SecProbe.io

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 VIA EDGAR and E-MAIL

 March 24, 2025

 Division of Corporation Finance

 Office of Finance

 U.S. Securities and Exchange Commission

 100 F Street, N.E.

 Washington, DC 20549

 Re: Fairfax Financial Holdings Limited

 Allied World Assurance Company Holdings, Ltd

 Registration Statement on Form F-4 (File Nos. 333-285834
and 333-285834-01)

 To Whom It May Concern:

 On behalf of Fairfax Financial Holdings Limited,
a corporation incorporated under the laws of Canada, and Allied World Assurance Company Holdings, Ltd, an exempted company limited by
shares incorporated under the laws of Bermuda, we hereby request that the U.S. Securities and Exchange Commission declare the Registration
Statement effective as of 4:00 p.m., New York time, on Wednesday, March 26, 2025, or as soon as possible thereafter.

 If the Staff has any questions, please contact
Christopher R. Bornhorst, Esq. of Torys LLP at cbornhorst@torys.com or (212) 880-6047.

 Sincerely,

 FAIRFAX FINANCIAL HOLDINGS LIMITED

 By:
 /s/ Amy Sherk

 Name: Amy Sherk

 Title: Vice President and Chief Financial Officer

 ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD

 By:
 /s/
 Michael Cann

 Name: Michael
 Cann

 Title:
 Vice President, Bermuda Controller

March 21, 2025
Prem Watsa
Chairman and CEO
Fairfax Financial Holdings Limited
95 Wellington Street West, Suite 800
M5J 2N7
Toronto, Ontario
Re:Fairfax Financial Holdings Limited
Registration Statement on Form F-4
Filed March 14, 2025
File No. 333-285834
Dear Prem Watsa:
            This is to advise you that we have not reviewed and will not review your registration
statement.
            Please refer to Rules 460 and 461 regarding requests for acceleration. We remind you
that the company and its management are responsible for the accuracy and adequacy of their
disclosures, notwithstanding any review, comments, action or absence of action by the staff.
            Please contact Robert Arzonetti at 202-551-8819 with any questions.
Sincerely,
Division of Corporation Finance
Office of Finance
cc:Chris Bornhorst

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May 4, 2017

BY EDGAR SUBMISSION

Securities and Exchange Commission

Division of Corporation Finance

Office of Healthcare & Insurance

100 F Street, N.E.

Washington, D.C. 20549

Attention: Joseph G. McCann

Re:                             Fairfax Financial Holdings Limited

Registration Statement on Form F-4

File No. 333-216074

Dear Mr. McCann:

In accordance with Rule 461 promulgated under the Securities Act of 1933, as amended, Fairfax Financial Holdings Limited (the “Company”) hereby respectfully requests acceleration of the effectiveness of the Company’s Registration Statement on Form F-4 (File No. 333-216074), in connection with the proposed transaction involving the Company and Allied World Assurance Company Holdings, AG, to 5:00 p.m., Eastern time, on May 8, 2017, or as soon thereafter is practicable.

The Company hereby acknowledges that:

·                                          should the Securities and Exchange Commission (the “Commission”) or the staff, acting pursuant to delegated authority, declare the filing effective, it does not foreclose the Commission from taking any action with respect to the filing;

·                                          the action of the Commission or the staff, acting pursuant to delegated authority, in declaring the filing effective, does not relieve the Company from its full responsibility for the adequacy and accuracy of the disclosure in the filing; and

·                                          the Company may not assert staff comments and the declaration of effectiveness as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

*****

Very   truly yours,

FAIRFAX   FINANCIAL HOLDINGS LIMITED

/s/Paul Rivett

Paul   Rivett

President

cc:                                       Nicholas P. Panos — Securities and Exchange Commission

Jason Lehner — Shearman & Sterling LLP

Scott Petepiece — Shearman & Sterling LLP

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COMMERCE COURT WEST  |  SUITE 4405, P.O. BOX 247  |  TORONTO  |  ONTARIO  |  M5L 1E8

WWW.SHEARMAN.COM  |  T +1.416.360.8484  |  F +1.416.360.2958

JLehner@shearman.com

April 7,   2017

212.848.7974

BY EDGAR AND COURIER

U.S. Securities and Exchange Commission
 Division of Corporation Finance
 Office of Healthcare & Insurance
 100 F Street, N.E.
 Washington, D.C. 20549
 Attention: Joseph McCann

Re:                             Fairfax Financial Holdings Limited

Registration Statement on Form F-4

Filed February 15, 2017

File No. 333-216074

Ladies and Gentlemen:

This letter responds to the comments contained in the letter from the staff (the “Staff”) of the U.S. Securities and Exchange Commission (the “Commission”), dated March 13, 2017, with respect to the Registration Statement on Form F-4 (File No. 333-216074) of Fairfax Financial Holdings Limited (“Fairfax”) filed with the Commission on February 15, 2017 (the “Form F-4”), and is submitted on behalf of Fairfax.  Fairfax has filed today Amendment No. 1 to the Form F-4 (“Amendment No. 1”).

For the convenience of the Staff, the comments contained in the Staff’s comment letter appear below in bold.  Fairfax’s response to each comment immediately follows the applicable comment.  References in the responses to page numbers are to pages of Amendment No. 1.

In addition to submitting this letter by EDGAR, we are also delivering to the Staff by courier four courtesy copies of this letter together with Amendment No. 1 marked to show the revisions Fairfax has made to the Form F-4, including revisions made in response to the Staff’s comments.

ABU DHABI  |  BEIJING  |  BRUSSELS  |  DUBAI  |  FRANKFURT  |  HONG KONG  |  LONDON  |  MENLO PARK  |  MILAN  |  NEW YORK

PARIS  |  ROME  |  SAN FRANCISCO  |  SÃO PAULO  |  SAUDI ARABIA*  |  SHANGHAI  |  SINGAPORE  |  TOKYO  |  TORONTO  |  WASHINGTON, DC

SHEARMAN & STERLING LLP IS A LIMITED LIABILITY PARTNERSHIP ORGANIZED IN THE UNITED STATES UNDER THE LAWS OF THE STATE OF DELAWARE, WHICH LAWS LIMIT THE PERSONAL LIABILITY OF PARTNERS.

COUNTRY OF PRIMARY QUALIFICATION: UNITED STATES OF AMERICA; NOT QUALIFIED TO PRACTICE ONTARIO LAW.

*DR. SULTAN ALMASOUD & PARTNERS IN ASSOCIATION WITH SHEARMAN & STERLING LLP

Capitalized terms used but not defined in this letter have the meanings attributed to them in Amendment No. 1.

Prospectus Cover Page

1.                                      The disclosures on page 2 and elsewhere indicate that Allied would be the party responsible for paying the “Special Dividend.” Please revise the second and fourth paragraphs to remove any implication that Allied is offering this Special Dividend as part of the tender offer consideration. For example, the disclosure indicates “[f]or each Allied World Share held, Allied World shareholders are being offered…”

In response to the Staff’s comment, the disclosure has been revised on the prospectus cover page and on pages 5 and 20 of Amendment No. 1.

2.                                      While we recognize that the Special Dividend would be “paid outside of the Offer” by Allied and is “condition upon the Offer,” the Special Dividend nevertheless appears to be presented as part of the overall transaction consideration. Please provide us with a brief legal analysis that explains whether or not Rule 14e-1(b) would apply in the event that the dividend amount is altered or dividend is ultimately not authorized to be issued.

We respectfully advise the Staff that the Special Dividend was approved by Allied World shareholders on March 22, 2017.  In the unlikely event that the Special Dividend is subsequently altered or rescinded (which would result in a breach by Allied World of the Merger Agreement and which would require further Allied World shareholder approval), and Fairfax waived the relevant condition to the Offer (which it would not be required to do) less than ten business days from the scheduled expiration date of the Offer, Fairfax would extend the Offer to ensure that the Offer would remain open for at least ten business days from the date that notice of such alteration or rescission of the Special Dividend is first published or sent or given to security holders, in accordance with Rule 14e-1(b).

Questions and Answers About the Offer, page 3

Q. Who is making the Offer?

3.                                      We noticed the representation that “Fairfax has agreed to cause all members of its group, including FFH Switzerland, to comply with all of Fairfax’s obligations in connection with the Offer.” Please advise us which parties will be described as “Filing Persons” on the cover page of Schedule TO and thus become responsible for completion of the signature block at the end of the disclosure statement. Refer to General Instruction K. (1), which defines the term “Offeror” for purposes of Rule

2

14d-100, as well as Rule 14d-1(g)(2), which defines the term “bidder” for purposes of Regulations 14D and 14E.

We respectfully advise the Staff that the parties that will be included as “Filing Persons” on the cover page of Schedule TO (and thus responsible for completion of the signature block at the end of the disclosure document) are (i) Fairfax Financial Holdings Limited, (ii) 1102952 B.C. Unlimited Liability Company, a direct wholly owned subsidiary of Fairfax (“Canada Sub”) and (iii) Fairfax Financial Holdings (Switzerland) GmbH, a limited liability company incorporated under the laws of Switzerland and a direct wholly owned subsidiary of Canada Sub (“FFH Switzerland”).

Q. What consideration is being offered for my Allied World shares?

4.                                      The offer to exchange uses a formula to establish the Fixed Value Stock Consideration, as defined in the prospectus. Given the uncertainty of the total Offer Consideration, as also defined in the prospectus, please provide us with a brief legal analysis that explains why the reliance on such a formula by the bidder(s) is not: (1) inconsistent with their obligation to comply with Item 4 of Schedule TO and corresponding Item 1004(a)(1)(ii) of Regulation M-A, which requires disclosure of the amount of consideration; and (2) Rule 14e-1(b) of Regulation 14E, which requires at least ten business days to remain in the offering period upon a change in the amount of consideration offered.

We respectfully advise the Staff that Fairfax believes the reliance on a formula to determine the Fixed Value Stock Consideration, as defined in the prospectus, is not inconsistent with the bidders’ obligation to comply with Item 4 of Schedule TO and corresponding Item 1004(a)(1)(ii) of Regulation M-A, which requires disclosure of the type and amount of consideration offered to security holders, for the following reasons:

·                                          The bidders have disclosed in the prospectus a specified dollar value of Fairfax subordinate voting shares (“Fairfax shares”) comprising the Fixed Value Stock Consideration (being $12.00 worth of Fairfax shares, as disclosed in Amendment No. 1);

·                                          The formula for determining the number of Fairfax shares to be issued as the Fixed Value Stock Consideration, including the minimum and maximum numbers of Fairfax shares issuable for each Allied World share accepted for exchange, have been disclosed in the prospectus to be disseminated to Allied World shareholders and will remain fixed throughout the duration of the Offer (and if there is a change in the formula or minimum and maximum numbers of Fairfax shares issuable, which would require the parties to amend the Merger Agreement, the Offer will remain open for at least ten business days from such change);

3

·                                          In light of the foregoing, holders of Allied World shares will at all times from the commencement of the Offer until the Acceptance Time know the value offered for each Allied World share exchanged, as well as the exact mechanism for determining the final exchange ratio;

·                                          The final exchange ratio will be determined immediately following the close of the Toronto Stock Exchange (being 4:00 p.m. Eastern time) on the trading day that is two trading days before the Acceptance Time as described in the definition of Fixed Value Stock Consideration in the prospectus (and so, for example, if the Acceptance Time occurs before 9:00 a.m. on a Friday, the Offer will have expired at 11:59 p.m. the preceding Thursday and the final exchange ratio will have been determined immediately following the close of the TSX at 4:00 p.m. on the preceding Wednesday);

·                                          Fairfax intends to publicly announce via press release and on its website, as well as in a filing pursuant to Rule 425 of the Securities Act, the final exchange ratio no later than 4:30 p.m. on the trading day that is two trading days before the Acceptance Time; and

·                                          Allied World shareholders will therefore have until 11:59 p.m. the next day (i.e., more than 30 hours) to tender their Allied World shares in the Offer once the final exchange ratio has been publicly disclosed; in addition, any Allied World shareholders who have previously tendered their Allied World shares in the Offer will be able to withdraw their shares until the Acceptance Time, and the procedures for making tenders and withdrawals have been disclosed in the prospectus that will be disseminated to Allied World shareholders.

We respectfully advise the Staff that the Fixed Value Stock Consideration will not be increased or decreased (which, as noted above, would require the parties to amend the Merger Agreement) unless Fairfax extends the Offer for at least ten business days from the date that notice of such increase or decrease is first published or sent or given to Allied World shareholders, in compliance with Rule 14(e)-1(b) of Regulation 14E.  We respectfully submit that the fact that the number of Fairfax shares that will be issued to tendering Allied World shareholders for this portion of the offer consideration is determined by reference to a formula does not, in our view, in and of itself constitute a change in the amount of such consideration — to the contrary, the amount of the Fixed Value Stock Consideration is fixed at $12.00 per Allied World share tendered.  Absent a change in the Fixed Value Stock Consideration, we therefore respectfully submit that the mere fact that the final exchange ratio will only be determined as set forth above should not require an extension of the Offer under Rule 14(e)-1(b).

4

How will the Cash Consideration component of the Offer Consideration be financed?, page 5

5.                                      Please revise to clarify whether any material conditions to the referenced funding sources exist. Refer to Item 1007(b) of Regulation M-A.

In response to the Staff’s comment, the disclosure has been revised on pages 6 and 115 of Amendment No. 1.

6.                                      Please revise to clarify why the sale to OMERS has been described as an “indirect sale.”

In response to the Staff’s comment, the disclosure has been revised on pages 6 and 115 of Amendment No. 1.

7.                                      Revise to identify the referenced non-core businesses, and also explain why Fairfax has “no ability to control long-term” these referenced businesses.

We respectfully advise the Staff that as of the date hereof, no definitive decisions have been made by Fairfax on the sale of any non-core businesses.  If such a sale were to occur prior to the closing of the Offer, Fairfax would expect it to include the sale of minority equity, joint venture and/or partnership interests of less than 35% in the applicable publicly-listed or privately-owned business that is held within the Fairfax group.  In response to the Staff’s comment, the disclosure has been revised on pages 6 and 115 of Amendment No. 1.

What are the most significant conditions to the Offer?, page 5

8.                                      Please revise to clarify whether the tender offer would remain open for a minimum period of time following the issuance of any notice that Fairfax has waived the Minimum Tender Condition down to the 66.66% threshold or otherwise.

In response to the Staff’s comment, we respectfully acknowledge the Staff’s general position that a waiver of a minimum tender condition constitutes a material change requiring that the tender offer remains open for a minimum of five business days from the date that the material change is first published. Accordingly, the disclosure has been revised on pages 7, 13, 24 and 110 of Amendment No. 1 in response to the Staff’s comment.

The Companies, page 16

9.                                      The disclosure on page 5 references OMERS’ role in financing the Cash Consideration in exchange for approximately 21% of the Allied shares. The Form 6-K filed on March 10, 2017 also discloses Alberta Investment Management’s $500 million commitment, on behalf of “certain of its clients,” as well as “other third

5

party commitments.” Please revise this section to identify OMERS, Alberta Investment Management, the unnamed “clients” and other third parties referenced in the Form 6-K, or advise us why such prospectus disclosure is not required. Please also confirm that each of these parties will be identified as bidders in the forthcoming Schedule TO, or briefly advise us why you do not believe they qualify as such. Refer also to General Instruction K.(1) of Schedule TO and 14d-1(g)(2). For additional guidance, also refer to the Division of Corporation Finance’s November 14, 2000 guidance on “Identifying the Bidder in a Tender Offer” available at: https://www.sec.gov/divisions/corpfin/guidance/ci111400ex_tor.htm

We respectfully advise the Staff that Fairfax does not believe that OMERS, Alberta Investment Management Corporation (“AIMCo”), or the clients and other third parties referenced in the Form 6-K (collectively, the “Co-Investors”) qualify as bidders for purposes of the Schedule TO, for the reasons discussed below.  We further respectfully advise the Staff that the reference to “other third party commitments” refers to two minority investors being CN Canadian Master Trust Fund and Lake Merritt LLC, and the disclosures on pages 6 and 115 of Amendment No. 1 has been revised to include such entities.  The reference to “clients” of AIMCo are to the pension, endowment and government funds in the Province of Alberta, Canada, for which AIMCo serves as investment manager.  We respectfully submit that Fairfax does not believe that identifying the specific pension, endowment and/or government funds on whose behalf AIMCo is investing would provide any material information to investors.

General Instruction K.(1) of Schedule TO defines “offeror” as “any person who makes a tender offer or on whose behalf a tender offer is made.” Rule 14d-1(g)(2) defines “bidder”, in relevant part, the same way.  The Division of Corporation Finance’s November 14, 2000 guidance on “Identifying the Bidder in a Tender Offer” describes the following relevant (but non-exclusive) factors in the analysis of who is the bidder in a tender offer, which the guidance notes is to be determined by the particular facts and circumstances of each transaction:

·                                          Did the person play a significant role in initiating, structuring, and negotiating the tender offer?

·                                          Is the person acting together with the named bidder?

·                                          To what extent did or does the person control the terms of the offer?

·                                          Is the person providing financing for the tender offer, or playing a primary role in obtaining financing?

·                                          Does the pe

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

       DIVISION OF
CORPORATION FINANCE

Mail Stop 4546

March 13, 2017

V. Prem Watsa
Chairman and Chief Executive Officer
Fairfax Financial Holdings Limited
95 Wellington Street West , Suite  800
Toronto, Ontario Canada
M5J 2N7

Re: Fairfax Financial Holdings Limited
  Registration Statement on Form F-4
Filed February 15, 2017
  File No. 333-216074

Dear Mr. Watsa :

We have limited our review of your registration statement to those issues we have
addressed in our comments.  In some of our comments, we may ask you to provide us with
information so we may better understand your disclosure.

Please respond to this letter by amending your registration statement and providing
the requested information.   If you do not be lieve our comments apply to your facts and
circumstances or do not believe an amendment is appropriate, please tell us why in your
response.

After reviewing any amendment to your registration statement and any information
you provide in response to thes e comments, we may have additional comments.

Prospectus Cover Page

1. The disclosures on page 2 and elsewhere indicat e that Allied would be the party
responsible for paying the “Special Dividend.”  Please revise the second and fourth
paragraphs to remove any implication that Allied  is offering this Special Dividend  as
part of the tender offer consideration .  For example, the disclosure indicates “[f]or
each Allied World Share held, Allied World shareholders are being offered…”

V. Prem Watsa
Fairfax Financial Holdings Limited
March 13, 2017
P a g e  | 2

 2. While we recognize that the Special Dividend would be “paid outside of the Offer”
by Allied  and is “condition upon the Offer ,” the Special Dividend nevertheless
appears  to be present ed as part of the overall transaction consideration.   Please
provide us with a  brief legal analysis  that explains  whether  or not  Rule 14e -1(b)
would apply in the event that the dividend amount is altered  or dividend is  ultimately
not authorized to be issued.

Questions and Answers About the Offer, page 3

Q.  Who is making the Offer?

3. We noticed the rep resentation that “Fairfax has agreed to cause all members of its
group, including FFH Switzerland, to comply with all of Fairfax’s obligations in
connection with the Offer.”  Please advise us which parties will be described as
“Filing Persons” on the cover  page of Schedule TO and thus become responsible for
completion of the signature block at the end of the disclosure statement.  Refer to
General Instruction K. (1), which defines the term “Offeror” for purposes of Rule
14d-100, as well as Rule 14d -1(g)(2),  which defines the term “bidder” for purposes of
Regulations 14D and 14E.

Q. What consideration is being offered for my Allied World shares?

4. The offer to exchange uses a formula to establish the Fixed Value Stock
Consideration, as defined in the prospectus.  Given the uncertainty of the total Offer
Consideration, as also defined in the prospectus, please provide us with a brief legal
analysis th at explains why the reliance on such a formula by the bidder(s) is not :  (1)
inconsistent with their obligation to comply with Item 4 of Schedule TO and
corresponding Item 1004(a)(1)(ii) of Regulation M -A, which requires disclosure of
the amoun t of conside ration; and (2)  Rule 14e -1(b) of Regulation 14E, which requires
at least ten business days to remain in the offering period upon a change in the
amount of consideration offered.

How will the Cash Consideration component of the Offer Consideration be finan ced?, page 5

5. Please revise to clarify whether any material conditions to the referenced funding
sources exist.  Refer to Item 1007(b)  of Regulation M -A.

6. Please revise to clarify why the sale to OMERS has been described as  an “indirect
sale.”

7. Revise to i dentify the referenced non-core businesses , and also explain why Fairfax
has “no ability to control long -term” these referenced businesses.

V. Prem Watsa
Fairfax Financial Holdings Limited
March 13, 2017
P a g e  | 3

What are the most significant conditions to the Offer?, page 5

8. Please revise to clarify whether the tender offer w ould remain open for a minimum
period of time following the issuance of any notice that Fairfax has waived the
Minimum Tender Condition down to the 66.66% threshold  or otherwise .

The Companies, page 16

9. The disclosure on page 5 references  OMERS ’ role in financing the Cash
Consideration in exchange for approximately 21% of the Allied shares.  The Form 6 -
K filed on March 10, 2017 also discloses Alberta Investment Management’s $500
million commitment, on behalf of “certain of its clients,” as well a s “other third party
commitments.”  Please revise this section to identify OMERS,  Alberta Investment
Management, the unnamed “clients” and other third parties referenced in the Form 6 -
K, or advise us why such prospectus disclosure is not required .  Please  also confirm
that each of these parties will be identified as bidders in the forthcoming Schedule
TO, or briefly advise  us why you do not believe they qualify as such.  Refer also to
General Instruction K.(1) of Schedule TO and 14d -1(g)(2).  For additiona l guidance,
also refer to the Division of Corporation Finance’s November 14, 2000 guidance on
“Identifying the Bidder in a Tender Offer” available at:
https://www.sec.gov/div isions/corpfin/guidance/ci111400ex_tor.htm

Summary Unaudited Pro Forma Condensed Combined Financial Information, page 32

10. Please advise  where the ratio of earnings to fixed charges  has been disclosed .
Refer to Item 1010(a)(3) of Regulation M -A.

The Off er, page 105

11. Please confirm that the margin requirements referenced in Item 1011(a)(4) of
Regulation M -A will be included via amendmen t.

Withdrawal Rights, page 106

12. Please revise to expressly discuss the availability of the statutory withdrawal rights
under Section 14(d)(5) of the Exchange Act.   Please also include clarifying disclosure
in the introductory Question and Answer section at the forepart of the prospectus.

V. Prem Watsa
Fairfax Financial Holdings Limited
March 13, 2017
P a g e  | 4

Conditions to the Offer, page 108

13. The closing paragraph indicates the offer conditions may waived “at any time from
time to time” , which implies  that offer conditions may be asserted or waived
following offer  expiration.   Please revise to clarify that all conditions to the offer,
other than those conditions dependent upon the rece ipt of government approvals
necessary to consummate the offer, must be satisfied or waived at or prior to the
expiration of the offer.

Validity of Tendered Allied World Shares, page 112

14. We noticed the representation that “FFH Switzerland’s determination will be final
and binding”  and that “FFH Switzerland’s interpretation of the terms and conditions
of the Offer [ ] will be final and binding.”  Please revise to expressly indicate that
security holders may challenge any such  determinations in a court of co mpetent
jurisdiction.

Certain Other Relationships with Allied World, page 219

15. Please explain to us why  the approximate dollar amount of the “reinsurance
transactions” has not been disclosed .  Refer to Item 1005(a) of Regulation M -A.

We remind you that t he company and its management are responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or
absence of action by the staff.

Refer to Rules 460 and 461 regarding requests for acceleration.  Please all ow
adequate time for us to review any amendment prior to the requested effective date of the
registration statement.

Please contact Joseph McCann at (202) 551 -6262 or Nicholas P. Panos at (202) 551 -
3266  with any questions.

Sincerely,

 /s/ Joseph G . McCann for

Suzanne Hayes
Assistant Director
Office of Healthcare & Insurance
cc: Jason Lehner, Esq. – Shearman & Sterling LLP

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COMMERCE COURT WEST  |  SUITE 4405, P.O. BOX 247  |  TORONTO  |  ONTARIO  |  M5L 1E8

WWW.SHEARMAN.COM  |  T +1.416.360.8484  |  F +1.416.360.2958

jlehner@shearman.com

March 3, 2017

+1.416.360.2974

BY EDGAR (FILED AS CORRESPONDENCE)

Mr. Joseph McCann

Staff Attorney

U.S. Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, D.C. 20549

Re:

Fairfax Financial Holdings Limited

Registration Statement on Form F-4

Filed February 15, 2017

Dear Mr. McCann:

On behalf of our client, Fairfax Financial Holdings Limited, which filed a Registration Statement on Form F-4 (the “Form F-4”) with the Securities and Exchange Commission (the “Commission”) on February 15, 2017, in connection with its previously announced exchange offer to acquire all of the outstanding shares of Allied World Assurance Company Holdings, AG (the “Offer”), please find attached as Annex I a draft table listing each of the form requirements of Schedule TO as they relate to the Offer, together with corresponding cross-references (as they will appear in the Schedule TO that Fairfax intends to file with the Commission) to the relevant sections of the preliminary prospectus contained in the Form F-4 (the “Prospectus”) in which such requirements of Schedule TO are satisfied.

*                                         *                                         *

Please do not hesitate to contact the undersigned at (416) 360-2974 with any questions or comments you may have.

ABU DHABI  |  BEIJING  |  BRUSSELS  |  DUBAI  |  FRANKFURT  |  HONG KONG  |  LONDON  |  MENLO PARK  |  MILAN  |  NEW YORK PARIS  |  ROME  |  SAN FRANCISCO  |  SÃO PAULO  |  SAUDI ARABIA*  |  SHANGHAI  |  SINGAPORE  |  TOKYO  |  TORONTO  |  WASHINGTON, DC

SHEARMAN & STERLING LLP IS A LIMITED LIABILITY PARTNERSHIP ORGANIZED IN THE UNITED STATES UNDER THE LAWS OF THE STATE OF DELAWARE, WHICH LAWS LIMIT THE PERSONAL LIABILITY OF PARTNERS.
 COUNTRY OF PRIMARY QUALIFICATION: UNITED STATES OF AMERICA; NOT QUALIFIED TO PRACTICE ONTARIO LAW.

*DR. SULTAN ALMASOUD & PARTNERS IN ASSOCIATION WITH SHEARMAN & STERLING LLP

Yours faithfully,

/s/ Jason Lehner

JL/sjs

cc:                                Derek Bulas — Fairfax Financial Holdings Limited
 Scott Petepiece — Shearman & Sterling LLP
 Sean J. Skiffington — Shearman & Sterling LLP

2

ANNEX I

DRAFT

Schedule TO Item

Prospectus Section containing Required
   Information

Item 1. Summary Term Sheet.

The information required by Item 1001 of Regulation M-A is set   forth in the section of the Prospectus entitled “Summary”.

Item 2. Subject Company Information.

(a) Name and Address.

(b) Securities.

(c) Trading Market and Price.

(a)                       The information   required by Item 1002(a) of Regulation M-A is set forth in the section   of the Prospectus entitled “Summary—The Companies—Allied   World”.

(b)                       The information   required by Item 1002(b) of Regulation M-A is set forth in the section   of the Prospectus entitled “The Offer—The Offer”.

(c)                        The information   required by Item 1002(c) of Regulation M-A is set forth in the section   of the Prospectus entitled “Comparative Per Share Market Price and Dividend   Information”.

Item 3. Identity and Background of Filing Person.

(a)-(c)  Name and Address; Business   and Background of Entities; Business and Background of Natural Persons.

The information required by Items 1003(a)-(c) of   Regulation M-A is set forth in the sections of the Prospectus entitled   “Summary—The Companies—FFH Switzerland,”   “Summary—The Companies—Fairfax,”   “Information About FFH Switzerland,” and “Management of Fairfax,” and in   Fairfax’s Annual Report on Form 40-F for the fiscal year ended   December 31, 2015, filed with the SEC on March 11, 2016,   incorporated by reference in the Prospectus.

Item 4. Terms of the Transaction.

(a)(1) Material Terms — Tender Offer.

(a)(2) Material Terms — Mergers or Similar Transactions.

The information required by Item 1004(a) of Regulation M-A,   except for the information required by Item 1004(a)(1)(ix), which is not   applicable, is set forth in the sections of the Prospectus entitled “The   Offer,” “Comparison of Shareholders’ Rights” and “Material Tax Consequences”.

Item 5. Past Contacts, Transactions, Negotiations and   Agreements.

(a) Transactions.

(b) Significant Corporate Events.

(a)                       The information   required by Item 1005(a) of Regulation M-A is set forth in the sections   of the Prospectus entitled “Related Party Transactions” and “Interests Of   Allied World, FFH Switzerland and Fairfax and their Directors and   Officers—Interests of Fairfax, FFH Switzerland and their Directors and   Executive Officers in the Offer”.

DRAFT

Schedule TO Item

Prospectus Section containing Required
   Information

(b)                       The information   required by Item 1005(b) of Regulation M-A is set forth in the section   of the Prospectus entitled “Background to and Reasons for the   Transactions—Background to the Transactions”.

Item 6. Purposes of the Transaction and Plans or Proposals.

(a) Purposes.

(c) Plans.

(a)                       The information   required by Item 1006(a) of Regulation M-A is set forth in the section   of the Prospectus entitled “Background to and Reasons for the   Transactions—Fairfax’s Reasons for the Transactions”.

(c)                        The information   required by Items 1006(c)(1) through (5) of Regulation M-A is set   forth in the sections of the Prospectus entitled “Plans and Proposals For   Allied World” and “The Merger Agreement—Structure of the Merger; Surviving   Company”; the information required by Items 1006(c)(6) and (7) of   Regulation M-A is set forth in the sections of the Prospectus entitled “The   Offer—Effect of the Offer on the Market for Allied World Shares,” “Plans and   Proposals for Allied World—Delisting and Deregistration—NYSE Listing” and   “Plans and Proposals for Allied World—Delisting and Deregistration—Exchange   Act Registration”.

Item 7. Source and Amount of Funds or Other Consideration.

(a) Source of Funds.

(b) Conditions.

(d) Borrowed Funds.

(a)                       The information   required by Item 1007(a) of Regulation M-A is set forth in the sections   of the Prospectus entitled “The Offer—Terms of the Offer” and “The   Offer—Sources and Amount of Funds”.

(b)                       Not applicable.

(d)                       Not applicable.

Item 8. Interest in Securities of the Subject Company.

(a) and (b) Securities Ownership; Securities Transactions.

The information required by Item 1008 of Regulation M-A is set   forth in the section of the Prospectus entitled “Interests of Allied World,   FFH Switzerland and Fairfax and their Directors and Officers—Interests of   Fairfax, FFH Switzerland and their Directors and Executive Officers in the   Offer—Securities Ownership and Transactions”.

Item 9. Persons/Assets, Retained, Employed,

The information required by Item 1009(a) of

DRAFT

Schedule TO Item

Prospectus Section containing Required
   Information

Compensated or Used.

(a) Solicitations or Recommendations.

Regulation M-A is set forth in the section of the Prospectus   entitled “The Offer—Fees and Expenses”.

Item 10. Financial Statements.

(a) Financial Information.

(b) Pro Forma Information.

(a)

The information required by Item 1010(a) of Regulation M-A   with respect to Fairfax is set forth in the sections of the Prospectus   entitled “Selected Historical Consolidated Financial Data of Fairfax” and   “Unaudited Comparative Historical and Pro Forma   Share Information,” and in the consolidated financial statements of Fairfax   and the accompanying notes incorporated by reference in the Prospectus.

(b)

The information required by Item 1010(b) of Regulation M-A   with respect to Fairfax is set forth in the sections of the Prospectus   entitled “Summary Unaudited Pro Forma   Condensed Combined Financial Information,” “Unaudited Comparative Historical   and Pro Forma Share Information” and   “Unaudited Pro Forma Condensed Combined   Financial Information”.

Item 11. Additional Information.

(a)(1)

(a)(2), (3)

(a)(4)

(a)(5)

(c)

(a)(1)

The information required by Item 1011(a)(1) of Regulation   M-A is set forth in the section of the Prospectus entitled “The Merger   Agreement—Covenants—Allied World Shareholder   Meeting and Shareholder Voting Agreement”.

(a)(2), (3)

The information required by Items 1011(a)(2) and   (3) of Regulation M-A is set forth in the section of the Prospectus   entitled “The Offer—Regulatory Matters”.

(a)(4)

The information required by Item 1011(a)(4) of Regulation M-A   will be set forth in the section of the Prospectus entitled “Plans and   Proposals for Allied World—Margin Regulations” to be included in an amendment   to the Prospectus.

(a)(5)

Not applicable.

(c)

The information required by Item 1011(c) of Regulation M-A   is set forth in the section of the Prospectus entitled “The Merger   Agreement”.

DRAFT

Schedule TO Item

Prospectus Section containing Required
   Information

Item 12. Exhibits.

The information required by Items 1012(a), (b), (d),   (g) and (h) of Regulation M-A have been (or will be filed by   amendment, if indicated by an asterisk below) filed as exhibits to the   Prospectus, as follows:

(a)(1)(i) Form of Letter of Transmittal*

(a)(1)(ii) Notice of Guaranteed Delivery*

(a)(1)(iii) Letter to Brokers, Dealers, Commercial Banks,   Trust Companies and Other Nominees*

(a)(1)(iv) Letter to Clients for Use by Brokers, Dealers,   Commercial Banks, Trust Companies and Other Nominees*

(a)(2) Recommendation Statement of Allied World’s Board of   Directors*

(a)(3) Not applicable.

(a)(4) Prospectus

(a)(5) Summary Advertisement in [The Wall   Street Journal]*  (b) None.

(d) Form of Company Shareholder Voting Agreement,   dated December 18, 2016, among Fairfax Financial Holdings Limited and   certain shareholders of Allied World Assurance Company Holdings, AG

(g) None.

(h)(i) Opinion of Shearman & Sterling LLP   regarding certain U.S. tax matters

(h)(ii) Opinion of Torys LLP, regarding certain Canadian   tax matters

(h)(iii) Opinion of Homburger AG, regarding certain Swiss   tax matters*

Item 13. Information Required by Schedule 13E-3.

Not applicable.

Mail Stop 4628
December 30, 2015

Via E -mail
Paul Rivett
President
Fairfax Financial Holdings Limited
95 Wellington Street West
Suite 800
Toronto, Ontario Canada
M5J 2N7

Re: Fairfax Financial Holdings Limited
 40-F for Fiscal Year Ended December 31, 2014
 Filed March 6, 2015
 File No. 1 -31556

Dear Mr. Rivett :

We refer you to our comment letter dated December 7 , 2015, regarding business contacts
with Sudan and Syria.  We have completed our review of this subject matter.  We remind you
that our comments or changes to disclosure in response to our comments do not foreclose the
Commission from taking any action with respect to the company or the filing and the company
may not asse rt 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 urge all persons who are
responsible for the accuracy and adequacy of the disclosure in the filing to be certain that the
filing includes the information the Securities Exchange Act of 1934 and all applicable rules
require.

Sincerely,

 /s/ Cecilia Blye

Cecilia Blye, Chief
Office of Global Security Risk

cc:  Suzanne Hayes
  Assistant Director
 Division of Corporation Finance

Derek Bulas
General Counsel
Fairfax Financial Holdings Limited

CORRESP
1
filename1.htm

December 18, 2015

By EDGAR

Securities and Exchange Commission

Division of Corporation Finance

100 F Street, NE

Washington, D.C. 20549

Attention:                                         Ms. Cecilia Blye, Chief, Office of Global Security Risk

Re:                             Fairfax Financial Holdings Limited (“Fairfax”)

40-F for Fiscal Year Ended December 31, 2014

Filed March 6, 2015
 Amendment No. 1 to 40-F for Fiscal Year Ended December 31, 2014
 Filed May 6, 2015
 File No. 1-31556

Dear Ms. Blye:

We hereby acknowledge receipt of the comment letter dated December 7, 2015 (the “Comment Letter”) from the Office of Global Security Risk (the “Staff”) of the Securities and Exchange Commission (the “Commission”) concerning the above captioned Form 40-F, as amended (the “Form 40-F”).  On behalf of Fairfax, 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 our responses.  Page number references herein refer to the page numbers of the Exhibits to the Form 40-F, unless otherwise noted.  Terms used but not defined herein have the meanings set forth in the Form 40-F.

1.              You state on page 3 of Exhibit 99.4 to the 40-F that you have a 41.4% interest in Gulf Insurance.  The Syrian Kuwaiti Insurance Company website states that Syrian Kuwaiti Insurance is a member of the Gulf Insurance Company, which currently holds 38.96% of Syrian Kuwaiti Insurance Company’s capital.  On pages 91 and 110 of Exhibit 9.2 to the 40-F you state that your International geographic segment includes countries located in Africa, a region that includes Sudan.

Sudan and Syria are designated by the U.S. Department of State as state sponsors of terrorism, and are subject to U.S. economic sanctions and export controls.  Please describe to us the nature and extent of any past, current, and anticipated contacts with Sudan and Syria, whether through subsidiaries, affiliates, partners, customers, joint ventures or other direct or indirect arrangements.  You should describe any services, products, information or technology you have provided to Sudan or Syria, directly or

indirectly, and any agreements, commercial arrangements, or other contacts you have had with the governments of those countries or entities they control.

Fairfax Response

Fairfax does not have any operations, facilities, branches or employees in either Syria or Sudan.

The 41.4% interest in Gulf Insurance Group (“Gulf”), as disclosed on page 3 of Exhibit 99.4 to the 40-F, represents a minority and non-controlling position in Gulf.  There is another shareholder, Kuwait Project Company Holding K.S.C.P. (“KIPCO”), who we understand owns 44.04% of the shares in the capital of Gulf.  Additionally, Gulf is a publicly traded company, the shares of which are listed for trading on the Kuwaiti Stock Exchange.  We understand that Gulf, in turn, holds a 38.96% interest in Syrian Kuwaiti Insurance Company (“SKIC”).  SKIC is also a publicly traded company, the shares of which are listed for trading on the Damascus Stock Exchange.  We are not involved in Gulf’s investment in SKIC, nor do we have any control over the operations of SKIC.  We also have a 7.15% interest in African Reinsurance Corporation (“Africa Re”) that was acquired on April 7, 2015, which we understand has some insurance arrangements involving Sudan.  Our investment in Africa Re represents a minority and non-controlling position and we are not involved in Africa Re’s business operations in Sudan.

The international geographic segment, as disclosed on pages 91 and 110 of Exhibit 99.2 to the 40-F, includes US$28.6 million of gross premiums written (reference to page 91) and US$26.1 million of net premiums earned (reference to page 110) related to Africa.  The majority of premiums in Africa were written by our OdysseyRe and Advent subsidiaries.  To the best of our knowledge, our international geographic segment does not include any gross premiums written or net premiums earned in Sudan or Syria.

To the best of our knowledge, our only connections to Syria and Sudan are through our investment in Gulf (through our indirect and non-controlling investment in SKIC) and Africa Re.  Furthermore, Fairfax, whether directly or indirectly through its subsidiaries, has not provided any services, products, information or technology to companies or individuals in either of Sudan or Syria, or their respective governments.

2.              Please discuss the materiality of any contacts with Sudan and Syria you describe in response to the comment above, and whether those contacts constitute a material investment risk for your security holders.  You should address materiality in quantitative terms, including the approximate dollar amounts of any associated revenues, assets, and liabilities for the last three fiscal years and the subsequent interim period.  Also, address materiality in terms of qualitative factors that a reasonable investor would deem important in making an investment decision, including the potential impact of corporate activities upon a company’s reputation and share value.  Various state and municipal governments, universities, and other investors have proposed or adopted divestment or similar initiatives regarding investment

2

in companies that do business with U.S.- designated state sponsors of terrorism.  You should address the potential impact of the investor sentiment evidenced by such actions directed toward companies that have operations associated with Sudan and Syria.

Fairfax Response

We consider our indirect and non-controlling investments in SKIC, through Gulf, and Africa Re to be both qualitatively and quantitatively immaterial to Fairfax’s business as a whole.  We also do not believe that our investments in Gulf and Africa Re constitute a material investment risk for our security holders.

Given our minority positions in Gulf and Africa Re, we do not consolidate the financial results of Gulf and Africa Re.  We account for our investment in Gulf using the equity method of accounting.  The carrying value of our investment in Gulf using the equity method of accounting was US$208.3 million (fair value of US$235.9 million), representing 0.58% of our total consolidated assets as at December 31, 2014.  We account for our investment in Africa Re at fair value through profit and loss.  We acquired our investment in Africa Re on April 7, 2015 for US$63.8 million, representing 0.17% of our total consolidated assets as at December 31, 2014 on a pro forma basis (i.e. had we made our investment in Africa Re on December 31, 2014).  We do not consider that our investments involving Gulf or Africa Re would have a negative impact on our reputation or our share value.  We believe that Fairfax investors focus on our stated corporate objective of achieving high rates of return on invested capital and building long-term shareholder value.

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

Fairfax acknowledges that: (i) it 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) it 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 privett@hwic.ca.

Yours very truly,

/s/   Paul Rivett

Paul Rivett

President

3

cc:                                V. Prem Watsa, Chairman and Chief Executive Officer

Fairfax Financial Holdings Limited

David Bonham, Vice President and Chief Financial Officer

Fairfax Financial Holdings Limited

Derek Bulas, General Counsel

Fairfax Financial Holdings Limited

4

Mail Stop 4628

December 7 , 2015

Via E -mail
Paul Rivett
President
Fairfax Financial Holdings Limited
95 Wellington Street West
Suite 800
Toronto, Ontario Canada
M5J 2N7

Re: Fairfax Financial Holdings Limited
 40-F for Fiscal Year Ended December 31, 2014
 Filed March 6, 2015
 Amendment No. 1 to 40-F for Fiscal Year Ended December 31, 2014
 Filed May 6, 2015
 File No. 1 -31556

Dear Mr. Rivett :

We have limited our review of your filing  to your contacts with countries that have been
identified as state sponsors of terrorism, and we have the following comments.  Our review with
respect to this issue does not preclude further review by the Assistant Director group with respect
to other iss ues.  In our comments, we ask you to provide us with information so we may better
understand your disclosure.

General

1. You state on page 3 of Exhibit 99.4 to the 40 -F that you have a 41.4% interest in Gulf
Insurance.  The Syrian Kuwaiti Insurance Company website states that Syrian Kuwaiti
Insurance is a member of the Gulf Insurance Company, which currently holds 38.96% of
Syrian Kuwaiti Insurance Company’s capital.  On pages 91 and 110 of Exhibit 9.2 to the
40-F you state that your International geographic  segment includes countries located in
Africa, a region that includes Sudan.

Sudan and Syria are designated by the U.S. Department of State as state sponsors of
terrorism, and are subject to U.S. economic sanctions and export controls.  Please
describe to  us the nature and extent of any past, current, and anticipated contacts with
Sudan and Syria, whether through subsidiaries, affiliates, partners, customers, joint
ventures or other direct or indirect arrangements.  You should describe any services,
produc ts, information or technology you have provided to Sudan or Syria, directly or

Paul Rivett
Fairfax Financial Holdings Limited
December 7 , 2015
Page 2

 indirectly, and any agreements, commercial arrangements, or other contacts you have had
with the governments of those countries or entities they control.

2. Please discuss the mat eriality of any contacts with Sudan and Syria you describe in
response to the comment above, and whether those contacts constitute a material
investment risk for your security holders.  You should address materiality in quantitative
terms, including the ap proximate dollar amounts of any associated revenues, assets, and
liabilities for the last three fiscal years and the subsequent interim period.  Also, address
materiality in terms of qualitative factors that a reasonable investor would deem
important in ma king an investment decision, including the potential impact of corporate
activities upon a company's reputation and share value.  Various state and municipal
governments, universities, and other investors have proposed or adopted divestment or
similar init iatives regarding investment in companies that do business with U.S. -
designated state sponsors of terrorism.  You should address the potential impact of the
investor sentiment evidenced by such actions directed toward companies that have
operations associa ted with Sudan and Syria.

We urge all persons who are responsible for the accuracy and adequacy of the disclosure
in the filing to be certain that the filing includes the information the Securities Exchange Act of
1934 and all applicable Exchange Act rule s require.   Since the company and its management are
in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy
and adequacy of the disclosures they have made.

 In responding to our comments, please provide a wr itten statement from the company
acknowledging that:

 the company is responsible for the adequacy and accuracy of the disclosure in the filing;

 staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing; and

 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.

You may contact Daniel Leslie, St aff Attorney, at (202) 551 -3876 or me at (202) 551 -
3470 if you have any questions about the comments or our review.

Sincerely,

 /s/ Cecilia Blye

Cecilia Blye, Chief
Office of Global Security Risk

Paul Rivett
Fairfax Financial Holdings Limited
December 7 , 2015
Page 3

 cc:  Suzanne Hayes
  Assistant Director
 Division of Corporation Fin ance

 Derek Bulas
 General Counsel
 Fairfax Financial Holdings Limited

July 3 , 2013

Via E-mail
Mr. Paul Rivett
Vice President, Operations
Fairfax Financial Holdings Limited
95 Wellington Street West, Suite 800
Toronto, Ontario Canada M5J2N7

Re: Fairfax Financial Holdings Limited
  Form 40-F for Fiscal Year Ended December 31, 2012
  Filed March 8, 2013
File No. 001 -31556

Dear  Mr. Rivett :

We have completed our review of your filing. We remind you that our comments
or changes to disclosure in response to our comments do not foreclose the Commission
from taking any action with respect to the company or the filing and the company may
not assert staff comments as a defense in any proceeding initiated by the Commission or
any person under the feder al securities laws of the United States. We urge all persons
who are responsible for the accuracy and adequacy of the disclosure in the filing to be
certain that the filing includes the information the Securities Exchange Act of 1934 and
all applicable rul es require.

Sincerely,

 /s/ Jim B. Rosenberg

Jim B. Rosenberg
Senior Assistant Chief
Accountant

CORRESP
1
filename1.htm

CORRESP

 June 4, 2013

BY EDGAR

 Securities and Exchange Commission

 Division of Corporation Finance

 100
F Street, NE

 Washington, D.C. 20549

Attention:
Mr. Jim B. Rosenberg, Senior Assistant Chief Accountant

 Mr. Mark Brunhofer, Senior Staff Accountant

 Mr. Frank Wyman, Staff
Accountant

Re:
Fairfax Financial Holdings Limited (“Fairfax”)

 Form 40-F for the Fiscal Year Ended December 31, 2012

 Filed
March 8, 2013

 File No. 001-31556

 Dear Sirs/Mesdames:

 We hereby acknowledge receipt of the comment letter dated May 20, 2013
(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. Page number references herein refer to the page
numbers of the Fairfax 2012 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 referred to herein as “the
company”) intends to include the revised disclosure as contemplated in this letter with respect to 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
June 30, 2013 and its Annual Report filed on Form 40-F for the fiscal year ending December 31, 2013. References to “the consolidated financial statements” mean the company’s consolidated financial statements for the year
ended December 31, 2012 included as Exhibit 2 of the Form 40-F. References to “the MD&A” mean the Management’s Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2012
included as Exhibit 3 of the Form 40-F.

 Exhibit 2: Audited Consolidated Financial Statements

Consolidated Statements of Earnings, page 28

1.
Please refer to prior comment 2. We have considered the information provided in your response and do not believe it provides a sufficient basis for the position
taken. We note that paragraph 7 of IAS 8 states that when an IFRS statement specifically applies to a transaction or condition that statement must be followed. We believe Paragraph 14(d)(ii) of IFRS 4 specifically applies. We
note that this paragraph prohibits the netting the expense of reinsurance premiums against the premiums of the related insurance contracts. As a result, please provide us a proposed revised consolidated statements of earnings presentation that does
not offset income or expense from your reinsurance contracts against the expense or income from the related insurance contracts.

 Company’s Response

 Commencing for the second quarter of 2013, the company’s
consolidated statement of earnings will present gross premiums written, net premiums written, and gross, ceded and net premiums earned as follows:

Year ended
December 31

Notes

2012

2011

 Revenue

 Gross premiums written

25

7,398.3

6,743.5

 Net premiums written

25

6,194.1

5,607.9

 Gross premiums earned

7,294.8

6,541.4

 Premiums ceded to reinsurers

9

(1,209.9
)

(1,114.5
)

 Net premiums earned

25

6,084.9

5,426.9

 Interest and dividends

5

409.3

705.3

 Share of profit of associates

5

15.0

1.8

 Net gains on investments

5

642.6

691.2

 Other revenue

25

871.0

649.8

8,022.8

7,475.0

 The company believes that Gross Premiums Written (a gross measure of the insurance exposure assumed by the company during
the period) and Net Premiums Written (arguably the most common measure of the risk retained by the company for its own account) are Key Performance Indicators within the insurance industry and that these indicators should be readily available
to users of the financial statements on the face of the consolidated statement of earnings. The omission of Gross Premiums Written and Net Premiums Written from the face of that financial statement would not be helpful to financial statement users
in identifying the principal Key Performance Indicators management uses when assessing the performance of its business. The company also acknowledges that its consolidated financial statements are prepared on the accrual basis of accounting and that
Gross Premiums Written and Net Premiums Written do not conform with the accrual basis of accounting. However, the company considers it very important and in the best interests of financial statement users to incorporate Gross Premiums Written and
Net Premiums Written into the presentation of revenue on the face of the consolidated statement of earnings and that such presentation is not inconsistent with the spirit of IFRS 4 Paragraph 14(d)(ii) when both measures are presented together.

 Please refer to Appendix A for a full illustration of the company’s consolidated statement of earnings for the years ended
December 31, 2012 and 2011 in the above format.

 Notes to Consolidated Financial Statements

18. Income Taxes, page 75

2.
Please refer to prior comment 6. We acknowledge your proposed new disclosure. However, it does not include an explanation of the factors causing changes in the mix
of profits/losses earned in the Canadian and foreign tax jurisdictions during the periods presented. Please provide us this information as proposed disclosure to be included in future filings.

 2

 Company’s Response

 In note 18 (Income Taxes) to the consolidated financial statements, the company will include the following table summarizing the amount of pre-tax earnings (loss) and the associated income tax provision
(recovery) for Canada, the U.S. and other jurisdictions commencing with its 2013 Annual Report. Explanations of changes in the mix of profit (loss) earned in each jurisdiction is also included in the proposed disclosures below.

The following table summarizes the amount of pre-tax earnings (loss) and the associated provision for (recovery of) income taxes by
jurisdiction.

2012

2011

Canada

U.S.

Other

Total

Canada

U.S.

Other

Total

 Earnings (loss) before income taxes

(372.3
)

447.6

581.5

656.8

(346.0
)

295.3

42.1

(8.7
)

 Provision for (recovery of) income taxes

(8.6
)

86.1

38.5

116.1

(68.0
)

4.0

7.6

(56.5
)

 Net earnings (loss)

(363.7
)

361.5

543.0

540.7

(278.0
)

291.3

34.5

47.8

 Losses before income taxes incurred in Canada in 2012 and 2011 primarily reflected interest expense on long
term debt and net investment losses. Earnings before income taxes in the U.S. of $295.3 in 2011 increased to $447.6 in 2012 principally as a result of the absence of significant catastrophe losses in 2012 relative to 2011. Earnings before income
taxes in other jurisdictions increased from $42.1 in 2011 to $581.5 in 2012 reflecting lower catastrophe losses on a year-over-year basis (Group Re), the gain in 2012 on disposition of the company’s investment in Cunningham Lindsey (Group Re),
favourable reserve development and accretive income from acquisitions (European Runoff).

 Disclosure regarding statutory tax rates will also
be included, as indicated in the prior response letter dated April 18, 2013 (reproduced below).

 The company’s Canadian
statutory income tax rate decreased from 28.3% in 2011 to 26.5% in 2012 due to reductions in federal and provincial income tax rates enacted by the respective governments.

3.
Please refer to prior comment 7. We acknowledge your proposed new disclosure. However, it does not explain the factors underlying key caption changes in your
reconciliations of income tax, as calculated at the statutory and effective tax rates. Please provide us this information for each period presented as proposed disclosure to be included in future filings, particularly for the captions, “Tax
rate differential on income and losses incurred outside Canada” and “Change in unrecorded tax benefit of losses.”

 Company’s Response

 Please refer to the proposed disclosures in the response to
Question 2 above. In addition, the note there referred to will include disclosure similar to the following to further explain the tax rate reconciliation.

 3

 Tax Rate Differential on Income and Losses Earned Outside Canada

The tax rate differential on income and losses incurred outside of Canada in 2012 decreased by $95.9 compared to 2011, primarily as a result
of increased earnings before tax in 2012 at Group Re reflecting lower catastrophe losses on a year-over-year basis and the gain in 2012 on disposition of the company’s investment in Cunningham Lindsey. Group Re’s principal operations are
domiciled outside of Canada where they are taxed at statutory tax rates significantly lower than the Canadian statutory rate.

Unrecorded Tax Benefit of Losses

 The unrecorded tax benefit of losses in 2012 increased by $89.9 compared to 2011, primarily as a result of unrecorded operating and capital losses incurred in Canada of $363.5 (2011 – $36.7),
partially offset by an increase in the utilization of previously unrecorded operating losses at nSpire Re and European Runoff of $189.0 (2011 – $151.4).

 The company’s assessment of its consolidated deferred tax assets and the losses for which deferred tax assets have not been recorded, by jurisdiction, are disclosed in the second-last paragraph of
Note 18 (Income Taxes) located on page 77 of the company’s 2012 Annual Report.

 Exhibit 3: Management’s Discussion and
Analysis of Financial Condition and Results of Operations

 Overview of Consolidated Performance, page 113

4.
Please refer to prior comment 5. We acknowledge the information provided in your response. However, disclosure on pages 63 and 198 appears to indicate that your
inability to cede further adverse reserve development may significantly impact the trend of your future reserve development and underwriting results as compared to prior periods. We continue to believe that investors would benefit from disclosure
that quantifies the impact of your inability to cede further adverse development in future periods. Please provide us proposed disclosure to be included in future filings that quantifies the expected impact of this known trend and uncertainty on
your future financial position, results of operations and cash flows. Also, as applicable, revise your MD&A on a segment basis, accordingly.

 Company’s Response

 The company does not believe that the inability to cede further
adverse reserve development related specifically to acquired companies would significantly impact the trend of its future reserve development and underwriting results compared to prior periods. Reinsurance treaties were historically put into place
to provide the company with sufficient time to improve the operations of acquired companies (for example, by enhancing underwriting guidelines and exiting lines of business with unacceptable risk profiles). Only one such reinsurance treaty remains
in effect; this treaty was initiated in 2001 to cover 2000 and years prior, and had insignificant reinsurance activity in the past two years.

 4

 In recent years the company has not relied on reinsurance treaties to cede significant adverse development
with respect to its acquired companies as the underwriting practices of acquired companies have tended to be consistent with the company’s internal guidelines for its established companies. The company did not intend for the disclosure in its
2012 Annual Report to imply that future adverse development at its acquired companies could have a significantly greater impact on its financial results going forward. Rather, the company intended to convey to the reader that even in the absence of
these historical reinsurance treaties, the impact of adverse development at acquired companies should be reasonably consistent with the experience of recent years. The following MD&A paragraph from page 197 of the company’s 2012 Annual
Report was intended to make this point:

 Although the magnitude of the company’s recoverable from reinsurers balance is significant, a
portion of the balance arose as a result of past acquisitions of companies that had relied heavily on reinsurance and of the company’s greater reliance on reinsurance in prior years, and is not necessarily indicative of the extent that the
company has utilized reinsurance more recently.

 To avoid potential confusion, the company will modify the following paragraph from Note 9
(Reinsurance) as follows, commencing with its 2013 Annual Report (new text in bold-faced type):

 Historically the company has purchased, or has
negotiated as part of the purchase of a subsidiary, adverse development covers as protection from adverse development of 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 in the future, if further adverse reserve development originally protected by these covers were to occur, little if any would be ceded to
reinsurers. The integration of acquired subsidiaries over time reduces the level of uncertainty associated with their reserve development. As such, the company believes replacement of these historical treaties is not warranted and any possibility
of further adverse development of prior years’ reserves is considered in the normal course of the company’s claims reserving and actuarial review processes.

 Sources of Net Earnings, page 120

5.
Please refer to prior comment 9. Your current disclosure on page 150 does not provide all of the information that we requested. Please provide us proposed disclosure
to be included in future filings that explains and quantifies the key factors underlying changes in your income tax expense provision (recovery) in relation to earnings (loss) before income taxes for the Canada and foreign tax jurisdictions for each
period presented.

 Company’s Response

 Please see the responses to Questions 2 and 3 above. The company will incorporate similar disclosures in its 2013 MD&A to explain and quantify the key factors underlying changes in its income tax
provision (recovery) in relation to pre-tax earnings (loss) for the jurisdictions presented.

 5

 Net Earnings by Reporting Segment, page 123

6.
Please refer to prior comment 10. We acknowledge the assertions in your response. However, we continue to believe that the disclosures you highlight are qualitative
in nature and that investors would benefit from a quantification of the impact of your reinsurance activities on underwriting profit (loss) for those segments where this impact is material or has varied materially during the periods presented.
Please provide us this information as proposed disclosure to be included in future filings.

 Company’s Response

 The company quantified the consolidated impact of reinsurance activities on underwriting profit (loss) in its MD&A on page 173 of its
2012 Annual Report. Those figures are derived primarily from Note 9 (Reinsurance) of the 2012 Annual Report. Commencing for the second quarter of 2013, the company will include such disclosure in its quarterly interim reporting and expand the table
to provide detailed quantification of reinsurance activities by reporting segment as illustrated below. The company will also continue to highlight the impact of segment reinsurance activities where significant throughout its MD&A.

December 31, 2012

Insurance

Reinsurance

Insurance
and
Reinsurance

Northbridge

U.S.

Fairfax
Asia

OdysseyRe

Other

Runoff

Total
Fairfax

 Reinsurers’ share of premiums earned

(171.3
)

(278.9
)

(240.5
)

(370.7
)

(102.7
)

(47.2
)

(1,211.3
)

 Commissions earned on reinsurers’ share of premiums earned

18.4

73.0

59.8

78.0

10.3

–

239.5

 Reinsurers’ share of losses on claims

164.5

203.9

198.8

244.4

61.0

157.7

1,030.3

 Release (provision) for uncollecti

May 20, 2013

Via E-mail
Mr. Paul Rivett
Vice President, Operations
Fairfax Financial Holdings Limited
95 Wellington Street West, Suite 800
Toronto, Ontario Canada M5J2N7

Re: Fairfax  Financial Holdings Limited
  Form 40-F for Fiscal Year Ended December 31, 2012
  Filed March 8, 2013
File No. 001 -31556

Dear  Mr. Rivett :

We have reviewed your April 18, 2013 response to our April 4, 2013 letter and have
the following comments.

Please respond to this letter within 10 business days by providing the requested
information or by advising us when you will provide the requested response. If you do not
believe a comment applies to your facts and circumstances, please tell us why in your
response. Please furnish us a letter on EDGAR under the form type label CORRESP that
keys your responses to our comments.

After reviewing the information provided, we may raise additional comments and/or
request that you amend your filing.

Exhibit 2:   Audited Consolidated Financial Statements

Consolidated Statements of Earnings, page 28

1. Please refer to prior comment 2.   We have considered  the information provided in
your response and do not believe it provides a sufficient basis for the position
taken.  We note that paragraph 7 of IAS 8 states that when an IFRS statement
specifically applies to a transaction or condition that statement must be
followed.   We believe Paragraph 14(d )(ii) of IFRS 4 specifically applies.   We
note that this paragraph prohi bits the netting the expense of reinsurance premiums
against the premiums of the related insurance contracts.   As a result, please
provide us a proposed revised consolidated statements of earnings presentation
that does not offset income or expense from your  reinsurance contracts against the
expense or income from the related insurance contracts.

Mr. Paul Rivett
Fairfax Financial Holdings Limited
May 20, 2013
Page 2

 Notes to Consolidated Financial Statements
18. Income Taxes, page 75

2. Please refer to prior comment 6.  We acknowledge your proposed new disclosure.
However, it does not include an explanation of the factors causing changes in the
mix of profits/losses earned in the Canadian and foreign tax jurisdictions during
the periods presented.   Please provide us this information as proposed disclosure
to be included in futu re filings.

3. Please refer to prior comment 7.  We acknowledge your proposed new disclosure.
However, it does not explain the factors underlying key caption changes in your
reconciliations of income tax, as calculated at the statutory and effective tax rates.
Please provide us this information for each period presented as proposed
disclosure to  be included in future filings, particularly for the captions, “Tax rate
differential on income and losses incurred outside Canada” and “Change in
unrecorded tax benefit of losses.”

Exhibit 3:  Management’s Discussion and Analysis of Financial Condition  and Results of
Operations

Overview of Consolidated Performance, page 113

4. Please refer to prior comment 5.  We acknowledge the information provided in
your response.  However, disclosure on pages 63 and 198 appears to indicate that
your inability to cede  further adverse reserve development may significantly
impact the trend of your future reserve development and underwriting results as
compared to prior periods. We continue to believe that investors would benefit
from disclosure that quantifies the impact  of your inability to cede further adverse
development in future periods. Please provide us proposed disclosure to be
included in future filings  that quantifies the expected impact of this known trend
and uncertainty on your future financial position, resu lts of operations and cash
flows. Also, as applicable, revise your MD&A on a segment basis, accordingly.

Sources of Net Earnings, page 120

5. Please refer to prior comment 9.  Your current disclosure on page 150 does not
provide all of the i nformation that we requested. P lease provide us proposed
disclosure to  be included in future filings  that explains and quantifies the key
factors underlying changes in your income tax expense  provision (recovery) in
relation to earnings (loss) before income taxes for the Canada and foreign tax
jurisdictions for each period pre sented .

Mr. Paul Rivett
Fairfax Financial Holdings Limited
May 20, 2013
Page 3

 Net Earnings by Reporting Segment, page 123

6. Please refer to prior comment 10.  We acknowledge the assertions in your
response.  However, we continue to believe that the disclosure s you hi ghlight are
qualitative in nature and that investors would benefit from a quantification of the
impact of your reinsurance activities on underwriting profit (loss) for those
segments where this impact is material or has varied materially during the periods
presented.  Please provide us this information as proposed disclosure to be
included in future filings.

Please contact Frank Wyman, Staff Accountant, at (202) 551 -3660 or Mark
Brunhofer, Senior Staff Accountant , at (202) 551 -3638  if you have any questions
regarding the comments. In this regard, do not hesitate to contact me at (202) 551 -3679.

Sincerely,

  /s/ Jim B . Rosenberg

Jim B. Rosenberg
Senior Assistant Chief
Accountant

CORRESP
1
filename1.htm

CORRESP

 April 18, 2013

 BY EDGAR

 Securities and Exchange Commission

Division of Corporation Finance

 100 F Street,
NE

 Washington, D.C. 20549

Attention:
Mr. Jim B. Rosenberg, Senior Assistant Chief Accountant

Mr. Mark Brunhofer, Senior Staff Accountant

Mr. Frank Wyman, Staff Accountant

Re:
Fairfax Financial Holdings Limited (“Fairfax”)

 Form 40-F for the Fiscal Year Ended December 31, 2012

 Filed
March 8, 2013

 File No. 001-31556

 Dear Sirs/Mesdames:

 We hereby acknowledge receipt of the comment letter dated April 4, 2013
(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. Page number references herein refer to the page
numbers of the Fairfax 2012 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 referred to herein as “the
company”) intends to include the revised disclosure as contemplated in this letter with respect to 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
March 31, 2013 and its Annual Report filed on Form 40-F for the fiscal year ending December 31, 2013. References to “the consolidated financial statements” means the company’s consolidated financial statements for the year
ended December 31, 2012 included as Exhibit 2 of the Form 40-F. References to “the MD&A” means the Management’s Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31,
2012 included as Exhibit 3 of the Form 40-F.

 Exhibit 1: Annual Information Form

 Audit Committee, page 14

1.
In the last sentence on page 14 you indicate that your auditor provides you claims handling services. Please tell us the nature of these services and how they are
not precluded services under Item 2-01(c)(4) of Regulation S-X, addressing each type of service identified in the referenced Item.

 Company’s Response

 The reference to “claims handling services” in the
description of “All other fees” was a typographical error. No such services were provided by PricewaterhouseCoopers LLP (“PwC”), the company’s auditor, in the past several years, including the past two fiscal years and this
was confirmed with PwC. All services provided by PwC in 2012 and 2011 were not precluded services under Item 2-01(c)(4) of Regulation S-X.

Exhibit 2: Audited Consolidated Financial Statements

 Consolidated Statements of Earnings, page 28

2.
You present net premiums earned on the face of your statements of earnings. You also present net losses on claims, albeit as a subtotal of gross losses on claims
less ceded losses. Please tell us why these net presentations are not precluded by paragraph 14(d)(ii) of IFRS 4.

Company’s Response

 The company
acknowledges the guidance in paragraph 14(d)(ii) of IFRS 4 which states that “an insurer shall not offset income or expense from reinsurance contracts against the expense or income from the related insurance contracts.” In determining the
appropriate IFRS presentation of revenue in its consolidated statement of earnings, the company noted that neither IFRS 4 Insurance Contracts nor IAS 18 Revenue specifically define what constitutes revenue from insurance operations and
that several revenue recognition models appeared acceptable based on IFRS 4 paragraph IG25 (reproduced in Appendix A). As described in Note 2 (Basis of Presentation) to the 2012 Annual Report, the company’s policy in these situations is to look
to the hierarchy of guidance in IAS 8 Accounting Policies, Changes in Accounting Estimate and Errors and to applicable guidance under US GAAP.

 FASB Codification paragraph 944-225-S99 under US GAAP contains the following SEC guidance:

 S99-1 The following is the text of Regulation S-X Rule 7-04, Income Statements.

 The purpose of this rule is to indicate the various items which, if applicable, should appear on the face of the income statements and in the notes thereto filed for persons to whom this article pertains.
(See 210.4–01(a).)

 2

 1. Premiums. Include premiums from reinsurance assumed and deduct premiums on reinsurance
ceded. Where applicable, the amounts included in this caption should represent premiums earned.

 The above guidance indicates that under
US GAAP, revenue for an insurance company would be comprised of net premiums earned. The company considers this definition of revenue to be acceptable under IFRS without contravening paragraph 14(d)(ii) of IFRS 4 because the company viewed net
premiums earned as the most relevant measure of revenue; hence ceded premiums constituted contra revenue rather than an expense. The Implementation Guidance to IFRS 4 paragraph IG25 (reproduced in Appendix A) further supports this view by permitting
variation in practice in respect of the disclosure of revenue and expenses of an insurer.

 Finally, the company believes its method of
presentation to be the most useful to readers of the consolidated financial statements in accordance with the IFRS Conceptual Framework, particularly paragraphs QC12 to QC18 (reproduced in Appendix A). Net premiums earned was observed to be a
commonly used measure of revenue under Canadian GAAP prior to the adoption of IFRS, under existing US GAAP and for IFRS preparers in Europe including Aviva plc and Zurich Financial Services Group. Insurance company performance is also typically
measured by the investment community using various ratios, including the combined ratio, expense ratio, and loss ratio, all of which depend on net premiums earned as an input. Therefore the company concluded that net premiums earned was both a
useful measure of revenue for readers of the financial statements and a reasonable measure of revenue among the alternatives available.

 In
addition to presenting net premiums earned, the company has also presented gross premiums written and net premiums written to provide financial statement users insight into the extent of the company’s reliance on reinsurance. Such information,
combined with the disclosures in note 8 (Insurance Contract Liabilities) and note 9 (Reinsurance) to the consolidated financial statements would permit a reader to determine the impact of reinsurance. For example, a reader could determine gross
premiums earned by taking the gross premiums written as disclosed on the statement of earnings in combination with the change in the provision for unearned premiums disclosed in note 8.

 Notes to Consolidated Financial Statements

 3. Summary of Significant
Accounting Policies – Investments in associates, page 35

3.
In the first paragraph on page 36 you indicate that the difference between your end of the reporting period and that of your associates is generally no more than
three months. As paragraph 25 of IAS 28 limits the maximum lag to three months, please tell us which associates have a lag of greater than three months and for each such associate tell us the following:

•

 the carrying value of your investment;

•

 your share of earnings in 2012 and 2011;

•

 the lag period you use; and

•

 an explanation as to why you cannot obtain financial statements within three months of your period end.

 3

 Company’s Response

 The company acknowledges the guidance in paragraph 25 of IAS 28 that limits the maximum lag to three months when applying the equity method of accounting to its investment in associates. The
company’s financial reporting for its associates complies with this guidance with the exception of two investments in private companies that together had a carrying value of $8.4 and $6.4 at December 31, 2012 and 2011 respectively
(representing 0.6% and 0.7% of the carrying value of the company’s associates, respectively). The company’s share of the pre-tax net earnings (loss) for those two associates totaled $2.0 and ($1.0) for the fiscal years ended
December 31, 2012 and 2011 respectively. One of these associates was subsequently sold in the first quarter of 2013. The company permitted a reporting lag of greater than three months specifically for those two associates on the basis of
materiality, and to a lesser degree, their status as private enterprises that do not provide quarterly financial reports.

 In its future
filings, the company will clarify its accounting policy as disclosed in note 3 (Summary of Significant Accounting Policies) to the consolidated financial statements to state that the difference between the end of its reporting period and that of its
associates is no more than three months. The materiality of any potential differences from this policy will be evaluated in accordance with paragraph 8 of IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.

5. Cash and Investments, page 50

4.
Please explain to us where the pledged assets in the first table on page 51 and those pledged to Lloyd’s, totaling $4.0 billion at December 31, 2012, are
classified on your consolidated balance sheet. Provide us proposed disclosure to be included in future filings that clarifies where these assets are recorded. Separately explain to us why these pledged assets are not specifically segregated on your
balance sheet like the assets pledged for short sale and derivative obligations and reference for us the authoritative literature you rely upon to support your presentation.

 Company’s Response

 The pledged assets on page 51 of the company’s 2012 Annual
Report, consisting of regulatory deposits and security for reinsurance and other, and those pledged to Lloyd’s on page 78, are primarily included in “Portfolio investments – Bonds” on the consolidated balance sheet.

 4

 The company proposes to add the following disclosure (in bold-faced type) to note 5 (Investments) in its
future filings to address where assets pledged in respect of regulatory deposits and security for reinsurance is recorded:

The table that follows summarizes pledged assets (excluding assets pledged in favour of Lloyd’s (note 20) and assets pledged for
short sale and derivative obligations) by the nature of the pledge requirement. Pledged assets are primarily included within “Portfolio investments – Bonds” on the consolidated balance sheet.

The company proposes to add the following disclosure (in bold-faced type) to note 20 (Contingencies and Commitments) in its future filings to address
where assets pledged to Lloyd’s is recorded:

 OdysseyRe, Advent and RiverStone (UK) (“the Lloyd’s
participants”) participate in Lloyd’s through their 100% ownership of certain Lloyd’s syndicates. The Lloyd’s participants have pledged securities and cash, with a fair value of $604.3 and $24.2 respectively as at
December 31, 2012, in deposit trust accounts in favour of Lloyd’s based on certain minimum amounts required to support the liabilities of the syndicates as determined under the risk-based capital models and on approval by Lloyd’s.
Pledged securities and restricted cash are primarily included within “Portfolio investments – Bonds” and “Portfolio investments – Subsidiary cash and short term investments” respectively, on the consolidated balance
sheet. The Lloyd’s participants have the ability to substitute these securities with other securities subject to certain admissibility criteria. These pledged assets effectively secure the contingent obligations of the Lloyd’s
syndicates should they not meet their obligations. The Lloyd’s participants’ contingent liability to Lloyd’s 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.

 IFRS 9
Financial Instruments paragraph 3.2.23 provides guidance on the measurement and presentation of financial instruments pledged as collateral. The relevant portion of the IFRS 9 guidance is reproduced below.

If a transferor provides non-cash collateral (such as debt or equity instruments) to the transferee, the accounting for the collateral by
the transferor and the transferee depends on whether the transferee has the right to sell or repledge the collateral and on whether the transferor has defaulted. The transferor and transferee shall account for the collateral as follows:

(a)
If the transferee has the right by contract or custom to sell or repledge the collateral, then the transferor shall reclassify that asset in its statement of financial
position (eg as a loaned asset, pledged equity instruments or repurchase receivable) separately from other assets.

 The
company’s pledged assets in respect of regulatory deposits, security for reinsurance and Lloyd’s participants do not permit the transferee to sell or repledge the collateral. Therefore in accordance with IFRS 9 paragraph 3.2.23, the
company has not segregated those pledged assets on its consolidated balance sheet.

 5

 9. Reinsurance, page 63

5.
You state that in the past a significant amount of adverse reserve development has been ceded under your reinsurance treaties and that if further adverse reserve
development were to occur, little if any could be ceded to reinsurers in future periods. Please provide us proposed MD&A disclosure to be included in future filings that describes this uncertainty regarding adverse development and quantifies the
expected impact of on your future financial position and operating results.

 Company’s Response

The statement referred to above by the Staff was in the context of the company’s acquisition of subsidiaries. The company manages adverse
development of prior years’ reserves for acquisitions through extensive due diligence prior to acquisition that includes review of the underlying case reserves and actuarial review. To reduce the level of uncertainty regarding adverse
development of the reserves of acquirees, the company has in the past: (i) required an indemnity from the seller for future adverse development, or (ii) structured a portion of the purchase price to be contingent on the ultimate
development of the prior years’ claims, or (iii) adjusted the purchase consideration to reflect the degree of uncertainty regarding adverse development of reserves. Historical treaties have not been replaced with new treaties because over
time the company is able to ensure its acquired subsidiaries adhere to internal reserving guidelines and measures are also taken to exit lines of business whose risk profiles are not acceptable to the company. Any future adverse development and its
impact on the company’s financial position and operating results stemming from acquired subsidiaries would be analyzed and considered as part of the company’s customary claims reserving and actuarial review processes.

The uncertainty regarding adverse development of the company’s claims reserves (including the claims reserves of acquired subsidiaries) is discussed
extensively in its consolidated financial statements, specifically note 3 (Summary of Significant Accounting Policies), note 8 (Insurance Contract Liabilities), note 9 (Reinsurance), note 24 (Financial Risk Management) and within the MD&A
section entitled “Components of Consolidated Balance Sheets”, specifically the subsections “Provision for Losses and Loss Adjustment Expenses”, “Asbestos and Pollution” and “Recoverable from Reinsurers”.
Therefore the company does not propose any additional

April 4, 2013

Via E-mail
Mr. Paul Rivett
Vice President, Operations
Fairfax Financial Holdings Limited
95 Wellington Street West, Suite 800
Toronto, Ontario Canada M5J2N7

Re: Fairfax Financial Holdings Limited
  Form 40-F for Fiscal Year Ended December 31, 2012
  Filed March 8, 2013
File No. 001 -31556

Dear  Mr. Rivett :

We have reviewed your filing and have the following comments.  In our
comments, we ask you to provide us with information so we may better understand your
disclosure.

Please respond to this letter within 10 business days by providing the requested
information or by advising us when you will provide the requested response.   If you do
not believe a comment app lies to your facts and circumstances, please tell us why in your
response.  Please furnish us a letter on EDGAR under the form type label CORRESP that
keys your responses to our comments.

After reviewing the information provided, we may raise additional  comments
and/or request that you amend your filing.

Exhibit 1:  Annual Information Form
Audit Committee, page 14

1. In the last sentence on page 14 you indicate that your auditor provides you claims
handling services.  Please tell us the nature of these s ervices and how they are not
precluded services under Item 2 -01(c)(4)  of Regulation S -X, addressing each type
of service identified in the reference d Item.

Mr. Paul Rivett
Fairfax Financial Holdings Limited
April 4, 2013
Page 2

 Exhibit 2:  Audited Consolidated Financial Statements

Consolidated Statements of Earnings, page  28

2. You present net premiums earned on the face of your statements of earnings.  You
also present net losses on claims, albeit as a subtotal of gross losses on claims less
ceded losses.  Please tell us why th ese net p resentation s are not precluded by
paragraph 14(d)(ii) of IFRS 4 .

Notes to Consolidated Financial Statements

3. Summary of Significant Accounting Policies
Investments in associates, page 35

3. In the first paragraph on page 36 you indicate that the difference between your
end of the reporting period and that of your associates is generally no more than
three months.  As paragraph 25 of IAS 28 limits the maximum lag to three
months, please tell us which associates have a lag of greater than three months
and for each such associate tell  us the following:
 the carrying value of your investment;
 your share of earnings in 2012 and 2011;
 the lag period you use; and
 an explanation as to why you cannot obtain financial statements within three
months of your period end.

5. Cash and Investments,  page 50

4. Please explain to us where the pledged assets in the first table on page 51 and
those pledged to Lloyd’s, totaling $4.0 billion at December 31, 2012, are
classified on your consolidated balance sheet.  Provide us proposed disclosure to
be includ ed in future filings that clarifies where these assets are recorded.
Separately explain to us why these pledged assets are not specifically segregated
on your balance sheet like the assets pledged for short sale and derivative
obligations and reference fo r us the authoritative literature you rely upon to
support your presentation.

9. Reinsurance, page 63

5. You state that in the past a significant amount of adverse reserve development has
been ceded under your reinsurance treaties and that if further adve rse reserve
development were to occur, little if any could be ceded to reinsurers  in future
periods.  Please provide us proposed MD&A disclosure to be included in future
filings  that describes this uncertainty regarding adverse development  and

Mr. Paul Rivett
Fairfax Financial Holdings Limited
April 4, 2013
Page 3

 quantifies t he expected impact of o n your future  financial position and operating
results .

18. Income Taxes, page 75

6. Please provide us proposed disclosure to be included i n future filings that
describes changes in your  domestic tax rate and other jurisdiction tax rates and
explains factors underlying changes  in the mix of profits/losses earned in the
different jurisdictions for each period presented.   Refer to paragraphs 81(d) and
85 in IAS 12.

7. Please provide us proposed disclosure to be included in future filings that
describes t he factors underlying changes in the captions in your reconciliations of
income tax calculated at the statutory and effective tax rates, part icularly changes
in the  “Tax rate differential on income and losses incurred outs ide Canada” and
“Change in unrec orded tax benefit of losses.”  Refer to paragraph 81 of IAS 12.

20. Contingencies and Commitments, page 78

8. You assert that the financial effect of uninsured litigation loss exposure on your
financial position is not material.  Please provide us proposed disclosure to be
included in future filings under paragraph 86 of IAS 37 that discusses each known
contingenc y that could have a material impact on your results of operations or
cash flows in any period.  In this regard, it appears that the requirement to
disclose an estimate of a contingency’s financial effect is not limited to its
potential impact on the balanc e sheet.

Exhibit 3:  Management’s Discussion and Analysis of Financial Condition and Results of
Operations

Sources of Net Earnings, page 120

9. Please provide an analysis of income tax expense , including a description of the
factors underlying changes in  this expense  for each period pre sented, as proposed
disclosure to  be included in future filings.

Net Earnings by Reporting Segment, page 123

10. Please provide us proposed MD&A disclosure to be included in future filings that
quantifies the impact of your  reinsurance activities on your underwriting profit
(loss) for each segment and explains the factors underlying changes in this impact
for each period presented.

Mr. Paul Rivett
Fairfax Financial Holdings Limited
April 4, 2013
Page 4

 We urge all persons who are responsible for the accuracy and adequacy of the
disclosu re in the filing to be certain that the filing includes the information the Securities
Exchange Act of 1934 and all applicable Exchange Act rules require.   Since the company
and its management are in possession of all facts relating to a company’s disclosu re, they
are responsible for the accuracy and adequacy of the disclosures they have made.

  In responding to our comments, please provide a written statement from the
company acknowledging that:

 the company is responsible for the adequacy and accuracy of the disclosure in the
filing;
 staff comments or changes to disclosure in response to staff comments do not
foreclose the Commission from taking any action with respect to the filing; and
 the company may not assert staff comments as a defense in any proc eeding
initiated by the Commission or any person under the federal securities laws of the
United States.

Please contact Frank Wyman, Staff Accountant, at (202) 551 -3660 or Mark
Brunhofer, Senior Staff Accountant , at (202) 551 -3638  if you have any question s
regarding the comments. In this regard, do not hesitate to contact me at (202) 551 -3679.

Sincerely,

 /s/ Jim B. Rosenberg

Jim B. Rosenberg
Senior Assistant Chief
Accountant

July 27 , 2012

Via E-mail
Mr. Bradley P. Martin
Vice President, Strategic Investments
Fairfax Financial Holdings Limited
95 Wellington Street West, Suite 800
Toronto, Ontario Canada  M5J2N7

Re: Fairfax Financial Holdings Limited
  Form 40-F for Fiscal Year Ended December 31, 2011
  Filed March 9, 2012
File No. 001 -31556

Dear  Mr. Martin:

We have completed our review of your filing. We remind you that our comments
or changes to disclosure in response to our comments do not foreclose the Commission
from taking any action with respect to the company or the filing and the company may
not assert staff comments as a defense in any proceeding initiated by the Commission or
any person u nder the federal securities laws of the United States. We urge all persons
who are responsible for the accuracy and adequacy of the disclosure in the filing to be
certain that the filing includes the information the Securities Exchange Act of 1934 and
all applicable rules require.

Sincerely,

/s/ Joel Parker

Joel Parker
Accounting Branch Chief

CORRESP
1
filename1.htm

CORRESP

 June 26, 2012

 BY EDGAR

 Securities and Exchange Commission

Division of Corporation Finance

 100 F Street,
NE

 Washington, D.C. 20549

Attention:
Mr. Jim B. Rosenberg, Senior Assistant Chief Accountant

Ms. Lisa Vanjoske, Assistant Chief Accountant

Mr. Frank Wyman, Staff Accountant

Re:
Fairfax Financial Holdings Limited (“Fairfax”)

 Form 40-F for the Fiscal Year Ended December 31, 2011

 Filed
March 9, 2012 and Amended on March 20, 2012

 File No. 001-31556

Dear Sirs/Mesdames:

 We hereby acknowledge
receipt of the comment letter dated June 13, 2012 (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 2011 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 referred to herein as “the company”) intends to include the revised disclosure as contemplated in
this letter with respect to 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 June 30, 2012 and its Annual Report filed on Form 40-F for the fiscal
year ending December 31, 2012. References to “the consolidated financial statements” means the company’s consolidated financial statements for the year ended December 31, 2011 included as Exhibit 2 of the Form 40-F.

 Notes to Consolidated Financial Statements

8. Insurance Contract Liabilities, page 57

1.
Your disclosure appears to indicate that the fair values and carrying values for your insurance and reinsurance contracts are calculated in a consistent manner,
except for the discounting of projected cash flows and the incorporation of a margin for risk and uncertainty in your determination of fair value. The differences between these calculations, however, appear to be relatively small in relation to the
potentially significant impact of discounting. Please quantify for us the separate impact of discounting and margin for risk and uncertainty and explain the factors that have caused these amounts to change for each period presented. Also, if a
margin for risk and uncertainty is not included in your determination of carrying value, please explain your basis for omitting it. If this margin is reflected in the carrying value, please provide us proposed disclosure to be included in future
filings that quantifies this amount and explains the factors you considered in changing this assumption for each period presented. Refer to paragraphs 37C and 37D of IFRS 4.

Response 1:

 The tables below quantify separately the impact of discounting and the margin for risk and uncertainty in the determination of the fair value of the company’s insurance and reinsurance contracts at
each reporting date shown. The margin for risk and uncertainty is calculated in accordance with guidance issued by the Canadian Institute of Actuaries in its technical publication titled “Margins for Adverse Deviations for Property and Casualty
Insurance”.1 The margin for risk and uncertainty
reflects the degree of uncertainty of the best estimate assumption of the insurance contract liability (i.e. the carrying value). The principal factors that the company considers when determining the margin for risk and uncertainty are: the
volatility of the lines of business written; familiarity with the lines of business; quantity of reinsurance purchased; credit quality of reinsurers; and a risk margin for future changes in interest rates. On an annual basis, the company analyzes
its cash flow projections and assesses the variables to be incorporated into the calculations of the fair value of the company’s insurance and reinsurance contracts. On a quarterly basis, the company monitors its assumptions for significant
changes which would impact the disclosure of the fair value of insurance and reinsurance contracts made annually.

1
 The publication can be accessed at http://www.actuaries.ca/members/publications/2009/209138e.pdf

- 2 -

 In the tables below, the fair value of insurance and reinsurance contracts is determined
from the carrying value by deducting the impact of discounting and then adding the margin for risk and uncertainty. The difference between the carrying value and fair value of the contracts appears to be relatively small at December 31, 2011
because the current interest rate environment results in the impact of discounting being similar in amount to the margin for risk and uncertainty. Changes in the interest rate environment in the future may cause divergence between these values.

Insurance Contracts

December 31,
2011

December 31,
2010

January 1,
2010

 Carrying value

19,719.5

18,170.2

16,418.6

 Less: impact of discounting

(2,353.0
)

(2,686.1
)

(2,277.8
)

 Add: margin for risk and uncertainty

2,535.5

2,255.5

1,733.1

 Fair value

19,902.0

17,739.6

15,873.9

Ceded Reinsurance Contracts

December 31,
2011

December 31,
2010

January 1,
2010

 Carrying value

  3,884.9

  3,509.7

  3,308.3

 Less: impact of discounting

(513.3
)

(602.8
)

(641.1
)

 Add: margin for risk and uncertainty

403.8

347.0

375.3

 Fair value

3,775.4

3,253.9

3,042.5

 The discount rate applied to the carrying value of insurance and reinsurance
contracts is derived from the expected return on the company’s investment portfolio. At December 31, 2011, the expected investment return was somewhat lower than that at December 31, 2010 due to continuing challenging economic
conditions, resulting in a lower discount rate and therefore higher discounted values (as a percentage of carrying values). For example, fixed income investments constitute a significant proportion of the company’s investment portfolio, and the
yield on 10-year US treasuries decreased from 3.30% at December 31, 2010 to 1.89% at December 31,
20111, illustrating one factor which contributed to the
lower expected investment return at the end of 2011. In comparison, the discount rate, and hence discounted values (as a percentage of carrying values) was relatively unchanged at December 31, 2010 compared to January 1, 2010 as the
expected investment returns were similar at the two dates.

 The margin for risk and uncertainty at December 31, 2011 had
increased slightly compared to December 31, 2010 (as a percentage of carrying value), and similarly, had also increased slightly from January 1, 2010 to December 31, 2010, due to an upward trend in the margin for interest rate risk
over the past two years.

 The carrying value (or nominal value) of insurance and reinsurance contracts does not include an
explicit margin for risk and uncertainty. The company’s accounting policies with respect to insurance and reinsurance contracts prior to the transition to IFRS on January 1, 2010, were in compliance with Canadian GAAP, which did not
require or restrict the use of discounting or the addition of a margin for risk and uncertainty on property and casualty insurance contracts. The company’s accounting policy choice was to establish reserves on an undiscounted basis, except for
workers’ compensation indemnity lifetime benefit claims. Except for certain specific matters, IFRS 4 permits companies to continue their pre-existing accounting policies for insurance contracts. On transition to IFRS, no changes were made to
the company’s then existing accounting policies for insurance and reinsurance contracts (with the exception of the treatment of some specific structured settlements as described in note 30, item (5) to the company’s consolidated
financial statements. Hence the carrying values of the company’s insurance and reinsurance contracts under IFRS continue to be recorded based upon management’s best estimate of the undiscounted ultimate expected claims payments for
incurred losses, without an explicit margin for risk and uncertainty.

1
 http://www.treasury.gov/resource-center/data-chart-center/interest-rates/pages/TextView.aspx?data=yieldYear&year=2010

- 3 -

20.
Contingencies and Commitments, page 74

2.
You do not appear to have provided all of the disclosure described in paragraphs 84-92 of IAS 37, such as a quantification of your litigation loss provisions and an
estimate of the reasonably likely financial impact of related contingent liabilities. Please provide us proposed disclosure to be included in future filings or explain to us your basis for omitting this information.

Response 2:

 Lawsuits – item (a)

 This paragraph in the company’s
consolidated financial statements provides a detailed description of the class action lawsuit filed on July 25, 2011 in which the company is named as a defendant. The last sentence of this paragraph also indicates that the company has not
recorded a provision in its financial statements in regards to this lawsuit.

 In accordance with IAS 37, the company had
carefully considered the potential financial impacts of this lawsuit, and the expected timing of any resulting outflows of economic benefits. Given the very preliminary stage of this lawsuit the company had determined that (i) the criteria for
recording a provision, as described in IAS 37 paragraph 14, had not been met, and (ii) it was not practicable to estimate the financial effects of the lawsuit.

 Commencing in its interim financial statements for the quarter ending June 30, 2012, the company will enhance the last sentence of the paragraph to more clearly articulate its adherence to paragraph
91 of IAS 37 as follows (proposed changes in bold and underlined typeface):

 … If their motion to dismiss the lawsuit is
not successful, Fairfax, OdysseyRe and the named directors and officers intend to vigorously defend against the lawsuit (as they did in the prior lawsuit mentioned above). and The financial effects, if
any, of this lawsuit cannot be practicably determined at this time and the company’s financial statements include no provision for loss in this matter. The company will update this assessment as information becomes
available.

- 4 -

 Lawsuits – item (b)

This paragraph in the company’s consolidated financial statements provides a detailed description of the lawsuit filed by the
company on July 26, 2006 against a number of defendants alleged to have participated in a stock market manipulation scheme involving Fairfax shares.

 Given that significant motion practice remains and that discovery is ongoing in this lawsuit, the company cannot practicably estimate the financial effects of this lawsuit or the counterclaim. Commencing
in its interim financial statements for the quarter ending June 30, 2012, the company will enhance the last sentence of the paragraph to more clearly articulate its adherence to paragraph 91 of IAS 37 as follows (proposed changes in bold and
underlined typeface):

 …The ultimate outcome of any litigation is uncertain. The financial effects,
if any, of this lawsuit and the counterclaim cannot be practicably determined at this time, and the company’s financial statements include no anticipated recovery from the lawsuit and no provision for loss on the
counterclaim. The company will update this assessment as information becomes available.

 Other

 Fairfax head office legal counsel had evaluated any significant existing lawsuits affecting operating companies in the
consolidated group up to the date of release of the consolidated financial statements and determined that the potential financial impact of such lawsuits were insignificant to the financial condition of the individual operating companies to which
they related, and were cumulatively insignificant to Fairfax as a whole. Therefore the company did not provide detailed disclosures under IAS 37 with respect to these lawsuits as such disclosures were not material to an understanding of the
financial statements.

 Legal counsel at Fairfax head office is directly involved in any lawsuits concerning Fairfax. In
addition, the company employs a rigorous process to ensure any significant lawsuits affecting operating companies in the consolidated group are brought to the attention of head office:

(i)
Lawsuits that arise at operating companies are first evaluated by legal counsel and senior management of the operating company or companies involved;

(ii)
To the extent that any such matters are considered significant to the financial condition of the operating company, operating company management will include details in
its management report to Fairfax head office which is prepared quarterly;

(iii)
The CEO and CFO of each operating company provide quarterly certificates attesting to the accuracy of the financial reports provided to Fairfax head office. This
certification also includes a representation with respect to the status of any outstanding litigation; and

(iv)
Operating company and Fairfax head office legal counsels maintain regular communication to keep abreast of legal and other matters that may impact the insurance
industry and one or more of Fairfax’s operating companies.

 Fairfax head office legal counsel is confident
that the above process keeps it informed of any significant lawsuits in a timely manner and allows for proper oversight.

- 5 -

24.
Financial Risk Management, page 83

3.
Your reported catastrophe losses of $1 billion in 2011 appears to significantly exceed your limit on company-wide catastrophe loss exposure, which is one year’s
normalized earnings before income taxes. Please provide us proposed disclosure to be included in future filings that describes and quantifies how your risk mitigation programs were designed to limit catastrophe loss exposures. Also, quantify this
catastrophe loss limit. Refer to paragraphs 39 of IFRS 4 and 34 of IFRS 7.

 Response
3:

 The company’s catastrophe losses of $1 billion in 2011 were within the company’s established upper limit of
$1.6 billion for catastrophe loss exposure. Consistent with the company’s philosophy of taking a long term view of its investments and operations, the company calculates normalized net earnings before income taxes based on its long term
objective of achieving a 15% annual return on common shareholders’ equity as follows:

 Common shareholders’ equity at December 31, 2010

7,697.9

 Achieve an annual increase of 15% in common shareholders’ equity

x 15
%

 After-tax net earnings required to achieve target

1,154.7

 Gross-up for tax at 2011 statutory tax rate of 28.3%

455.7

 Company-wide limit for catastrophe losses in 2011 (pre-tax)

1,610.4

 Actual catastrophe losses experienced in 2011

1,021.0

 The company believes its long term objective of achieving a 15% annual return on common
shareholders’ equity is a reasonable basis for calculating normalized net earnings given that it achieved compounded returns on common shareholders’ equity of 16.4% and 17.6% in the 15 and 20 year periods ended December 31, 2010,
respectively.

 As a secondary measure of whether the catastrophe limit determined above is reasonable from a shorter term
perspective, the company also calculated a normalized net earnings figure based on its insurance and reinsurance operations and investment returns over a rolling 10 year period.

- 6 -

Combined
ratio

Investment
return (%)

2001

120.1

7.1

2002

101.5

11.2

2003

97.6

11.3

2004

96.9

6.5

2005

107.7

6.5

2006

95.5

8.1

2007

94.9

14.4

2008

106.2

16.4

2009

99.8

12.2

2010

103.5

3.8

10 year average

102.4

9.8

 The 10 year average combined ratio and investment return are a

June 1 3, 2012

Via E-mail
Mr. Bradley P. Martin
Vice President, Strategic Investments
Fairfax Financial Holdings Limited
95 Wellington Street West, Suite 800
Toronto, Ontario Canada M5J2N7

Re: Fairfax Financial Holdings Limited
  Form 40-F for Fiscal Year Ended December 31, 2011
  Filed March 9, 2012  and Amended on March 20, 2012
File No. 001 -31556

Dear  Mr. Martin:

We have limited our review  to only your financial statements and related
disclosures and do not intend to expand our review to other portions of your document .
In our comment s, we ask you to provide us with information so we may better understand
your disclosure.

Please respond t o this letter within 10 business days by  providing the requested
information or by advising us when you will provide the requested response.   If you do
not believe a comment applies to your facts and circumstances, please tell us why in your
response.   Please furnish us a letter on EDGAR under the form type label CORRESP that
keys your response s to our comment s.

After reviewing the information provided, we may raise additional comments
and/or request that you amend your filing.

Notes to Consolidated Fin ancial Statements
8. Insurance Contract Liabilities, page 57

1. Your disclosure appears to indicate that the fair values and carrying values for
your insurance and reinsurance contracts are calculated in a consistent manner,
except for the discounting of pro jected cash flows and the incorporation of a
margin for risk and uncertainty in your determination of fair value. The
differences between these calculations , however,  appear to be relatively small in
relation to the potentially significant impact of discou nting.   Please quantify for
us the separate impact of discounting and margin for risk and uncertainty and
explain the factors that have caused these amounts to change for each period
presented. Also, if a margin for risk and uncertainty is not included in your

Mr. Bradley P. Martin
Fairfax Financial Holdings Limited
June 1 3, 2012
Page 2

 determination of carrying value, please explain your basis for omitting it. If this
margin is reflected in the carrying value, please provide us proposed disclosure to
be included in future filings that quantifies this amount and explains the factors
you considered in changing this assumption for each period presented. Refer to
paragraphs 37C and 37D of IFRS 4.

20. Contingencies and Commitments, page 74

2.   You do not appear to have provided all of the disclosure described in paragraphs
84-92 of IAS 37, such as a quantification of your litigation loss provisions and an
estimate of the reasonably likely financial impact of related contingent liabilities.
Please p rovide us proposed disclosure to be included in future filings or explain
to us your basis for omitting this information.

24. Financial Risk Management, page 83
3. Your reported catastrophe losses of $1 billion in 2011 appears to significantly
exceed your limit on company -wide catastrophe loss exposure, which is one
year’s normalized earnings before income taxes. Please provide us proposed
disclosure to be included i n future filings that describes and quantifies how your
risk mitigation programs were designed to limit catastrophe loss exposures. Also,
quantify this catastrophe loss limit. Refer to paragraphs 39 of IFRS 4 and 34 of
IFRS 7.
4. You do not appear to have pr ovided all of the disclosure described in paragraphs
38-39 of IFRS 4, such as how you assess the probability of occurrence and
magnitude of potential catastrophic events in identifying insurance
concentrations subject to catastrophe risk and in turn how yo u establish
underwriting guidelines and reinsurance protection. Please provide us proposed
disclosure to be included in future filings that describes these risk mitigation
procedures or explain to us your basis for omitting this information.

We urge all persons who are responsible for the accuracy and adequacy of the
disclosure in the filing to be certain that the filing includes the information the Securities
Exchange Act of 1934 and all applicable Exchange Act rules require.   Since the company
and its m anagement are in possession of all facts relating to a company’s disclosure, they
are responsible for the accuracy and adequacy of the disclosures they have made.

Mr. Bradley P. Martin
Fairfax Financial Holdings Limited
June 1 3, 2012
Page 3

 In responding to our comment, please provide  a written statement from the
company ac knowledging that:

 the company is responsible for the adequacy and accuracy of the disclosure in the
filing;
 staff comments or changes to disclosure in response to staff comments do not
foreclose the Commission from taking any action with respect to the fi ling; and
 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.

Please contact Frank Wyman, Staff Accountant, at (202) 551 -3660  or Lisa
Vanjoske, Assistant Chief Accountant, at (202) 551 -3614, if you have any questions
regarding the comment. In this regard, do not hesitate to contact me at (202) 551 -3679.

Sincerely,

 /s/ Jim B. Rosenberg

Jim B. Rosenberg
Senior Assistant Chief
Accountant

Via Facsimile and U.S. Mail
Mail Stop 4720

                                                                                                November 3, 2009

Mr. V. Prem Watsa
Chairman and Chief Executive Officer
Fairfax Financial Holdings Limited
95 Wellington Street West, Suite 800
Toronto, Ontario Canada M5J 2N7

Re: Fairfax Financial Holdings Limited
 Form 40-F for the Fiscal Year Ended December 31, 2008
File No. 1-31556

Dear Mr. Watsa:

We have completed our review of your Fo rm 40-F and related filings and have no
further comments at this time.

Sincerely,

Carlton E. Tartar Accounting Branch Chief

CORRESP
1
filename1.htm

corresp

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October 16, 2009

BY EDGAR

Julia E. Griffith

Special Counsel

Office of Mergers and Acquisitions

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C., 20549

    Re:

    Odyssey Re Holdings Corp.

Schedule TO-T and Schedule 13E-3

Filed by Fairfax Investments USA Corp. and

Fairfax Financial Holdings Limited

Filed September 23, 2009

File No. 5-61705

Dear Ms. Griffith:

On behalf of our clients, Fairfax Financial Holdings Limited (“Fairfax”) and Fairfax
Investments USA Corp. (“Purchaser” and, together with Fairfax, the “Filing
Parties”), we hereby acknowledge receipt of the comment letter dated October 14, 2009 (the
“Comment Letter”) from the staff (the “Staff”) of the Securities and Exchange
Commission (the “Commission”) concerning the above referenced Schedule TO-T and Schedule
13E-3 (the “Schedule TO”).

On behalf of the Filing Parties, we submit this letter in response to the Comment Letter. For ease
of reference, we have reproduced the text of the comments in bold-face type below, followed by the
Filing Parties’ responses. The Filing Parties are filing today, by way of EDGAR, an Amendment No.
3 to the Schedule TO-T together with this response letter. Capitalized terms
used in this letter not otherwise defined herein have the meanings ascribed to them in the Schedule
TO.

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COUNTRY OF PRIMARY QUALIFICATION: UNITED STATES OF AMERICA NOT QUALIFIED TO PRACTICE ONTARIO LAW.

RESPONSES TO STAFF COMMENTS

Offer to Purchase

Introduction, page 6

    1.

    Throughout your document, you refer to the board’s determination that the Offer and the
Merger are “fair to and in the best interests of Odyssey Re and the holders of Shares (other
than Fairfax and its subsidiaries).” Item 8 of Schedule 13E-3 and Item 1014 of Regulation M-A
require you to state whether the filer believes that the transaction is fair to the
unaffiliated shareholders of Odyssey. In addition to Fairfax and its subsidiaries, there
appear to be other affiliated shareholders of Odyssey Re. Please revise or advise throughout
your documents.

    Response: On behalf of the Filing Parties, we respectfully submit that the statements required
by Item 8 of Schedule 13E-3 and Item 1014 of Regulation M-A with respect to the Filing Parties’
belief that the transaction is fair to the unaffiliated shareholders of Odyssey Re are
approriately included in the Offer to Purchase. We respectfully direct the Staff’s attention to
page 2 of the Offer to Purchase, under the heading “Summary Term Sheet,” and page 14 of the
Offer to Purchase, under the heading “Special Factors—Section 4. Position of Fairfax and
Purchaser Regarding Fairness of the Offer and the Merger,” which include statements that the
Filing Parties believe that:

    •

    “[...] the transaction is fair to Odyssey Re’s stockholders who are not affiliated
with the Fairfax Group[...]”; and

    •

    “[...] the Offer Price to be received by Odyssey Re’s unaffiliated stockholders
pursuant to the Offer and the Merger is fair to such stockholders[...].”

Statements in the Offer to Purchase that the Offer and the Merger are “fair to and in the best
interests of Odyssey Re and the holders of Shares (other than Fairfax and its subsidiaries)” are
disclosures regarding resolutions of the board of directors of Odyssey Re and the special
committee thereof. Such statements are not disclosed to report the Filing Parties’ beliefs
regarding fairness.

Special Factors, page 9

    2.

    You disclose that on August 13, 2009, Fairfax launched an offering of senior notes which was
increased in size because of investor demand. As a result of the positive response to this
note offering, you state that Fairfax considered taking Odyssey Re private. Detail the events
leading up to Fairfax’s definitive decision to pursue that option, including how and when it
reached this decision and the alternatives that were considered. See Items 1013(b), (c) and
(d) of Regulation M-A. In addition, clarify why the oversubscribed note offering led Fairfax
to the going-private alternative for Odyssey Re.

    Response: We have been advised by the Filing Parties that:

2

    •

    other than those events disclosed in the Offer to Purchase, there were no events
leading up to Fairfax’s definitive decision to pursue the going-private transaction;

    •

    Fairfax did not consider any alternatives to acquiring all of the outstanding shares
of common stock of Odyssey Re that the Fairfax Group did not already own.

In response to the Staff’s comment, the Filing Parties have revised the disclosure in the Offer
to Purchase, under the heading “Special Factors—Section 2. Purpose of and Reasons for the
Offer; Plans for Odyssey Re After the Offer and the Merger,” to include a statement that Fairfax
did not consider any alternatives to acquiring all of the outstanding shares of common stock of
Odyssey Re that the Fairfax Group did not already own.

As disclosed on page 9 of the Offer to Purchase, under the heading “Special Factors—Section 1.
Background,” the positive response to Fairfax’s senior notes offering was reflective of the
market’s overall assessment of Fairfax’s financial flexibility and strong financial position.
It indicated to the management of Fairfax that Fairfax would likely be able to complete an equity
offering on terms which would be satisfactory to Fairfax to fund a going-private transaction.
We are advised by the Filing Parties that these factors alone, and no others, caused Fairfax to
decide to explore the going-private transaction. In response to the Staff’s comment, the Filing
Parties have revised the disclosure in the Offer to Purchase, under the heading “Special
Factors—Section 1. Background,” to include this information.

    3.

    Expand the discussion to provide more specifics about the substance of any communications
between filing persons and their fairness advisors that are materially related to this
transaction. See Item 9 of Schedule 13E-3 and Item 1015 of Regulation M-A (these Items
encompass both oral and written “reports” prepared by financial advisors in connection with
this transactions). For example, provide more specifics about the discussions between BofA
and Fairfax on September 16-17th.

    Response: We are advised by the Filing Parties that the presentation filed as Exhibit (g) of
the Schedule TO summarizes all of the financial analyses that BofA Merrill Lynch provided orally
to management of Fairfax that are materially related to this transaction. This presentation is
summarized beginning on page 17 of the Offer to Purchase, under the heading “Special
Factors—Section 5. Presentation of BofA Merrill Lynch to Fairfax Management,” and includes the
financial analyses presented by BofA Merrill Lynch to Fairfax, and discussed between BofA
Merrill Lynch and Fairfax on September 16-17th.

    We are advised by the Filing Parties that on September 17, 2009, BofA Merrill Lynch and
management of Fairfax continued to discuss views on value and the amount that Fairfax might be
willing to pay in light of the Special Committee’s continued justification of a $66.00 per Share
offer price. In response to the Staff’s comment, the Filing Parties have revised the disclosure
in the Offer to Purchase, under the heading “Special Factors—Section 1. Background,” to
include this information.

    4.

    See our last comment above. We remind you that each presentation, discussion or report held
with or presented by an outside party that is materially related to the Rule 13e-3
transaction, whether oral or written, is a separate report that requires a

3

    reasonably detailed description meeting the requirements of Item 1015 of Regulation M-A. This
requirement applies to both preliminary and final reports. Please confirm that you have
summarized all presentations or reports, both oral and written, provided by any outside party to
Fairfax, including any such reports received before August 2009, that are materially related to
an acquisition of Odyssey. This may include analyses or reports generated in contemplation of a
different transaction structure than the tender offer. In this regard, please confirm that you
have summarized all written presentations by BofA Merrill Lynch, beginning with your first
contemplation of any going private transaction. File any written materials, including board
books, as exhibits to Item 9 of Schedule 13E-3 and pursuant to Item 1016(c) of Regulation M-A,
or advise us as to why the reports are not material to the transaction.

    Response: On behalf of the Filing Parties, we confirm that:

    •

    the Offer to Purchase summarizes all presentations, discussions and reports, both
oral and written, held with or presented by any outside party, including any such
reports received before August 2009, that are materially related to the going-private
transaction;

    •

    subject to our response to Staff comment No. 12 below, the Offer to Purchase
summarizes all written presentations by BofA Merrill Lynch, beginning with the first
contemplation of any going-private transaction; and

    •

    all written materials, including board books, have been filed as exhibits to the
Schedule TO.

    5.

    All non-public information, including projections and forecasts, shared between Odyssey Re
and Fairfax, or by either party with BofA Merrill Lynch or Sandler O’Neill in connection with
this transaction, should be summarized in the offer materials. Any such information should be
accompanied by a discussion of the material assumptions which underlie it, as well as a
discussion of any relevant limitations. Please revise or advise.

    Response: On behalf of the Filing Parties, we confirm that all material non-public information,
including projections and forecasts, shared between Odyssey Re and Fairfax, or by either party
with BofA Merrill Lynch or Sandler O’Neill in connection with this transaction, as well as all
material assumptions and limitations underlying such information, have been summarized in the
offer materials.

    6.

    Provide more specifics about how you eventually determined the $65.00 per share offer price.

    Response: In response to the Staff’s comment, the Filing Parties have revised the disclosure in
the Offer to Purchase, under the heading “Special Factors—Section 1. Background,” to include a
statement that Fairfax decided to offer $65.00 per Share, representing the midpoint between its $64.00 per Share

4

    offer and the Special Committee’s $66.00 per Share counter-proposal, with the objective of
reaching an agreement with the Special Committee.

Purpose of and Reasons for the Offer, page 13

    7.

    Your statement that the purpose of the Offer is for Fairfax to obtain all outstanding Shares
seems to describe the effect of the transaction rather than its purpose. Revise to
explain why Fairfax chose to pursue this result, including why it chose to do so at this time.

    Response: In response to the Staff’s comment, the Filing Parties have revised the Offer to
Purchase, under the heading “Special Factors—Section 2. Purpose of and Reasons for the Offer;
Plans for Odyssey Re After the Offer and the Merger,” to state that the purpose of the Offer is
for Fairfax to obtain ownership of all of the common equity of Odyssey Re and, accordingly, to
participate in 100% of the earnings and growth in book value of Odyssey Re.

    As disclosed on page 13 of the Offer to Purchase, under the heading “Special Factors—Section 2.
Purpose of and Reasons for the Offer; Plans for Odyssey Re After the Offer and the Merger,”
Fairfax intends not to make any changes in Odyssey Re’s strategic or operating philosophy
following completion of the proposed Offer and Fairfax expects that Odyssey Re will continue to
operate its business on an independent and decentralized basis.

    We respectfully direct the Staff’s attention to page 13 of the Offer to Purchase, under the
heading “Special Factors—Section 2. Purpose of and Reasons for the Offer; Plans for Odyssey Re
After the Offer and the Merger,” which states the reasons why Fairfax chose to pursue this
transaction, including why it chose to do so at such time.

    8.

    See our last comment above. Expand your explanation of alternatives considered, including
why each was rejected in favor of this transaction.

    Response: On behalf of the Filing Parties, we confirm that no alternatives were considered
other than the acquisition of all of the outstanding shares of common stock of Odyssey Re that
the Fairfax Group did not already own. As described in our response to Staff comment No. 2
above, the Filing Parties have revised the disclosure in the Offer to Purchase, under the
heading “Special Factors—Section 2. Purpose of and Reasons for the Offer; Plans for Odyssey Re
After the Offer and the Merger,” to include this information.

Position of Fairfax and Purchaser Regarding Fairness of the Offer and the Merger, page 14

    9.

    We note your statement at the bottom of page 16 that Fairfax and Purchaser did not consider
the liquidation value of Odyssey Re and why. However, if liquidation value would yield a
higher per share value than the offer price, please disclose.

    Response: On behalf of the Filing Parties, we confirm that the Filing Parties’ belief is that
the liquidation value would not yield a higher per share value than the Offer Price.

5

    10.

    Explain why Fairfax and Purchaser did not consider the going concern value of Odyssey Re in
assessing the fairness of the transaction. If going concern value would yield a higher per
share value than the offer price, please disclose.

    Response: We respectfully direct the Staff’s attention to page 15 of the Offer to Purchase,
under the heading “Special Factors—Section 4. Position of Fairfax and Purchaser Regarding
Fairness of the Offer and the Merger,” in the Offer to Purchase, which states that the Filing
Parties considered the going concern value of Odyssey Re and believed that the going concern
value of Odyssey Re as a public company could be less than the Offer Price of $65.00 per Share
due to the negative impact of the following factors on Odyssey Re: general market conditions,
the increasingly competitive reinsurance environment, required financial flexibility and the
growing capital bases of Odyssey Re’s primary competitors.

    11.

    See the last two comments above. Provide the same disclosure with respect to the book value
per share. See Instruction 2 to Item 1015 of Regulation M-A.

    Response: On behalf of the Filing Parties, we confirm that based on book value per share as of
June 30, 2009 and estimated book value per share as of September 30, 2009 (in each case as
disclosed in the Offer to Purchase under the headings “The Offer—Section 7. Certain
Information Concerning Odyssey Re—Financial Information” and “Special Factors—Section 5.
Presentation of BofA Merrill Lynch to Fairfax Management”), book value per share is less than
the Offer Price. Analysis regarding book value per share was included in BofA Merrill Lynch’s
analyses presented to the management of Fairfax as described in the Offer to Purchase, beginning
on page 17 under the heading “Special Factors—Section 5. Presentation of BofA Merrill Lynch to
Fairfax Management.” The analyses contained in the BofA Merrill Lynch pres

CORRESP
1
filename1.htm

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

 - 2 -

    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

 - 3 -

    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

 - 4 -

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

- 5 -

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

Via Facsimile and U.S. Mail
Mail Stop 4720

                                                                                                September 9, 2009

Mr. Greg Taylor
Vice President and Chief Financial Officer
Fairfax Financial Holdings Limited
95 Wellington Street West, Suite 800
Toronto, Ontario Canada M5J 2N7

Re: Fairfax Financial Holdings Limited
 Form 40-F for the Fiscal Year Ended December 31, 2008
Filed March 6, 2009 File No. 1-31556
 Dear Mr. Taylor:

We have reviewed your June 25, 2009 res ponse to our June 11, 2009 letter and
have the following comments.  In our comments, we ask you to provide us with information to better understand your disc losure.  Where a comment requests you to
revise disclosure, the information you provide should show us what the revised disclosure
will look like and identify the f iling, in which you intend to fi rst include it.  If you do not
believe that revised disclosure  is necessary, explain the reason in your response.  After
reviewing the information provided, we may raise additional comments and/or request
that you amend your filing.

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 financia l 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.

Mr. Greg Taylor
Fairfax Financial Holdings Limited   September 9, 2009 Page 2
 Exhibit 3

Management’s Discussion and Analysis of Fi nancial 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 respon ses, particularly how you employ
derivative instruments to mitigate financ ial 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 disc lose this summarized information in
future filings along with an explanati on quantifying the eff ects 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.

3.     You assert in your responses to comments 3, 4 and 7 that it is not possible to
“definitively quantify” how your deri vative 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, mark et uncertainties or other factors that
prohibit you from providing his information.

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

*    *    *    *

Please respond to these comments within  10 business days or tell us when you
will provide us with a response.  Please furnish a letter that  keys your responses to our
comments and provide the requested information.  Detailed letters gr eatly facilitate our
review.  Please furnish your letter on EDGAR under the form type label CORRESP.

Please contact Frank Wyman, Staff A ccountant, at (202) 551-3660 or Don
Abbott, Senior Staff Accountant, at (202) 551-3608, if you have any questions regarding
the comments. In this regard, do not he sitate to contact me at (202) 551-3679.

Sincerely,

Jim B. Rosenberg Senior Assistant Chief Accountant

Via Facsimile and U.S. Mail
Mail Stop 4720

                                                                                                June 11, 2009

Mr. V. Prem Watsa
Chairman and Chief Executive Officer
Fairfax Financial Holdings Limited
95 Wellington Street West, Suite 800
Toronto, Ontario Canada M5J 2N7

Re: Fairfax Financial Holdings Limited
 Form 40-F for the Fiscal Year Ended December 31, 2008
Filed March 6, 2009 File No. 1-31556
 Dear Mr. Watsa:

We have reviewed your filing and have the following comments.  In our
comments, we ask you to provide us with  information to better understand your
disclosure.  Where a comment requests you to  revise disclosure, the information you
provide should show us what the revised disc losure will look like and identify the annual
or quarterly filing, as appli cable, in which you intend to fi rst include it.  If you do not
believe that revised disclosure  is necessary, explain the reason in your response.  After
reviewing the information provided, we may raise additional comments and/or request
that you amend your filing.

 Please understand that the purpose of our re view process is to assist you in your
compliance with the applicable disclosure  requirements and to  enhance the overall
disclosure in your filing.  We look forward to  working with you in these respects.  We
welcome any questions you may have about our comments or on any other aspect of our review.  Feel free to call us at the telephone numbers listed at the end of this letter.

Exhibit 2

Notes to Consolidated Financial Statements
 4. Securities Sold but not yet Purchase d and Derivative Transactions, page 41

1. In 2008, you “closed-out” your short equity  and equity index instruments,
realizing pre tax gains of $2.1 billion. Please revise your disclosure to explain the
process and accounting for these “close- out” transactions. Tell us how each
payment made or received was recorded  and the amount of any gain or loss
recognized. Link this disclosure to the re lated amounts recorded in your financial

Mr. V. Prem Watsa
Fairfax Financial Holdings Limited   June 11, 2009 Page 2
 statements, including derivative liabilities  and any amounts of collateral received.
Discuss, as applicable, counterparty nett ing activity that occurred in connection
with these transactions.
2. Since 2003, you have been purchasing credit default swaps referenced to various
issuers in the banking, mortgage and insurance sectors of  the financial services
industry that served as an economic hedge  against fair value declines of your
financial assets. In 2008, you realized a $1.3 billion gain from the sale of these
credit default swap contracts with a notional value of $12.6 billion. Please revise
your disclosure to explain the process a nd accounting for these credit default swap
sales, including how the $1.3 billion gain on these sale s related to previously-
recognized changes in fair value for these derivative financial instruments. Tell us
how each payment made or received was r ecorded and the amount of any gain or
loss recognized. Link this disclosure to the related amounts recorded in your
financial statements, including derivative liabilities and any amounts of collateral
received. Discuss, as applicable, counterp arty netting activity that occurred in
connection with these transactions.

18. Financial Risk Management, page 60

3. Please describe your objectives and strate gies for using derivatives instruments
and quantify how derivative instruments and related hedged items affected and
are expected to effect your financial positi on, results of operations  and cash flows.
Credit Risk
4. Please describe and quantify how your cred it default swaps have served as an
economic hedge against fair value declines in your financial asse ts, as well as the
effects that these hedging activities may be expected to have on the Company’s
future financial position, li quidity and operating results.
Liquidity Risk
5. Please revise your disclosure to present the claims liability in the schedule of
payment obligations on a gross and not a net basis.  This comment also applies to
your disclosure in the tabl e of contractual obligations  on page 147 in Exhibit 3.
 Market Risk
6. As a result, of your close-out of synthetic short positions in various global equity
indices and listed common stocks and sale  of credit default swaps, you appear to
have eliminated a significant portion of the economic hedges protecting your
capital, despite your asserti on that the current recession is going to be long and
deep. In addition, given the decline in  equity valuations, you significantly
increased your equity holdings in the fourth quarter of 2008. Please revise your
disclosure to explain the impact of these transacti ons on your financial risk

Mr. V. Prem Watsa
Fairfax Financial Holdings Limited   June 11, 2009 Page 3
 management programs, particularly your st rategy for controlling future credit risk
and market risk.

Market Price Fluctuations
7. You disclose that at December 31, 2007 the fair value and notional amount of
certain derivative positions represented 85.6% of the Company’s aggregate equity
holdings. However, similar disclosure was not provided at December 31, 2008.
Please revise your disclosure to describe and quantify how he dging activities have
mitigated realized losses on your equity  securities for each period presented, as
well as the effects that these hedging activ ities may be expected to have on the
Company’s future financial position, li quidity and operating results. Also, we
were unable to find your disclo sure in Note 4 of the shor t positions in the form of
SPDRs, common stocks and total return swaps with an aggregate fair value and notional amount of $2,856.9 million. Please te ll us where this disclosure is
located.

Exhibit 3

Management’s Discussion and Analysis of Fi nancial Condition and Results of Operations
 Components of Net Earnings

Net gains on investments, page 111
8. Please revise to disclose how the $2,079.6 m illion of gains related to the close-out
of your short equity and equity inde x positions relates to the corresponding
$1,876.8 million notional amount at Decem ber 31, 2007 and the corresponding
reclassification from accumulated ot her comprehensive income in 2008.
9. Please revise to disclose how the $1,290.5 million of gains recognized on the sale
of credit default swap instruments in 2008 relates to the corresponding $1,802.9
million of gains disclosed in the table on page 111. Explain how the original acquisition cost of approximately $245.8 m illion, as presented in this table,
impacted the determination of gains reco rded in your consolidated statement of
earnings. In addition, reconcile the notiona l amount of credit default swaps at
December 31, 2007, as disclosed in Note 4, with the notional amounts presented
in this table.
10. You use third party broker-dea ler quotes to determine fair value for these credit
default swaps, which you assert is subject to significant volatility. The fair value
of credit default swaps sold in 2008 represented approximately 18% of notional value while the fair valu e of credit default swaps held at December 31, 2008
represented approximately 5% of notional value. Please revise your disclosure to
explain the factors that caused this apparent decrease in fair value.
11. In connection with the re maining credit default swaps with an $8.9 billion
notional value at December 31, 2008, please di sclose the material terms of these

Mr. V. Prem Watsa
Fairfax Financial Holdings Limited   June 11, 2009 Page 4
 credit default swap contract s, including the identity of counterparties to these
transactions, the specific c overed financial risks, the defined credit events and
collateral posting requirements, as well as the nature of events and conditions that
trigger them.
*    *    *    *
Please respond to these comments within  10 business days or tell us when you
will provide us with a response.  Please furnish a letter that  keys your responses to our
comments and provide the requested information.  Detailed letters gr eatly facilitate our
review.  Please furnish your letter on EDGAR under the form type label CORRESP.

 We urge all persons who are responsible for the accuracy and adequacy of the
disclosure in the filing to be certain that the filing includes all in formation required under
the Securities Exchange Act of 1934 and th at they have provided all information
investors require for an informed invest ment decision.  Since the company and its
management are in possession of all facts re lating to a company’s disclosure, they are
responsible for the accuracy and adequacy of the disclosures they have made.

 In connection with responding to our co mments, please provide, in your letter, a
statement from the company acknowledging that:
• the company is responsible for the adequacy  and accuracy of the disclosure in the
filing;
• staff comments or changes to disclosure  in response to staff comments do not
foreclose the Commission from taking any action with respect to the filing; and
• the company may not assert staff comme nts as a defense in any proceeding
initiated by the Commission or any person under the federal secu rities laws of the
United States.

In addition, please be advise d that the Division of Enfo rcement has access to all
information you provide to the staff of the Divi sion of Corporation Fi nance in our review
of your filing or in response to our comment on your filing.

Please contact Frank Wyman, Staff A ccountant, at (202) 551-3660 or Don
Abbott, Senior Staff Accountant, at (202) 551-3608, if you have any questions regarding
the comments. In this regard, do not he sitate to contact me at (202) 551-3679.

Sincerely,

Jim B. Rosenberg Senior Assistant Chief Accountant

CORRESP
1
filename1.htm

CORRESP

June 25, 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 June 11, 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 June 30, 2009
and its Annual Report filed on Form 40-F for the fiscal year ending December 31, 2009.

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

Exhibit 2

Notes to the Consolidated Financial Statements

4.      Securities Sold but not yet Purchased and Derivative Transactions, page 41

    1.

    In 2008, you “closed-out” your short equity and equity index instruments, realizing pre-tax
gains of $2.1 billion. Please revise your disclosure to explain the process and accounting
for these “close-out” transactions. Tell us how each payment made or received was recorded
and the amount of any gain or loss recognized. Link this disclosure to the related amounts
recorded in your financial statements, including derivative liabilities and any amounts of
collateral received. Discuss, as applicable, counterparty netting activity that occurred in
connection with these transactions.

    Response 1:  The short equity and equity index total return swap contracts closed out by the
Company in the fourth quarter of 2008 comprised Company-initiated, contractually-permitted
terminations of multiple industry standard total return swap contracts (as distinct from
contractual reset transactions and contract expiries). The $2,079.6 million of net gains on the
Company’s equity hedges in 2008 arose and were recorded during the year as a result of these
resets, expiries and closing transactions. Typically, each contract contained provisions
permitting the Company to terminate, or close out, the total return swap at any time during the
term of the contract, for a cash settlement amount determined by the fair value of the total
return swap. During the time period that a contract was in force (i.e. prior to expiry or
closing out) the contract required the counterparties to cash-settle the changes in the
unrealized fair value of each total return swap contract, typically on a quarterly basis
(“quarterly reset”). The Company has accounted for all of its total return swaps as derivatives
under Canadian and US GAAP. The Company’s accounting policy for derivatives and related
collateral received or delivered to counterparties is included in note 1 to the consolidated
financial statements (page 27 of the Company’s Form 40-F).

    The process and accounting for contractual reset transactions reflect the total return swap
contract provisions requiring counterparties to cash-settle, typically on a quarterly basis,
any market value movements arising since the prior reset settlement. A total return swap
requires no initial net investment and at its inception, the fair value of the derivative is
zero. Any cash paid to settle unfavorable market value

- 2 -

    changes and, conversely, any cash received in settlement of favorable market value changes was
recognized by the Company as net gains (losses) on investments in the consolidated statements of
net earnings. The impact of this accounting was to reset the balance sheet derivative asset or
liability associated with each contract to zero value on each quarterly reset date. To the extent
that the quarterly reset date of each contract did not correspond to the balance sheet date, the
Company recorded additional net gains (losses) on investments in the consolidated statements of net
earnings to adjust the carrying value of the derivative asset or liability associated with each
total return swap contract to reflect its fair value at the balance sheet date.

    A closing out transaction resulting in final settlement of a short equity and equity index total
return swap (as well as a contract expiry) resulted in the Company reversing any previously
recorded unrealized market value changes since the last quarterly reset date and recognizing the
actual amount of the final cash settlement as net gains (losses) on investments in the consolidated
statements of net earnings. Derivative assets and liabilities were reported gross on a
contract-by-contract basis without regard to counterparty netting. Cash settlements, whether
occurring at a quarterly reset date, at a contract expiry or at a termination date of a total
return swap, were recorded as cash flows from investing activities arising from net sales of assets
and liabilities classified as held for trading in the consolidated statement of cash flows.

    Accounting for the non-market-value-related cash flows provided by the swaps required that on each
balance sheet date subsequent to the date a contract was entered into, accruals were established to
record any dividend liability owed by the Company to the counterparty and any interest income
receivable from the counterparty. Whereas the accruals are reflected on the balance sheet on a
gross basis (the receivable is reflected as an asset and the payable as a liability), the related
dividend expense and interest income are both reflected in interest and dividend income in the
consolidated statements of net earnings.

    All of the Company’s equity total return swaps were contracted with Citibank and Merrill Lynch as
the counterparties. Typically, when the Company entered into a total return swap contract, the
counterparty required the Company to post an upfront margin amount equal to a varying percentage of
the notional amount of the total return swap, which margin remained in place for the duration of
the total return swap. In addition, the Company was required to post collateral on a regular basis
in favor of the counterparty equal to any decline in the market value of the total return swap. All
margin and collateral amounts were in the form of cash or U.S. government debt securities. The fair
value of such collateral (including the margin amounts) was disclosed in the consolidated balance
sheets as assets pledged for short sale and derivative obligations. The decrease in assets pledged
for short sale and derivative obligations from $1,798.7 million at December 31, 2007 to $8.3
million at December 31, 2008 resulted from the closing out of total return swaps and short equity
positions as disclosed in note 4 to the consolidated financial statements (page 41 of the Company’s
Form 40-F).

- 3 -

    The counterparties to the total return swap contracts were required to post collateral on a
regular basis in favor of the Company in the form of cash or U.S. government debt securities
in an amount equal to any increase in the market value of the total return swaps. All of the
Company’s total return swap sales, expirations and terminations were settled in cash and all
collateral and margin amounts supporting such settled trades were returned to the party
providing such collateral or margin (i.e. there was no netting of the termination payments
against posted collateral). The return of collateral held by the Company to counterparties
following the closing out of a significant number of total return swap contracts and the
return of collateral held by the Company to counterparties following the sales of credit
default swaps in the fourth quarter of 2008 resulted in a net decrease in collateral pledged
in favor of the Company from $899.4 million at September 30, 2008 to $285.1 million at
December 31, 2008.

    Beginning with the consolidated financial statements to be included in the Company’s Interim
Report filed on Form 6-K for the period ending June 30, 2009 and on Form 40-F for the fiscal
year ending December 31, 2009, the Company will provide additional disclosure in the notes to
those financial statements on the accounting for the settlements of short equity and equity
index total return swaps (including resets, expiries and closing out transactions). See
Appendix 2 for a pro forma example of the Company’s proposed revised disclosure based upon the
results reported for December 31, 2008 (the proposed revisions are shown in bold type).

    2.

    Since 2003, you have been purchasing credit default swaps referenced to various issuers in
the banking, mortgage and insurance sectors of the financial services industry that served as
an economic hedge against fair value declines of your financial assets. In 2008, you realized
a $1.3 billion gain from the sale of these credit default swap contracts with a notional value
of $12.6 billion. Please revise your disclosure to explain the process and accounting for
these credit default swap sales, including how the $1.3 billion gain on these sales related to
previously-recognized changes in fair value for these derivative financial instruments. Tell
us how each payment made or received was recorded and the amount of any gain or loss
recognized. Link this disclosure to the related amounts recorded in your financial statements,
including derivative liabilities and any amounts of collateral received. Discuss, as
applicable, counterparty netting activity that occurred in connection with these transactions.

    Response 2:  The credit default swap contracts sold by the Company in 2008 comprised previously
purchased, industry standard credit default swap contracts which formed part of a diversified
portfolio comprising approximately three dozen reference entities in the global financial
services industry (i.e. at inception of the contracts, the Company was a “purchaser of credit
protection” and not a “seller of credit protection”). At the inception of a purchase of credit
protection in the form of a credit default swap (or in very limited instances, at regular
intervals during the term of the credit default swap contract), the Company paid a cash premium
to the counterparty for the right to recover any decrease in value of the underlying debt
security that resulted from a credit event related to the referenced issuer for a period

- 4 -

    ranging from five to seven years at inception. This cash outlay constituted the only cash outlay
by the Company and represented the maximum potential loss on the contract (as opposed to the much
higher potential loss exposure to “sellers of protection”). The Company has accounted for all of
its credit default swaps as derivatives under Canadian and US GAAP. The Company’s accounting
policy for derivatives and related collateral received or delivered to counterparties is included
in note 1 to the consolidated financial statements (page 27 of the Company’s Form 40-F).

    The initial premium paid for each credit default swap contract was recorded as a derivative asset
and was subsequently adjusted for changes in the unrealized market value of the contract at each
balance sheet date. Changes in the unrealized market value of the contract were recorded as net
gains (losses) on investments in the Company’s consolidated statements of net earnings at each
balance sheet date with a corresponding adjustment to the carrying value of the balance sheet
derivative asset. As these contracts do not qualify for hedge accounting, all changes in the
unrealized market value of these contracts were recorded as net gains (losses) on investments.

    In general, the unrealized market value of credit default swaps may be monetized in one of three
ways: (1) the credit default swap contracts are terminated prior to maturity by negotiated
agreement between the holder and the counterparty in return for the counterparty paying the market
value of the contract to the holder; (2) the credit default swap contracts are sold by the holder
to a third party at market value; or (3) the credit default swap contracts are exercised pursuant
to a credit event, requiring the counterparty to pay the holder par value on the underlying debt
security of the reference entity. During 2008, the monetization (i.e. the cash proceeds to the
Company) of credit default swap contracts by the Company was achieved through the first two types
of transactions described above. Sales of credit default swap contracts during 2008 caused the
Company to reverse any previously recorded unrealized market value changes since the inception of
the contract and to record the actual amount of the final cash settlement through net gains
(losses) on investments in the consolidated statements of net earnings.

    Substantially all of the Company’s credit default swaps were contracted with Citibank, Deutsche
Bank AG, Barclays Bank PLC or the Bank of Montreal as the counterparties. The counterparties were
required to post cash or US government debt securities as collateral in support of their total
obligations owed to the Company under the credit default swaps once such obligations exceeded a
contracted threshold amount (except for Citibank where there was no threshold). Further to the
disclosure of collateral arrangements related to the Company’s credit default swaps and total
return swaps in note 4 to the consolidated financial statements (page 41 of the Company’s Form
40-F), it was primarily as a result of the return of collateral following sales of credit default
swaps during 2008 that collateral held by the Company securing the credit default swap derivative
asset of $415.0 million (2007 -$1,119.1 million) decreased from $886.0 million at December 31, 2007
to $285.1 million at December 31, 2008. This decrease was partially offset by the impact of
increases in the fair values of the Company’s remaining credit default swap contracts,
which required the counterparties to those contracts to post additional collateral with the
Company’s third party bank custodian.

- 5 -

    Derivative assets are reported gross, on a contract-by-contract basis. The sale, expiration or
early settlement of a credit default swap will not result in a cash payment owed by the
Company; rather, such an event can only result in a cash payment by a third party purchaser of
the contract, or the counterparty, to the Company. Accordingly, there is no opportunity for
n

Mail Stop 6010 Via Facsimile and U.S. Mail
                                                                                                March 17, 2008
 Mr. V. Prem Watsa Chairman and Chief Executive Officer Fairfax Financial Holdings Limited  95 Wellington Street West, Suite 800 Toronto, Ontario Canada M5J2N7
Re:     Fairfax Financial Holdings Limited
           Form 40-F for fiscal year ended December 31, 2006
            File No. 1-31556
Dear Mr. Watsa:

We have completed our review of your Form 40-F and have no further comments
at this time.

       S i n c e r e l y ,            C a r l t o n  E .  T a r t a r
      B r a n c h  C h i e f

CORRESP
1
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corresp

February 26, 2008

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 February 12, 2008 (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 on Form 40-F for the year ended
December 31, 2007 to be filed on March 7, 2008.

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

Exhibit 2 — Consolidated Financial Statements

Notes to Consolidated Financial Statements

Note 20 US GAAP Reconciliation, page 52

    1.

    We have reviewed your response to prior comment two. It is difficult to determine the impact
of reinsurance from the proposed narrative disclosure for Note 7. We suggest that this
proposed disclosure be revised to show the effect of ceded reinsurance transactions by
including a presentation similar to the first tabular presentation in your response to comment
two. Also, please provide revised disclosure to be included in MD&A that quantifies the
effect of ceded reinsurance transactions on each year presented in your consolidated
statements of earnings and cash flows and that explains the reasons for period-to-period
fluctuations. The explanations of the fluctuations should cover each component included in
the above tabular presentation.

    In order to enhance our disclosure of the effect of ceded reinsurance transactions on our
operations, we propose replacing the paragraph included in Note 7 to our 2006 consolidated
financial statements in a manner consistent with the table set out below, which shows how we
would have revised that note in our 2006 consolidated financial statements:

    The net impact of ceded reinsurance transactions for each of the fiscal years 2006, 2005 and
2004 is as follows:

    2006

    2005

    2004

    Earned premiums ceded to reinsurers

    (747.2
    )

    (860.1
    )

    (862.7
    )

    Commissions earned on ceded reinsurance premiums

    143.7

    145.2

    156.9

    Claims incurred ceded to reinsurers(1)(2)

    (98.0
    )

    1,522.9

    1,166.9

    Provision for uncollectible reinsurance

    (46.5
    )

    (51.1
    )

    (62.8
    )

    Net impact of ceded reinsurance transactions
(pre-tax)

    (748.0
    )

    756.9

    398.3

    (1)

    In 2006 included a $412.6 loss on the commutation of the Swiss Re
corporate adverse development cover. In 2005 included a $103.1 loss on the
commutation of the Chubb Re adverse development cover by U.S. runoff.

    (2)

    In 2005 and 2004, included significant claims related to U.S. Gulf
hurricanes.

- 2 -

    In our MD&A, we will include a discussion of the impact of ceded reinsurance
transactions as follows:

    The company’s insurance and reinsurance operating companies purchase reinsurance for
various reasons including risk diversification and mitigation and protection of
capital. As set out in note 7 to the consolidated financial statements, ceded
reinsurance transactions had a net negative impact in 2006 of $748.0 pre-tax,
including the effect of the $412.6 pre-tax loss on the commutation of the Swiss Re
corporate adverse development cover. Ceded reinsurance transactions had a net positive
impact of $756.9 pre-tax in 2005 and $398.3 pre-tax in 2004. Earned premiums ceded to
reinsurers in 2006 decreased to $747.2 compared to $860.1 in 2005 and $862.7 in 2004.
Earned premiums ceded to reinsurers in 2006 decreased as a result of greater retention
of premiums written by the insurance and reinsurance operating companies and the
effect of declines in gross premiums written from 2005 to 2006 and from 2004 to 2005
related to intensifying competition and deteriorating pricing associated with
underwriting cycle softening. The declines in earned premiums ceded to reinsurers in
2005 and 2004 due to the aforementioned factors were partially offset by the effects
of reinstatement premiums paid to reinsurers to reinstate catastrophe protection
against additional catastrophe events. Commissions earned on ceded reinsurance
premiums declined from 2005 to 2006 and from 2004 to 2005 due to the insurance and
reinsurance operating companies’ increased retention of written premiums and as a
result of the declines in written premiums associated with the softening underwriting
cycle. Claims incurred ceded to reinsurers in 2006 were reduced by $412.6,
representing the pre-tax loss on the commutation of the Swiss Re corporate adverse
development cover, but were increased by additional cessions by Northbridge related to
2005 hurricane losses. Claims incurred ceded to reinsurers in 2005 and 2004 included
significant cessions to reinsurers of incurred losses related to hurricane losses.
Claims incurred ceded to reinsurers in 2005 were reduced by $103.1, representing the
pre-tax loss on the commutation of the Chubb Re adverse development cover by U.S.
runoff. The provision for uncollectible reinsurance declined in 2006 relative to 2005
and in 2005 relative to 2004, primarily reflecting effective credit risk management
and improved credit experience with the company’s reinsurers.

    Cash provided by operating activities was increased significantly in 2006 by
reinsurance recoveries, with the $1,154.2 decline during 2006 in amounts recoverable
from reinsurers reflecting collections by the insurance and reinsurance operating
companies from reinsurers of paid claims related to 2005 and 2004 hurricanes. The
$437.1 decline during 2005 in amounts recoverable from reinsurers included collections
from reinsurers related to paid claims on 2004 hurricane losses. Cash provided by
operating activities was increased in 2006 and in 2005 by the $412.6 pre-tax non-cash
loss on the 2006 commutation of the Swiss Re corporate adverse development cover and
the $103.1 pre-tax non-cash loss on the 2005 commutation of the Chubb Re adverse
development cover by U.S. runoff, respectively.

- 3 -

    We also propose amending Note 20 paragraph (a) as follows:

    Under Canadian GAAP, recoveries on certain stop loss reinsurance treaties (including the former
Swiss Re corporate adverse development cover) which in 2006 (or in prior years in the case of
other commuted treaties) protected Fairfax, Crum & Forster and TIG are recorded at the same
time as the claims incurred are ceded. Under US GAAP, these recoveries, which are considered
to be retroactive reinsurance, are recorded up to the amount of the premium paid with the
excess of the ceded liabilities over the premium paid recorded as a deferred gain. The deferred
gain is amortized to income over the estimated settlement period over which the company expects
to receive the recoveries and is recorded in accounts payable and accrued liabilities. The
Swiss Re corporate adverse development cover was commuted as described in note 6 in July 2006.
The loss of $412.6 recorded under Canadian GAAP has been reversed and the related deferred gain
of $429.9 at that date under US GAAP was eliminated. On a US GAAP basis, the pre-tax gain
related to the commutation of the Swiss Re corporate adverse development cover was $17.3.
During 2005, the Canadian GAAP loss on commutation of the Chubb Re adverse development cover of
$88.7 was eliminated for US GAAP purposes. These adjustments for retroactive reinsurance, when
considered with the pre-tax impact of ceded reinsurance transactions as set out in Note 7,
provide disclosure of the net impact of ceded reinsurance transactions on a US GAAP basis. At
December 31, 2006, the deferred gain included in accounts payable and accrued liabilities was
$168.0 (2005 — $633.8).

    In our responses dated December 2, 2007 and September 28, 2007, respectively, on this issue, we
had included additional proposed disclosure. We repeat this proposed disclosure below for your
convenience and will include it in the Issues and Risks section of our future Annual Reports,
with updates for factual changes as appropriate.

    In the Issues and Risks section of the Company’s Annual Report, the Company discloses that the
“availability and cost of reinsurance are subject to prevailing market conditions, both in
terms of price and available capacity, which can affect the company’s business volume and
profitability”. This disclosure in the risk factor entitled “Cost of Reinsurance and Adequate
Protection” will be revised as follows: “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”.

    The rates charged by reinsurers applied to the amount of reinsurance purchased by our operating
subsidiaries represents the cost of reinsurance to the Company, and this cost is appropriately
measured, in the Company’s view, by the amount of ceded premiums earned during a period. The
net impact of reinsurance utilization on the Company’s profitability during a period includes
earned premiums ceded to reinsurers, commissions earned on ceded reinsurance premiums
(principally related to proportional reinsurance treaties), claims incurred ceded to
reinsurers, and provisions for uncollectible reinsurance.

- 4 -

    The following proposed disclosure will be added to the risk factor entitled “Cost of
Reinsurance and Adequate Protection” in the Issues and Risks section of the Annual Report:

    The rates charged by reinsurers and the availability of reinsurance to the Company’s
subsidiaries will generally reflect the recent loss experience of the Company and of the
industry in general. For example, the significant hurricane losses in 2004 and 2005 caused the
prices for catastrophe reinsurance protection in the U.S. Gulf region to increase significantly
in 2006. However, rather than the Company incurring increased costs of reinsurance as a result
of purchasing more reinsurance or as a result of these higher rates, in the following year the
Company elected to decrease its direct catastrophe exposure in that region, therefore requiring
the purchase of a reduced amount of catastrophe reinsurance.

    The following proposed disclosure will be added to the risk factor entitled “Recoverable from
Reinsurers” in the Issues and Risks section of the Annual Report:

    Although the relative magnitude of the Company’s reinsurance recoverable balance is
significant, this is primarily the result of past acquisitions of companies that relied heavily
on reinsurance and greater reliance on reinsurance in prior years, and is not necessarily
indicative of the extent that the Company has utilized reinsurance more recently. The credit
risk associated with reinsurance recoverable balances is addressed in the Reinsurance
Recoverable section of Management’s Discussion and Analysis of Financial Condition and Results
of Operation in the Annual Report.

    2.

    Please provide revised disclosure to be included in Note 2 Summary of Significant Accounting
Policies — Reinsurance that describes your accounting policies for ceded reinsurance,
including your policies for each component included in the above tabular presentation. We
would presume that these accounting policies comply with U.S. GAAP other than as disclosed in
Note 20.

    We propose amending Note 1 Summary of Significant Accounting Policies — Reinsurance as
follows:

    ..........The company records the premium charge (earned premiums ceded to reinsurers), commissions
earned on ceded reinsurance premiums and the related reinsurance recovery (claims incurred
ceded to reinsurers) in its consolidated statement of earnings in the period in which the
adverse development is incurred and ceded to the reinsurer. Provisions for uncollectible
reinsurance are recorded in the consolidated statement of earnings in the period in which the
company determines that it is unlikely that the full amount or disputed amounts due from
reinsurers on an individual basis are not collectible.

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

- 5 -

We appreciate your assistance in reviewing this response letter, and we look forward to including
the revised disclosure in the Company’s Annual Report on Form 40-F to be filed on March 7, 2008.
Please direct all questions or comments regarding this filing to the undersigned at (416) 367-4942
or p_rivett@fairfax.ca.

Yours very truly,

/s/  Paul Rivett

Paul Rivett

Vice President and Chief Legal Officer

    cc:

    V. Prem Watsa, Chairman and Chief Executive Officer,

Fairfax Financial Holdings Limited

Bill
McFarland, National Managing Partner Canada

PricewaterhouseCoopers LLP

- 6 -

Mail Stop 6010 Via Facsimile and U.S. Mail
                                                                                                February 12, 2008
 Mr. V. Prem Watsa Chairman and Chief Executive Officer Fairfax Financial Holdings Limited  95 Wellington Street West, Suite 800 Toronto, Ontario Canada M5J2N7
Re:      Fairfax Financial Holdings Limited             Form 40-F for fiscal year ended December 31, 2006
            File No. 1-31556
Dear Mr. Watsa:

We have reviewed your December 2 0, 2007 response to our December 14, 2007
letter and have the following comments. In ou r comments, we ask you to provide us with
information so we may better understand your disclosure.  Where a comment requests
you to revise disclosure, the information you provide should show us what the revised disclosure will look like and identify the fili ng in which you intend to first include it.  If
you do not believe that revised disclosure is necessary, explain the reason in your
response.  After reviewing the informati on provided, we may raise additional comments
and/or request that you amend your filing.

Exhibit 2 - Consolidated  Financial Statements

Notes to Consolidated Financial Statements

Note 20. US GAAP Reconciliation, page 52

1. We have reviewed your response to pr ior comment two.  It is difficult to
determine the impact of reinsurance from  the proposed narrative disclosure for
Note 7.  We suggest that this proposed disc losure be revised to show the effect of
ceded reinsurance transac tions by including a presentation similar to the first
tabular presentation in your response to  comment two.  Also, please provide
revised disclosure to be included in MD &A that quantifies th e effect of ceded
reinsurance transactions on each year presen ted in your consolidated statements of
earnings and cash flows and that explai ns the reasons for period-to-period

Mr. V. Prem Watsa
Fairfax Financial Holdings Limited February 12, 2008 Page 2
 fluctuations.  The explanations of the fluctuations should cover each component
included in the above tabular presentation.
2. Please provide revised disclosure to be included in Note 2 Summary of Significant Accounting Policies – Reinsu rance that describes your accounting
policies for ceded reinsu rance, including your policies for each component
included in the above tabular presenta tion.  We would presume that these
accounting policies comply with U. S. GAAP  other than as disclosed in Note 20.

*    *    *    *

Please respond to these comments within  10 business days or tell us when you
will provide us with a respons e.  Your letter should key your responses to our comments.
Detailed cover letters greatly facilitate our review.  Please furnish your letter on EDGAR
under the form type label CORRESP.
You may contact Frank Wyman, St aff Accountant, at 202-551-3660  or Don
Abbott, Senior Staff Accountant, at 202- 551-3608, if you have questions regarding the
comments.  In this regard, do not hes itate to contact me, at (202) 551-3679.

       S i n c e r e l y ,

        J i m  B .  R o s e n b e r g
      Senior Assistant Chief Accountant

CORRESP
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corresp

December 20, 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 December 14, 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 on 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.

    We acknowledge your response to comment one, particularly your statement that the disclosures
in Notes 4, 13 and 15 “relate to arrangements that are more aptly described as contingencies
and not off-balance sheet arrangements.” In

    your response, you describe only two off-balance sheet arrangements, the pledge of certain
securities on behalf of Advent and the obligation to assume loans to officers and directors by
Canadian banks. However, you appear to have engaged in other off-balance sheet arrangements,
such as the $247.7 million pledge in support of Syndicate 1218’s capacity at Lloyd’s and
reinsurance-to-close commitments between RiverStone Insurance UK, Lloyd’s of London Syndicate
3500 and Kingsmead syndicates 271 and 506. Please expand your disclosure to cover all
arrangements with Lloyd’s syndicates or explain your basis for concluding that these activities
did not constitute off-balance sheet arrangements. Provide a quantification of the contractual
obligations of Syndicate 3500, including those related to Kingsmead syndicates 271 and 506.
Please provide separate disclosure that clearly identifies all of your off-balance sheet
arrangements in accordance with General Instruction B (11).

    Response 1: As more fully explained in the next paragraph, the $247.7 million of assets pledged
in support of Newline Syndicate 1218 does not constitute an off-balance sheet arrangement as
contemplated within General Instruction B (11), since these pledged assets are simply security
for liabilities included in our consolidated balance sheet.

    Odyssey Re Holdings Corp. (“OdysseyRe”) participates in Lloyd’s through its 100% ownership of
Newline, where OdysseyRe provides 100% of the capacity for Newline Syndicate 1218 (“Syndicate
1218”). The results of Syndicate 1218 are consolidated in the financial statements of
OdysseyRe, the results of which are in turn consolidated in the financial statements of
Fairfax. Consequently, the liabilities of Syndicate 1218 are included in Fairfax’s
consolidated balance sheet. Note 4 to Fairfax’s consolidated financial statements discloses
that there are assets of $2.2 billion pledged in support of the Company’s obligations to pay
claims or make premium payments. This $2.2 billion includes the $247.7 million of assets
pledged as security for the liabilities of Syndicate 1218.

    Similarly, as more fully explained in the next paragraph, the commitments between RiverStone
Insurance UK, Lloyd’s Syndicate 3500 and Kingsmead syndicates 271 and 506 do not constitute
off-balance sheet arrangements as contemplated within General Instruction B (11), since these
commitments are simply liabilities included in our consolidated balance sheet.

    In November 2003, RiverStone Insurance provided unlimited reinsurance protection for the 2000
and prior years of account of Syndicates 271 and 506. Syndicates 271 and 506 stopped writing
business in 2000. The open years of account of Syndicates 271 and 506 were then assumed by
Syndicate 3500 (a syndicate established by Kingsmead Managing Agency) following a
reinsurance-to-close transaction. In December 2003, RiverStone Holdings acquired the Kingsmead
Managing Agency (now operating as RiverStone Lloyd’s Agency). As a result of these
transactions, the gross claims liabilities of Syndicates 271, 506 and 3500, aggregating $432.0
million, are included in the $15,502.3 million of Provision for Claims liabilities included in
Fairfax’s consolidated balance sheet as at December 31, 2006.

-2-

    As noted in our response letter dated September 28, 2007, we will enhance our disclosure with
respect to Advent in our consolidated financial statements for the year ended December 31, 2007
as proposed in that letter. With that enhancement, we believe that all of our off-balance
sheet arrangements will be appropriately disclosed and clearly identified in accordance with
General Instruction B (11).

Exhibit 2 — Consolidated Financial Statements

Notes to Consolidated Financial Statements

Note 20 US GAAP Reconciliation, page 52

    2.

    Please refer to prior comment four. Your response appears to indicate that cost of
reinsurance is equivalent to ceded premiums as disclosed in Note 7. However, you also discuss
ceded claims and state that “the preceding analysis ignores the impact of reinsurance
commission and bad debt expense.” Please provide a clearer and more complete explanation and
quantification of how you determine cost of reinsurance and the effect of ceded reinsurance
transactions on your operations for each period presented, as required in paragraph 27 of SFAS
113.

    In the Issues and Risks section of the Company’s Annual Report, the Company discloses that the
“availability and cost of reinsurance...can affect the company’s business volume and
profitability”. This disclosure will be revised to state that the “availability of reinsurance
and the rates charged by reinsurers...can affect...”. The rates charged by reinsurers applied
to the amount of reinsurance purchased by our operating subsidiaries represents the cost of
reinsurance to the Company, and this cost is appropriately measured, in the Company’s view, by
the amount of ceded premiums earned during a period. The net impact of reinsurance utilization
on the Company’s profitability during a period includes ceded premiums earned, reinsurance
ceding commission earned (principally related to proportional reinsurance treaties), ceded
claims incurred, and reinsurance bad debt expense.

    On a Canadian GAAP basis, the impact on pre-tax earnings of reinsurance utilization is as
follows:

    2006

    2005

    2004

    Ceded premiums earned

    (747.2
    )

    (860.1
    )

    (862.7
    )

    Reinsurance ceding commission earned

    143.7

    145.2

    156.9

    Ceded claims incurred

    (98.0
    )

    1,522.9

    1,166.9

    Reinsurance recoverable provision for bad debts

    (46.5
    )

    (51.1
    )

    (62.8
    )

    Net impact of reinsurance (pre-tax)

    (748.0
    )

    756.9

    398.3

    The net impact of reinsurance on a US GAAP basis, as set out in the table that follows,
includes adjustments related to retroactive reinsurance recoveries. Note 20

-3-

    to the consolidated financial statements discloses the Company’s reconciliation of US GAAP
earnings to Canadian GAAP, including the amounts of recoveries on retroactive reinsurance and
the basis for the amortization of deferred gains.

    2006

    2005

    2004

    Net impact of reinsurance (pre-tax),
Cdn GAAP basis

    (748.0
    )

    756.9

    398.3

    Adjustments for recoveries on retroactive reinsurance

    465.8

    169.8

    (15.1
    )

    Net impact of reinsurance (pre-tax),
US GAAP basis

    (282.2
    )

    926.7

    383.2

    In order to enhance our disclosure with a clearer and more complete explanation and
quantification of the cost of reinsurance and the effect of ceded reinsurance transactions on
our operations, we propose amending the paragraph included in Note 7 to our 2006 consolidated
financial statements in a manner consistent with the paragraph set out below, which shows how
we would have revised that paragraph in our 2006 consolidated financial statements:

    The effect of ceded reinsurance transactions on the Company’s operations during
the year included ceded premiums earned of $747.2 (2005-$860.1; 2004-$862.7),
ceded claims incurred of ($98.0), including ($412.6) from the Swiss Re commutation
(2005-$1,522.9; 2004-$1,166.9), reinsurance ceding commission earned of $143.7
(2005-$145.2; 2004-$156.9), and reinsurance recoverable bad debt expense of $46.5
(2005-$51.1; 2004-$62.8).

    In our response dated September 28, 2007 on this issue, we had included additional proposed
disclosure. We repeat this proposed disclosure below for your convenience and will include it
in the Issues and Risks section of our future Annual Reports with updates for factual changes
as appropriate.

    Although the magnitude of the Company’s reinsurance recoverable balance is significant, this is
primarily the result of past acquisitions of companies that relied heavily on reinsurance and
greater reliance on reinsurance in prior years, and is not necessarily indicative of the extent
that the Company has utilized reinsurance more recently. The credit risk associated with these
older reinsurance recoverable balances is addressed on page 131 of the Annual Report.

    The rates charged by reinsurers and the availability of reinsurance to the Company’s
subsidiaries will generally reflect the recent loss experience of the Company and of the
industry in general. For example, the significant hurricane losses in 2004 and 2005 caused the
prices for catastrophe reinsurance protection in Florida to increase significantly in 2006.
However, rather than the Company incurring increased costs of reinsurance as a result of
purchasing more reinsurance or as a result of these higher

-4-

    rates, in the following year the Company elected to decrease its direct catastrophe exposure in
that region, therefore requiring the purchase of a reduced amount of catastrophe reinsurance.

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

We appreciate your assistance in reviewing this response letter. Please direct all questions or
comments regarding this filing to the undersigned at (416) 367-4942 or p_rivett@fairfax.ca.

    Yours very truly,

    /s/ Paul Rivett

Paul Rivett

Vice President and Chief Legal Officer

    cc:

    V. Prem Watsa, Chairman and Chief Executive Officer,

Fairfax Financial Holdings Limited

    Bill McFarland, National Managing Partner Canada

PricewaterhouseCoopers LLP

-5-

Mail Stop 6010 Via Facsimile and U.S. Mail
                                                                                                December 14, 2007

Mr. V. Prem Watsa Chairman and Chief Executive Officer Fairfax Financial Holdings Limited  95 Wellington Street West, Suite 800 Toronto, Ontario Canada M5J2N7
Re:      Fairfax Financial Holdings Limited             Form 40-F for fiscal year ended December 31, 2006
            File No. 1-31556
Dear Mr. Watsa:

We have reviewed your September 28, 2007 response to our September 19, 2007
letter and have the following comments. In ou r comments, we ask you to provide us with
information so we may better understand your  disclosure.  After reviewing this
information, we may raise additional comments.

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

Off-Balance Sheet Arrangements
1. We acknowledge your response to comment one, particularly your statement that
the disclosures in Notes 4, 13 and 15 “relat e to arrangements that are more aptly
described as contingencies and not off- balance sheet arrangements.”  In your
response, you describe only two off-bala nce sheet arrangements, the pledge of
certain securities on behalf  of Advent and the obligation to assume loans to
officers and directors by Ca nadian banks. However, you appear to have engaged
in other off-balance sheet arrangements,  such as the $247.7 million pledge in
support of Syndicate 1218’s capacity at  Lloyd’s and reinsu rance-to-close
commitments between RiverStone Insurance UK, Lloyd’s of London Syndicate
3500 and Kingsmead syndicates 271 and 506.  Please expand your disclosure to
cover all arrangements with Lloyd’s s yndicates or explain your basis for
concluding that these activities did not constitute off-ba lance sheet arrangements.
Provide a quantification of the contractual oblig ations of Syndicate 3500,
including those related to Kingsmead  syndicates 271 and 506.  Please provide

Mr. V. Prem Watsa
Fairfax Financial Holdings Limited December 14, 2007 Page 2
 separate disclosure that  clearly identifies all of your off-balance sheet
arrangements in accordance with General Instruction B (11).

Exhibit 2 - Consolidated  Financial Statements

Notes to Consolidated Financial Statements
 Note 20. US GAAP Reconciliation, page 52

2. Please refer to prior comment four. Your res ponse appears to indicate that cost of
reinsurance is equivalent to ceded premiu ms as disclosed in Note 7.  However,
you also discuss ceded claims and state th at “the preceding analysis ignores the
impact of reinsurance commission and ba d debt expense.” Please provide a
clearer and more complete explanation and quantification of how you determine
cost of reinsurance and the effect of ceded reinsurance tr ansactions on your
operations for each period presented, as required in paragraph 27 of SFAS 113.

*    *    *    *

Please respond to these comments within  10 business days or tell us when you
will provide us with a respons e.  Your letter should key your responses to our comments.
Detailed cover letters greatly facilitate our review.  Please furnish your letter on EDGAR
under the form type label CORRESP.

You may contact Frank Wyman, St aff Accountant, at 202-551-3660  or Don
Abbott, Senior Staff Accountant, at 202- 551-3608, if you have questions regarding the
comments.  In this regard, do not hes itate to contact me, at (202) 551-3679.

       S i n c e r e l y ,            J i m  B .  R o s e n b e r g
      Senior Assistant Chief Accountant

Mail Stop 6010
Via Facsimile and U.S. Mail

                                                                                                September 19, 2007

Mr. V. Prem Watsa
Chairman and Chief Executive Officer
Fairfax Financial Holdings Limited
95 Wellington Street West, Suite 800
Toronto, Ontario Canada M5J2N7

Re:      Fairfax Financial Holdings Limited
           Form 40-F for fiscal year ended December 31, 2006
            File No. 1-31556

Dear Mr. Watsa:

We have reviewed your filing and have the following comments. We have limited
our review to only your financia l statements and related disclosures and do not intend to
expand our review to other portions of your documents. In our comments, we ask you to
provide us with information so we may better understand your disclosure.  After
reviewing this information, we may raise additional comments.

 Please understand that the purpose of our re view process is to assist you in your
compliance with the applicable disclosure requirements and to enhance the overall disclosure in your filing.  We look forward to  working with you in these respects.  We
welcome any questions you may have about our comments or any other aspect of our review.  Feel free to call us at the telephone numbers listed at the end of this letter.

Form 40-F for fiscal year  ended December 31, 2006
Off-Balance Sheet Arrangements
1. You state that off-balance sheet arrangem ents are described in Notes 4, 13 and 15
to your consolidated financial statemen ts. 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 of f-balance sheet arrangements to arise and
known trends or uncertainties that are reas onably likely to result in a material
reduction in the availability of off-ba lance sheet arrangements to you. Please
provide the information required by Genera l 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.

Mr. V. Prem Watsa
Fairfax Financial Holdings Limited
September 19, 2007 Page 2
Exhibit 2 - Consolidated  Financial Statements

Notes to Consolidated Financial Statements

Note 20. US GAAP Reconciliation, page 52

For each of the comments below, please provide us the information requested in
disclosure-type format in order that we may evaluate your disclosure.

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 inform ation.” Ensure that the pr incipal terms of your ceded
reinsurance contracts are adequately descri bed so that an investor would be able
to adequately assess the exte nt of your net exposure to claims risk. Describe and
quantify any limitations in these contract s on your ability to cede losses in the
future on a basis consistent with historical results.

3. On page 53, you state that under Cana dian GAAP recoveries on stop loss
reinsurance treaties are reco rded 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 a
deferred gain. Guideline D-7 issued by the Superintendent of Financial
Institutions appears to indicate Canadian GAAP account ing model for reinsurance
of short term insurance contracts fo llows the requirements of SFAS 113, in
particular the deferral of the excess of reinsured liabilities under retroactive
reinsurance over cash paid. Explain mo re 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.

4. On page 132, you state that the Company’s profitability is affected by cost of
reinsurance, which appears to be signif icant, given the magnitude of amounts
recoverable from reinsurers at De cember 31, 2006. Quantify the cost of
reinsurance and the factors that caused vari ations in this cost on a US GAAP basis
for each period presented.

5. Please tell us why your provision for uncoll ectible reinsurance is the same amount
under both Canadian and US GAAP a nd did not change between 2005 and 2006
despite your $1 billion commutation of the Swiss Re corporate insurance cover.

6. On page 36, you describe the accounting eff ect of the Swiss Re commutation as a
“non-cash pre-tax and after-tax charge of $142.6 million …a $1 billion decrease in the balance recoverable from re insurers and a $587.4 decrease in funds
withheld payable to reinsurers.” You also show this $587.4 million amount as
“proceeds from the Swiss Re commutation” that increased unpaid claim liabilities. Also, you state elsewhere that  the Swiss Re commutation produced
“approximately $585 million cash proceeds.” Pl ease provide us in disclosure-type
format a description of your US GAAP accounting for the Swiss Re

Mr. V. Prem Watsa
Fairfax Financial Holdings Limited
September 19, 2007 Page 3
commutations that explains your accounting for this transaction and all accounts
affected.
*    *    *    *
Please respond to these comments within  10 business days or tell us when you
will provide us with a respons e.  Your letter should key your responses to our comments.
Detailed cover letters greatly facilitate our review.  Please furnish your letter on EDGAR
under the form type label CORRESP.

We urge all persons who are responsible for the accuracy and adequacy of the
disclosure in the filing to be certain that the filing includes all in formation required under
the Securities Exchange Act of 1934 and th at they have provided all information
investors require for an informed invest ment decision.  Since the company and its
management are in possession of all facts re lating to a company’s disclosure, they are
responsible for the accuracy and adequacy of the disclosures they have made.

 In connection with responding to our co mments, please provide, in your letter, a
statement from the company acknowledging that:

• the company is responsible for the adequacy  and accuracy of the disclosure in the
filings;
• staff comments or changes to disclosure  in response to staff comments do not
foreclose the Commission from taking any action with respect to the filing; and
• the company may not assert staff comme nts as a defense in any proceeding
initiated by the Commission or any person under the federal secu rities laws of the
United States.

 In addition, please be advi sed that the Division of En forcement has access to all
information you provide to the staff of the Divi sion of Corporation Fi nance in our review
of your filing or in response to our comments on your filing.

You may contact Frank Wyman, St aff Accountant, at 202-551-3660  or Don
Abbott, Senior Staff Accountant, at 202- 551-3608, if you have questions regarding the
comments.  In this regard, do not hes itate to contact me, at (202) 551-3679.

       S i n c e r e l y ,

       J i m  B .  R o s e n b e r g
      Senior Assistant Chief Accountant

CORRESP
1
filename1.htm

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.

- 2 -

    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.

- 3 -

    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.

- 4 -

    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.

- 5 -

    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