us Canada, the privatization of Mosaic Capital and Fairfax India's sale of Privi during 2021.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(5)* *Includes net gains on investments of $255.4 (2021 - $222.7) recognized on the company's investment in long equity total return swaps on Fairfax subordinate voting shares.* 

The table that follows illustrates the potential impact on net earnings of changes in the fair value of the company's equity and equity-related holdings as a result of changes in global equity markets at December 31, 2022 and 2021. The analysis assumes variations of 10% and 20% (December 31, 2021 - 10% and 20%) which the company believes to be reasonably possible in the current economic environment based on analysis of the return on various equity indexes and management's knowledge of global equity markets.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |
| **Change in global equity markets** | **20% increase** | **10% increase** | **No change** | **10% decrease** | **20% decrease** |
| Fair value of equity and equity-related holdings | 9297.5 | 8531.9 | 7769.1 | 7010.3 | 6258.5 |
| Hypothetical $ change in net earnings | 1301.9 | 649.8 |  | (646.8) | (1287.8) |
| Hypothetical % change in fair value | 19.7 | 9.8 |  | (9.8) | (19.4) |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
| **Change in global equity markets** | **20% increase** | **10% increase** | **No change** | **10% decrease** | **20% decrease** |
| Fair value of equity and equity-related holdings | 10861.1 | 9966.1 | 9073.6 | 8184.4 | 7297.3 |
| Hypothetical $ change in net earnings | 1549.7 | 773.5 |  | (770.6) | (1538.8) |
| Hypothetical % change in fair value | 19.7 | 9.8 |  | (9.8) | (19.6) |

---

The change in fair value of non-insurance investments in associates and joint ventures has been excluded from each of the scenarios presented above as any change in the fair value of an investment in associate is generally recognized in the company's consolidated financial reporting only upon disposition of the associate. Changes in fair value of equity and equity-related holdings related to insurance and reinsurance investments in associates and joint ventures and certain other equity and equity-related holdings have also been excluded from each of the scenarios presented above as those investments are considered long term strategic holdings.

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

At December 31, 2022 the company's ten largest holdings within common stocks, long equity total return swaps and non-insurance investments in associates and joint ventures totaled $6,958.2 or 12.5% of the total investment portfolio (December 31, 2021 - $6,048.7 or 11.4%), of which the largest single holding was the company's investment in Eurobank of $1,507.6 (note 6) or 2.7% of the total investment portfolio (December 31, 2021 - $1,298.4 or 2.4%).

*Foreign currency risk*

Foreign currency risk is the risk that the fair value or cash flows of a financial instrument or another asset or liability will fluctuate because of changes in foreign currency exchange rates and produce an adverse effect on earnings or equity when measured in a company's functional currency. The company is exposed to foreign currency risk through transactions conducted in currencies other than the U.S. dollar, including net premiums earned and losses on claims, net that are denominated in foreign currencies. Investments in associates and net investments in subsidiaries with functional currencies other than the U.S. dollar also result in exposure to foreign currency risk. There were no significant changes to the company's exposure to foreign currency risk or the framework used to monitor, evaluate and manage foreign currency risk at December 31, 2022 compared to December 31, 2021.

The company's foreign currency risk management objective is to mitigate the impact of foreign currency exchange rate fluctuations on total equity, notwithstanding the company's exposure to the Indian rupee from its investment in Fairfax India. The company monitors its invested assets for exposure to foreign currency risk and limits such exposure as deemed necessary. At the consolidated level the company accumulates and matches all significant asset and liability foreign currency exposures to identify net unmatched positions, whether long or short. To mitigate exposure to an unmatched position, the company may: enter into long and short foreign currency forward contracts (primarily denominated in the euro, the British pound sterling and the Canadian dollar) to manage exposure on foreign currency denominated transactions; identify or incur foreign currency denominated liabilities to manage exposure to investments in associates and net investments in subsidiaries with functional currencies other than the U.S. dollar; and, purchase investments denominated in the same currency as foreign currency exposed liabilities. Despite such efforts, the company may experience gains or losses resulting from foreign currency fluctuations, which may favourably or adversely affect operating results.

At December 31, 2022 the company has designated the carrying value of Cdn$2,800.0 principal amount of its Canadian dollar denominated unsecured senior notes with a fair value of $1,926.8 (December 31, 2021 - principal amount of Cdn$2,800.0 with a fair value of $2,364.6) as a hedge of a portion of its net investment in Canadian subsidiaries. During 2022 the company recognized pre-tax gains of $149.5 (2021 – pre-tax losses of $16.7) related to exchange rate movements on the Canadian dollar denominated unsecured senior notes in gains (losses) on hedge of net investment in Canadian subsidiaries in the consolidated statement of comprehensive income.

At December 31, 2022 the company has designated the carrying value of €750.0 principal amount of its euro denominated unsecured senior notes with a fair value of $698.3 (December 31, 2021 - principal amount of €750.0 with a fair value of $926.3) as a hedge of its net investment in European operations with a euro functional currency. During 2022 the company recognized pre-tax gains of $51.8 (2021 - $63.9) related to exchange rate movements on the euro denominated unsecured senior notes in gains on hedge of net investment in European operations in the consolidated statement of comprehensive income.

The pre-tax foreign exchange effects included in net gains (losses) on investments in the company's consolidated statements of earnings for the years ended December 31 were as follows:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Net gains (losses) on investments: |  |  |
| &nbsp;&nbsp;Investing activities | (366.5) | (122.3) |
| &nbsp;&nbsp;Underwriting activities | 8.6 | 41.2  |
| &nbsp;&nbsp;Foreign currency contracts | 53.6 | (12.0) |
| Foreign currency net losses | (304.3) | (93.1) |

---

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

Foreign currency net losses on investing activities during 2022 primarily related to the strengthening of the U.S. dollar relative to the company's investments denominated in the Indian rupee, Canadian dollar, Egyptian pound, Sri Lankan rupee and British pound, partially offset by foreign currency net gains on U.S. dollar denominated investments held by subsidiaries with a Canadian dollar or British pound functional currency as the U.S. dollar strengthened relative to those currencies. Foreign currency net losses on investing activities during 2021 primarily related to euro and Indian rupee denominated investments held by subsidiaries with a U.S. dollar functional currency as the U.S. dollar strengthened relative to those currencies.

The tables below present, in U.S. dollars, the foreign currency assets and liabilities to which the company is principally exposed, showing separately those assets and liabilities that result in foreign currency transaction gains and losses in the consolidated statement of earnings and those that result in foreign currency translation gains and losses in the consolidated statement of other comprehensive income. The tables also present the approximate effect of a 10% appreciation of the U.S. dollar against each of the principal foreign currencies on pre-tax earnings (loss), net earnings (loss), pre-tax other comprehensive income (loss) and other comprehensive income (loss). Certain shortcomings are inherent in the method of analysis presented, including the assumption that the 10% appreciation of the U.S. dollar occurred at December 31, 2022 with all other variables held constant.

**Foreign currency effects on the consolidated statement of earnings**

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  | **British** | **British** |  |  |
|  | **Canadian dollar** | **Canadian dollar** | **Euro** | **Euro** | **pound sterling** | **pound sterling** | **Indian rupee** | **Indian rupee** |
|  | **2022** | **2021** | **2022** | **2021** | **2022** | **2021** | **2022** | **2021** |
| Assets | 1751.0 | 1863.4 | 1033.2 | 905.5 | 1739.4 | 1748.6 | 1872.9 | 2795.0 |
| Liabilities | (791.0) | (671.6) | (1275.4) | (1134.2) | (2252.8) | (2156.6) | (252.9) | (273.7) |
| Net asset exposure before hedge of net investment | 960.0 | 1191.8 | (242.2) | (228.7) | (513.4) | (408.0) | 1620.0 | 2521.3 |
| Notional long (short) amount of foreign currency forward contracts | (1258.2) | (1251.2) | (208.7) | (84.9) | 87.0 | (8.4) | 3.4 | 4.2 |
| Net asset (liability) exposure after foreign currency forward contracts | (298.2) | (59.4) | (450.9) | (313.6) | (426.4) | (416.4) | 1623.4 | 2525.5 |
| Hypothetical change in pre-tax earnings (loss) | 29.8 | 5.9 | 45.1 | 31.4 | 42.6 | 41.6 | (162.3) | (252.6) |
| Hypothetical change in net earnings (loss) | 23.7 | 1.7 | 36.6 | 26.9 | 37.6 | 35.5 | (161.2) | (235.8) |

---

The hypothetical effects at December 31, 2022 of the foreign currency movements on pre-tax earnings (loss) in the table above principally related to the following:

*Canadian dollar*: Net liability exposure after foreign currency forward contracts at December 31, 2022 primarily related to net liabilities at Odyssey Group and Crum & Forster, partially offset by net assets at Corporate and Other and Allied World. The increase in net liability exposure after foreign currency forward contracts at December 31, 2022 compared to December 31, 2021 principally reflected higher loss reserves at Allied World and Odyssey Group and lower portfolio investments held by Crum & Forster and Zenith National.

*Euro*: Net liability exposure after foreign currency forward contracts at December 31, 2022 primarily related to net liabilities at Odyssey Group, Allied World, Crum & Forster and Brit. The increase in net liability exposure after foreign currency forward contracts at December 31, 2022 compared to December 31, 2021 primarily reflected lower portfolio investments and higher loss reserves at Odyssey Group, partially offset by higher portfolio investments at Allied World.

*British pound sterling*: Net liability exposure after foreign currency forward contracts at December 31, 2022 primarily related to net liabilities at Allied World, Brit and Odyssey Group. The increase in net liability exposure after foreign currency forward contracts at December 31, 2022 compared to December 31, 2021 primarily reflected higher loss reserves at Allied World.

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

*Indian rupee*: Net asset exposure after foreign currency forward contracts at December 31, 2022 primarily related to net assets at Fairfax Asia. The decrease in net asset exposure after foreign currency forward contracts at December 31, 2022 compared to December 31, 2021 primarily reflected the reinvestment of proceeds from the sale of Indian government bonds in 2021 into other currency investments during 2022.

**Foreign currency effects on the consolidated statement of other comprehensive income**

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  | **British** | **British** |  |  |
|  | **Canadian dollar** | **Canadian dollar** | **Euro** | **Euro** | **pound sterling** | **pound sterling** | **Indian rupee** | **Indian rupee** |
|  | **2022** | **2021** | **2022** | **2021** | **2022** | **2021** | **2022** | **2021** |
| Assets | 11055.5 | 11028.6 | 8269.4 | 7549.2 | 1783.3 | 1793.8 | 3697.6 | 3663.6 |
| Liabilities | (7129.0) | (6719.6) | (6844.3) | (6066.3) | (1339.1) | (1292.7) | (1251.3) | (1184.8) |
| Net asset exposure before hedge of net investment | 3926.5 | 4309.0 | 1425.1 | 1482.9 | 444.2 | 501.1 | 2446.3 | 2478.8 |
| Hedge of net investment | (2057.7) | (2205.5) | (792.2) | (842.4) |  |  |  |  |
| Net asset exposure after hedge of net investment | 1868.8 | 2103.5 | 632.9 | 640.5 | 444.2 | 501.1 | 2446.3 | 2478.8 |
| Hypothetical change in pre-tax other comprehensive income (loss)  | (186.9) | (210.4) | (63.3) | (64.1) | (44.4) | (50.1) | (244.6) | (247.9) |
| Hypothetical change in other comprehensive income (loss)  | (181.3) | (209.3) | (35.7) | (40.0) | (43.5) | (49.1) | (228.0) | (230.5) |

---

The hypothetical effects at December 31, 2022 of the foreign currency movements on pre-tax other comprehensive income (loss) in the table above principally related to the translation of the company's non-U.S. dollar net investments in subsidiaries and investments in associates as follows:

*Canadian dollar*: Primarily related to net investments in Northbridge and Canadian subsidiaries within the Non-insurance companies reporting segment (principally Recipe, Dexterra Group and Boat Rocker) and the company's investments in associates (principally Stelco), partially offset by the impact of Canadian dollar borrowings applied as a hedge of net investment in Canadian subsidiaries. The decrease in net asset exposure after hedge of net investment at December 31, 2022 compared to December 31, 2021 primarily reflected non-cash goodwill impairment charges on Farmers Edge (note 12), partially offset by increased net investments at Northbridge (principally related to net earnings, partially offset by dividends paid) and increased investments in associates (principally Stelco).

*Euro*: Primarily related to the company's investments in associates (principally Eurobank and Astarta) and net investments in Eurolife and Colonnade Insurance, partially offset by Odyssey Group's net investment in its European branches (net liability exposure) and euro borrowings applied as a hedge of net investment in European operations. The decrease in net asset exposure after hedge of net investment at December 31, 2022 compared to December 31, 2021 principally reflected decreased net investments in Odyssey Group's European branches and Eurolife, partially offset by the consolidation of Grivalia Hospitality and increased exposure in the company's investments in associates (primarily related to share of profit of Eurobank). 

*British pound sterling*: Primarily related to Odyssey Group's net investment in its Newline syndicate, with the decrease in net asset exposure at December 31, 2022 compared to December 31, 2021 principally reflecting movements within Newline syndicate's insurance business.

*Indian rupee*: Primarily related to net investments in Fairfax India and Thomas Cook India, and the company's investments in associates (principally Quess and Digit). The decrease in net asset exposure at December 31, 2022 compared to December 31, 2021 principally reflected increased net investments in Fairfax India, partially offset by decreased net investment in Thomas Cook India and decreased net exposure in the company's investments in associates.

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Capital Management
The company's capital management framework is designed to protect, in the following order, its policyholders, its bondholders and its preferred shareholders and then finally to optimize returns to common shareholders. Effective capital management includes measures designed to maintain capital above minimum regulatory levels, above levels required to satisfy issuer credit ratings and financial strength ratings requirements, and above internally determined and calculated risk management levels. Total capital, comprising total debt, shareholders' equity attributable to shareholders of Fairfax and non-controlling interests, was $28,960.7 at December 31, 2022 compared to $29,068.3 at December 31, 2021.

The company manages its capital based on the following financial measurements and ratios:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | **Excluding consolidated non-** | **Excluding consolidated non-** |
|  | **Consolidated** | **Consolidated** | **insurance companies** | **insurance companies** |
|  | **December 31,**  | **December 31,**  | **December 31,**  | **December 31,**  |
|  | **2022** | **2021** | **2022** | **2021** |
| Holding company cash and investments (net of derivative obligations) | 1326.4 | 1446.2  | 1326.4 | 1446.2  |
| Borrowings – holding company | 5887.6 | 5338.6  | 5887.6 | 5338.6  |
| Borrowings – insurance and reinsurance companies | 733.4 | 790.7  | 733.4 | 790.7  |
| Borrowings – non-insurance companies | 2003.9 | 1623.7  |  |  |
| Total debt | 8624.9 | 7753.0  | 6621.0 | 6129.3  |
| Net debt<sup>(1)</sup> | 7298.5 | 6306.8  | 5294.6 | 4683.1  |
| Common shareholders' equity | 15340.7 | 15049.6  | 15340.7 | 15049.6  |
| Preferred stock | 1335.5 | 1335.5  | 1335.5 | 1335.5  |
| Non-controlling interests | 3659.6 | 4930.2  | 1969.2 | 2931.4  |
| Total equity | 20335.8 | 21315.3 | 18645.4 | 19316.5  |
| Net debt/total equity | 35.9% | 29.6% | 28.4% | 24.2% |
| Net debt/net total capital<sup>(2)</sup> | 26.4% | 22.8% | 22.1% | 19.5% |
| Total debt/total capital<sup>(3)</sup> | 29.8% | 26.7% | 26.2% | 24.1% |
| Interest coverage<sup>(4)</sup> | 5.2x | 10.6x | 5.9x<br><sup>(6)</sup> | 13.0x<br><sup>(6)</sup> |
| Interest and preferred share dividend distribution coverage<sup>(5)</sup> | 4.5x | 9.4x | 4.9x<br><sup>(6)</sup> | 11.1x<br><sup>(6)</sup> |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Net debt is calculated by the company as total debt less holding company cash and investments (net of derivative obligations).* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Net total capital is calculated by the company as the sum of total equity and net debt.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *Total capital is calculated by the company as the sum of total equity and total debt.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(4)* *Interest coverage is calculated by the company as earnings (loss) before income taxes and interest expense on borrowings, divided by interest expense on borrowings.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(5)* *Interest and preferred share dividend distribution coverage is calculated by the company as earnings (loss) before income taxes and interest expense on borrowings divided by the sum of interest expense on borrowings and preferred share dividend distributions adjusted to a pre-tax equivalent at the company's Canadian statutory income tax rate.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(6)* *Excludes earnings (loss) before income taxes, and interest expense on borrowings, of consolidated non-insurance companies.* 

The company's capital management objectives include maintaining sufficient liquid resources at the holding company to be able to pay interest on debt, dividends to preferred shareholders and all other holding company obligations. Accordingly, the company monitors its interest and preferred share dividend distribution coverage ratio calculated as described in footnote 5 of the table above.

Common shareholders' equity increased to $15,340.7 at December 31, 2022 from $15,049.6 at December 31, 2021, primarily reflecting net earnings attributable to shareholders of Fairfax ($1,147.2), partially offset by net unrealized foreign currency translation losses net of hedges ($399.1), changes in capitalization ($173.6, principally related to the acquisition of additional common shares of Allied World from non-controlling interests and the privatization of Recipe), purchases of subordinate voting shares for cancellation ($199.6) and for use in share-based payment awards ($148.2), and payments of common and preferred share dividends ($295.1). For further details on net changes in capitalization refer to note 16 and note 23. Changes in borrowings and non-controlling interests are described in note 15 and note 16 respectively.

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

The changes in borrowings and common shareholders' equity affected the company's leverage ratios as follows: The consolidated net debt/net total capital ratio increased to 26.4% at December 31, 2022 from 22.8% at December 31, 2021, primarily as a result of increased net debt. The increase in net debt was principally due to the issuance of $750.0 principal amount of 5.625% unsecured senior notes due in 2032 by the holding company and increased borrowings by non-insurance companies. The consolidated total debt/total capital ratio increased to 29.8% at December 31, 2022 from 26.7% at December 31, 2021, primarily as a result of increased total debt and decreased total capital (reflecting decreased non-controlling interests, partially offset by increases in common shareholders' equity and total debt).

In the United States, the National Association of Insurance Commissioners ("NAIC") applies a model law and risk-based capital ("RBC") formula designed to help regulators identify property and casualty insurers that may be inadequately capitalized. Under the NAIC's requirements, an insurer must maintain total capital and surplus above a calculated threshold or face varying levels of regulatory action. The threshold is based on a formula that attempts to quantify the risk of a company's insurance and reinsurance, investment and other business activities. At December 31, 2022 Odyssey Group, Crum & Forster, Zenith National, Allied World and U.S. Run-off subsidiaries had capital and surplus that met or exceeded the regulatory minimum requirement of two times the authorized control level; each subsidiary had capital and surplus of at least 3.0 times (December 31, 2021 – 3.0 times) the authorized control level, except for TIG Insurance which had at least 2.0 times (December 31, 2021 – 2.3 times).

In Bermuda, insurance and reinsurance companies are regulated by the Bermuda Monetary Authority and are subject to the statutory requirements of the Bermuda Insurance Act 1978. There is a requirement to hold available statutory economic capital and surplus equal to or in excess of an enhanced capital and target capital level as determined under the Bermuda Solvency Capital Requirement model. The target capital level is measured as 120% of the enhanced capital requirements. At December 31, 2022 and 2021 Allied World's subsidiary was in compliance with Bermuda's regulatory requirements.

In Canada, property and casualty companies are regulated by the Office of the Superintendent of Financial Institutions on the basis of a minimum supervisory target of 150% of a minimum capital test ("MCT") formula. At December 31, 2022 Northbridge's subsidiaries had a weighted average MCT ratio of 241% (December 31, 2021 – 222%) of the minimum supervisory target.

Brit is subject to the solvency and regulatory capital requirements of the Prudential Regulatory Authority in the U.K. for its Lloyd's business and the Bermuda Monetary Authority for its Bermudan business. The management capital requirements for Brit are set using an internal model based on the prevailing regulatory framework in these jurisdictions. At December 31, 2022 Brit's total capital consisted of net tangible assets (total assets less any intangible assets and all liabilities), subordinated debt and contingent funding from its revolving credit facility and amounted to $2,052.7 (December 31, 2021 - $2,199.5). This represented a surplus of $709.5 (December 31, 2021 - $617.9) over Brit's management capital requirements.

In countries other than the U.S., Bermuda, Canada and the U.K. where the company operates, the company met or exceeded the applicable regulatory capital requirements at December 31, 2022 and 2021.

&nbsp;&nbsp;&nbsp;&nbsp;25. **Segmented Information** 

The company is a holding company which, through its subsidiaries, is primarily engaged in property and casualty insurance and reinsurance and the associated investment management.

On April 1, 2022 the company revised its property and casualty insurance and reinsurance reporting segments to those described below and believes the revised reporting segments provide better insight into the company's evaluation of operating performance, insurance risk exposure and strategic opportunities for these operating companies. The operating companies comprising each new reporting segment are similar in insurance risks underwritten, distribution methods used, and customer type and geographic areas served. Comparative periods have been revised to align with the new property and casualty insurance and reinsurance reporting segments. There were no changes to the company's other reporting segments. Life insurance and Run-off, which did not change, is comprised of Eurolife and Run-off and represents an aggregation of operating segments which are not included in any other reporting segment. Transactions between reporting segments have not been eliminated from individual segment results as management considers those transactions in assessing the performance of each segment.

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

***Property and Casualty Insurance and Reinsurance***

**North American Insurers –** comprising Northbridge, Crum & Forster and Zenith National, this reporting segment provides a full range of commercial insurance in property, casualty, and specialty risks, principally within the United States and Canada.

**Global Insurers and Reinsurers –** comprising Allied World, Odyssey Group and Brit, this reporting segment provides diverse insurance and reinsurance coverage to its global customers including specialty insurance, treaty and facultative reinsurance and other risk management solutions.

**International Insurers and Reinsurers –** comprising a collection of international insurers, this reporting segment provides coverage for diverse insurance and reinsurance risks in local markets, primarily across Asia, Europe (excluding the U.K.) and Latin America. The International Insurers and Reinsurers reporting segment's business is underwritten by individual companies within Fairfax Asia, Fairfax Latin America and Fairfax Central and Eastern Europe, as well as Group Re, Bryte Insurance, and Eurolife's property and casualty insurance operations.

***Life insurance and Run-off***

This reporting segment is comprised of Eurolife's life insurance operations and U.S. Run-off, which includes TIG Insurance Company.

***Non-insurance companies***

This reporting segment is comprised as follows:

**Restaurants and retail** – Comprised principally of Recipe, Golf Town, Sporting Life and Toys "R" Us Canada (deconsolidated on August 19, 2021).

**Fairfax India** – Comprised of Fairfax India and its subsidiaries, which are principally NCML and Privi (deconsolidated on April 29, 2021).

**Thomas Cook India** – Comprised of Thomas Cook India and its subsidiary Sterling Resorts.

**Other** – Comprised primarily of AGT, Dexterra Group, Boat Rocker, Farmers Edge, Grivalia Hospitality (consolidated July 5, 2022), Pethealth (deconsolidated on October 31, 2022) and Mosaic Capital (deconsolidated on August 5, 2021).

On July 5, 2022 the company commenced consolidating Grivalia Hospitality in the Non-insurance companies reporting segment, and on October 31, 2022 the Crum & Forster Pet Insurance Group and Pethealth were deconsolidated from the North American Insurers and Non-insurance companies reporting segments respectively, pursuant to the transactions described in note 23 There were no other significant changes to the identifiable assets and liabilities by operating segment at December 31, 2022 compared to December 31, 2021.

***Corporate and Other***

Corporate and Other includes the parent entity (Fairfax Financial Holdings Limited), its subsidiary intermediate holding companies and Hamblin Watsa, an investment management company.

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Sources of Earnings by Reporting Segment
Sources of earnings by reporting segment for the years ended December 31 were as follows:

#### 2022

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** |  |  |  |  |  |
|  |  |  |  |  | **Life** |  |  |  |  |
|  | **North** | **Global** | **International** |  | **insurance** | **Non-** |  | **Eliminations** |  |
|  | **American** | **Insurers and** | **Insurers and** |  | **and** | **insurance** | **Corporate** | **and**  |  |
|  | **Insurers** | &nbsp;&nbsp;&nbsp;&nbsp;**Reinsurers** | **Reinsurers** | **Total** | **Run-off** | **companies** | **and Other** | **adjustments** | **Consolidated** |
| Gross premiums written |  |  |  |  |  |  |  |  |  |
| External | 7600.9 | 16995.6 | 2965.2 | 27561.7 | 350.9 |  |  |  | 27912.6 |
| Intercompany | 49.6 | 101.0 | 213.4 | 364.0 |  |  |  | (364.0) |  |
|  | 7650.5 | 17096.6 | 3178.6 | 27925.7 | 350.9 |  |  | (364.0) | 27912.6 |
| Net premiums written | 6457.6 | 13506.3 | 1963.1 | 21927.0 | 344.7 |  |  |  | 22271.7 |
| Net premiums earned |  |  |  |  |  |  |  |  |  |
| External | 6140.8 | 12851.5 | 1671.4 | 20663.7 | 342.4 |  |  |  | 21006.1 |
| Intercompany | (33.0) | (124.6) | 157.6 |  |  |  |  |  |  |
|  | 6107.8 | 12726.9 | 1829.0 | 20663.7 | 342.4 |  |  |  | 21006.1 |
| Underwriting expenses<sup>(1)</sup> | (5674.8) | (12067.9) | (1815.7) | (19558.4) | (509.7) |  |  | 0.5 | (20067.6) |
| &nbsp;&nbsp;&nbsp;Underwriting profit (loss) | 433.0 | 659.0 | 13.3 | 1105.3 | (167.3) |  |  | 0.5 | 938.5 |
| Interest income | 249.0 | 447.8 | 99.0 | 795.8 | 56.4 | 10.2 | 11.8 | (0.7) | 873.5 |
| Dividends | 32.0 | 54.9 | 16.0 | 102.9 | 12.3 | 24.6 | 0.6 |  | 140.4 |
| &nbsp;&nbsp;&nbsp;Investment expenses | (47.0) | (89.4) | (16.2) | (152.6) | (13.1) | (8.2) | (2.8) | 124.6 | (52.1) |
| Interest and dividends | 234.0 | 413.3 | 98.8 | 746.1 | 55.6 | 26.6 | 9.6 | 123.9 | 961.8 |
| Share of profit of associates | 239.8 | 429.3 | 52.4 | 721.5 | 56.4 | 134.0 | 102.8 |  | 1014.7 |
| Other |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Revenue |  |  |  |  |  | 5581.6 |  |  | 5581.6 |
| &nbsp;&nbsp;&nbsp;Expenses |  |  |  |  |  | (5520.9) |  |  | (5520.9) |
|  |  |  |  |  |  | 60.7 |  |  | 60.7 |
| &nbsp;&nbsp;&nbsp;Operating income (loss) | 906.8 | 1501.6 | 164.5 | 2572.9 | (55.3) | 221.3 | 112.4 | 124.4 | 2975.7 |
| Net gains (losses) on investments | (397.7) | (1151.1) | (211.1) | (1759.9) | (306.5) | 71.4 | 261.1 |  | (1733.9) |
| Gain on sale and consolidation of insurance subsidiaries (note 23) | 1213.2 |  | 6.5 | 1219.7 |  |  |  |  | 1219.7 |
| Interest expense | (5.7) | (51.1) | (3.0) | (59.8) | (13.2) | (122.8) | (257.2) | 0.2 | (452.8) |
| Corporate overhead and other | (39.8) | (98.9) | (12.1) | (150.8) | (1.4) |  | (19.9) | (124.6) | (296.7) |
| &nbsp;&nbsp;&nbsp;Pre-tax income (loss) | 1676.8 | 200.5 | (55.2) | 1822.1 | (376.4) | 169.9 | 96.4 |  | 1712.0 |
| Provision for income taxes |  |  |  |  |  |  |  |  | (425.2) |
| Net earnings |  |  |  |  |  |  |  |  | 1286.8 |
| Attributable to: |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Shareholders of Fairfax |  |  |  |  |  |  |  |  | 1147.2 |
| &nbsp;&nbsp;&nbsp;Non-controlling interests |  |  |  |  |  |  |  |  | 139.6 |
|  |  |  |  |  |  |  |  |  | 1286.8 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Property and casualty insurance and reinsurance underwriting expenses for the year ended December 31, 2022 were comprised as shown below. Accident year underwriting expenses exclude the impact of favourable or adverse prior year claims reserve development.* 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** |
|  | **North** | **Global** | **International** |  |
|  | **American** | **Insurers and**  | **Insurers and** |  |
|  | **Insurers** | &nbsp;&nbsp;&nbsp;&nbsp;**Reinsurers** | **Reinsurers** | **Total** |
| Loss & LAE - accident year | 3733.4 | 8715.7 | 1207.3 | 13656.4 |
| Commissions | 998.3 | 2109.5 | 324.4 | 3432.2 |
| Other underwriting expenses | 1020.3 | 1263.8 | 381.9 | 2666.0 |
| Underwriting expenses - accident year | 5752.0 | 12089.0 | 1913.6 | 19754.6 |
| Net favourable claims reserve development | (77.2) | (21.1) | (97.9) | (196.2) |
| Underwriting expenses - calendar year | 5674.8 | 12067.9 | 1815.7 | 19558.4 |

---

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### 2021

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** |  |  |  |  |  |
|  | **North** | **Global** | **International** |  | **Life insurance** | **Non-** |  | **Eliminations** |  |
|  | **American** | **Insurers and** | **Insurers and** |  | **and**  | **insurance** | **Corporate** | **and** |  |
|  | **Insurers** | &nbsp;&nbsp;&nbsp;&nbsp;**Reinsurers** | **Reinsurers** | **Total** | **Run-off** | **companies** | **and Other** | **adjustments** | **Consolidated** |
| Gross premiums written |  |  |  |  |  |  |  |  |  |
| External | 6544.6 | 14567.6 | 2683.8 | 23796.0 | 114.2 |  |  |  | 23910.2  |
| Intercompany | 34.2 | 93.8 | 169.5 | 297.5 | 358.1 |  |  | (655.6) |  |
|  | 6578.8 | 14661.4 | 2853.3 | 24093.5 | 472.3 |  |  | (655.6) | 23910.2  |
| Net premiums written | 5319.7 | 10755.5 | 1734.2 | 17809.4 | 468.7 |  |  |  | 18278.1  |
| Net premiums earned |  |  |  |  |  |  |  |  |  |
| External | 5435.3 | 9530.6 | 1482.4 | 16448.3 | 109.7 |  |  |  | 16558.0  |
| Intercompany | (410.5) | (78.8) | 131.2 | (358.1) | 358.1 |  |  |  |  |
|  | 5024.8 | 9451.8 | 1613.6 | 16090.2 | 467.8 |  |  |  | 16558.0  |
| Underwriting expenses<sup>(2)</sup> | (4637.9) | (9077.6) | (1573.5) | (15289.0) | (776.8) |  |  | 0.3 | (16065.5) |
| Underwriting profit (loss) | 386.9 | 374.2 | 40.1 | 801.2 | (309.0) |  |  | 0.3 | 492.5  |
| Interest income | 154.4 | 299.6 | 66.8 | 520.8 | 22.2 | 3.9 | 28.2 | (6.7) | 568.4  |
| Dividends | 23.9 | 37.2 | 11.6 | 72.7 | 7.8 | 28.5 | (0.8) |  | 108.2  |
| Investment expenses | (43.2) | (100.1) | (8.5) | (151.8) | (10.7) | (127.1) | (2.8) | 256.6 | (35.8) |
| Interest and dividends | 135.1 | 236.7 | 69.9 | 441.7 | 19.3 | (94.7) | 24.6 | 249.9 | 640.8  |
| Share of profit of associates | 103.6 | 184.8 | 35.7 | 324.1 | 16.8 | 22.3 | 38.8 |  | 402.0  |
| Other |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Revenue |  |  |  |  |  | 5157.5 |  | 0.5 | 5158.0  |
| &nbsp;&nbsp;&nbsp;Expenses |  |  |  |  |  | (5092.1) |  | 5.2 | (5086.9) |
|  |  |  |  |  |  | 65.4 |  | 5.7 | 71.1  |
| &nbsp;&nbsp;&nbsp;Operating income (loss) | 625.6 | 795.7 | 145.7 | 1567.0 | (272.9) | (7.0) | 63.4 | 255.9 | 1606.4  |
| Net gains on investments<sup>(1)</sup> | 518.5 | 604.1 | 1521.9 | 2644.5 | 69.7 | 266.0 | 464.9 |  | 3445.1  |
| Gain on sale and consolidation of insurance subsidiaries (note 23) |  | 68.7 | 64.8 | 133.5 |  |  | 130.5 |  | 264.0  |
| Interest expense | (8.6) | (50.5) | (2.4) | (61.5) | (7.9) | (140.3) | (305.4) | 1.2 | (513.9) |
| Corporate overhead and other | (53.7) | (88.0) | (22.3) | (164.0) | (38.4) |  | 50.0 | (256.6) | (409.0) |
| Pre-tax income (loss) | 1081.8 | 1330.0 | 1707.7 | 4119.5 | (249.5) | 118.7 | 403.4 | 0.5 | 4392.6  |
| Provision for income taxes |  |  |  |  |  |  |  |  | (726.0) |
| Net earnings |  |  |  |  |  |  |  |  | 3666.6  |
| Attributable to: |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Shareholders of Fairfax |  |  |  |  |  |  |  |  | 3401.1  |
| &nbsp;&nbsp;&nbsp;Non-controlling interests |  |  |  |  |  |  |  |  | 265.5  |
|  |  |  |  |  |  |  |  |  | 3666.6  |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Includes net gains on deconsolidation of non-insurance subsidiaries primarily related to the deconsolidation of Fairfax India's subsidiary Privi of $94.9 and Toys "R" Us Canada of $85.7 as described in note 23.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Property and casualty insurance and reinsurance underwriting expenses for the year ended December 31, 2021 were comprised as shown below. Accident year underwriting expenses exclude the impact of favourable or adverse prior year claims reserve development.* 

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** |
|  | **North** | **Global** | **International** |  |
|  | **American** | **Insurers and**  | **Insurers and** |  |
|  | **Insurers** | &nbsp;&nbsp;&nbsp;&nbsp;**Reinsurers** | **Reinsurers** | **Total** |
| Loss & LAE - accident year | 2900.3 | 6551.6 | 986.6 | 10438.5 |
| Commissions | 913.6 | 1571.0 | 289.6 | 2774.2 |
| Other underwriting expenses | 927.7 | 1156.4 | 347.8 | 2431.9 |
| Underwriting expenses - accident year | 4741.6 | 9279.0 | 1624.0 | 15644.6 |
| Net favourable claims reserve development | (103.7) | (201.4) | (50.5) | (355.6) |
| Underwriting expenses - calendar year | 4637.9 | 9077.6 | 1573.5 | 15289.0 |

---

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Investments in Associates, Additions to Goodwill, Segment Assets and Segment Liabilities
Investments in associates, segment assets and segment liabilities at December 31, and additions to goodwill for the years then ended, by reporting segment, were as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Investments in** | **Investments in** |  |  |  |  |  |  |
|  | **associates** | **associates** | **Additions to goodwill** | **Additions to goodwill** | **Segment assets** | **Segment assets** | **Segment liabilities** | **Segment liabilities** |
|  | **2022** | **2021** | **2022** | **2021** | **2022** | **2021** | **2022** | **2021** |
| Property and Casualty Insurance and Reinsurance |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;North American Insurers | 1217.7 | 801.5 |  |  | 18664.9 | 17418.7 | 12890.0 | 11551.5 |
| &nbsp;&nbsp;&nbsp;Global Insurers and Reinsurers | 2893.3 | 2168.7 |  | 16.4 | 51634.9 | 46849.3 | 39086.8 | 34266.7 |
| &nbsp;&nbsp;&nbsp;International Insurers and Reinsurers | 592.0 | 415.2 |  |  | 9547.2 | 9616.9 | 5631.9 | 5700.7 |
|  | 4703.0 | 3385.4 |  | 16.4  | 79847.0 | 73884.9 | 57608.7 | 51518.9 |
| Life insurance and Run-off | 348.1 | 272.6 | 0.4 |  | 6087.7 | 6669.1 | 5289.5 | 5781.1 |
| Non-insurance companies | 1378.5 | 1379.7 | 151.6 | 44.3  | 8611.4 | 7856.4 | 4820.6 | 4075.1 |
| Corporate and Other and eliminations and adjustments | 1004.3 | 1066.3 |  |  | (2421.0) | (1765.0) | 4070.5 | 3955.0 |
| Consolidated | 7433.9 | 6104.0 | 152.0 | 60.7  | 92125.1 | 86645.4 | 71789.3 | 65330.1 |

---

#### Product Line
Net premiums earned by product line for the years ended December 31 were as follows:

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Property** | **Property** | **Casualty** | **Casualty** | **Specialty**<sup>(1)</sup> | **Specialty**<sup>(1)</sup> | **Total** | **Total** |
|  | **2022** | **2021** | **2022** | **2021** | **2022** | **2021** | **2022** | **2021** |
| Property and Casualty Insurance and Reinsurance - net premiums earned |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;North American Insurers | 1379.3 | 1209.6  | 4284.3 | 3400.2  | 444.2 | 415.0  | 6107.8 | 5024.8  |
| &nbsp;&nbsp;&nbsp;Global Insurers and Reinsurers | 4895.5 | 3876.9  | 6866.2 | 4856.8  | 965.2 | 718.1  | 12726.9 | 9451.8  |
| &nbsp;&nbsp;&nbsp;International Insurers and Reinsurers | 919.9 | 834.9  | 615.1 | 544.3  | 294.0 | 234.4  | 1829.0 | 1613.6  |
|  | 7194.7 | 5921.4  | 11765.6 | 8801.3  | 1703.4 | 1367.5  | 20663.7 | 16090.2  |
| Life insurance and Run-off<sup>(1)</sup> |  | 8.2  | 0.5 | 348.8  | 341.9 | 110.8  | 342.4 | 467.8  |
| Consolidated net premiums earned | 7194.7 | 5929.6  | 11766.1 | 9150.1  | 2045.3 | 1478.3  | 21006.1 | 16558.0  |
| Interest and dividends |  |  |  |  |  |  | 961.8 | 640.8  |
| Share of profit of associates |  |  |  |  |  |  | 1014.7 | 402.0  |
| Net gains (losses) on investments |  |  |  |  |  |  | (1733.9) | 3445.1  |
| Gain on sale and consolidation of insurance subsidiaries (note 23) |  |  |  |  |  |  | 1219.7 | 264.0  |
| Other revenue |  |  |  |  |  |  | 5581.6 | 5158.0  |
| Consolidated income |  |  |  |  |  |  | 28050.0 | 26467.9  |
| Distribution of net premiums earned | 34.3% | 35.8% | 56.0% | 55.3% | 9.7% | 8.9% | 100.0% | 100.0% |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Includes Eurolife's life insurance operations since Eurolife's consolidation on July 14, 2021, as described in note 23.* 

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Geographic Region
Net premiums earned by geographic region for the years ended December 31 were as follows:

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Canada** | **Canada** | **United States** | **United States** | **Asia**<sup>(1)</sup> | **Asia**<sup>(1)</sup> | **International**<sup>(2)</sup> | **International**<sup>(2)</sup> | **Total** | **Total** |
|  | **2022** | **2021** | **2022** | **2021** | **2022** | **2021** | **2022** | **2021** | **2022** | **2021** |
| Property and Casualty Insurance and Reinsurance - net premiums earned |  |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;North American Insurers | 1914.1 | 1784.9 | 4157.5 | 3222.1  | 1.4 | 1.2 | 34.8 | 16.6 | 6107.8 | 5024.8 |
| &nbsp;&nbsp;Global Insurers and Reinsurers | 378.8 | 293.1 | 9337.3 | 6671.4  | 878.1 | 806.9 | 2132.7 | 1680.4 | 12726.9 | 9451.8 |
| &nbsp;&nbsp;International Insurers and Reinsurers | 0.6 | 0.2 | 122.4 | 81.8  | 551.9 | 438.9 | 1154.1 | 1092.7 | 1829.0 | 1613.6 |
|  | 2293.5 | 2078.2 | 13617.2 | 9975.3  | 1431.4 | 1247.0 | 3321.6 | 2789.7 | 20663.7 | 16090.2 |
| Life insurance and Run-off<sup>(3)</sup> |  |  | 0.5 | 358.1  |  |  | 341.9 | 109.7 | 342.4 | 467.8 |
| Consolidated net premiums earned | 2293.5 | 2078.2 | 13617.7 | 10333.4  | 1431.4 | 1247.0 | 3663.5 | 2899.4 | 21006.1 | 16558.0 |
| Interest and dividends |  |  |  |  |  |  |  |  | 961.8 | 640.8 |
| Share of profit of associates |  |  |  |  |  |  |  |  | 1014.7 | 402.0 |
| Net gains (losses) on investments |  |  |  |  |  |  |  |  | (1733.9) | 3445.1 |
| Gain on sale and consolidation of insurance subsidiaries (note 23) |  |  |  |  |  |  |  |  | 1219.7 | 264.0 |
| Other revenue |  |  |  |  |  |  |  |  | 5581.6 | 5158.0 |
| Consolidated income |  |  |  |  |  |  |  |  | 28050.0 | 26467.9 |
| Distribution of net premiums earned | 10.9% | 12.6% | 64.9% | 62.4% | 6.8% | 7.5% | 17.4% | 17.5% | 100.0% | 100.0% |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *The Asia geographic segment is primarily comprised of countries located throughout Asia, including China, Japan, India, Sri Lanka, Malaysia, Singapore, Indonesia and South Korea, and the Middle East.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *The International geographic segment is primarily comprised of countries located in South America, Europe, Africa and Oceania.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *Includes Eurolife's life insurance operations since Eurolife's consolidation on July 14, 2021, as described in note 23.* 

#### Non-insurance companies
Revenue and expenses of the Non-insurance companies reporting segment were comprised as follows for the years ended December 31:

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Restaurants** | **Restaurants** |  |  |  |  |  |  |  |  |
|  | **and retail** | **and retail** | **Fairfax India**<sup>(1)</sup> | **Fairfax India**<sup>(1)</sup> | **Thomas Cook India**<sup>(2)</sup> | **Thomas Cook India**<sup>(2)</sup> | **Other**<sup>(3)</sup> | **Other**<sup>(3)</sup> | **Total** | **Total** |
|  | **2022** | **2021** | **2022** | **2021** | **2022** | **2021** | **2022** | **2021** | **2022** | **2021** |
| Revenue | 1710.3 | 1803.8 | 216.7 | 228.2 | 611.0 | 249.4 | 3043.6 | 2876.1 | 5581.6 | 5157.5 |
| Expenses | (1582.2) | (1724.8) | (208.1) | (206.9) | (600.8) | (293.4) | (3129.8) | (2867.0) | (5520.9) | (5092.1) |
| Pre-tax income (loss) before interest expense and other<sup>(4)</sup> | 128.1 | 79.0 | 8.6 | 21.3 | 10.2 | (44.0) | (86.2) | 9.1 | 60.7 | 65.4 |
| Interest and dividends | 9.9 | 7.5 | 21.4 | (102.2) |  | (0.1) | (4.7) | 0.1 | 26.6 | (94.7) |
| Share of profit (loss) of associates | (0.1) |  | 132.0 | 20.2 | 0.3 | (0.1) | 1.8 | 2.2 | 134.0 | 22.3 |
| Operating income (loss) | 137.9 | 86.5 | 162.0 | (60.7) | 10.5 | (44.2) | (89.1) | 11.4 | 221.3 | (7.0) |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *These results differ from those published by Fairfax India primarily due to Fairfax India's application of investment entity accounting under IFRS.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *These results differ from those published by Thomas Cook India primarily due to differences between IFRS and Ind AS, and acquisition accounting adjustments.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *Included in Expenses is a non-cash goodwill impairment charge on Farmers Edge of $133.4 recognized in 2022.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(4)* *Excludes interest and dividends, share of profit (loss) of associates and net gains (losses) on investments.* 

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Segmented Balance Sheet
The company's segmented balance sheets as at December 31, 2022 and 2021 present the assets, liabilities and non-controlling interests of each reporting segment in accordance with the company's IFRS accounting policies and includes, where applicable, acquisition accounting adjustments principally related to goodwill and intangible assets which arose on initial acquisition of the subsidiaries or on a subsequent step acquisition. Certain of the company's subsidiaries hold equity interests in other Fairfax subsidiaries ("affiliates") which are carried at cost. In the table below, the company's three property and casualty insurance and reinsurance reporting segments have been presented in aggregate, and affiliated insurance and reinsurance balances are not shown separately and are eliminated in "Corporate and eliminations".

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **Property**  |  |  |  |  | **Property** |  |  |  |  |
|  | **and**  |  |  |  |  | **and** |  |  |  |  |
|  | **casualty**  | **Life** |  |  |  | **casualty** | **Life** |  |  |  |
|  | **insurance and**  | **insurance** | **Non-** | **Corporate**  |  | **insurance and**  | **insurance** | **Non-** | **Corporate**  |  |
|  | **reinsurance**  | **and** | **insurance**  | **and**  |  | **reinsurance**  | **and** | **insurance**  | **and**  |  |
|  | **companies** | **Run-off** | **companies** | **eliminations**<sup>(4)</sup> | **Consolidated** | **companies** | **Run-off** | **companies** | **eliminations**<sup>(4)</sup> | **Consolidated** |
| **Assets** |  |  |  |  |  |  |  |  |  |  |
| Holding company cash and investments | 316.6 |  |  | 1029.2 | 1345.8 | 604.5  |  |  | 873.8  | 1478.3  |
| Insurance contract receivables | 8310.9 | 28.2 |  | (431.6) | 7907.5 | 7215.5  | 7.8  |  | (340.1) | 6883.2  |
| Portfolio investments<sup>(1)</sup> | 49038.8 | 4275.4 | 2119.3 | (1110.6) | 54322.9 | 45061.8  | 4963.9  | 2252.8  | (581.1) | 51697.4  |
| Deferred premium acquisition costs | 2201.3 | 7.5 |  | (38.5) | 2170.3 | 1950.6  | 3.8  |  | (30.3) | 1924.1  |
| Recoverable from reinsurers | 14097.9 | 517.5 |  | (1499.6) | 13115.8 | 13060.3  | 457.6  |  | (1427.4) | 12090.5  |
| Deferred income tax assets | 337.3 | 25.6 | 54.5 | 74.7 | 492.1 | 268.2  | 29.0  | 66.9  | 158.3  | 522.4  |
| Goodwill and intangible assets | 3396.8 | 7.5 | 2284.4 | 0.3 | 5689.0 | 3579.5  | 7.5  | 2341.2  |  | 5928.2 |
| Due from affiliates | 206.3 | 364.1 |  | (570.4) |  | 231.3  | 360.2  |  | (591.5) |  |
| Other assets | 1774.0 | 832.6 | 4153.2 | 321.9 | 7081.7 | 1746.0  | 810.0  | 3195.5  | 369.8  | 6121.3  |
| Investments in affiliates<sup>(2)</sup> | 167.1 | 29.3 |  | (196.4) |  | 167.2  | 29.3  |  | (196.5) |  |
| Total assets | 79847.0 | 6087.7 | 8611.4 | (2421.0) | 92125.1 | 73884.9  | 6669.1  | 7856.4  | (1765.0) | 86645.4  |
| **Liabilities** |  |  |  |  |  |  |  |  |  |  |
| Accounts payable and accrued liabilities | 2304.9 | 263.1 | 2430.7 | 216.5 | 5215.2 | 2149.9  | 233.4  | 2077.4  | 524.7  | 4985.4  |
| Derivative obligations | 113.5 |  | 58.2 | 19.3 | 191.0 | 72.5  |  | 47.9  | 32.5  | 152.9  |
| Due to affiliates | 16.5 | 0.4 | 82.4 | (99.3) |  | 28.8  | 0.2  | 135.1  | (164.1) |  |
| Deferred income tax liabilities | 225.0 | 18.5 | 252.4 | 0.8 | 496.7 | 322.2  | 72.9  | 198.5  | 5.2  | 598.8  |
| Insurance contract payables | 4839.7 | 688.4 |  | (466.2) | 5061.9 | 4208.6  | 652.0  |  | (367.1) | 4493.5  |
| Provision for losses and loss adjustment expenses<sup>(3)</sup> | 37531.7 | 4300.9 |  | (1343.0) | 40489.6 | 33381.4  | 4806.1  |  | (1295.2) | 36892.3  |
| Provision for unearned premiums<sup>(3)</sup> | 11844.0 | 18.2 |  | (152.2) | 11710.0 | 10564.8  | 16.5  |  | (127.1) | 10454.2  |
| Borrowings | 733.4 |  | 1996.9 | 5894.6 | 8624.9 | 790.7  |  | 1616.2  | 5346.1  | 7753.0  |
| Total liabilities | 57608.7 | 5289.5 | 4820.6 | 4070.5 | 71789.3 | 51518.9  | 5781.1  | 4075.1  | 3955.0  | 65330.1  |
| **Equity** |  |  |  |  |  |  |  |  |  |  |
| Shareholders' equity attributable to shareholders of Fairfax | 20269.1 | 798.2 | 2100.4 | (6491.5) | 16676.2 | 19778.9  | 888.0  | 1782.5  | (6064.3) | 16385.1  |
| Non-controlling interests | 1969.2 |  | 1690.4 |  | 3659.6 | 2587.1  |  | 1998.8  | 344.3  | 4930.2  |
| Total equity | 22238.3 | 798.2 | 3790.8 | (6491.5) | 20335.8 | 22366.0  | 888.0  | 3781.3  | (5720.0) | 21315.3 |
| Total liabilities and total equity | 79847.0 | 6087.7 | 8611.4 | (2421.0) | 92125.1 | 73884.9  | 6669.1  | 7856.4  | (1765.0) | 86645.4  |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Includes intercompany investments in Fairfax non-insurance subsidiaries carried at cost that are eliminated on consolidation.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Intercompany investments in Fairfax insurance and reinsurance subsidiaries carried at cost that are eliminated on consolidation.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *Included in insurance contract liabilities on the consolidated balance sheet.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(4)* *Corporate and eliminations includes the Fairfax holding company, subsidiary intermediate holding companies, and consolidating and eliminating entries. The most significant of those entries are the elimination of intercompany reinsurance provided by Group Re, and reinsurance provided by Odyssey Group and Allied World to affiliated primary insurers.* 

 

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

**26.** **Expenses**

Losses on claims, net, operating expenses and other expenses for the years ended December 31 were comprised as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2022** | **2021** | **2021** | **2021** |
|  | **Insurance** |  |  | **Insurance** |  |  |
|  | **and** | **Non-** |  | **and** | **Non-** |  |
|  | **reinsurance** | **insurance** |  | **reinsurance** | **insurance** |  |
|  | **companies**<sup>(1)</sup> | **companies** | **Total** | **companies**<sup>(1)</sup> | **companies** | **Total** |
| Losses and loss adjustment expenses, property and casualty | 13169.1 |  | 13169.1 | 10272.9  |  | 10272.9  |
| Provisions and claims, Eurolife | 251.1 |  | 251.1 | 81.0  |  | 81.0  |
| Cost of sales |  | 3349.4 | 3349.4 |  | 2987.5  | 2987.5  |
| Wages and salaries | 1580.8 | 877.5 | 2458.3 | 1547.1  | 761.3  | 2308.4  |
| Depreciation, amortization and impairment charges | 233.2 | 450.4 | 683.6 | 291.0  | 639.4  | 930.4  |
| Employee benefits | 381.3 | 125.9 | 507.2 | 345.3  | 116.9  | 462.2  |
| Premium taxes | 306.8 |  | 306.8 | 285.9  |  | 285.9  |
| Information technology costs | 254.7 | 44.5 | 299.2 | 216.3  | 40.7  | 257.0  |
| Audit, legal and tax professional fees | 189.1 | 53.7 | 242.8 | 159.7  | 43.4  | 203.1  |
| Repairs, maintenance and utilities | 14.4 | 163.9 | 178.3 | 13.2  | 144.2  | 157.4  |
| Shipping and delivery | 1.3 | 152.8 | 154.1 | 1.2  | 120.0  | 121.2  |
| Share-based payments to directors and employees | 131.5 | 20.4 | 151.9 | 118.2  | 18.3  | 136.5  |
| Marketing costs | 38.9 | 76.6 | 115.5 | 33.4  | 70.1  | 103.5  |
| Administrative expense and other | 357.2 | 205.8 | 563.0 | 321.4  | 145.1  | 466.5  |
| Losses on claims, net, operating expenses and other expenses<sup>(2)(3)</sup> | 16909.4 | 5520.9 | 22430.3 | 13686.6  | 5086.9  | 18773.5  |
| Commissions, net (note 9)<sup>(4)</sup> | 3454.9 |  | 3454.9 | 2787.9  |  | 2787.9  |
| Interest expense (note 15)<sup>(4)</sup> | 330.0 | 122.8 | 452.8 | 373.6  | 140.3  | 513.9  |
|  | 20694.3 | 5643.7 | 26338.0 | 16848.1  | 5227.2  | 22075.3  |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)*  ***Includes Life insurance and Run-off and Corporate and Other.*** 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Expenses of the insurance and reinsurance companies, excluding commissions, net and interest expense, are included in losses on claims, net and operating expenses in the consolidated statement of earnings.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *Expenses of the non-insurance companies, excluding commissions, net and interest expense, are included in other expenses in the consolidated statement of earnings.* 

*(4) Presented as separate lines in the consolidated statement of earnings.*

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

**27.**Supplementary Cash Flow Information

Cash, cash equivalents and bank overdrafts as presented in the consolidated statements of cash flows excludes restricted cash and cash equivalents that are amounts primarily required to be maintained on deposit with various regulatory authorities to support the operations of the property and casualty insurance and reinsurance subsidiaries. Cash equivalents are comprised of treasury bills and other eligible bills.

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** |  |
|  | **Unrestricted cash and cash** | **Unrestricted cash and cash** | **Unrestricted cash and cash** |  |  |  |  |  |  |
|  | **equivalents included in the** | **equivalents included in the** | **equivalents included in the** |  |  |  | **Cash and cash equivalents included on** | **Cash and cash equivalents included on** | **Cash and cash equivalents included on** |
|  | **consolidated statement of cash flows** | **consolidated statement of cash flows** | **consolidated statement of cash flows** | **Restricted cash and cash equivalents** | **Restricted cash and cash equivalents** | **Restricted cash and cash equivalents** | **the consolidated balance sheet** | **the consolidated balance sheet** | **the consolidated balance sheet** |
|  |  | **Cash** |  |  | **Cash** |  |  | **Cash** |  |
|  | **Cash** | **equivalents** | **Total** | **Cash** | **equivalents** | **Total** | **Cash** | **equivalents** | **Total** |
| Holding company cash and investments | 72.7 | 479.4 | 552.1 |  |  |  | 72.7 | 479.4 | 552.1 |
| Holding company assets pledged for derivative obligations |  | 40.6 | 40.6 |  |  |  |  | 40.6 | 40.6 |
| Subsidiary cash and short term investments | 3243.3 | 2105.6 | 5348.9 | 500.8 | 353.6 | 854.4 | 3744.1 | 2459.2 | 6203.3 |
| Fairfax India | 34.5 | 143.5 | 178.0 | 0.8 | 6.0 | 6.8 | 35.3 | 149.5 | 184.8 |
|  | 3350.5 | 2769.1 | 6119.6 | 501.6 | 359.6 | 861.2 | 3852.1 | 3128.7 | 6980.8 |

---

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **Unrestricted cash and cash equivalents** | **Unrestricted cash and cash equivalents** | **Unrestricted cash and cash equivalents** |  |  |  |  |  |  |
|  | **included in the consolidated statement** | **included in the consolidated statement** | **included in the consolidated statement** |  |  |  | **Cash and cash equivalents included on**  | **Cash and cash equivalents included on**  | **Cash and cash equivalents included on**  |
|  | **of cash flows** | **of cash flows** | **of cash flows** | **Restricted cash and cash equivalents** | **Restricted cash and cash equivalents** | **Restricted cash and cash equivalents** | **the consolidated balance sheet** | **the consolidated balance sheet** | **the consolidated balance sheet** |
|  |  | **Cash** |  |  | **Cash** |  |  | **Cash** |  |
|  | **Cash** | **equivalents** | **Total** | **Cash** | **equivalents** | **Total** | **Cash** | **equivalents** | **Total** |
| Holding company cash and investments | 129.9 | 336.0 | 465.9 |  |  |  | 129.9 | 336.0 | 465.9 |
| Holding company assets pledged for derivative obligations |  | 46.8 | 46.8 |  |  |  |  | 46.8 | 46.8 |
| Subsidiary cash and short term investments | 5259.2 | 5777.6 | 11036.8 | 484.6 | 761.8 | 1246.4 | 5743.8 | 6539.4 | 12283.2 |
| Subsidiary assets pledged for derivative obligations |  | 74.0 | 74.0 |  |  |  |  | 74.0 | 74.0 |
| Fairfax India | 35.1 | 26.8 | 61.9 | 1.6 | 13.0 | 14.6 | 36.7 | 39.8 | 76.5 |
|  | 5424.2 | 6261.2 | 11685.4 | 486.2 | 774.8 | 1261.0 | 5910.4 | 7036.0 | 12946.4 |

---

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

Details of certain cash flows included in the consolidated statement of cash flows for the years ended December 31 were as follows:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| **Net (purchases) sales of investments classified at FVTPL** |  |  |
| &nbsp;&nbsp;Short term investments | 6352.5 | (767.1) |
| &nbsp;&nbsp;Bonds | (16016.2) | 2545.7 |
| &nbsp;&nbsp;Preferred stocks | (293.2) | (37.3) |
| &nbsp;&nbsp;Common stocks | (63.6) | 477.2 |
| &nbsp;&nbsp;Net derivatives and other invested assets | 380.3 | 395.9 |
|  | (9640.2) | 2614.4 |
| **Changes in operating assets and liabilities** |  |  |
| &nbsp;&nbsp;Net decrease (increase) in restricted cash and cash equivalents | 393.7 | (472.6) |
| &nbsp;&nbsp;Provision for losses and loss adjustment expenses | 4530.1 | 3692.0 |
| &nbsp;&nbsp;Provision for unearned premiums | 1455.3 | 2152.2 |
| &nbsp;&nbsp;Provision for life policy benefits  | (142.4) | (167.9) |
| &nbsp;&nbsp;Insurance contract receivables | (1134.9) | (1152.9) |
| &nbsp;&nbsp;Insurance contract payables | 625.8 | 1079.8 |
| &nbsp;&nbsp;Recoverable from reinsurers | (1257.9) | (1580.0) |
| &nbsp;&nbsp;Other receivables | (349.8) | (96.7) |
| &nbsp;&nbsp;Accounts payable and accrued liabilities | 338.2 | 291.1 |
| &nbsp;&nbsp;Other | (638.0) | (758.1) |
|  | 3820.1 | 2986.9 |
| **Net interest and dividends received** |  |  |
| &nbsp;&nbsp;Interest and dividends received | 1030.8 | 865.7 |
| &nbsp;&nbsp;Interest paid on borrowings | (360.5) | (366.7) |
| &nbsp;&nbsp;Interest paid on lease liabilities | (48.1) | (54.8) |
|  | 622.2 | 444.2 |
| **Net income taxes paid** | (416.4) | (288.7) |

---

**28.**Related Party Transactions

#### Management and Director Compensation
Compensation for the company's key management team for the years ended December 31 determined in accordance with the company's IFRS accounting policies was as follows:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Salaries and other short-term employee benefits | 10.2 | 10.8 |
| Share-based payments | 5.7 | 4.7 |
|  | 15.9 | 15.5 |

---

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

Compensation for the company's Board of Directors for the years ended December 31 was as follows:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Retainers and fees | 1.7 | 1.5 |
| Share-based payments | 0.3 | 0.4 |
|  | 2.0 | 1.9 |

---

#### Transactions with subsidiaries
*Thomas Cook India conversion of preferred shares*

During 2022 the company converted its preferred shares in Thomas Cook India to common shares, which increased the company's ownership interest by 6.6%. See note 16.

*Fairfax India Performance Fee Receivable*

On December 31, 2022 the holding company had a performance fee receivable of $41.5 pursuant to its investment advisory agreement with Fairfax India for the period from January 1, 2021 to December 31, 2023. This intercompany receivable is eliminated in the company's consolidated financial reporting. Under the investment advisory agreement, if a performance fee is payable for the period ending on December 31, 2023, the performance fee will be payable in cash, or at Fairfax's option, in subordinate voting shares of Fairfax India. If Fairfax elects to have the performance fee paid in subordinate voting shares, such election must be made no later than December 15, 2023.

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

**29.**Subsidiaries

The company's principal operating subsidiaries are presented in the tables below. During 2022 the company consolidated Grivalia Hospitality as described in note 23. Excluded from these tables are intermediate holding companies of investments in subsidiaries and intercompany balances that are eliminated on consolidation.

---

| | | |
|:---|:---|:---|
|  |  | **Fairfax's ownership** |
|  |  | **(100% other than as** |
| **December 31, 2022** | **Domicile** | **shown below)** |
| **Property and casualty insurance and reinsurance** |  |  |
| ***North American Insurers*** |  |  |
| Northbridge Financial Corporation (Northbridge) | Canada |  |
| Crum & Forster Holdings Corp. (Crum & Forster) | United States |  |
| Zenith National Insurance Corp. (Zenith National) | United States |  |
| ***Global Insurers and Reinsurers*** |  |  |
| Odyssey Group Holdings, Inc. (Odyssey Group) | United States | 90.0% |
| Brit Limited (Brit) | United Kingdom | 86.2% |
| Allied World Assurance Company Holdings, Ltd (Allied World) | Bermuda | 82.9% |
| ***International Insurers and Reinsurers*** |  |  |
| Fairfax Central and Eastern Europe, *which consists of:* |  |  |
| &nbsp;&nbsp;&nbsp;Polskie Towarzystwo Reasekuracji Spólka Akcyjna (Polish Re) | Poland |  |
| &nbsp;&nbsp;&nbsp;Colonnade Insurance S.A. (Colonnade Insurance) | Luxembourg |  |
| &nbsp;&nbsp;&nbsp;FFH Ukraine Holdings (Fairfax Ukraine), *which consists of:* | Ukraine | 70.0% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ARX Insurance Company (ARX Insurance) | Ukraine |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Private Joint Stock Company Insurance Company Universalna (Universalna) | Ukraine |  |
| Fairfax Latin America, *which consists of:* |  |  |
| &nbsp;&nbsp;&nbsp;Fairfax Brasil Seguros Corporativos S.A. (Fairfax Brasil) | Brazil |  |
| &nbsp;&nbsp;&nbsp;La Meridional Compañía Argentina de Seguros S.A. (La Meridional Argentina) | Argentina |  |
| &nbsp;&nbsp;&nbsp;SBS Seguros Colombia S.A. (Southbridge Colombia) | Colombia |  |
| &nbsp;&nbsp;&nbsp;SBI Seguros Uruguay S.A. (Southbridge Uruguay) | Uruguay |  |
| &nbsp;&nbsp;&nbsp;Southbridge Compañía de Seguros Generales S.A. (Southbridge Chile) | Chile |  |
| Bryte Insurance Company Ltd (Bryte Insurance) | South Africa |  |
| Eurolife FFH General Insurance Single Member S.A. (Eurolife General) | Greece | 80.0% |
| Group Re, *which underwrites business in:* |  |  |
| &nbsp;&nbsp;&nbsp;CRC Reinsurance Limited (CRC Re) | Barbados |  |
| &nbsp;&nbsp;&nbsp;Wentworth Insurance Company Ltd. (Wentworth) | Barbados |  |
| &nbsp;&nbsp;&nbsp;Connemara Reinsurance Company Ltd. (Connemara) | Barbados |  |
| Fairfax Asia, *which consists of:* |  |  |
| &nbsp;&nbsp;&nbsp;Falcon Insurance Company (Hong Kong) Limited (Falcon) | Hong Kong |  |
| &nbsp;&nbsp;&nbsp;The Pacific Insurance Berhad (Pacific Insurance) | Malaysia | 85.0% |
| &nbsp;&nbsp;&nbsp;PT Asuransi Multi Artha Guna Tbk (AMAG Insurance) | Indonesia | 80.3% |
| &nbsp;&nbsp;&nbsp;Fairfirst Insurance Limited (Fairfirst Insurance) | Sri Lanka | 78.0% |
| &nbsp;&nbsp;&nbsp;Singapore Reinsurance Corporation Limited (Singapore Re) | Singapore |  |
| **Life insurance and Run-off** |  |  |
| Eurolife FFH Life Insurance Group Holdings S.A. (Eurolife) | Greece | 80.0% |
| Run-off*, which is principally comprised of:* |  |  |
| &nbsp;&nbsp;&nbsp;U.S. Run-off: TIG Insurance Company (TIG Insurance) | United States |  |
| **Investment management** |  |  |
| Hamblin Watsa Investment Counsel Ltd. (Hamblin Watsa) | Canada |  |

---

[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

---

| | | | |
|:---|:---|:---|:---|
|  |  | **Fairfax's** |  |
| **December 31, 2022** | **Domicile** | **ownership** | **Primary business** |
| **Non-insurance companies** |  |  |  |
| ***Restaurants and retail*** |  |  |  |
| Recipe Unlimited Corporation (Recipe) | Canada | 75.7% | Franchisor, owner and operator of restaurants |
| Sporting Life Group Limited, *which owns:* | Canada | 88.5% | Invests in retail businesses |
| &nbsp;&nbsp;100.0% of Sporting Life Inc. (Sporting Life) | Canada | 88.5% | Retailer of sporting goods and sports apparel |
| &nbsp;&nbsp;100.0% of Golf Town Limited (Golf Town) | Canada | 88.5% | Retailer of golf equipment, apparel and accessories |
| ***Fairfax India*** |  |  |  |
| Fairfax India Holdings Corporation (Fairfax India) | Canada | 34.7% <sup>(1)</sup> | Invests in public and private Indian businesses |
| ***Thomas Cook India*** |  |  |  |
| Thomas Cook (India) Limited (Thomas Cook India), *which owns:* | India | 73.3% | Provider of integrated travel and travel-related financial services |
| &nbsp;&nbsp;100.0% of Sterling Holiday Resorts Limited (Sterling Resorts) | India | 73.3% | Owner and operator of holiday resorts |
| ***Other*** |  |  |  |
| AGT Food and Ingredients Inc. (AGT) | Canada | 59.6% | Originator, processor and distributor of value-added pulses and staple foods |
| Dexterra Group Inc. (Dexterra Group) | Canada | 48.7% <sup>(2)</sup> | Provider of Infrastructure support services |
| Boat Rocker Media Inc. (Boat Rocker) | Canada | 44.9% <sup>(3)</sup> | Entertainment content creator, producer and distributor |
| Farmers Edge Inc. (Farmers Edge) | Canada | 61.3% | Provider of advanced digital tools for agriculture |
| Grivalia Hospitality S.A. (Grivalia Hospitality) | Greece | 78.4% | Hospitality real estate investor, developer and manager |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *The company owns multiple voting shares and subordinate voting shares of Fairfax India that give it voting rights of 94.4 %.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *The company has de facto voting control of Dexterra Group as its largest equity and voting shareholder.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *The company has voting rights of 56.1 % due to Boat Rocker's issuance of non-voting shares to non-controlling interests.*

## Exhibit 99.3

[**Table of Contents**](#TOC)

#### Exhibit 99.3
*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Index to Management's Discussion and Analysis of Financial Condition and Results of Operations

---

| | |
|:---|:---|
| [Notes to Management's Discussion and Analysis of Financial Condition and Results of Operations](#NotestoManagementsDiscussionandAnalysiso) | 2 |
| [Overview of Consolidated Performance](#OverviewofConsolidatedPerformance_724189) | 2 |
| [Business Developments](#BusinessDevelopments_475163) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Substantial Issuer Bid](#SubstantialIssuerBid_532665) | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Acquisitions and Divestitures](#AcquisitionsandDivestitures_616782) | 10 |
| [Sources of Income](#SourcesofIncome_459997) | 12 |
| [Net Premiums Earned by Geographic Region](#NetPremiumsEarnedbyGeographicRegion_6105) | 14 |
| [Sources of Net Earnings](#SourcesofNetEarnings_629452) | 15 |
| [Net Earnings by Reporting Segment](#NetEarningsbyReportingSegment_53549) | 18 |
| [Components of Net Earnings](#ComponentsofNetEarnings_218589) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Underwriting and Operating Income](#UnderwritingandOperatingIncome_77487) | 19 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Interest and Dividends](#InterestandDividends_477967) | 28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Share of Profit (Loss) of Associates](#ShareofProfitLossofAssociates_328821) | 28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Net Gains (Losses) on Investments](#NetGainsLossesonInvestments_500456) | 28 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Interest Expense](#InterestExpense_8378) | 29 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Corporate Overhead and Other](#CorporateOverheadandOther_941002) | 30 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Income Taxes](#IncomeTaxes_399827) | 30 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Non-controlling Interests](#NoncontrollingInterests_510353) | 31 |
| [Balance Sheets by Reporting Segment](#BalanceSheetsbyReportingSegment_823931) | 32 |
| [Components of Consolidated Balance Sheets](#ComponentsofConsolidatedBalanceSheets_97) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Consolidated Balance Sheet Summary](#ConsolidatedBalanceSheetSummary_265301) | 34 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Provision for Losses and Loss Adjustment Expenses](#ProvisionforLossesandLossAdjustmentExpen) | 37 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Asbestos, Pollution and Other Latent Hazards](#AsbestosPollutionandOtherLatentHazards_9) | 39 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Recoverable from Reinsurers](#RecoverablefromReinsurers_113332) | 40 |
| [Investments](#Investments_232036) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Hamblin Watsa Investment Counsel Ltd.](#HamblinWatsaInvestmentCounselLtd_397866) | 43 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Overview of Investment Performance](#OverviewofInvestmentPerformance_610611) | 44 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Interest and Dividends](#InterestandDividends_74167) | 44 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Share of Profit (Loss) of Associates](#ShareofProfitLossofAssociates_382719) | 47 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Net Gains (Losses) on Investments](#NetGainsLossesonInvestments_253798) | 49 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Total Return on the Investment Portfolio](#TotalReturnontheInvestmentPortfolio_8841) | 50 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Bonds](#Bonds_223237) | 51 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Common Stocks](#CommonStocks_981512) | 52 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Derivatives and Derivative Counterparties](#DerivativesandDerivativeCounterparties_8) | 53 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Float](#Float_417144) | 53 |
| [Financial Condition](#FinancialCondition_742155) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Capital Resources and Management](#CapitalResourcesandManagement_842774) | 55 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Book Value per Basic Share](#BookValuePerBasicShare_416648) | 56 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Liquidity](#Liquidity_436756) | 59 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Contractual Obligations](#ContractualObligations_47575) | 62 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Contingencies and Commitments](#ContingenciesandCommitments_998703) | 62 |
| [Accounting and Disclosure Matters](#AccountingandDisclosureMatters_476633) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Management's Evaluation of Disclosure Controls and Procedures](#ManagementsEvaluationofDisclosureControl) | 63 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Management's Report on Internal Control Over Financial Reporting](#ManagementsReportonInternalControlOverFi) | 63 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Critical Accounting Estimates and Judgments](#CriticalAccountingEstimatesandJudgments_) | 63 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Significant Accounting Policy Changes](#SignificantAccountingPolicyChanges_71855) | 63 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Future Accounting Changes](#FutureAccountingChanges_102747) | 64 |
| [Risk Management](#RiskManagement_739863) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Overview](#Overview_994944) | 65 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Issues and Risks](#IssuesandRisks_170603) | 65 |
| [Other](#Other_662548) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Quarterly Data (unaudited)](#QuarterlyDataunaudited_284598) | 78 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Stock Prices and Share Information](#StockPricesandShareInformation_828777) | 79 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Compliance with Corporate Governance Rules](#CompliancewithCorporateGovernanceRules_2) | 79 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Forward-Looking Statements](#ForwardLookingStatements_371614) | 80 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[Glossary of Non-GAAP and Other Financial Measures](#GlossaryofNonGAAPandOtherFinancialMeasur) | 81 |

---

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Management's Discussion and Analysis of Financial Condition and Results of Operations

#### (as of March 10, 2023)
*(Figures and amounts are in US$ and $ millions except per share amounts and as otherwise indicated. Figures may not add due to rounding.)*

#### Notes to Management's Discussion and Analysis of Financial Condition and Results of Operations
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Readers of the Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should review the entire Annual Report for additional commentary and information. Additional information about the company, including its annual information form, can be found on SEDAR at *www.sedar.com*. Additional information can also be accessed from the company's website *www.fairfax.ca*.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) In this MD&A, Life Insurance and Run-off is included in references to the insurance and reinsurance companies and excluded in references to the property and casualty insurance and reinsurance companies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) Management analyzes and assesses the underlying insurance and reinsurance companies, and the financial position of the consolidated company, in various ways. Certain of the measures and ratios provided in this Annual Report, which have been used consistently and disclosed regularly in the company's Annual Reports and interim financial reporting, do not have a prescribed meaning under International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS") and may not be comparable to similar measures presented by other companies. Please refer to the Glossary of Non-GAAP and Other Financial Measures at the end of this MD&A for details of the company's measures and ratios, which include:

**Supplementary Financial Measures** – Gross premiums written, net premiums written, combined ratio, loss ratio, expense ratio, commission expense ratio, underwriting expense ratio, accident year loss ratio, accident year combined ratio, combined ratio points, float, average float, annual benefit (cost) of float, book value per basic share, increase (decrease) in book value per basic share (with and without adjustment for the $10.00 per common share dividend), long equity exposures, and long equity exposures and financial effects.

**Capital Management Measures** – Net debt, net total capital, total capital, net debt divided by total equity, net debt divided by net total capital and total debt divided by total capital, interest coverage ratio and interest and preferred share dividend distribution coverage ratio. The company presents all of these measures on a consolidated basis and also on a consolidated basis excluding consolidated non-insurance companies.

**Total of Segments Measures** – Underwriting profit (loss), corporate overhead, operating income (loss), and various supplementary financial measures presented for the property and casualty insurance and reinsurance segments in aggregate.

**Non-GAAP Financial Measures** – Excess (deficiency) of fair value over carrying value, cash provided by (used in) operating activities (excluding operating cash flow activity related to investments recorded at FVTPL), investments in Fairfax insurance and reinsurance affiliates and investments in Fairfax affiliates.

#### Overview of Consolidated Performance
The analysis that follows presents the company's five year track record in a format that the company has consistently used in its external reporting. This analysis is consistent with what management and the company's Board of Directors use when assessing performance and growth in the various businesses, and is believed to help readers understand the business and the value of Fairfax.

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[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Five year Financial Profile

#### Net earnings attributable to shareholders of Fairfax
Net earnings attributable to shareholders of Fairfax of $1,147.2 in 2022 reflected a record year for both underwriting profit and operating income from the property and casualty insurance and reinsurance operations. This is immediately following 2021 which produced record net earnings attributable to shareholders of Fairfax of $3,401.1, principally due to net gains on investments of $3,445.1. The decrease in net earnings attributable to shareholders of Fairfax in 2022 principally reflected net losses on investments of $1,733.9 that were primarily comprised of mark-to-market losses on bonds due to the rising interest rate environment, the majority of which are expected to reverse over the short term. Key drivers of Fairfax's consolidated performance in 2022 compared to 2021, an analysis of Fairfax's five year performance, an overview of the current insurance environment and the company's strong financial position are discussed below.

#### Property and Casualty Insurance and Reinsurance

#### Underwriting Performance

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  |  |  | **Net favourable prior year** | **Net favourable prior year** |
|  |  |  |  |  | **Catastrophe losses**<sup>(1)</sup> | **Catastrophe losses**<sup>(1)</sup> | **reserve development** | **reserve development** |
|  | **Gross premiums** |  |  |  |  |  | **Favourable** |  |
|  | **written, third** | **Net premiums** | **Underwriting** | **Combined** |  | **Combined** | **reserve** | **Combined** |
|  | **party** | **written** | **profit** | **ratios** | **Losses** | **ratio impact** | **development** | **ratio impact** |
| 2018 | 15377.6 | 12017.5 | 318.3 | 97.3% | 752.3 | 6.5% | 789.0 | 6.8% |
| 2019 | 16904.8 | 13261.1 | 394.5 | 96.9% | 497.8 | 4.0% | 479.8 | 3.8% |
| 2020 | 18979.1 | 14717.7 | 309.0 | 97.8% | 1313.0 | 9.5% | 454.9 | 3.3% |
| 2021 | 23796.0 | 17809.4 | 801.2 | 95.0% | 1203.2 | 7.5% | 355.6 | 2.2% |
| 2022 | 27561.7 | 21927.0 | 1105.3 | 94.7% | 1255.7 | 6.1% | 196.2 | 0.9% |
| % change 2022 over 2021 | 15.8% | 23.1% |  |  |  |  |  |  |
| % change 2022 over 2018 | 79.2% | 82.5% |  |  |  |  |  |  |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Includes COVID-19 losses of $55.1 and $668.7 in 2021 and 2020.* 

● On April 1, 2022 the company revised its property and casualty insurance and reinsurance reporting segments to those described in note 25 (Segmented Information) to the consolidated financial statements for the year ended December 31, 2022 and believes the revised reporting segments provide better insight into the company's evaluation of operating performance, insurance risk exposure and strategic opportunities for these operating companies. The operating companies comprising each new reporting segment are similar in insurance risks underwritten, distribution methods used, and customer type and geographic areas served. Comparative periods have been revised to align with the new property and casualty insurance and reinsurance reporting segments. There were no changes to the company's other reporting segments.

● The company continued to achieve significant growth in written premiums with gross premiums written up by 15.8% or $3,765.7, and net premiums written up by 23.1% or $4,117.6, driven principally by new business and continued incremental rate increases, almost entirely organically. All major insurance operating companies continued to achieve rate increases in 2022, except Zenith National, which continued to experience pricing pressures on its workers' compensation business.

● The company's net premiums written to statutory surplus (total equity) in 2022 increased with some companies now writing in excess of 1.0 times. Crum & Forster was at 1.8 times and Northbridge was at 1.2 times compared to Allied World at 1.0 times and Odyssey Group at 1.1 times, reflecting the formers' ability to further expand in the favourable market conditions that continue to prevail in many of their markets, particularly in North America.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

● The company's property and casualty insurance and reinsurance operations reported record underwriting profit in 2022 of $1,105.3 (an increase of 38.0%) and a 94.7% combined ratio, despite significant catastrophe losses of $1,255.7 or 6.1 combined ratio points, exceeding the previous record in 2021 that produced a combined ratio of 95.0% and an underwriting profit of $801.2 which absorbed catastrophe and COVID-19 losses of $1,203.2 or 7.5 combined ratio points. The impact of the increased frequency and severity experienced in catastrophe losses during 2022, reflected in the losses from Hurricane Ian, the France hailstorms, and the Australian floods, were mitigated by the company's property and casualty insurance and reinsurance operations' strong underwriting and risk management disciplines, diversification provided by the company's decentralized organization, and the significant growth achieved in net premiums earned. The continued strong underwriting performance by reporting segment was as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2021** | **2021** |
|  | **Combined ratio** | **Underwriting profit** | **Combined ratio** | **Underwriting profit** |
| **North American Insurers** | **92.9%**  | **433.0** | **92.3%**  | **386.9** |
| &nbsp;&nbsp;&nbsp;&nbsp;Northbridge | 89.4% | 204.8 | 88.8% | 202.2 |
| &nbsp;&nbsp;&nbsp;&nbsp;Crum & Forster | 94.5% | 189.5 | 95.9% | 101.9 |
| &nbsp;&nbsp;&nbsp;&nbsp;Zenith National | 94.7% | 38.7 | 88.4% | 82.8 |
| **Global Insurers and Reinsurers** | **94.8%**  | **659.0** | **96.0%**  | **374.2** |
| &nbsp;&nbsp;&nbsp;&nbsp;Allied World | 90.7% | 388.7 | 93.4% | 226.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;Odyssey Group | 96.3% | 209.0 | 97.8% | 92.2 |
| &nbsp;&nbsp;&nbsp;&nbsp;Brit | 97.9% | 61.3 | 96.8% | 55.6 |
| **International Insurers and Reinsurers** | **99.3%**  | **13.3** | **97.5%**  | **40.1** |
| **Property and casualty insurance and reinsurance** | **94.7%**  | **1105.3** | **95.0%**  | **801.2** |

---

● Despite significant increases in catastrophe losses in the recent three years, including the impact from the COVID-19 losses in 2020, the company has been able to achieve strong underwriting profits in each of the last five years. The company's results in 2022 and 2021 reflected the diversification provided by the company's decentralized organization, and the significant growth achieved in net premiums earned of 25.6% in 2022 compared to 2021, where the increased premium base has expanded significantly enabling the company to absorb significant catastrophe losses in those periods within underlying underwriting profit.

● The property and casualty insurance and reinsurance operations continued to experience net favourable prior year reserve development, with a benefit of $196.2 or 0.9 combined ratio points in 2022. All of the company's major property and casualty insurance and reinsurance companies had net favourable prior year reserve development in 2022 with the exception of Allied World, which experienced net adverse prior year reserve development primarily related to late 2021 catastrophe losses, partially offset by net favourable prior year reserve development on its non-catastrophe U.S. property lines.

● Run-off reported net adverse prior year reserve development of $147.2 principally related to exposures in asbestos, pollution and other hazard reserves. For details on the Life Insurance and Run-off segment, refer to the Components of Net Earnings section of this MD&A under the heading "Life Insurance and Run-off".

● On January 1, 2023 the company adopted the new accounting standard for insurance contracts ("IFRS 17") which will first be presented in the company's consolidated financial reporting in the first quarter of 2023, with comparative periods restated. For details refer to the Future Accounting Changes section of this MD&A.

***Gain on sale and consolidation of insurance subsidiaries***

● Gain on sale and consolidation of insurance subsidiaries in the consolidated statement of earnings in 2022 principally reflected a pre-tax gain of $1.2 billion (after-tax gain of $933.9) related to the company's sale of its interests in the Crum & Forster Pet Insurance Group and Pethealth, including all of their worldwide operations, to Independence Pet Group and certain of its affiliates, which are majority owned by JAB Holding Company, for $1.4 billion, paid as $1.15 billion in cash and $250.0 in debentures.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Insurance Environment
Property and casualty insurers once again saw significant growth in premium volume in 2022 resulting from continued favourable underwriting conditions and rate increases across most lines of business. This year again reinforced that insurers are in the risk business with the industry absorbing natural catastrophe losses in excess of $130 billion. Despite improving underwriting conditions, the property and casualty insurance and reinsurance industry is expected to report a modest underwriting loss, weighed down by the impact of elevated catastrophe losses stemming from traditional and secondary perils and the growing impact of inflationary pressures, most notably for property and motor claims, both on underlying costs and social inflation, and a return to more normal economic activity following extensive government mandated shutdowns in 2020 and 2021.

Favourable underwriting conditions are expected to continue into 2023, albeit more modestly after very healthy rate increases in both 2021 and 2022. As inflationary pressures continue to impact all components of the economy, the risks associated with climate change become more prominent with above average catastrophe losses and reinsurance costs increasing significantly, and insurers keeping prices in line with loss costs. Although the industry is well capitalized from an economic capital standpoint heading into 2023, the industry is feeling the effects of significant increases in interest rates during 2022, with many insurers' shareholders' equity decreasing well in excess of 10%. Should interest rates remain higher for longer, the unrealized investment losses will take many years to unwind and could prolong the hard market for a few years. In addition to the impact of rising interest rates, volatility in equity markets throughout 2022 negatively impacted total investment returns.

The reinsurance sector continued to benefit from the hard underlying insurance market in 2022 with most lines of business achieving significant rate increases. Following the landfall of Hurricane Ian, in 2023 the reinsurance market sustained its most challenging January 1st renewal season since 2001, following the 9/11 attacks. All lines of business were impacted, however property, especially catastrophe exposed business, was faced with the triple impact of increased retentions, material rate increases and tightening of terms and conditions, which included more exclusionary language. In the casualty lines of business where rates remained firm albeit moderating compared to 2021, social inflationary pressures were again front and centre as well as continued tightening of terms and conditions, particularly related to infectious diseases and cyber risks. Considering the conflict in Ukraine which quickly followed the fallout from COVID-19, reinsurance capacity for specialty lines was also very challenging to source during the January 2023 renewal season. The reinsurance industry continues to be well capitalized; however, rising interest rates and challenging equity markets accompanied by the significant catastrophe losses, with the insurance and reinsurance industry now having five of the last six years each absorbing insured losses in excess of $120 billion, global reinsurance capital shrank in 2022 and did not attract significant new capital from either traditional or alternative sources. Given the reduced capital position, it is believed the hard market will continue into 2023 and possibly beyond.

#### Non-insurance companies

#### Operating income (loss) - Non-insurance companies

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  | **Performance** | **Fairfax India** |  |  |  |
|  | **Restaurants** |  | **fee expense** | **excluding impact of** | **Thomas Cook** |  |  |
|  | **and retail**<sup>(1)</sup> | **Fairfax India**<sup>(1)</sup> | **(income)**<sup>(2)</sup> | **performance fee** | **India**<sup>(1)</sup> | **Other**<sup>(1)(3)</sup> | **Total** |
| 2018 | **131.9** | 99.7 |  | **99.7** | **27.1** | **121.6** | **380.3** |
| 2019 | **79.4** | 113.6 | 48.5 | **162.1** | **(176.7)** | **(18.7)** | **46.1** |
| 2020 | **(69.5)** | 11.0 | (42.0) | **(31.0)** | **(66.5)** | **(53.7)** | **(220.7)** |
| 2021 | **86.5** | (60.7) | 85.2 | **24.5** | **(44.2)** | **11.4** | **78.2** |
| 2022 | **137.9** | 162.0 | (36.4) | **125.6** | **10.5** | **(89.1)** | **184.9** |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *As disclosed in Note 25 (Segmented Information) to the relevant consolidated financial statements for the years ended December 31.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Relates to performance fees recorded by Fairfax India to be paid to the company pursuant to Fairfax India's investment advisory agreement with the company. This intercompany fee is eliminated in the company's consolidated financial reporting. Refer to Note 28 (Related Party Transactions) to the consolidated financial statements for the year ended December 31, 2022. Fairfax has earned $119.6 in performance fees from Fairfax India since Fairfax India's inception in 2015 that was paid in subordinate voting shares of Fairfax India for the cumulative period ending December 31, 2020.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *Includes non-cash goodwill impairment charges of $133.4 on Farmers Edge in 2022.* 

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

● Operating income of the Non-insurance companies reporting segment increased to $184.9 in 2022 from $78.2 in 2021. Excluding the impact of the non-cash goodwill impairment charges on Farmers Edge recorded during 2022 of $133.4, operating income of the Non-insurance companies reporting segment increased significantly by $240.1 to $318.3 in 2022, principally reflecting higher share of profit of associates at Fairfax India, higher business volumes at Thomas Cook India, and improved margins and higher business volumes in the Restaurants and retail operating segment and at AGT. This significant improvement of $240.1 from the Non-insurance companies reporting segment reflected the easing of COVID-19 restrictions that had previously negatively impacted this reporting segment with the increase in operating income in 2022 driven by increases reported in all underlying operating segments.

● On July 5, 2022 the company increased its interest in Grivalia Hospitality S.A. ("Grivalia Hospitality") to 78.4% from 33.5%. Grivalia Hospitality acquires, develops and manages hospitality real estate in Greece, Cyprus and Panama.

● On October 28, 2022 the company acquired all of the multiple voting shares ("MVS") and subordinate voting shares in the capital of Recipe, other than those shares owned by the company and 9,398,729 MVS owned by Cara Holdings Limited, increasing the company's equity ownership in Recipe from 39.4% to 84.0%, inclusive of Recipe shares held through the company's investment in AVLNs entered with RiverStone Barbados.

● The company's investments in non-insurance associates and market traded consolidated non-insurance subsidiaries are primarily held in the insurance and reinsurance companies' investment portfolios and as such are managed and reviewed by management as part of portfolio investment performance. Refer to the heading Financial Condition within this section of the MD&A for additional details on the pre-tax excess of fair value over the carrying value of investments in non-insurance associates and market traded consolidated non-insurance subsidiaries of $310.0 at December 31, 2022 that the company considers to be portfolio investments and is not reflected in the company's book value per basic share.

#### Investment Performance

#### Interest and dividends

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Interest income**  | **Dividends** | **Investment expenses** | **Interest and dividends** |
| 2018 | 743.9 | 81.5 | (41.9) | **783.5** |
| 2019 | 826.3 | 93.7 | (39.8) | **880.2** |
| 2020 | 716.5 | 77.8 | (25.1) | **769.2** |
| 2021 | 568.4 | 108.2 | (35.8) | **640.8** |
| 2022 | 873.5 | 140.4 | (52.1) | **961.8** |

---

● Interest and dividends increased to $961.8 in 2022 from $640.8 in 2021, primarily reflecting higher interest income earned, principally due to a general increase in sovereign bond yields, net purchases of U.S. treasury and Canadian government bonds, first mortgage loans and other government bonds during 2021 and 2022, and increased dividend income from preferred stocks, partially offset by lower interest income earned from net sales of U.S. corporate bonds during 2021 and lower dividend income earned from long equity total return swaps.

● At December 31, 2022 the company's insurance and reinsurance companies held portfolio investments of $52.2 billion (excluding Fairfax India's portfolio of $1.9 billion), of which $9.4 billion was in cash and short term investments and $28.6 billion in short-dated fixed income securities. During 2022 the company used existing cash and the proceeds from sales and maturities of short dated investments to primarily purchase U.S. treasury and Canadian government bonds with 1 to 5 year terms, Canadian provincial bonds, short-dated high quality corporate bonds and first mortgage loans, principally increasing interest and dividend income in 2022 by $321.0, and producing the company's current run rate of approximately $1.5 billion annually.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Share of profit (loss) of associates

---

| | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Insurance and reinsurance** | **Insurance and reinsurance** | **Insurance and reinsurance** | **Insurance and reinsurance** | **Non-insurance** | **Non-insurance** | **Non-insurance** | **Non-insurance** | **Non-insurance** | **Non-insurance** |  |
|  |  |  |  |  |  |  |  |  |  |  | **Share of** |
|  |  | **Gulf** | **All** |  |  |  |  |  |  |  | **Profit (loss)** |
|  | **Eurolife**<sup>(1)</sup> | **Insurance** | **other** | **Total** | **Eurobank** | **Resolute** | **Atlas**<sup>(2)</sup> | **Quess** | **All other** | **Total** | **of associates** |
| 2018 | 18.1 | 7.3 | (55.1) | **(29.7)** |  | 74.4 | 8.8 | 8.4 | 159.2 | **250.8** | **221.1** |
| 2019 | 154.8 | 15.4 | (23.7) | **146.5** |  | (4.9) | 83.8 | (183.2) | 127.4 | **23.1** | **169.6** |
| 2020 | 6.1 | 5.8 | 107.4 | **119.3** | (11.9) | (57.0) | 116.4 | (124.6) | (155.0) | **(232.1)** | **(112.8)** |
| 2021 | 14.3 | 55.5 | 2.8 | **72.6** | 162.3 | 75.9 | 69.5 | (1.4) | 23.1 | **329.4** | **402.0** |
| 2022 |  | 53.0 | (22.6) | **30.4** | 263.0 | 159.0 | 258.2 | 6.8 | 297.3 | **984.3** | **1014.7** |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)*  ***Consolidated on July 14, 2021.*** 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)*  ***Formerly Seaspan Corporation during 2019 and 2018.*** 

● Share of profit of associates in 2022 of $1,014.7 primarily reflected significant improvement in the company's underlying investments in Atlas (share of profit of $258.2 compared to $69.5 in 2021), Eurobank (share of profit of $263.0 compared to $162.3 in 2021), Resolute (share of profit of $159.0 compared to $75.9 in 2021), and EXCO (share of profit of $81.9 compared to share of loss of $41.2 in 2021). Fairfax has seen improvements during 2022 and 2021 in the underlying operations that are evidenced in the company's share of profit recorded and the absence of impairment charges in those respective periods.

#### Net gains (losses) on investments

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Long equity** | **Short equity** | **Net equity exposures** |  |  | **Net gains (losses)**  |
|  | **exposures** | **exposures** | **and financial effects** | **Bonds** | **Other** | **on investments** |
| 2018 | 431.9 | (38.2) | 393.7 | 8.3 | (149.1) | 252.9 |
| 2019 | 1280.0 | (57.8) | 1222.2 | 110.4 | 383.6 | 1716.2 |
| 2020 | 371.9 | (528.6) | (156.7) | 460.2 | 9.6 | 313.1 |
| 2021 | 2312.1 |  | 2312.1 | (260.9) | 1393.9 | 3445.1 |
| 2022 | (243.8) |  | (243.8) | (1086.1) | (404.0) | (1733.9) |

---

● Net losses on long equity exposures of $243.8 in 2022 were primarily comprised of net losses on common stocks ($242.7), convertible bonds ($237.0), AVLNs entered with RiverStone Barbados ($87.3) and equity warrants and options ($50.0), partially offset by net gains on long equity total return swaps ($328.1) which included net gains of $255.4 on the company's investment in long equity total return swaps on Fairfax subordinate voting shares.

● Net losses on bonds in 2022 of $1,086.1, the majority of which are expected to reverse over the short term, were primarily comprised of net losses on corporate and other bonds ($445.7, principally related to U.S. and other corporate bonds), U.S. treasury bonds ($442.1), Greek government bonds ($157.8) and U.S. state and municipal bonds ($73.7), partially offset by net gains on U.S. treasury bond forward contracts ($162.4). At December 31, 2022 the company's fixed income portfolio duration remained low at approximately 1.6 years on $38.0 billion invested in cash and principally short-dated investments (comprised of short term investments and the bond portfolio which is mainly invested in short-dated bonds). The company experienced a decline of only 2.9% in its fixed income portfolio in 2022, and the low duration should continue to mitigate the impact of rising interest rates on the company's fixed income portfolio, while enabling the company to continue to benefit significantly from increased interest income in future periods considering the portfolio is primarily deployed into one to five year U.S. treasury and Canadian government bonds, short-dated high quality corporate bonds and first mortgage loans.

● Net losses on other of $404.0 primarily reflected unrealized foreign exchange losses, principally related to the strengthening of the U.S. dollar against the company's investments denominated in the Indian rupee, Canadian dollar and Egyptian pound.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Financial Condition

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Holding** | **Total debt to total** |  |  |  |  |  |
|  | **company cash** | **capital, excluding** | **Excess** | **Net earnings** |  |  |  |
|  | **and investments,** | **consolidated** | **(deficiency) of** | **attributable to** | **Common** | **Book value** | **Closing** |
|  | **net of derivative** | **non-insurance** | **fair value over** | **shareholders** | **shareholders'** | **per basic** | **share price** |
|  | **obligations** | **companies**<sup>(1)</sup> | **carrying value** <sup>(2)</sup> | **of Fairfax** | **equity** | **share** | **in Cdn$** |
| 2018 | 1550.6 | 25.0% | (98.4) | 376.0 | 11779.3 | 432.46 | 600.98 |
| 2019 | 975.2 | 24.5% | (209.0) | 2004.1 | 13042.6 | 486.10 | 609.74 |
| 2020 | 1229.4 | 29.7% | (662.6) | 218.4 | 12521.1 | 478.33 | 433.85 |
| 2021 | 1446.2 | 24.1% | 346.4 | 3401.1 | 15049.6 | 630.60 | 622.24 |
| 2022 | 1326.4 | 26.2% | 310.0 | 1147.2 | 15340.7 | 657.68 | 802.07 |
| % change 2022 over 2021 |  |  |  |  |  | 4.3% | 28.9% |
| % change 2022 over 2018 |  |  |  |  |  | 52.1% | 33.5% |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Excludes borrowings at the consolidated non-insurance companies as those are non-recourse to the holding company.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Excess (deficiency) of fair value over carrying value of non-insurance associates and market traded consolidated non-insurance subsidiaries as disclosed in Financial Condition under the heading Book Value Per Basic Share in this MD&A.* 

● Maintaining an emphasis on financial soundness, the company held $1,345.8 of cash and investments at the holding company at December 31, 2022 compared to $1,478.3 at December 31, 2021, with its $2.0 billion unsecured revolving credit facility undrawn. The holding company cash and investments, as mentioned before, supports the decentralized structure and enables Fairfax to deploy capital to the company's insurance and reinsurance companies efficiently. On June 29, 2022 the company amended and restated its $2.0 billion unsecured revolving credit facility with a syndicate of lenders on substantially the same terms which extended the expiry from June 29, 2026 to June 29, 2027.

● The company's property and casualty insurance and reinsurance companies continue to maintain capital well above minimum regulatory levels, at levels adequate to support their issuer credit and financial strength ratings, and above internally calculated risk management levels. Refer to the Financial Condition section under the heading "Capital Resources and Management" within this MD&A for additional details on the financial strength ratings of the company's property and casualty insurance and reinsurance operating companies.

● The company's consolidated total debt to total capital ratio, excluding consolidated non-insurance subsidiaries, increased to 26.2% at December 31, 2022 from 24.1% at December 31, 2021, primarily reflecting the issuance on August 16, 2022 of $750.0 million principal amount of 5.625% unsecured senior notes due 2032 and a decline in non-controlling interests reflecting the company's acquisition of additional shares of Allied World from non-controlling interests, where the company now has an ownership interest in Allied World of 82.9%. The company has no significant holding company debt maturities until August 2024.

● At December 31, 2022 the excess of fair value over carrying value of investments in non-insurance associates and market traded consolidated non-insurance subsidiaries was $310.0 compared to an excess of fair value over carrying value at December 31, 2021 of $346.4, with the pre-tax excess of $310.0 not reflected in the company's book value per share, but regularly reviewed by management as an indicator of investment performance. The company's investments in non-insurance associates accounted for $266.3 of the pre-tax excess, principally attributable to Atlas ($358.4), EXCO ($256.4) and Stelco ($118.5), partially offset by Quess ($224.9) and Eurobank ($163.1), and the improvements in market traded consolidated non-insurance subsidiaries accounted for $43.7, primarily related to Thomas Cook India ($78.8) and Fairfax India ($68.3), partially offset by Farmers Edge ($65.9) and Boat Rocker ($61.9).

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

● Common shareholders' equity increased to $15,340.7 at December 31, 2022 from $15,049.6 at December 31, 2021, primarily reflecting:

● strong net earnings attributable to shareholders of Fairfax of $1,147.2, and

● other comprehensive income relating to net gains on defined benefit plans of $174.7; partially offset by

● other comprehensive loss of $399.1 relating to unrealized foreign currency losses net of hedges,

● payments of common and preferred share dividends of $295.1,

● purchases of subordinate voting shares for cancellation for cash consideration of $199.6, or $514.71 per share, well below the company's book value per basic share, and

● net changes in capitalization of $173.6 (principally related to the acquisition of additional common shares of Allied World from non-controlling interests and the privatization of Recipe).

● Book value per basic share was $657.68 at December 31, 2022 compared to $630.60 at December 31, 2021, representing an increase of 4.3% without adjustment for the $10.00 per common share dividend paid in the first quarter of 2022, or an increase of 6.0% adjusted to include that dividend. At December 31, 2022 there were 23,325,305 common shares effectively outstanding.

● The company's book value per basic share has increased 52.1% since 2018 while the share price in Canadian dollars has increased by 33.5%. As a result, Fairfax has completed share buybacks but not at the expense of supporting growth at the insurance and reinsurance companies and maintaining strong issuer credit and financial strength ratings at the holding company and insurance and reinsurance companies. Fairfax has purchased 3,306,421 subordinate voting shares for cancellation from the first quarter of 2018 up to December 31, 2022, at a cost of $1,569.3, or an average price of $474.63 per share, a significant benefit to Fairfax's long term shareholders.

● Information on the company's 2022 Environmental, Social and Governance ("ESG") report can be accessed from the company's website *www.fairfax.ca.* 

#### Conflict in Ukraine
On February 24, 2022 Russia invaded Ukraine, causing a major humanitarian crisis. As a result, countries around the world have imposed economic sanctions against Russia, largely led by western nations ("the conflict in Ukraine") including bans on the import of Russian oil and natural gas by certain countries including Canada and the U.S. As such, oil and other commodity prices increased sharply and were volatile throughout 2022.

The company's insurance operations located in Ukraine (comprised of the company's 70.0% equity interest in Fairfax Ukraine, which consists of ARX Insurance and Universalna, and Colonnade Insurance's wholly-owned Ukrainian insurance company) have all continued to operate, with continued efforts on maintaining sales, finance, marketing, operations and claims handling processes, leveraging the remote work environment established during the COVID-19 crisis. The company's property and casualty insurance and reinsurance subsidiaries' operating results in 2022 included net losses on claims of $68.4 (approximately 84% incurred but not reported losses), or 0.3 combined ratio points, directly related to insurance policies that have potential exposure to the conflict in Ukraine, primarily in marine, terrorism and political risk lines of business in the Global Insurers and Reinsurers reporting segment.

The company's investment in associate, Astarta Holding N.V., is located in Ukraine and also continued to operate with no significant effects reported on its underlying operations in 2022. The company will continue to monitor the potential impact the conflict in Ukraine may have on its businesses.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Business Developments

#### Substantial Issuer Bid
On December 29, 2021 the company completed a substantial issuer bid pursuant to which it purchased for cancellation 2,000,000 subordinate voting shares for cash consideration of $1.0 billion or $500.00 per share.

#### Acquisitions and Divestitures
The following narrative sets out the company's key business developments subsequent to December 31, 2022, and completed in 2022 and 2021 by reporting segment. For details of these transactions refer to note 6 (Investments in Associates), note 16 (Total Equity) and note 23 (Acquisitions and Divestitures) to the consolidated financial statements for the year ended December 31, 2022.

#### North American Insurers
On October 31, 2022 the company sold its interests in the Crum & Forster Pet Insurance Group and Pethealth to Independence Pet Group and certain of its affiliates, which are majority owned by JAB Holding Company ("JAB"). As part of the transaction, the company received $1.4 billion in the form of $1.15 billion in cash and $250.0 in debentures, and the company committed to invest $200.0 in a JAB consumer fund. As a result of the sale, the company recorded a pre-tax gain of $1,213.2, in gain on sale and consolidation of insurance subsidiaries in the consolidated statement of earnings (an after-tax gain of $933.9), and deconsolidated assets and liabilities with carrying values of $149.1 and $32.0.

#### Global Insurers and Reinsurers
On January 7, 2023 Brit entered into an agreement to sell Ambridge Group, its Managing General Underwriter operations, to Amynta Group. The company will receive approximately $400 on closing, comprised principally of cash of $275.0 and a promissory note of approximately $125. An additional $100.0 may be receivable based on 2023 performance targets of Ambridge. Closing of the transaction is subject to customary closing conditions, including regulatory approvals, and is expected to occur in the next few months. On closing of the transaction, the company expects to deconsolidate assets and liabilities with carrying values at December 31, 2022 of approximately $284 and $160, and to record a pre-tax gain of approximately $275 (prior to ascribing any fair value to the additional receivable).

On December 15, 2021 Odyssey Group issued shares representing an aggregate 9.99% equity interest to a subsidiary of Canada Pension Plan Investment Board ("CPPIB") and OMERS, the pension plan for Ontario's municipal employees, for cash consideration of $900.0 which was subsequently paid by Odyssey Group as a dividend to Fairfax. The company recorded an aggregate equity gain of $429.1, principally comprised of a dilution gain and the fair value of a call option received, which was presented as net changes in capitalization in the consolidated statement of changes in equity. The company has the option to purchase the interests of CPPIB and OMERS in Odyssey Group at certain dates commencing in January 2025.

On August 27, 2021 Brit issued shares representing a 13.9% equity interest to OMERS for cash consideration of $375.0 which was subsequently paid by Brit as a dividend to Fairfax. The company recorded an aggregate equity gain of $115.4, principally comprised of a dilution gain and the fair value of a call option received, which was presented as net changes in capitalization in the consolidated statement of changes in equity. The company has the option to purchase OMERS' interest in Brit at certain dates commencing in October 2023.

#### International Insurers and Reinsurers
On June 17, 2021 the company increased its ownership interest in Singapore Reinsurance Corporation Limited ("Singapore Re") from 28.2% to 94.0% for $102.9 (SGD 138.0) and subsequently increased its ownership interest to 100%.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Life insurance and Run-off
On August 23, 2021 the company sold its 60.0% joint venture interest in RiverStone Barbados to CVC Capital Partners ("CVC") for consideration of $695.7, principally comprised of cash of $462.0 and non-voting shares of CVC's RiverStone Barbados holding company. Prior to completion of the transaction, certain subsidiaries of RiverStone Barbados held investments in various Fairfax subsidiaries and certain other companies. As part of the transaction, on February 8, 2021 the company had entered into Asset Value Loan Notes ("AVLNs") to guarantee the then approximately $1.3 billion value of the securities to CVC and certain affiliates thereof until such time the securities are purchased by or sold at the direction of Hamblin Watsa, prior to the end of 2022. The company, through Hamblin Watsa, continues to manage and have direction over these securities, including their voting rights. The company recorded the AVLNs as derivative instruments whose fair value is the difference between the guaranteed value of the underlying securities and their fair value, which resulted in a derivative asset of $103.8 on the consolidated balance sheet at December 31, 2021, and a net gain on investments of $103.8 for the year then ended in the consolidated statement of earnings. During 2021 securities with a guaranteed value of $120.8 were sold or purchased by Hamblin Watsa, leaving securities with a guaranteed value of approximately $1.1 billion remaining under the AVLNs at December 31, 2021. Subsequently on July 5, 2022, as described in note 7 (Derivatives) to the consolidated financial statements for the year ended December 31, 2022, an amendment to the AVLNs was completed, extending $543.4 of the underlying securities to be purchased or sold prior to the end of 2023. The remainder of the securities were purchased or sold during 2022; in addition, certain of the amended AVLNs were purchased in the second half of 2022, leaving securities with a guaranteed value of $486.8 at December 31, 2022 to be purchased or sold in 2023.

On July 14, 2021 the company increased its interest in Eurolife to 80.0% from 50.0% by exercising a call option valued at $127.3 to acquire the joint venture interest of OMERS for cash consideration of $142.7 (€120.7).

#### Non-insurance companies
*Restaurants and retail*

On October 28, 2022 the company acquired all of the multiple voting shares ("MVS") and subordinate voting shares in the capital of Recipe, other than those shares owned by the company and 9,398,729 MVS owned by Cara Holdings Limited, at a cash purchase price of Cdn$20.73 per share or $342.3 (Cdn$465.9) in aggregate and recorded a loss in retained earnings of $66.1 and a decrease in non-controlling interests of $276.2. The transaction increased the company's equity ownership in Recipe from 38.5% at December 31, 2021 to 75.7%, or 84.0% inclusive of Recipe shares held through the company's investment in AVLNs entered with RiverStone Barbados. Recipe was subsequently delisted from the Toronto Stock Exchange.

On August 19, 2021 the company sold the operations of Toys "R" Us Canada for consideration of $90.3 (Cdn$115.7).

*Fairfax India*

On September 16, 2021 Fairfax India transferred 43.6% out of its 54.0% equity interest in Bangalore Airport to Anchorage Infrastructure Investments Holdings Limited ("Anchorage"), its wholly-owned holding compay for investments in the airport sector of India, and sold an 11.5% equity interest in Anchorage to OMERS for gross proceeds of $129.2 (9.5 billion Indian rupees). Upon closing Fairfax India recorded a non-controlling interest in Anchorage and continued to equity account for its aggregate 54.0% equity interest in Bangalor Airport.

On April 29, 2021 Fairfax India sold its 48.8% equity interest in Privi to certain affiliates of Privi's founders for $164.8 (12.2 billion Indian rupees).

*Other*

On July 5, 2022 the company increased its interest in Grivalia Hospitality S.A. ("Grivalia Hospitality") to 78.4% from 33.5% by acquiring additional shares for cash consideration of $194.6 (€190.0) and commenced consolidating the assets, liabilities and results of operations of Grivalia Hospitality.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

On August 5, 2021 Mosaic Capital completed a privatization arrangement with a third party purchaser pursuant to which the company principally exchanged its holdings of Mosaic Capital debentures and warrants, and cash of $10.7 (Cdn$13.3), for $130.8 (Cdn$163.3) of newly issued Mosaic Capital 25-year debentures.

During March 2021, Boat Rocker completed an initial public offering for $135.5 (Cdn$170.1) and Farmers Edge completed an initial public offering for $113.8 (Cdn$143.8).

#### Sources of Income
Income for the most recent three years was comprised as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **2022** | **2021** | **2020** |
| Net premiums earned - Property and Casualty Insurance and Reinsurance |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;North American Insurers | 6107.8 | 5024.8 | 4494.1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Global Insurers and Reinsurers | 12726.9 | 9451.8 | 8019.9 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;International Insurers and Reinsurers | 1829.0 | 1613.6 | 1346.6 |
|  | 20663.7 | 16090.2 | 13860.6 |
| Life insurance and Run-off | 342.4 | 467.8 | 128.1 |
| Net premiums earned | 21006.1 | 16558.0 | 13988.7 |
| Interest and dividends | 961.8 | 640.8 | 769.2 |
| Share of profit (loss) of associates | 1014.7 | 402.0 | (112.8) |
| Net gains (losses) on investments | (1733.9) | 3445.1 | 313.1 |
| Gain on sale and consolidation of insurance subsidiaries | 1219.7 | 264.0 | 117.1 |
| Other revenue<sup>(1)</sup> | 5581.6 | 5158.0 | 4719.6 |
|  | 28050.0 | 26467.9 | 19794.9 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Represents revenue earned by the Non-insurance companies reporting segment, which is comprised primarily of the revenue earned by the Restaurants and retail operating segment (comprised of Recipe, Sporting Life and Golf Town), Thomas Cook India (inclusive of its subsidiary Sterling Resorts), Fairfax India and its subsidiaries, and the Other operating segment (comprised of AGT, Boat Rocker, Dexterra Group, Farmers Edge and Grivalia Hospitality (consolidated on July 5, 2022)). Also included is the revenue earned by the following companies up to the noted date of deconsolidation: Toys "R" Us Canada (August 19, 2021) and Mosaic Capital (August 5, 2021).* 

*Year ended December 31, 2022 compared to December 31, 2021*

The increase of $4,573.5 in net premiums earned by the company's property and casualty insurance and reinsurance operations in 2022 reflected the continued significant growth in the Global Insurers and Reinsurers ($3,275.1, 34.7%), North American Insurers ($1,083.0, 21.6%), and International Insurers and Reinsurers ($215.4, 13.3%) reporting segments. Refer to the Components of Net Earnings section of this MD&A under the relevant reporting segment for details about net premiums earned by the company's property and casualty insurance and reinsurance operations, and Life insurance and Run-off in 2022 and 2021.

A detailed analysis of consolidated interest and dividends, share of profit (loss) of associates and net gains (losses) on investments in 2022 and 2021 is provided in the Investments section of this MD&A.

Gain on sale and consolidation of insurance subsidiaries of $1,219.7 in 2022 primarily related to the sale of the company's interest in the Crum & Forster Pet Insurance Group and Pethealth, including all of their worldwide operations, to Independence Pet Group and certain of its affiliates, which are majority owned by JAB Holding Company. Gain on sale and consolidation of insurance subsidiaries of $264.0 in 2021 primarily related to realized gains on the consolidation of Eurolife ($130.5) and Singapore Re ($32.4), and a realized gain of $36.1 recorded by Allied World on disposition of its majority interest in Vault Insurance.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

Other revenue earned by the Non-insurance companies reporting segment increased to $5,581.6 in 2022 from $5,158.0 in 2021, principally reflecting increased business volumes at AGT, Thomas Cook India (from continued easing of COVID-19 related travel restrictions and increased domestic and international travel), Dexterra Group (primarily driven by acquisitions in the first quarter of 2022) and Recipe (principally due to reduced COVID-19 related restrictions in 2022), partially offset by the deconsolidation of Toys "R" Us Canada (on August 19, 2021) and Mosaic Capital (on August 5, 2021), decreased business volumes at Boat Rocker and Fairfax India's deconsolidation of Privi (on April 29, 2021). Refer to the Non-insurance companies section of this MD&A for additional details on other revenue in 2022 and 2021.

*Year ended December 31, 2021 compared to December 31, 2020*

The increase in net premiums earned by the company's property and casualty insurance and reinsurance operations in 2021 reflected increases at the Global Insurers and Reinsurers ($1,431.9, 17.9%), North American Insurers ($530.7, 11.8%), and International Insurers and Reinsurers ($267.0, 19.8%) reporting segments. The increase in net premiums earned at Life insurance and Run-off in 2021 principally reflected the consolidation of Eurolife on July 14, 2021, as well as the fourth quarter 2021 intercompany reinsurance transaction that increased net premiums earned at Run-off by $358.1, as described in the Life insurance and Run-off section of this MD&A.

Net gains on investments of $3,445.1 in 2021 principally reflected net gains on long equity exposures of $2,312.1 and preferred stocks of $1,508.9 (primarily reflecting net unrealized gains of $1,490.3 (inclusive of foreign exchange losses) on Digit compulsory convertible preferred shares), partially offset by net losses on bonds. Net gains on investments of $313.1 in 2020 principally reflected net gains on bonds (due to unrealized appreciation of high quality corporate bonds) and long equity exposures, partially offset by net losses on short equity exposures (from closing out the company's remaining short equity total return swaps) and U.S. treasury bond forward contracts.

Interest and dividends decreased to $640.8 in 2021 from $769.2 in 2020, primarily reflecting lower interest income earned, principally due to a general decrease in sovereign bond yields, sales and maturities of U.S. treasury bonds throughout 2020 and net sales of U.S. corporate bonds during 2021, partially offset by higher interest income earned on first mortgage loans purchased during 2021 and increased dividend income from common stocks.

*Share of profit of associates of $402.0 in 2021 principally reflected share of profit of Eurobank of $162.3, Resolute of $75.9, Atlas of $69.5 and Gulf Insurance of $55.5. Share of loss of associates of $112.8 in 2020 primarily reflected non-cash impairment losses of $240.3 (principally related to investments in Quess, Resolute, Atlas Mara and Astarta) and share of loss from Fairfax India's investments in Sanmar of $48.6 and Bangalore Airport of $30.5, partially offset by share of profit of Atlas of $116.4 and RiverStone Barbados of $113.0.*

*Gain on sale and consolidation of insurance subsidiaries of $117.1 in 2020 related to the deconsolidation of European Run-off.*

*Other revenue earned by the Non-insurance companies reporting segment increased to $5,158.0 in 2021 from $4,719.6 in 2020 principally reflecting higher business volumes at the Restaurants and retail operating segment (partially offset by the deconsolidation of Toys "R" Us Canada on August 19, 2021), Boat Rocker, Dexterra Group (partly due to the reverse acquisition of Horizon North on May 29, 2020) and AGT, and the impact of the strengthening of the Canadian dollar relative to the U.S. dollar on the non-insurance companies located in Canada, partially offset by the deconsolidation of Fairfax Africa (on December 8, 2020) and Privi at Fairfax India (on April 29, 2021).* 

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

*Net Premiums Written by Reporting Segment*

The table below presents net premiums written by the company's insurance and reinsurance operations.

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| | | | |
|:---|:---|:---|:---|
|  |  |  | **% change** |
|  |  |  | **year-over-** |
| Property and Casualty Insurance and Reinsurance | **2022** | **2021** | **year** |
| &nbsp;&nbsp;&nbsp;&nbsp;North American Insurers | 6457.6 | 5319.7 | 21.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;Global Insurers and Reinsurers | 13506.3 | 10755.5 | 25.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;International Insurers and Reinsurers | 1963.1 | 1734.2 | 13.2 |
|  | 21927.0 | 17809.4 | 23.1 |
| Life insurance and Run-off | 344.7 | 468.7 | (26.5) |
| Net premiums written | 22271.7 | 18278.1 | 21.8 |

---

*Property and Casualty Insurance and Reinsurance Operations*

*North American Insurers' net premiums written increased by 21.4% in 2022, primarily reflecting increased business volumes at Crum & Forster (primarily accident and health, surplus and specialty, and commercial lines) and Northbridge (primarily property lines and strong retention), rate increases across most lines of business, with the exception of Zenith National's workers' compensation which continues to experience rate decreases, and the impact of Crum & Forster's fourth quarter of 2021 intercompany reinsurance transaction described in the North American Insurers section of this MD&A.*

*Global Insurers and Reinsurers' net premiums written increased by 25.6% in 2022, primarily reflecting record premiums at each of the operating companies within this reporting segment which included increased premiums at Odyssey Group (primarily relating to U.S. property reinsurance including a large quota share agreement covering homeowners risks, U.S. casualty reinsurance and U.S. crop insurance), Brit (primarily reflecting growth at Ki Insurance and core insurance lines of business) and Allied World (primarily the North American and Global Markets platforms relating to excess casualty and professional liability, as well as its reinsurance operations).*

*International Insurers and Reinsurers' net premiums written increased by 13.2% in 2022, primarily reflecting increases at Fairfax Asia (principally as a result of the consolidation of Singapore Re on June 17, 2021), Fairfax Latin America (primarily due to increases at Fairfax Latam (increases at Southbridge Chile and La Meridional Argentina), partially offset by decreases at Fairfax Brasil) and at Group Re (across all of Group Re's operating companies), and the consolidation of Eurolife General for a full year.*

*Life insurance and Run-off*

Net premiums written at Life insurance and Run-off decreased by 26.5% in 2022, principally reflecting Run-off assuming $358.1 as an increase in premiums in 2021 in an intercompany reinsurance transaction (as described in the Life insurance and Run-off section of this MD&A), partially offset by the consolidation of Eurolife on July 14, 2021.

#### Net Premiums Earned by Geographic Region
As presented in note 25 (Segmented Information) to the consolidated financial statements for the year ended December 31, 2022, the United States, Canada, International and Asia accounted for 64.9%, 10.9%, 17.4% and 6.8% respectively, of net premiums earned by geographic region in 2022, compared to 62.4%, 12.6%, 17.5% and 7.5% respectively, in 2021.

*United States*

Net premiums earned in the United States geographic region increased by 31.8% from $10,333.4 in 2021 to $13,617.7 in 2022 principally reflecting growth at each of Odyssey Group (property and casualty reinsurance), Crum & Forster (accident and health, surplus and specialty, and commercial lines), Allied World (primarily excess casualty and professional liability, as well as its reinsurance operations) and Brit (reflecting growth at Ki Insurance and cyber and property insurance), and the impact of the fourth quarter 2021 reinsurance transaction at Brit which decreased premiums earned in 2021.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

*Canada*

Net premiums earned in the Canada geographic region increased by 10.4% from $2,078.2 in 2021 to $2,293.5 in 2022 primarily reflecting an increase at Northbridge (new business, strong retention of renewal business and continued incremental rate increases).

*International*

Net premiums earned in the International geographic region increased by 26.4% from $2,899.4 in 2021 to $3,663.5 in 2022 primarily reflecting growth in Europe at Brit (property and cyber insurance and casualty treaty) and Allied World (primarily property and professional liability insurance), and in Latin America at Odyssey Group (treaty and facultative reinsurance) and Fairfax Latin America.

*Asia*

Net premiums earned in the Asia geographic region increased by 14.8% from $1,247.0 in 2021 to $1,431.4 in 2022 primarily reflecting growth at Group Re and the inclusion of a full year of earned premium of Singapore Re.

#### Sources of Net Earnings
The table below presents the sources of the company's net earnings for the years ended December 31, 2022, 2021 and 2020 using amounts presented in note 25 (Segmented Information) to the company's consolidated financial statements for the years ended December 31, 2022 and 2021, set out in a format the company has consistently used as it believes it assists in understanding the composition and management of the company. The table shows separately combined ratios and underwriting results for each of the Property and Casualty Insurance and Reinsurance segments. Operating income (loss) as presented for the Property and Casualty Insurance and Reinsurance, Life insurance and Run-off and Non-insurance companies reporting segments includes interest and dividends and share of profit (loss) of associates, and excludes net gains (losses) on investments which are considered a less predictable source of investment income. Net gains (losses) on investments is disaggregated into net realized gains (losses) on investments and net change in unrealized gains (losses) on investments, consistent with the manner in which management reviews the results of the company's investment management strategies.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

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| | | | |
|:---|:---|:---|:---|
|  | **2022** | **2021** | **2020** |
| **Combined ratios - Property and Casualty Insurance and Reinsurance** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;North American Insurers | 92.9% | 92.3% | 95.1% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Global Insurers and Reinsurers | 94.8% | 96.0% | 99.1% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;International Insurers and Reinsurers | 99.3% | 97.5% | 99.1% |
| Consolidated | 94.7% | 95.0% | 97.8% |
| **Sources of net earnings** |  |  |  |
| Operating income - Property and Casualty Insurance and Reinsurance: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Underwriting profit: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;North American Insurers | 433.0 | 386.9 | 220.8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Global Insurers and Reinsurers | 659.0 | 374.2 | 75.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;International Insurers and Reinsurers | 13.3 | 40.1 | 12.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Underwriting profit | 1105.3 | 801.2 | 309.0 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest and dividends  | 746.1 | 441.7 | 560.6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Share of profit of associates  | 721.5 | 324.1 | 46.2 |
| Operating income - property and casualty insurance and reinsurance | 2572.9 | 1567.0 | 915.8 |
| Operating loss - Life insurance and Run-off  | (55.3) | (272.9) | (194.6) |
| Operating income (loss) - Non-insurance companies  | 221.3 | (7.0) | (178.7) |
| Interest expense | (452.8) | (513.9) | (475.9) |
| Corporate overhead and other expense | (59.9) | (89.7) | (252.7) |
| Gain on sale and consolidation of insurance subsidiaries | 1219.7 | 264.0 | 117.1 |
| Pre-tax income (loss) before net gains (losses) on investments | 3445.9 | 947.5 | (69.0) |
| Net realized gains (losses) on investments | 757.1 | 1463.0 | (669.1) |
| Pre-tax income (loss) including net realized gains (losses) on investments | 4203.0 | 2410.5 | (738.1) |
| Net change in unrealized gains (losses) on investments | (2491.0) | 1982.1 | 982.2 |
| Earnings before income taxes | 1712.0 | 4392.6 | 244.1 |
| Provision for income taxes | (425.2) | (726.0) | (206.7) |
| Net earnings | 1286.8 | 3666.6 | 37.4 |
| Attributable to: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Shareholders of Fairfax | 1147.2 | 3401.1 | 218.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;Non-controlling interests | 139.6 | 265.5 | (181.0) |
|  | 1286.8 | 3666.6 | 37.4 |
| **Net earnings per share** | $46.62 | $129.33 | $6.59 |
| **Net earnings per diluted share** | $43.49 | $122.25 | $6.29 |
| **Cash dividends paid per share** | $10.00 | $10.00 | $10.00 |

---

The company reported net earnings attributable to shareholders of Fairfax of $1,147.2 (net earnings of $46.62 per basic share and $43.49 per diluted share) in 2022 compared to record net earnings attributable to shareholders of Fairfax of $3,401.1 (net earnings of $129.33 per basic share and $122.25 per diluted share) in 2021. The year-over-year decrease in profitability reflected net losses on investments in 2022 (comprising mark-to-market losses on bonds due to the rising interest rate environment, the majority of which are expected to reverse over the short term) compared to net gains on investments in 2021, partially offset by a record year for both underwriting profit and operating income from the property and casualty insurance and reinsurance operations and increased operating income from the Non-insurance companies reporting segment.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

*Underwriting Profit - Property and Casualty Insurance and Reinsurance*

The consolidated combined ratio of the property and casualty insurance and reinsurance operations was 94.7% in 2022, producing record underwriting profit of $1,105.3 despite catastrophe losses of $1,255.7 (representing 6.1 combined ratio points), compared to a combined ratio of 95.0% and an underwriting profit of $801.2 in 2021. The property and casualty insurance and reinsurance operations continued to experience net favourable prior year reserve development, with a benefit of $196.2 or 0.9 combined ratio points compared to $355.6 or 2.2 combined ratio points in 2021. Net favourable prior year reserve development in 2022 and 2021 was comprised as follows:

---

| | | |
|:---|:---|:---|
| Property and Casualty Insurance and Reinsurance | **2022** | **2021**<sup>(1)</sup> |
| &nbsp;&nbsp;North American Insurers | (77.2) | (103.7) |
| &nbsp;&nbsp;Global Insurers and Reinsurers | (21.1) | (201.4) |
| &nbsp;&nbsp;International Insurers and Reinsurers | (97.9) | (50.5) |
| Net favourable prior year reserve development | (196.2) | (355.6) |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Includes net adverse prior year reserve development of COVID-19 losses of $73.5, primarily in the Global Insurers and Reinsurers reporting segment (principally at Odyssey Group and Allied World) related to assumed business interruption exposures outside North America.* 

Current period catastrophe losses in 2022 and 2021 were comprised as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2022** | **2022** |  | **2021** | **2021** |  |
|  |  | **Combined** |  |  | **Combined** |  |
|  | **Losses**<sup>(1)</sup> | **ratio impact**<sup>(2)</sup> |  | **Losses**<sup>(1)</sup> | **ratio impact**<sup>(2)</sup> |  |
| &nbsp;&nbsp;Hurricane Ian | 567.0 | 2.8 |  |  |  |  |
| &nbsp;&nbsp;France hailstorms | 118.7 | 0.6 |  |  |  |  |
| &nbsp;&nbsp;Australian floods | 71.4 | 0.3 |  |  |  |  |
| &nbsp;&nbsp;Hurricane Ida |  |  |  | 407.9 | 2.5 |  |
| &nbsp;&nbsp;U.S. winter storms |  |  |  | 246.0 | 1.5 |  |
| &nbsp;&nbsp;European floods |  |  |  | 219.8 | 1.4 |  |
| &nbsp;&nbsp;Other | 498.6 | 2.4 |  | 274.4 | 1.8 |  |
| Total catastrophe losses | 1255.7 | 6.1 | points | 1148.1 | 7.2 | points |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)*  ***Net of reinstatement premiums.*** 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)*  ***Expressed in combined ratio points.*** 

The following table presents the components of the company's combined ratios for the years ended December 31:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| **Underwriting profit - Property and Casualty Insurance and Reinsurance** | 1105.3 | 801.2 |
| &nbsp;&nbsp;Loss & LAE - accident year | 66.1% | 64.9% |
| &nbsp;&nbsp;Commissions | 16.6% | 17.2% |
| &nbsp;&nbsp;Underwriting expense | 12.9% | 15.1% |
| **Combined ratio - accident year** | 95.6% | 97.2% |
| &nbsp;&nbsp;Net favourable reserve development | (0.9)% | (2.2)% |
| **Combined ratio - calendar year** | 94.7% | 95.0% |

---

The calendar year loss & LAE ratio, comprised of the accident year loss & LAE ratio and net favourable reserve development, increased to 65.2% in 2022 from 62.7% in 2021, primarily reflecting lower net favourable prior year reserve development and the impact of the reinsurance transactions in 2021 (the Brit fourth quarter 2021 reinsurance transaction and the Crum & Forster fourth quarter 2021 intercompany reinsurance transaction, both of which reduced net premiums earned and losses on claims in 2021) that decreased the calendar year loss & LAE ratio by 1.5%.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

The commission expense ratio of 16.6% in 2022 decreased from 17.2% in 2021, primarily reflecting the impact of reinsurance transactions in 2021 discussed above that added 0.7% to the commission expense ratio and increased premium volumes at Allied World which attract lower average net commissions, partially offset by increases at Odyssey Group (primarily reflecting changes in the mix of business written).

The underwriting expense ratio improved significantly to 12.9% in 2022 from 15.1% in 2021, principally reflecting lower underwriting expense ratios at Odyssey Group, Allied World, and Crum & Forster (primarily reflecting increased net premiums earned relative to modest increases in other underwriting expenses at each operating company) and the impact of reinsurance transactions in 2021 discussed above that added 0.6% to the underwriting expense ratio in 2021.

Other underwriting expenses increased to $2,666.0 in 2022 from $2,431.9 in 2021, primarily reflecting increased business volumes at most of the property and casualty insurance and reinsurance companies. For further details refer to note 25 (Segmented Information) to the consolidated financial statements for the year ended December 31, 2022.

*Operating expenses and Other expenses*

Operating expenses as presented in the consolidated statement of earnings increased to $3,057.5 in 2022 from $2,946.1 in 2021, primarily reflecting increases in other underwriting expenses of the property and casualty insurance and reinsurance operations (as described in the preceding paragraph), partially offset by decreased Fairfax and subsidiary holding companies' corporate overhead (refer to the Corporate Overhead and Other section in this MD&A for details).

Other expenses as presented in the consolidated statement of earnings increased to $5,520.9 in 2022 from $5,086.9 in 2021, principally reflecting increased business volumes at AGT, Thomas Cook India (primarily from continued easing of COVID-19 related travel restrictions and increased domestic and international travel), Dexterra Group (primarily driven by local acquisitions in the first quarter of 2022 and organic growth) and Recipe (primarily from the easing of COVID-19 restrictions), and a non-cash goodwill impairment charge on Farmers Edge of $133.4 recorded in 2022, partially offset by the deconsolidation of Toys "R" Us Canada on August 19, 2021 and Mosaic Capital on August 5, 2021. Refer to the Non-insurance companies section of this MD&A for additional details.

*Investment Income*

An analysis of interest and dividends, share of profit (loss) of associates and net gains (losses) on investments for the years ended December 31, 2022 and 2021 is provided in the Investments section of this MD&A.

#### Net Earnings by Reporting Segment
The company's sources of net earnings shown by reporting segment are set out below for the years ended December 31, 2022 and 2021. In the Eliminations and adjustments column, the gross premiums written adjustment eliminates premiums on reinsurance ceded within the Property and Casualty Insurance and Reinsurance and Life insurance and Run-off reporting segments, primarily to Odyssey Group, Allied World and Group Re. Also presented in that column are adjustments to eliminate investment management and administration fees paid by the operating companies to the holding company. Those fees are included in interest and dividends (as investment

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

management expense) by the operating companies and in corporate overhead and other (expense) income by the Corporate and Other reporting segment.

*Year ended December 31, 2022*

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** |  |  |  |  |  |
|  | **North** |  | **International** |  |  |  |  | **Eliminations**  |  |
|  | **American** | **Global Insurers**  | **Insurers and** |  | **Life insurance and** | **Non-insurance**  | **Corporate**  | **and**  |  |
|  | **Insurers** | **and Reinsurers** | **Reinsurers** | **Total** | **Run-off** | **companies** | **and Other** | **adjustments** | **Consolidated** |
| Gross premiums written | 7650.5 | 17096.6 | 3178.6 | 27925.7 | 350.9 |  |  | (364.0) | 27912.6 |
| Net premiums written | 6457.6 | 13506.3 | 1963.1 | 21927.0 | 344.7 |  |  |  | 22271.7 |
| Net premiums earned | 6107.8 | 12726.9 | 1829.0 | 20663.7 | 342.4 |  |  |  | 21006.1 |
| Underwriting profit (loss) | 433.0 | 659.0 | 13.3 | 1105.3 | (167.3) |  |  | 0.5 | 938.5 |
| Interest and dividends | 234.0 | 413.3 | 98.8 | 746.1 | 55.6 | 26.6 | 9.6 | 123.9 | 961.8 |
| Share of profit of associates | 239.8 | 429.3 | 52.4 | 721.5 | 56.4 | 134.0 | 102.8 |  | 1014.7 |
| Non-insurance companies reporting segment |  |  |  |  |  | 60.7 |  |  | 60.7 |
| Operating income (loss) | 906.8 | 1501.6 | 164.5 | 2572.9 | (55.3) | 221.3 | 112.4 | 124.4 | 2975.7 |
| Net gains (losses) on investments | (397.7) | (1151.1) | (211.1) | (1759.9) | (306.5) | 71.4 | 261.1 |  | (1733.9) |
| Gain on sale and consolidation of insurance subsidiaries | 1213.2 |  | 6.5 | 1219.7 |  |  |  |  | 1219.7 |
| Interest expense | (5.7) | (51.1) | (3.0) | (59.8) | (13.2) | (122.8) | (257.2) | 0.2 | (452.8) |
| Corporate overhead and other | (39.8) | (98.9) | (12.1) | (150.8) | (1.4) |  | (19.9) | (124.6) | (296.7) |
| Pre-tax income (loss) | 1676.8 | 200.5 | (55.2) | 1822.1 | (376.4) | 169.9 | 96.4 |  | 1712.0 |
| Provision for income taxes |  |  |  |  |  |  |  |  | (425.2) |
| Net earnings |  |  |  |  |  |  |  |  | 1286.8 |
| Attributable to: |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Shareholders of Fairfax |  |  |  |  |  |  |  |  | 1147.2 |
| &nbsp;&nbsp;&nbsp;Non-controlling interests |  |  |  |  |  |  |  |  | 139.6 |
|  |  |  |  |  |  |  |  |  | 1286.8 |

---

*Year ended December 31, 2021*

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** | | | | | |
|  | **North**<br>**American**<br>**Insurers** | <br>**Global Insurers** <br>**and Reinsurers** | **International** <br>**Insurers and** <br>**Reinsurers** | <br>**Total** | <br>**Life insurance and**<br>**Run-off** | <br>**Non-insurance** <br>**companies** | <br>**Corporate** <br>**and Other** | <br>**Eliminations** <br>**and** <br>**adjustments** | <br>**Consolidated** |
| Gross premiums written | 6578.8 | 14661.4 | 2853.3 | 24093.5 | 472.3 |  |  | (655.6) | 23910.2 |
| Net premiums written | 5319.7 | 10755.5 | 1734.2 | 17809.4 | 468.7 |  |  |  | 18278.1 |
| Net premiums earned | 5024.8 | 9451.8 | 1613.6 | 16090.2 | 467.8 |  |  |  | 16558.0 |
| Underwriting profit (loss) | 386.9 | 374.2 | 40.1 | 801.2 | (309.0) |  |  | 0.3 | 492.5 |
| Interest and dividends | 135.1 | 236.7 | 69.9 | 441.7 | 19.3 | (94.7) | 24.6 | 249.9 | 640.8 |
| Share of profit of associates | 103.6 | 184.8 | 35.7 | 324.1 | 16.8 | 22.3 | 38.8 |  | 402.0 |
| Non-insurance companies reporting segment |  |  |  |  |  | 65.4 |  | 5.7 | 71.1 |
| Operating income (loss) | 625.6 | 795.7 | 145.7 | 1567.0 | (272.9) | (7.0) | 63.4 | 255.9 | 1606.4 |
| Net gains on investments<sup>(1)</sup> | 518.5 | 604.1 | 1521.9 | 2644.5 | 69.7 | 266.0 | 464.9 |  | 3445.1 |
| Gain on sale and consolidation of insurance subsidiaries |  | 68.7 | 64.8 | 133.5 |  |  | 130.5 |  | 264.0 |
| Interest expense | (8.6) | (50.5) | (2.4) | (61.5) | (7.9) | (140.3) | (305.4) | 1.2 | (513.9) |
| Corporate overhead and other | (53.7) | (88.0) | (22.3) | (164.0) | (38.4) |  | 50.0 | (256.6) | (409.0) |
| Pre-tax income (loss) | 1081.8 | 1330.0 | 1707.7 | 4119.5 | (249.5) | 118.7 | 403.4 | 0.5 | 4392.6 |
| Provision for income taxes |  |  |  |  |  |  |  |  | (726.0) |
| Net earnings |  |  |  |  |  |  |  |  | 3666.6 |
| Attributable to: |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Shareholders of Fairfax |  |  |  |  |  |  |  |  | 3401.1 |
| &nbsp;&nbsp;&nbsp;Non-controlling interests |  |  |  |  |  |  |  |  | 265.5 |
|  |  |  |  |  |  |  |  |  | 3666.6 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Includes net gains on deconsolidation of non-insurance subsidiaries primarily related to the deconsolidation of Fairfax India's subsidiary Privi of $94.9 and Toys "R" Us Canada of $85.7 as described in note 23 (Acquisitions and Divestitures) to the consolidated financial statements for the year ended December 31, 2021.* 

#### Components of Net Earnings

#### Underwriting and Operating Income
Presented below are the underwriting and operating results of the property and casualty insurance and reinsurance reporting segments and the operating income (loss) of Life insurance and Run-off and Non-insurance companies reporting segments, for the years ended December 31, 2022 and 2021. Interest and dividends, share of profit (loss) of associates and net gains (losses) on investments by reporting segment for the years ended December 31, 2022 and 2021 are provided in the Investments sections of this MD&A.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### North American Insurers

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021**<sup>(1)</sup> |
| **Underwriting profit** | **433.0** | **386.9** |
| &nbsp;&nbsp;Loss & LAE - accident year | 61.1% | 57.7% |
| &nbsp;&nbsp;Commissions | 16.3% | 18.2% |
| &nbsp;&nbsp;Underwriting expenses | 16.8% | 18.5% |
| **Combined ratio - accident year** | 94.2% | 94.4% |
| &nbsp;&nbsp;&nbsp;&nbsp;Net favourable reserve development | (1.3)% | (2.1)% |
| **Combined ratio - calendar year** | 92.9% | 92.3% |
| Gross premiums written | 7650.5 | 6578.8 |
| Net premiums written | 6457.6 | 5319.7 |
| Net premiums earned | 6107.8 | 5024.8 |
| Underwriting profit | 433.0 | 386.9 |
| Interest and dividends | 234.0 | 135.1 |
| Share of profit of associates | 239.8 | 103.6 |
| Operating income | 906.8 | 625.6 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Effective October 1, 2021 Crum & Forster completed a loss portfolio transfer with Resolution Group Reinsurance (Barbados) Limited, to reinsure all net reserves for risks predominantly comprised of property, liability and workers' compensation exposures relating to accident years 2014 and prior ("2021 intercompany reinsurance transaction"). This transaction resulted in Crum & Forster ceding $358.1 of net insurance contract liabilities in exchange for consideration of $358.1 which was reflected as a reduction in net premiums written and net premiums earned of $358.1, and losses on claims of $358.1, which were eliminated within Fairfax's consolidated financial reporting.* 

North American Insurers, comprised of Northbridge, Crum & Forster and Zenith National, provides a full range of commercial insurance in property, casualty, and specialty risks, principally within the United States and Canada.

The North American Insurers reporting segment continued their strong underwriting performance, reporting an underwriting profit of $433.0 and a combined ratio of 92.9% in 2022 compared to an underwriting profit of $386.9 and a combined ratio of 92.3% in 2021. The increase in underwriting profitability in 2022 principally reflected continued growth in net premiums earned at Crum & Forster and Northbridge (including rate increases across most lines of business) relative to modest increases in underwriting expenses, the absence of current year COVID-19 losses and decreased current period catastrophe losses at Crum & Forster (as set out in the table below), partially offset by decreased net favourable prior year reserve development at Zenith National. The combined ratios and underwriting profits for each operating company in the North American Insurers reporting segment for 2022 and 2021 are shown in the table below.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Combined ratios** | **Combined ratios** | **Underwriting profit** | **Underwriting profit** |
|  | **2022** | **2021** | **2022** | **2021** |
| Northbridge | 89.4% | 88.8% | 204.8 | 202.2 |
| Crum & Forster | 94.5% | 95.9% | 189.5 | 101.9 |
| Zenith National | 94.7% | 88.4% | 38.7 | 82.8 |
| **North American Insurers** | 92.9% | 92.3% | 433.0 | 386.9 |

---

The commission expense ratio decreased to 16.3% in 2022 from 18.2% in 2021 primarily reflecting increased commission income from certain ceded lines at Northbridge, decreased average commissions in accident and health lines at Crum & Forster and the impact of Crum & Forster's 2021 intercompany reinsurance transaction.

The underwriting expense ratio decreased to 16.8% in 2022 from 18.5% in 2021 primarily reflecting increased net premiums earned relative to modest increases in other underwriting expenses and the impact of Crum & Forster's 2021 intercompany reinsurance transaction.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

Net favourable prior year reserve development of $77.2 (1.3 combined ratio points) in 2022 primarily reflected net favourable emergence in workers' compensation at Zenith National, principally related to accident years 2015 through 2021, and commercial auto lines of business at Northbridge. Net favourable prior year reserve development of $103.7 (2.1 combined ratio points) in 2021 principally reflected net favourable emergence at Zenith National, primarily related to accident years 2018 through 2020 including favourable emergence on COVID-19 losses as well as better than expected loss emergence across multiple lines at Northbridge, primarily related to accident years 2018 through 2020 and partially offset by adverse loss emergence on mass latent claims from Northbridge's legacy business.

Catastrophe losses in the North American Insurers reporting segment for 2022 and 2021 are as set out in the following table:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2022** | **2022** |  | **2021** | **2021** |  |
|  |  | **Combined** |  |  | **Combined** |  |
|  | **Losses**<sup>(1)</sup> | **ratio impact** |  | **Losses**<sup>(1)</sup> | **ratio impact** |  |
| &nbsp;&nbsp;Winter Storm Elliott | 31.5 | 0.5 |  |  |  |  |
| &nbsp;&nbsp;Hurricane Ian | 17.0 | 0.3 |  |  |  |  |
| &nbsp;&nbsp;U.S. winter storms |  |  |  | 45.4 | 0.9 |  |
| &nbsp;&nbsp;Hurricane Ida |  |  |  | 28.0 | 0.6 |  |
| &nbsp;&nbsp;Other | 51.9 | 0.8 |  | 40.7 | 0.8 |  |
| Total catastrophe losses | 100.4 | 1.6 | Points  | 114.1 | 2.3 | points |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)*  ***Net of reinstatement premiums.*** 

Crum & Forster and Northbridge both produced record business volumes in 2022, contributing to the 16.3% increase in gross premiums written in the year, and primarily reflected increased business volumes at Crum & Forster (primarily accident and health, surplus and specialty, and commercial lines) and Northbridge (primarily property lines and strong retention) and rate increases across most lines of business with the exception of Zenith National's workers' compensation which continued to experience rate decreases. Zenith National's gross premiums written increased in 2022, primarily reflecting growth in other property and casualty lines of business, partially offset by a modest decrease in its workers' compensation business (principally reflecting continued rate decreases, partially offset by increased payroll exposure).

Net premiums written increased by 21.4% in 2022 consistent with the growth in gross premiums written and the impact of Crum & Forster's 2021 intercompany reinsurance transaction described previously.

Net premiums earned increased by 21.6% in 2022 principally reflecting the increase in net premiums written during 2022 and 2021 and the impact of Crum & Forster's 2021 intercompany reinsurance transaction. Gross premiums written and net premiums earned for each operating company in the North American Insurers reporting segment for 2022 and 2021 are shown in the table below.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Gross premiums written** | **Gross premiums written** | **Net premiums earned** | **Net premiums earned** |
|  | **2022** | **2021** | **2022** | **2021** |
| Northbridge | 2306.0 | 2126.6 | 1924.4 | 1800.9 |
| Crum & Forster | 4622.8 | 3729.7 | 3455.5 | 2512.8 |
| Zenith National | 762.8 | 735.2 | 727.9 | 711.1 |
| Inter-segment eliminations<sup>(1)</sup> | (41.1) | (12.7) |  |  |
| **North American Insurers** | 7650.5 | 6578.8 | 6107.8 | 5024.8 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Reflects the elimination of intercompany gross premiums written amongst subsidiaries included within the North American Insurers reporting segment.* 

Cash provided by operating activities (excluding operating cash flow activity related to investments recorded at FVTPL) increased to $1,469.6 in 2022 from $1,352.0 in 2021 primarily reflecting increased net premium collections, partially offset by increased net claims paid at Crum & Forster and increased net taxes paid at Northbridge.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Global Insurers and Reinsurers

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021**<sup>(1)</sup> |
| **Underwriting profit** | **659.0** | **374.2** |
| &nbsp;&nbsp;Loss & LAE - accident year | 68.5% | 69.3% |
| &nbsp;&nbsp;Commissions | 16.6% | 16.6% |
| &nbsp;&nbsp;Underwriting expenses | 9.9% | 12.2% |
| **Combined ratio - accident year** | 95.0% | 98.1% |
| &nbsp;&nbsp;Net favourable development | (0.2)% | (2.1)% |
| **Combined ratio - calendar year** | 94.8% | 96.0% |
| Gross premiums written | 17096.6 | 14661.4 |
| Net premiums written | 13506.3 | 10755.5 |
| Net premiums earned | 12726.9 | 9451.8 |
| Underwriting profit | 659.0 | 374.2 |
| Interest and dividends | 413.3 | 236.7 |
| Share of profit of associates | 429.3 | 184.8 |
| Operating income | 1501.6 | 795.7 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Effective October 1, 2021 Brit completed a loss portfolio transfer with RiverStone International, to reinsure all net reserves for risks predominantly comprised of U.S. casualty and discontinued lines of business relating to prior accident years ("Brit's 2021 reinsurance transaction"). This transaction resulted in Brit ceding $379.1 of net insurance contract liabilities for consideration of $344.1 which was reflected as a reduction within net premiums written and net premiums earned and losses on claims of $379.1, resulting in net favourable prior year reserve development of $35.0.* 

Global Insurers and Reinsurers, comprised of Allied World, Odyssey Group and Brit, provides diverse insurance and reinsurance coverage to its global customers including specialty insurance, treaty and facultative reinsurance and other risk management solutions.

The Global Insurers and Reinsurers reporting segment reported a significant improvement in underwriting profit of $659.0 producing a combined ratio of 94.8% in 2022 compared to an underwriting profit of $374.2 with a combined ratio of 96.0% in 2021. The improved underwriting results in 2022 principally reflected growth in net premiums earned (including rate increases across most lines of business) relative to modest increases in underwriting expenses and the absence of COVID-19 losses, partially offset by decreased net favourable prior year reserve development and a marginal increase in current period catastrophe losses. The combined ratios and underwriting profits for each operating company in the Global Insurers and Reinsurers reporting segment for 2022 and 2021 are shown in the table below.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Combined ratios** | **Combined ratios** | **Underwriting profit** | **Underwriting profit** |
|  | **2022** | **2021** | **2022** | **2021** |
| Allied World | 90.7% | 93.4% | 388.7 | 226.4 |
| Odyssey Group | 96.3% | 97.8% | 209.0 | 92.2 |
| Brit | 97.9% | 96.8% | 61.3 | 55.6 |
| **Global Insurers and Reinsurers** | 94.8% | 96.0% | 659.0 | 374.2 |

---

The underwriting expense ratio decreased to 9.9% in 2022 from 12.2% in 2021, primarily reflecting increased premiums earned relative to more modest increases in other underwriting expenses.

Net favourable prior year reserve development of $21.1 (0.2 of a combined ratio point) in 2022 primarily reflected net favourable prior year reserve development at Odyssey Group (primarily related to catastrophe losses, partially offset by net adverse prior year reserve development related to U.S. casualty losses), partially offset by net adverse prior year reserve development at Allied World (principally reflecting unfavourable loss emergence on late reported 2021 catastrophe losses, partially offset by net favourable prior year reserve development on non-catastrophe U.S. property lines). Net favourable prior year reserve development of $201.4 (2.1 combined ratio points) in 2021 primarily reflected better than expected non-catastrophe loss experience at Brit and Odyssey Group, partially offset by a modest net adverse prior year reserve development at Allied World, principally related to COVID-19 losses.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

Catastrophe losses in the Global Insurers and Reinsurers reporting segment for 2022 and 2021 are as set out in the following table:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2022** | **2022** |  | **2021** | **2021** |  |
|  |  | **Combined** |  |  | **Combined** |  |
|  | **Losses**<sup>(1)</sup> | **ratio impact** |  | **Losses**<sup>(1)</sup> | **ratio impact** |  |
| &nbsp;&nbsp;Hurricane Ian | 543.4 | 4.3 |  |  |  |  |
| &nbsp;&nbsp;France hailstorms | 118.6 | 0.9 |  |  |  |  |
| &nbsp;&nbsp;Australian floods | 71.4 | 0.6 |  |  |  |  |
| &nbsp;&nbsp;Hurricane Ida |  |  |  | 376.8 | 4.0 |  |
| &nbsp;&nbsp;European floods |  |  |  | 219.0 | 2.3 |  |
| &nbsp;&nbsp;U.S. winter storms |  |  |  | 198.1 | 2.1 |  |
| &nbsp;&nbsp;Other | 337.0 | 2.7 |  | 224.1 | 2.4 |  |
| Total catastrophe losses | 1070.4 | 8.5 | Points  | 1018.0 | 10.8 | points |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)*  ***Net of reinstatement premiums.*** 

Catastrophe losses of $1,070.4 (8.5 combined ratio points) in 2022 primarily related to Hurricane Ian (with all companies in this reporting segment being affected: $254.4 at Brit, $177.6 at Allied World and $111.4 at Odyssey Group), attritional catastrophe losses (primarily at Odyssey Group), the France hailstorms (primarily impacting Odyssey Group, and to a lesser extent, Allied World) and the Australian floods (principally impacting Allied World and to a lesser extent, Odyssey Group and Brit). The catastrophe losses table above excludes net losses of $67.7 (approximately 84% incurred but not reported losses) in 2022 relating to the Ukraine conflict primarily within the political risk and terrorism lines of business.

Gross premiums written increased by 16.6% in 2022, primarily reflecting record premiums at each operating company within this reporting segment including increased premiums at Odyssey Group (primarily relating to U.S. property reinsurance including a large quota share agreement covering homeowners risks, U.S. casualty reinsurance and U.S. crop insurance), Brit (primarily reflecting growth at Ki Insurance and core insurance lines of business) and Allied World (primarily the North American and Global Markets platforms relating to excess casualty and professional liability, as well as its reinsurance operations).

Net premiums written increased by 25.6% in 2022, primarily reflecting the growth in gross premiums written at each operating company and increased retention at Odyssey Group (primarily related to increased assumed U.S. property reinsurance which was principally retained) and Brit (primarily reflecting reduced use of proportional reinsurance). The increase in net premiums written in 2022 also reflected the impact of Brit's 2021 reinsurance transaction described previously. The increase in net premiums written in 2022 also reflected Brit's purchase of four years of reinsurance protection for a range of U.S. catastrophe perils in the first quarter of 2021 which did not occur in 2022.

Net premiums earned in 2022 increased by 34.7% consistent with the growth in net premiums written during 2022 and 2021 and the impact of Brit's fourth quarter 2021 reinsurance transaction. Gross premiums written and net premiums earned for each operating company in the Global Insurers and Reinsurers reporting segment for 2022 and 2021 are shown in the table below.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Gross premiums written** | **Gross premiums written** | **Net premiums earned** | **Net premiums earned** |
|  | **2022** | **2021** | **2022** | **2021** |
| Allied World | 6543.9 | 5851.9 | 4197.9 | 3451.6 |
| &nbsp;&nbsp;Odyssey Group | 6810.0 | 5746.3 | 5666.3 | 4245.9 |
| &nbsp;&nbsp;Brit | 3965.8 | 3238.3 | 2862.7 | 1754.3 |
| &nbsp;&nbsp;Inter-segment eliminations<sup>(1)</sup> | (223.1) | (175.1) |  |  |
| **Global Insurers and Reinsurers** | 17096.6 | 14661.4 | 12726.9 | 9451.8 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)*  ***Reflects the elimination of intercompany gross premiums written amongst subsidiaries included within the Global Insurers and Reinsurers reporting segment.*** 

**Cash provided by operating activities (excluding operating cash flow activity related to investments recorded at FVTPL) increased to $3,832.0 in 2022 from $2,889.4 in 2021, primarily reflecting increased net premium collections, partially offset by increased net paid losses.**

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

**On September 27, 2022 the company increased its ownership interest in Allied World to 82.9% from 70.9% for total consideration of $733.5, inclusive of the fair value of a call option exercised and an accrued dividend paid, and recorded a loss in retained earnings of $228.1 presented within the Corporate and Other reporting segment. During 2022 Allied World paid a dividend of $126.4 to its minority shareholders (2021 - $126.4), excluding the dividend referenced above, and Odyssey Group paid dividends of $65.3 (2021 - nil) to its minority shareholders.**

#### International Insurers and Reinsurers

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| **Underwriting profit** | **13.3** | **40.1** |
| &nbsp;&nbsp;Loss & LAE - accident year | 66.0% | 61.1% |
| &nbsp;&nbsp;Commissions | 17.7% | 17.9% |
| &nbsp;&nbsp;Underwriting expenses | 21.0% | 21.6% |
| **Combined ratio - accident year** | 104.7% | 100.6% |
| &nbsp;&nbsp;Net favourable development | (5.4)% | (3.1)% |
| **Combined ratio - calendar year** | 99.3% | 97.5% |
| Gross premiums written | 3178.6 | 2853.3 |
| Net premiums written | 1963.1 | 1734.2 |
| Net premiums earned | 1829.0 | 1613.6 |
| Underwriting profit | 13.3 | 40.1 |
| Interest and dividends | 98.8 | 69.9 |
| Share of profit of associates | 52.4 | 35.7 |
| Operating income | 164.5 | 145.7 |

---

International Insurers and Reinsurers, comprised of Fairfax Asia, Fairfax Latin America, Fairfax Central and Eastern Europe, Group Re, Bryte Insurance, and Eurolife's property and casualty insurance operations, provides diverse insurance and reinsurance coverage to its international customers including specialty insurance, treaty and facultative reinsurance and other risk management solutions. For further details of operating subsidiaries refer to note 29 (Subsidiaries) to the consolidated financial statements for the year ended December 31, 2022.

The International Insurers and Reinsurers reporting segment reported an underwriting profit of $13.3 producing a combined ratio of 99.3% in 2022 compared to an underwriting profit of $40.1 and a combined ratio of 97.5% in 2021. The decrease in underwriting profit in 2022 primarily reflected an underwriting loss at Fairfax Latin America compared to an underwriting profit in 2021 (principally due to catastrophe losses in Fairfax Brasil's agricultural business line) and an increased underwriting loss at Bryte Insurance (principally due to catastrophe losses stemming from flooding in the KwaZulu-Natal province of South Africa), partially offset by increased underwriting profit at Fairfax Asia (benefiting from the full year of underwriting profit at Singapore Re) and Fairfax Central and Eastern Europe (primarily at Fairfax Ukraine).

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

The combined ratios and underwriting profit (loss) for each operating company in the International Insurers and Reinsurers reporting segment for 2022 and 2021 are shown in the table below.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Combined ratios** | **Combined ratios** | **Underwriting profit (loss)** | **Underwriting profit (loss)** |
|  | **2022** | **2021** | **2022** | **2021** |
| Fairfax Asia(1) | 88.6% | 91.9% | 33.5 | 20.1 |
| Fairfax Latin America | 106.9% | 96.2% | (24.3) | 11.8 |
| Fairfax Central and Eastern Europe | 94.4% | 96.3% | 24.3 | 16.7 |
| Group Re | 99.4% | 98.3% | 2.4 | 4.9 |
| Bryte Insurance | 108.2% | 104.9% | (23.0) | (13.8) |
| Eurolife General(2) | 99.4% | 98.7% | 0.4 | 0.4 |
| International Insurers and Reinsurers | 99.3% | 97.5% | 13.3 | 40.1 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *On June 17, 2021 the company increased its ownership interest in Singapore Re from 28.2% to 94.0% and commenced consolidating Singapore Re. The company subsequently increased its ownership interest in Singapore Re to 100%.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *On July 14, 2021 the company increased its interest in Eurolife to 80.0% from 50.0%. and commenced consolidating Eurolife.* 

The commission expense ratio of 17.7% in 2022 was comparable to the commission expense ratio of 17.9% in 2021. The underwriting expense ratio decreased to 21.0% in 2022 from 21.6% in 2021, primarily reflecting increased net premiums earned relative to modest increases in underwriting expenses.

Net favourable prior year reserve development of $97.9 (5.4 combined ratio points) in 2022 primarily reflected favourable emergence across most operating companies, principally at Fairfax Asia (primarily at Singapore Re related to property and accident lines of business), Fairfax Latin America and Fairfax Central and Eastern Europe (primarily related to motor, health and property lines of business). Net favourable prior year development of $50.5 (3.1 combined ratio points) in 2021 reflected favourable emergence across all operating companies, principally at Fairfax Asia (primarily related to automobile and property lines of business), Fairfax Latin America (primarily across each operating company in Fairfax Latam) and Eurolife General.

Catastrophe losses in the International Insurers and Reinsurers reporting segment for 2022 and 2021 are as set out in the following table:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2022** | **2022** |  | **2021** | **2021** |  |
|  |  | **Combined** |  |  | **Combined**  | **Combined**  |
|  | **Losses**<sup>(1)</sup> | **ratio impact** |  | **Losses**<sup>(1)</sup> | **ratio impact**  | **ratio impact**  |
| &nbsp;&nbsp;Brazil drought | 54.4 | 3.0 |  | —  | —  |  |
| &nbsp;&nbsp;South Africa floods | 18.3 | 1.0 |  |  |  |  |
| &nbsp;&nbsp;Other | 12.2 | 0.6 |  | 16.0 | 1.0 |  |
| Total catastrophe losses | 84.9 | 4.6 | points | 16.0 | 1.0 | points |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)*  ***Net of reinstatement premiums.*** 

Gross premiums written increased by 11.4% in 2022, primarily reflecting increases at Fairfax Asia (principally from the consolidation of Singapore Re), Fairfax Latin America (principally due to increases at Fairfax Latam's operating companies Southbridge Chile and La Meridional Argentina, partially offset by decreases at Fairfax Brasil) and at Group Re (across all of Group Re's operating companies), and the consolidation of Eurolife General for a full year. Excluding the consolidations of Singapore Re and Eurolife General, gross premiums written increased by 3.7% in 2022.

Net premiums written increased by 13.2% in 2022 consistent with the growth in gross premiums written. Excluding the consolidations of Singapore Re and Eurolife General, net premiums written increased by 9.3% in 2022, primarily reflecting increased retention at La Meridional Argentina and new business growth at Group Re and Pacific Insurance.

Net premiums earned increased by 13.3% in 2022, principally reflecting the increase in net premiums written. Excluding the consolidations of Singapore Re and Eurolife General, net premiums earned increased by 9.6% in 2022, consistent with the increase in net premiums written.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

Gross premiums written and net premiums earned for each operating company in the International Insurers and Reinsurers reporting segment for 2022 and 2021 are shown in the table below.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Gross premiums written** | **Gross premiums written** | **Net premiums earned** | **Net premiums earned** |
|  | **2022** | **2021** | **2022** | **2021** |
| Fairfax Asia<sup>(1)</sup> | 746.8 | 537.0 | 292.5 | 249.7 |
| Fairfax Latin America | 1108.2 | 1049.0 | 351.3 | 311.1 |
| Fairfax Central and Eastern Europe | 509.8 | 543.1 | 436.1 | 452.1 |
| Group Re | 466.8 | 352.2 | 413.3 | 291.0 |
| Bryte Insurance | 382.1 | 387.7 | 278.6 | 279.2 |
| Eurolife General<sup>(2)</sup> | 80.5 | 35.6 | 57.2 | 30.5 |
| Inter-segment eliminations<sup>(3)</sup> | (115.6) | (51.3) |  |  |
| **International Insurers and Reinsurers** | 3178.6 | 2853.3 | 1829.0 | 1613.6 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *On June 17, 2021 the company increased its ownership interest in Singapore Re from 28.2% to 94.0% and subsequently increased its ownership interest to 100%.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *On July 14, 2021 the company increased its interest in Eurolife to 80.0% from 50.0%.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *Reflects the elimination of intercompany gross premiums written amongst subsidiaries included within the International Insurers and Reinsurers reporting segment.* 

#### Life Insurance and Run-off

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2022** | **2021** | **2021** | **2021** |
|  | **Eurolife**<sup>(1)</sup> | **Run-off** | **Total** | **Eurolife**<sup>(1)</sup> | **Run-off**<sup>(2)</sup> | **Total** |
| Gross premiums written | 350.9 |  | 350.9 | 114.2 | 358.1 | 472.3 |
| Net premiums written | 344.2 | 0.5 | 344.7 | 110.6 | 358.1 | 468.7 |
| Net premiums earned | 341.9 | 0.5 | 342.4 | 109.7 | 358.1 | 467.8 |
| Losses on claims, net | (251.1) | (140.6) | (391.7) | (81.0) | (576.7) | (657.7) |
| Operating expenses | (44.5) | (73.5) | (118.0) | (28.6) | (90.5) | (119.1) |
| Interest and dividends | 34.6 | 21.0 | 55.6 | 9.1 | 10.2 | 19.3 |
| Share of profit of associates | 14.6 | 41.8 | 56.4 | 3.3 | 13.5 | 16.8 |
| **Operating income (loss)** | 95.5 | (150.8) | (55.3) | 12.5 | (285.4) | (272.9) |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *These results differ from those published by Eurolife primarily due to acquisition accounting adjustments recorded by Fairfax related to the consolidation of Eurolife on July 14, 2021 and the presentation of Eurolife's life insurance operations as "Eurolife" in the Life Insurance and Run-off segment in the table above and separate presentation of Eurolife's property and casualty insurance operations within the International Insurers and Reinsurers reporting segment as "Eurolife General".* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Effective October 1, 2021 Resolution Group Reinsurance (Barbados) Limited reinsured a portfolio of business written by Crum & Forster, predominantly comprised of property, liability and workers' compensation exposures relating to accident years 2014 and prior ("2021 intercompany reinsurance transaction"). This transaction resulted in Run-off assuming $358.1 of net insurance contract liabilities in exchange for consideration of $358.1 and recorded as an increase in gross premiums written, net premiums written and net premiums earned of $358.1, and losses on claims of $358.1, which were eliminated within Fairfax's consolidated financial reporting.* 

#### Eurolife
In the company's segmented reporting, the assets, liabilities and results of operations of Eurolife's life insurance business are reported in Life insurance and Run-off and those of Eurolife's property and casualty insurance business are reported in International Insurers and Reinsurers. The discussion which follows makes reference to Eurolife's life operations.

Gross premiums written of $350.9 in 2022 and $114.2 in 2021 primarily consisted of traditional life insurance policies (endowments, deferred annuities, whole life and term life), group benefits including retirement benefits, and accident and health insurance policies.

Losses on claims, net of $251.1 in 2022 and $81.0 in 2021 primarily consisted of net policy holder benefits and losses on claims. Losses on claims, net in 2022 included decreases in net policy holder benefits resulting from continued rising interest rates in the period.

Eurolife's operating expenses include net commission expense and other underwriting expenses.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Run-off
The Run-off reporting segment was formed with the acquisition of the company's interest in The Resolution Group ("TRG") on August 11, 1999, and currently consists of the U.S. Run-off group, principally consisting of TIG Insurance Company and Resolution Group Reinsurance (Barbados) Limited. The U.S. Run-off group is managed by the dedicated RiverStone Run-off management operation in the U.S. which has 350 employees.

On August 23, 2021 the company sold its 60.0% joint venture interest in RiverStone Barbados to CVC for consideration of $695.7. Refer to the Business Developments section of this MD&A under the heading "Acquisitions and Divestitures" for additional details.

Run-off reported an improved operating loss of $150.8 in 2022 compared to an operating loss of $285.4 in 2021. The decrease in operating losses in 2022 principally reflected decreased net adverse prior year reserve development of $147.2 primarily related to asbestos, pollution and other hazards reserves in 2022 compared to $224.6 in 2021 and increased share of profit of associates and increased interest and dividends.

During 2022 the holding company made cash contributions of $240.0 (2021 - $93.6) to Run-off to augment its capital.

Run-off's cash flows may be volatile as to timing and amount, with potential variability arising principally from timing delays between when gross claims are paid and the subsequent collection from third party reinsurers. Further delays may occur while assets pledged to secure the payment of claims are released subsequent to the initial payment.

#### Non-insurance companies

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2022** | **2022** | **2022** | **2021** | **2021** | **2021** | **2021** | **2021** |
|  | **Restaurants**  | **Fairfax** | **Thomas** |  |  | **Restaurants** | **Fairfax** | **Thomas** |  |  |
|  | **and retail**<sup>(1)</sup> | **India**<sup>(2)</sup> | **Cook India**<sup>(3)</sup> | **Other**<sup>(4)</sup> | **Total**<sup>(5)</sup> | **and retail**<sup>(1)</sup> | **India**<sup>(2)</sup> | **Cook India**<sup>(3)</sup> | **Other**<sup>(4)</sup> | **Total**<sup>(5)</sup> |
| Revenue | 1710.3 | 216.7 | 611.0 | 3043.6 | 5581.6 | 1803.8 | 228.2 | 249.4 | 2876.1 | 5157.5 |
| Expenses | (1582.2) | (208.1) | (600.8) | (3129.8) | (5520.9) | (1724.8) | (206.9) | (293.4) | (2867.0) | (5092.1) |
| Pre-tax income (loss) before interest expense and other | 128.1 | 8.6 | 10.2 | (86.2) | 60.7 | 79.0 | 21.3 | (44.0) | 9.1 | 65.4 |
| Interest and dividends | 9.9 | 21.4 |  | (4.7) | 26.6 | 7.5 | (102.2) | (0.1) | 0.1 | (94.7) |
| Share of profit (loss) of associates | (0.1) | 132.0 | 0.3 | 1.8 | 134.0 |  | 20.2 | (0.1) | 2.2 | 22.3 |
| Operating income (loss) | 137.9 | 162.0 | 10.5 | (89.1) | 221.3 | 86.5 | (60.7) | (44.2) | 11.4 | (7.0) |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Comprised primarily of Recipe, Golf Town, Sporting Life and Toys "R" Us Canada (deconsolidated on August 19, 2021).* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Comprised of Fairfax India and its subsidiaries. These results differ from those published by Fairfax India primarily due to Fairfax India's application of investment entity accounting under IFRS.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *Comprised of Thomas Cook India and its subsidiary Sterling Resorts. These results differ from those published by Thomas Cook India primarily due to differences between IFRS and Ind AS, and acquisition accounting adjustments.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(4)* *Comprised primarily of AGT, Dexterra Group, Boat Rocker, Farmers Edge, Grivalia Hospitality (consolidated on July 5, 2022) and Mosaic Capital (deconsolidated on August 5, 2021).* 

&nbsp;&nbsp;&nbsp;&nbsp;*(5)* *Amounts as presented in note 25 (Segmented Information) to the consolidated financial statements for the year ended December 31, 2022.* 

For details of acquisition and divestiture transactions, refer to the Business Developments section of this MD&A under the heading "Acquisitions and Divestitures".

#### Restaurants and retail
The decrease in revenue and expenses of Restaurants and retail in 2022 primarily reflected the deconsolidation of Toys "R" Us Canada on August 19, 2021, lower business volumes at Golf Town and the impact of the weakening of the Canadian dollar relative to the U.S. dollar (measured using average foreign exchange rates) by 3.7% in 2022, partially offset by higher business volumes across most other operating companies, principally due to reduced COVID-19 related restrictions in 2022 compared to 2021.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Fairfax India
***Fairfax India's revenue decreased modestly in 2022 primarily reflecting the deconsolidation of Privi, lower business volumes at NCML and the impact of the weakening of the Indian rupee relative to the U.S. dollar (measured using average foreign exchange rates) by 5.9% in 2022, partially offset by the consolidations of Jaynix and Maxop, and higher business volumes at Saurashtra Freight and Fairchem. Fairfax India's expenses remained relatively flat in 2022, principally reflecting the same factors as noted above in revenue, as well as lower margins at Fairchem and Saurashtra Freight.***

***Fairfax India's interest and dividends include the impacts of performance fee payable to Fairfax. Interest and dividend income of $21.4 in 2022 primarily reflected a reversal of a performance fee payable to Fairfax of $36.4, dividend income earned on common stocks and interest income on bonds, partially offset by investment management fees payable to Fairfax. Interest and dividend expense of $102.2 in 2021 included an accrual of a performance fee payable to Fairfax of $85.2. The investment management fees, performance fee payable and reversal of payable represented intercompany transactions that were eliminated on consolidation.***

***At December 31, 2022 the holding company had a performance fee receivable of $41.5 pursuant to its investment advisory agreement with Fairfax India for the period from January 1, 2021 to December 31, 2023. For additional details refer to note 28 (Related Party Transactions) to the consolidated financial statements for the year ended December 31, 2022.***

#### Thomas Cook India
Thomas Cook India reported significant increases in revenue and expenses in 2022 primarily reflecting higher business volumes resulting from continued easing of COVID-19 related travel restrictions, and increased domestic and international travel (Sterling Resorts also contributed to these results with its resorts fully operational and at a higher occupancy rate in 2022), partially offset by the impact of the weakening of the Indian rupee relative to the U.S. dollar (measured using average foreign exchange rates) by 5.9% in 2022.

#### Other
**The Other operating segment's revenue and expenses increased in 2022 primarily reflecting higher business volumes at AGT and an increase in revenue and expenses at Dexterra Group principally driven by local acquisitions in the first quarter of 2022 and organic growth, partially offset by decreased business volumes at Boat Rocker and the deconsolidation of Mosaic Capital. The increase in expenses of Other in 2022 also reflected non-cash goodwill impairment charges on Farmers Edge of $133.4.**

#### Interest and Dividends
An analysis of interest and dividends is presented in the Investments section of this MD&A.

#### Share of Profit (Loss) of Associates
An analysis of share of profit (loss) of associates is presented in the Investments section of this MD&A.

#### Net Gains (Losses) on Investments
An analysis of consolidated net gains (losses) on investments is provided in the Investments section of this MD&A.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Interest Expense
Consolidated interest expense as presented in the consolidated statement of earnings was comprised as follows:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Interest expense on borrowings: |  |  |
| &nbsp;&nbsp;Holding company | 257.1 | 305.2 |
| &nbsp;&nbsp;Insurance and reinsurance companies | 59.0 | 51.6 |
| &nbsp;&nbsp;Non-insurance companies<sup>(1)</sup> | 89.8 | 99.2 |
|  | 405.9 | 456.0 |
| Interest expense on lease liabilities:<sup>(2)</sup> |  |  |
| &nbsp;&nbsp;Holding company and insurance and reinsurance companies | 13.9 | 16.8 |
| &nbsp;&nbsp;Non-insurance companies | 33.0 | 41.1 |
|  | 46.9 | 57.9 |
| Interest expense | 452.8 | 513.9 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Borrowings and related interest expense of the non-insurance companies are non-recourse to the holding company.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Represents accretion of lease liabilities using the effective interest method.* 

The decrease in interest expense on borrowings at the holding company in 2022 principally reflected the loss of $45.7 recorded in 2021 on redemptions of the $353.5 (Cdn$446.0) principal amount of 5.84% unsecured senior notes due 2022 and the $317.1 (Cdn$400.0) principal amount of 4.50% unsecured senior notes due 2023, and the redemption in October 2021 of $85.0 principal amount 4.142% unsecured senior notes due 2024, partially offset by the issuances in August 2022 of the $750.0 principal amount of 5.625% unsecured senior notes due 2032, and in March 2021 of the $671.6 (Cdn$850.0) principal amount of 3.95% unsecured senior notes due 2031 and the $600.0 principal amount of 3.375% unsecured senior notes due 2031.

The interest expense on borrowings at the insurance and reinsurance companies marginally increased in 2022 principally reflecting the accretion of the redemption liability related to the non-controlling interests in Eurolife and higher interest expense at Brit on its revolving credit facility, partially offset by the redemption of Odyssey Group's unsecured senior notes on March 15, 2021 and June 15, 2021.

The modest decrease in interest expense on borrowings at the non-insurance companies in 2022 principally reflected lower accretion of certain redemption liabilities primarily at Boat Rocker, the deconsolidation of borrowings of Privi on April 29, 2021, Toys "R" Us Canada on August 19, 2021 and Mosaic Capital on August 5, 2021, settlement of Farmers Edge debt on March 3, 2021 as part of its initial public offering, decreased borrowings at Recipe on its revolving credit facility and decreased interest expense at Fairfax India (primarily due to lower amortization of issuance costs), partially offset by higher interest expense at Dexterra and Boat Rocker due to increased borrowings and higher interest rates year over year.

Interest expense by reporting segment is set out in the Net Earnings by Reporting Segment section of this MD&A.

For details of the company's borrowings refer to note 15 (Borrowings) to the consolidated financial statements for the year ended December 31, 2022.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Corporate Overhead and Other
Corporate overhead and other primarily consists of the expenses of all of the group holding companies (corporate overhead), net of investment management and administration fees earned by the holding company, interest and dividends earned on holding company cash and investments and holding company share of (profit) loss of associates.

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Fairfax corporate overhead | 144.5 | 206.6 |
| Subsidiary holding companies' corporate overhead | 60.7 | 61.7 |
| Subsidiary holding companies' non-cash intangible asset amortization and goodwill impairment charges<sup>(1)</sup> | 91.5 | 140.7 |
| Corporate overhead<sup>(2)</sup> | 296.7 | 409.0 |
| Holding company interest and dividends | (9.6) | (24.6) |
| Holding company share of profit of associates | (102.8) | (38.8) |
| Investment management and administration fee income and other<sup>(3)</sup> | (124.4) | (255.9) |
|  | 59.9 | 89.7 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Non-cash intangible asset amortization is principally related to customer and broker relationships.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Presented as consolidated corporate overhead in note 25 (Segmented Information) to the consolidated financial statements for the year ended December 31, 2022.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *Presented as a consolidation elimination in note 25 (Segmented Information) to the consolidated financial statements for the year ended December 31, 2022.* 

Fairfax corporate overhead decreased to $144.5 in 2022 from $206.6 in 2021, primarily reflecting decreases in employee compensation expenses and charitable donations, partially offset by increased office and general expenses.

Subsidiary holding companies' corporate overhead slightly decreased to $60.7 in 2022 from $61.7 in 2021, primarily reflecting lower net costs related to insurance agents and brokers and a reversal of impairment charge on premises and equipment, partially offset by increased office and general expenses and increased audit fees related to the implementation of IFRS 17.

Subsidiary holding companies' non-cash intangible asset amortization and goodwill impairment charges decreased to $91.5 in 2022 from $140.7 in 2021, primarily due to the inclusion in 2021 of non-cash goodwill impairment charges of $48.2 (primarily related to Run-off). Intangible asset amortization charges of $91.5 (2021 - $92.5) were primarily at Allied World and Crum & Forster.

Investment management and administration fee income and other of $124.4 in 2022 (2021 - $255.9) were primarily comprised of investment and administration fees of $124.6 (2021 - $256.6) earned from the insurance and reinsurance subsidiaries, partially offset by consolidation eliminations. The decrease in investment and administration fee income in 2022 primarily reflected the change in the performance fee receivable from Fairfax India (reversal of a $36.4 receivable in 2022 compared to a receivable of $85.2 in 2021).

At December 31, 2022 the performance fee receivable of $41.5 was accrued by the company pursuant to its investment advisory agreement with Fairfax India whereby the company receives a performance fee, if any, as the increase in Fairfax India's book value per share (common shareholders' equity divided by the number of common shares effectively outstanding) over the period from January 1, 2021 to December 31, 2023 exceeds a specified threshold.

Interest and dividends, share of profit (loss) of associates and net gains (losses) on investments attributable to the Corporate and Other reporting segment are set out in the Investments section of this MD&A.

#### Income Taxes
The company's effective income tax rate in 2022 of 24.8% (provision for income taxes of $425.2) was lower than the company's Canadian statutory income tax rate of 26.5% primarily due to income taxed at rates lower than the Canadian statutory income tax rate (principally in the U.S., Mauritius and Barbados), non-taxable investment income (principally comprised of dividend income, non-taxable interest income, the 50% of net capital gains which are not taxable in Canada and share of profit of associates in certain jurisdictions) and foreign exchange (principally related to Canadian holding companies where tax returns are filed in Canadian dollars but the holding companies are U.S. dollar functional currency, with the U.S. dollar strengthened relative to the Canadian dollar), partially offset by permanent differences (principally related to a non-cash goodwill impairment charge on Farmers Edge).

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

The company's effective income tax rate in 2021 of 16.5% (provision for income taxes of $726.0) was lower than the company's Canadian statutory income tax rate of 26.5% primarily due to income taxed at rates lower than the Canadian statutory income tax rate (principally in Asia, the U.S., Barbados, the U.K. and at Allied World) and non-taxable investment income (principally comprised of dividend income, non-taxable interest income, the 50% of net capital gains which are not taxable in Canada and share of profit of associates in certain jurisdictions), partially offset by the non-recognition of the tax benefit of losses and temporary differences (principally related to unrecorded deferred tax assets in Canada and the U.S., partially offset by the recognition of previously unrecorded deferred tax assets in the U.K. and at Allied World) and permanent differences.

For details refer to note 18 (Income Taxes) to the consolidated financial statements for the year ended December 31, 2022.

#### Non-controlling Interests
Non-controlling interests principally related to Fairfax India, Allied World, Brit, Odyssey Group and Recipe. For details refer to note 16 (Total Equity) to the consolidated financial statements for the year ended December 31, 2022.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Balance Sheets by Reporting Segment
The company's segmented balance sheets as at December 31, 2022 and 2021 present the assets and liabilities of, and the capital invested by the company in, each of the company's reporting segments. The segmented balance sheets have been prepared on the following basis:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The balance sheet for each reporting segment is on a legal entity basis for the subsidiaries within that segment, in accordance with Fairfax's IFRS accounting policies and includes, where applicable, acquisition accounting adjustments principally related to goodwill and intangible assets which arose on initial acquisition of the subsidiaries or on a subsequent step acquisition.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Certain of the company's subsidiaries held equity interests in other Fairfax subsidiaries ("Fairfax affiliates") at December 31, 2022. These investments in Fairfax affiliates are carried at cost and are disclosed in the table below. Affiliated insurance and reinsurance balances, including premiums receivable (included in insurance contracts receivable), deferred premium acquisition costs, recoverable from reinsurers, insurance contract payables, provision for losses and loss adjustment expenses and provision for unearned premiums, are not shown separately but are eliminated within the respective reporting segments and in "Corporate and eliminations".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Corporate and eliminations includes the Fairfax holding company and its subsidiary intermediate holding companies, and the consolidating and eliminating entries required under IFRS to prepare consolidated financial statements. The most significant of those entries are derived from the elimination of intercompany reinsurance (primarily consisting of reinsurance provided by Group Re and reinsurance between Odyssey Group and Allied World and the primary insurers), which affects recoverable from reinsurers, provision for losses and loss adjustment expenses and unearned premiums. Borrowings within Corporate and eliminations of $5,894.6 at December 31, 2022 (December 31, 2021 - $5,346.1) primarily consisted of Fairfax holding company borrowings of $5,887.6 (December 31, 2021 - $5,338.6).

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Equity interests in Fairfax affiliates at December 31, 2022** | **Equity interests in Fairfax affiliates at December 31, 2022** | **Equity interests in Fairfax affiliates at December 31, 2022** | **Equity interests in Fairfax affiliates at December 31, 2022** | **Equity interests in Fairfax affiliates at December 31, 2022** |  |
|  |  |  | **International**  |  |  |  |
|  | **North American** | **Global Insurers** | **Insurers and** | **Life insurance** | **Corporate &** |  |
|  | **Insurers** | **and Reinsurers** | **Reinsurers** | **and Run-off** | **Other** | **Consolidated** |
| **Investments in insurance and reinsurance affiliates**<sup>(1)(2)</sup> |  |  |  |  |  |  |
| Zenith National | 2.0% | 6.1% |  |  | 91.9% | 100.0% |
| TRG (Run-off) |  |  | 31.5% |  | 68.5% | 100.0% |
| Singapore Re |  | 8.8% | 91.2% |  |  | 100.0% |
| **Investments in non-insurance affiliates**<sup>(3)</sup> |  |  |  |  |  |  |
| Thomas Cook India | 4.3% | 20.7% | 0.8% | 2.4% | 45.1% | 73.3% |
| Fairfax India | 6.0% | 18.8% | 3.6% |  | 6.3% | 34.7% |
| Recipe | 29.3% | 41.7% | 1.7% | 0.3% | 2.7% | 75.7% |
| Boat Rocker | 34.3% | 5.9% | 4.7% |  |  | 44.9% |
| AGT | 17.0% | 24.1% |  |  | 18.5% | 59.6% |
| Dexterra Group | 5.3% | 30.9% |  | 3.4% | 9.1% | 48.7% |
| Farmers Edge | 28.6% | 22.9% | 9.8% |  |  | 61.3% |
| Grivalia Hospitality | 9.6% | 28.3% |  | 40.5% |  | 78.4% |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *This table excludes subsidiaries where the company's equity interest is entirely held by the holding company including Northbridge, Odyssey Group, Crum & Forster, Brit, Allied World, Fairfax Asia, Fairfax Brasil, Fairfax Latam, Bryte Insurance, Polish Re, Colonnade Insurance, Fairfax Ukraine and Eurolife.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Investments in insurance and reinsurance affiliates are reported in investments in Fairfax insurance and reinsurance affiliates on the segmented balance sheet.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *Investments in non-insurance affiliates are reported in portfolio investments on the segmented balance sheet.* 

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

*Segmented Balance Sheet as at December 31, 2022*

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** |  |  |  |  |
|  | **North**  | **Global** | **International**  |  |  | **Non-** | **Corporate**  |  |
|  | **American**  | **Insurers and**  | **Insurers and**  |  | **Life insurance** | **insurance**  | **and**  |  |
|  | **Insurers** | **Reinsurers** | **Reinsurers** | **Total** | **and Run-off** | **companies** | **eliminations**<sup>(4)</sup> | **Consolidated** |
| **Assets** |  |  |  |  |  |  |  |  |
| Holding company cash and investments | 110.7 | 205.9 |  | 316.6 |  |  | 1029.2 | 1345.8 |
| Insurance contract receivables | 1374.8 | 5839.7 | 1096.4 | 8310.9 | 28.2 |  | (431.6) | 7907.5 |
| Portfolio investments<sup>(1)</sup> | 12714.6 | 30808.2 | 5516.0 | 49038.8 | 4275.4 | 2119.3 | (1110.6) | 54322.9 |
| Deferred premium acquisition costs | 498.8 | 1471.7 | 230.8 | 2201.3 | 7.5 |  | (38.5) | 2170.3 |
| Recoverable from reinsurers | 2175.7 | 9768.7 | 2153.5 | 14097.9 | 517.5 |  | (1499.6) | 13115.8 |
| Deferred income tax assets | 129.8 | 155.6 | 51.9 | 337.3 | 25.6 | 54.5 | 74.7 | 492.1 |
| Goodwill and intangible assets | 800.8 | 2410.4 | 185.6 | 3396.8 | 7.5 | 2284.4 | 0.3 | 5689.0 |
| Due from affiliates | 193.3 | 10.9 | 2.1 | 206.3 | 364.1 |  | (570.4) |  |
| Other assets | 637.0 | 861.0 | 276.0 | 1774.0 | 832.6 | 4153.2 | 321.9 | 7081.7 |
| Investments in Fairfax insurance and reinsurance affiliates<sup>(2)</sup> | 29.4 | 102.8 | 34.9 | 167.1 | 29.3 |  | (196.4) |  |
| Total assets | 18664.9 | 51634.9 | 9547.2 | 79847.0 | 6087.7 | 8611.4 | (2421.0) | 92125.1 |
| **Liabilities** |  |  |  |  |  |  |  |  |
| Accounts payable and accrued liabilities | 878.1 | 1169.9 | 256.9 | 2304.9 | 263.1 | 2430.7 | 216.5 | 5215.2 |
| Derivative obligations | 5.6 | 107.4 | 0.5 | 113.5 |  | 58.2 | 19.3 | 191.0 |
| Due to affiliates | 6.6 | 2.9 | 7.0 | 16.5 | 0.4 | 82.4 | (99.3) |  |
| Deferred income tax liabilities |  | 19.2 | 205.8 | 225.0 | 18.5 | 252.4 | 0.8 | 496.7 |
| Insurance contract payables | 521.2 | 3567.3 | 751.2 | 4839.7 | 688.4 |  | (466.2) | 5061.9 |
| Provision for losses and loss adjustment expenses<sup>(3)</sup> | 8564.0 | 25870.8 | 3096.9 | 37531.7 | 4300.9 |  | (1343.0) | 40489.6 |
| Provision for unearned premiums<sup>(3)</sup> | 2876.2 | 7654.2 | 1313.6 | 11844.0 | 18.2 |  | (152.2) | 11710.0 |
| Borrowings | 38.3 | 695.1 |  | 733.4 |  | 1996.9 | 5894.6 | 8624.9 |
| Total liabilities | 12890.0 | 39086.8 | 5631.9 | 57608.7 | 5289.5 | 4820.6 | 4070.5 | 71789.3 |
| **Equity** |  |  |  |  |  |  |  |  |
| Shareholders' equity attributable to shareholders of Fairfax | 5774.9 | 12173.6 | 3846.8 | 21795.3 | 798.2 | 3664.1 | (9581.4) | 16676.2 |
| Non-controlling interests |  | 374.5 | 68.5 | 443.0 |  | 126.7 | 3089.9 | 3659.6 |
| Total equity | 5774.9 | 12548.1 | 3915.3 | 22238.3 | 798.2 | 3790.8 | (6491.5) | 20335.8 |
| Total liabilities and total equity | 18664.9 | 51634.9 | 9547.2 | 79847.0 | 6087.7 | 8611.4 | (2421.0) | 92125.1 |
| **Capital** |  |  |  |  |  |  |  |  |
| Borrowings | 38.3 | 695.1 |  | 733.4 |  | 1996.9 | 5894.6 | 8624.9 |
| Investments in Fairfax affiliates | 692.4 | 1317.9 | 146.8 | 2157.1 | 276.2 |  | (2433.3) |  |
| Shareholders' equity attributable to shareholders of Fairfax | 5082.5 | 9311.1 | 3718.4 | 18112.0 | 522.0 | 2100.4 | (4058.2) | 16676.2 |
| Non-controlling interests |  | 1919.1 | 50.1 | 1969.2 |  | 1690.4 |  | 3659.6 |
| Total capital | 5813.2 | 13243.2 | 3915.3 | 22971.7 | 798.2 | 5787.7 | (596.9) | 28960.7 |
| % of consolidated total capital | 20.1% | 45.7% | 13.5% | 79.3% | 2.8% | 20.0% | (2.1)% | 100.0% |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Includes intercompany investments in Fairfax non-insurance subsidiaries carried at cost that are eliminated on consolidation.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Intercompany investments in Fairfax insurance and reinsurance subsidiaries carried at cost that are eliminated on consolidation.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *Included in insurance contract liabilities on the consolidated balance sheet.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(4)* *Corporate and eliminations includes the Fairfax holding company, subsidiary intermediate holding companies, and consolidating and eliminating entries. The most significant of those entries are the elimination of intercompany reinsurance provided by Group Re, and reinsurance provided by Odyssey Group and Allied World to affiliated primary insurers.* 

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

*Segmented Balance Sheet as at December 31, 2021*

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** |  |  |  |  |
|  | **North**  | **Global**  | **International**  |  |  | **Non-** | **Corporate** |  |
|  | **American**  | **Insurers and**  | **Insurers and**  |  | **Life insurance**  | **insurance** | **and** |  |
|  | **Insurers** | **Reinsurers** | **Reinsurers** | **Total** | **and Run-off** | **companies** | **eliminations**<sup>(4)</sup> | **Consolidated** |
| **Assets** |  |  |  |  |  |  |  |  |
| Holding company cash and investments | 93.5 | 511.0 |  | 604.5 |  |  | 873.8 | 1478.3 |
| Insurance contract receivables | 1273.4 | 4998.1 | 944.0 | 7215.5 | 7.8 |  | (340.1) | 6883.2 |
| Portfolio investments<sup>(1)</sup> | 11688.5 | 27922.6 | 5450.7 | 45061.8 | 4963.9 | 2252.8 | (581.1) | 51697.4 |
| Deferred premium acquisition costs | 441.1 | 1299.1 | 210.4 | 1950.6 | 3.8 |  | (30.3) | 1924.1 |
| Recoverable from reinsurers | 2039.1 | 8588.6 | 2432.6 | 13060.3 | 457.6 |  | (1427.4) | 12090.5 |
| Deferred income tax assets | 153.9 | 69.8 | 44.5 | 268.2 | 29.0 | 66.9 | 158.3 | 522.4 |
| Goodwill and intangible assets | 898.3 | 2476.5 | 204.7 | 3579.5 | 7.5 | 2341.2 | - | 5928.2 |
| Due from affiliates | 213.6 | 16.2 | 1.5 | 231.3 | 360.2 |  | (591.5) |  |
| Other assets | 587.9 | 864.6 | 293.5 | 1746.0 | 810.0 | 3195.5 | 369.8 | 6121.3 |
| Investments in Fairfax insurance and reinsurance affiliates<sup>(2)</sup> | 29.4 | 102.8 | 35.0 | 167.2 | 29.3 |  | (196.5) |  |
| Total assets | 17418.7 | 46849.3 | 9616.9 | 73884.9 | 6669.1 | 7856.4 | (1765.0) | 86645.4 |
| **Liabilities** |  |  |  |  |  |  |  |  |
| Accounts payable and accrued liabilities | 724.7 | 1191.5 | 233.7 | 2149.9 | 233.4 | 2077.4 | 524.7 | 4985.4 |
| Derivative obligations | 4.6 | 67.9 |  | 72.5 |  | 47.9 | 32.5 | 152.9 |
| Due to affiliates | 3.4 | 10.9 | 14.5 | 28.8 | 0.2 | 135.1 | (164.1) |  |
| Deferred income tax liabilities |  | 95.7 | 226.5 | 322.2 | 72.9 | 198.5 | 5.2 | 598.8 |
| Insurance contract payables | 447.9 | 3043.7 | 717.0 | 4208.6 | 652.0 |  | (367.1) | 4493.5 |
| Provision for losses and loss adjustment expenses<sup>(3)</sup> | 7777.5 | 22308.3 | 3295.6 | 33381.4 | 4806.1 |  | (1295.2) | 36892.3 |
| Provision for unearned premiums<sup>(3)</sup> | 2555.1 | 6796.3 | 1213.4 | 10564.8 | 16.5 |  | (127.1) | 10454.2 |
| Borrowings | 38.3 | 752.4 |  | 790.7 |  | 1616.2 | 5346.1 | 7753.0 |
| Total liabilities | 11551.5 | 34266.7 | 5700.7 | 51518.9 | 5781.1 | 4075.1 | 3955.0 | 65330.1 |
| **Equity** |  |  |  |  |  |  |  |  |
| Shareholders' equity attributable to shareholders of Fairfax | 5867.2 | 12348.4 | 3839.5 | 22055.1 | 888.0 | 3690.8 | (10248.8) | 16385.1 |
| Non-controlling interests |  | 234.2 | 76.7 | 310.9 |  | 90.5 | 4528.8 | 4930.2 |
| Total equity | 5867.2 | 12582.6 | 3916.2 | 22366.0 | 888.0 | 3781.3 | (5720.0) | 21315.3 |
| Total liabilities and total equity | 17418.7 | 46849.3 | 9616.9 | 73884.9 | 6669.1 | 7856.4 | (1765.0) | 86645.4 |
| **Capital** |  |  |  |  |  |  |  |  |
| Borrowings | 38.3 | 752.4 |  | 790.7 |  | 1616.2 | 5346.1 | 7753.0 |
| Investments in Fairfax affiliates | 709.9 | 1069.3 | 162.5 | 1941.7 | 76.5 |  | (2018.2) |  |
| Shareholders' equity attributable to shareholders of Fairfax | 5157.3 | 8984.4 | 3695.5 | 17837.2 | 811.5 | 1782.5 | (4046.1) | 16385.1 |
| Non-controlling interests |  | 2528.9 | 58.2 | 2587.1 |  | 1998.8 | 344.3 | 4930.2 |
| Total capital | 5905.5 | 13335.0 | 3916.2 | 23156.7 | 888.0 | 5397.5 | (373.9) | 29068.3 |
| % of consolidated total capital | 20.3% | 45.9% | 13.5% | 79.7% | 3.1% | 18.6% | (1.4)% | 100.0% |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Includes intercompany investments in Fairfax non-insurance subsidiaries carried at cost that are eliminated on consolidation.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Intercompany investments in Fairfax insurance and reinsurance subsidiaries carried at cost that are eliminated on consolidation.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *Included in insurance contract liabilities on the consolidated balance sheet.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(4)* *Corporate and eliminations includes the Fairfax holding company, subsidiary intermediate holding companies, and consolidating and eliminating entries. The most significant of those entries are the elimination of intercompany reinsurance provided by Group Re, and reinsurance provided by Odyssey Group and Allied World to affiliated primary insurers.* 

#### Components of Consolidated Balance Sheets

#### Consolidated Balance Sheet Summary
**Changes to the assets and liabilities on the company's consolidated balance sheet at December 31, 2022 compared to December 31, 2021 were primarily due to the consolidation of Grivalia Hospitality on July 5, 2022, increased business volumes at the property and casualty insurance and reinsurance companies and net proceeds received from the sale of Crum & Forster's Pet Insurance Group and Pethealth.** 

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

**Holding company cash and investments decreased to $1,345.8 ($1,326.4 net of $19.4 of holding company derivative obligations) at December 31, 2022 from $1,478.3 at December 31, 2021 ($1,446.2 net of $32.1 of holding company derivative obligations). Significant cash transactions at the holding company in 2022 are set out in the Financial Condition section of this MD&A under the heading "Liquidity".**

**Insurance contract receivables increased by $1,024.3 to $7,907.5 at December 31, 2022 from $6,883.2 at December 31, 2021 primarily reflecting increased insurance and reinsurance premiums receivable due to increased business volumes and the normal lag in the associated premium collection, principally at the companies in the Global Insurers and Reinsurers reporting segment.**

**Portfolio investments comprise investments carried at fair value and equity accounted investments, the aggregate carrying value of which was $54,322.9 at December 31, 2022 ($54,151.3 net of subsidiary derivative obligations) compared to an aggregate carrying value at December 31, 2021 of $51,697.4 ($51,576.6 net of subsidiary derivative obligations). The increase of $2,574.7 principally reflected share of profit of associates of $1,014.7, interest and dividends earned by the property and casualty insurance and reinsurance companies of $746.1, and the proceeds received of $250.0 in debentures on the sale of Crum & Forster's Pet Insurance Group and Pethealth, partially offset by net unrealized losses on bonds and common stocks, and foreign currency net losses on investments, in addition to the specific factors which caused movements in portfolio investments as discussed in the paragraphs that follow.**

**Subsidiary cash and short term investments (including cash and short term investments pledged for derivative obligations) decreased by $12,399.1, primarily reflecting net investments of existing cash and the proceeds from sales and maturities of U.S. treasury and Canadian provincial short term investments into bonds as described in the paragraph that follows.**

**Bonds (including bonds pledged for derivative obligations) increased by $14,467.0, primarily reflecting net purchases of U.S. treasury and Canadian government bonds, first mortgage loans and short-dated high quality corporate bonds, and debentures received on the sale of Crum & Forster's Pet Insurance Group and Pethealth, partially offset by net unrealized losses.** 

**Common stocks decreased by $541.7 primarily reflecting net unrealized losses and the commencement of the equity method of accounting for Stelco on August 31, 2022.**

**Investments in associates increased by $1,329.9 primarily reflecting share of profit of associates of $1,014.7, the commencement of the equity method of accounting for Stelco and additional investments in Atlas common shares (through the exercise of equity warrants with a strike price of $8.05 and purchases of Atlas common shares held through AVLNs entered with RiverStone Barbados), partially offset by share of other comprehensive loss of associates (principally foreign currency losses), the recognition of distributions and dividends from associates and joint ventures and the consolidation of Grivalia Hospitality (previously equity accounted). Derivatives and other invested assets, net of derivative obligations, decreased by $213.5 primarily reflecting the exercise of Atlas equity warrants with a strike price of $8.05 and net sales of investment property, partially offset by higher net receivables from counterparties on long equity total return swaps, including long equity total return swaps on Fairfax subordinate voting shares.**

**Recoverable from reinsurers increased by $1,025.3 to $13,115.8 at December 31, 2022 from $12,090.5 at December 31, 2021 primarily reflecting increased business volumes (principally at Allied World, Crum & Forster and Brit) and U.S. crop losses ceded to reinsurers at Odyssey Group, partially offset by the settlement of a fronting claim at Fairfax Latam's operating company Southbridge Chile.**

**Deferred income tax assets decreased by $30.3 to $492.1 at December 31, 2022 from $522.4 at December 31, 2021 primarily reflecting the utilization of foreign tax credits in the U.S., partially offset by an increase in temporary differences in the U.S. due to net unrealized losses on investments.**

**Goodwill and intangible assets decreased by $239.2 to $5,689.0 at December 31, 2022 from $5,928.2 at December 31, 2021 primarily reflecting the weakening of the Canadian dollar relative to the U.S. dollar, non-cash goodwill impairment charges of $133.4 on Farmers Edge, the amortization of intangible assets and the deconsolidation of Crum & Forster's Pet Insurance Group and Pethealth, partially offset by the consolidations of Grivalia Hospitality and Fairfax India's subsidiaries Maxop and Jaynix, and intangible asset additions. The allocation by operating segment at December 31, 2022 of goodwill of $2,927.5 and intangible assets of $2,761.5 (December 31, 2021 - $3,084.8 and $2,843.4), is described in note 12 (Goodwill and Intangible Assets) to the consolidated financial statements for the year ended December 31, 2022. Impairment tests for goodwill and indefinite-lived intangible assets were completed during 2022 and it** 

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### was concluded that no significant impairments had occurred, other than non-cash goodwill impairment charges on Farmers Edge as described above.
**Other assets increased by $960.4 to $7,081.7 at December 31, 2022 from $6,121.3 at December 31, 2021 primarily reflecting the consolidations of Grivalia Hospitality and Fairfax India's subsidiaries Maxop and Jaynix, increases in inventories and other revenue receivables at the non-insurance companies, higher pension surplus at the insurance and reinsurance companies and higher accrued interest and dividends related to higher interest income in 2022, partially offset by decreased receivables for securities sold but not yet settled.** 

**Accounts payable and accrued liabilities increased by $229.8 to $5,215.2 at December 31, 2022 from $4,985.4 at December 31, 2021 primarily due to the consolidation of Grivalia Hospitality, higher payables related to cost of sales at the non-insurance companies related to growth in business volumes, higher deferred revenue due to additional production contracts at Boat Rocker, higher payables for securities purchased but not yet settled and increased income taxes payable, partially offset by decreased lease liabilities (primarily reflecting payments made) and decreased pension and post retirement liabilities.**

**Deferred income tax liabilities decreased by $102.1 to $496.7 at December 31, 2022 from $598.8 at December 31, 2021 principally due to net unrealized losses on investments at Eurolife and Allied World.** 

**Insurance contract payables increased by $568.4 to $5,061.9 at December 31, 2022 from $4,493.5 at December 31, 2021 primarily reflecting an increase in other insurance contract payables at Odyssey Group (principally related to its U.S. crop insurance business) and increased life liabilities at Eurolife (principally payables associated with unit-linked insurance products).**

**Provision for losses and loss adjustment expenses increased by $3,896.4 to $38,319.2 at December 31, 2022 from $34,422.8 at December 31, 2021 primarily reflecting increased business volumes (principally at Allied World, Odyssey Group, Brit, Northbridge and Crum & Forster) and catastrophe losses, partially offset by the strengthening of the U.S. dollar relative to the company's reserves denominated in other currencies (primarily the Canadian dollar, British pound, euro and Argentinian peso), Run-off's continued progress settling its claims liabilities, the settlement of claims at Fairfax Latam (at Southbridge Chile related to the 2019 Chilean riots) and net favourable prior year reserve development.**

**Non-controlling interests decreased by $1,270.6 to $3,659.6 at December 31, 2022 from $4,930.2 at December 31, 2021 primarily reflecting net changes in capitalization ($1,070.9, principally related to the acquisition of the non-controlling interests in Allied World, the privatization of Recipe and the purchase of certain securities held through AVLNs entered with RiverStone Barbados, partially offset by a third party's investment in Brit's subsidiary Ki Insurance), dividends paid to non-controlling interests ($263.2, primarily dividends paid by Allied World, Odyssey Group and Brit to their minority shareholders) and non-controlling interests' share of other comprehensive losses ($198.3), partially offset by non-controlling interests' share of net earnings ($139.6) and the acquisition of subsidiaries ($111.5, principally related to the consolidation of Grivalia Hospitality). For further details refer to note 16 (Total Equity) and note 23 (Acquisitions and Divestitures) to the consolidated financial statements for the year ended December 31, 2022.** 

**Comparison of 2021 to 2020 - Total assets and total liabilities increased to $86,645.4 and $65,330.1 at December 31, 2021 from$74,054.0 and $56,526.7 at December 31, 2020 primarily reflecting increased business volumes at the property and casualty insurance and reinsurance companies, net unrealized gains on equity and equity-related holdings and the company's investment in Digit compulsory convertible preferred shares, and the consolidations of Eurolife on July 14, 2021 and Singapore Re on June 17, 2021, partially offset by the deconsolidation of Fairfax India's subsidiary Privi on April 19, 2021, Mosaic Capital on August 5, 2021, and Toys "R" Us Canada on August 19, 2021. Refer to note 23 (Acquisitions and Divestitures) to the consolidated financial statements for the year ended December 31, 2022 for additional details.**

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Provision for Losses and Loss Adjustment Expenses
Since 1985, in order to ensure so far as possible that the company's provision for losses and loss adjustment expenses ("LAE") (often called "loss reserves" or "provision for claims") is adequate, management has established procedures so that the provision for losses and loss adjustment expenses at the company's property and casualty insurance and reinsurance operations and Life insurance and Run-off are subject to several reviews. The reserves are reviewed separately by, and must be acceptable to, internal actuaries at each operating company and the company's Chief Actuary. Additionally, independent actuaries are periodically engaged to review an operating company's reserves or reserves for certain lines of business.

The tables below present the company's property and casualty insurance and reinsurance companies and Run-off's gross provision for losses and loss adjustment expenses, by segment and line of business:

#### December 31, 2022

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** |  |  |  |
|  | **North**  |  | **International**  |  |  |  |  |
|  | **American**  | **Global Insurers**  | **Insurers and**  |  |  | **Corporate** |  |
|  | **Insurers** | **and Reinsurers** | **Reinsurers** | **Total** | **Run-off** | **and Other** | **Consolidated** |
| Property | 735.5 | 5579.9 | 1196.7 | 7512.1 | 40.4 |  | 7552.5 |
| Casualty | 7487.5 | 18625.5 | 984.1 | 27097.1 | 1255.9 |  | 28353.0 |
| Specialty | 308.0 | 1515.5 | 589.3 | 2412.8 | 0.9 |  | 2413.7 |
|  | 8531.0 | 25720.9 | 2770.1 | 37022.0 | 1297.2 |  | 38319.2 |
| Intercompany | 33.0 | 149.9 | 326.8 | 509.7 | 833.3 | (1343.0) |  |
| Provision for losses and LAE | 8564.0 | 25870.8 | 3096.9 | 37531.7 | 2130.5 | (1343.0) | 38319.2 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Excludes Eurolife's provision for life policy benefits of $2,170.4* 

#### December 31, 2021

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** |  |  |  |
|  | **North**  |  | **International**  |  |  |  |  |
|  | **American** | **Global Insurers**  | **Insurers and**  |  |  | **Corporate** |  |
|  | **Insurers** | **and Reinsurers** | **Reinsurers** | **Total** | **Run-off** | **and Other** | **Consolidated** |
| Property | 661.3 | 4579.4 | 1530.3 | 6771.0 | 43.9 |  | 6814.9 |
| Casualty | 6844.2 | 16204.5 | 989.0 | 24037.7 | 1375.6 |  | 25413.3 |
| Specialty | 264.0 | 1391.2 | 538.5 | 2193.7 | 0.9 |  | 2194.6 |
|  | 7769.5 | 22175.1 | 3057.8 | 33002.4 | 1420.4 |  | 34422.8 |
| Intercompany | 8.0 | 133.2 | 237.8 | 379.0 | 916.2 | (1295.2) |  |
| Provision for losses and LAE | 7777.5 | 22308.3 | 3295.6 | 33381.4 | 2336.6 | (1295.2) | 34422.8 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Excludes Eurolife's provision for life policy benefits of $2,469.5* 

In the ordinary course of carrying on business, the company's property and casualty insurance and reinsurance and Run-off operations may pledge their own assets as security for their own obligations to pay claims or to make premium (and accrued interest) payments. Circumstances where assets may be pledged (either directly or to support letters of credit) include: regulatory deposits (such as with U.S. states for workers' compensation business); deposits of funds at Lloyd's in support of London market underwriting; and by a non-admitted company under U.S. insurance regulations as security for claims assumed or to support funds withheld obligations. Generally, the pledged assets are released as the underlying payment obligation is fulfilled. Cash and investments pledged by the company's subsidiaries at December 31, 2022 of $7.3 billion, as described in note 5 (Cash and Investments) to the consolidated financial statements for the year ended December 31, 2022, represented the aggregate amount at that date that had been pledged in the ordinary course of business to support each pledging subsidiary's respective obligations (these pledges do not involve the cross-collateralization by one subsidiary of another subsidiary's obligations).

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

The provision for losses is established by the company's insurance companies using the case method when claims are initially reported. The provisions are subsequently adjusted as additional information on the estimated ultimate amount of a claim becomes known during the course of its settlement. The company's reinsurance companies rely on initial and subsequent premium and loss information received from ceding companies to establish estimates of their provisions for losses. In determining the provision to cover the estimated ultimate liability for all of the company's insurance and reinsurance obligations, a provision is also made for management's calculation of factors affecting the future development of losses including incurred but not reported losses based on the volume of business currently in force, the historical experience on claims and potential changes, such as changes in the underlying book of business, in law and in cost factors.

As time passes, more information about claims becomes known and the provision for losses may consequently be adjusted upward or downward. Because of the various elements of estimation encompassed in this process, and the time it takes to settle many of the more substantial claims, several years may be required before a meaningful comparison of actual losses to the original estimates can be developed.

The development of the provision for losses is often measured as the difference between estimates of reserves as of the initial year-end and the re-estimated reserves at each subsequent year-end. This is based on actual payments in full or partial settlement of claims, plus re-estimates of the reserves required for claims still open or claims still unreported. Favourable development (or redundancies) means that subsequent reserve estimates are lower than originally indicated, while unfavourable development (or deficiencies) means that the original reserve estimates were lower than subsequently indicated. The net favourable reserve development in the tables that follow excludes the loss reserve development of a subsidiary in the year it is acquired. In the "Reconciliation of Provision for Claims - Consolidated" table, a subsidiary's provision for losses at December 31 in the year of acquisition is included in the line "Provision for claims of companies acquired during the year at December 31", whereas the net favourable reserve development as set out in the Sources of Net Earnings section of this MD&A and in the consolidated statement of earnings includes the loss reserve development of a subsidiary from its acquisition date.

Net favourable (unfavourable) prior year reserve development by reporting segment for the years ended December 31 were comprised as follows:

---

| | | |
|:---|:---|:---|
|  | **Favourable/(Unfavourable)** | **Favourable/(Unfavourable)** |
| Property and Casualty Insurance and Reinsurance | **2022** | **2021** |
| &nbsp;&nbsp;North American Insurers | 77.2 | 103.7 |
| &nbsp;&nbsp;Global Insurers and Reinsurers | 21.1 | 201.4 |
| &nbsp;&nbsp;International Insurers and Reinsurers<sup>(1)</sup> | 97.9 | 43.6 |
|  | 196.2 | 348.7 |
| Run-off | (147.2) | (224.6) |
| Net favourable prior year reserve development | 49.0 | 124.1 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)*  ***Excludes net favourable prior year reserve development of companies acquired in 2021: Singapore Re ($4.0) and Eurolife ($2.9).*** 

Changes in provision for losses and loss adjustment expenses recorded on the consolidated balance sheets and the related effect on losses on claims, net for the years ended December 31 were as shown in the following table:

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

*Reconciliation of Provision for Claims – Consolidated*

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Provision for claims at January 1 - net | 25474.5 | 22856.5 |
| Foreign exchange effect | (442.4) | (236.8) |
| Losses on claims for claims occurring: |  |  |
| &nbsp;&nbsp;In the current year | 13648.9 | 10756.5 |
| &nbsp;&nbsp;In the prior years - net favourable development | (49.0) | (124.1) |
| Paid on claims during the year related to: |  |  |
| &nbsp;&nbsp;The current year | (2973.4) | (2380.6) |
| &nbsp;&nbsp;The prior years | (6593.5) | (5594.7) |
| Provision for claims of companies acquired and reinsurance transactions during the year, at December 31 | 3.8 | 210.0 |
| Divestitures during the year |  | (12.3) |
| Provision for claims at December 31 before the undernoted | 29068.9 | 25474.5 |
| CTR Life | 4.4 | 4.4 |
| Provision for claims at December 31 - net | 29073.3 | 25478.9 |
| Reinsurers' share of provision for claims at December 31 | 9245.9 | 8943.9 |
| Provision for claims at December 31 - gross | 38319.2 | 34422.8 |

---

Foreign exchange effect and other principally reflected the decrease of reserves denominated in the Canadian dollar, British pound, euro and Argentinian peso which weakened against the U.S. dollar (2021 - principally reflected the decrease of reserves denominated in the euro, Chilean peso, Argentinian peso, Colombian peso and South African rand which weakened against the U.S. dollar). The company generally manages foreign currency risk on claims liabilities by investing in financial instruments and other assets denominated in the same currency as the liabilities to which they relate.

The company endeavours to establish adequate provisions for losses and loss adjustment expenses at the original valuation date, with the objective of achieving net favourable prior period reserve development at subsequent valuation dates. The reserves will always be subject to upward or downward development in the future which could be significantly different from the past due to many unknown factors.

Available on Fairfax's website (*www.fairfax.ca*) in the Annual Financial Supplement for the year ended December 31, 2022 are tables that show the historical reserve reconciliation and the reserve development of the underlying operating companies in the company's property and casualty insurance and reinsurance reporting segments: North American Insurers (comprised of Northbridge, Crum & Forster and Zenith National), Global Insurers and Reinsurers (comprised of Odyssey Group, Brit and Allied World) and International Insurers and Reinsurers (comprised of Fairfax Asia and Insurance and Reinsurance - Other's operating companies Group Re, Bryte Insurance, Fairfax Latin America, Fairfax Central and Eastern Europe and Eurolife General), as well as Run-off's reconciliation of provision for claims.

#### Asbestos, Pollution and Other Latent Hazards
The company's insurance contract liabilities include estimates for exposure to asbestos claims, environmental pollution and other types of latent hazard claims (collectively "APO exposures").

A number of the company's subsidiaries wrote general liability policies and reinsurance prior to their acquisition by Fairfax under which policyholders continue to present asbestos-related injury claims. Substantially all of the company's exposure to asbestos losses are now under the management of Run-off. Considerable uncertainty surrounding these types of claims affects the ability of insurers and reinsurers to estimate the amount of unpaid claims and related settlement expenses. Key legal principles governing coverage obligations remain unsettled in the courts, and legislation in various states has undermined the intent of the insurer and policyholder expressed in policy language. Further, asbestos litigation itself continues to be an imperfect process for resolving asbestos claims fairly. As a result, the insurance industry confronts continuing litigation and uncertainty in its efforts to quantify asbestos exposures.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

Mesothelioma and lung cancer claims comprise the majority of asbestos claims now being filed and litigated, and the number of mesothelioma cases has not tailed off as expected. The average number of defendants named in each case continues to rise, and each year more defendants not previously sued for asbestos liability are named in lawsuits, putting pressure on costs of defense. Furthermore, plaintiffs' firms in the asbestos litigation continue to push for an increase in the settlement values and jury verdicts in asbestos cases involving malignancies. Asbestos trial results have been mixed, with both plaintiff and defense verdicts having been rendered in courts throughout the U.S. The company continues to implement strategies and initiatives to address these issues and will evaluate and adjust its asbestos reserves as necessary.

The company also faces claims exposure related to environmental pollution and other latent injury allegedly from exposure to potentially harmful products or substances such as pharmaceutical products, chemical products, lead-based pigments and talc. Other latent injury claims have also arisen from insureds' alleged responsibility for sports-related head trauma, sexual molestation, and opioid addiction. Potential exposure associated with sexual molestation claims has increased, driven by heightened awareness and investigation into past abuse, high profile claims, and legislation expanding alleged victims' ability to sue, all of which have resulted in additional claims being reported to the company. The company also is monitoring the emergence of water and soil contamination claims involving perfluorinated chemicals ("PFCs"), as well as growing mass tort litigation involving claims of injury from pesticides and agricultural chemicals such as "Roundup," Paraquat and chlorpyrifos. Coverage for lead paint manufacturers' liability for large-scale abatement of lead paint that is being litigated in various appellate courts also presents potential exposure to the company. Moreover, the company continues to be presented with claims by companies seeking coverage for suits by women who claim bodily injury from exposure to talc, often alleged to have been contaminated with asbestos, as an ingredient of consumer products such as powders and cosmetics. Individual claimants number in the tens of thousands, and the future development of these claims and the degree of the company's exposure to them are highly uncertain.

Reserves for asbestos, pollution and other latent hazards cannot be estimated using traditional loss reserving techniques that rely on historical accident year loss development factors. The uncertainty around future estimates is driven by the lack of historical experience to draw from, uncertainty surrounding the volume of such claims and reporting patterns, emerging science that examines the risk of disease posed by these substances, changes in law, inconsistent trial results, insolvencies of defendants and co-insurers, and social and economic inflation. As each insured presents different liability and coverage issues, the company evaluates its asbestos, pollution and other latent hazard exposure on an insured-by-insured basis. Since the mid-1990's the company has utilized a sophisticated methodology that draws upon company experience and claim data sets to assess liabilities on reported claims. The methodology utilizes a ground-up, exposure-based analysis that constitutes the industry "best practice". In conjunction with the exposure-based analysis, the company also uses aggregate industry methods when setting its overall asbestos, pollution and other latent hazard reserves.

Following is an analysis of the company's gross and net loss and ALAE reserves from U.S. asbestos exposures for the years ended December 31:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2021** | **2021** |
|  | **Gross** | **Net** | **Gross** | **Net** |
| ***Asbestos*** |  |  |  |  |
| Provision for asbestos claims and ALAE at January 1 | 1036.7 | 838.9 | 1030.6 | 840.0 |
| Asbestos losses and ALAE incurred during the year | 215.8 | 113.7 | 199.1 | 151.6 |
| Asbestos losses and ALAE paid during the year | (175.2) | (132.5) | (193.0) | (152.7) |
| Provision for asbestos claims and ALAE at December 31 | 1077.3 | 820.1 | 1036.7 | 838.9 |

---

To the extent that future social, scientific, economic, legal, or legislative developments alter the volume of claims, the liabilities of policyholders, policy coverage or the ability to recover reinsurance, additional adjustments to loss reserves beyond current estimates may emerge in future periods.

#### Recoverable from Reinsurers
The company's property and casualty insurance and reinsurance operations purchase reinsurance to achieve various objectives including protection from catastrophic financial loss resulting from a single event, such as the total loss of a large manufacturing plant from a fire, protection against the aggregation of many smaller claims resulting from a single event, such as an earthquake or major hurricane, that may affect many policyholders simultaneously, and generally to protect capital by limiting loss exposure to acceptable levels.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

Recoverable from reinsurers of $13,115.8 on the consolidated balance sheet at December 31, 2022 consisted of future recoverable amounts from reinsurers on unpaid claims ($9,274.8), reinsurance receivable on paid losses ($1,599.4) and the unearned portion of premiums ceded to reinsurers ($2,413.5), net of a provision for uncollectible balances ($171.9). Recoverables from reinsurers on unpaid claims increased by $285.5 to $9,274.8 at December 31, 2022 from $8,989.3 at December 31, 2021, primarily reflecting increased business volumes at most insurance and reinsurance companies, partially offset by the settlement of fronting claims at Fairfax Latam (at Southbridge Chile related to the 2019 Chilean riots).

The following table presents the company's top 10 reinsurance groups (ranked by gross recoverable from reinsurers) at December 31, 2022, which represented 62.5% (December 31, 2021 - 61.7%) of gross recoverable from reinsurers.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  | **A.M. Best** |  | **Net unsecured** |
|  |  | **rating (or S&P** | **Gross recoverable** | **recoverable** |
| **Reinsurance group** | **Principal reinsurers** | **equivalent)**<sup>(1)</sup> | **from reinsurers**<sup>(2)</sup> | **from reinsurers**<sup>(3)</sup> |
| Munich | Munich Reinsurance Company | A+ | 1618.5 | 1398.5 |
| Swiss Re | Swiss Reinsurance America Corporation | A+ | 1436.8 | 1383.1 |
| Lloyd's | Lloyd's | A | 1212.9 | 1197.5 |
| Everest | Everest Reinsurance (Bermuda), Ltd | A+ | 780.0 | 649.9 |
| Risk Management Agency | Federal Crop Insurance Corporation | NR | 737.1 | 737.1 |
| HDI | Hannover Rück SE | A+ | 577.6 | 570.8 |
| Berkshire Hathaway | General Reinsurance Corporation | A++ | 551.8 | 549.6 |
| AIG | Validus Reinsurance (Switzerland) Ltd | A | 470.9 | 459.9 |
| Axis | Axis Reinsurance Company | A | 469.8 | 409.2 |
| Sompo Holdings | Endurance Assurance Corporation | A+ | 448.6 | 441.8 |
| Top 10 reinsurance groups |  |  | 8304.0 | 7797.4 |
| Other reinsurers |  |  | 4983.7 | 4245.1 |
| Gross recoverable from reinsurers |  |  | 13287.7 | 12042.5 |
| Provision for uncollectible reinsurance |  |  | (171.9) | (171.9) |
| Recoverable from reinsurers |  |  | 13115.8 | 11870.6 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)*  ***Financial strength rating of principal reinsurer.*** 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)*  ***Excludes specific provisions for uncollectible reinsurance.*** 

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *Net of outstanding balances for which security was held, and excludes specific provisions for uncollectible reinsurance.* 

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

The following table presents recoverable from reinsurers of $13,115.8 at December 31, 2022 separately for the Property and Casualty Insurance and Reinsurance reporting segment and Life insurance and Run-off, according to the financial strength rating of the reinsurers. Shown separately are pools and associations, which generally consist of government or similar insurance funds carrying limited credit risk.

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Property and Casualty** | **Property and Casualty** | **Property and Casualty** |  |  |  |  |  |  |
|  | **Insurance and Reinsurance** | **Insurance and Reinsurance** | **Insurance and Reinsurance** | **Life Insurance and Run-off** | **Life Insurance and Run-off** | **Life Insurance and Run-off** | **Consolidated** | **Consolidated** | **Consolidated** |
|  | **Gross** | **Balance for** | **Net unsecured** | **Gross** |  | **Net unsecured** | **Gross** | **Balance for** | **Net unsecured** |
|  | **recoverable** | **which** | **recoverable** | **recoverable** | **Balance for** | **recoverable** | **recoverable** | **which** | **recoverable** |
| **A.M. Best rating (or** | **from** | **security is** | **from** | **from** | **which security** | **from** | **from** | **security is** | **from** |
| **S&P equivalent)** | **reinsurers** | **held** | **reinsurers** | **reinsurers** | **is held** | **reinsurers** | **reinsurers** | **held** | **reinsurers** |
| A++ | 546.5 | 23.9 | 522.6 | 53.8 | 0.3 | 53.5 | 600.3 | 24.2 | 576.1 |
| A+ | 6376.1 | 435.6 | 5940.5 | 255.2 | 8.5 | 246.7 | 6631.3 | 444.1 | 6187.2 |
| A | 3636.9 | 199.4 | 3437.5 | 114.0 | 6.5 | 107.5 | 3750.9 | 205.9 | 3545.0 |
| A- | 468.7 | 51.2 | 417.5 | 9.7 | 2.4 | 7.3 | 478.4 | 53.6 | 424.8 |
| B++ | 52.1 | 3.5 | 48.6 | 3.2 | 0.8 | 2.4 | 55.3 | 4.3 | 51.0 |
| B+ | 0.8 |  | 0.8 |  |  |  | 0.8 |  | 0.8 |
| B or lower | 10.6 |  | 10.6 |  |  |  | 10.6 |  | 10.6 |
| Not rated | 799.4 | 464.2 | 335.2 | 199.4 | 42.3 | 157.1 | 998.8 | 506.5 | 492.3 |
| Pools and associations | 756.3 | 6.6 | 749.7 | 5.0 |  | 5.0 | 761.3 | 6.6 | 754.7 |
|  | 12647.4 | 1184.4 | 11463.0 | 640.3 | 60.8 | 579.5 | 13287.7 | 1245.2 | 12042.5 |
| Provision for uncollectible reinsurance | (43.3) |  | (43.3) | (128.6) |  | (128.6) | (171.9) |  | (171.9) |
| Recoverable from reinsurers | 12604.1 |  | 11419.7 | 511.7 |  | 450.9 | 13115.8 |  | 11870.6 |

---

To support recoverable from reinsurers balances, the company had the benefit of letters of credit or trust funds totaling $1,245.2 at December 31, 2022. In addition to the above security arrangements, Lloyd's is also required to maintain funds in Canada and the United States that are monitored by the applicable regulatory authorities in those jurisdictions.

Substantially all of the provision for uncollectible reinsurance of $171.9 at December 31, 2022 related to net unsecured reinsurance recoverable of $554.7 from reinsurers rated B++ or lower, including those that are not rated (which excludes pools and associations).

Credit risk associated with the company's recoverable from reinsurers is discussed in note 24 (Financial Risk Management, under the heading "Credit Risk") to the consolidated financial statements for the year ended December 31, 2022. From the credit risk analysis performed by its reinsurance security department, the company believes that its provision for uncollectible reinsurance is reasonable for all incurred losses arising from uncollectible reinsurance at December 31, 2022.

Consolidated net earnings included the pre-tax cost of ceded reinsurance of $611.2 (2021 - $765.8), which is a supplementary financial measure used by the company to determine the cost or benefit of ceding business volume and insurance risk. The consolidated pre-tax impact of ceded reinsurance was comprised as follows, using amounts from note 9 (Reinsurance) to the consolidated financial statements for the year ended December 31, 2022: reinsurers' share of premiums earned of $5,448.8 (2021 - $5,228.8); commissions earned on reinsurers' share of premiums earned of $1,184.4 (2021 - $1,007.8); losses on claims ceded to reinsurers of $3,642.0 (2021 - $3,479.0); and net recovery of uncollectible reinsurance of $11.2 (2021 - net provision for uncollectible reinsurance of $23.8).

*Year ended December 31, 2022*

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** |  |  |  |
|  |  |  | **International** |  | **Life** |  |  |
|  | **North American** | **Global Insurers** | **Insurers and** |  | **insurance and** | **Inter-** |  |
|  | **Insurers** | **and Reinsurers** | **Reinsurers** | **Total** | **Run-off** | **company** | **Consolidated** |
| Reinsurers' share of premiums earned | 1144.9 | 3482.9 | 1149.1 | 5776.9 | 5.8 | (333.9) | 5448.8 |
| Pre-tax benefit (cost) of ceded reinsurance | (57.2) | 4.4 | (526.0) | (578.8) | 137.4 | (169.8) | (611.2) |

---

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[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

*Year ended December 31, 2021*

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** |  |  |  |
|  | **North** |  | **International** |  | **Life** |  |  |
|  | **American** | **Global Insurers** | **Insurers and** |  | **insurance and** | **Inter-** |  |
|  | **Insurers**<sup>(1)</sup> | **and Reinsurers**<sup>(2)</sup> | **Reinsurers** | **Total** | **Run-off** | **company**<sup>(1)</sup> | **Consolidated** |
| Reinsurers' share of premiums earned | 1223.7 | 3597.5 | 1017.9 | 5839.1 | 3.6 | (613.9) | 5228.8 |
| Pre-tax benefit (cost) of ceded reinsurance | (19.3) | (417.8) | (297.2) | (734.3) | 62.5 | (94.0) | (765.8) |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Includes reinsurers' share of premiums earned of $358.1 related to Crum & Forster's fourth quarter 2021 intercompany reinsurance transaction with Run-off as described in the North American Insurers section of this MD&A.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Includes reinsurers' share of premiums earned of $344.1 and pre-tax benefit of ceded reinsurance of $35.0 related to Brit's fourth quarter 2021 reinsurance transaction as described in the Global Insurers and Reinsurers section of this MD&A.* 

Reinsurers' share of premiums earned increased to $5,448.8 in 2022 from $5,228.8 in 2021, reflecting increases at Allied World, Crum & Forster and Fairfax Latam primarily due to higher business volumes and the inclusion of a full year of ceded premium of Singapore Re, partially offset by the fourth quarter 2021 reinsurance transaction at Brit which increased reinsurer's share of premiums earned in 2021.

Commissions earned on reinsurers' share of premiums earned increased to $1,184.4 in 2022 from $1,007.8 in 2021 commensurate with the increase in reinsurers' share of premiums earned and a modestly higher commission rate.

Reinsurers' share of losses on claims increased to $3,642.0 in 2022 from $3,479.0 in 2021, primarily due to higher U.S. crop losses ceded to reinsurers at Odyssey Group and an increase at Crum & Foster primarily reflecting increased business volumes, partially offset by favourable development in 2022 on fronting claims related to the 2019 Chilean riots at Fairfax Latam and the fourth quarter 2021 reinsurance transaction at Brit which increased reinsurer's share of losses on claims in 2021.

The use of reinsurance in 2022 decreased cash provided by operating activities by approximately $1,847.0 (2021 - $2,394.9) primarily reflecting the timing of premiums paid to reinsurers in each of 2022 and 2021 which was earlier than the collection of reinsurance on claims paid.

#### Investments

#### Hamblin Watsa Investment Counsel Ltd.
Hamblin Watsa Investment Counsel Ltd. ("Hamblin Watsa") is a wholly owned subsidiary of the company that serves as the investment manager for the holding company, the property and casualty insurance and reinsurance operations, Life insurance and Run-off companies, and Fairfax India. Following a long term value-oriented investment philosophy with primary emphasis on the preservation of invested capital, Hamblin Watsa looks for investments with a margin of safety by conducting thorough proprietary analysis of investment opportunities and markets, assessing the financial strength of issuers, identifying attractively priced securities selling at discounts to intrinsic value and hedging risks where appropriate. Hamblin Watsa is opportunistic and disciplined in seeking undervalued securities in the market, often investing in out-of-favour securities when sentiment is negative, and maintaining a large proportion of its investment portfolio in cash and cash equivalents when it perceives markets to be over-valued.

Hamblin Watsa generally operates as a separate investment management entity, with the company's Chief Executive Officer and one other corporate officer serving as members of Hamblin Watsa's investment committee. This investment committee is responsible for making all investment decisions, subject to relevant regulatory guidelines and constraints, and oversight by Hamblin Watsa management. The company's Board of Directors, management and operating companies served by Hamblin Watsa are kept apprised of significant investment decisions by Hamblin Watsa through the financial reporting process and periodic presentations by Hamblin Watsa management.

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[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Overview of Investment Performance
Investments at their year end carrying values (including at the holding company) for the company's first year and for the past ten years are presented in the following table. Included in bonds are U.S. treasury bond forward contracts, CPI-linked derivatives and credit default swaps and included in common stocks are investments in associates and equity derivatives.

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Cash and**  |  |  |  |  |  |  |
|  | **short term** |  | **Preferred** | **Common** | **Real** | **Total**  | **Investments**  |
| **Year**<sup>(1)</sup> | **investment** | **Bonds**<sup>(2)</sup> | **stocks** | **stocks** | **estate**<sup>(3)</sup> | **investments**<sup>(4)</sup> | **per share ($)**<sup>(5)</sup> |
| 1985 | 6.4 | 14.1 | 1.0 | 2.5 |  | 24.0 | 4.80 |
| &nbsp;&nbsp;↕ |  |  |  |  |  |  |  |
| 2013 | 7988.0 | 10710.3 | 764.8 | 4951.0 | 447.5 | 24861.6 | 1172.72 |
| 2014 | 6428.5 | 12660.3 | 520.6 | 5968.1 | 615.2 | 26192.7 | 1236.90 |
| 2015 | 7368.7 | 14905.0 | 116.9 | 6124.4 | 501.1 | 29016.1 | 1306.22 |
| 2016 | 11214.4 | 10358.3 | 70.6 | 6281.1 | 506.3 | 28430.7 | 1231.11 |
| 2017<sup>(6)</sup> | 19186.2 | 10392.5 | 299.6 | 9014.1 | 363.0 | 39255.4 | 1414.55 |
| 2018 | 7423.8 | 20727.3 | 264.6 | 9738.1 | 686.8 | 38840.6 | 1425.97 |
| 2019<sup>(7)</sup> | 10652.2 | 16499.9 | 582.9 | 10539.5 | 730.1 | 39004.6 | 1453.71 |
| 2020 | 13860.6 | 16483.3 | 609.9 | 11504.9 | 712.7 | 43171.4 | 1649.24 |
| 2021<sup>(8)</sup> | 22796.8 | 14700.7 | 2419.9 | 12255.0 | 850.4 | 53022.8 | 2221.72 |
| 2022 | 10386.4 | 29209.5 | 2349.1 | 12830.5 | 702.2 | 55477.7 | 2378.43 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *IFRS basis for 2010 to 2022; Canadian GAAP basis for 2009 and prior. Under Canadian GAAP, investments were generally carried at cost or amortized cost in 2006 and prior.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Includes the company's investment in other funds with a carrying value of $202.8 at December 31, 2022 (December 31, 2021 - $195.5, December 31, 2020 - $195.4, December 31, 2019 - $175.6, December 31, 2018 - $150.3, December 31, 2017 - $90.9, December 31, 2016 - $157.1, December 31, 2015 - $1,094.0) that are invested principally in fixed income securities.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *Includes the company's equity accounted investments in KWF LPs, and Grivalia Properties prior to its consolidation effective July 4, 2017. Grivalia Properties was deconsolidated upon its merger into Eurobank on May 17, 2019. Eurobank is included in common stocks in the table above.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(4)* *Comprised of holding company cash and investments and portfolio investments, net of derivative obligations (commencing in 2004), as presented on the consolidated balance sheet.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(5)* *Total investments divided by the number of common shares effectively outstanding as presented in the consolidated financial statements. This supplementary financial measure is presented principally to indicate the significance of the company's investments in the composition of book value per basic share.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(6)* *Increases primarily related to Allied World's investment portfolio of $7,918.8, which the company commenced consolidating on July 6, 2017.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(7)* *Excludes European Run-off's portfolio investments that were included in assets held for sale on the consolidated balance sheet at December 31, 2019.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(8)* *Increases in part related to the consolidation of Eurolife on July 14, 2021 and Singapore Re on June 17, 2021, and their investment portfolios of $3,256.8 and $316.9 respectively.* 

Investments per share increased by $156.71 to $2,378.43 at December 31, 2022 from $2,221.72 at December 31, 2021 primarily reflecting the factors that increased investments described under the heading "Components of Consolidated Balance Sheets" in this MD&A and the impact of the company's net purchases of its common shares for treasury (for use in its share-based payment awards) and for cancellation (pursuant to normal course issuer bids). The company's common shares effectively outstanding decreased to 23,325,305 at December 31, 2022 from 23,865,600 at December 31, 2021. Since 1985, investments per share has compounded at a rate of 18.3% per year, including the impact of acquisitions.

#### Interest and Dividends
The majority of interest and dividends is earned by the property and casualty insurance and reinsurance operations. Interest and dividends earned in the company's first year and for the past ten years is presented in the following table. The company calculates a pre-tax and after-tax interest and dividends yield on average investments at carrying value, which are supplementary financial measures, to determine the return earned on investments during the holding period prior to realization of capital gains or losses.

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[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
|  | | **Interest and dividends** | **Interest and dividends** | **Interest and dividends** | **Interest and dividends** | **Interest and dividends** | **Interest and dividends** |
|  | <br>**Average** | **Pre-tax** | **Pre-tax** | **Pre-tax** | **After-tax** | **After-tax** | **After-tax** |
|  | **Investment at** |  | **Yield**<sup>(4)</sup> | **Per share**<sup>(5)</sup> |  | **Yield**<sup>(4)</sup> | **Per share**<sup>(5)</sup> |
| **Year**<sup>(1)</sup> | **carrying value**<sup>(2)</sup> | **Amount**<sup>(3)</sup> | **(%)** | **($)** | **Amount**<sup>(3)</sup> | **(%)** | **($)** |
| 1986 | 46.3 | 3.4 | 7.34 | 0.70 | 1.8 | 3.89 | 0.38 |
| &nbsp;&nbsp;↕ |  |  |  |  |  |  |  |
| 2013 | 25454.7 | 376.9 | 1.48 | 18.51 | 277.0 | 1.09 | 13.60 |
| 2014 | 25527.2 | 403.8 | 1.58 | 18.70 | 296.8 | 1.16 | 13.74 |
| 2015 | 27604.4 | 512.2 | 1.86 | 22.70 | 376.5 | 1.36 | 16.69 |
| 2016 | 28723.4 | 555.2 | 1.93 | 24.12 | 408.1 | 1.42 | 17.73 |
| 2017 | 33843.1 | 559.0 | 1.65 | 21.42 | 410.9 | 1.21 | 15.74 |
| 2018 | 39048.0 | 783.5 | 2.01 | 27.59 | 575.9 | 1.47 | 20.28 |
| 2019<sup>(6)</sup> | 40109.3 | 880.2 | 2.19 | 31.37 | 646.9 | 1.61 | 23.05 |
| 2020 | 41088.0 | 769.2 | 1.87 | 27.75 | 565.4 | 1.38 | 20.40 |
| 2021 | 48097.1 | 640.8 | 1.33 | 23.34 | 471.0 | 0.98 | 17.15 |
| 2022 | 54250.3 | 961.8 | 1.77 | 37.96 | 706.9 | 1.30 | 27.90 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *IFRS basis for 2010 to 2022; Canadian GAAP basis for 2009 and prior. Under Canadian GAAP, investments were generally carried at cost or amortized cost in 2006 and prior. All amounts in the table are calculated using information presented in the consolidated financial statements.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Investments at carrying value is comprised of holding company cash and investments and portfolio investments, net of derivative obligations (commencing in 2004), as presented on the consolidated balance sheet. Average investments at carrying value is the simple average of investments at carrying value at the beginning and end of the year.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *Pre-tax amount is as presented in the consolidated statement of earnings. After-tax amount is tax effected at the company's Canadian statutory income tax rate.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(4)* *Interest and dividends, on a pre-tax and after-tax basis, expressed as a percentage of average investments at carrying value.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(5)* *Calculated using the weighted average diluted number of common shares outstanding during the year as disclosed in the consolidated financial statements.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(6)* *Average investments at carrying value and interest and dividends yield on a pre-tax and after-tax basis were calculated inclusive of European Run-off's portfolio investments included in assets held for sale on the consolidated balance sheet at December 31, 2019.* 

Interest and dividends increased to $961.8 in 2022 from $640.8 in 2021, primarily reflecting higher interest income earned, principally due to a general increase in sovereign bond yields, net purchases of U.S. treasury and Canadian government bonds, first mortgage loans and other government bonds during 2021 and 2022, and increased dividend income from preferred stocks, partially offset by lower interest income earned from net sales of U.S. corporate bonds during 2021 and lower dividend income earned from long equity total return swaps.

The company's pre-tax interest and dividends yield of 1.77% in 2022 increased from 1.33% in 2021 and the company's after-tax interest and dividends yield of 1.30% in 2022 increased from 0.98% in 2021, with the year-over-year increases principally reflecting the factors described in the preceding paragraph.

Interest and dividends by reporting segment in 2022 and 2021 were comprised as shown in the following tables:

*Year ended December 31, 2022*

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** |  |  |  |  |
|  | **North** | **Global** | **International** |  | **Life** |  |  |  |
|  | **American** | **Insurers and** | **Insurers an** |  | **insurance** | **Non-insurance** | **Corporate** |  |
|  | **Insurers** | **Reinsurers** | **Reinsurers** | **Total** | **and Run-off** | **companies** | **and Other** | **Consolidated** |
| Interest income: |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Cash and short term investments | 19.8 | 44.4 | 24.7 | 88.9 | 2.7 | 1.2 | 8.7 | 101.5 |
| &nbsp;&nbsp;Bonds | 220.1 | 384.1 | 73.1 | 677.3 | 53.2 | 8.8 | 13.8 | 753.1 |
| &nbsp;&nbsp;Derivatives and other invested assets | 9.1 | 19.3 | 1.2 | 29.6 | 0.5 | 0.2 | (11.4) | 18.9 |
|  | 249.0 | 447.8 | 99.0 | 795.8 | 56.4 | 10.2 | 11.1 | 873.5 |
| Dividends: |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Preferred stocks | 15.7 | 21.8 | 1.5 | 39.0 | 0.7 |  |  | 39.7 |
| &nbsp;&nbsp;Common stocks | 16.3 | 33.1 | 14.5 | 63.9 | 11.6 | 24.6 | 0.6 | 100.7 |
|  | 32.0 | 54.9 | 16.0 | 102.9 | 12.3 | 24.6 | 0.6 | 140.4 |
| Investment expenses | (47.0) | (89.4) | (16.2) | (152.6) | (13.1) | (8.2) | 121.8 | (52.1) |
| Interest and dividends | 234.0 | 413.3 | 98.8 | 746.1 | 55.6 | 26.6 | 133.5 | 961.8 |

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[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

*Year ended December 31, 2021*

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** |  |  |  |  |
|  | **North** | **Global** | **International** |  | **Life** |  |  |  |
|  | **American** | **Insurers and** | **Insurers and** |  | **insurance** | **Non-insurance** | **Corporate** |  |
|  | **Insurers** | **Reinsurers** | **Reinsurers** | **Total** | **and Run-off** | **companies** | **and Other** | **Consolidated** |
| Interest income: |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Cash and short term investments | 4.8 | 8.5 | 14.2 | 27.5 | (1.1) | 0.4 |  | 26.8 |
| &nbsp;&nbsp;Bonds | 131.4 | 263.7 | 51.9 | 447.0 | 22.8 | 3.5 | 15.2 | 488.5 |
| &nbsp;&nbsp;Derivatives and other invested assets | 18.2 | 27.4 | 0.7 | 46.3 | 0.5 |  | 6.3 | 53.1 |
|  | 154.4 | 299.6 | 66.8 | 520.8 | 22.2 | 3.9 | 21.5 | 568.4 |
| Dividends: |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Preferred stocks | 5.2 | 7.3 | 0.8 | 13.3 | 0.3 |  | 0.5 | 14.1 |
| &nbsp;&nbsp;Common stocks | 18.7 | 29.9 | 10.8 | 59.4 | 7.5 | 28.5 | (1.3) | 94.1 |
|  | 23.9 | 37.2 | 11.6 | 72.7 | 7.8 | 28.5 | (0.8) | 108.2 |
| Investment expenses | (43.2) | (100.1) | (8.5) | (151.8) | (10.7) | (127.1) | 253.8 | (35.8) |
| Interest and dividends | 135.1 | 236.7 | 69.9 | 441.7 | 19.3 | (94.7) | 274.5 | 640.8 |

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[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Share of Profit (Loss) of Associates
*Share of profit of associates increased significantly to $1,014.7 in 2022 from $402.0 in 2021 principally reflecting increased share of profit of Atlas, Eurobank and Resolute and share of profit of EXCO (compared to share of loss in 2021).*

*Share of profit (loss) of associates by reporting segment in 2022 and 2021 were comprised as shown in the following tables:*

*Year ended December 31, 2022*

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** |  |  |  |  |
|  | **North** | **Global** | **International** |  | **Life**  | **Non-** |  |  |
|  | **American** | **Insurers and** | **Insurers and** |  | **insurance** | **insurance** | **Corporate** |  |
|  | **Insurers** | **Reinsurers** | **Reinsurers** | **Total** | **and Run-off** | **companies** | **and Other** | **Consolidated** |
| **Insurance and reinsurance:** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Gulf Insurance |  |  |  |  |  |  | 53.0 | 53.0 |
| &nbsp;&nbsp;Digit |  |  | (11.0) | (11.0) |  |  |  | (11.0) |
| &nbsp;&nbsp;Other | (1.8) | 1.2 | (0.7) | (1.3) | (0.9) |  | (9.4) | (11.6) |
|  | (1.8) | 1.2 | (11.7) | (12.3) | (0.9) |  | 43.6 | 30.4 |
| **Non-insurance:** |  |  |  |  |  |  |  |  |
| *India* |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;IIFL Finance |  |  |  |  |  | 36.5 |  | 36.5 |
| &nbsp;&nbsp;IIFL Securities | 2.9 | 0.7 | 0.1 | 3.7 |  | 10.9 |  | 14.6 |
| &nbsp;&nbsp;Other held by Fairfax India |  |  |  |  |  | 84.6 |  | 84.6 |
| &nbsp;&nbsp;Other |  |  |  |  |  | 0.2 | 6.6 | 6.8 |
|  | 2.9 | 0.7 | 0.1 | 3.7 |  | 132.2 | 6.6 | 142.5 |
| *Real estate* |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;KWF LPs | 12.8 | (6.7) |  | 6.1 | 10.4 |  |  | 16.5 |
| &nbsp;&nbsp;Other |  | 3.0 |  | 3.0 | 0.9 | (0.2) | (0.9) | 2.8 |
|  | 12.8 | (3.7) |  | 9.1 | 11.3 | (0.2) | (0.9) | 19.3 |
| *Other* |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Eurobank | 28.3 | 141.6 | 28.9 | 198.8 | 21.3 |  | 42.9 | 263.0 |
| &nbsp;&nbsp;Atlas (formerly Seaspan) | 29.9 | 194.6 | 15.4 | 239.9 | 12.1 |  | 6.2 | 258.2 |
| &nbsp;&nbsp;Resolute | 104.8 | 34.6 | 11.3 | 150.7 | 4.9 |  | 3.4 | 159.0 |
| &nbsp;&nbsp;EXCO | 30.0 | 36.5 | 9.0 | 75.5 | 4.6 |  | 1.8 | 81.9 |
| &nbsp;&nbsp;Other | 32.9 | 23.8 | (0.6) | 56.1 | 3.1 | 2.0 | (0.8) | 60.4 |
|  | 225.9 | 431.1 | 64.0 | 721.0 | 46.0 | 2.0 | 53.5 | 822.5 |
|  | 241.6 | 428.1 | 64.1 | 733.8 | 57.3 | 134.0 | 59.2 | 984.3 |
| **Share of profit of associates** | 239.8 | 429.3 | 52.4 | 721.5 | 56.4 | 134.0 | 102.8 | 1014.7 |

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[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

*Year ended December 31, 2021*

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** |  |  |  |  |
|  | **North** | **Global** | **International** |  | **Life**  | **Non-** |  |  |
|  | **American** | **Insurers and** | **Insurers and** |  | **insurance** | **insurance** | **Corporate** |  |
|  | **Insurers** | **Reinsurers** | **Reinsurers** | **Total** | **and Run-off** | **companies** | **and Other** | **Consolidated** |
| **Insurance and reinsurance:** |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Gulf Insurance<sup>(1)</sup> |  |  |  |  |  |  | 55.5 | 55.5 |
| &nbsp;&nbsp;Digit |  |  | 5.3 | 5.3 |  |  |  | 5.3 |
| &nbsp;&nbsp;Other | (0.7) | 1.7 | 6.2 | 7.2 | 1.0 |  | 3.6 | 11.8 |
|  | (0.7) | 1.7 | 11.5 | 12.5 | 1.0 |  | 59.1 | 72.6 |
| **Non-insurance:** |  |  |  |  |  |  |  |  |
| *India* |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;IIFL Finance | 6.1 | 1.7 | 0.4 | 8.2 | 0.3 | 30.4 | 1.7 | 40.6 |
| &nbsp;&nbsp;IIFL Securities | 2.1 | 0.6 | 0.2 | 2.9 | 0.1 | 10.4 | 0.6 | 14.0 |
| &nbsp;&nbsp;Other held by Fairfax India |  |  |  |  |  | (20.6) |  | (20.6) |
| &nbsp;&nbsp;Other |  |  |  |  |  |  | (1.4) | (1.4) |
|  | 8.2 | 2.3 | 0.6 | 11.1 | 0.4 | 20.2 | 0.9 | 32.6 |
| *Real estate* |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;KWF LPs | (1.5) | (3.9) |  | (5.4) | (3.6) |  |  | (9.0) |
| &nbsp;&nbsp;Other |  | (3.0) |  | (3.0) | 2.2 | 0.6 | (1.5) | (1.7) |
|  | (1.5) | (6.9) |  | (8.4) | (1.4) | 0.6 | (1.5) | (10.7) |
| *Other* |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;Eurobank | 18.2 | 91.4 | 18.3 | 127.9 | 1.1 |  | 33.3 | 162.3 |
| &nbsp;&nbsp;Resolute | 50.4 | 16.2 | 5.4 | 72.0 | 2.3 |  | 1.6 | 75.9 |
| &nbsp;&nbsp;Atlas (formerly Seaspan) | 8.5 | 55.6 | 1.0 | 65.1 | 3.6 |  | 0.8 | 69.5 |
| &nbsp;&nbsp;EXCO | (15.4) | (18.6) | (4.0) | (38.0) | (2.3) |  | (0.9) | (41.2) |
| &nbsp;&nbsp;Other | 35.9 | 43.1 | 2.9 | 81.9 | 12.1 | 1.5 | (54.5) | 41.0 |
|  | 97.6 | 187.7 | 23.6 | 308.9 | 16.8 | 1.5 | (19.7) | 307.5 |
|  | 104.3 | 183.1 | 24.2 | 311.6 | 15.8 | 22.3 | (20.3) | 329.4 |
| &nbsp;&nbsp;**Share of profit of associates** | 103.6 | 184.8 | 35.7 | 324.1 | 16.8 | 22.3 | 38.8 | 402.0 |

---

*See note 6 (Investments in Associates) and note 23 (Acquisitions and Divestitures) to the consolidated financial statements for the year ended December 31, 2022 for details of transactions described below:*

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *On February 8, 2021 the company entered into an arrangement to purchase (unless sold earlier) certain portfolio investments owned by RiverStone Barbados and subsequently commenced applying the equity method of accounting to its interest in Gulf Insurance pursuant to that arrangement.* 

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[**Table of Contents**](#TOC)

*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Net Gains (Losses) on Investments
Net losses on investments of $1,733.9 in 2022 (2021 - net gains on investments of $3,445.1) was comprised as shown in the following table:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **2022** | **2022** | **2022** | **2021** | **2021** | **2021** |
|  | **Net** | **Net change in** | **Net gains** |  | **Net change in** | **Net gains** |
|  | **realized gains** | **unrealized gains**  | **(losses) on** | **Net realized** | **unrealized gains**  | **(losses)** |
|  | **(losses)** | **(losses)** | **investments** | **gains (losses)**<sup>(1)</sup> | **(losses)** | **oninvestments** |
| &nbsp;&nbsp;Common stocks<sup>(1)</sup> | 364.5 | (607.2) | (242.7) | 483.4 | 850.0 | 1333.4 |
| &nbsp;&nbsp;Preferred stocks - convertible | 1.4 | (5.8) | (4.4) | 0.7 | 2.1 | 2.8 |
| &nbsp;&nbsp;Bonds - convertible | 10.2 | (247.2) | (237.0) | 0.2 | 101.1 | 101.3 |
| &nbsp;&nbsp;Other equity derivatives<sup>(2)(3)(4)</sup> | 331.7 | (140.9) | 190.8 | 461.5 | 170.1 | 631.6 |
| &nbsp;&nbsp;Disposition of non-insurance associates<sup>(5)</sup> | 45.1 |  | 45.1 | 52.7 |  | 52.7 |
| &nbsp;&nbsp;Deconsolidation of non-insurance subsidiaries<sup>(6)</sup> | 4.4 |  | 4.4 | 190.3 |  | 190.3 |
| **Long equity exposures and financial effects** | 757.3 | (1001.1) | (243.8) | 1188.8 | 1123.3 | 2312.1 |
| &nbsp;&nbsp;Bonds<sup>(7)</sup> | (183.6) | (1064.9) | (1248.5) | 338.0 | (624.6) | (286.6) |
| **U.S. treasury bond forward contracts** | 163.0 | (0.6) | 162.4 | 26.0 | (0.3) | 25.7 |
| &nbsp;&nbsp;Total bonds | (20.6) | (1065.5) | (1086.1) | 364.0 | (624.9) | (260.9) |
| &nbsp;&nbsp;Preferred stocks<sup>(8)</sup> | 12.9 | (101.1) | (88.2) | 1.5 | 1507.4 | 1508.9 |
| &nbsp;&nbsp;Other derivative contracts | (62.0) | 86.6 | 24.6 | (157.2) | 181.3 | 24.1 |
| &nbsp;&nbsp;Foreign currency<sup>(9)</sup> | 105.8 | (410.1) | (304.3) | (64.5) | (28.6) | (93.1) |
| &nbsp;&nbsp;Other | (36.3) | 0.2 | (36.1) | 130.4 | (176.4) | (46.0) |
| **Net gains (losses) on investments** | 757.1 | (2491.0) | (1733.9) | 1463.0 | 1982.1 | 3445.1 |
| **Net gains (losses) on bonds is comprised as follows:** |  |  |  |  |  |  |
| &nbsp;&nbsp;Government bonds | (161.3) | (567.8) | (729.1) | 2.7 | (62.5) | (59.8) |
| &nbsp;&nbsp;U.S. states and municipalities | (0.2) | (73.5) | (73.7) |  | 10.5 | 10.5 |
| &nbsp;&nbsp;Corporate and other | (22.1) | (423.6) | (445.7) | 335.3 | (572.6) | (237.3) |
|  | (183.6) | (1064.9) | (1248.5) | 338.0 | (624.6) | (286.6) |

---

*See note 5 (Cash and Investments), note 6 (Investments in Associates) and note 23 (Acquisitions and Divestitures) to the consolidated financial statements for the year ended December 31, 2022 for details of 2022 transactions described below:*

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *On August 31, 2022 Stelco Holdings Inc. repurchased 5.1 million of its outstanding common shares under its substantial issuer bid which resulted in the loss of a certain right held by another investor and the company's ownership interest in Stelco increasing to 20.5%. Accordingly, the company commenced applying the equity method of accounting to its interest in Stelco at that date, resulting in unrealized gains of $151.9 being reclassified to realized with a net impact of nil in the consolidated statement of earnings.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Other equity derivatives include long equity total return swaps, equity warrants and options and the Asset Value Loan Notes ("AVLNs") entered with RiverStone Barbados. Net change in unrealized gains (losses) in 2022 included $100.6 in unrealized gains (2021 - $91.8) on the company's investment in long equity total return swaps on Fairfax subordinate voting shares, with the fair value of $196.3 at December 31, 2022 (December 31, 2021 - $95.7) recorded in holding company cash and investments.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *Amounts recorded in net realized gains (losses) include net gains (losses) on total return swaps where the counterparties are generally required to cash-settle monthly or quarterly the market value movement since the previous reset date notwithstanding that the total return swap positions remain open subsequent to the cash settlement. Net realized gains (losses) in 2022 included $154.8 of realized gains (2021 - $130.9) on the company's investment in long equity total return swaps on Fairfax subordinate voting shares, which represented cash-settlement amounts recorded in holding company cash and investments.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(4)* *On April 6, 2022 the company acquired 25.0 million Atlas common shares by exercising its equity warrants in Atlas with a strike price of $8.05 per share for aggregate cash consideration of $201.3 and recognized a net loss on investment of $37.2 (realized gains of $58.6, of which $95.8 was recorded as unrealized gains in prior years) on derecognition of the equity warrants.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(5)* *During 2021 the company sold a portion of its investment in IIFL Finance for cash proceeds of $113.7 (8.6 billion Indian rupees) and recorded a net realized gain of $42.0 in the consolidated statement of earnings.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(6)* *Principally comprised of the sale of Toys "R" Us Canada and Fairfax India's sale of Privi during 2021.* 

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

&nbsp;&nbsp;&nbsp;&nbsp;*(7)* *Includes the derecognition of Seaspan Corporation debentures that were exchanged for Atlas Corp. preferred shares on June 11, 2021 and Seaspan Corporation debentures that were redeemed on August 23, 2021.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(8)* *Includes net unrealized gains of $1,490.3 (inclusive of foreign exchange losses) on Digit compulsory convertible preferred shares during 2021.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(9)* *Foreign currency net losses on investing activities during 2022 primarily related to the strengthening of the U.S. dollar relative to the company's investments denominated in the Indian rupee, Canadian dollar, Egyptian pound, Sri Lankan rupee and British pound, partially offset by foreign currency net gains on U.S. dollar denominated investments held by subsidiaries with a Canadian dollar or British pound functional currency as the U.S. dollar strengthened relative to those currencies. Foreign currency net losses on investing activities during 2021 primarily related to euro and Indian rupee denominated investments held by subsidiaries with a U.S. dollar functional currency as the U.S. dollar strengthened relative to those currencies.* 

**Long equity exposures and financial effects: Long equity exposures and financial effects excludes the company's insurance and reinsurance investments in associates and joint ventures and other equity and equity-related holdings which are considered long term strategic holdings. During 2022 the company's long equity exposures produced net losses of $243.8 (2021 - net gains of $2,312.1). Net losses on long equity exposures of $243.8 in 2022 were primarily comprised of net losses on common stocks ($242.7), convertible bonds ($237.0), AVLNs entered with RiverStone Barbados ($87.3) and equity warrants and options ($50.0), partially offset by net gains on long equity total return swaps ($328.1). Net gains on long equity total return swaps in 2022 included net gains of $255.4 on the company's investment in long equity total return swaps on Fairfax subordinate voting shares.**

**Bonds: Net losses on bonds in 2022 of $1,086.1 were primarily comprised of net losses on corporate and other bonds ($445.7, principally related to U.S. and other corporate bonds), U.S. treasury bonds ($442.1), Greek government bonds ($157.8) and U.S. state and municipal bonds ($73.7), partially offset by net gains on U.S. treasury bond forward contracts ($162.4). Net losses on bonds in 2021 of $260.9 were primarily comprised of net losses on corporate and other bonds ($237.3, principally related to U.S. and other corporate bonds).**

**To reduce its exposure to interest rate risk (primarily exposure to certain long dated U.S. corporate bonds and U.S. state and municipal bonds held in its fixed income portfolio), the company held forward contracts to sell long dated U.S. treasury bonds with a notional amount at December 31, 2022 of $183.7 (December 31, 2021 - $1,691.3). The decrease in U.S. treasury bond forward contracts held primarily reflected the closing of certain contracts as interest rates increased during the second half of 2022 and from the corresponding decrease in the company's exposure to certain U.S. corporate bonds from sales completed in late 2021. These contracts have an average term to maturity of less than six months, and may be renewed at market rates.** 

**Foreign currency: Foreign currency net losses in 2022 of $304.3 primarily reflected foreign currency net losses on investing activities of $366.5 (primarily related to the strengthening of the U.S. dollar relative to the company's investments denominated in the Indian rupee, Canadian dollar, Egyptian pound, Sri Lankan rupee and British pound, partially offset by foreign currency net gains on U.S. dollar denominated investments held by subsidiaries with a Canadian dollar or British pound functional currency as the U.S. dollar strengthened relative to those currencies) and net losses on foreign currency contracts of $53.6. Foreign currency net losses in 2021 of $93.1 primarily reflected foreign currency net losses on investing activities of $122.3 (primarily related to euro and Canadian dollar denominated investments held by subsidiaries with a U.S. dollar functional currency as the U.S. dollar weakened relative to those currencies), partially offset by net gains on underwriting activities of $41.2.**

#### Total Return on the Investment Portfolio
The following table presents the performance of the investment portfolio for the company's first year and for the past ten years. For the years 1986 to 2006, total return on average investments, a supplementary financial measure, included interest and dividends, net realized gains (losses) and changes in net unrealized gains (losses) as the majority of the company's investment portfolio was carried at cost or amortized cost under Canadian GAAP. For the years 2007 to 2009, Canadian GAAP required the company to carry the majority of its investments at fair value and as a result, total return on average investments during this period included interest and dividends, net gains (losses) on investments recorded in the consolidated statement of earnings and net unrealized gains (losses) on investments recorded in other comprehensive income. Effective January 1, 2010 the company adopted IFRS and was required to carry the majority of its investments at FVTPL and as a result, total return on average investments for the years 2010 to 2022 includes interest and dividends, net gains (losses) on investments and share of profit (loss) of associates, as presented in the consolidated statement of earnings, expressed

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

as a percentage of average investments at carrying value. All amounts described above used in the calculation of total return on average investments are included on a pre-tax basis, and are as presented in the consolidated financial statements.

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  |  |  |  |  | **Net gains (losses) recorded in:** | **Net gains (losses) recorded in:** |  |  |  |
|  | **Average** |  | **Net** | **Change in** |  |  |  | **Total return** | **Total return** |
|  | **investment** | **Interest** | **realized** | **unrealized** | **Consolidated** | **Other** | **Share of profit** | **on average** | **on average** |
|  | **at carrying** | **and** | **gains** | **gains** | **statement of** | **comprehensive** | **(loss) of** | **investments** | **investments** |
| **Year**<sup>(1)</sup> | **value**<sup>(2)</sup> | **dividends** | **(losses)** | **(losses)** | **earnings**<sup>(4)</sup> | **income (loss)** | **associates** |  | **(%)** |
| 1986 | 46.3 | 3.4 | 0.7 | (0.2) |  |  |  | 3.9 | 8.4 |
| &nbsp;&nbsp;↕ |  |  |  |  |  |  |  |  |  |
| 2013 | 25454.7 | 376.9 |  |  | (1579.8) |  | 96.7 | (1106.2) | (4.3) |
| 2014 | 25527.2 | 403.8 |  |  | 1682.7 |  | 105.7 | 2192.2 | 8.6 |
| 2015 | 27604.4 | 512.2 |  |  | (341.3) |  | 172.9 | 343.8 | 1.2 |
| 2016 | 28723.4 | 555.2 |  |  | (1223.3) |  | 24.2 | (643.9) | (2.2) |
| 2017 | 33843.1 | 559.0 |  |  | 1542.4 |  | 200.5 | 2301.9 | 6.8 |
| 2018 | 39048.0 | 783.5 |  |  | 221.3 |  | 221.1 | 1225.9 | 3.1 |
| 2019(5) | 40109.3 | 880.2 |  |  | 1710.6 |  | 169.6 | 2760.4 | 6.9 |
| 2020 | 41088.0 | 769.2 |  |  | 329.9 |  | (112.8) | 986.3 | 2.4 |
| 2021 | 48097.1 | 640.8 |  |  | 3403.9 |  | 402.0 | 4446.7 | 9.2 |
| 2022 | 54250.3 | 961.8 |  |  | (1742.5) |  | 1014.7 | 234.0 | 0.4 |
| Cumulative from inception |  | 15040.5 | 3887.8 |  | 10672.1 |  | 2357.4 | 33221.8 | 7.7<br><sup>(6)</sup> |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *IFRS basis for 2010 to 2022; Canadian GAAP for 2009 and prior. Under Canadian GAAP, investments were generally carried at cost or amortized cost in 2006 and prior.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Investments at carrying value is comprised of holding company cash and investments and portfolio investments, net of derivative obligations (commencing in 2004), as presented on the consolidated balance sheet. Average investments at carrying value is the simple average of investments at carrying value at the beginning and end of the year.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *Excludes gains on the company's secondary offerings of certain insurance and reinsurance subsidiaries (2004 - $40.1; 2006 - $69.7), losses on repurchase of long term debt at premiums to par (2004 - $27.0; 2006 - $15.7) and other gains and losses arising on transactions involving the common and preferred shares of consolidated insurance and reinsurance subsidiaries (2006 - $8.1 loss; 2009 - $25.9 gain).* 

&nbsp;&nbsp;&nbsp;&nbsp;*(4)* *Excludes foreign currency net gains (losses) recognized on the company's underwriting activities since 2008, as presented in the consolidated financial statements.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(5)* *Average investments at carrying value and total return on average investments were calculated inclusive of European Run-off's portfolio investments that were presented in assets held for sale on the consolidated balance sheet at December 31, 2019.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(6)* *Simple average of the total return on average investments for each of the 37 years.* 

Investment gains have been an important component of the company's financial results since 1985, having contributed an aggregate $15,618.6 (pre-tax) to total equity since inception. The contribution has fluctuated significantly from period to period; the amount of investment gains (losses) for any period has no predictive value and variations in amount from period to period have no practical analytical value. From inception in 1985 to 2022, total return on average investments has averaged 7.7%.

The company has a long term, value-oriented investment philosophy. It continues to expect fluctuations in the global financial markets for common stocks, bonds, derivatives and other securities.

#### Bonds

#### Credit Risk
***At December 31, 2022, 80.1% (December 31, 2021 - 65.1%) of the fixed income portfolio's carrying value was rated investment grade or better, with 60.6% (December 31, 2021 - 39.1%) rated AA or better (primarily consisting of government bonds). At December 31, 2022 the fixed income portfolio included the company's investments in first mortgage loans of $2,500.7 (December 31, 2021 - $1,659.4) secured by real estate predominantly in the U.S., Europe and Canada, with a weighted average loan-to-value ratio of approximately 60%, reducing the company's credit risk exposure related to these investments. Refer to note 24 (Financial Risk Management, under the heading "Investments in Debt Instruments") to the consolidated financial statements for the year ended December 31, 2022 for a discussion of the company's exposure to the credit risk in its fixed income portfolio.***

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Interest Rate Risk
Hypothetical parallel upward shifts in the term structure of interest rates by 100 basis points and 200 basis points would potentially decrease net earnings by $435.4 and $852.9 respectively (2021 - $224.3 and $418.4).

The company's exposure to interest rate risk increased during 2022 primarily due to net investments of existing cash and the proceeds from sales and maturities of U.S. treasury and Canadian provincial short term investments into U.S. treasury and Canadian government bonds with 1 to 5 year terms and short-dated high quality corporate bonds of $10,721.3, $1,422.1 and $2,202.6, respectively. To reduce its exposure to interest rate risk (primarily exposure to certain long-dated U.S. corporate bonds and U.S. state and municipal bonds held in its fixed income portfolio), the company held forward contracts to sell long-dated U.S. treasury bonds with a notional amount at December 31, 2022 of $183.7 (December 31, 2021 - $1,691.3). The decrease in U.S. treasury bond forward contracts held primarily reflected the closing of certain contracts as interest rates increased during the second half of 2022 and from the corresponding decrease in the company's exposure to certain U.S. corporate bonds from sales completed in late 2021. These contracts have an average term to maturity of less than six months and may be renewed at market rates.

The company's exposure to interest rate risk is discussed further in note 24 (Financial Risk Management) to the consolidated financial statements for the year ended December 31, 2022.

#### Common Stocks
The company holds significant investments in equity and equity-related instruments. The market value and the liquidity of these investments are volatile and may vary dramatically either up or down in short periods, and their ultimate value will therefore only be known over the long term or on disposition. The change in fair value of equity and equity-related holdings related to insurance and reinsurance investments in associates and joint ventures and certain other equity and equity-related holdings are considered long term strategic holdings and therefore excluded from the following analysis.

During 2022 the company's equity and equity-related exposure increased, primarily reflecting share of profit of associates, an increase in the notional amount of long equity total return swaps on individual equities for investment purposes (primarily from net gains of $255.4 on the company's investment in long equity total return swaps on Fairfax subordinate voting shares), partially offset by net unrealized depreciation on common stock positions.

The company's risk management objective with respect to market price fluctuations places primary emphasis on the preservation of invested capital. In the foreseeable future, the company will remain focused on its long term value-oriented investment philosophy, seeking investments that are attractively priced, selling at a discount to intrinsic value and afford a margin of safety.

A hypothetical decrease in global equity markets of 10% and 20% at December 31, 2022 would potentially decrease the company's net earnings by $646.8 and $1,287.8 (December 31, 2021 - by $770.6 and $1,538.8). The company's long equity exposures and exposure to market price fluctuations are discussed further in note 24 (Financial Risk Management) to the consolidated financial statements for the year ended December 31, 2022.

The company's holdings of common stocks, long equity total return swaps and investments in associates at December 31, 2022 and 2021 are summarized by the issuer's primary industry in the table below.

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2022**<sup>(1)(2)</sup> | **2021**<sup>(1)(2)</sup> |
| Financials and investment funds | 7486.6 | 7096.1 |
| Commercial and industrial | 4082.3 | 3151.1 |
| Consumer products and other | 1956.0 | 2177.7 |
|  | 13524.9 | 12424.9 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Excludes other funds that are invested principally in fixed income securities at December 31, 2022 of $202.8 (December 31, 2021 - $195.5).* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Excludes the company's insurance and reinsurance investments in associates and joint ventures which are considered long term strategic holdings.* 

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

The company's top 10 holdings of common stocks, long equity total return swaps and investments in associates at December 31, 2022 and 2021 are summarized by the issuer's country of domicile in the table below.

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2022**<sup>(1)(2)</sup> | **2021**<sup>(1)(2)</sup> |
| Canada<sup>(3)</sup> | 5031.0 | 4089.1 |
| United States | 2574.7 | 2027.5 |
| India<sup>(4)</sup> | 2156.5 | 2386.9 |
| Greece | 1624.6 | 1468.1 |
| United Kingdom | 377.4 | 373.2 |
| Egypt | 324.4 | 343.4 |
| Singapore | 218.0 | 285.7 |
| Thailand | 147.9 | 104.4 |
| China | 144.0 | 165.6 |
| Netherlands | 130.8 | 173.0 |
| All other | 795.6 | 1008.0 |
|  | 13524.9 | 12424.9 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Excludes other funds that are invested principally in fixed income securities at December 31, 2022 of $202.8 (December 31, 2021 - $195.5).* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Excludes the company's insurance and reinsurance investments in associates and joint ventures which are considered long term strategic holdings.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *The year-over-year increase primarily reflects share of profits from associates and net gains on investments recognized on the company's investment in long equity total return swaps on Fairfax subordinate voting shares, partially offset by net unrealized depreciation on common stock positions.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(4)* *Principally held by Fairfax India, in which the company has a 34.7% economic ownership interest and the remaining 65.3% is held by non-controlling interests.* 

#### Derivatives and Derivative Counterparties
The company endeavours to limit counterparty risk through diligent selection of counterparties to its derivative contracts and through the terms of negotiated agreements. Pursuant to these agreements, counterparties are contractually required to deposit eligible collateral in collateral accounts (subject to certain minimum thresholds) for the benefit of the company based on the daily fair value of the derivative contracts. Agreements negotiated with counterparties provide for a single net settlement of all financial instruments covered by the agreement in the event of default by the counterparty, thereby permitting obligations owed by the company to a counterparty to be offset to the extent of the aggregate amount receivable by the company from that counterparty. The company's exposure to net derivative counterparty risk at December 31, 2022 was estimated to be $11.7 (December 31, 2021 - $37.6).

Refer to note 24 (Financial Risk Management, under the heading "Credit Risk - Counterparties to Derivative Contracts") to the consolidated financial statements for the year ended December 31, 2022 for a discussion and tabular analysis of the company's exposure to derivative counterparty risk.

#### Float
Float in the insurance industry refers to the funds available for investment that arise as an insurance or reinsurance operation receives premiums in advance of the payment of claims. The company calculates its float as the sum of its property and casualty insurance and reinsurance contract liabilities (comprised of provision for losses and loss adjustment expenses and provision for unearned premiums) and insurance contract payables, less the sum of its insurance contract receivables, recoverable from reinsurers and deferred premium acquisition costs. The annual cost (benefit) of float is calculated by expressing annual underwriting profit (loss) as a percentage of average float for the year (the simple average of float at the beginning and end of the year) and results in an annual benefit (cost) in years where the company has an underwriting profit (loss).

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

The following table presents the accumulated float and the cost (benefit) of generating that float for the company's property and casualty insurance and reinsurance operations. The average float increased by 14.2% in 2022 to $27,775.2, at no cost.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  |  | **Cost** | **Average long term** |
|  | **Underwriting** |  | **(benefit)** | **Canada treasury** |
|  | **profit** <sup>(1)</sup> | **Average float** | **of float** | **bond yield** |
| **Year** |  |  |  |  |
| 1986 | 2.5 | 21.6 | (11.6)% | 9.6% |
| ↕ |  |  |  |  |
| 2018 | 318.3 | 20009.6 | (1.6)% | 2.4% |
| 2019 | 394.5 | 20149.6 | (2.0)% | 1.8% |
| 2020 | 309.0 | 21668.1 | (1.4)% | 1.2% |
| 2021 | 801.2 | 24320.9 | (3.3)% | 1.9% |
| 2022 | 1105.3 | 27775.2 | (4.0)% | 2.8% |
| Weighted average since inception |  |  | (0.6)% | 3.1% |
| Fairfax's weighted average net benefit of float since inception: |  |  | (3.7)% |  |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *IFRS basis for 2010 to 2022; Canadian GAAP basis for 2009 and prior. Underwriting profit of the property and casualty insurance and reinsurance subsidiaries for 2022 and 2021 is presented in note 25 (Segmented Information) to the consolidated financial statements for the year ended December 31, 2022.* 

The table above presents the company's weighted average benefit of float of 0.6% since inception, which means that float has not cost the company anything but instead has been a net benefit (in years of profitable underwriting the company is effectively able to borrow at no cost) compared to the cost of borrowing implied by the average long term Canada treasury bond yield since inception of 3.1%, resulting in an advantage to the company as noted in Fairfax's weighted average net benefit of float since inception of 3.7%. The company's long term goal is to increase float at no cost, by achieving combined ratios consistently below 100%, and to invest that float for positive returns.

Year-end float for the most recent five years was comprised as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** | **Property and Casualty Insurance and Reinsurance** |  |  |
|  |  | **Global** | **International** |  |  |  |
|  | **North American** | **Insurers and** | **Insurers and** |  |  |  |
| **Year** | **Insurers** | **Reinsurers** | **Reinsurers** | **Total** | **Run-off**<sup>(1)</sup> | **Consolidated Float** |
| 2018 | 5782.6 | 12549.5 | 1335.9 | 19668.0 | 3050.1 | 22718.1 |
| 2019 | 6043.4 | 13259.4 | 1328.3 | 20631.1 | 1747.4 | 22378.5 |
| 2020 | 6514.2 | 14835.5 | 1355.3 | 22705.0 | 1572.8 | 24277.8 |
| 2021 | 7026.9 | 17262.5 | 1647.4 | 25936.8 | 1900.1 | 27836.9 |
| 2022 | 7912.1 | 20012.2 | 1689.3 | 29613.6 | 1616.4 | 31230.0 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)*  ***Run-off is an operating segment included in the Life insurance and Run-off reporting segment.*** 

During 2022 the company's consolidated float increased by $3,393.1 to $31,230.0, at no cost to the company, primarily reflecting increased business volumes at all of the company's property and casualty insurance and reinsurance reporting segments (principally from all operating companies in the Global Insurers and Reinsurers reporting segment, Crum & Forster and Northbridge). The increased float primarily resulted from increases in provision for losses and loss adjustment expenses and provision for unearned premiums, partially offset by increased reinsurance recoverables and insurance contract receivables. The company's consolidated float was also partially impacted by the decrease at Run-off principally as a result of decreased provision for losses and loss adjustment expenses reflecting Run-off's continued progress settling its claim liabilities, partially offset by net adverse prior year reserve development on asbestos, pollution and other hazards reserves.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

Float, average float and cost (benefit) of float are supplementary financial measures that are calculated using amounts presented in the consolidated financial statements. Float as presented above was calculated using amounts on the consolidated balance sheets, excluding Eurolife's life operations, at December 31 as follows:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **As presented above** | **Eurolife** | **Consolidated** | **As presented above** | **Eurolife** | **Consolidated** |
| Insurance contract payables | 4391.1 | 670.8 | 5061.9 | 3858.5 | 635.0 | 4493.5 |
| Insurance contract liabilities | 50011.0 | 2188.6 | 52199.6 | 44860.5 | 2486.0 | 47346.5 |
| Insurance contract receivables | (7896.4) | (11.1) | (7907.5) | (6875.2) | (8.0) | (6883.2) |
| Deferred premium acquisition costs | (2162.8) | (7.5) | (2170.3) | (1920.3) | (3.8) | (1924.1) |
| Recoverable from reinsurers | (13112.9) | (2.9) | (13115.8) | (12086.6) | (3.9) | (12090.5) |
|  | 31230.0 | 2837.9 | 34067.9 | 27836.9 | 3105.3 | 30942.2 |

---

#### Financial Condition

#### Capital Resources and Management
The company's total capital marginally decreased to $28,960.7 at December 31, 2022 from $29,068.3 at December 31, 2021. The company's property and casualty insurance and reinsurance companies continued to maintain capital above minimum regulatory levels, at levels adequate to support their issuer credit and financial strength ratings, and above internally calculated risk management levels. Changes in total capital and the components thereof, the company's capital management measures and ratios, and capital levels of the property and casualty insurance and reinsurance companies are described in note 24 (Financial Risk Management, under the heading of "Capital Management") to the consolidated financial statements for the year ended December 31, 2022.

A common measure of capital adequacy in the property and casualty industry is the ratio of net premiums written to statutory surplus (or total equity). This ratio, a supplementary financial measure which is used by the company to evaluate capital adequacy and underwriting capacity, is presented below for the property and casualty insurance and reinsurance companies:

---

| | | |
|:---|:---|:---|
|  | **Net premiums written to** | **Net premiums written to** |
|  | **statutory surplus** | **statutory surplus** |
|  | **2022** | **2021** |
| **Property and Casualty Insurance and Reinsurance** |  |  |
| North American Insurers |  |  |
| &nbsp;&nbsp;Northbridge | 1.2 | 1.2 |
| &nbsp;&nbsp;Crum & Forster<sup>(1)</sup> | 1.8 | 1.6 |
| &nbsp;&nbsp;Zenith National | 1.0 | 1.0 |
| Global Insurers and Reinsurers |  |  |
| &nbsp;&nbsp;Allied World<sup>(2)</sup> | 1.0 | 0.8 |
| &nbsp;&nbsp;Odyssey Group | 1.1 | 0.9 |
| &nbsp;&nbsp;Brit<sup>(1)</sup> | 1.5 | 1.1 |
| International Insurers and Reinsurers |  |  |
| &nbsp;&nbsp;Fairfax Asia<sup>(3)</sup> | 0.5 | 0.4 |
| &nbsp;&nbsp;Other | 1.2 | 1.2 |
| &nbsp;&nbsp;**Industry** |  |  |
| &nbsp;&nbsp;Canadian insurance industry | 1.1 | 1.1 |
| &nbsp;&nbsp;U.S. insurance industry | 0.8 | 0.7 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Net premiums written in 2021 excludes the impact of the fourth quarter 2021 reinsurance transactions at Crum & Forster and Brit which reduced net premiums written by $358.1 and $344.1, respectively.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Allied World's ratios use its U.S. GAAP equity of $4,594.7 and $4,794.8 at December 31, 2022 and 2021.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *Total equity excludes certain holding company investments.* 

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

The issuer credit ratings and financial strength ratings of Fairfax and its property and casualty insurance and reinsurance operating companies at December 31, 2022 were as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  | **Standard**  |  |  |
| **Issuer Credit Ratings** | **A.M. Best** | **& Poor's** | **Moody's** | **DBRS** |
| Fairfax Financial Holdings Limited | bbb | BBB | Baa3 | BBB (high) |
| **Financial Strength Ratings** |  |  |  |  |
| North American Insurers |  |  |  |  |
| &nbsp;&nbsp;Northbridge Financial Corporation<sup>(1)</sup> | A | A | A3 | A |
| &nbsp;&nbsp;Crum & Forster Holdings Corp.<sup>(1)</sup> | A | A | Baa1 |  |
| &nbsp;&nbsp;Zenith National Insurance Corp.<sup>(1)</sup> | A | A | Baa1 |  |
| Global Insurers and Reinsurers |  |  |  |  |
| &nbsp;&nbsp;Allied World Assurance Company Holdings, Ltd<sup>(1)</sup> | A | A | A2 |  |
| &nbsp;&nbsp;Odyssey Group Holdings, Inc.<sup>(1)</sup>  | A | A | A2 |  |
| &nbsp;&nbsp;Brit Limited<sup>(2)</sup> | A | A+ |  |  |
| International Insurers and Reinsurers |  |  |  |  |
| &nbsp;&nbsp;Falcon Insurance Company (Hong Kong) Limited |  | A |  |  |
| &nbsp;&nbsp;Singapore Reinsurance Corporation Limited | A |  |  |  |
| &nbsp;&nbsp;Wentworth Insurance Company Ltd.  | A u |  |  |  |
| &nbsp;&nbsp;Polish Re | A- |  |  |  |
| &nbsp;&nbsp;Colonnade Insurance S.A.  | A- |  |  |  |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)*  ***Financial strength ratings apply to the operating companies.*** 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)*  ***Brit's ratings are the A.M. Best and Standard & Poor's ratings assigned to Lloyd's.*** 

During 2022, S&P upgraded the issuer credit rating of Fairfax from "BBB-" to "BBB" and the financial strength ratings of its core operating companies from "A-" to "A", and A.M. Best upgraded the financial strength rating of Singapore Re from "A-" to "A" and placed the "A" financial strength rating of Wentworth under review with negative implications. There were no other changes in the issuer credit ratings and financial strength ratings of Fairfax and its property and casualty insurance and reinsurance operating companies at December 31, 2022 compared to December 31, 2021.

#### Book Value Per Basic Share
Common shareholders' equity at December 31, 2022 of $15,340.7 or $657.68 per basic share compared to $15,049.6 or $630.60 per basic share at December 31, 2021, representing an increase per basic share in 2022 of 4.3% (without adjustment for the $10.00 per common share dividend paid in the first quarter of 2022; an increase of 6.0% adjusted to include that dividend).

The increase in book value per basic share was primarily due to net earnings attributable to shareholders of Fairfax of $1,147.2, other comprehensive income relating to net gains on defined benefit plans of $174.7 and a lower number of common shares effectively outstanding, partially offset by net unrealized foreign currency translation losses net of hedges of $399.1, payments of common and preferred share dividends of $295.1, purchases of subordinate voting shares for cancellation for cash consideration of $199.6 and net changes in capitalization of $173.6 (principally related to the acquisition of additional common shares of Allied World from non-controlling interests and the privatization of Recipe).

During 2022 the number of basic shares decreased primarily as a result of net purchases of 387,790 subordinate voting shares for cancellation and net purchases of 152,505 subordinate voting shares for treasury (for use in the company's share-based payment awards). At December 31, 2022 there were 23,325,305 common shares effectively outstanding.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

In the most recent five years the company has not issued any common shares and has purchased common shares for cancellation as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **Number of <br>subordinate** | **Average<br>purchase** | **Net** |
| **Year** | **voting shares<br>purchased** | **price per<br>share**<sup>(1)</sup> | **purchase<br>cost** |
| 2018<sup>(2)</sup> | 187476 | $494.46 | 92.7 |
| 2019<sup>(2)</sup> | 249361 | $473.21 | 118.0 |
| 2020<sup>(2)</sup> | 343871 | $293.42 | 100.9 |
| 2021<sup>(3)</sup> | 2137923 | $494.92 | 1058.1 |
| 2022<sup>(2)</sup> | 387790 | $514.71 | 199.6 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *The company calculates average purchase price per share for annual periods as aggregate net purchase cost divided by the number of subordinate voting shares purchased for cancellation, calculated using amounts presented in the consolidated financial statements.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Subordinate voting shares purchased for cancellation under the terms of the company's normal course issuer bids.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *Subordinate voting shares purchased for cancellation under a substantial issuer bid completed on December 29, 2021 for 2,000,000 shares at $500.00 per share, and under the terms of the company's normal course issuer bids for 137,923 shares.* 

*Excess (deficiency) of fair value over carrying value*

The table below presents the pre-tax excess (deficiency) of fair value over carrying value of investments in non-insurance associates and market traded consolidated non-insurance subsidiaries the company considers to be portfolio investments. Those amounts, while not included in the calculation of book value per basic share, are regularly reviewed by management as an indicator of investment performance. The aggregate pre-tax excess of fair value over carrying value of these investments at December 31, 2022 was $310.0 (December 31, 2021 - $346.4).

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  |  |  | **Excess (deficiency)** |  |  | **Excess (deficiency)** |
|  |  |  | **of fair value** |  |  | **of fair value** |
|  |  | **Carrying** | **over carrying** |  | **Carrying** | **over carrying** |
|  | **Fair value** | **value** | **value** | **Fair value** | **value** | **value** |
| Non-insurance associates<sup>(1)</sup>: |  |  |  |  |  |  |
| &nbsp;&nbsp;Eurobank | 1344.5 | 1507.6 | (163.1) | 1210.3 | 1298.5 | (88.2) |
| &nbsp;&nbsp;Atlas | 1864.7 | 1506.3 | 358.4 | 1285.8 | 922.1 | 363.7 |
| &nbsp;&nbsp;Quess | 222.2 | 447.1 | (224.9) | 514.1 | 492.1 | 22.0 |
| &nbsp;&nbsp;All other | 2252.9 | 1957.0 | 295.9 | 1531.7 | 1404.3 | 127.4 |
|  | 5684.3 | 5418.0 | 266.3 | 4541.9 | 4117.0 | 424.9 |
| Non-insurance companies<sup>(2)</sup>: |  |  |  |  |  |  |
| &nbsp;&nbsp;Restaurants and other<sup>(3)</sup> | 174.8 | 278.2 | (103.4) | 731.8 | 906.2 | (174.4) |
| &nbsp;&nbsp;Fairfax India | 585.3 | 517.0 | 68.3 | 535.0 | 444.1 | 90.9 |
| &nbsp;&nbsp;Thomas Cook India | 292.8 | 214.0 | 78.8 | 259.0 | 254.0 | 5.0 |
|  | 1052.9 | 1009.2 | 43.7 | 1525.8 | 1604.3 | (78.5) |
|  | 6737.2 | 6427.2 | 310.0 | 6067.7 | 5721.3 | 346.4 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *The fair values and carrying values of non-insurance associates represent their fair values and carrying values as presented in note 6 (Investments in Associates) to the consolidated financial statements for the year ended December 31, 2022, and excludes investments in associates held by Fairfax India (including Bangalore Airport), Recipe, Thomas Cook India (including its share of Quess), Dexterra Group and Boat Rocker as those amounts are already included in the carrying values of the consolidated non-insurance companies used in this performance measure. Refer to the Glossary of Non-GAAP and Other Financial Measures in this MD&A for details.* 

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *The fair values of the company's investments in market traded non-insurance companies - Recipe (privatized in 2022), Fairfax India, Thomas Cook India, Dexterra Group, Boat Rocker and Farmers Edge - are calculated as the company's pro rata ownership share of each subsidiary's market capitalization, as determined by traded share prices at the financial statement date. The carrying value of each subsidiary represents its total equity as included in the company's consolidated financial statements for the year ended December 31, 2022, less the subsidiary's non-controlling interests as presented in note 16 (Total Equity) to those consolidated financial statements. Recipe was delisted from the Toronto Stock Exchange in 2022 following the privatization transaction described in note 23 (Acquisitions and Divestitures) to the consolidated financial statements for the year ended December 31, 2022 and as a result is not included in the table above at December 31, 2022. At December 31, 2021 Thomas Cook India's fair value and carrying value include preferred shares held by the company that are eliminated on consolidation. Refer to the Glossary of Non-GAAP and Other Financial Measures in this MD&A for details.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *Comprised of Dexterra Group, Boat Rocker and Farmers Edge in both periods, and Recipe in 2021. Boat Rocker and Farmers Edge were included commencing in 2021 upon completion of their respective initial public offerings.* 

*Normal course issuer bid*

Following the expiry on September 29, 2022 of its then current normal course issuer bid, on September 30, 2022 the company commenced a normal course issuer bid pursuant to which it is authorized, until expiry of the bid on September 29, 2023, to acquire up to 2,381,484 subordinate voting shares, 751,034 Series C preferred shares, 178,415 Series D preferred shares, 543,613 Series E preferred shares, 179,629 Series F preferred shares, 771,984 Series G preferred shares, 228,015 Series H preferred shares, 1,042,010 Series I preferred shares, 157,989 Series J preferred shares, 950,000 Series K preferred shares and 919,600 Series M preferred shares, representing approximately 10% of the public float in respect of the subordinate voting shares and each series of preferred shares. Decisions regarding any future purchases will be based on market conditions, share price and other factors including opportunities to invest capital for growth. The Notice of Intention to Make a Normal Course Issuer Bid is available by contacting the Corporate Secretary of the company.

The company's indirect ownership of its own shares through The Sixty Two Investment Company Limited results in an effective reduction of shares outstanding by 799,230, and this reduction has been reflected in the earnings per share, net earnings per diluted share and book value per basic share figures.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Liquidity
The following table presents major components of cash flows for the years ended December 31:

---

| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| **Operating activities** |  |  |
| &nbsp;&nbsp;Cash provided by operating activities before net purchases of investments classified at FVTPL | 5220.3 | 4026.6 |
| &nbsp;&nbsp;Net (purchases) sales of investments classified at FVTPL | (9640.2) | 2614.4 |
|  | (4419.9) | 6641.0 |
| **Investing activities** |  |  |
| &nbsp;&nbsp;Purchases of investments in associates | (363.5) | (175.4) |
| &nbsp;&nbsp;Sales of investments in associates | 192.9 | 809.2 |
| &nbsp;&nbsp;Purchases of subsidiaries, net of cash acquired | (229.9) | 1259.5 |
| &nbsp;&nbsp;Proceeds from sale of insurance subsidiaries, net of cash divested | 1109.0 | 85.4 |
| &nbsp;&nbsp;Proceeds from sale of non-insurance subsidiaries, net of cash divested | 10.5 | 186.8 |
| &nbsp;&nbsp;Net purchases of premises and equipment and intangible assets | (418.9) | (353.9) |
| &nbsp;&nbsp;Net sales of investment property | 84.7 | 27.0 |
|  | 384.8 | 1838.6 |
| **Financing activities** |  |  |
| &nbsp;&nbsp;Net proceeds from borrowings - holding company and insurance and reinsurance companies | 743.4 | 1250.0 |
| &nbsp;&nbsp;Repayments of borrowings - holding company and insurance and reinsurance companies | (0.3) | (932.9) |
| &nbsp;&nbsp;Net repayments to holding company revolving credit facility |  | (700.0) |
| &nbsp;&nbsp;Net repayments to other revolving credit facilities - insurance and reinsurance companies | (35.0) | (84.3) |
| &nbsp;&nbsp;Net proceeds from borrowings - Non-insurance companies | 47.0 | 499.1 |
| &nbsp;&nbsp;Repayments of borrowings - Non-insurance companies | (25.3) | (593.9) |
| &nbsp;&nbsp;Net borrowings from (repayments to) revolving credit facilities and short term loans - Non-insurance companies | 304.1 | (262.0) |
| &nbsp;&nbsp;Principal payments on lease liabilities - holding company and insurance and reinsurance companies | (68.5) | (64.6) |
| &nbsp;&nbsp;Principal payments on lease liabilities - Non-insurance companies | (138.9) | (162.8) |
| &nbsp;&nbsp;Purchases of subordinate voting shares for treasury (for share-based payment awards) | (148.2) | (132.6) |
| &nbsp;&nbsp;Purchases of subordinate voting shares for cancellation | (199.6) | (1058.1) |
| &nbsp;&nbsp;Issuances of subsidiary shares to non-controlling interests | 167.5 | 1603.2 |
| &nbsp;&nbsp;Purchases of subsidiary shares from non-controlling interests | (1384.7) | (233.0) |
| &nbsp;&nbsp;Sales of subsidiary common shares to non-controlling interests |  | 174.8 |
| &nbsp;&nbsp;Common and preferred share dividends paid | (295.1) | (316.6) |
| &nbsp;&nbsp;Dividends paid to non-controlling interests | (261.0) | (175.6) |
|  | (1294.6) | (1189.3) |
| **Increase (decrease) in cash and cash equivalents during the year** | (5329.7) | 7290.3 |

---

For details of the transactions discussed below, see note 6 (Investments in Associates), note 15 (Borrowings), note 16 (Total Equity) and note 23 (Acquisitions and Divestitures) to the consolidated financial statements for the year ended December 31, 2022.

*Operating activities for the years ended December 31, 2022 and 2021*

*Cash provided by operating activities (excluding net purchases of investments classified at FVTPL) increased to $5,220.3 in 2022 from $4,026.6 in 2021, principally reflecting higher net premium collections, partially offset by higher net paid losses and higher income taxes paid. Refer to the consolidated statements of cash flows and to note 27 (Supplementary Cash Flow Information) to the consolidated financial statements for the year ended December 31, 2022 for details of operating activities, including net purchases of investments classified at FVTPL.*

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

*Investing activities for the year ended December 31, 2022*

*Purchases of investments in associates of $363.5 primarily reflected increased investment in Atlas common shares through the exercise of equity warrants with a strike price of $8.05 per share for aggregate cash consideration of $201.3 and purchases of Atlas common shares held through AVLNs entered with RiverStone Barbados for cash consideration of $84.4.* 

*Purchases of subsidiaries, net of cash acquired of $229.9 primarily reflected the acquisition of Grivalia Hospitality for cash consideration of $194.6, net of Grivalia Hospitality's cash balance of $56.6.*

*Proceeds from sale of insurance subsidiaries, net of cash divested of $1,109.0 primarily reflected the company's sale of the Crum & Forster Pet Insurance Group and Pethealth for cash consideration of $1.15 billion, net of selling expenses and cash divested.*

*Investing activities for the year ended December 31, 2021*

Purchases of investments in associates of $175.4 primarily related to increased investments in Gulf Insurance, HFP and a Fairfax India associate.

Sales of investments in associates of $809.2 primarily related to the sale of the joint venture interest in RiverStone Barbados, a partial sale of the investment in IIFL Finance, and dividends and distributions received from associates and joint ventures.

Purchases of subsidiaries, net of cash acquired of $1,259.5 primarily reflected the acquisition of OMERS' joint venture interest in Eurolife for cash consideration of $142.7, net of Eurolife's cash balance of $1,433.3, and an additional investment in Singapore Re.

Proceeds from sale of insurance subsidiaries, net of cash divested of $85.4 primarily reflected Allied World's sale of its majority interest in Vault Insurance.

Proceeds from sale of non-insurance subsidiaries, net of cash divested of $186.8 primarily reflected Fairfax India's sale of its 48.8% equity interest in Privi.

*Financing activities for the year ended December 31, 2022*

*Proceeds from borrowings - holding company and insurance and reinsurance companies of $743.4 principally reflected net proceeds from the issuance of $750.0 principal amount of 5.625% unsecured senior notes due 2032.*

*Net borrowings from revolving credit facilities and short term loans - non-insurance companies of $304.1 primarily reflected an increase in borrowings by Recipe of $99.8 (Cdn$135.9) in connection with its privatization transaction, and Boat Rocker and AGT's additional borrowings on their revolving credit facilities to support growth.*

*Issuances of subsidiary shares to non-controlling interests of $167.5 primarily reflected a third party's investment in Brit's subsidiary, Ki Insurance.*

*Purchases of subsidiary shares from non-controlling interests of $1,384.7 primarily reflected the company's acquisition of additional common shares of Allied World from non-controlling interests for cash consideration of $650.0, an additional investment made in connection with the privatization of Recipe for cash consideration of $342.3 (Cdn$465.9), purchases of certain securities held through AVLNs entered with RiverStone Barbados, purchases of common shares of Fairfax India from non-controlling interests and purchases of common shares under normal course issuer bids by Fairfax India.*

*Dividends paid to non-controlling interests of $261.0 primarily reflected dividends paid by Allied World, Odyssey Group and Brit to their minority shareholders.*

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

*Financing activities for the year ended December 31, 2021*

Net proceeds from borrowings - holding company and insurance and reinsurance companies of $1,250.0 principally reflected net proceeds from issuances of $671.6 (Cdn$850.0) principal amount of 3.95% unsecured senior notes and $600.0 principal amount of 3.375% unsecured senior notes, both due 2031.

Repayments - holding company and insurance and reinsurance companies of $932.9 primarily reflected the holding company's use of the net proceeds from its $671.6 (Cdn$850.0) unsecured senior notes to redeem on March 29, 2021 its $353.5 (Cdn$446.0) principal amount of 5.84% unsecured senior notes due 2022 and $317.1 (Cdn$400.0) principal amount of 4.50% unsecured senior notes due 2023 (which incurred an aggregate loss on redemption of $45.7), Odyssey Group's redemption of $90.0 principal amount of its unsecured senior notes upon maturity, the holding company's redemption of its $85.0 principal amount of 4.142% unsecured senior notes due 2024, and Crum & Forster's redemption of $41.4 principal amount of First Mercury trust preferred securities.

Net repayments on the holding company revolving credit facility of $700.0 reflected the full repayment of the draw in 2020.

Net proceeds from borrowings - non-insurance companies of $499.1 primarily reflected net proceeds from Fairfax India's issuance of $500.0 principal amount of 5.00% unsecured senior notes due 2028.

Repayments - non-insurance companies of $593.9 primarily reflected Fairfax India's repayment of its $550.0 floating rate term loan using the net proceeds of its senior notes issuance described above.

Net repayments to revolving credit facilities and short term loans - non-insurance companies of $262.0 primarily reflected repayments by Boat Rocker upon completion of its initial public offering, and Sporting Life, Recipe and AGT's partial repayments of their revolving credit facilities.

Purchases of subordinate voting shares for cancellation of $1,058.1 principally related to 2,000,000 subordinate voting shares purchased for cancellation through a $1.0 billion substantial issuer bid completed on December 29, 2021 at $500.00 per share.

Issuances of subsidiary shares to non-controlling interests of $1,603.2 primarily reflected the sale of non-controlling interests in Odyssey Group and Brit, and initial public offerings by Farmers Edge and Boat Rocker.

Purchases of subsidiary shares from non-controlling interests of $233.0 primarily reflected purchases of common shares under a substantial issuer bid by Fairfax India.

Sales of subsidiary shares to non-controlling interests of $174.8 principally reflected Fairfax India's sale of an 11.5% equity interest in its subsidiary Anchorage.

Dividends paid to non-controlling interests of $175.6 primarily reflected dividends paid by Allied World to its minority shareholders.

*Holding Company*

*Holding company cash and investments at December 31, 2022 was $1,345.8 ($1,326.4 net of $19.4 of holding company derivative obligations) compared to $1,478.3 ($1,446.2 net of $32.1 of holding company derivative obligations) at December 31, 2021.*

*Significant cash and investment transactions at the holding company during 2022 included the acquisition of additional common shares of Allied World from non-controlling interests for cash consideration of $650.0, purchases of certain securities held through AVLNs entered with RiverStone Barbados of $346.5, the payment of common and preferred share dividends of $295.1, net gains of $255.4 on the company's investment in long equity total return swaps on Fairfax subordinate voting shares, purchases for cancellation of 387,790 subordinate voting shares under the terms of the company's normal course issuer bids at a cost of $199.6, and cash capital contributions to U.S. Run-off of $240.0, Fairfax Brasil of $108.0, Wentworth of $50.0 and Odyssey Group operating companies of $50.0, partially offset by a special dividend of $940.0 received from Crum & Forster as a result of the sale of its Pet Insurance Group and Pethealth, net proceeds of $743.4 from the issuance of unsecured senior notes due in 2032 and dividends received from the insurance and reinsurance companies of $380.9.* 

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

*The carrying value of holding company cash and investments was also affected by the receipt of investment management and administration fees, disbursements for corporate overhead expenses, interest paid on borrowings and changes in the fair value of holding company investments.* 

*The company believes that holding company cash and investments, net of holding company derivative obligations at December 31, 2022 of $1,326.4 provides adequate liquidity to meet the holding company's known commitments in 2023. The holding company expects to continue to receive investment management and administration fees from its insurance and reinsurance subsidiaries and Fairfax India, investment income on its holdings of cash and investments, and dividends from its insurance and reinsurance subsidiaries. To further augment its liquidity, the holding company can draw upon its $2.0 billion unsecured revolving credit facility, which was undrawn at December 31, 2022.*

*The holding company's known significant commitments for 2023 consist of payment of a common share dividend of $245.2 ($10.00 per common share, paid in January 2023), interest and corporate overhead expenses, preferred share dividends, income tax payments, potential payments on amounts borrowed from the revolving credit facility and other investment related activities. Additionally, pursuant to the sale of RiverStone Barbados as described in note 23 (Acquisitions and Divestitures) to the consolidated financial statements for the year ended December 31, 2022, the company has guaranteed the remaining value of $486.8 at December 31, 2022 of certain securities that remain held by CVC and certain affiliates thereof until such time that the securities are purchased by or sold at the direction of Hamblin Watsa, prior to the end of 2023. Should the company direct that the securities be sold, any difference between their fair value and guaranteed value will be settled in cash (a derivative asset of $30.7 at December 31, 2022). The company may also in 2023 make payments related to its insurance and reinsurance companies to support their underwriting initiatives in the continued favourable insurance markets.*

*Insurance and reinsurance*

During 2022 subsidiary cash and short term investments (including cash and short term investments pledged for derivative obligations) decreased by $12,399.1 principally reflected the use of existing cash and proceeds from sales and maturities of U.S. treasury and Canadian provincial short term investments into U.S. treasury and Canadian government bonds with 1 to 3 year terms of $8,287.0 and $609.3, and short-dated high quality corporate bonds of $2,202.6 (principally comprised of investments in first mortgage loans).

The insurance and reinsurance subsidiaries may experience cash inflows or outflows on occasion related to their derivative contracts, including collateral requirements. During 2022 the insurance and reinsurance subsidiaries paid net cash of $30.9 in connection with long equity total return swaps (2021 - received net cash of $176.9), excluding the impact of collateral requirements.

*Non-insurance companies*

The non-insurance companies have principal repayments coming due in 2023 of $371.8, primarily related to AGT's credit facilities. Borrowings of the non-insurance companies are non-recourse to the holding company and are generally expected to be settled through a combination of refinancing and operating cash flows.

#### Contractual Obligations
For details of the company's contractual obligations, including the maturity profile of financial liabilities, please see note 24 (Financial Risk Management, under the heading "Liquidity Risk") to the consolidated financial statements for the year ended December 31, 2022.

#### Contingencies and Commitments
For a full description of these matters, please see note 20 (Contingencies and Commitments) to the consolidated financial statements for the year ended December 31, 2022.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Accounting and Disclosure Matters

#### Management's Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of the company's Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), the company conducted an evaluation of the effectiveness of its disclosure controls and procedures as of December 31, 2022, as required by Canadian and U.S. securities legislation. Disclosure controls and procedures are designed to ensure that the information required to be disclosed by the company in the reports it files or submits under securities legislation is recorded, processed, summarized and reported on a timely basis and that such information is accumulated and reported to the company's CEO and CFO, as appropriate, to allow required disclosures to be made in a timely fashion. Based on their evaluation, the CEO and CFO have concluded that, as of December 31, 2022, the company's disclosure controls and procedures were effective.

#### Management's Report on Internal Control Over Financial Reporting
The company's management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the United States Securities Exchange Act of 1934, as amended, and under National Instrument 52-109 - *Certification of Disclosure in Issuer's Annual and Interim Filings* of the Canadian Securities Administrators). The company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). A company's internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS as issued by the IASB, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Furthermore, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The company's management assessed the effectiveness of the company's internal control over financial reporting as of December 31, 2022. In making this assessment, the company's management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in *Internal Control - Integrated Framework (2013).* Based on this assessment, the company's management, including the CEO and CFO, concluded that, as of December 31, 2022, the company's internal control over financial reporting was effective based on the criteria in *Internal Control - Integrated Framework (2013)* issued by COSO.

Pursuant to the requirements of the United States Securities Exchange Act of 1934, as amended, the effectiveness of the company's internal control over financial reporting as of December 31, 2022 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in its report which appears within this Annual Report.

#### Critical Accounting Estimates and Judgments
Please see note 4 (Critical Accounting Estimates and Judgments) to the consolidated financial statements for the year ended December 31, 2022.

#### Significant Accounting Policy Changes
For a detailed description of the company's accounting policies and changes thereto during 2022, please see note 3 (Summary of Significant Accounting Policies) to the consolidated financial statements for the year ended December 31, 2022.

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#### Future Accounting Changes
New standards and amendments that have been issued but are not yet effective are described in note 3 (Summary of Significant Accounting Policies) to the consolidated financial statements for the year ended December 31, 2022. The company does not expect to adopt any of those new standards and amendments in advance of their respective effective dates except where otherwise specified.

#### IFRS 17 Insurance Contracts
For a detailed description of IFRS 17 Insurance Contracts, please see note 3 (Summary of Significant Accounting Policies) to the consolidated financial statements for the year ended December 31, 2022.

On January 1, 2023 the company adopted IFRS 17 which will first be presented in the company's consolidated financial reporting in the first quarter of 2023, with comparative periods restated. IFRS 17 brings considerable changes to the recognition, measurement, presentation and disclosure of the company's insurance contracts. It will not, however, affect the company's underwriting strategy, its prudent reserving, management's use of the traditional performance metrics of gross premiums written, net premiums written and combined ratios, or the company's cash flows.

The company anticipates recording a transition adjustment to increase opening common shareholders' equity as at January 1, 2022 which is not expected to exceed 2.5% of common shareholders' equity as at December 31, 2021, and will primarily reflect:

● a decrease to insurance contract liabilities from the introduction of discounting claims reserves which the company does not include within the measurement under IFRS 4; and

● the deferral of additional insurance acquisition costs which were previously expensed as incurred (as a result of IFRS 17's broader definition of insurance acquisition costs compared with the company's current policy under IFRS 4); partially offset by

● an increase to insurance contract liabilities with the introduction of a new risk adjustment for uncertainty related to the timing and amount of cash flows arising from non-financial risks; and

● the recognition of a loss component for contracts that are considered onerous at initial recognition.

The changes to the presentation and disclosure of the company's insurance and reinsurance business within the consolidated financial statements will be considerable and will primarily include:

*Consolidated Statement of Earnings*

● gross premiums earned as presented in the consolidated statement of earnings will be replaced with Insurance contract revenue which will remain principally unchanged but will reflect the netting of certain commission expenses against Insurance contract revenue which were separately presented as commission expense under IFRS 4;

● premiums ceded to reinsurers, losses on claims ceded to reinsurers, and the associated reinsurance expenses and commission income included within operating expenses and commissions, net as presented in the consolidated statement of earnings will be presented as a net result (Net reinsurance result) within the consolidated statement of earnings;

● all insurance related expenses that are currently presented on the consolidated statement of earnings including gross losses on claims, operating expenses, gross commissions will be presented as a single expense within the consolidated statement of earnings as Insurance service expense. Insurance service expense will exclude certain costs which are determined to not be directly attributable to the writing and fulfilling of insurance contracts which are currently included within underwriting results as shown in the notes to the consolidated financial statements and the MD&A under IFRS 4. These costs will be presented below the Insurance service result (discussed below);

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● the introduction of a new measure, the Insurance service result, representing the sum of insurance contract revenues less insurance service expenses and the net reinsurance result; and

● the introduction of Insurance finance income or expense for both gross and ceded insurance contracts which primarily represents the impact from discounting insurance reserves including both the unwind of the discount and the effects of changes in discount rates.

*Consolidated Balance Sheets*

● the presentation of gross insurance balances including certain insurance contract receivables, deferred premium acquisition costs, certain insurance contract payables, and insurance contract liabilities will be presented net on a single line on the consolidated balance sheet reported in Insurance contract liabilities or Insurance contract assets; and

● the presentation of ceded insurance balances including recoverable from reinsurers, ceded deferred premium acquisition costs, and other ceded assets and liabilities will be presented net on a single line on the consolidated balance sheet reported in Reinsurance contract assets or Reinsurance contract liabilities.

Given the increasing interest rate environment experienced throughout 2022 and the beneficial impact it will have on the discounting of claims reserves under IFRS 17, the company anticipates recording a material benefit to the restated consolidated statement of earnings for the full year of 2022 and common shareholders' equity as at December 31, 2022.

With the company's underwriting strategy remaining unchanged and management continuing the use of the traditional performance metrics of gross premiums written, net premiums written and combined ratios to evaluate and describe the results of the insurance and reinsurance operations, these metrics will continue to be presented within the MD&A and will include reconciliations to the amounts presented within the financial statements under IFRS 17.

#### Risk Management

#### Overview
The primary goals of the company's financial risk management program are to ensure that the outcomes of activities involving elements of risk are consistent with the company's objectives and risk tolerance, while maintaining an appropriate balance between risk and reward and protecting the company's consolidated balance sheet from events that have the potential to materially impair its financial strength. Please see note 24 (Financial Risk Management) to the consolidated financial statements for the year ended December 31, 2022 for a detailed discussion of the company's risk management policies.

#### Issues and Risks
The following issues and risks, among others, should be considered in evaluating the outlook of the company. Additional detail on the company's issues and risks, including those risks discussed below, can be found in the section entitled "Risk Factors" in the company's most recent Short Form Base Shelf Prospectus and Supplements filed with the securities regulatory authorities in Canada, which are available on SEDAR at <u>www.sedar.com</u>.

#### Insurance

#### Claims Reserves
Reserves are maintained to cover the estimated ultimate unpaid liability for losses and loss adjustment expenses with respect to insurance and reinsurance policies underwritten by the company at the end of each reporting period. The company's success is dependent upon its ability to accurately assess the risks associated with the businesses being insured or reinsured. Failure to accurately assess the risks assumed may lead to the setting of inappropriate premium rates and establishing reserves that are inadequate to cover the company's losses. This could adversely affect the company's net earnings and financial condition in future reporting periods.

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Reserves do not represent an exact calculation of liability, but instead represent estimates at a point in time involving actuarial and statistical projections of the company's expectations of the ultimate settlement of claims incurred and the associated claims adjustment expense. Establishing an appropriate level of claims reserves is an inherently uncertain process. Both proprietary and commercially available actuarial models, as well as historical insurance industry loss development patterns, are utilized to establish appropriate claims reserves.

In contrast to casualty losses, which frequently can be determined only through lengthy and unpredictable litigation, property losses tend to be reported promptly and are usually settled within a shorter period of time. Nevertheless, for both casualty and property losses, actual claims and claim expenses ultimately paid may deviate, perhaps substantially, from the reserve estimates reflected in the company's consolidated financial statements. Variables in the reserve estimation process can be affected by both internal and external events, such as changes in claims handling procedures, economic and social inflation, legal trends and legislative changes. Many of these items are not directly quantifiable, particularly on a prospective basis.

The company's management of pricing and reserving risk is discussed in note 24 (Financial Risk Management) to the consolidated financial statements for the year ended December 31, 2022.

#### Catastrophe Exposure
The company's insurance and reinsurance operations are exposed to claims arising from catastrophes. The company has experienced and will, in the future, experience catastrophe losses that may materially reduce the company's profitability or harm its financial condition. Catastrophes can be caused by various events, including natural events such as hurricanes, windstorms, earthquakes, tornadoes, hailstorms, severe winter weather and fires, and unnatural events such as terrorist attacks and riots. Weather-related losses have increased in recent years, in part due to climate change which represents a significant emerging risk that will continue to increase the inherent unpredictability of both the frequency and severity of weather-related catastrophe losses.

The extent of losses from a catastrophe is a function of both the total amount of insured exposure in the area affected by the event and the severity of the event. Most catastrophes are restricted to small geographic areas; however, hurricanes, windstorms and earthquakes may produce significant damage in large, heavily populated areas. Catastrophes can cause losses in a variety of property and casualty lines, including losses relating to business interruptions occurring in the same geographic area as the catastrophic event or in the other geographic areas. It is possible that a catastrophic event or multiple catastrophic events could have a material adverse effect on the company's financial condition, profitability or cash flows. The company believes that increases in the value and geographic concentration of insured property, higher construction costs due to labour and raw material shortages following a significant catastrophe event could increase the number and severity of claims from catastrophic events in the future. The company's management of catastrophe risk is discussed in note 24 (Financial Risk Management) to the consolidated financial statements for the year ended December 31, 2022.

#### Cyclical Nature of the Property & Casualty Business
The financial performance of the insurance and reinsurance industries has historically tended to fluctuate due to competition, frequency or severity of both catastrophic and non-catastrophic events, levels of capital and underwriting capacity, general economic conditions and other factors. Demand for insurance and reinsurance is influenced significantly by underwriting results of primary insurers and prevailing general economic conditions. Factors such as changes in the level of employment, wages, consumer spending, business investment and government spending, the volatility and strength of the global capital markets and inflation or deflation all affect the business and economic environment and, ultimately, the demand for insurance and reinsurance products, and therefore may affect the company's net earnings, financial position or cash flows.

The property and casualty insurance business historically has been characterized by periods of intense price competition due to excess underwriting capacity, as well as periods when shortages of underwriting capacity have permitted attractive pricing. The company expects to continue to experience the effects of this cyclicality, which, during down periods, could significantly reduce the amount of premiums the company writes and could harm its financial position, profitability or cash flows.

In the reinsurance industry, the supply of reinsurance is related to prevailing prices and levels of underwriting capacity surplus that, in turn, may fluctuate in response to changes in rates of return being realized in the broader capital markets. If premium rates change or other reinsurance policy terms and conditions change expanding coverage, particularly if the present level of demand for reinsurance

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decreases because insurers require less reinsurance or the level of supply of reinsurance increases as a result of capital provided by existing reinsurers or alternative forms of reinsurance capacity enter the market, the profitability of the company's reinsurance business could be adversely affected.

The company actively manages its operations to withstand the cyclical nature of the property and casualty business by maintaining sound liquidity and strong capital management as discussed in note 24 (Financial Risk Management) to the consolidated financial statements for the year ended December 31, 2022.

#### Latent Claims
The company has established loss reserves for asbestos, environmental and other types of latent hazard claims that represent its best estimate of ultimate claims and claims adjustment expenses based upon all known facts and current law. As a result of significant issues surrounding liabilities of insurers, risks inherent in major litigation and diverging legal interpretations and judgments in different jurisdictions, actual liability for these types of claims could exceed the loss reserves set by the company by an amount that could be material to the company's financial condition, profitability or cash flows in future periods.

The company's exposure to asbestos, environmental and other latent hazard claims is discussed in the Asbestos, Pollution and Other Latent Hazards section of this MD&A. The company's management of reserving risk is discussed in note 24 (Financial Risk Management) and in note 8 (Insurance Contract Liabilities) to the consolidated financial statements for the year ended December 31, 2022.

#### Recoverable from Reinsurers and Insureds
Most insurance and reinsurance companies reduce their exposure to any individual claim by reinsuring amounts in excess of their maximum desired retention. Reinsurance is an arrangement in which an insurer, called the cedant, transfers insurance risk to another insurer, called the reinsurer, which accepts the risk in return for a premium payment. This third party reinsurance does not relieve the company, as a cedant, of its primary obligation to the insured. Recoverable from reinsurers balances may become uncollectible due to reinsurer solvency and credit concerns, due to the potentially long time period over which claims may be paid and the resulting recoveries may be received from the reinsurers, or due to policy disputes. If reinsurers are unwilling or unable to pay the company amounts due under reinsurance contracts, the company may incur unexpected losses and its operations, financial condition and cash flows could be adversely affected. The credit risk associated with the company's reinsurance recoverable balances is described in note 24 (Financial Risk Management) to the consolidated financial statements for the year ended December 31, 2022 and in the Recoverable from Reinsurers section of this MD&A.

The company's insurance and reinsurance companies write certain insurance policies, such as large deductible policies (policies where the insured retains a specific amount of any potential loss), in which the insured must reimburse the company's insurance and reinsurance companies for certain losses. Accordingly, the company's insurance and reinsurance companies bear credit risk on these policies as there is no assurance that the insureds will provide reimbursement on a timely basis or at all.

#### Competition
The property and casualty insurance industry and the reinsurance industry are both highly competitive, and will likely remain highly competitive in the foreseeable future. Competition in these industries is based on many factors, including premiums charged and other terms and conditions offered, products and services provided, commission structure, financial ratings assigned by independent rating agencies, speed of claims payment, reputation, selling effort, perceived financial strength and the experience of the insurer or reinsurer in the line of insurance or reinsurance to be written. The company competes, and will continue to compete, with a large number of Canadian, U.S. and foreign insurers and reinsurers, as well as certain underwriting syndicates, some of which have greater financial, marketing and management resources than the company. In addition, some financial institutions, such as banks, are now able to offer services similar to those offered by the company's reinsurance subsidiaries while in recent years, capital market participants have also created alternative products that are intended to compete with reinsurance products.

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Consolidation within the insurance industry could result in insurance and reinsurance market participants using their market power to implement price reductions. If competitive pressures compel the company to reduce its prices, the company's operating margins would decrease. As the insurance industry consolidates, competition for customers could become more intense and the importance of acquiring and properly servicing each customer could become greater, causing the company to incur greater expenses relating to customer acquisition and retention and further reducing operating margins. The company's management of pricing risk is discussed in note 24 (Financial Risk Management) to the consolidated financial statements for the year ended December 31, 2022.

#### Emerging Claim and Coverage Issues
The provision for claims is an estimate and may be found to be deficient, perhaps significantly, in the future as a result of unanticipated frequency or severity of claims or for a variety of other reasons including unpredictable judicial rulings, expansion of insurance coverage to include exposures not contemplated at the time of policy issue (as was the case with asbestos and pollution exposures), extreme weather events, civil unrest and pandemics. Unanticipated developments in the law as well as changes in social and environmental conditions could result in unexpected claims for coverage under insurance and reinsurance contracts. With respect to casualty lines of business, these legal, social and environmental changes may not become apparent until some time after their occurrence.

The full effects of these and other unforeseen emerging claim and coverage issues are extremely hard to predict. As a result, the full extent of the company's liability under its coverages, and in particular its casualty insurance policies and reinsurance contracts, may not be known until many years after a policy or contract is issued. The company's exposure to this uncertainty is greatest in its "long-tail" casualty lines of business where claims can typically be made for many years, rendering them more susceptible to these trends than in the property insurance lines of business, which is more typically "short-tail". In addition, the company could be adversely affected by the growing trend of plaintiffs targeting participants in the property-liability insurance industry in purported class action litigation relating to claims handling and other practices.

Although loss exposure is limited by geographic diversification and the company seeks to limit its loss exposure by employing a variety of policy limits and other terms and conditions and through prudent underwriting of each program written, there can be no assurance that such measures will be successful in limiting the company's loss exposure. The company's management of reserving risk is discussed in note 24 (Financial Risk Management) to the consolidated financial statements for the year ended December 31, 2022 and in the Asbestos, Pollution and Other Latent Hazards section of this MD&A.

#### Cost of Reinsurance and Adequate Protection
The company uses reinsurance arrangements, including reinsurance of its own reinsurance business purchased from other reinsurers, referred to as retrocessionaires, to help manage its exposure to property and casualty risks. The availability of reinsurance and the rates charged by reinsurers are subject to prevailing market conditions, both in terms of price and available capacity, which can affect the company's business volume and profitability. Reinsurance companies can also add or exclude certain coverages from, or alter terms in, the policies they offer. Some exclusions are with respect to risks which the company cannot exclude in its policies due to business or regulatory constraints, such as coverage with respect to acts of terrorism, mold and cyber risk. Reinsurers may also impose terms, such as lower per occurrence and aggregate limits, on primary insurers that are inconsistent with corresponding terms in the policies written by these primary insurers. As a result, the company's insurance subsidiaries, like other primary insurance companies, increasingly are writing insurance policies which to some extent do not have the benefit of reinsurance protection. These gaps in reinsurance protection expose the company to greater risk and greater potential losses.

The rates charged by reinsurers and the availability of reinsurance to the company's insurance and reinsurance subsidiaries will generally reflect the recent loss experience of the company and of the industry overall. Reinsurance pricing has continued to firm as a result of catastrophe losses in recent years and the effects of social inflation in the United States. The retrocession market continues to experience significant rate increases due to increased catastrophe activity in recent years. Each of the company's insurance and reinsurance subsidiaries continue to evaluate the relative costs and benefits of accepting more risk on a net basis, reducing exposure on a direct basis, and paying additional premiums for reinsurance.

***Reliance on Distribution Channels***

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The company uses brokers to distribute its business and in some instances will distribute through agents or directly to customers. The company may also conduct business through third parties such as managing general agents where it is cost effective to do so and where the company can control the underwriting process to ensure its risk management criteria are met. Each of these channels has its own distinct distribution characteristics and customers. A large majority of the company's business is generated by brokers (including international reinsurance brokers with respect to the company's reinsurance operations), with the remainder split among the other distribution channels. This is substantially consistent across the company's insurance and reinsurance subsidiaries.

The company's insurance operations have relationships with many different types of brokers including independent retail brokers, wholesale brokers and national brokers depending on the particular jurisdiction, while the company's reinsurance operations are dependent primarily on a limited number of international reinsurance brokers. The company transacts business with these brokers on a non-exclusive basis. These independent brokers also transact the business of the company's competitors and there can be no assurance as to their continuing commitment to distribute the company's insurance and reinsurance products. The continued profitability of the company depends, in part, on the marketing efforts of independent brokers and the ability of the company to offer insurance and reinsurance products and maintain financial ratings that meet the requirements and preferences of such brokers and their policyholders.

Because the majority of the company's brokers are independent, there is limited ability to exercise control over them. In the event that an independent broker exceeds its authority by binding the company on a risk which does not comply with the company's underwriting guidelines, the company may be at risk for that policy until the application is received and a cancellation effected. Although to date the company has not experienced a material loss from improper use of binding authority by its brokers, any improper use of such authority may result in losses that could have a material adverse effect on the business, financial condition, profitability or cash flows of the company. The company's insurance and reinsurance subsidiaries closely manage and monitor broker relationships and regularly audit broker compliance with the company's established underwriting guidelines.

***Guaranty Funds and Shared Markets***

Virtually all U.S. states require insurers licensed to do business in their state to bear a portion of the loss suffered by some insureds as a result of impaired or insolvent insurance companies. Many states also have laws that establish second-injury funds to provide compensation to injured employees for aggravation of a prior condition or injury. In addition, as a condition to the ability to conduct business in various jurisdictions, some of the company's insurance subsidiaries are required to participate in mandatory property and casualty shared market mechanisms or pooling arrangements, which provide various types of insurance coverage to individuals or other entities that otherwise are unable to purchase that coverage from private insurers. The effect of these assessments and mandatory shared-market mechanisms or changes in them could reduce the profitability of the company's U.S. insurance subsidiaries in any given period or limit their ability to grow their business. Similarly, the company's Canadian insurance subsidiaries contribute to mandatory guaranty funds that protect insureds in the event of a Canadian property and casualty insurer becoming insolvent, and certain of the company's Asian insurance subsidiaries participate in mandatory pooling arrangements in their local markets.

**Investments**

***Investment Portfolio***

Investment returns are an important part of the company's overall profitability as the company's operating results depend in part on the performance of its investment portfolio. The company's investment portfolio includes bonds and other debt instruments, common stocks, preferred stocks and derivative instruments. Accordingly, fluctuations in the fixed income or equity markets could have an adverse effect on the company's financial condition, profitability or cash flows. Investment income is derived from interest and dividends, together with net gains or losses on investments. The portion derived from net gains or losses on investments generally fluctuates from year to year and is typically a less predictable source of investment income than interest and dividends, particularly in the short term. The return on the portfolio and the risks associated with the investments are affected by the asset mix, which can change materially depending on market conditions.

The uncertainty around the ultimate amount and the timing of the company's claim payments may force it to liquidate securities, which may cause the company to incur losses. If the company structures its investments improperly relative to its liabilities, it may be forced to liquidate investments prior to maturity at a significant loss to cover such liabilities. Realized and unrealized investment losses resulting from a decline in value could significantly decrease the company's net earnings.

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The ability of the company to achieve its investment objectives is affected by general economic conditions that are beyond its control. General economic conditions can adversely affect the markets for interest-rate-sensitive securities, including the extent and timing of investor participation in such markets, the level and volatility of interest rates and, consequently, the value of fixed income securities. Interest rates are highly sensitive to many factors, including governmental monetary policies, domestic and international economic and political conditions and other factors beyond the company's control. General economic conditions, stock market conditions, environmental conditions, climate change and many other factors can also adversely affect the equity markets and, consequently, the value of the equities owned.

Inflation rates in jurisdictions in which the company operates or invests have increased significantly in 2022, rising above the target inflation rate ranges set by governing central banks. A significant portion of the upward pressure on prices has been attributed to the rising costs of labour, energy, food, motor vehicles and housing, as well as overall challenges involved in reopening and managing the economy throughout the COVID-19 pandemic and continuing global supply-chain disruptions. Inflationary increases may or may not be transitory and future inflation may be impacted by reductions or increases in labour market constraints, supply-chain disruptions and commodity prices. However, any sustained upward trajectory in the inflation rate and corresponding increases to interest rates would likely have an adverse impact on the company's operating results and its investments. Inflationary pressures in the jurisdictions in which the company operates or invests will continue to be monitored to assess any potential effects on the company's operating results and investments.

In addition, defaults by third parties who fail to pay or perform on their obligations could reduce the company's investment income and net gains on investment or result in investment losses. The company's management of credit risk, liquidity risk, market risk and interest rate risk is discussed in note 24 (Financial Risk Management) to the consolidated financial statements for the year ended December 31, 2022.

***Derivative Instruments***

The company may be a counterparty to various derivative instruments, for investment purposes or for general protection against declines in the fair value of its financial assets. Derivative instruments may be used to manage or reduce risks or as a cost-effective way to synthetically replicate the investment characteristics of an otherwise permitted investment. The market value and liquidity of these instruments are volatile and may vary dramatically up or down in short periods, and these circumstances may be exacerbated by adverse economic conditions, fluctuations in interest rates and volatility in the public markets and their ultimate value will therefore only be known upon their disposition or settlement.

The company's use of derivative instruments is governed by its investment policies and exposes the company to a number of risks, including credit risk, interest rate risk, liquidity risk, inflation risk, market risk, basis risk and counterparty risk. If the counterparties to the company's derivative instruments fail to honor their obligations under the derivative instrument agreements, the company may lose the value of its derivative instruments, which failure could have an adverse effect on the company's financial condition, profitability or cash flows. The company endeavors to limit counterparty risk through diligent selection of counterparties to its derivative instruments and through the terms of agreements negotiated with counterparties. Pursuant to these agreements, both parties are required to deposit eligible collateral in collateral accounts for either the benefit of the company or the counterparty depending on the current fair value or change in the fair value of the derivative contract.

The company may not be able to realize its investment objectives with respect to derivative instruments, which could have an adverse effect upon its financial position, profitability or cash flows. The company's use of derivative instruments is discussed in note 7 (Derivatives) and its management of credit risk, liquidity risk, market risk, interest rate risk and counterparty risk is discussed in note 24 (Financial Risk Management) to the consolidated financial statements for the year ended December 31, 2022.

***Economic Hedging Strategies***

The company may use derivative instruments from time to time to manage or reduce its exposure to credit risk and various market risks, including interest rate risk, equity market risk, inflation/deflation risk and foreign currency risk. The company may choose to hedge risks associated with a specific financial instrument, asset or liability or at a macro level to hedge systemic financial risk and the impact of potential future economic crisis and credit related problems on its operations and the value of its financial assets. Credit default swaps, total return swaps and consumer price index-linked derivative instruments have been used in the past to hedge macro level risks. The

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company's use of derivative instruments is discussed in note 7 (Derivatives) to the consolidated financial statements for the year ended December 31, 2022.

The company's derivative instruments may expose it to basis risk. Basis risk is the risk that the fair value or cash flows of derivative instruments applied as economic hedges will not experience changes in exactly the opposite directions from those of the underlying hedged exposure. This imperfect correlation may adversely impact the net effectiveness of the hedge and may diminish the financial viability of maintaining the hedging strategy and therefore adversely impact the company's financial condition, profitability or cash flows.

The company regularly monitors the prospective and retrospective effectiveness of its economic hedging instruments and will adjust the amount and/or type of hedging instruments as required to achieve its risk management goals. The management of credit risk and various market risks is discussed in note 24 (Financial Risk Management) to the consolidated financial statements for the year ended December 31, 2022.

**Capital**

***Ratings***

Financial strength and credit ratings by the major North American rating agencies are important factors in establishing competitive position for insurance and reinsurance companies. Third-party rating agencies assess and rate the claims-paying ability of reinsurers and insurers based upon the criteria of such rating agencies. Periodically the rating agencies evaluate the company's insurance and reinsurance subsidiaries to confirm that they continue to meet the criteria of the ratings previously assigned to them. The claims-paying ability ratings assigned by rating agencies to insurance or reinsurance companies represent independent opinions of financial strength and ability to meet policyholder obligations. A downgrade in these ratings could lead to a significant reduction in the number of insurance policies the company's insurance subsidiaries write and could cause early termination of contracts written by the company's reinsurance subsidiaries or a requirement for them to post collateral at the direction of their counterparties. A downgrade of the company's long term debt ratings by the major rating agencies could require the company and/or its subsidiaries to accelerate their cash settlement obligations for certain derivative transactions to which they are a party, and could result in the termination of certain other derivative transactions. In addition, a downgrade of the company's credit rating may affect the cost and availability of unsecured financing. Ratings are subject to periodic review at the discretion of each respective rating agency and may be revised downward or revoked at their sole discretion. Rating agencies may also increase their scrutiny of rated companies, revise their rating standards or take other action. The company has dedicated personnel that manage the company's relationships with its various rating agencies, however there can be no assurance that these activities will avoid a downgrade by rating agencies in the future.

***Holding Company Liquidity***

Fairfax is a holding company that conducts substantially all of its business through its subsidiaries and receives substantially all of its earnings from them. The holding company controls the operating insurance and reinsurance companies, each of which must comply with applicable insurance regulations of the jurisdictions in which it operates. Each insurance and reinsurance operating company must maintain reserves for losses and loss adjustment expenses to cover the risks it has underwritten.

Although substantially all of the company's operations are conducted through its subsidiaries, none of its subsidiaries are obligated to make funds available to the holding company for the payment of principal and interest on its outstanding debt. Accordingly, the holding company's ability to meet financial obligations, including the ability to make payments on outstanding debt, is dependent on the distribution of earnings from its subsidiaries. The ability of subsidiaries to pay dividends or distributions in the future will depend on their statutory surplus, on earnings and on regulatory restrictions. The company's subsidiaries may incur additional indebtedness that may severely restrict or prohibit the payment of dividends or distributions to the company. Dividends, distributions or returns of capital to the holding company are subject to restrictions set forth in the insurance laws and regulations of the countries where the company operates (principally the U.S., Canada, the United Kingdom and Bermuda) (in each case, including the provinces, states or other jurisdictions therein) and is affected by the subsidiaries' credit agreements and indentures, rating agencies, the discretion of insurance regulatory authorities and capital support agreements with subsidiaries. Although the holding company strives to be soundly financed and maintains high levels of liquid assets as discussed in note 24 (Financial Risk Management) to the consolidated financial statements

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for the year ended December 31, 2022 and in the Liquidity section of this MD&A, an inability of subsidiaries to pay dividends could have a negative impact on the holding company's liquidity and ability to meet its obligations.

***Access to Capital***

The company's future capital requirements depend on many factors, including its ability to successfully write new business and to establish premium rates and reserves at levels sufficient to cover losses. To the extent that the funds generated by the company's business are insufficient to fund future operations, additional funds may need to be raised through equity or debt financings. If the company requires additional capital or liquidity but cannot obtain it on reasonable terms or at all, its business, financial condition and profitability would be materially adversely affected.

The company's ability and/or the ability of its subsidiaries to obtain additional financing for working capital, capital expenditures or acquisitions in the future may also be limited under the terms of the unsecured revolving credit facility discussed in note 15 (Borrowings) to the consolidated financial statements for the year ended December 31, 2022. The revolving credit facility contains various covenants that may restrict, among other things, the company's ability or the ability of its subsidiaries to incur additional indebtedness, to create liens or other encumbrances and to sell or otherwise dispose of assets and merge or consolidate with another entity. In addition, the revolving credit facility contains certain financial covenants that require the company to maintain a ratio of consolidated debt to consolidated capitalization not exceeding 0.35:1 and consolidated shareholders' equity of not less than $9.5 billion, both calculated as defined in such financial covenants. A failure to comply with the obligations and covenants under the revolving credit facility could result in an event of default under such agreement which, if not cured or waived, could permit acceleration of indebtedness, including other indebtedness of the holding company or its subsidiaries. The company strives to maintain sufficient levels of liquid assets at the holding company to mitigate risk to the holding company should this occur, but if such indebtedness were to be accelerated, there can be no assurance that the company's assets would be sufficient to repay that indebtedness in full. The company's management of liquidity risk is discussed further in note 24 (Financial Risk Management) to the consolidated financial statements for the year ended December 31, 2022 and in the Liquidity section of this MD&A.

**Technology**

***Technology Infrastructure***

The company's business is highly dependent upon the successful and uninterrupted functioning of its computer and data processing systems which are relied upon to perform actuarial and other modeling functions necessary for writing business, to process and make claim payments and to process and summarize investment transactions. Third parties provide certain of the key components of the company's business infrastructure such as voice and data communications and network access. Given the high volume of transactions processed daily, the company is reliant on such third party provided services to successfully deliver its products and services. The company has highly trained information technology staff that is committed to the continual development and maintenance of its technology infrastructure. Security measures, including data security programs to protect confidential personal information, have been implemented and are regularly upgraded. The company, together with its third party service providers, also maintains and regularly tests contingency plans for its technology infrastructure. Notwithstanding these measures, the failure of the company's systems could interrupt the company's operations or impact its ability to rapidly evaluate and commit to new business opportunities. If sustained or repeated, a system failure could result in the loss of existing or potential business relationships, or compromise the company's ability to pay claims in a timely manner.

In addition, a security breach of the company's computer systems could damage the company's reputation or result in liability. The company retains confidential information regarding its business dealings in its computer systems, including, in some cases, confidential personal information regarding insureds. Significant capital and other resources may be required to protect against security breaches or to alleviate problems caused by such breaches. Any well publicized compromise of security could deter people from conducting transactions that involve transmitting confidential information to the company's systems. Therefore, it is critical that these facilities and infrastructure remain secure and are perceived by the marketplace to be secure. This infrastructure may be vulnerable to physical break-ins, computer viruses, programming errors, attacks by third parties or similar disruptive problems. In addition, the company could be subject to liability if hackers were able to penetrate its network security or otherwise misappropriate confidential information.

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***Systemic Cyber-Attacks***

The company relies on information technology in virtually all aspects of its business. A significant disruption or failure of the company's information technology systems could result in service interruptions, safety failures, security violations, regulatory compliance failures, and inability to protect information and assets against intruders, and other operational difficulties. Attacks perpetrated against those information systems could result in loss of assets and critical information, potential breach of privacy laws, expose the company to remediation costs, reputational damage, regulatory scrutiny, litigation and adversely affect the company's results of operations, financial condition and liquidity.

Cyber-attacks could further adversely affect the company's ability to operate facilities, information technology and business systems, or compromise confidential customer and employee information. Cyber-attacks resulting in political, economic, social or financial market instability or damage to or interference with the company's assets, or its customers or suppliers may result in business interruptions, lost revenue, higher commodity prices, disruption in fuel supplies, lower energy consumption, unstable markets, increased security and repair or other costs, any of which may affect the company's consolidated financial results. Furthermore, instability in the financial markets as a result of terrorism, sustained or significant cyber-attacks, or war could also adversely affect the company's ability to raise capital.

The company has taken steps intended to mitigate these risks, including implementation of cyber security and cyber resilience measures, business continuity planning, disaster recovery planning and business impact analysis, and regularly updates these plans and security measures, however, there can be no assurance that such steps will be adequate to protect the company from the impacts of a cyber-attack.

***Technological Changes***

Technological changes could have unpredictable effects on the insurance and reinsurance industries. It is expected that new services and technologies will continue to emerge that will affect the demand for insurance and reinsurance products and services, the premiums payable, the profitability of such products and services and the risks associated with underwriting certain lines of business, including new lines of business. While the company does maintain an innovation working group comprised of members with diverse backgrounds from across its global operating companies to regularly assess new services and technologies that may be applicable or disruptive to the insurance and reinsurance industries, failure to understand evolving technologies, or to position the company in the appropriate direction, or to deploy new products and services in a timely way that considers customer demand and competitor activities could have an adverse impact on the company's business, financial condition, profitability or cash flows.

**Other**

***Acquisitions, Divestitures and Strategic Initiatives***

The company may periodically and opportunistically acquire other insurance and reinsurance companies or execute other strategic initiatives developed by management. Although the company undertakes due diligence prior to the completion of an acquisition, it is possible that unanticipated factors could arise and there is no assurance that the anticipated financial or strategic objectives following an integration effort or the implementation of a strategic initiative will be achieved, which could adversely affect the company's financial condition, profitability or cash flows. The company may periodically explore opportunities to make strategic investments in all or part of certain businesses or companies. Acquisitions may involve a number of special risks, including failure to retain key personnel, unanticipated events or circumstances and legal liabilities, some or all of which could have a material adverse effect on the company's business, results of operations and financial position. The company cannot be certain that any acquired businesses will achieve the anticipated revenues, income and synergies. Failure on the company's part to manage its acquisition strategy successfully could have a material adverse effect on its business, results of operations and financial position. The company cannot be certain that it will be able to identify appropriate targets, profitably manage additional businesses or successfully integrate any acquired business into its operations.

The strategies and performance of the company's subsidiaries, and the alignment of those strategies throughout the organization, are regularly assessed through various processes undertaken by senior management and the company's Board of Directors, however there can be no assurance that these efforts will be successful to mitigate the risks identified above. The company's recent acquisitions and

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divestitures are discussed in note 23 (Acquisitions and Divestitures) to the consolidated financial statements for the year ended December 31, 2022.

***Key Employees***

The company is substantially dependent on a small number of key employees, including its Chairman, Chief Executive Officer and significant shareholder, Mr. Prem Watsa, and the senior management of the company and its operating subsidiaries. The industry experience and reputation of these individuals are important factors in the company's ability to attract new business and investment opportunities. The company's success has been, and will continue to be, dependent on its ability to retain the services of existing key employees and to attract and retain additional qualified personnel in the future. The loss of the services of any of these key employees, or the inability to identify, hire and retain other highly qualified personnel in the future could adversely affect the quality and profitability of the company. At the operating subsidiaries, employment agreements have been entered into with key employees. The company does not maintain key employee insurance with respect to any of its employees.

#### Regulatory, Political and other Influences
The company is subject to government regulation in each of the jurisdictions in which its operating insurance and reinsurance subsidiaries are licensed or authorized to conduct business. Governmental bodies have broad administrative power to regulate many aspects of the insurance business, which may include accounting methods, governance, premium rates, market practices, policy forms and capital adequacy. The laws and rules behind this regulation are concerned primarily with the protection of policyholders rather than investors. Governmental bodies may impose fines, additional capital requirements or limitations on the company's insurance and reinsurance operations, and/or impose criminal sanctions for violation of regulatory requirements. The laws and regulations that are applicable to the company's insurance and reinsurance operations are complex and may increase the costs of regulatory compliance or subject the company's business to the possibility of regulatory actions or proceedings.

In recent years, the insurance industry has been subject to increased scrutiny by legislatures and regulators alike. New laws and rules and new interpretations of existing laws and rules could adversely affect the company's financial results by limiting its operating insurance subsidiaries' ability to make investments consistent with the company's total return strategy or requiring the company to maintain capital in specific operating subsidiaries in excess of the amounts the company considers to be appropriate, or causing the company to make unplanned modifications of products or services, or imposing restrictions on its ability to enter or exit lines of insurance business or to utilize new methods of assessing and pricing risks or selling products and services. The company cannot predict the future impact of changing law or regulation on its operations; any changes could have a material adverse effect on it or the insurance industry in general.

The company's management of the risks associated with its capital within the various regulatory regimes in which it operates is discussed in note 24 (Financial Risk Management, under the heading of "Capital Management") to the consolidated financial statements for the year ended December 31, 2022 and in the "Capital Resources and Management" section of this MD&A.

#### Economic Sanctions and Foreign Corrupt Practices
The company must comply with all applicable economic sanctions and anti-bribery laws and regulations, including those of Canada, the U.S., the United Kingdom, the European Union and other foreign jurisdictions where it operates. U.S. laws and regulations applicable to the company include the economic trade sanctions laws and regulations administered by the U.S. Department of the Treasury's Office of Foreign Assets Control, as well as certain laws administered by the U.S. Department of State. In addition, the company's business is subject to the Canadian Corruption of Foreign Public Officials Act, U.S. Foreign Corrupt Practices Act and other anti-bribery laws such as the U.K. Bribery Act that generally bar corrupt payments or unreasonable gifts to foreign governments or officials. The company believes that its commitment to honesty and integrity, set out in its Guiding Principles and regularly communicated, and that the large number of its executives and employees who have served the company for a long time, significantly enhance the likelihood that it will comply with those laws and regulations. More specifically, the company has policies and controls in place that are designed to ensure compliance with these laws and regulations, including policies distributed annually to employees, controls and oversight at individual operating companies and company wide, and whistleblower programs that are monitored by senior management and the Board of Directors. Despite these policies and controls, it is possible that an employee or intermediary could fail to comply with applicable laws and regulations, which could expose the company to civil penalties, criminal penalties and other sanctions, including fines or other

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punitive actions. In addition, such violations could damage the company's business and/or reputation and therefore have a material adverse effect on the company's financial condition and results of operations.

#### Information Requests or Proceedings by Government Authorities
From time to time, the insurance industry has been subject to investigations, litigation and regulatory activity by various insurance, governmental and enforcement authorities, concerning certain practices within the industry. The company sometimes receives inquiries and informational requests from insurance regulators or other government officials in the jurisdictions in which its insurance and reinsurance subsidiaries operate. The company's internal and external legal counsels coordinate with operating companies in responding to information requests and government proceedings. From time to time, consumer advocacy groups or the media also focus attention on certain insurance industry practices. The company cannot predict at this time the effect that investigations, litigation and regulatory activity or negative publicity from consumers or the media will have on the insurance or reinsurance industry or its business, or whether activities or practices currently thought to be lawful will be characterized in the future as unlawful or will become subject to negative scrutiny from consumer advocacy groups or the media. The company's involvement in any investigations and related lawsuits would cause it to incur legal costs and, if the company were found to have violated any laws, could be required to pay fines and damages, perhaps in material amounts. In addition, the company could be materially adversely affected by the negative publicity for the insurance industry related to any such proceedings, and by any new industry-wide regulations or practices that may result from such proceedings or publicity. It is possible that future investigations or related regulatory developments will mandate changes in industry practices in a fashion that increases the company's costs of doing business or requires the company to alter aspects of the manner in which it conducts its business.

#### Regional or Geographical Limitations and Risks
The company's international operations are regulated in various jurisdictions with respect to licensing requirements, currency, amount and type of security deposits, amount and type of reserves, amount and type of local investment and other matters. The company regularly monitors for political and other changes in each country where it operates. The decentralized nature of the company's operations generally permits quick adaptation to, or mitigation of, evolving regional risks. Furthermore, the company's international operations are widespread and therefore not dependent on the economic stability of any one particular region. International operations and assets held abroad may, however, be adversely affected by political and other developments in foreign countries, including possibilities of tax changes, nationalization and changes in regulatory policy, as well as by consequences of terrorism, war, hostilities and unrest. The risks of such occurrences and their overall effect upon the company vary from country to country and cannot easily be predicted.

***Lawsuits and Regulatory Proceedings***

The company may, from time to time, become party to a variety of legal claims and regulatory proceedings including, but not limited to: disputes over coverage or claims adjudication; disputes regarding sales practices, disclosures, premium refunds, licensing, regulatory compliance and compensation arrangements; disputes with its agents, brokers or network providers over compensation and termination of contracts and related claims; regulatory actions relating to consumer pressure in relation to benefits realized by insurers; disputes with taxing authorities regarding its tax liabilities and tax assets; regulatory proceedings and litigation related to acquisitions or divestitures made or proposed by the company or its subsidiaries or in connection with subsidiaries in which the company holds an investment; and disputes relating to certain businesses acquired or disposed of by the company. Operating companies manage day-to-day regulatory and legal risk primarily by implementing appropriate policies, procedures and controls. Internal and external legal counsels also work closely with the operating companies to identify and mitigate areas of potential regulatory and legal risk. The existence of such claims against the company or its subsidiaries, affiliates, directors or officers could, however, have various adverse effects, including negative publicity and the incurrence of significant legal expenses defending claims, even those without merit.

The company's legal and regulatory matters are discussed in note 20 (Contingencies and Commitments) to the consolidated financial statements for the year ended December 31, 2022.

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#### Significant Shareholder
The company's Chairman and Chief Executive Officer, Mr. Prem Watsa, owns, directly or indirectly, or exercises control or direction over shares representing approximately 43.9% of the voting power of the company's outstanding shares. Mr. Watsa has the ability to substantially influence certain actions requiring shareholder approval, including approving a business combination or consolidation, liquidation or sale of assets, electing members of the Board of Directors and adopting amendments to articles of incorporation and by-laws.

Amendments were made to the terms of the company's multiple voting shares, which are controlled by Mr. Watsa, in August of 2015 having the effect of preserving the voting power represented by the multiple voting shares at 41.8% even if additional subordinate voting shares are issued in the future. The amendments are described in note 16 (Total Equity) to the consolidated financial statements for the year ended December 31, 2015 and in the company's annual information form filed with the securities regulatory authorities in Canada, which are available on SEDAR at *www.sedar.com*.

#### Foreign Exchange
The company's reporting currency is the U.S. dollar. A portion of the company's premiums and expenses are denominated in foreign currencies and a portion of assets (including investments) and loss reserves are also denominated in foreign currencies. The company may, from time to time, experience losses resulting from fluctuations in the values of foreign currencies (including when certain foreign currency assets and liabilities of the company are hedged) which could adversely affect the company's financial condition, profitability or cash flows. The company's management of foreign currency risk is discussed in note 24 (Financial Risk Management) to the consolidated financial statements for the year ended December 31, 2022.

#### IFRS 17 Insurance Contracts
***IFRS 17 becomes effective for insurance companies during their annual reporting period beginning on or after January 1, 2023. The standard must be applied retrospectively with restatement of comparatives unless impracticable. IFRS 17 will replace IFRS 4 *Insurance Contracts* and will bring considerable changes to the recognition, measurement, presentation and disclosure of insurance contracts within the company's consolidated financial statements. IFRS 17 has certain risks associated with its adoption, including, but not limited to:***

● operational risks - IFRS 17 requires a more extensive set of financial data, introduces complex assessment techniques, computational requirements and disclosures, which require a major transformation to various actuarial and financial reporting processes, tools, and systems. The complexity and additional workload imposed by IFRS 17 may create additional challenges in retaining key personnel, and the company's ability to identify, hire and retain other highly qualified personnel in the future could adversely affect the quality of financial data and required complex disclosures;

● financial reporting and business risks - IFRS 17 may cause additional changes and volatility in the company's reported consolidated financial results, with potential volatility in the company's consolidated statement of earnings and financial position, which may require the creation or modification of non-GAAP measures to explain the company's results in the MD&A; and

● income tax risks - in certain jurisdictions, including Canada, the implementation of IFRS 17 may impact income tax positions and other financial metrics that are dependent upon IFRS accounting values.

#### Goodwill, Indefinite-lived Intangible Assets and Investments in Associates
The goodwill, indefinite-lived intangible assets and investments in associates on the company's consolidated balance sheet originated from various acquisitions and investments made by the company or its operating subsidiaries. Continued profitability and achievement of financial plans by acquired businesses and associates is a key consideration for there to be no impairment in the carrying value of goodwill, indefinite-lived intangible assets and investments in associates. An intangible asset may be impaired if the economic benefit to be derived from its use is unexpectedly diminished. An investment in associate is considered to be impaired if its carrying value exceeds its recoverable amount (the higher of the associate's fair value and value-in-use).

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Management regularly reviews the current and expected profitability of operating companies and associates and their success in achieving financial plans when assessing the carrying value of goodwill, indefinite-lived intangible assets and investments in associates. The carrying values of goodwill and indefinite-lived intangible assets are tested for impairment at least annually or more often if events or circumstances indicate there may be impairment. Investments in associates with carrying values that exceed their fair values are tested for impairment using value-in-use discounted cash flow models at each reporting date. The company's goodwill and indefinite-lived intangible assets, and their annual impairment tests, are described in note 12 (Goodwill and Intangible Assets), and the company's investments in associates are described in note 6 (Investments in Associates), to the consolidated financial statements for the year ended December 31, 2022.

#### Taxation
Realization of deferred income tax assets is dependent upon the generation of taxable income in those jurisdictions where the relevant tax losses and temporary differences exist. Failure to achieve projected levels of profitability could lead to a reduction in the company's deferred income tax asset if it is no longer probable that the amount of the asset will be realized.

The company is subject to income taxes in Canada, the U.S. and many foreign jurisdictions where it operates, and the company's determination of its tax liability is subject to review by applicable domestic and foreign tax authorities. The company has specialist tax personnel responsible for assessing the income tax consequences of planned transactions and events and undertaking the appropriate tax planning. The company also consults with external tax professionals as needed. Tax legislation of each jurisdiction in which the company operates is interpreted to determine the provision for income taxes and expected timing of the reversal of deferred income tax assets and liabilities. While the company believes its tax positions to be reasonable, where the company's interpretations differ from those of tax authorities or the timing of realization is not as expected, the provision for income taxes may increase or decrease in future periods to reflect actual experience.

There is a risk that Canadian or foreign tax laws, or the interpretation thereof, could change in a manner that adversely affects the company. Canada, together with approximately 140 other countries comprising the Organisation for Economic Co-operation and Development ("OECD") and the G20 Inclusive Framework on Base Erosion and Profit Shifting ("BEPS"), approved in principle in 2021 certain base erosion tax initiatives including the introduction of a 15% global minimum tax which was initially intended to be effective in 2023. Canada has not yet released any domestic legislation in respect of the introduction of a global minimum tax. The exact implementation date of the proposed global minimum tax in Canada is not yet known. In November 2022, the Department of Finance Canada released for public comment draft legislative proposals (revising prior draft legislative proposals released for comment in February 2022) which, if enacted, may limit the deductibility of interest and financing expenses for Canadian tax purposes. The draft legislative proposals are generally intended to apply in respect of taxation years beginning on or after October 1, 2023. Comments on the draft legislative proposals were invited until January 6, 2023. The company will continue to monitor the BEPS and interest deductibility limitation proposals, which may result in an increase in future taxes and an adverse effect on the company. The company's deferred income tax assets are described in note 18 (Income Taxes) to the consolidated financial statements for the year ended December 31, 2022.

***COVID-19 pandemic and the conflict in Ukraine***

COVID-19 continues to create uncertainty in the global economy, despite many countries emerging from government mandated lockdowns and vaccines becoming more widely available. While the economic impact of the COVID-19 pandemic has eased in many regions, supply chain disruptions and volatility in commodity prices persist, contributing to increased inflationary pressures, worsened by supply shocks arising from the conflict in Ukraine and other geopolitical events worldwide. In response, central banks around the world have aggressively raised interest rates in an effort to ease rising inflation. The company's businesses rely, to a certain extent, on free movement of goods, services and capital from around the world, and as a result, are facing upward cost pressures. Given the ongoing and dynamic nature of the circumstances surrounding COVID-19, the conflict in Ukraine and other geopolitical events worldwide, it is difficult to predict how significant these continuing events will be on the global economy and the company's businesses, investments and employees, or for how long any further disruptions in the future are likely to continue.

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#### Other
**Quarterly Data** (unaudited)

*Years ended December 31*

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **First** | **Second** | **Third** | **Fourth** | **Full** |
|  | **Quarter** | **Quarter** | **Quarter** | **Quarter** | **Year** |
| **2022** |  |  |  |  |  |
| Income | 5982.6 | 5502.3 | 6844.6 | 9720.5 | 28050.0 |
| Net earnings (loss) | 178.6 | (915.4) | (79.3) | 2102.9 | 1286.8 |
| Net earnings (loss) attributable to shareholders of Fairfax | 125.5 | (881.4) | (75.1) | 1978.2 | 1147.2 |
| Net earnings (loss) per share | $4.79 | $(37.59) | $(3.65) | $84.09 | $46.62 |
| Net earnings (loss) per diluted share | $4.49 | $(37.59) | $(3.65) | $78.33 | $43.49 |
| **2021** |  |  |  |  |  |
| Income | 5998.2 | 6831.0 | 6710.4 | 6928.3 | 26467.9 |
| Net earnings  | 822.6 | 1280.2 | 576.1 | 987.7 | 3666.6 |
| Net earnings attributable to shareholders of Fairfax | 806.0 | 1201.4 | 462.4 | 931.3 | 3401.1 |
| Net earnings per share | $30.44 | $45.79 | $17.43 | $35.66 | $129.33 |
| Net earnings per diluted share | $28.91 | $43.25 | $16.44 | $33.64 | $122.25 |

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Income of $5,982.6 in the first quarter of 2022 was steady compared to $5,998.2 in the first quarter of 2021, principally reflecting continued strong increases in net premiums earned from the property and casualty insurance and reinsurance operations of $1,002.2 and the benefit of higher share of profit of associates, partially offset by net losses on investments that reflected the short-term impact of rising interest rates on the company's bond portfolio. Net earnings attributable to shareholders of Fairfax decreased to $125.5 (net earnings of $4.79 and $4.49 per basic and diluted share respectively) in the first quarter of 2022 from $806.0 (net earnings of $30.44 and $28.91 per basic and diluted share respectively) in the first quarter of 2021, primarily reflected net losses on investments (compared to net gains on investments in the first quarter of 2021), partially offset by increased operating income at the property and casualty insurance and reinsurance operations (reflecting increases in underwriting profit, share of profit of associates and interest and dividends).

Income of $5,502.3 in the second quarter of 2022 decreased from $6,831.0 in the second quarter of 2021, principally reflecting net losses on investments that related to the short-term impact of rising interest rates on the company's bond portfolio and the impact on the equity portfolio from the global financial market volatility experienced during the quarter compared to net gains on investments in the second quarter of 2021, partially offset by increased net premiums earned primarily in the North American Insurers and Global Insurers and Reinsurers reporting segments, increased Other revenue and higher share of profit of associates and interest and dividend incomes. Net loss attributable to shareholders of Fairfax of $881.4 (net loss of $37.59 per basic and diluted share) in the second quarter of 2022 compared to net earnings attributable to shareholders of Fairfax of $1,201.4 (net earnings of $45.79 and $43.25 per basic and diluted share respectively) in the second quarter of 2021, principally reflected net unrealized losses on investments in the second quarter of 2022 compared to net unrealized gains on investment in the second quarter of 2021, partially offset by increased operating income at the property and casualty insurance and reinsurance operations (reflecting increases in underwriting profit, share of profit of associates and interest and dividends) and a recovery of income taxes in the second quarter of 2022 compared to a provision for income taxes in the second quarter of 2021.

Income of $6,844.6 in the third quarter of 2022 increased from $6,710.4 in the third quarter of 2021, principally as a result of increased net premiums earned, primarily in the Global Insurers and Reinsurers and North American Insurers reporting segments, increased share of profit of associates and interest and dividends, partially offset by net losses on investments that related to the short-term impact of rising interest rates on the company's bond portfolio and the impact on the equity portfolio from the global financial market volatility experienced during the quarter compared to net gains on investments in the third quarter of 2021. Net loss attributable to shareholders of Fairfax of $75.1 (net loss of $3.65 per basic and diluted share) in the third quarter of 2022 compared to net earnings attributable to shareholders of Fairfax of $462.4 (net earnings of $17.43 and $16.44 per basic and diluted share respectively) in the third quarter of 2021, principally reflected net unrealized losses on investments in the third quarter of 2022 compared to net unrealized gains on investment in the third quarter of 2022, partially offset by increased operating income at the property and casualty insurance and

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reinsurance operations (reflecting a lower underwriting loss and increases in share of profit of associates and interest and dividends) and lower provision for income taxes.

Income of $9,720.5 in the fourth quarter of 2022 increased from $6,928.3 in the fourth quarter of 2021, principally as a result of increased net premiums earned, primarily in the Global Insurers and Reinsurers and North American Insurers reporting segments, increased share of profit of associates and interest and dividends and the gain on sale of Crum & Forster's Pet Insurance Group and Pethealth, partially offset by lower net gains on investments. Net earnings attributable to shareholders of Fairfax increased to $1,978.2 (net earnings of $84.09 and $78.33 per basic and diluted share respectively) in the fourth quarter of 2022 from $931.3 (net earnings of $35.66 and $33.64 per basic and diluted share respectively) in the fourth quarter of 2021, principally reflecting increased operating income at the property and casualty insurance and reinsurance operations (primarily increases in underwriting profit, share of profit of associates and interest and dividends) and the gain on sale of Crum & Forster's Pet Insurance Group and Pethealth, partially offset by lower net gains on investments and higher provision for income taxes.

Operating results at the company's insurance and reinsurance companies have been, and may continue to be, affected by the economic impacts of the continued conflict in Ukraine and the ongoing COVID-19 pandemic, including increased inflationary pressures and rising interest rates. Individual quarterly results have been (and may in the future be) affected by losses from significant natural or other catastrophes, by favourable or adverse reserve development and by settlements or commutations, the occurrence of which are not predictable, and have been (and are expected to continue to be) significantly affected by net gains or losses on investments, the timing of which are not predictable.

**Stock Prices and Share Information** 

At March 9, 2023, Fairfax had 22,479,323 subordinate voting shares and 1,548,000 multiple voting shares outstanding (an aggregate of 23,228,093 shares effectively outstanding after an intercompany holding). Each subordinate voting share carries one vote per share at all meetings of shareholders except for separate meetings of holders of another class of shares. The multiple voting shares cumulatively carry 41.8% voting power at all meetings of shareholders except in certain circumstances (which have not occurred) and except for separate meetings of holders of another class of shares. The multiple voting shares are not publicly traded.

The table that follows presents the Toronto Stock Exchange high, low and closing Canadian dollar prices of subordinate voting shares of Fairfax for each quarter of 2022 and 2021.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | **First** | **Second** | **Third** | **Fourth** |
|  | **Quarter** | **Quarter** | **Quarter** | **Quarter** |
|  | (Cdn$) | (Cdn$) | (Cdn$) | (Cdn$) |
| **2022** |  |  |  |  |
| High | 700.00 | 716.59 | 707.91 | 815.01 |
| Low | 569.62 | 623.54 | 612.00 | 612.00 |
| Close | 682.03 | 682.10 | 630.89 | 802.07 |
| **2021** |  |  |  |  |
| High | 560.59 | 581.00 | 579.57 | 636.08 |
| Low | 427.49 | 538.41 | 507.75 | 493.00 |
| Close | 548.55 | 543.60 | 511.31 | 622.24 |

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#### Compliance with Corporate Governance Rules
Fairfax is a Canadian reporting issuer with securities listed on the Toronto Stock Exchange and trading in Canadian dollars under the symbol FFH and in U.S. dollars under the symbol FFH.U. It has in place corporate governance practices that comply with all applicable rules and substantially comply with all applicable guidelines and policies of the Canadian Securities Administrators and the practices set out therein.

The company's Board of Directors has adopted a set of Corporate Governance Guidelines (which include a written mandate of the Board), established an Audit Committee, a Governance and Nominating Committee and a Compensation Committee, approved written charters for all of its committees, approved a Code of Business Conduct and Ethics and an Anti-Corruption Policy, which are applicable

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to all directors, officers and employees of the company. The Board of Directors also established, in conjunction with the Audit Committee, a Whistleblower Policy. The company continues to monitor developments in the area of corporate governance as well as its own procedures.

#### Forward-Looking Statements
Certain statements contained herein may constitute forward-looking statements and are made pursuant to the "safe harbour" provisions of the United States Private Securities Litigation Reform Act of 1995 and any applicable Canadian securities regulations. Such forward-looking statements are subject to known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Fairfax to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

Such factors include, but are not limited to: a reduction in net earnings if our loss reserves are insufficient; underwriting losses on the risks we insure that are higher or lower than expected; the occurrence of catastrophic events with a frequency or severity exceeding our estimates; unfavourable changes in market variables, including interest rates, foreign exchange rates, equity prices and credit spreads, which could negatively affect our investment portfolio; the cycles of the insurance market and general economic conditions, which can substantially influence our and our competitors' premium rates and capacity to write new business; insufficient reserves for asbestos, environmental and other latent claims; exposure to credit risk in the event our reinsurers fail to make payments to us under our reinsurance arrangements; exposure to credit risk in the event our insureds, insurance producers or reinsurance intermediaries fail to remit premiums that are owed to us or failure by our insureds to reimburse us for deductibles that are paid by us on their behalf; our inability to maintain our long term debt ratings, the inability of our subsidiaries to maintain financial or claims paying ability ratings and the impact of a downgrade of such ratings on derivative transactions that we or our subsidiaries have entered into; risks associated with implementing our business strategies; the timing of claims payments being sooner or the receipt of reinsurance recoverables being later than anticipated by us; risks associated with any use we may make of derivative instruments; the failure of any hedging methods we may employ to achieve their desired risk management objective; a decrease in the level of demand for insurance or reinsurance products, or increased competition in the insurance industry; the impact of emerging claim and coverage issues or the failure of any of the loss limitation methods we employ; our inability to access cash of our subsidiaries; our inability to obtain required levels of capital on favourable terms, if at all; the loss of key employees; our inability to obtain reinsurance coverage in sufficient amounts, at reasonable prices or on terms that adequately protect us; the passage of legislation subjecting our businesses to additional adverse requirements, supervision or regulation, including additional tax regulation, in the United States, Canada or other jurisdictions in which we operate; risks associated with government investigations of, and litigation and negative publicity related to, insurance industry practice or any other conduct; risks associated with political and other developments in foreign jurisdictions in which we operate; risks associated with legal or regulatory proceedings or significant litigation; failures or security breaches of our computer and data processing systems; the influence exercisable by our significant shareholder; adverse fluctuations in foreign currency exchange rates; our dependence on independent brokers over whom we exercise little control; risks associated with IFRS 17; impairment of the carrying value of our goodwill, indefinite-lived intangible assets or investments in associates; our failure to realize deferred income tax assets; technological or other change which adversely impacts demand, or the premiums payable, for the insurance coverages we offer; disruptions of our information technology systems; assessments and shared market mechanisms which may adversely affect our insurance subsidiaries; and risks associated with the global pandemic caused by COVID-19 and the conflict in Ukraine. Additional risks and uncertainties are described in this Annual Report, which is available at <u>www.fairfax.ca,</u> and in our Base Shelf Prospectus (under "Risk Factors") filed with the securities regulatory authorities in Canada, which is available on SEDAR at <u>www.sedar.com</u>. Fairfax disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities law.

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

#### Glossary of Non-GAAP and Other Financial Measures
Management analyzes and assesses the underlying insurance and reinsurance companies, and the financial position of the consolidated company, in various ways. Certain of those measures and ratios, which have been used consistently and disclosed regularly in the company's Annual Reports and interim financial reporting, do not have a prescribed meaning under IFRS and may not be comparable to similar measures presented by other companies.

#### Supplementary Financial Measures
**Gross premiums written and net premiums written** – The company presents information on gross premiums written and net premiums written throughout its financial reporting. Gross premiums written represents the total premiums on policies issued by the company during a specified period, irrespective of the portion ceded or earned, and is an indicator of the volume of new business generated. Net premiums written represents gross premiums written less amounts ceded to reinsurers and is considered a measure of the insurance risk that the company has chosen to retain from the new business it has generated. These measures are used in the insurance industry and by the company primarily to evaluate business volumes, including related trends, and the management of insurance risk.

**Property and casualty insurance and reinsurance ratios** – The **combined ratio** is the traditional performance measure of underwriting results of property and casualty companies and is calculated by the company as the sum of the **loss ratio** (claims losses and loss adjustment expenses expressed as a percentage of net premiums earned) and the **expense ratio** (commissions, premium acquisition costs and other underwriting expenses expressed as a percentage of net premiums earned). Other ratios used by the company include the **commission expense ratio** (commissions expressed as a percentage of net premiums earned), the **underwriting expense ratio** (premium acquisition costs and other underwriting expenses expressed as a percentage of net premiums earned), the **accident year loss ratio** (claims losses and loss adjustment expenses excluding the net favourable or adverse development of reserves established for claims that occurred in previous accident years, expressed as a percentage of net premiums earned), and the **accident year combined ratio** (the sum of the accident year loss ratio and the expense ratio). All of the ratios described above are calculated from information disclosed in note 25 (Segmented Information) to the consolidated financial statements for the year ended December 31, 2022 and are used by the company for comparisons to historical underwriting results, to the underwriting results of competitors and to the broader property and casualty industry, as well as for evaluating the performance of individual operating companies. The company may also refer to **combined ratio points**, which expresses a loss that is a component of losses on claims, net, such as a catastrophe loss or net favourable or adverse prior year reserve development, as a percentage of net premiums earned during the same period. Both losses on claims, net, and net premiums earned, are amounts presented in the consolidated statement of earnings.

**Float** – In the insurance industry the funds available for investment that arise as an insurance or reinsurance operation receives premiums in advance of the payment of claims is referred to as float. The company calculates its float as the sum of its insurance contract liabilities (comprised of provision for losses and loss adjustment expenses, and provision for unearned premiums) and insurance contract payables, less the sum of its recoverable from reinsurers, insurance contract receivables and deferred premium acquisition costs, all as presented on the consolidated balance sheet. Float of a reporting segment or segments is calculated in the same manner using the company's segmented balance sheet. The **annual benefit (cost) of float** is calculated by expressing annual underwriting profit (loss) from note 25 (Segmented Information) to the consolidated financial statements for the year ended December 31, 2022 as a percentage of **average float** for the year (the simple average of float at the beginning and end of the year).

**Book value per basic share** – The company considers book value per basic share a key performance measure as one of the company's stated objectives is to build long term shareholder value by compounding book value per basic share over the long term by 15% annually. This measure is calculated by the company as common shareholders' equity divided by the number of common shares effectively outstanding. Those amounts are presented in the consolidated balance sheet and note 16 (Total Equity, under the heading "Common stock") respectively to the consolidated financial statements for the year ended December 31, 2022. **Increase or decrease in book value per basic share** is calculated as the percentage change in book value per basic share from the end of the last annual reporting period to the end of the current reporting period. **Increase or decrease in book value per basic share adjusted for the $10.00 per common share dividend** is calculated in the same manner except that it assumes the annual $10.00 per common share dividend paid in the first quarter of 2022 was not paid and book value per basic share at the end of the current reporting period would be higher as a result.

**Equity exposures** – **Long equity exposures** refer to the company's long positions in equity and equity-related instruments held for investment purposes, and **long equity exposures and financial effects** refers to the aggregate position and performance of the

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*FAIRFAX FINANCIAL HOLDINGS LIMITED*

company's long equity exposures. Long equity exposures exclude the company's insurance and reinsurance investments in associates, joint ventures, and other equity and equity-related holdings which are considered long-term strategic holdings. These measures are presented and explained in note 24 (Financial Risk Management, under the heading "Market risk") to the consolidated financial statements for the year ended December 31, 2022.

#### Capital Management Measures
**Net debt**, **net total capital**, **total capital**, **net debt divided by total equity**, **net debt divided by net total capital** and **total debt divided by total capital** are measures and ratios used by the company to assess the amount of leverage employed in its operations. The company also uses an **interest coverage ratio** and an **interest and preferred share dividend distribution coverage ratio** to measure its ability to service its debt and pay dividends to its preferred shareholders. These measures and ratios are calculated using amounts presented in the company's consolidated financial statements for the year ended December 31, 2022, both including and excluding the relevant balances of consolidated non-insurance companies, and are presented and explained in note 24 (Financial Risk Management, under the heading "Capital Management") thereto.

#### Total of Segments Measures
**Underwriting profit (loss)** – This is a measure of underwriting activity in the insurance industry that is calculated by the company for its insurance and reinsurance operations as net premiums earned less **underwriting expenses**, which is comprised of losses on claims, net, commissions, net, and operating expenses (excluding corporate overhead), as presented in the consolidated statement of earnings. **Corporate overhead**, comprised of the non-underwriting operating expenses of the Fairfax holding company and the holding companies of the insurance and reinsurance operations, and the amortization of intangible assets that primarily arose on acquisition of the insurance and reinsurance subsidiaries, is a component of operating expenses as presented in the consolidated statement of earnings.

**Operating income (loss)** – This measure is used by the company as a pre-tax performance measure of operations that excludes net gains (losses) on investments, gain on sale and consolidation of insurance subsidiaries, interest expense and corporate overhead, and that includes interest and dividends and share of profit (loss) of associates, which the company considers to be more predictable sources of investment income. Operating income (loss) includes underwriting profit (loss) for the insurance and reinsurance operations and includes other revenue and other expenses for the non-insurance companies.

A reconciliation of underwriting profit (loss) and operating income (loss) to earnings before income taxes, the most directly comparable IFRS measure to both of those measures, is presented in the table below. All figures in the table are from the company's consolidated

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statement of earnings for the year ended December 31, 2022, except for underwriting expenses, underwriting profit and corporate overhead, which are described above.

---

| | | |
|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** |
|  | **2022** | **2021** |
| Net premiums earned | 21006.1 | 16558.0 |
| Underwriting expenses: |  |  |
| Losses on claims, net | 13851.9 | 10740.5 |
| Operating expenses | 3057.5 | 2946.1 |
| Commissions, net | 3454.9 | 2787.9 |
| Less: corporate overhead | (296.7) | (409.0) |
|  | 20067.6 | 16065.5 |
| **Underwriting profit** | 938.5 | 492.5 |
| Non-insurance companies: |  |  |
| &nbsp;&nbsp;Other revenue | 5581.6 | 5158.0 |
| &nbsp;&nbsp;Other expenses | (5520.9) | (5086.9) |
| Investments: |  |  |
| &nbsp;&nbsp;Interest and dividends | 961.8 | 640.8 |
| &nbsp;&nbsp;Share of profit of associates | 1014.7 | 402.0 |
| **Operating income** | 2975.7 | 1606.4 |
| Net gains (losses) on investments | (1733.9) | 3445.1 |
| Gain on sale and consolidation of insurance subsidiaries | 1219.7 | 264.0 |
| Interest expense | (452.8) | (513.9) |
| Corporate overhead | (296.7) | (409.0) |
| **Earnings before income taxes** | 1712.0 | 4392.6 |

---

**Property and casualty insurance and reinsurance** – References in this MD&A to the company's property and casualty insurance and reinsurance operations do not include the company's life insurance and run-off operations. The company believes this aggregation of reporting segments to be helpful in evaluating the performance of its core property and casualty insurance and reinsurance companies and has historically disclosed measures on this basis including net premiums written, net premiums earned, underwriting profit (loss) and operating income (loss), consistent with the information presented in note 25 (Segmented Information) to the consolidated financial statements for the year ended December 31, 2022. References to "**insurance and reinsurance**" operations includes property and casualty insurance and reinsurance, life insurance and run-off operations.

#### Non-GAAP Financial Measures
**Excess (deficiency) of fair value over carrying value** – These pre-tax amounts, while not included in the calculation of book value per basic share, are regularly reviewed by management as an indicator of investment performance for the company's non-insurance associates and market traded consolidated non-insurance subsidiaries that are considered to be portfolio investments, which are Fairfax India, Thomas Cook India, Dexterra Group, Boat Rocker and Farmers Edge, and also Recipe in 2021, prior to its privatization by the company on October 28, 2022.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | &nbsp;&nbsp;&nbsp;&nbsp;**December 31, 2021** | &nbsp;&nbsp;&nbsp;&nbsp;**December 31, 2021** | &nbsp;&nbsp;&nbsp;&nbsp;**December 31, 2021** |
|  | <br>**Fair value** | <br>**Carrying**<br>**value** | <br>**Excess of fair**<br>**value over** <br>**carrying value** | <br>**Fair value** | <br>**Carrying**<br>**value** | **Excess**<br>**(deficiency) of**<br>**fair value over** <br>**carrying value** |
| Non-insurance associates | 5684.3 | 5418.0 | 266.3 | 4541.9 | 4117.0 | 424.9 |
| Non-insurance companies | 1052.9 | 1009.2 | 43.7 | 1525.8 | 1604.3 | (78.5) |
|  | 6737.2 | 6427.2 | 310.0 | 6067.7 | 5721.3 | 346.4 |

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*Non-insurance associates included in the performance measure*

The fair values and carrying values of non-insurance associates used in the determination of this performance measure are the IFRS fair values and carrying values included in the consolidated balance sheets as at December 31, 2022 and 2021, and excludes investments in associates held by the company's consolidated non-insurance companies as those amounts are already included in the carrying values of the consolidated non-insurance companies used in this performance measure.

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** |
|  |  | **Carrying**  |  | **Carrying**  |
|  | **Fair value** | **value** | **Fair value** | **value** |
| Investments in associates as presented on the consolidated balance sheets | 6772.9 | 6091.3 | 5671.9 | 4755.1 |
| Less: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Insurance and reinsurance investments in associates<sup>(1)</sup> | 1069.0 | 647.3 | 1099.1 | 607.4 |
| &nbsp;&nbsp;&nbsp;&nbsp;Associates held by consolidated non-insurance companies<sup>(2)</sup> | 19.6 | 26.0 | 30.9 | 30.7 |
| Non-insurance associates included in the performance measure | 5684.3 | 5418.0 | 4541.9 | 4117.0 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *As presented in note 6 (Investments in Associates) to the consolidated financial statements for the year ended December 31, 2022.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Principally comprised of associates held by Thomas Cook India (including its share of Quess), Dexterra Group and Boat Rocker. Also includes associates held by Recipe at December 31, 2021.* 

*Non-insurance companies included in the performance measure*

The fair values of market traded consolidated non-insurance companies are calculated as the company's pro rata ownership share of each subsidiary's market capitalization as determined by traded share prices at the financial statement date. The carrying value of each subsidiary represents Fairfax's share of that subsidiary's net assets, calculated as the subsidiary's total assets, less total liabilities and non-controlling interests. Carrying value is included in shareholders' equity attributable to shareholders of Fairfax in the company's consolidated balance sheets as at December 31, 2022 and 2021, as shown in the table below which reconciles the consolidated balance sheet of the market traded non-insurance companies to that of the Non-insurance companies reporting segment included in the company's consolidated balance sheet.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **December 31, 2022** | **December 31, 2022** | **December 31, 2022** | **December 31, 2021** | **December 31, 2021** | **December 31, 2021** |
|  | **Market traded** | **All other non-** | **Total non-** | **Market traded** | **All other non-** | **Total non-** |
|  | **non-insurance** | **insurance** | **insurance** | **non-insurance** | **insurance** | **insurance** |
|  | **companies** | **companies**<sup>(2)</sup> | **companies**<sup>(1)</sup> | **companies** | **companies**<sup>(2)</sup> | **companies**<sup>(1)</sup> |
| Portfolio investments | 2099.4 | 19.9 | 2119.3 | 2418.5 | (165.7) | 2252.8 |
| Deferred income tax assets | 37.5 | 17.0 | 54.5 | 41.1 | 25.8 | 66.9 |
| Goodwill and intangible assets | 759.9 | 1524.5 | 2284.4 | 2069.5 | 271.7 | 2341.2 |
| Other assets<sup>(3)</sup> | 1279.2 | 2874.0 | 4153.2 | 1895.9 | 1299.6 | 3195.5 |
| Total assets | 4176.0 | 4435.4 | 8611.4 | 6425.0 | 1431.4 | 7856.4 |
| Accounts payable and accrued liabilities<sup>(3)</sup> | 929.4 | 1583.7 | 2513.1 | 1565.2 | 647.3 | 2212.5 |
| Derivative obligations |  | 58.2 | 58.2 |  | 47.9 | 47.9 |
| Deferred income tax liabilities | 28.5 | 223.9 | 252.4 | 153.7 | 44.8 | 198.5 |
| Borrowings - non-insurance companies | 845.8 | 1151.1 | 1996.9 | 1093.4 | 522.8 | 1616.2 |
| Total liabilities | 1803.7 | 3016.9 | 4820.6 | 2812.3 | 1262.8 | 4075.1 |
| Shareholders' equity attributable to shareholders of Fairfax<sup>(4)</sup> | 1009.2 | 1091.2 | 2100.4 | 1604.3 | 178.2 | 1782.5 |
| Non-controlling interests | 1363.1 | 327.3 | 1690.4 | 2008.4 | (9.6) | 1998.8 |
| Total equity | 2372.3 | 1418.5 | 3790.8 | 3612.7 | 168.6 | 3781.3 |
| Total liabilities and equity | 4176.0 | 4435.4 | 8611.4 | 6425.0 | 1431.4 | 7856.4 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)* *Non-insurance companies reporting segment as presented in the Segmented Balance Sheet in note 25 (Segmented Information) to the consolidated financial statements for the year ended December 31, 2022.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)* *Portfolio investments includes intercompany debt securities issued by a non-insurance company to Fairfax affiliates which are eliminated on consolidation.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(3)* *Other assets includes due from affiliates, and accounts payable and accrued liabilities includes due to affiliates.* 

&nbsp;&nbsp;&nbsp;&nbsp;*(4)* *Bolded figures represent the carrying values of the market traded non-insurance subsidiaries.* 

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**Cash provided by (used in) operating activities (excluding operating cash flow activity related to investments recorded at FVTPL)** is presented in this MD&A for the largest property and casualty insurance and reinsurance reporting segments as management believes this measure to be a useful estimate of cash generated or used by underwriting activities. This measure is a component of cash provided by (used in) operating activities as presented in the consolidated statement of cash flows, the most directly comparable IFRS measure.

---

| | | |
|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** |
|  | **2022** | **2021** |
| Cash provided by (used in) operating activities (excluding operating cash flow activity related to investments recorded at FVTPL): |  |  |
| &nbsp;&nbsp;North American Insurers and Global Insurers and Reinsurers | 5301.6 | 4241.4 |
| &nbsp;&nbsp;All other reporting segments | (81.3) | (214.8) |
| Net (purchases) sales of investments classified at FVTPL | (9640.2) | 2614.4 |
| Cash provided by (used in) operating activities as presented in the consolidated statement of cash flows | (4419.9) | 6641.0 |

---

**Intercompany shareholdings** - On the segmented balance sheets intercompany shareholdings of insurance and reinsurance subsidiaries are presented as "**Investments in Fairfax insurance and reinsurance affiliates**", intercompany shareholdings of non-insurance subsidiaries are included in "Portfolio investments" and total intercompany shareholdings of subsidiaries are presented as "**Investments in Fairfax affiliates**" in the "Capital" section. Intercompany shareholdings of subsidiaries are carried at cost in the segmented balance sheets as management believes that provides a better comparison of operating performance over time, whereas those shareholdings are eliminated upon consolidation in the consolidated financial statements with no directly comparable IFRS measure.

#### Appendix to Chairman's Letter to Shareholders
The Chairman's Letter to Shareholders ("the Letter") presents the performance of the underlying insurance and reinsurance companies, and the financial position of the consolidated company, in various ways. Certain of those measures and ratios, which have been used consistently and disclosed regularly in the Letter, do not have a prescribed meaning under IFRS and may not be comparable to similar measures presented by other companies.

#### Fairfax Worldwide Insurance Operations as at December 31, 2022
**This table in the Letter includes information on certain non-consolidated insurance companies which are presented as insurance and reinsurance investments in associates in note 6 (Investments in Associates) to the company's consolidated financial statements for the year ended December 31, 2022. As associates are recorded using the equity method of accounting under IFRS and not consolidated, the gross premiums written and investment portfolios of these associates are not included in the relevant amounts presented in the company's consolidated statement of earnings and consolidated balance sheet respectively.**

#### Gross Premiums Written per Share
This supplementary financial measure is calculated as gross premiums written by the property and casualty insurance and reinsurance companies divided by the number of common shares effectively outstanding, as presented in note 25 (Segmented Information) and note 16 (Total Equity) respectively to the company's consolidated financial statements for the year ended December 31, 2022. Management uses this measure as an indicator of organic growth and accretive acquisitions in its property and casualty insurance and reinsurance operations, and to illustrate the benefit premiums have on book value per basic share.

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**EBITDA of Consolidated Non-Insurance Investments**

EBITDA, or "Earnings Before Interest, Tax, Depreciation and Amortization" is a non-GAAP financial measure that the company uses, among other financial measures, to evaluate the performance of its non-insurance subsidiaries and their ability to generate cash flows for operating and capital expenditures. EBITDA is defined by the company as pre-tax income (loss) adjusted to exclude (i) interest expense and (ii) depreciation, amortization and impairment charges.

---

| | |
|:---|:---|
| **Non-insurance companies reporting segment** | **Year ended December 31, 2022** |
| EBITDA | 743.1 |
| Less: |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest expense<sup>(1)</sup> | 122.8 |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation, amortization and impairment charges<sup>(1)</sup> | 450.4 |
|  | 573.2 |
| Pre-tax income (loss)<sup>(2)</sup> | 169.9 |

---

&nbsp;&nbsp;&nbsp;&nbsp;*(1)*  ***As presented in note 26 (Expenses) to the consolidated financial statements for the year ended December 31, 2022.*** 

&nbsp;&nbsp;&nbsp;&nbsp;*(2)*  ***As presented in note 25 (Segmented Information) to the consolidated financial statements for the year ended December 31, 2022.*** 

#### Compound Growth in Book Value per Share
**This supplementary financial measure is calculated as the compound return on book value per basic share for the beginning and ending years of the relevant measurement period. Book value per basic share is described in the MD&A of this annual report, under the heading "Glossary of Non-GAAP and Other Financial Measures".**

#### Average Total Return on Investments
**This supplementary financial measure is calculated as the simple average of total return on average investments for the relevant years in the measurement period. Total return on average investments is described in the MD&A of this annual report, under the heading "Total Return on the Investment Portfolio".**

#### Unconsolidated Balance Sheet
The unconsolidated balance sheet in the Letter presents the IFRS carrying values of the company's subsidiaries prior to consolidation to better reflect the amount invested into the company's core property and casualty insurance and reinsurance operations. The company also presents per share amounts for each line item in the unconsolidated balance sheet to better illustrate the composition of book value per basic share. Per share amounts are calculated by dividing the dollar amount of each line item by the number of common shares effectively outstanding, which is presented in note 16 (Total Equity) to the consolidated financial statements for the year ended December 31, 2022. As IFRS requires that controlled subsidiaries be consolidated, the following table presents a reconciliation of the unconsolidated balance sheet to the company's consolidated balance sheet as at December 31, 2022. All figures are rounded to US$ billions, and may not add due to rounding.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  |  | **&nbsp;&nbsp;&nbsp;&nbsp;December 31, 2022** | **&nbsp;&nbsp;&nbsp;&nbsp;December 31, 2022** | **&nbsp;&nbsp;&nbsp;&nbsp;December 31, 2022** | **&nbsp;&nbsp;&nbsp;&nbsp;December 31, 2022** |
|  |  | **As presented in**  |  |  | **As presented in**  |
|  |  | **the unconsolidated** |  | **Consolidation of** | **the consolidated** |
|  |  | **balance sheet** | **Reclassifications** | **subsidiaries** | **balance sheet** |
| **Assets** |  | *(US$ billions)* | *(US$ billions)* | *(US$ billions)* | *(US$ billions)* |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Northbridge |  | 1.8 |  | (1.8) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Odyssey Group |  | 4.0 |  | (4.0) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Crum & Forster |  | 2.0 |  | (2.0) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Zenith National |  | 1.0 |  | (1.0) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Brit |  | 1.7 |  | (1.7) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Allied World |  | 3.4 |  | (3.4) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;International Insurers and Reinsurers |  | 3.7 |  | (3.7) |  |
| Life insurance and Run-off |  | 0.2 |  | (0.2) |  |
| Insurance and reinsurance operations |  | 17.8 |  | (17.8) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Recipe |  | 0.6 |  | (0.6) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fairfax India |  | 0.5 |  | (0.5) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Grivalia Hospitality |  | 0.4 |  | (0.4) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Thomas Cook India |  | 0.2 |  | (0.2) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other Non-insurance |  | 0.4 |  | (0.4) |  |
| Non-insurance operations |  | 2.1 |  | (2.1) |  |
| **Total consolidated operations** |  | 19.9 |  | (19.9) |  |
| Holding company cash and investments |  | 1.3 |  |  | 1.3 |
| Insurance contract receivables |  |  |  | 7.9 | 7.9 |
| Investments in associates |  | 1.0 | (1.0) |  |  |
| Portfolio investments |  |  | 1.0 | 53.3 | 54.3 |
| Deferred premium acquisition costs |  |  |  | 2.2 | 2.2 |
| Recoverable from reinsurers |  |  |  | 13.1 | 13.1 |
| Deferred income tax assets |  |  |  | 0.5 | 0.5 |
| Goodwill and intangible assets |  |  |  | 5.7 | 5.7 |
| Other assets |  |  | 0.6 | 6.5 | 7.1 |
| Other holding company assets |  | 0.6 | (0.6) |  |  |
| Total assets |  | 22.8 |  | 69.3 | 92.1 |
| **Liabilities** |  |  |  |  |  |
| Accounts payable and other liabilities |  | 0.3 |  | 4.9 | 5.2 |
| Derivative obligations |  |  |  | 0.2 | 0.2 |
| Deferred income tax liabilities |  |  |  | 0.5 | 0.5 |
| Insurance contract payables |  |  |  | 5.1 | 5.1 |
| Insurance contract liabilities |  |  |  | 52.2 | 52.2 |
| Borrowings – holding company and insurance and reinsurance companies |  |  | 5.9 | 0.7 | 6.6 |
| Borrowings – non-insurance companies |  |  |  | 2.0 | 2.0 |
| Borrowings – holding company |  | 5.9 | (5.9) |  |  |
| Total liabilities |  | 6.2 |  | 65.6 | 71.8 |
| **Equity** |  |  |  |  |  |
| Common shareholders' equity |  | 15.3 |  |  | 15.3 |
| Preferred stock |  | 1.3 |  |  | 1.3 |
| Shareholders' equity attributable to shareholders of Fairfax |  | 16.6 |  |  | 16.6 |
| Non-controlling interests |  |  |  | 3.7 | 3.7 |
| Total Equity |  | 16.6 |  | 3.7 | 20.3 |
| Total Liabilities and Total Equity |  | 22.8 |  | 69.3 | 92.1 |

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## Exhibit 99.5

**Exhibit 99.5**

**Consent of Independent Registered Public Accounting Firm**

We hereby consent to the inclusion in this Annual Report on Form 40-F for the year ended December 31, 2022 of Fairfax Financial Holdings Limited of our report dated March 10, 2023, relating to the consolidated financial statements and the effectiveness of internal control over financial reporting, which is filed as part of Exhibit 99.2 to this Annual Report on Form 40-F.

We also consent to the incorporation by reference in the Registration Statements on Form S-8 of Fairfax Financial Holdings Limited (File Nos. 333-165730, 333-168835, 333-170873, 333-200235, 333-200658, 333-207812, 333-221676, 333-228219, 333-250975, 333-237956, 333-237955, 333-260837 and 333-266380) of our report dated March 10, 2023 referred to above.

We also consent to reference to us under the heading "Interests of Experts" which appears in the Annual Information Form filed as Exhibit 99.1 to this Annual Report on Form 40-F, which is incorporated by reference in such Registration Statements.

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| |
|:---|
| /s/ PricewaterhouseCoopers LLP |
| **Chartered Professional Accountants, Licensed Public Accountants** |
| Toronto, Canada |
| March 10, 2023 |

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## Exhibit 99.6

**Exhibit 99.6**

**RULE 13a-14(a)/15d-14(a) CERTIFICATIONS**

I, V. Prem Watsa, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this annual report on Form 40-F of Fairfax Financial Holdings Limited;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Evaluated the effectiveness of the issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Disclosed in this report any change in the issuer's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. The issuer's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer's auditors and the audit committee of the issuer's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer's internal control over financial reporting.

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| |
|:---|
| Date: March 10, 2023 |
| /s/ V. Prem Watsa |
| V. Prem Watsa |
| *Chairman and Chief Executive Officer* |

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------

I, Jennifer Allen, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this annual report on Form 40-F of Fairfax Financial Holdings Limited;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Evaluated the effectiveness of the issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Disclosed in this report any change in the issuer's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. The issuer's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer's auditors and the audit committee of the issuer's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer's internal control over financial reporting.

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| |
|:---|
| Date: March 10, 2023 |
| /s/ Jennifer Allen |
| Jennifer Allen |
| *Vice President and Chief Financial Officer* |

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## Exhibit 99.7

**Exhibit 99.7**

**SECTION 1350 CERTIFICATIONS**

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), the undersigned officer of Fairfax Financial Holdings Limited (the "Company"), hereby certifies, to such officer's knowledge, that:

The Annual Report on Form 40-F for the year ended December 31, 2022 (the "Report") of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

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| |
|:---|
| /s/ V. Prem Watsa |
| V. Prem Watsa |
| *Chairman and Chief Executive Officer* |
| Date: March 10, 2023 |

---

A signed original of this written statement required by Section 906 has been provided to Fairfax Financial Holdings Limited and will be retained by Fairfax Financial Holdings Limited and furnished to the Securities and Exchange Commission or its staff upon request.

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Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), the undersigned officer of Fairfax Financial Holdings Limited (the "Company"), hereby certifies, to such officer's knowledge, that:

The Annual Report on Form 40-F for the year ended December 31, 2022 (the "Report") of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

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| |
|:---|
| <u>/</u>s/ Jennifer Allen |
| Jennifer Allen |
| *Vice President and Chief Financial Officer* |
| Date: March 10, 2023 |

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A signed original of this written statement required by Section 906 has been provided to Fairfax Financial Holdings Limited and will be retained by Fairfax Financial Holdings Limited and furnished to the Securities and Exchange Commission or its staff upon request.

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