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corresp

September 23, 2009

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. Don Abbott, Senior Staff Accountant

Mr. Frank Wyman, Staff Accountant

    Re:

    Fairfax Financial Holdings Limited (“Fairfax”)

Form 40-F for the Fiscal Year Ended December 31, 2008

Filed March 6, 2009

File No. 1-31556

Dear Sirs/Mesdames:

We hereby acknowledge receipt of the comment letter dated September 9, 2009 (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 Fairfax 2008 Annual
Report appearing as Exhibits 2 and 3 of the Form 40-F, unless otherwise noted. Terms used but not
defined herein have the meanings set forth in the Form 40-F. Fairfax (sometimes herein called “the
Company”) intends to include the revised disclosure contemplated subsequently in this letter with
respect to financial periods covered by its reports on Form 40-F and Form 6-K, as applicable,
beginning with the Company’s Interim Report filed on Form 6-K for the period ending September 30,
2009 and its Annual Report filed on Form 40-F for the fiscal year ending December 31, 2009.

For purposes of clarity in reading the following responses and commentary, the reader is advised
that the Company has accounted for all of its credit default swap contracts and total return swap
contracts under Canadian and US GAAP as freestanding derivatives carried at fair value on the
consolidated balance sheets, with changes in fair value recorded in net gains (losses) on
investments in the consolidated statements of net

earnings. Accordingly, as the Company has not applied hedge accounting as contemplated in the
Canadian and US GAAP accounting pronouncements to any of its derivative contracts, all references
to hedging activities in the responses which follow refer solely to economic hedging activities.

Form 40-F for fiscal year ended December 31, 2008

18. Financial Risk Management, page 60

    1.

    Please refer to prior comments three, four and six. Please revise your disclosure to explain
how you revised the financial objectives of your hedging programs given market conditions and
the impact of your sales and close out transactions in 2008 in order to effectively manage the
Company’s future credit risk and market risk.

    Response 1: Beginning with the consolidated financial statements included in the Company’s
Interim Report filed on Form 6-K for the period ending September 30, 2009 and in the Company’s
Annual Report filed on Form 40-F for the fiscal year ending December 31, 2009, the Company will
include a discussion of the financial objectives of the Company’s hedging programs intended to
manage future credit risk and market risk. See Appendices 1 and 2 for pro forma presentations
of the Company’s proposed revised note disclosures based upon the results reported for the
fiscal year ended December 31, 2008.

Exhibit 3

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Components of Net Earnings

Net gains on investments, page 111

    2.

    Please refer to prior comments eight and nine. We acknowledge the information provided in
your responses, particularly how you employ derivative instruments to mitigate financial risks
arising principally from your investment holdings and balances recoverable from reinsurers.
The impact of these derivative instruments and related hedged items, as presented in Notes 3
and 4 of your financial statements, appears to have been summarized in Appendix 1 of your
response. Please disclose this summarized information in future filings along with an
explanation quantifying the effects that the key factors of your hedging programs had on the
Company’s financial position, results of operations and cash flows as of and for each period
presented.

    Response 2: Beginning with the consolidated financial statements included in the Company’s
Interim Report filed on Form 6-K for the period ending September 30, 2009 and in the Company’s
Annual Report filed on Form 40-F for the fiscal year ending December 31, 2009, the Company will
include tables summarizing the impact of derivative instruments and related hedged items along
with an explanation

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    quantifying the effects that the key factors of the Company’s hedging program had on the
Company’s financial position, results of operations and cash flows as of and for each period
presented. See Appendices 1 and 2 for a pro forma presentation of the Company’s proposed
revised note disclosures based upon the results reported for the fiscal year ended December 31,
2008. The Company has determined that the disclosures described in the Staff’s comment closely
resemble the disclosure requirements of Statement of Financial Accounting Standards No. 161,
Disclosures about Derivative Instruments and Hedging Activities — an Amendment of FASB
Statement No. 133 (“SFAS 161”) which the company adopted on January 1, 2009. Therefore, in
accordance with SFAS 161, the Company intends to make these disclosure revisions in its
consolidated financial statements rather than in its Management’s Discussion and Analysis of
Financial Condition and Results of Operations.

    3.

    You assert in your responses to comments 3, 4 and 7 that it is not possible to “definitively
quantify” how your derivative instruments and related hedged items are expected to affect your
future financial position, results of operations and cash flows. Please revise your MD&A to
describe and quantify the “reasonably likely” future impact of your hedging programs.
Otherwise, disclose the risks, data limitations, market uncertainties or other factors that
prohibit you from providing this information.

    Response 3: Beginning with the Management’s Discussion and Analysis of Financial Condition and
Results of Operations included in the Company’s Interim Report filed on Form 6-K for the period
ending September 30, 2009 and in the Company’s Annual Report filed on Form 40-F for the fiscal
year ending December 31, 2009, the Company will include an explanation as to why it is not
possible to quantify the “reasonably likely” future impact of the company’s hedging programs as
it pertains to managing credit risk. As a result of the Company having discontinued its equity
hedges in 2008, it will not be possible to describe and quantify the future impact of equity
market price risk hedging programs. See Appendix 3 for a pro forma presentation of the
Company’s proposed revised disclosure related to credit risk management based upon the results
reported for the fiscal year ended December 31, 2008.

    As a result of the Company having discontinued its equity hedging program in the fourth quarter
of 2008, the Company is unable to disclose the “reasonably likely” future impact of the
Company’s hedging programs as it pertains to managing equity market price risk, however the
Company will describe the risk management strategies it intends to follow in the future.
Should the Company undertake any new hedging activities related to its equity risk exposure,
the Company will determine the extent to which it is possible to quantify the future impact of
such a hedging strategy and will undertake to satisfy the requirement to disclose this
quantification. Beginning with the consolidated financial statements included in the Company’s
Interim Report filed on Form 6-K for the period ending September 30, 2009 and in the Company’s
Annual Report filed on Form 40-F for the fiscal year ending December 31, 2009, the Company will
include disclosure highlighting the discontinuation of the Company’s equity hedging program in
the fourth quarter of 2008 and the risk management

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    strategies it intends to follow in the future. See Appendix 2 for a pro forma presentation of
the Company’s proposed revised disclosure related to equity risk management based upon the
results reported for the fiscal year ended December 31, 2008.

    4.

    Please refer to prior comment 11. We acknowledge the information provided in your response.
Please confirm to us that you will incorporate this information in future filings.

    Response 4: Beginning with the Management’s Discussion and Analysis of Financial Condition and
Results of Operations included in the Company’s Interim Report filed on Form 6-K for the period
ending September 30, 2009 and in the Company’s Annual Report filed on Form 40-F for the fiscal
year ending December 31, 2009, the Company will include disclosure of the material terms of its
credit default swap contracts, including the identity of counterparties to these transactions,
the specific covered financial risks, the defined credit events and collateral posting
requirements, as well as the nature of events and conditions that trigger them. See Appendix 3
for a pro forma presentation of the Company’s proposed revised disclosure based upon the
results reported for the fiscal year ended December 31, 2008.

* * * * * * * * * * * * * * * *

The Company acknowledges that: (i) the Company is responsible for the adequacy and accuracy of the
disclosure in the Form 40-F; (ii) Staff comments or changes to disclosure in response to Staff
comments do not foreclose the Commission from taking any action with respect to the Form 40-F; and
(iii) the Company may not assert Staff comments as a defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the United States.

We appreciate your assistance in reviewing this response letter. Please direct all questions or
comments regarding this filing to the undersigned at (416) 367-4941 or g_taylor@fairfax.ca.

Yours very truly,

Greg Taylor

Vice President and Chief Financial Officer

    cc:

    V. Prem Watsa, Chairman and Chief Executive Officer,

Fairfax Financial Holdings Limited

Bruce Winter, Partner

PricewaterhouseCoopers LLP

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Appendix 1

Fairfax Financial Holdings Limited

Response to SEC Comment Letter of September 9, 2009

Pro forma Disclosure Revision — Revised financial objectives of hedging programs

     The following is a pro forma presentation of information disclosed in notes to the
consolidated financial statements of Fairfax Financial Holdings Limited (the “Company”) relating to
its credit risk hedging activities as reported in the Company’s Annual Report filed on Form 40-F
for the fiscal year ended December 31, 2008. This disclosure will be included in notes to
financial statements included in its Interim Report filed on Form 6-K for periods ending on or
after September 30, 2009 and in its Annual Report filed on Form 40-F for fiscal years ending on or
after December 31, 2009:

18. Financial Risk Management — Credit Risk, page 61

Credit risk is the risk that one party to a financial instrument fails to discharge an obligation
and thereby causes financial loss to another party. The company’s exposure to credit risk is
concentrated in two specific areas: investment assets and underwriting and operating balances,
including on balances recoverable and receivable from reinsurers on ceded losses (including ceded
incurred losses, ceded paid losses and ceded unearned premiums) and accounts receivable.

The aggregate gross credit risk exposure at December 31, 2008 (without taking into account amounts
pledged to and held by the company as collateral of $1,307.1 (2007 — $2,358.5)) was $21,366.0
(2007 — $23,699.6) and was comprised as follows:

    December 31,

    2008

    2007

    Gross recoverable from reinsurers

    4,234.2

    5,038.5

    Bonds

    U.S., Canadian and other government

    2,441.8

    8,374.1

    Corporate and other and U.S. states and municipalities

    6,212.8

    2,138.2

    Derivatives (primarily credit default swaps)

    455.5

    1,213.4

    Accounts receivable

    1,688.7

    1,906.9

    Cash and short term investments

    6,333.0

    5,028.5

    Total gross exposure

    21,366.0

    23,699.6

Since 2003, the company has used credit default swap contracts referenced to various issuers in the
banking, mortgage and insurance sectors of the financial services industry as an economic hedge of
risks affecting specific financial assets (recoverables from reinsurers), exposures potentially
affecting the fair value of the company’s fixed income portfolio (principally investments in fixed
income securities classified as corporate and other and U.S. states and municipalities in the
company’s consolidated financial statements) and of broader systemic risk. The company’s holdings
of credit default swap contracts have declined significantly in 2009 relative to prior years,
largely as a result of significant sales in 2008. In the latter part of 2008, the company revised
the financial objectives of its hedging program by determining not to replace its credit default
swap hedge position as

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sales or expiries occurred based on the significant increase in the cost of purchasing credit
protection (reducing the attractiveness of the credit default swap contract as a hedging
instrument), the fact that the company’s capital and liquidity had benefited significantly from
more than $2.4 billion in cash proceeds of sales of credit default swaps realized since 2007, and
the company’s judgment that its exposure to elevated levels of credit risk had moderated and that
as a result the company had made the determination that its historical approaches to managing
credit risk (as described below) were once again satisfactory as a means of mitigating the
company’s exposure to credit risk arising from its exposure to financial assets. As a result, the
effects that credit default swaps as hedging instruments may be expected to have on the company’s
future financial position, liquidity and operating results may be expected to diminish
significantly relative to the effects in recent years. The company may initiate new credit default
swap contracts as an effective hedging mechanism in the future, but there can be no assurance that
it will do so.

The table that follows summarizes the pre-tax impact on the company’s consolidated statement of
comprehensive income of the company’s risk management program to mitigate credit risk:

    December 31,

    2008

    2007

    ($ millions)

    Net gains on credit default swap contracts

    1,290.5

    1,145.0

    Net gains on bonds — corporate and other and U.S.
states and municipalities

    (359.4
    )

    10.2

    Change in unrealized gains on bonds — available
for sale corporate and other and U.S. states and
municipalities

    (32.2
    )

    (57.0
    )

    Other than temporary impairments recorded on bonds

    (29.1
    )

    (15.0
    )

    Credit losses recorded on reinsurance recoverable

    (15.0
    )

    (46.2
    )

Investments in Debt Instruments

The company’s risk management strategy is to invest primarily in debt instruments of high credit
quality issuers and to limit the amount of credit exposure with respect to any one issuer. While
the company reviews third party ratings, it carries out its own analysis and does not delegate the
credit decision to rating agencies. The company endeavours to limit credit exposure by imposing
fixed income portfolio limits on individual corporate issuers and limits based on credit quality
and may, from time to time, invest in credit default swaps to further mitigate