Fairfax Financial Holdings Limited

US$200,000,000 Aggregate Principal Amount of

5% Convertible Senior Debentures Due 2023

Subordinate Voting Shares

         This document supplements our base shelf prospectus dated August 11, 2003, as supplemented October 6, 2003, October 31, 2003, December 19, 2003, February 17, 2004, March 9, 2004, April 30, 2004, July 30, 2004 and October 29, 2004, relating to the resale of up to US$200,000,000 aggregate principal amount of debentures and the subordinate voting shares issuable upon conversion, redemption, purchase or maturity thereof by certain selling securityholders, each an Electing Holder, named in Schedule A to this prospectus supplement.

      You should read this prospectus supplement in conjunction with the base shelf prospectus. This prospectus supplement updates certain information in the base shelf prospectus and, accordingly, to the extent inconsistent, the information in this prospectus supplement supersedes the information contained in the base shelf prospectus.

      The debentures and the subordinate voting shares issuable upon conversion, redemption, purchase or maturity thereof may be offered in negotiated transactions or otherwise, at varying prices determined at the time of the sale or at negotiated prices. In addition, the subordinate voting shares may be offered from time to time through ordinary brokerage transactions on the New York Stock Exchange. See “Plan of Distribution” in the base shelf prospectus.

Investing in the debentures and the subordinate voting shares issuable upon their conversion involves risks.

See the “Risk Factors” section beginning on page 2 of the base shelf prospectus.

       We are permitted to prepare this prospectus supplement and the base shelf prospectus in accordance with Canadian disclosure requirements, which are different from those of the United States. We prepare our financial statements in accordance with Canadian generally accepted accounting principles, and are subject to Canadian auditing and auditor independence standards. As a result, they may be not be comparable to financial statements of United States companies.

      Owning debentures or subordinate voting shares may subject you to tax consequences both in the United States and Canada. This prospectus supplement may not describe these tax consequences fully. You should read the tax discussion under “Certain Income Tax Considerations” in the base shelf prospectus.

      Your ability to enforce civil liabilities under the United States federal securities laws may be affected adversely because we are incorporated in Canada, our officers and directors and the experts named in the base shelf prospectus are Canadian residents, and many of our assets are located outside the United States.

      NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATOR HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS SUPPLEMENT OR THE BASE SHELF PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The date of this prospectus supplement is February 10, 2005.

WHERE YOU CAN FIND MORE INFORMATION ABOUT FAIRFAX

      The following documents, filed with the Ontario Securities Commission (the “OSC”) under the Securities Act (Ontario) are specifically incorporated by reference into and form an integral part of the base shelf prospectus, as supplemented, which we refer to as the prospectus:

      Any document of the type referred to in the preceding paragraphs and management information circulars (except as provided under applicable securities laws and excluding press releases and confidential material change reports) subsequently filed by us with the OSC after the date of this prospectus supplement and prior to the termination of the distribution of the debentures and subordinate voting shares under this prospectus supplement shall be deemed to be incorporated by reference in this prospectus.

      Any statement contained in a document incorporated or deemed to be incorporated by reference in this prospectus shall be deemed to be modified or superseded, for the purposes of this prospectus, to the extent that a statement contained herein or therein, or any other subsequently filed document which also is or is deemed to be incorporated by reference herein or therein, modifies or supercedes that statement. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document that it modifies or supersedes. The making of a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus.

      Upon a new annual information form and new annual comparative consolidated financial statements being filed by us with, and where required, accepted by, the applicable securities regulatory authorities during the currency of this prospectus, the previous annual information form, the previous annual comparative consolidated financial statements and the accompanying management’s discussion and analysis, all interim consolidated financial statements and the accompanying management’s discussion and analysis, information circulars and material change reports filed prior to the commencement of our then current fiscal year in which our new annual information form is filed, will be deemed no longer to be incorporated into this prospectus for purposes of future offers and sales of the securities under this prospectus. Upon interim

consolidated financial statements and the accompanying management’s discussion and analysis being filed by us with the applicable securities regulatory authorities during the currency of this prospectus, all interim consolidated financial statements and the accompanying management’s discussion and analysis filed prior to the new interim consolidated financial statements will be deemed no longer to be incorporated into this prospectus for purposes of future offers and sales of securities under this prospectus.

      Information has been incorporated in this prospectus from documents filed with the OSC. Copies of documents incorporated herein or therein by reference may be obtained on request without charge from Bradley P. Martin, Vice President and Corporate Secretary of Fairfax, at Suite 800, 95 Wellington Street West, Toronto, Ontario, M5J 2N7. Copies of documents that we have filed with the OSC may be obtained over the Internet at the Canadian Securities Administrators’ website at www.sedar.com.

      We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and in accordance therewith file or furnish reports and other information with or to the SEC. Our recent SEC filings may be obtained over the Internet at the SEC’s website at www.sec.gov. You may also read and copy any document we file or furnish with or to the SEC at the public reference facilities maintained by the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. Please call 1-800-SEC-0330 for further information on the operations of the public reference facilities and copying charges.

SCHEDULE A

ELECTING HOLDERS

      The debentures originally were issued by us and sold by Banc of America Securities LLC, Ferris, Baker Watts Incorporated and BNY Capital Markets, Inc., as the initial purchasers, in transactions exempt from the registration requirements of the Securities Act of 1933, as amended, to persons reasonably believed by the initial purchasers to be qualified institutional buyers. The Electing Holders named below, including their transferees, pledgees or donees or their successors, may from time to time offer and sell any or all of the debentures and the subordinate voting shares conversion, redemption, purchase or maturity thereof pursuant to this prospectus supplement. The Electing Holders may offer all, some or none of the debentures and the subordinate voting shares issuable upon conversion, redemption, purchase or maturity thereof.

      The table below sets forth the name of each Electing Holder, the principal amount of debentures that may be offered by each Electing Holder under this prospectus and the number of subordinate voting shares into which the debentures are convertible upon conversion, redemption, purchase or maturity thereof. The information is based on information provided to us by or on behalf of the Electing Holders on or prior to January 11, 2005. The Electing Holders identified below may have sold, transferred or otherwise disposed of all or a portion of their debentures or subordinate voting shares since the date on which they provided this information in transactions exempt from the registration requirements of the Securities Act of 1933, as amended. Information about the Electing Holders may change from time to time. Any changed information will be set forth in prospectus supplements or post-effective amendments, as required.

      Because the Electing Holders may offer all or some portion of the debentures or the subordinate voting shares issuable upon conversion, redemption, purchase or maturity thereof, we cannot estimate the amount of debentures or subordinate voting shares that may be held by the Electing Holders upon the conversion, redemption, purchase or maturity thereof, upon completion of any sales. For information on the procedure for sales by selling securityholders, read the disclosure under the heading “Plan of Distribution” in the base shelf prospectus.

ANNEX A

FAIRFAX News Release

TORONTO, February 10, 2005

FINANCIAL RESULTS FOR THE YEAR ENDED DECEMBER 31, 2004

     Fairfax Financial Holdings Limited (TSX:FFH.SV) (NYSE:FFH) announces that it had net earnings of $5.6 million in the fourth quarter of 2004 and a net loss of $17.8 million for the 2004 year, and that it ended the year with a very strong financial position. Operating highlights for 2004 were as follows:

	•	Earnings from operations before income taxes were $139.1 million in 2004 (2003 — $527.5 million), after $252.7 million of losses from the third quarter hurricanes and $104.1 million of non-trading realized losses (described below).
	•	The combined ratio of the company’s continuing insurance and reinsurance operations improved to 90.6% in the fourth quarter of 2004 from 97.4% in 2003, and to 97.5% for the full year from 97.6% in 2003. The 97.5% combined ratio in 2004 included 5.1 combined ratio points arising from the third quarter hurricanes.
	•	In the fourth quarter, following an independent ground-up study, Crum & Forster increased its asbestos reserves by $100 million, all of which was covered by aggregate stop loss reinsurance, and the runoff group strengthened its construction defect reserves by $50 million. Crum & Forster’s full-year net cost related to development of prior years’ loss reserves, including redundancies and the fourth quarter $100 million increase of asbestos reserves, was $25 million.
	•	Net premiums written at the company’s continuing insurance and reinsurance operations increased 7.1% in 2004 to $4.4 billion.
	•	Underwriting profit at the company’s continuing insurance and reinsurance operations increased to $108.4 million in 2004 from $87.7 million in 2003.
	•	Cash flow from operations at Northbridge, Crum & Forster and OdysseyRe remained strong at $948.4 million in 2004 compared to $1,099.2 million in 2003.
	•	Total interest and dividends increased to $366.7 million in 2004 from $330.1 million in 2003, due primarily to an increase in yield resulting from the reinvestment of a significant portion of the cash and short term investments, primarily in U.S. treasury bonds, and to increased investment portfolios reflecting positive cash flow from continuing operations.
	•	Realized gains on investments in 2004 totalled $288.3 million, after $104.1 million of non-trading losses, compared to $845.9 million in 2003. The $104.1 million of losses consisted of $77.1 of mark to market changes in fair value, recorded as realized losses, primarily relating to the economic hedges put in place by the company against a decline in the equity markets, and $27.0 of costs, recorded as realized losses, in connection with the company’s repurchase of outstanding debt at a premium to par.
	•	The company had $566.8 million of cash, short term investments and marketable securities at the holding company level at December 31, 2004.
	•	During 2004, the company issued $300 million of equity to long term investors, and through debt issues and a debt exchange offer issued $466.4 million of investment grade debt due in 2012, resulting in meaningful deleveraging and effectively removing any external debt maturities until 2012.
	•	Cash and investments (net of $539.5 of liabilities for economic hedges against a decline in the equity markets) increased to $13.5 billion at December 31, 2004 from $12.6 billion at the end of 2003.
	•	The unrealized gain on portfolio investments was $428.3 million at the end of 2004, compared to $244.9 million at the end of 2003.
	•	Total common shareholders’ equity increased to $3.0 billion at December 31, 2004 from $2.7 billion at December 31, 2003, but because the 2004 equity issue was done below book value, common shareholders’ equity per basic share decreased to $184.86 at December 31, 2004 from $192.81 at the end of 2003.
	•	At December 31, 2004, United States Fire Insurance, Crum & Forster’s principal operating subsidiary, remained in a positive earned surplus position, with a dividend capacity in 2005 of approximately $88 million, while North River Insurance, Crum & Forster’s other significant operating subsidiary which previously lacked dividend capacity, moved to a positive earned surplus position (thereby achieving dividend capacity) of approximately $5 million.

 

     Following is a summary of Fairfax’s unaudited fourth quarter and full year financial results:

     The results for the fourth quarter of 2004 were impacted by $62.6 million of mark to market changes in fair value, recorded as realized losses, relating to the economic hedges put in place by the company against a decline in equity markets; $24.8 of costs, recorded as realized losses, in connection with the company’s repurchase of outstanding debt at a premium to par; and the reserve strengthenings mentioned above for asbestos claims at Crum & Forster and for construction defect claims at the runoff operations.

     There were 13.9 and 14.0 million weighted average shares outstanding during 2004 and 2003 respectively (14.1 and 13.9 million during the fourth quarters of 2004 and 2003 respectively). At the end of 2004, there were 16,091,529 shares effectively outstanding. The consolidated balance sheets and consolidated statements of earnings, retained earnings and cash flows for 2004 and 2003 are set out below, followed by management’s discussion and analysis.

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CONSOLIDATED BALANCE SHEETS
as at December 31, 2004 and 2003
(unaudited — US$ millions)

See accompanying notes to the financial statements.

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CONSOLIDATED STATEMENTS OF EARNINGS
for the years ended December 31, 2004 and 2003
(unaudited — US$ millions except per share amounts)

CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
for the years ended December 31, 2004 and 2003
(unaudited — US$ millions)

See accompanying notes to the financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended December 31, 2004 and 2003
(unaudited — US$ millions)

Cash resources consist of cash and short term investments, including subsidiary cash and short term investments, and excludes $169.7 of subsidiary cash and short term investments pledged for securities sold but not yet purchased which is restricted. Short term investments are readily convertible into cash and have maturities of three months or less.

See accompanying notes to the financial statements.

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Notes to Consolidated Financial Statements
for the years ended December 31, 2004 and 2003
(unaudited — in US$ millions except per share amounts and as otherwise indicated)

1.	Basis of Presentation

     These consolidated financial statements should be read in conjunction with the company’s consolidated financial statements for the year ended December 31, 2003 as set out on pages 22 to 48 of the company’s 2003 Annual Report. These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (“GAAP”) using the same accounting policies as were used for the company’s consolidated financial statements for the year ended December 31, 2003, and although they do not include all disclosures required by Canadian GAAP for annual financial statements, in management’s opinion they include all disclosures necessary for the fair presentation of the company’s year-end results. Included in goodwill at December 31, 2004 is $150.1 related to Lindsey Morden’s U.K. operations. The recoverability of this goodwill is sensitive to the ability of the U.K. operations to meet their profit and cash flow forecasts for 2005 and future years. Failure to meet those forecasts could result in a writedown of goodwill.

2.	Portfolio Investments

     At December 31, 2004, as an economic hedge against a decline in the equity markets, the company had short sales of approximately $400 notional amount of Standard & Poor’s Depository Receipts (“SPDRs”) and $50 of common stocks, as well as a swap with a notional value of approximately $450, as described in the two following paragraphs. At December 31, 2004, common stocks in the company’s portfolio aggregated $1,678.6, with a market value of $1,957.9.

     Simultaneously with short sales of approximately $400 notional amount of SPDRs and $50 of common stocks, the company entered into two-year call options (“options”) to limit the potential loss on the future purchase of the SPDRs and the common stocks to $90.0. The company is required to provide collateral for the obligation to purchase the SPDRs, which amounted to $401.7 of cash and $162.5 of bonds at market value. The collateral provided for the purchase of common stocks sold short is $70.5 of cash. Both the obligation to purchase the securities sold short and the options are carried at fair value in the consolidated financial statements. The fair value of the obligation to purchase the SPDRs and common stocks is included in securities sold but not yet purchased and the fair value of the options is included in common stocks on the consolidated balance sheet.

     In addition, during the year, the company entered into a Total Return Swap (the “swap”). The swap has a notional value of approximately $450 and the company receives floating payments based on the notional value multiplied by LIBOR. The company pays or receives a fixed rate based on the change of the SPDRs which are the underlying security multiplied by the notional value of the swap. Simultaneously, the company entered into an option to limit the potential loss on the swap to $90.0. Short term securities have been pledged as collateral for the swap in the amount of $99.2. The fair value of the swap is a liability of $44.9 and is included in securities sold but not yet purchased on the consolidated balance sheet.

     The company also has purchased credit default swaps and bond put warrants which are carried at fair value of $52.5 and classified as bonds on the consolidated balance sheet.

     Changes in the fair value for the transactions described above have been included in realized gains and losses in the consolidated statements of earnings as follows:

3.	Investments

     On December 29, 2004, the company agreed to acquire 100% of the issued and outstanding common shares of Compagnie de Réassurance d’Ile de France (“Corifrance”), a French reinsurance company, for $59.8 (Euros 44.0) payable on April 7, 2005. As at January 11, 2005 (the date of acquisition), the fair value of assets and liabilities acquired was $122.2 (Euros 89.9) and $62.4 (Euros 45.9) respectively, resulting in no goodwill. In addition, the seller has agreed to indemnify the company for any adverse development on acquired net reserves.

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     On November 15, 2004, OdysseyRe acquired Overseas Partners U.S. Reinsurance Company, a reinsurance company domiciled in the state of Delaware, for $43.0. The fair value of assets and liabilities acquired was $237.8 and $194.8 respectively, resulting in no goodwill.

     Subsidiaries of the company sold 3.1 million shares of common stock of Zenith National Insurance Corp. which they owned, at $43 per share, in an underwritten public offering which closed on July 30, 2004, resulting in a pre-tax gain after expenses of $40.9. At December 31, 2004 the company owned 24.4% of Zenith National.

     On May 18, 2004, the company recorded a pre-tax gain of $40.1 (Cdn$53.5) on the sale of 6,000,000 common shares of its Northbridge subsidiary in an underwritten secondary offering at a price of Cdn$25.60 per share, generating net proceeds of $104.8 (Cdn$146.0) and reducing the company’s ownership of Northbridge from 71.0% to 59.2%.

     On May 28 and June 10, 2003, the company’s Northbridge subsidiary issued an aggregate of 14,740,000 common shares in an initial public offering at Cdn$15 (US$10.82) per share. Net proceeds (after expenses of issue) were $148.9 (Cdn$206.4). After the offering, Fairfax held 36.1 million (71.0%) of Northbridge’s common shares. Fairfax recorded a $5.7 (Cdn$8.0) gain on its effective sale of a 29.0% interest in Northbridge.

     On March 3, 2003, the company purchased an additional 4,300,000 outstanding common shares of Odyssey Re Holdings Corp. (OdysseyRe) for $18.15 per share, increasing its interest in OdysseyRe from 73.8% to 80.6%. As consideration, the company issued seven-year 3.15% debentures exchangeable in November 2004 and February 2005 into the number of OdysseyRe shares purchased. On November 19, 2004, these debentures were purchased and in consideration the company issued new exchangeable debentures, as described in the fourth paragraph of note 4 below.

4.	Capital, Long Term Debt and Trust Preferred Securities

     On December 21, 2004, the company issued $200.0 of its 7.75% notes due 2012.

     On December 21, 2004, the company completed a debt tender offer. A total of $114.6 principal amount of debt was tendered and purchased as follows: $11.1 principal amount of TIG’s 8 1/8% notes due 2005, $62.6 principal amount of 7 3/8% notes due 2006, $36.5 principal amount of 6 7/8% notes due 2008, and $4.4 principal amount of TIG’s trust preferred securities due 2027.

     On December 16, 2004, the company issued 2,406,741 subordinate voting shares at $124.65 per share for net proceeds after issue costs (net of tax) of $299.7.

     On November 19, 2004, the company, through one of its subsidiaries, purchased its $78.0 principal amount of 3.15% exchangeable debentures due 2010 in a private transaction. As consideration, the subsidiary issued $101.0 principal amount of new 3.15% exchangeable debentures due 2009 which are collectively exchangeable into an aggregate of 4,300,000 OdysseyRe common shares in August 2006 (with respect to $32.9 principal amount of new debentures) and November 2006 (with respect to $68.1 principal amount of new debentures).

     From October 29 to November 3, 2004, the company repurchased $23.0 of TIG’s trust preferred securities due in 2027. On November 16 and 17, 2004, the company repurchased $6.5 of its convertible debentures due in 2023. On November 1, 2004, the company repurchased $5.0 of its notes due in 2026.

     On August 27, 2004, the company issued an additional $95.0 (before issue expenses of approximately $3.5) of its 7.75% notes due in 2012. By September 30, 2004, $65.1 of the proceeds were used to repurchase (including the payment of accrued interest of $2.1) $40.3 of its notes due in 2006 and $20.0 of its notes due in 2005.

     On April 29, 2004, the company closed its note exchange offers (which were accounted for as a modification of debt), under which $204.6 of outstanding notes due in 2005 through 2008 were exchanged for a cash payment of $59.4 (including accrued interest) and the issue of $160.4 of new 7.75% notes due in 2012. On June 29, 2004, an additional $10.0 of the company’s notes due in 2006 were exchanged for the issue of $11.0 of new 7.75% notes due in 2012.

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     During the third quarter of 2003, the company repurchased $26.4 and $18.1 of its U.S. dollar-denominated debentures and Canadian dollar-denominated debentures respectively at a cost of $44.5. The debentures purchased were debentures maturing in 2003.

     On July 14 and 24, 2003, the company issued an aggregate $200.0 of 5% convertible senior debentures due July 15, 2023 for net proceeds (after expenses of issue) of $193.7.

     Effective June 5, 2003, Crum & Forster Holdings Corp. issued $300 of 10.375% senior notes due June 15, 2013 for net proceeds (after expenses of issue) of $281.0, of which $63.1 was placed in an interest escrow account to fund the first four interest payments.

     In February 2003, the company redeemed its RHINOS preferred securities for $136.0 cash.

5.

Other

     On March 31, 2004, Lindsey Morden raised $49.5 (Cdn$65.0) in short term financing to cover the payment described in the paragraph below and to repay debt owing to the company. On July 12, 2004, a subsidiary of Lindsey Morden raised $78.3 (Cdn$105.0) under an unsecured non-revolving term facility for an initial term to March 31, 2005 which may be extended, subject to certain conditions, for two successive six-month periods. Proceeds of the loan were used principally to repay the short term financing raised on March 31, 2004, debt owing to banks and debt owing to the company. Fairfax has extended its letter of support of Lindsey Morden to March 2006.

     On March 14, 2004, Lindsey Morden completed the sale of its U.S. third party claims administration business for a cash payment by Lindsey Morden of $22.0. The disposition of this business resulted in a charge to earnings of $13.4, consisting of a $3.6 loss on the sale of the business and other related accruals, including lease termination costs, of $9.8.

6.	Segmented Information

     The company is a financial services holding company which, through its subsidiaries, is engaged in property and casualty insurance conducted on a direct and reinsurance basis, runoff operations and claims adjusting, appraisal and loss management services.

     In Management’s Discussion and Analysis of Financial Condition and Results of Operations, the company shows the net premiums earned, combined ratios, and underwriting and operating results for each of its insurance and reinsurance groups, and as applicable, for its runoff operations as well as the earnings contributions from its claims adjusting, appraisal and loss management services. In the table showing the sources of net earnings, interest and dividends on the consolidated statements of earnings are included in the insurance and reinsurance group operating results and in the runoff and other operations and realized gains on investments related to the runoff group are included in the runoff and other operations. There were no significant changes in the identifiable assets by operating group as at December 31, 2004 compared to December 31, 2003.

7.	U.S. GAAP Reconciliation

     The consolidated financial statements of the company have been prepared in accordance with Canadian GAAP which are different in some respects from those applicable in the United States, as described in note 19 on pages 44 to 48 of the company’s 2003 Annual Report.

The following shows the net earnings in accordance with US GAAP:

(1)	Consists of the change in the mark to market valuation of investments of $95.1 (2003 — $92.7) and the change in currency translation adjustment amount of $75.9 (2003 — $352.9).

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     The following shows the balance sheet amounts in accordance with US GAAP, setting out individual amounts where different from the amounts reported under Canadian GAAP:

The difference in consolidated shareholders’ equity is as follows:

     At December 31, 2004, the cumulative reduction in net earnings under US GAAP relates primarily to the deferred gain on retroactive reinsurance which is amortized into income as the underlying claims are paid.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in US$ millions except per share amounts and as otherwise indicated)

     The company produced an excellent underwriting result in 2004. The combined ratio of its continuing insurance and reinsurance operations was 97.5% for the year (which includes 5.1 combined ratio points arising from the third quarter hurricanes), with Northbridge, Crum & Forster and OdysseyRe producing combined ratios of 87.7%, 106.5% and 98.1% (which include 2.9, 11.1 and 4.2 combined ratio points arising from the third quarter hurricanes), respectively, compared to 97.6% in 2003. The combined ratio of the continuing operations in the fourth quarter of 2004 was 90.6%, compared to 97.5% in the fourth quarter of 2003.

     Earnings from operations before income taxes were $139.1 in 2004 (compared to $527.5 in 2003), after $252.7 of losses from the third quarter hurricanes (including $30.6 at Group Re) and $104.1 of non-trading realized losses (described under “Interest and Dividends and Realized Gains” below).

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     The increase in underwriting income and interest and dividends in 2004 was more than offset by a reduction in realized gains and an increased runoff loss (described below), resulting in a net loss of $17.8 ($2.16 per basic or diluted share) compared to net earnings of $271.1 ($18.55 per basic share or $18.23 per diluted share) in 2003.

     Revenue in the year increased to $5,792.6 from $5,713.9 last year, principally as a result of increased earned premiums offset by reduced realized gains. During 2004, net premiums written by Northbridge, Crum & Forster and OdysseyRe, expressed in local currency, increased 10.4%, 1.4% and 9.1% respectively over 2003. Consolidated net premiums written in 2004 increased by 7.1% to $4,402.8 from $4,109.6 in 2003.

     Cash flow from operations for the year ended December 31, 2004 amounted to $250.5 for Northbridge ($165.9 in 2003), $94.7 for Crum & Forster ($379.2 in 2003) and $603.2 for OdysseyRe ($554.1 in 2003).

Net Earnings

     The combined ratios by segment and the sources of net earnings (with Lindsey Morden equity accounted) were as follows for the years ended December 31, 2004 and 2003:

(1)	These combined ratios include 2.9 (Canadian insurance), 9.4 (U.S. insurance), 4.2 (reinsurance) and 5.1 (consolidated) combined ratio points arising from the third quarter hurricanes.

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     The above sources of net earnings (with Lindsey Morden equity accounted) shown by business segments were as follows for the years ended December 31, 2004 and 2003:

Year ended December 31, 2004

Year ended December 31, 2003

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     Summarized income statements showing the underwriting results and operating income for each business segment for the years ended December 31, 2004 and 2003 are set out below, followed by a discussion of the principal other elements of net earnings.

     Canadian Insurance — Northbridge

     Continued premium growth and improved underwriting performance generated a record 2004 underwriting profit for Northbridge of $115.5, an increase of 120.8% over underwriting profit of $52.3 earned in 2003. Notwithstanding the impact of $27.5 in losses related to the third quarter hurricanes in the U.S. (representing 2.9 combined ratio points), Northbridge’s combined ratio improved to 87.7% in 2004 from 92.6% in 2003 (79.5% in the fourth quarter of 2004 compared to 89.0% in 2003). Premium growth in most of the markets served by Northbridge, while still robust in 2004, slowed relative to the rates of increase in many of those markets in 2003. Rate increases achieved in 2004 in many of Northbridge’s markets, reduced overall quota share treaty cessions to reinsurers, and strong levels of renewal retention augmented by new business volumes nevertheless combined to produce growth (measured in Canadian dollars) in net premiums written of 10.4% and in net premiums earned of 23.5% over 2003 levels. After the inclusion of interest and dividend income, Northbridge reported operating income of $176.4 in 2004, representing an increase of 71.1% over $103.1 of operating income produced in 2003. For more information on Northbridge’s results, please see its 2004 year-end press release posted on its website www.northbridgefinancial.com.

     U.S. Insurance

Year ended December 31, 2004

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Year ended December 31, 2003

(1)	These results differ from those published by Crum & Forster Holdings Corp. due to differences between Canadian and US GAAP.
(2)	Transferred to runoff effective January 1, 2004.

     The U.S. insurance combined ratio for 2004 was 105.4% (90.9% in the fourth quarter) compared to 102.7% for 2003 (107.6% in the fourth quarter). The 105.4% combined ratio in 2004 included 9.4 combined ratio points arising from the third quarter hurricanes.

     Crum & Forster’s combined ratio of 106.5% in 2004 included 11.1 combined ratio points arising from the third quarter hurricanes. Underwriting results also reflected a net cost of $25 or 2.4 combined ratio points related to development of prior years’ loss reserves. Such net prior year loss development included redundancies and $100 of APH strengthening, recorded following an independent ground-up study, all of which was covered by aggregate stop loss reinsurance. Excluding the third quarter hurricanes, the combined ratio improved to 95.4% in 2004 from 104.4% in 2003, reflecting the earned premium impact of the more than 10% price increase achieved in 2003 and stable pricing in 2004 and the company’s continued focus on expenses. Crum & Forster’s net premiums written in 2004 grew by 5.3% (excluding premium cessions related to catastrophe events and prior year reserve actions), reflecting improved retention of renewal business. United States Fire Insurance, Crum & Forster’s principal operating subsidiary, which was redomiciled from New York to Delaware at December 31, 2003, moved to a positive earned surplus position at that date and paid an $80 dividend in 2004 to its parent holding company. Its 2005 dividend capacity is approximately $88. North River Insurance, Crum & Forster’s New Jersey-domiciled operating subsidiary, improved its earned surplus from a deficit of $6 at December 31, 2003 to positive $5 at December 31, 2004 and therefore has 2005 dividend capacity of $5. Cash flow from operations at Crum & Forster was $94.7 in 2004 compared to 2003 operating cash flow of $379.2, with the decrease primarily due to cash received from two large treaty commutations in 2003 and paid losses on catastrophe events in 2004. For more information on Crum & Forster, please see its website www.cfins.com, where its 10K for 2004 is expected to be posted before the end of February.

     Fairmont’s combined ratio of 99.3% reflects its continued focus on underwriting profitability combined with moderate price increases obtained in 2004. Fairmont’s disciplined response to competitive pressure in the employer stop loss market decreased net premiums written to $166.4 in 2004 from $185.4 in 2003.

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     Fairfax Asia

     In 2003, Fairfax Asia included only Falcon. Effective January 1, 2004, Fairfax Asia consists of the company’s Asia operations: Falcon, First Capital and a 26.0% interest in the ICICI/Lombard joint venture. These operations continue to reflect a focus on underwriting profit. The decrease in the combined ratio to 91.9% in 2004 (93.8% in the fourth quarter) from 96.0% in 2003 (91.0% in the fourth quarter) reflects the inclusion in 2004 of First Capital’s strong underwriting results.

     Reinsurance — OdysseyRe⁽¹⁾

(1)	These results differ from those published by Odyssey Re Holdings Corp. due to differences between Canadian and US GAAP and the exclusion from these results of the results of First Capital (First Capital’s results are included in Fairfax Asia above).

     OdysseyRe’s combined ratio was 98.1% in 2004 (including 4.2 combined ratio points arising from the third quarter hurricanes), which marked its third consecutive year producing an underwriting profit. The combined ratio in the fourth quarter of 2004 was 95.2%, compared to 96.0% in 2003. Net premiums written increased by 9.1% in 2004, which follows increases of 32.0% in 2003 and 65.7% in 2002. During this three year period, OdysseyRe significantly expanded its presence in the global marketplace through a deliberate strategy of product and geographic diversification. For 2004, gross premiums written in the United States represented 54% of the total, with non-U.S. business producing 46%. Over the last three years, international business produced an increasing amount of OdysseyRe’s premium volume. The diversification of activity OdysseyRe has achieved was responsible for its ability to produce an underwriting profit in 2004 despite incurring record hurricane losses in Florida and the Caribbean during the third quarter of 2004.

     Net operating cash flow amounted to $603.2 and $554.1 for the years ended December 31, 2004 and 2003, respectively. Since the end of 2001, OdysseyRe’s shareholders’ equity has increased by 93% on a US GAAP basis, generated entirely from retained earnings and invested asset appreciation. For more information on OdysseyRe’s results, please see its year-end press release posted on its website www.odysseyre.com.

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     Interest and Dividends and Realized Gains

     Interest and dividend income in 2004 increased to $301.4 from $220.3 in 2003, due primarily to an increase in yield resulting from the reinvestment of a significant portion of the cash and short term investments, primarily in U.S. treasury bonds, and to increased investment portfolios reflecting positive cash flow from continuing operations.

     Realized gains on investments were $162.7 for 2004, consisting of $206.5 of realized gains reduced by adjustments of $43.8, primarily for intersegment gains. Consolidated realized gains of $288.3 include as well the $125.6 of realized gains in the runoff segment, and were impacted by $104.1 of non-trading losses. The $104.1 of losses consisted of $77.1 of mark to market changes in fair value, recorded as realized losses, primarily relating to the economic hedges put in place by the company against a decline in the equity markets, and $27.0 of costs, recorded as realized losses, in connection with the company’s repurchase of outstanding debt at a premium to par.

     Runoff and Other

Year ended December 31, 2004

Year ended December 31, 2003

     Excluding the “Loss on TIG commutation” (this commutation in the third quarter was another step towards simplifying the company’s runoff structure) and the “Realized gains (losses) on intra-group sales” (which are eliminated on consolidation), both shown separately above (the “Special Items”), and excluding the $75.0 strengthening of construction defect reserves referred to below, the runoff and other pre-tax loss for 2004 was better than the company’s expectation of a runoff and other pre-tax loss of approximately $25 in each quarter of 2004.

     Excluding the Special Items, for the year ended December 31, 2004, the U.S. runoff group had a pre-tax loss of $3.6, primarily attributable to operating and internal claims handling costs in excess of net investment income, substantially offset by realized gains (including the gain on the sale of Zenith National shares of $38.8).

     Excluding the Special Items, for the year ended December 31, 2004, the European runoff group had a pre-tax loss of $215.4, of which $75.0 reflects a strengthening (including $50.0 in the fourth quarter) of construction defect reserves, $22.5 relates to various costs and losses allocated to the European runoff group and the remainder is primarily attributable to operating and internal claims

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