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corresp

September 28, 2007

BY EDGAR

Securities and Exchange Commission

Division of Corporation Finance

450 Fifth Street, N.W. Mail Stop 6010

Washington, D.C. 20549

    Attention:

    Mr. Jim B. Rosenberg, Senior Assistant Chief Accountant

Mr. Frank Wyman, Staff Accountant

Mr. Don Abbott, Senior Staff Accountant

    Re:

    Fairfax Financial Holdings Limited (“Fairfax”)

Form 40-F for fiscal year ended December 31, 2006

File No. 1-31556

Dear Sirs/Mesdames:

We hereby acknowledge receipt of the comment letter dated September 19, 2007 (the “Comment Letter”)
from the staff of the Division of Corporation Finance (the “Staff”) of the Securities and Exchange
Commission (the “Commission”) concerning the above captioned Form 40-F (the “Form 40-F”). We
submit this letter in response to the Comment Letter. For ease of reference, we have reproduced
the text of the comments in bold-faced type below, followed by Fairfax’s responses. The responses
to each of the comments are set forth in numbered paragraphs that correspond to the numbers of the
Staff comments. Page number references herein refer to the page numbers of the Annual Report
appearing as Exhibits 2, 3 and 4 of the Form 40-F, unless otherwise noted. Terms used but not
defined herein have the meanings set forth in the Form 40-F. Shaded text reflects proposed changes
from the disclosure in the Form 40-F as filed. Fairfax (sometimes herein called “the Company”)
intends to include such revised disclosure with respect to financial periods covered by its Form
40-F, as applicable, beginning with the Company’s Annual Report Form 40-F for the year ending
December 31, 2007.

Form 40-F for fiscal year ended December 31, 2006

Off-Balance Sheet Arrangements

    1.

    You state that off-balance sheet arrangements are described in Notes 4, 13 and 15 to your
consolidated financial statements. However, these disclosures do not appear to provide all of
the information specified in General Instruction B (11). In particular, you appear to omit
discussion of triggering events that could cause

    obligations or liabilities related to off-balance sheet arrangements to arise and known trends
or uncertainties that are reasonably likely to result in a material reduction in the
availability of off-balance sheet arrangements to you. Please provide information required by
General Instruction B (11) in a disclosure-type format or explain to us the factors that you
considered in concluding that the existing disclosure in Notes 4, 13 and 15 is adequate.

    Response 1: Our Form 40-F for the fiscal year ended December 31, 2006 refers the reader to
Notes 4, 13 and 15 for disclosure of off-balance sheet arrangements. We recognize that certain
of these disclosures relate to arrangements that are more aptly described as contingencies and
not off-balance sheet arrangements. However, in order to make the arrangements clear to the
reader of the financial statements, we felt it was appropriate to describe them in part under
the heading of off-balance sheet arrangements. In the interests of greater clarity, we will
review our disclosure to make the distinction clearer between contingencies and off-balance
sheet arrangements in future filings. The following is a discussion of the factors we
considered in concluding that in each case our existing disclosure is adequate and in
compliance with General Instruction B(11):

    Note 4: “...the company’s subsidiaries have pledged cash and investments of $2.2
billion 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 to support letters
of credit). These pledges are in the normal course of business and are generally released when
the payment obligation is fulfilled.”

    Under insurance regulatory regimes, insurers, especially when not resident in the jurisdiction
of the insured, are often required to provide security for their payment obligations to the
insured. The security can be given directly (by a pledge of assets or the establishment of
assets in trust), or by means of a letter of credit issued at the request of the insurer by a
bank; in this latter case, the insurer regularly provides security directly (as described
above) to the issuer of the letter of credit. The issuer of a letter of credit typically has
an off-balance sheet obligation or arrangement, but as noted above, neither Fairfax nor its
subsidiaries are the issuer of the letters of credit involved, so they do not have an
off-balance sheet obligation or arrangement.

    The Company has recorded the amounts payable to third party insureds in its claims liabilities
balance (in the case of unpaid losses) or in its accounts payable balance (in the case of paid
losses). In the event that the Company fails to pay a third party insured, that third party has
the ability to collect from the bank that issued the letter of credit. This would not result
in any additional liability to the Company, as in such an instance the claims liability
formerly due to the third party would now become payable to the bank that issued the letter of
credit.

    Consequently, the items referred to in this disclosure do not meet the definition of an
off-balance sheet arrangement as defined in General Instruction B(11). All obligations and
assets referred to in this disclosure are recorded in the
consolidated balance sheet. No additional contingent obligations, liabilities or assets are expected to
arise as a result of these arrangements.

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    Note 13: The disclosures in Note 13 under the headings SEC Subpoenas and Lawsuits are
intended to draw the financial statement reader’s attention to certain contingent liabilities
or obligations that could arise in the future; these are not off-balance sheet arrangements as
contemplated by General Instruction B(11). We believe the materiality of the potential outcome
of these events and the triggering events or circumstances that could cause them to arise are
fairly described in the following existing disclosures in Note 13:

    SEC Subpoenas: “At the present time the Company cannot predict the outcome from these
continuing inquiries or the ultimate effect on its business, operations or financial condition,
which effect could be material and adverse. The financial cost to the Company to address these
matters has been and is likely to continue to be significant. The Company expects that these
matters will continue to require significant management attention, which could divert
management’s attention away from the Company’s business. In addition, the Company could be
materially adversely affected by negative publicity related to these inquiries or any similar
proceedings.”

    Lawsuits: “The ultimate outcome of any litigation is uncertain and should the consolidated
lawsuit be successful, the defendants may be subject to an award of significant damages, which
could have a material adverse effect on Fairfax’s business, results of operations and financial
condition. The consolidated lawsuit may require significant management attention, which could
divert management’s attention away from the Company’s business. In addition, the Company could
be materially adversely affected by negative publicity related to this lawsuit. Any of the
possible consequences noted above, or the perception that any of them could occur, could have
an adverse effect upon the market price for the Company’s securities.”

    Under the heading of Other, we include disclosure describing an arrangement whereby Odyssey
America (a consolidated subsidiary) pledges certain of its assets on behalf of Advent (an
equity accounted affiliate) to support a portion of Advent’s underwriting capacity at Lloyd’s.
We believe that our disclosure of this off-balance sheet guarantee, which indicates that in the
event that Advent’s financial resources were unable to support its underwriting at Lloyd’s it
could trigger the forfeiture of a portion or all of Odyssey America’s assets pledged in support
of those underwritings, is consistent with the requirements of General Instruction B(11). We
refer to the following disclosure: “The Company believes that the financial resources of
Advent provide adequate protection to support its liabilities in the ordinary course of
business.” However, in the interests of greater clarity, in future filings we will provide
additional disclosure to state that in the event that Advent’s financial resources were unable
to support Advent’s underwritings at Lloyd’s, such an event could trigger the forfeiture of a
portion or all of Odyssey America’s pledged assets.

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    Also under the heading of Other, we disclose that “Fairfax (the ultimate parent company) has
provided a letter of support to Cunningham Lindsey (a consolidated subsidiary) with respect to
the repayment of this credit facility ($62.5 million).” We do not believe that this
arrangement is an off-balance sheet arrangement pursuant to General Instruction B(11)(ii) which
defines off-balance sheet arrangements as “any transaction, agreement or other contractual
arrangement (in this case a guarantee) to which an entity unconsolidated with the registrant is
a party...” Since the registrant (Fairfax) consolidates Cunningham Lindsey, this guarantee
does not represent an off-balance sheet arrangement to the consolidated group. However, we
believe that this disclosure is appropriate as it helps the financial statement reader assess
the potential obligations of Fairfax (the ultimate parent company) and implications to holding
company cash, short term investments and marketable securities in the event of a default by
Cunningham Lindsey.

    Also under the heading of Other, we disclose that “The Company under certain circumstances may
be obligated to assume loans to officers and directors of the Company and its subsidiaries from
Canadian chartered banks totaling $8.5 million for which 196,586 subordinate voting shares of
the Company with a year-end market value of $39.1 million have been pledged as security by the
borrowers.” We believe that our disclosure of this off-balance sheet guarantee is adequate as
it discloses that if the Company were obligated to assume the described loans, as a result of a
default by any or all of the officers or directors on their loans or otherwise, more than
sufficient security existed at the end of 2006, on the basis of the market value of the
collateral, to relieve the Company of any financial liability for its described obligation.

    The final paragraph under the heading of Other is a description of the Company’s restricted
stock plans which do not result in any off-balance sheet arrangements.

    Note 15 is a description of normal course operating leases with the required future
minimum lease payment detail; these are not off-balance sheet arrangements as contemplated by
General Instruction B(11). None of the operating leases referred to in this disclosure contain
any unusual features which would create obligations or liabilities at the termination date of
the lease (for example, a bargain purchase option).

Exhibit 2 — Consolidated Financial Statements

Notes to Consolidated Financial Statements

Note 20 US GAAP Reconciliation, page 52

    2.

    Consistent with CICA Accounting Guideline AcG-3 (paragraph 15), describe your “corporate
policies with respect to limits of coverage, reinsurance, net retentions and similar
information.” Ensure that the principal terms of your ceded reinsurance contracts are
adequately described so that an investor would be able to adequately assess the extent of your
net exposure to claims risk.

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    Describe and quantify any limitations in these contracts on your ability to cede losses in the
future on a basis consistent with historical results.

    Response 2: We understand that these are desirable disclosures and are not required, but we
will amend our disclosure to provide greater clarity in future filings by including additional
detail in the first paragraph of Note 7, which describes our policy with respect to
reinsurance, in the form set out below (subject to subsequent factual changes):

    The Company follows the policy of underwriting and reinsuring contracts of insurance and
reinsurance which, depending on the type of contract, generally limits the liability of the
individual insurance and reinsurance subsidiaries to a maximum amount on any one loss of $15.0
million for OdysseyRe, $5.0 million (excluding workers’ compensation) for Crum & Forster and
$3.8 million for Northbridge. Reinsurance decisions are made by the subsidiaries 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 subsidiaries 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 subsidiary and 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 policy holder.

    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 Company does not expect that
there will be significant changes in prices or terms and conditions in the near future. If a
major loss were to occur (for example, of the magnitude of 2005’s Hurricane Katrina) or if the
performance of the industry were to deteriorate, the cost for reinsurance could change
significantly. If that were to occur, each subsidiary would evaluate the relative costs and
benefits of accepting more risk on a net basis, reducing exposure on a direct basis or paying
additional premiums for reinsurance.

    Historically the Company has purchased, or has negotiated as part of the purchase of a
subsidiary, adverse development covers as protection from adverse development on prior years’
reserves. In the past, significant amounts of reserve development have been ceded to these
reinsurance treaties. The majority of these treaties have been commuted, are at limit, or are
nearing limit, so that going forward, if further adverse reserve development originally
protected by these covers were to occur, little if any would be ceded to reinsurers.

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    3.

    On page 53, you state that under Canadian GAAP recoveries on stop loss reinsurance treaties
are recorded at the same time as the claims are ceded, while under US GAAP, consistent with
accounting for retroactive reinsurance under SFAS 113, the excess of ceded liabilities over
premium paid is recorded as deferred gain. Guideline D-7 issued by the Superintendent of
Financial Institutions appears to indicate Canadian GAAP accounting model for reinsurance of
short term insurance contracts follows the requirements of SFAS 113, in particular the
deferral of the excess of reinsured liabilities under retroactive reinsurance over cash paid.
Explain more specifically the methods and key assumptions used to account for your reinsurance
arrangements on both a Canadian and a US GAAP basis, particularly the factors that you
considered in not applying the provisions of Guideline D-7.

    Response 3: In 1999, Fairfax obtained a significant ($1 billion) reinsurance cover (the “Swiss
Re Cover”). Prior to Fairfax’s entering into this cover, management spent cons