40-F

QuickLinks -- Click here to rapidly navigate through this document

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

Form 40-F

(Check one)
o	Registration statement pursuant to Section 12 of the Securities Exchange Act of 1934
or
ý	Annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2017            Commission File Number: 1-31556

FAIRFAX FINANCIAL HOLDINGS LIMITED
(Exact name of Registrant as specified in its charter)

Canada
(Province or other jurisdiction of incorporation or organization)

6331
(Primary Standard Industrial Classification Code Number (if applicable))

Not Applicable
(I.R.S. Employer Identification Number (if applicable))

95 Wellington Street West
Suite 800
Toronto, Ontario Canada
M5J 2N7
(416)  367-4941
(Address and telephone number of Registrant's principal executive offices)

CT Corporation System
111 Eighth Avenue, 13^th Floor
New York, NY 10011
U.S.A.
(212) 894-8700
(Name, address (including zip code) and telephone number (including area code) of agent for service in the United States)

Securities registered pursuant to Section 12(b) of the Act:
Not Applicable

Securities registered or to be registered pursuant to Section 12(g) of the Act:
Subordinate Voting Shares

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
Not Applicable

For annual reports, indicate by check mark the information filed with this form:
ýAnnual Information Form    ýAudited Annual Financial Statements

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

Subordinate Voting Shares	27,002,303
Multiple Voting Shares	1,548,000

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

Yes ý No o

         Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).

Yes ý No o

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

         Emerging growth company o

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

PRINCIPAL DOCUMENTS

        The following documents have been filed as part of this Annual Report on Form 40-F

1.

Annual Information Form dated March 9, 2018 attached as Exhibit 99.1 hereto.



2.

Audited Consolidated Financial Statements of the Registrant as of December 31, 2017 and 2016 and for the two years in the period ended December 31, 2017 and the related notes, Management's Report on Internal Control over Financial Reporting and the Report of Independent Registered Public Accounting Firm on the Consolidated Financial Statements and the effectiveness of internal control over financial reporting, attached as Exhibit 99.2 hereto.



3.

Management's Discussion and Analysis of Financial Condition and Results of Operations dated March 9, 2018 attached as Exhibit 99.3 hereto.

DISCLOSURE CONTROLS AND PROCEDURES

Certifications

        The required certifications are included in Exhibits 99.6 and 99.7 hereto.

Disclosure Controls and Procedures

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

Management's Annual Report on Internal Control Over Financial Reporting

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

Attestation Report of the Registered Public Accounting Firm

        The attestation report of PricewaterhouseCoopers LLP is included in the Report of Independent Registered Public Accounting Firm which is included in Exhibit 99.2 hereto and is incorporated by reference herein.

Changes in Internal Control Over Financial Reporting

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

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

NOTICES PURSUANT TO REGULATION BTR

        The Registrant was not required by Rule 104 of Regulation BTR to send any notice to any of its directors or executive officers during the year ended December 31, 2017.

2

AUDIT COMMITTEE FINANCIAL EXPERT

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

CODE OF ETHICS

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

PRINCIPAL ACCOUNTANT FEES AND SERVICES

        For details on the Registrant's principal accountant fees payable to PricewaterhouseCoopers LLP and its affiliates for the years ended December 31, 2017 and December 31, 2016, as well as a description of the nature of each category of fees, see the information under "Audit Committee" in the Registrant's Annual Information Form dated March 9, 2017, included as Exhibit 99.1 hereto.

Pre-Approval Policies and Procedures

        The Registrant's Audit Committee has adopted a pre-approval policy with respect to permitted audit and non-audit services. Non-audit services are expected to relate primarily to tax advisory services. Under the policy, non-audit service requests and associated estimated fees payable by the Registrant and its subsidiaries must be submitted prior to the initiation of the services in advance of each financial quarter for pre-approval by the Registrant's Audit Committee. Requests by the Registrant or its subsidiaries for pre-approval of non-audit services (other than tax advisory services discussed below) within any financial quarter must be submitted to the Registrant's chief financial officer and pre-approved by the Chair of the Audit Committee and must be presented to the Audit Committee at its next meeting. The Audit Committee has pre-approved in principle certain types of tax advisory services and during any quarter, the Registrant's chief financial officer may approve requests for such services of less than CDN $5,000 per item subject to an aggregate quarterly limit of CDN $25,000 for Canadian and international tax matters and $25,000 for U.S. tax matters.

        For the year ended December 31, 2017, none of the services described above were approved by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

OFF-BALANCE SHEET ARRANGEMENTS

        The Registrant and its subsidiaries have certain security arrangements and commitments that have financial implications. These arrangements are described in Note 20 to the Registrant's audited consolidated financial statements for the year ended December 31, 2017, included as Exhibit 99.2 hereto.

TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

        Tabular disclosure of the Registrant's present and future obligations as at December 31, 2017 is provided in Note 24 to the Registrant's audited consolidated financial statements for the year ended December 31, 2017, included as Exhibit 99.2 hereto.

        For further details on the Registrant's provision for claim liability, long term debt principal and interest payments, purchase obligation and other liabilities payments and operating lease payments, see Notes 8, 15, 22, 23 and 24 of the Registrant's audited consolidated financial statements for the year ended December 31, 2017, included as Exhibit 99.2 hereto.

3

IDENTIFICATION OF THE AUDIT COMMITTEE

        The Registrant has a standing audit committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. The members of the Registrant's audit committee are Alan D. Horn, Anthony F. Griffiths, Robert J. Gunn, Timothy R. Price and Lauren C. Templeton. The disclosure provided under "Statement of Corporate Governance Practices—Audit Committee" in the Registrant's Management Proxy Circular, included as Exhibit 99.4 hereto, is incorporated by reference herein.

MINE SAFETY DISCLOSURE

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

FORWARD-LOOKING INFORMATION

        A number of statements in the documents incorporated by reference in this Form 40-F constitute "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Please refer to the paragraph under the heading "Forward-Looking Statements" in the Management's Discussion and Analysis of Financial Condition and Results of Operations dated March 9, 2018, including Management's Report on Internal Control over Financial Reporting incorporated by reference herein, attached as Exhibit 99.3 hereto and forming an integral part of this document, for a discussion of risks, uncertainties and assumptions that could cause actual results to vary from those forward-looking statements.

UNDERTAKING AND CONSENT TO SERVICE OF PROCESS

A.    Undertaking.

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

B.    Consent to Service of Process.

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

4

SIGNATURES

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

	FAIRFAX FINANCIAL HOLDINGS LIMITED
Date: March 9, 2018	By:	/s/ Paul Rivett
		Name:	Paul Rivett
		Title:	President

5

EXHIBIT INDEX

99.1	Annual Information Form dated March 9, 2018
99.2	Audited Consolidated Financial Statements of the Registrant as of December 31, 2017 and 2016 and for the two years in the period ended December 31, 2017 and the related notes, Management's Report on Internal Control over Financial Reporting and the Report of Independent Registered Public Accounting Firm on the Consolidated Financial Statements and the effectiveness of internal control over financial reporting
99.3	Management's Discussion and Analysis of Financial Condition and Results of Operations dated March 9, 2018
99.4	The information under "Statement of Corporate Governance Practices" in the Registrant's Management Proxy Circular, dated March 9, 2018 in connection with the annual meeting of shareholders to be held on April 26, 2018, is incorporated herein by reference to Exhibit 99.1 to the Registrant's Report on Form 6-K furnished to the Securities and Exchange Commission on March 9, 2018
99.5	Consent of PricewaterhouseCoopers LLP
99.6	Rule 13a-14(a)/15d-14(a) Certifications:
	Certification of Registrant's Chief Executive Officer Certification of Registrant's Chief Financial Officer
99.7	Section 1350 Certifications:
	Certification of Registrant's Chief Executive Officer Certification of Registrant's Chief Financial Officer
101	Interactive Data File

6

QuickLinks

PRINCIPAL DOCUMENTS
DISCLOSURE CONTROLS AND PROCEDURES
NOTICES PURSUANT TO REGULATION BTR
AUDIT COMMITTEE FINANCIAL EXPERT
CODE OF ETHICS
PRINCIPAL ACCOUNTANT FEES AND SERVICES
OFF-BALANCE SHEET ARRANGEMENTS
TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
IDENTIFICATION OF THE AUDIT COMMITTEE
MINE SAFETY DISCLOSURE
FORWARD-LOOKING INFORMATION
UNDERTAKING AND CONSENT TO SERVICE OF PROCESS
SIGNATURES
EXHIBIT INDEX

EX-99.1

QuickLinks -- Click here to rapidly navigate through this document

Exhibit 99.1

ANNUAL INFORMATION FORM

FOR THE YEAR ENDED DECEMBER 31, 2017

March 9, 2018

Fairfax Financial Holdings Limited
95 Wellington Street West, Suite 800
Toronto, Ontario, Canada M5J 2N7

FAIRFAX FINANCIAL HOLDINGS LIMITED — 2017 ANNUAL INFORMATION FORM

TABLE OF CONTENTS AND INFORMATION INCORPORATED BY REFERENCE

	Page Reference
	Annual Information Form		2017 Annual Report(1)		Management Proxy Circular(2)
CORPORATE STRUCTURE		3
DESCRIPTION OF THE BUSINESS		5		2-3, 39-121, 123-202
GENERAL DEVELOPMENT OF THE BUSINESS		6		4-27, 76-81, 88-94
RISK FACTORS		7		94-111, 189-200
DIVIDENDS		7
CAPITAL STRUCTURE		8
MARKET FOR SECURITIES		11
DIRECTORS AND OFFICERS		15
LEGAL PROCEEDINGS		17		86-87
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS		17
TRANSFER AGENTS AND REGISTRARS		17
MATERIAL CONTRACTS		18
INTERESTS OF EXPERTS		18
AUDIT COMMITTEE		18				18
ADDITIONAL INFORMATION		19

(1)

Incorporated by reference from the Fairfax Financial Holdings Limited 2017 Annual Report (the "2017 Annual Report").

(2)

Incorporated by reference from the Fairfax Financial Holdings Limited Management Proxy Circular dated March 9, 2018 (the "Management Proxy Circular").

        Except as otherwise noted, all information given is at, or for the fiscal year ended, December 31, 2017. As the majority of our operations are in the United States or conducted in U.S. dollars, we report our consolidated financial statements in U.S. dollars. All comparative financial information, financial data and other monetary data in this Annual Information Form are reported in U.S. dollars unless otherwise noted.

        Copies of this Annual Information Form, as well as copies of the 2017 Annual Report and the Management Proxy Circular (parts of which are incorporated herein by reference), may be obtained from our Corporate Secretary at 95 Wellington Street West, Suite 800, Toronto, Ontario, M5J 2N7. These documents may also be found on our website at www.fairfax.ca or on SEDAR at www.sedar.com. See "Additional Information".

-2-

CORPORATE STRUCTURE

Name, Address and Incorporation

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

Intercorporate Relationships

        The following is a list of our principal subsidiaries. Indented companies are subsidiaries of the non-indented company which precedes them. All subsidiaries were wholly-owned, directly or through another subsidiary, as of December 31, 2017 unless otherwise noted.

Name	Jurisdiction of Incorporation
Canadian insurance subsidiaries
Northbridge Financial Corporation	Canada
Federated Insurance Company of Canada	Canada
Northbridge General Insurance Corporation	Canada
Northbridge Personal Insurance Corporation	Canada
U.S. insurance subsidiaries
Crum & Forster Holdings Corp.	Delaware
United States Fire Insurance Company	Delaware
First Mercury Insurance Company	Delaware
The North River Insurance Company	New Jersey
Seneca Insurance Company, Inc	New York
Zenith National Insurance Corp.	Delaware
Zenith Insurance Company	California
Asian insurance and reinsurance subsidiaries
Falcon Insurance Company (Hong Kong) Limited	Hong Kong
Fairfirst Insurance Limited (78.00% owned)	Sri Lanka
PT Asuransi Multi Artha Guna Tbk (80.00% owned)	Indonesia
The Pacific Insurance Berhad (85.00% owned)	Malaysia
Other insurance subsidiaries
Bryte Insurance Company Ltd	South Africa
Fairfax Brasil Seguros Corporativos S.A.	Brazil
Fairfax Latin America Ltd.	Canada
SBS Seguros Colombia S.A.	Colombia
Southbridge Compañía de Seguros Generales S.A.	Chile
La Meridional Compañía Argentina de Seguros S.A. (99.99% owned)	Argentina

-3-

Name	Jurisdiction of Incorporation
Reinsurance and insurance subsidiaries
Advent Capital (Holdings) LTD	England and Wales
Brit Limited (72.51% owned)	England and Wales
Brit Insurance Holdings Limited	England and Wales
Brit Reinsurance (Bermuda) Limited	Bermuda
Brit Syndicates Limited	England and Wales
Colonnade Insurance S.A.	Luxembourg
CRC Reinsurance Limited	Barbados
Fairfax Financial Holdings (Switzerland) GmbH (67.40% owned)	Switzerland
Allied World Assurance Company Holdings, GmbH	Switzerland
Allied World Assurance Company, AG	Switzerland
Allied World Assurance Company, Ltd	Bermuda
Allied World Assurance Company (Europe) dac	Ireland
Allied World National Assurance Company	New Hampshire
Allied World Insurance Company	New Hampshire
Allied World Specialty Insurance Company	Delaware
Odyssey Re Holdings Corp.	Delaware
Odyssey Reinsurance Company	Connecticut
Odyssey Re Europe Holdings S.A.S.	France
Newline Holdings UK Limited	United Kingdom
Newline Corporate Name Limited	United Kingdom
Newline Insurance Company Limited	United Kingdom
Hudson Insurance Company	Delaware
Pethealth Inc.	Canada
Polskie Towarzystwo Reasekuracji Spólka Akcyjna	Poland
Wentworth Insurance Company Ltd.	Barbados
Runoff subsidiaries
RiverStone Insurance Limited	United Kingdom
RiverStone Insurance (UK) Limited	United Kingdom
RiverStone Managing Agency Limited	United Kingdom
TIG Insurance Company	California
Investment management subsidiary
Hamblin Watsa Investment Counsel Ltd.	Canada

-4-

Name	Jurisdiction of Incorporation
Other non-insurance and non-reinsurance subsidiaries
Boat Rocker Media Inc. (58.21% owned)	Ontario
Cara Operations Limited(a)	Ontario
Fairfax Africa Holdings Corporation(b)	Canada
Fairfax India Holdings Corporation(c)	Canada
National Collateral Management Services Limited (89.53% owned)	India
FAIRVentures Inc.	Canada
Golf Town Limited(d)	Canada
Grivalia Properties Real Estate Investment Company S.A. (52.66% owned)	Greece
Keg Restaurants Ltd. (51.00% owned)	Ontario
Peak Achievement Athletics Inc.(e)	Canada
Praktiker Hellas Commercial Societe Anonyme	Greece
Rouge Media Group Inc. (65.00% owned)	Canada
Rouge Media, Inc. (65.00% owned)	Delaware
Sporting Life Inc. (75.00% owned)	Ontario
Tommy & Lefebvre Inc.	Ontario
Thomas Cook (India) Limited (67.61% owned)	India
Sterling Holiday Resorts Limited	India
Quess Corp Limited (49.02% owned)	India
MFXchange Holdings Inc	Ontario
William Ashley China Corporation	Canada

(a)

The multiple voting shares of Cara Operations Limited ("Cara") held by Fairfax represent approximately 56.70% of the voting rights and 40.24% of the equity interest in Cara.

(b)

The multiple voting shares of Fairfax Africa Holdings Corporation ("Fairfax Africa") held by Fairfax represent approximately 98.81% of the voting rights and 64.20% of the equity interest in Fairfax Africa.

(c)

The multiple voting shares of Fairfax India Holdings Corporation ("Fairfax India") held by Fairfax represent approximately 93.64% of the voting rights and 30.19% of the equity interest in Fairfax India.

(d)

Fairfax, through a holding company, owns 100% of the voting rights and 60.00% of the economic interest in Golf Town Limited.

(e)

Fairfax, through a holding company, owns 50.00% of the voting rights and 42.58% of the economic interest in Peak Achievement Athletics Inc.

DESCRIPTION OF THE BUSINESS

Overview

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

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

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

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

-5-

        Since 2011, we have acquired companies that are in industries other than insurance and re-insurance where the companies met our investment criteria. Such companies are run on a decentralized basis with autonomous management and represent a small portion of Fairfax's consolidated operations.

        For a full description of our business see our corporate profile, the notes to our audited consolidated financial statements and management's discussion and analysis of financial conditions and results of operations, all in our 2017 Annual Report.

Competition

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

Cycles of Insurance

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

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

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

Employees

        As at December 31, 2017, Fairfax (the holding company) had 40 employees and our subsidiaries had in aggregate approximately 38,000 full-time employees.

GENERAL DEVELOPMENT OF THE BUSINESS

        Over the past three completed financial years our total assets have increased from $27.8 billion as at December 31, 2015 to $64.1 billion as at December 31, 2017. Common shareholders' equity was $8.9 billion, $8.5 billion and $12.5 billion as at December 31, 2015, 2016 and 2017 respectively. For the year ended December 31, 2015, Fairfax had revenue of $9.6 billion and net earnings attributable to shareholders of Fairfax of $568 million. For the year ended December 31, 2016, Fairfax had revenue of $9.3 billion and net loss attributable to shareholders of Fairfax of $512.5 million. For the year ended December 31, 2017, Fairfax had revenue of $16.2 billion and net earnings attributable to shareholders of Fairfax of $1.7 billion.

-6-

        For a description of the recent developments of our company, see our Chairman's letter to shareholders in our 2017 Annual Report. For a description of our acquisitions and divestitures over the last three years, see Note 23 (Acquisitions and Divestitures) to our audited consolidated financial statements in our 2017 Annual Report. We have filed a Form 51-102F4 — Business Acquisition Report with respect to one of our acquisitions referenced in Note 23 (Acquisitions and Divestitures) to our audited consolidated financial statements in our 2017 Annual Report. For a description of our capital transactions, see Note 16 (Total Equity) to our annual consolidated financial statements in our 2017 Annual Report. For a description of our debt profile, see Note 15 (Borrowings) to our audited consolidated financial statements in our 2017 Annual Report.

RISK FACTORS

        We have identified certain risks and uncertainties to which our business, operations and financial conditions are subject, which are described under "Issues and Risks" on pages 189-200 of our 2017 Annual Report. Additional risks and uncertainties not known to us or that we currently believe are not reasonably likely to materially affect us may also impair our business, results of operations and financial condition. An explanation of our risk management approach can be found in Note 24 (Financial Risk Management) to our 2017 Annual Report.

DIVIDENDS

        We have declared the following dividends since 2015 on our subordinate voting shares and multiple voting shares (collectively, the "Equity Shares"):

•

On January 5, 2015, we declared a dividend of $10.00 per Equity Share, payable on January 27, 2015.

•

On January 5, 2016, we declared a dividend of $10.00 per Equity Share, payable on January 27, 2016.

•

On January 4, 2017, we declared a dividend of $10.00 per Equity Share, payable on January 26, 2017.

•

On January 3, 2018, we declared a dividend of $10.00 per Equity Share, payable on January 25, 2018.

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

        Dividends of CDN$1.1445 per Series C preferred share were paid to holders of our Series C preferred shares during each of 2015, 2016 and 2017.

        Dividends of CDN$0.93768, CDN$0.90972 and CDN$0.9262 per Series D preferred share were paid to holders of our Series D preferred shares during each of 2015, 2016 and 2017, respectively.

        Dividends of CDN$0.842515, CDN$0.72752 and CDN$0.72752 per Series E preferred share were paid to holders of our Series E preferred shares during each of 2015, 2016 and 2017, respectively.

        Dividends of CDN$0.49975, CDN$0.66222 and CDN$0.67939 per Series F preferred share were paid to holders of our Series F preferred shares during each of 2015, 2016 and 2017, respectively.

        Dividends of CDN$1.144875, CDN$0.8295 and CDN$0.8295 per Series G preferred share were paid to holders of our Series G preferred shares during each of 2015, 2016 and 2017, respectively.

        Dividends of CDN$0.18300, CDN$0.76222 and CDN$0.77911 per Series H preferred share were paid to holders of our Series H preferred shares during each of 2015, 2016 and 2017, respectively.

        Dividends of CDN$1.25, CDN$0.927 and CDN$0.927 per Series I preferred share were paid to holders of our Series I preferred shares during each of 2015, 2016 and 2017, respectively.

        Dividend payments on our Series J preferred shares commenced during 2016. Dividends of CDN$0.8360 and CDN$0.85141 were paid to holders of our Series J preferred shares during 2016 and 2017, respectively.

        Dividends of CDN$1.25, CDN$1.25 and CDN$1.188314 per Series K preferred share were paid to holders of our Series K preferred shares during each of 2015, 2016 and 2017, respectively.

        Dividends of CDN$0.98091, CDN$1.1875 and CDN$1.1875 per Series M preferred share were paid to holders of our Series M preferred shares during each of 2015, 2016 and 2017, respectively.

-7-

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

CAPITAL STRUCTURE

General Description

        For a general description of our capital structure please see "Description of Subordinate Voting Shares and Preferred Shares" at pages 52-64 of our short form base shelf prospectus dated October 19, 2017 filed with the Canadian securities regulatory authorities and incorporated herein by reference.

        On February 1, 2010 we issued 8,000,000 Series E preferred shares. On February 26, 2010 we issued 563,381 subordinate voting shares. On July 28, 2010 we issued 10,000,000 Series G preferred shares. On October 5, 2010 we issued 12,000,000 Series I preferred shares. On March 21, 2012 we issued 9,500,000 Series K preferred shares. On November 15, 2013, we issued 1,000,000 subordinate voting shares. On December 31, 2014, holders representing 3,983,616 Series C preferred shares exercised their right to convert their Series C preferred shares into Series D preferred shares, on a one-for-one basis, with the result that 3,983,616 Series D preferred shares were issued. On March 3, 2015 we issued 1,150,000 subordinate voting shares and 9,200,000 Series M preferred shares. On March 31, 2015, holders representing 3,572,044 Series E preferred shares exercised their right to convert their Series E preferred shares into Series F preferred shares, on a one-for-one basis, with the result that 3,572,044 Series F preferred shares were issued. On April 10, 2015, in connection with the initial public offering of Cara, we issued an aggregate of 19,294 subordinate voting shares, on a private placement basis. On September 30, 2015, holders representing 2,567,048 Series G preferred shares exercised their right to convert their Series G preferred shares into Series H preferred shares, on a one-for-one basis, with the result that 2,567,048 Series H preferred shares were issued. On December 31, 2015, holders representing 1,534,447 Series I preferred shares exercised their right to convert their Series I preferred shares into Series J preferred shares, on a one-for-one basis, with the result that 1,534,447 Series J preferred shares were issued. On March 2, 2016 we issued 1,000,000 subordinate voting shares. In the third quarter of 2017, we issued an aggregate of 5,075,894 subordinate voting shares in connection with the acquisition of Allied World Assurance Company Holdings, AG (which was subsequently renamed Allied World Assurance Company Holdings, GmbH). For a general description of each series of our preferred shares see our prospectus supplements referenced below, each of which has been filed with the Canadian securities regulatory authorities and is incorporated herein by reference:

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

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

-8-

•

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

•

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

        Our short form base shelf prospectus and supplementary prospectuses are available on SEDAR at www.sedar.com.

Ratings

Long Term Debt

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

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

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

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

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

Preferred Shares

        Our preferred shares have been assigned the following ratings:

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

-9-

        S&P's preferred share rating scale is a current assessment of the creditworthiness of an obligor with respect to a specified preferred share obligation issued in the Canadian market, relative to preferred shares issued by other issuers in the Canadian market. There is a direct correspondence between the specific ratings assigned on the Canadian preferred share scale and the various rating levels on the global debt rating scale. The rating scale ranges from P-1(High) to D, which represents the range from highest to lowest quality of such securities rated. A rating of P-3 by S&P is the third highest of eight categories and indicates that the obligation is less vulnerable to nonpayment than other speculative issues. The ratings from P-1 to P-3 may be modified by "high", "mid" and "low" grades which indicate relative standing within the major rating categories.

        The DBRS preferred share rating scale is meant to give an indication of the risk that a borrower will not fulfill its full obligations in a timely manner. The "Pfd-3" rating is in the third highest category available from DBRS for preferred shares. According to the DBRS rating system, securities rated Pfd-3 are of adequate credit quality. "High" or "low" grades are used to indicate the relative standing within a rating category. The absence of either a "high" or "low" designation indicates the rating is in the "middle" of the category.

        The "Ba" rating is the fifth highest of the nine categories used by Moody's for hybrid securities. The modifier "2" indicates that the obligation ranks in the middle of the "Ba" rating category. The "hyb" indicator signals the potential for ratings volatility due to less predictable exogenous (and often non-credit linked) factors such as regulatory and/or government intervention coupled with a hybrid's equity-like features.

        The "bb+" rating is the fifth highest category used by A.M. Best for hybrid securities and is assigned to issues with fair credit characteristics. The assignment of a plus (+) or minus (-) designation after a rating indicates whether the credit quality is near the top or bottom of a category.

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

-10-

MARKET FOR SECURITIES

Trading Price and Volume

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

Subordinate Voting Shares

Month	High		Low		Close		Trading Volume
January, 2017		663.63		601.00		608.00		1,224,809
February, 2017		633.43		598.00		598.00		991,793
March, 2017		633.99		603.00		605.20		943,001
April, 2017		628.42		605.00		624.00		683,978
May, 2017		623.99		589.00		592.69		923,114
June, 2017		601.73		547.95		562.01		1,821,450
July, 2017		598.20		552.01		594.51		2,445,576
August, 2017		652.89		588.44		649.08		1,119,666
September, 2017		651.62		592.11		649.33		1,273,486
October, 2017		682.28		639.00		679.41		909,195
November, 2017		708.99		667.78		708.99		840,123
December, 2017		704.00		658.87		669.34		657,552

Series C Preferred Shares

Month	High		Low		Close		Trading Volume
January, 2017		21.54		20.19		21.42		134,423
February, 2017		22.49		21.50		21.50		296,405
March, 2017		22.86		21.40		22.51		172,826
April, 2017		22.72		21.25		22.15		106,232
May, 2017		22.11		21.54		21.92		98,916
June, 2017		22.67		21.38		22.67		115,125
July, 2017		23.08		22.55		22.85		121,670
August, 2017		22.93		22.05		22.71		117,179
September, 2017		23.08		22.50		22.91		151,113
October, 2017		23.68		22.95		23.52		139,109
November, 2017		24.19		23.41		23.97		113,736
December, 2017		24.08		23.30		23.89		118,648

-11-

Series D Preferred Shares

Month	High		Low		Close		Trading Volume
January, 2017		19.86		18.83		19.86		43,485
February, 2017		21.12		19.86		20.19		58,357
March, 2017		21.41		20.02		21.41		64,120
April, 2017		21.73		20.92		21.00		30,869
May, 2017		21.14		20.75		21.14		31,348
June, 2017		21.65		20.74		21.65		57,848
July, 2017		22.50		21.65		22.36		57,251
August, 2017		22.55		21.84		22.15		55,407
September, 2017		22.73		22.14		22.70		34,904
October, 2017		23.25		22.59		23.20		40,576
November, 2017		23.60		22.91		23.30		61,274
December, 2017		23.76		23.05		23.20		32,533

Series E Preferred Shares

Month	High		Low		Close		Trading Volume
January, 2017		15.60		14.69		15.60		94,907
February, 2017		16.82		15.63		16.10		98,075
March, 2017		16.80		15.99		16.66		102,485
April, 2017		17.16		16.41		16.51		85,012
May, 2017		16.50		15.90		16.24		81,966
June, 2017		16.98		15.82		16.86		96,146
July, 2017		17.86		16.89		17.55		95,407
August, 2017		17.67		16.81		17.34		27,051
September, 2017		18.01		17.31		18.01		83,685
October, 2017		18.25		17.72		18.25		67,144
November, 2017		18.74		18.10		18.71		204,059
December, 2017		18.76		17.81		18.13		36,730

Series F Preferred Shares

Month	High		Low		Close		Trading Volume
January, 2017		14.72		13.85		14.65		88,506
February, 2017		15.44		14.62		15.10		200,284
March, 2017		15.71		15.00		15.65		70,764
April, 2017		16.10		15.56		15.61		58,436
May, 2017		15.74		15.22		15.68		61,405
June, 2017		16.16		15.31		16.05		71,822
July, 2017		17.27		16.08		17.27		36,920
August, 2017		17.31		16.66		17.10		48,145
September, 2017		17.35		17.01		17.35		21,170
October, 2017		17.60		17.00		17.40		53,912
November, 2017		18.32		17.40		18.00		178,487
December, 2017		18.10		17.54		17.85		47,930

-12-

Series G Preferred Shares

Month	High		Low		Close		Trading Volume
January, 2017		17.60		16.47		17.60		185,034
February, 2017		19.22		17.60		18.17		200,221
March, 2017		19.15		18.20		18.95		181,008
April, 2017		19.05		17.73		17.76		131,713
May, 2017		17.91		16.75		17.75		217,663
June, 2017		18.84		17.22		18.80		176,022
July, 2017		19.42		18.70		19.10		116,351
August, 2017		19.25		18.41		18.90		98,268
September, 2017		19.60		18.80		19.55		330,252
October, 2017		20.26		19.51		20.09		117,531
November, 2017		20.50		19.99		20.48		193,868
December, 2017		20.53		19.30		19.83		140,803

Series H Preferred Shares

Month	High		Low		Close		Trading Volume
January, 2017		16.90		15.80		16.61		224,243
February, 2017		17.92		16.62		17.75		141,192
March, 2017		19.15		17.48		19.05		54,979
April, 2017		19.32		18.00		18.22		44,088
May, 2017		18.31		17.84		17.97		28,399
June, 2017		18.25		17.55		18.10		27,751
July, 2017		19.25		18.15		19.12		28,076
August, 2017		19.25		18.61		19.00		21,255
September, 2017		19.60		19.00		19.55		24,667
October, 2017		20.13		19.29		20.13		130,739
November, 2017		20.24		19.82		20.10		31,489
December, 2017		20.40		19.50		19.80		21,442

Series I Preferred Shares

Month	High		Low		Close		Trading Volume
January, 2017		19.45		18.49		19.28		176,362
February, 2017		20.20		19.18		19.19		259,944
March, 2017		20.10		19.16		20.10		209,710
April, 2017		20.60		19.34		19.42		229,402
May, 2017		19.61		19.07		19.51		177,975
June, 2017		20.24		18.99		20.12		172,681
July, 2017		20.63		20.10		20.35		95,568
August, 2017		20.48		19.51		20.14		58,428
September, 2017		20.55		19.96		20.55		108,435
October, 2017		21.40		20.47		21.32		115,682
November, 2017		22.20		20.99		21.42		124,830
December, 2017		21.46		20.16		20.82		162,572

-13-

Series J Preferred Shares

Month	High		Low		Close		Trading Volume
January, 2017		18.06		16.74		18.05		22,503
February, 2017		18.51		18.04		18.20		35,984
March, 2017		18.97		17.91		18.97		33,279
April, 2017		19.50		18.81		19.10		16,460
May, 2017		19.07		18.54		18.78		25,197
June, 2017		19.20		18.68		19.10		16,646
July, 2017		20.25		19.20		20.10		23,420
August, 2017		20.12		19.60		19.80		17,689
September, 2017		20.35		19.85		20.35		22,121
October, 2017		21.65		20.28		20.75		25,800
November, 2017		21.02		20.61		20.96		27,450
December, 2017		20.91		20.00		20.25		21,073

Series K Preferred Shares

Month	High		Low		Close		Trading Volume
January, 2017		22.46		21.45		22.30		726,292
February, 2017		23.14		22.15		22.15		320,620
March, 2017		23.05		22.17		22.67		254,253
April, 2017		23.50		22.60		22.75		146,855
May, 2017		23.35		22.52		22.84		193,359
June, 2017		23.41		22.60		23.25		308,188
July, 2017		23.63		23.10		23.35		127,399
August, 2017		23.39		22.50		23.17		177,344
September, 2017		23.53		22.99		23.53		168,205
October, 2017		23.90		23.46		23.86		103,076
November, 2017		24.38		23.75		24.30		103,490
December, 2017		24.35		23.45		23.97		146,382

Series M Preferred Shares

Month	High		Low		Close		Trading Volume
January, 2017		24.39		23.29		24.15		208,155
February, 2017		24.83		23.78		23.78		243,083
March, 2017		24.80		23.81		24.46		212,492
April, 2017		24.71		23.85		24.00		179,250
May, 2017		24.19		23.44		24.10		195,343
June, 2017		24.50		23.73		24.47		193,987
July, 2017		24.85		24.26		24.65		71,997
August, 2017		24.73		23.60		24.39		90,585
September, 2017		24.80		24.31		24.80		204,595
October, 2017		25.00		24.72		24.87		156,022
November, 2017		25.10		24.80		25.10		185,511
December, 2017		25.12		24.41		25.02		141,138

Prior Sales

        On December 4, 2017, we completed the sale of CDN$650 million aggregate principal amount of 4.25% Senior Notes due 2027 at an issue price of CDN$99.992 per CDN$100 principal amount of Senior Notes.

-14-

DIRECTORS AND OFFICERS

Name, Occupation and Security Holding

Directors

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

Name and municipality of residence	Principal occupation during the last five years	Date first elected
Anthony F. Griffiths(a)(b)(c)(d) Toronto, Ontario	Independent Business Consultant and Corporate Director		2002
Robert J. Gunn(a)(c) Toronto, Ontario	Independent Business Consultant and Corporate Director		2007
Alan D. Horn(a) Toronto, Ontario	President and Chief Executive Officer, Rogers Telecommunications Limited. From 2006 to December 2017, Chairman of Rogers Communications Inc.		2008
Lauren C. Templeton(a) Lookout Mountain, Tennessee, U.S.A.	Founder and President, Templeton and Phillips Capital Management, LLC		2017
John R.V. Palmer(b) Toronto, Ontario	Chairman of the Toronto Leadership Centre		2012
Timothy R. Price(a)(b) Toronto, Ontario	Chairman of Brookfield Funds, a division of Brookfield Asset Management Inc.		2010
Brandon W. Sweitzer(b)(c) New Canaan, Connecticut, U.S.A.	Dean, School of Risk Management, St. John's University		2004
Karen L. Jurjevich Toronto, Ontario	Principal, Branksome Hall and CEO, Branksome Hall Global		2017
Benjamin P. Watsa Toronto, Ontario	President, Marval Capital Ltd. From 2006 to October 2017, Partner and Portfolio Manager, Lissom Investment Management Inc.		2015
V. Prem Watsa Toronto, Ontario	Chairman and Chief Executive Officer, Fairfax; Vice President, Hamblin Watsa Investment Counsel Ltd.		1985
Notes:

(a)

Member of the Audit Committee (Chair — Alan D. Horn)

(b)

Member of the Governance and Nominating Committee (Chair — Anthony F. Griffiths)

(c)

Member of the Compensation Committee (Chair — Anthony F. Griffiths)

(d)

Lead Director

-15-

Officers

Name and municipality of residence	Principal occupation during the last five years (office is with Fairfax, unless otherwise specified)	Office held
David Bonham Mississauga, Ontario	Vice President and Chief Financial Officer	Vice President and Chief Financial Officer
Peter Clarke Richmond Hill, Ontario	Vice President and Chief Risk Officer	Vice President and Chief Risk Officer
Jean Cloutier Toronto, Ontario	Vice President, International Operations	Vice President, International Operations
Bradley Martin Toronto, Ontario	Vice President, Strategic Investments	Vice President, Strategic Investments
Paul Rivett Toronto, Ontario	President; Vice President, Structured Investments and Managing Director, Hamblin Watsa Investment Counsel Ltd. From 2012 to July 2013, Vice President, Operations of Fairfax. From 2007 to February 2018, Vice President and Chief Operating Officer of Hamblin Watsa Investment Counsel Ltd.	President
Eric Salsberg Toronto, Ontario	Vice President, Corporate Affairs and Corporate Secretary.	Vice President, Corporate Affairs and Corporate Secretary
Ronald Schokking Lakefield, Ontario	Vice President and Treasurer	Vice President and Treasurer
John Varnell Caledon, Ontario	Vice President, Corporate Development. Vice President, Corporate Affairs, Fairfax India Holdings Corporation.	Vice President, Corporate Development
V. Prem Watsa Toronto, Ontario	Chairman and Chief Executive Officer; Vice President, Hamblin Watsa Investment Counsel Ltd.	Chairman and Chief Executive Officer

Directors and Officers — Ownership of Securities

        As at December 31, 2017, to our knowledge, the directors and officers of Fairfax beneficially owned, directly or indirectly, or exercised control or direction over, approximately 446,318 of our subordinate voting shares (1.7%) and 1,548,000 of our multiple voting shares (100%). As at such date, V. Prem Watsa, our Chairman and Chief Executive Officer, controlled shares representing 42.5% of the total votes attached to all classes of our shares (100% of the total votes attached to the multiple voting shares and 1.2% of the total votes attached to the subordinate voting shares). As of December 31, 2017, to our knowledge, the directors and officers of Fairfax beneficially owned, directly or indirectly, or exercised control or direction over, approximately 408,540 of the subordinate voting shares (0.3%) of Fairfax India. As of December 31, 2017, to our knowledge, the directors and officers of Fairfax beneficially owned, directly or indirectly, or exercised control or direction over, approximately 105,000 of the subordinate voting shares (0.5%) of Fairfax Africa. As of December 31, 2017, to our knowledge, the directors and officers of Fairfax beneficially owned, directly or indirectly, or exercised control or direction over, approximately 31,280 of subordinate voting shares (0.1%) of Cara.

Cease Trade Orders, Bankruptcies, Penalties or Sanctions

        Mr. Griffiths was a Director of PreMD Inc. from 1995 to February 2010, and, in connection with the voluntary delisting of that company's shares from the TSX, cease trade orders were issued in April 2009 requiring all trading in and all acquisitions of securities of that company to cease permanently due to that

-16-

company's failure to file continuous disclosure materials required by Ontario securities law. The cease trade orders are still in effect.

        Mr. Griffiths and Mr. Rivett were Directors of Resolute Forest Products Inc. (formerly AbitibiBowater Inc.) when that company and certain of its U.S. and Canadian subsidiaries filed for protection in Canada under the Companies' Creditors Arrangement Act (Canada) ("CCAA") and for relief under Chapter 11 of the United States Bankruptcy Code ("USBC") in the United States in April 2009. On December 9, 2010, that company emerged from creditor protection under the CCAA in Canada and Chapter 11 of the USBC in the United States.

        Mr. Griffiths was a Director of Jaguar Mining Inc. from May 2004 to June 2013. On December 23, 2013, that company commenced proceedings under the CCAA to complete a recapitalization and financing transaction. Trading of that company's common shares was suspended on December 23, 2013 and those shares were delisted from the TSX on February 10, 2014. On February 7, 2014, the affected unsecured creditors of that company and the Ontario Superior Court of Justice approved that company's plan of compromise and arrangement pursuant to the CCAA which was implemented effective April 22, 2014.

Conflicts of Interest

        Each of V. Prem Watsa, Alan D. Horn and Anthony F. Griffiths, each a Director (and, in the case of Mr. Watsa, a Director of Hamblin Watsa) and a Director of Fairfax India, will be required to disclose the nature and extent of his interest in, and is not entitled to vote on, any resolution to approve, any material contract or transaction or any proposed material contract or transaction between Fairfax and Fairfax India (or, in the case of Mr. Watsa, between Fairfax and Hamblin Watsa) or any of their affiliates or any other entity in which Messrs. Watsa, Horn or Griffiths, respectively, has an interest (unless the contract or transaction relates to his remuneration or an indemnity on liability insurance).

        Each of V. Prem Watsa and Paul C. Rivett, a Director and the President of Fairfax, respectively, each a Director and an Officer of Hamblin Watsa, and each a Director of Fairfax Africa, and Quinn McLean, Managing Director, Middle East and Africa of Hamblin Watsa and a Director of Fairfax Africa, will be required to disclose the nature and extent of his interest in, and is not entitled to vote on, any resolution to approve, any material contract or transaction or any proposed material contract or transaction between Fairfax and Fairfax Africa or between Fairfax and Hamblin Watsa, or any of their affiliates, or any other entity in which Messrs. Watsa, Rivett or McLean has an interest (unless the contract or transaction relates to his remuneration or an indemnity on liability insurance).

LEGAL PROCEEDINGS

        A description of the legal proceedings to which we are a party to during 2017 is included in Note 20 (Contingencies and Commitments) in our 2017 Annual Report.

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

        During the three-year period ending December 31, 2017 and during the current financial year up to the date hereof, none of our directors, executive officers, 10 percent shareholders or any of their associates or affiliates had a material interest in any transaction that has materially affected or will materially affect Fairfax on a consolidated basis.

TRANSFER AGENTS AND REGISTRARS

        The transfer agent and registrar for our subordinate voting shares in Canada is Computershare Trust Company of Canada, 100 University Avenue, 8^th Floor, Toronto, Ontario M5J 2Y1, and in the United States is Computershare Trust Company, N.A., 250 Royall Street, Canton, Massachusetts, 02021. The transfer agent and registrar for our Series C preferred shares, Series D preferred shares, Series E preferred shares, Series F preferred shares, Series G preferred shares, Series H preferred shares, Series I preferred shares, Series J preferred shares, Series K preferred shares and Series M preferred shares is Computershare Trust Company of Canada, 100 University Avenue, 8^th Floor, Toronto, Ontario M5J 2Y1.

-17-

MATERIAL CONTRACTS

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

INTERESTS OF EXPERTS

        Our independent registered public accounting firm is PricewaterhouseCoopers LLP, Chartered Professional Accountants, Licensed Public Accountants who has issued an independent auditor's report dated March 9, 2018 in respect of Fairfax's consolidated financial statements as at December 31, 2017 and 2016 and for the two years ended December 31, 2017 and on the effectiveness of Fairfax's internal control over financial reporting as at December 31, 2017. PricewaterhouseCoopers LLP has advised that they are independent with respect to Fairfax within the meaning of the Rules of Professional Conduct of the Chartered Professional Accountants of Ontario and the rules of the US Securities and Exchange Commission and the requirements of the Public Company Accounting Oversight Board Rule 3520, Auditor Independence.

AUDIT COMMITTEE

        A copy of our Audit Committee Charter is attached as Schedule A. The members of our Audit Committee are Alan D. Horn (Chair), Anthony F. Griffiths, Robert J. Gunn, Timothy R. Price and Lauren C. Templeton. All of the members of our Audit Committee are independent and financially literate pursuant to the meanings of such terms in Multilateral Instrument 52-110 — Audit Committees. Additional information concerning our Audit Committee, including the education and experience of each Audit Committee member and the procedures that we have adopted for the engagement of non-audit services, can be found in our Management Proxy Circular dated March 9, 2018 under the heading "Audit Committee".

        Accountant fees payable for the years ended December 31, 2017 and December 31, 2016 to our external auditor, PricewaterhouseCoopers LLP, and its affiliates by us and our subsidiaries were CDN$34.8 million and CDN$29.6 million, respectively. The fees payable to PricewaterhouseCoopers LLP in 2017 and 2016 are detailed below.

	Year ended December 31, 2017		Year ended December 31, 2016
	(CDN $ millions)		(CDN $ millions)
Audit fees	$	31.7	$	25.9
Audit-related fees		0.8		0.9
Tax fees		1.2		1.8
All other fees		1.1		1.0
Total	$	34.8	$	29.6

        The nature of each category of fees is described below.

Audit Fees

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

Audit-Related Fees

        Audit-related fees were paid for assurance and related services related to employee pension and benefit plan audits, accounting consultations, and assurance services that are not required by statute or regulation and special actuarial reviews.

-18-

Tax Fees

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

All Other Fees

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

ADDITIONAL INFORMATION

        Additional information about our company may be found on SEDAR at www.sedar.com.

        Additional information, including directors' and officers' remuneration and indebtedness, principal holders of our securities and options to purchase securities is contained in our Management Proxy Circular dated March 9, 2018. Additional financial information is provided in our audited consolidated financial statements and management's discussion and analysis of financial conditions and results of operations for the year ended December 31, 2017 and in pages 2-3 and 4-27 of our 2017 Annual Report.

-19-

Schedule A

FAIRFAX FINANCIAL HOLDINGS LIMITED

AUDIT COMMITTEE CHARTER

Approved by the Board of Directors on February 17, 2005, except
the Addition of Paragraph 21 of Section 4 was
Approved by the Board of Directors on May 30, 2014

-20-

FAIRFAX FINANCIAL HOLDINGS LIMITED
AUDIT COMMITTEE CHARTER

1.     Statement of Purpose

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

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

2.     Committee Membership

    Members

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

    Chair

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

    Qualifications

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

    Ex Officio Members and Management Attendance

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

3.     Committee Operations

    Frequency of Meetings

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

    Agenda and Reporting to the Board

        The Chair will establish the agenda for meetings in consultation with the other members of the Committee, the Chairman of the Board and the Lead Director. To the maximum extent possible, the agenda and meeting

-21-

materials will be circulated to the members in advance to ensure sufficient time for study prior to the meeting. The Committee will report to the Board at the next meeting of the Board following each Committee meeting.

    Secretary

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

    Minutes

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

    Quorum

        A quorum at any meeting will be a simple majority.

    Procedure

        The procedure at meetings will be determined by the Committee.

    Transaction of Business

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

    Absence of Chair

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

    Exercise of Power Between Meetings

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

4.     Committee Duties and Responsibilities

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

Independent Auditor's Qualifications and Independence

1.

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

2.

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

3.

The Committee must pre-approve any permitted non-audit services to be provided by the independent auditor to Fairfax or its subsidiaries. The Committee may delegate to one or more of its members the

-22-

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

4.

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

5.

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

6.

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

7.

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

8.

The Committee will establish hiring policies for employees and former employees of its independent auditor.

Financial Statements and Financial Review

9.

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

10.

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

11.

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

-23-

12.

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

13.

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

14.

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

15.

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

16.

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

17.

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

18.

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

Additional Oversight

19.

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

20.

The Committee will annually review the expenses of the CEO and the CFO.

21.

The Committee will participate in the oversight of Fairfax's insurance subsidiaries that are subject to the NAIC Model Audit Rules, as adopted by the respective insurers' states of domicile, including through its interaction with their designated audit committees. If material weaknesses or significant deficiencies in internal control and/or significant solvency concerns are identified in such a subsidiary, at thresholds appropriate for the subsidiary, regardless of their materiality at the consolidated Fairfax level, the Committee will be involved in addressing these issues and will oversee their remediation. If any additional review and oversight responsibilities not included above are required to be performed by independent

-24-

committees of the boards of directors of Fairfax's insurance subsidiaries under state laws and regulations applicable to such insurers in their states or provinces of domicile were such insurers not part of Fairfax, and if any such subsidiary or its designated audit committee notifies the Committee of such required performance, then regardless of the materiality of the subject matter involved at the consolidated Fairfax level, the Committee will perform such additional review and oversight responsibilities.

5.     Access to Advisors

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

6.     The Committee Chair

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

7.     Committee Evaluation

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

-25-

QuickLinks

Exhibit 99.1

FAIRFAX FINANCIAL HOLDINGS LIMITED — 2017 ANNUAL INFORMATION FORM TABLE OF CONTENTS AND INFORMATION INCORPORATED BY REFERENCE
Schedule A FAIRFAX FINANCIAL HOLDINGS LIMITED AUDIT COMMITTEE CHARTER Approved by the Board of Directors on February 17, 2005, except the Addition of Paragraph 21 of Section 4 was Approved by the Board of Directors on May 30, 2014
FAIRFAX FINANCIAL HOLDINGS LIMITED AUDIT COMMITTEE CHARTER

EX-99.2

QuickLinks -- Click here to rapidly navigate through this document

Exhibit 99.2

Management's Responsibility for the Financial Statements

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

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

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

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

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

Management's Report on Internal Control over Financial Reporting

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

Management has assessed the effectiveness of the company's internal control over financial reporting as of December 31, 2017 using criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). The scope of this assessment, in accordance with Canadian and U.S. securities laws, did not include an evaluation of the internal control over financial reporting of Allied World Assurance Company Holdings, AG (since renamed "Allied World Assurance Company Holdings, GmbH") which was acquired on July 6, 2017. The operations of Allied World Assurance Company Holdings, GmbH represented 6.5% of the company's consolidated revenue for the year ended December 31, 2017 and represented 22.8% and 23.9% of the company's consolidated assets and liabilities respectively as at December 31, 2017. Based on this assessment, management concluded that the company's internal control over financial reporting was effective as of December 31, 2017.

The effectiveness of the company's internal control over financial reporting as of December 31, 2017 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.

March 9, 2018

V. Prem Watsa Chairman and Chief Executive Officer	David Bonham Vice President and Chief Financial Officer

28

Report of Independent Registered Public Accounting Firm

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

Opinions on the financial statements and internal control over financial reporting

We have audited the accompanying consolidated balance sheets of Fairfax Financial Holdings Limited and its subsidiaries (together, the Company) as of December 31, 2017 and 2016, and the related consolidated statements of earnings, comprehensive income, changes in equity and cash flows for the years then ended, including the related notes (collectively referred to as the consolidated financial statements). We also have audited the Company's internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and its financial performance and its cash flows for the years then ended in conformity with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control – Integrated Framework (2013) issued by the COSO.

Basis for opinions

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

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

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

As described in Management's Report on Internal Control over Financial Reporting, management has excluded Allied World Assurance Company Holdings, AG, which was subsequently renamed Allied World Assurance Company Holdings, GmbH (Allied World) from its assessment of internal control over financial reporting as of December 31, 2017 because it was acquired by the Company in a purchase business combination during 2017. We have also excluded Allied World from our audit of internal control over financial reporting. Allied World is a subsidiary whose total assets, total liabilities and total revenues excluded from management's assessment and our audit of internal control over financial reporting represent 22.8%, 23.9% and 6.5%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2017.

29

Definition and limitations of internal control over financial reporting

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

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

Chartered Professional Accountants, Licensed Public Accountants

Toronto, Canada
March 9, 2018

We have served as the Company's auditor since at least 1985. We have not determined the specific year we began serving as auditor of the Company or its predecessor.

(This page is intentionally left blank)

30

31

Consolidated Financial Statements

Consolidated Balance Sheets
as at December 31, 2017 and December 31, 2016

	Notes	December 31, 2017	December 31, 2016
		(US$ millions)
Assets
Holding company cash and investments (including assets pledged for short sale and derivative obligations – $77.8; December 31, 2016 – $94.4)	5, 27	2,368.4	1,371.6
Insurance contract receivables	10	4,686.9	2,917.5
Portfolio investments
Subsidiary cash and short term investments	5, 27	17,382.5	9,938.0
Bonds (cost $8,764.6; December 31, 2016 – $8,699.1)	5	9,164.1	9,323.2
Preferred stocks (cost $338.5; December 31, 2016 – $111.2)	5	296.8	69.6
Common stocks (cost $4,877.5; December 31, 2016 – $4,824.0)	5	4,838.7	4,158.8
Investments in associates (fair value $2,824.3; December 31, 2016 – $2,955.4)	5, 6	2,487.0	2,393.0
Derivatives and other invested assets (cost $585.7; December 31, 2016 – $546.2)	5, 7	255.4	179.7
Assets pledged for short sale and derivative obligations (cost $197.5; December 31, 2016 – $223.9)	5, 7	194.7	228.5
Fairfax India and Fairfax Africa cash, portfolio investments and associates	5, 6, 27	2,394.0	1,002.6
		37,013.2	27,293.4
Deferred premium acquisition costs	11	927.5	693.1
Recoverable from reinsurers (including recoverables on paid losses – $453.8; December 31, 2016 – $290.9)	9	7,812.5	4,010.3
Deferred income taxes	18	380.8	732.6
Goodwill and intangible assets	12	6,072.5	3,847.5
Other assets	13	4,828.3	2,518.4
Total assets		64,090.1	43,384.4

See accompanying notes.

Signed on behalf of the Board

Director	Director

32

	Notes	December 31, 2017	December 31, 2016
		(US$ millions)
Liabilities
Accounts payable and accrued liabilities	14	3,629.5	2,888.6
Income taxes payable	18	95.6	35.4
Short sale and derivative obligations (including at the holding company – $11.5; December 31, 2016 – $42.2)	5, 7	126.2	234.3
Funds withheld payable to reinsurers		850.2	416.2
Insurance contract liabilities	8	34,562.5	23,222.2
Borrowings – holding company and insurance and reinsurance companies	15	4,848.1	3,908.0
Borrowings – non-insurance companies	15	1,566.0	859.6
Total liabilities		45,678.1	31,564.3
Equity	16
Common shareholders' equity		12,475.6	8,484.6
Preferred stock		1,335.5	1,335.5
Shareholders' equity attributable to shareholders of Fairfax		13,811.1	9,820.1
Non-controlling interests		4,600.9	2,000.0
Total equity		18,412.0	11,820.1
		64,090.1	43,384.4

See accompanying notes.

33

Consolidated Statements of Earnings
for the years ended December 31, 2017 and 2016

		Notes	2017			2016
			(US$ millions except per share amounts)
Revenue
	Gross premiums written	10, 25		12,207.5			9,534.3
	Net premiums written	25		9,983.5			8,088.4
	Gross premiums earned			11,822.0			9,209.7
	Premiums ceded to reinsurers			(2,100.6	)		(1,347.5	)
	Net premiums earned	25		9,721.4			7,862.2
	Interest and dividends	5		559.0			555.2
	Share of profit of associates	6		200.5			24.2
	Net gains (losses) on investments	5		1,467.5			(1,203.6	)
	Gain on sale of subsidiary	23		1,018.6			–
	Other revenue	25		3,257.6			2,061.6
				16,224.6			9,299.6
Expenses
	Losses on claims, gross	8		9,518.7			5,682.9
	Losses on claims ceded to reinsurers	9		(2,371.8	)		(964.3	)
	Losses on claims, net	26		7,146.9			4,718.6
	Operating expenses	26		2,049.5			1,597.7
	Commissions, net	9		1,649.2			1,336.4
	Interest expense	15		331.2			242.8
	Other expenses	25, 26		3,024.6			1,958.4
				14,201.4			9,853.9
Earnings (loss) before income taxes				2,023.2			(554.3	)
Provision (recovery) for income taxes		18		408.3			(159.6	)
Net earnings (loss)				1,614.9			(394.7	)
Attributable to:
Shareholders of Fairfax				1,740.6			(512.5	)
Non-controlling interests				(125.7	)		117.8
				1,614.9			(394.7	)
Net earnings (loss) per share		17	$	66.74		$	(24.18	)
Net earnings (loss) per diluted share		17	$	64.98		$	(24.18	)
Cash dividends paid per share		16	$	10.00		$	10.00
Shares outstanding (000) (weighted average)		17		25,411			23,017

See accompanying notes.

34

Consolidated Statements of Comprehensive Income
for the years ended December 31, 2017 and 2016

			Notes	2017		2016
				(US$ millions)
Net earnings (loss)				1,614.9		(394.7	)
Other comprehensive income (loss), net of income taxes			16
	Items that may be subsequently reclassified to net earnings
		Net unrealized foreign currency translation gains (losses) on foreign operations		461.7		(80.2	)
		Losses on hedge of net investment in Canadian subsidiaries	7	(106.3	)	(37.5	)
		Share of other comprehensive income (loss) of associates, excluding net gains (losses) on defined benefit plans	6	110.1		(35.6	)
				465.5		(153.3	)
	Items that will not be subsequently reclassified to net earnings
		Share of net gains (losses) on defined benefit plans of associates	6	5.2		(33.2	)
		Net losses on defined benefit plans	21	(31.8	)	(18.3	)
				(26.6	)	(51.5	)
Other comprehensive income (loss), net of income taxes				438.9		(204.8	)
Comprehensive income (loss)				2,053.8		(599.5	)
Attributable to:
Shareholders of Fairfax				2,024.4		(696.4	)
Non-controlling interests				29.4		96.9
				2,053.8		(599.5	)

			Notes	2017		2016
Income tax (expense) recovery included in other comprehensive income (loss)
	Income tax on items that may be subsequently reclassified to net earnings
		Net unrealized foreign currency translation gains (losses) on foreign operations		10.4		14.0
		Share of other comprehensive income (loss) of associates, excluding net gains (losses) on defined benefit plans		(25.9	)	3.7
				(15.5	)	17.7
	Income tax on items that will not be subsequently reclassified to net earnings
		Share of net gains (losses) on defined benefit plans of associates		(7.4	)	10.5
		Net losses on defined benefit plans		2.3		5.0
				(5.1	)	15.5
Total income tax (expense) recovery				(20.6	)	33.2

See accompanying notes.

35

Consolidated Statements of Changes in Equity
for the years ended December 31, 2017 and 2016
(US$ millions)

		Subordinate voting shares		Multiple voting shares	Treasury shares (at cost)		Share- based payments and other reserves		Retained earnings		Accumulated other comprehensive income (loss)		Common shareholders' equity		Preferred shares	Equity attributable to shareholders of Fairfax		Non- controlling interests		Total equity
Balance as of January 1, 2017		4,750.8		3.8	(285.1	)	106.8		4,456.2		(547.9	)	8,484.6		1,335.5	9,820.1		2,000.0		11,820.1
Net earnings (loss) for the year		–		–	–		–		1,740.6		–		1,740.6		–	1,740.6		(125.7	)	1,614.9
Other comprehensive income, net of income taxes:
	Net unrealized foreign currency translation gains on foreign operations	–		–	–		–		–		306.7		306.7		–	306.7		155.0		461.7
	Losses on hedge of net investment in Canadian subsidiaries	–		–	–		–		–		(106.3	)	(106.3	)	–	(106.3	)	–		(106.3	)
	Share of other comprehensive income of associates, excluding net gains on defined benefit plans	–		–	–		–		–		109.3		109.3		–	109.3		0.8		110.1
	Share of net gains on defined benefit plans of associates	–		–	–		–		–		5.0		5.0		–	5.0		0.2		5.2
	Net losses on defined benefit plans	–		–	–		–		–		(30.9	)	(30.9	)	–	(30.9	)	(0.9	)	(31.8	)
Issuance of shares		2,196.4		–	17.4		(16.9	)	–		–		2,196.9		–	2,196.9		–		2,196.9
Purchases and amortization		(45.6	)	–	(140.5	)	51.8		–		–		(134.3	)	–	(134.3	)	3.8		(130.5	)
Excess of book value over consideration of common shares purchased for cancellation		–		–	–		–		(50.6	)	–		(50.6	)	–	(50.6	)	–		(50.6	)
Common share dividends		–		–	–		–		(237.4	)	–		(237.4	)	–	(237.4	)	(67.5	)	(304.9	)
Preferred share dividends		–		–	–		–		(44.6	)	–		(44.6	)	–	(44.6	)	–		(44.6	)
Acquisitions of subsidiaries (note 23)		–		–	–		–		–		–		–		–	–		2,451.2		2,451.2
Other net changes in capitalization (note 16)		–		–	–		52.8		183.8		–		236.6		–	236.6		184.0		420.6
Balance as of December 31, 2017		6,901.6		3.8	(408.2	)	194.5		6,048.0		(264.1	)	12,475.6		1,335.5	13,811.1		4,600.9		18,412.0
Balance as of January 1, 2016		4,229.8		3.8	(236.0	)	88.2		5,230.7		(364.0	)	8,952.5		1,334.9	10,287.4		1,731.5		12,018.9
Net earnings (loss) for the year		–		–	–		–		(512.5	)	–		(512.5	)	–	(512.5	)	117.8		(394.7	)
Other comprehensive loss, net of income taxes:
	Net unrealized foreign currency translation losses on foreign operations	–		–	–		–		–		(61.4	)	(61.4	)	–	(61.4	)	(18.8	)	(80.2	)
	Losses on hedge of net investment in Canadian subsidiaries	–		–	–		–		–		(37.5	)	(37.5	)	–	(37.5	)	–		(37.5	)
	Share of other comprehensive loss of associates, excluding net losses on defined benefit plans	–		–	–		–		–		(35.4	)	(35.4	)	–	(35.4	)	(0.2	)	(35.6	)
	Share of net losses on defined benefit plans of associates	–		–	–		–		–		(32.0	)	(32.0	)	–	(32.0	)	(1.2	)	(33.2	)
	Net losses on defined benefit plans	–		–	–		–		–		(17.6	)	(17.6	)	–	(17.6	)	(0.7	)	(18.3	)
Issuance of shares		523.5		–	15.1		(17.6	)	–		–		521.0		–	521.0		–		521.0
Purchases and amortization		(6.1	)	–	(64.2	)	40.6		–		–		(29.7	)	–	(29.7	)	(0.8	)	(30.5	)
Excess of book value over consideration of common shares purchased for cancellation		–		–	–		–		(8.0	)	–		(8.0	)	–	(8.0	)	–		(8.0	)
Common share dividends		–		–	–		–		(227.8	)	–		(227.8	)	–	(227.8	)	(41.2	)	(269.0	)
Preferred share dividends		–		–	–		–		(44.0	)	–		(44.0	)	–	(44.0	)	–		(44.0	)
Acquisitions of subsidiaries (note 23)		–		–	–		–		–		–		–		–	–		86.8		86.8
Other net changes in capitalization		3.6		–	–		(4.4	)	17.8		–		17.0		0.6	17.6		126.8		144.4
Balance as of December 31, 2016		4,750.8		3.8	(285.1	)	106.8		4,456.2		(547.9	)	8,484.6		1,335.5	9,820.1		2,000.0		11,820.1

See accompanying notes.

36

Consolidated Statements of Cash Flows
for the years ended December 31, 2017 and 2016

			Notes	2017		2016
				(US$ millions)
Operating activities
	Net earnings (loss)			1,614.9		(394.7	)
	Depreciation, amortization and impairment charges		26	280.5		191.7
	Net bond premium (discount) amortization			(52.7	)	3.6
	Amortization of share-based payment awards			51.8		40.6
	Share of profit of associates		6	(200.5	)	(24.2	)
	Deferred income taxes		18	230.3		(273.8	)
	Net (gains) losses on investments		5	(1,467.5	)	1,203.6
	Gain on sale of subsidiary		23	(1,018.6	)	–
	Loss on repurchase of borrowings		15	28.6		–
	Net sales of securities classified as FVTPL		27	2,678.4		1,119.3
	Changes in operating assets and liabilities		27	555.4		(607.9	)
Cash provided by operating activities				2,700.6		1,258.2
Investing activities
	Sales of investments in associates		6, 23	1,014.9		45.8
	Purchases of investments in associates		6, 23	(1,026.5	)	(735.3	)
	Net purchases of premises and equipment and intangible assets			(415.2	)	(208.3	)
	Purchases of subsidiaries, net of cash acquired		23	(1,107.7	)	(779.1	)
	Sale of subsidiary, net of cash divested		23	640.4		–
	Decrease in restricted cash for purchase of subsidiary			–		6.5
Cash used in investing activities				(894.1	)	(1,670.4	)
Financing activities
	Borrowings – holding company and insurance and reinsurance companies:		15
		Proceeds, net of issuance costs		577.0		637.7
		Repayments		(483.7	)	(5.4	)
		Net borrowings from (repayments to) holding company revolving credit facility		(200.0	)	200.0
	Borrowings – non-insurance companies:		15
		Proceeds, net of issuance costs		500.6		360.5
		Repayments		(268.7	)	(38.9	)
		Net borrowings from revolving credit facilities		193.7		193.6
		Increase in restricted cash related to financing activities		(150.8	)	(18.9	)
	Subordinate voting shares:		16
		Issuances, net of issuance costs		–		523.5
		Repurchases for treasury		(140.5	)	(64.2	)
		Repurchases for cancellation		(96.2	)	(14.1	)
	Common share dividends		16	(237.4	)	(227.8	)
	Preferred share dividends		16	(44.6	)	(44.0	)
	Subsidiary common shares:
		Issuances to non-controlling interests, net of issuance costs	23	2,223.2		157.1
		Purchases of non-controlling interests	23	(140.3	)	(87.2	)
		Sales to non-controlling interests	23	96.8		12.7
		Dividends paid to non-controlling interests	16	(67.5	)	(41.2	)
Cash provided by financing activities				1,761.6		1,543.4
Increase in cash and cash equivalents				3,568.1		1,131.2
	Cash and cash equivalents – beginning of year			4,219.1		3,125.6
	Foreign currency translation			147.8		(37.7	)
Cash and cash equivalents – end of year			27	7,935.0		4,219.1

See accompanying notes.

37

Index to Notes to Consolidated Financial Statements

1.	Business Operations	39
2.	Basis of Presentation	39
3.	Summary of Significant Accounting Policies	39
4.	Critical Accounting Estimates and Judgments	51
5.	Cash and Investments	52
6.	Investments in Associates	60
7.	Short Sales and Derivatives	65
8.	Insurance Contract Liabilities	67
9.	Reinsurance	70
10.	Insurance Contract Receivables	71
11.	Deferred Premium Acquisition Costs	72
12.	Goodwill and Intangible Assets	73
13.	Other Assets	75
14.	Accounts Payable and Accrued Liabilities	75
15.	Borrowings	76
16.	Total Equity	78
17.	Earnings per Share	81
18.	Income Taxes	82
19.	Statutory Requirements	85
20.	Contingencies and Commitments	86
21.	Pensions and Post Retirement Benefits	87
22.	Operating Leases	88
23.	Acquisitions and Divestitures	88
24.	Financial Risk Management	94
25.	Segmented Information	111
26.	Expenses	117
27.	Supplementary Cash Flow Information	118
28.	Related Party Transactions	119
29.	Subsidiaries	120

38

Notes to Consolidated Financial Statements
for the years ended December 31, 2017 and 2016
(in US$ and $ millions except per share amounts and as otherwise indicated)

1.    Business Operations

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

2.    Basis of Presentation

The company's consolidated financial statements for the year ended December 31, 2017 are prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") effective as at December 31, 2017, except IFRS 9 (2010) Financial Instruments which was adopted early. The consolidated financial statements have been prepared on a historical cost basis, except for derivative financial instruments and fair value through profit and loss ("FVTPL") financial assets and liabilities that have been measured at fair value.

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

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

These consolidated financial statements were approved for issue by the company's Board of Directors on March 9, 2018.

3.    Summary of Significant Accounting Policies

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

Consolidation

Subsidiaries – The company's consolidated financial statements include the assets, liabilities, equity, revenue, expenses and cash flows of the holding company and its subsidiaries. A subsidiary is an entity over which the company has control. The company controls an entity when the company has power over the entity, is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Assessment of control is based on the substance of the relationship between the company and the entity and includes consideration of both existing voting rights and, if applicable, potential voting rights that are currently exercisable and convertible. The operating results of subsidiaries acquired are included in the consolidated financial statements from the date control is acquired (typically the acquisition date). The operating results of subsidiaries that are divested during the year are included up to the date control ceased and any difference between the fair value of the consideration received and the carrying value of a divested subsidiary is recognized in the consolidated statement of earnings.

The consolidated financial statements were prepared as of December 31, 2017 and 2016 based on individual holding companies' and subsidiary companies' financial statements at those dates. Accounting policies of subsidiaries have

39

been aligned with those of the company where necessary. The company's significant subsidiaries are identified in note 29.

Non-controlling interests – A non-controlling interest is initially recognized as the proportionate share of the identifiable net assets of a subsidiary on its acquisition date and is subsequently adjusted for the non-controlling interest's share of changes in the acquired subsidiary's earnings and capital. Effects of transactions with non-controlling interests are recorded in equity if there is no change in control.

Business combinations

Business combinations are accounted for using the acquisition method of accounting whereby the consideration transferred is measured at fair value at the date of acquisition. This consideration may include cash paid and the fair value at the date of exchange of assets given, liabilities incurred and equity instruments issued by the company or its subsidiaries. The consideration transferred also includes any contingent consideration arrangements, recorded at fair value. Directly attributable acquisition-related costs are expensed in the current period and reported within operating expenses. At the date of acquisition, the company recognizes the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquired business. The identifiable assets acquired and liabilities assumed are initially recognized at fair value. If the consideration transferred is less than the fair value of identifiable net assets acquired, the excess is recognized in the consolidated statement of earnings.

A pre-existing equity interest is re-measured to fair value at the date of a business combination with any gain or loss recognized in net gains (losses) on investments in the consolidated statement of earnings.

Goodwill and intangible assets

Goodwill – Goodwill is recorded as the excess of consideration transferred over the fair value of the identifiable net assets acquired in a business combination, less accumulated impairment charges, and is allocated to the cash-generating units expected to benefit from the acquisition for the purpose of impairment testing. On an annual basis or more frequently if there are potential indicators of impairment, the carrying value of a cash-generating unit inclusive of its allocated goodwill is compared to its recoverable amount, with any goodwill impairment measured as the excess of the carrying amount over the recoverable amount. Goodwill is derecognized on disposal of a cash-generating unit to which goodwill was previously allocated.

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

Intangible assets are initially recognized at cost (fair value when acquired through a business combination) and subsequently measured at cost less accumulated amortization and impairment, where amortization is calculated using the straight-line method based on the estimated useful life of those intangible assets with a finite life. The carrying value of intangible assets with a finite life are re-evaluated by the company when there are potential indicators of impairment. Indefinite-lived intangible assets are not subject to amortization but are assessed for impairment annually or more frequently if there are potential indicators of impairment.

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

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

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

Investments in associates

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

40

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

Upon loss of significant influence, any retained interest classified as a financial asset is re-measured to fair value and all amounts previously recognized in other comprehensive income in relation to that investee are reclassified to the consolidated statement of earnings. Gains and losses on loss of significant influence or disposition of an associate are recognized in net gains (losses) on investments in the consolidated statement of earnings.

Foreign currency translation

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

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

Translation of foreign subsidiaries – The functional currencies of some of the company's subsidiaries (principally in Canada, the United Kingdom and Asia) differ from the consolidated group U.S. dollar presentation currency. As a result, the assets and liabilities of these foreign subsidiaries (including goodwill and fair value adjustments arising on their acquisition, where applicable) are translated on consolidation at the rates of exchange prevailing at the balance sheet date. Revenue and expenses are translated at the average rate of exchange for the period. The net unrealized gain or loss resulting from this translation is recognized in accumulated other comprehensive income, and only recycled to the consolidated statement of earnings upon reduction of an investment in a foreign subsidiary.

Net investment hedge – The company has designated a portion of the principal amount of its Canadian dollar denominated borrowings as a hedge of its net investment in its Canadian subsidiaries. The cumulative unrealized gain or loss relating to the effective portion of the hedge is recognized in accumulated other comprehensive income, and only recycled to the consolidated statement of earnings upon reduction of an investment in a hedged foreign subsidiary. Gains and losses relating to any ineffective portion of the hedge are recorded in net gains (losses) on investments in the consolidated statement of earnings.

Comprehensive income (loss)

Comprehensive income (loss) consists of net earnings (loss) and other comprehensive income (loss) and includes all changes in total equity during a period, except for those resulting from investments by owners or distributions to owners. Unrealized foreign currency translation amounts arising from foreign subsidiaries and associates that do not have U.S. dollar functional currencies and the effective portion of changes in the fair value of hedging instruments on hedges of net investments in foreign subsidiaries are recognized in other comprehensive income (loss) and included in accumulated other comprehensive income (loss) until recycled to the consolidated statement of earnings on reduction of an investment in a foreign subsidiary or associate. Actuarial gains and losses and changes in asset limitation amounts on defined benefit pension and post retirement plans are recorded in other comprehensive income (loss) and included in accumulated other comprehensive income (loss) without recycling. Upon settlement of the defined benefit plan or disposal of the related associate or subsidiary, those amounts are reclassified directly to retained earnings. Accumulated other comprehensive income (loss), net of income taxes, is included on the consolidated balance sheet as a component of common shareholders' equity.

41

Consolidated statement of cash flows

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

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

Investments

Investments include cash and cash equivalents, short term investments, equity instruments, debt instruments, securities sold short, derivatives, investment property and investments in associates. Management determines the appropriate classifications of investments at their acquisition date. The company has not designated any financial assets or liabilities (including derivatives) as accounting hedges except for the hedge of its net investment in Canadian subsidiaries as described in note 7.

Classification – Short term investments, equity instruments, bonds, securities sold short and derivatives are classified as FVTPL.

An investment in a debt instrument is measured at amortized cost if (i) the objective of the company's business model is to hold the instrument in order to collect contractual cash flows and (ii) the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The company's business model currently does not permit any of its short term investments or bonds to be measured at amortized cost.

Recognition and measurement – The company recognizes purchases and sales of investments on the trade date, which is the date on which the company commits to purchase or sell the asset. Transactions pending settlement are reflected on the consolidated balance sheet in other assets or in accounts payable and accrued liabilities.

Investments classified as FVTPL are carried at fair value on the consolidated balance sheet, with transaction costs expensed as incurred and changes in fair value reported in the consolidated statement of earnings as interest and dividends and net gains (losses) on investments. Interest and dividends comprises dividends received on holdings of common stocks and preferred stocks, and interest income on short term investments and bonds calculated using the effective interest method, net of investment expenses. All other changes in fair value of investments classified as FVTPL are reported in net gains (losses) on investments in the consolidated statement of earnings, such that the sum of interest income and net gains (losses) on short term investments and bonds is equal to their total change in fair value for the reporting period.

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

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

Short term investments – Debt instruments with maturity dates between three months and twelve months when purchased are presented as short term investments.

Bonds – Debt instruments with maturity dates greater than twelve months when purchased are presented as bonds.

Securities sold short – Securities sold short ("short sales") represent obligations to deliver securities which were not owned at the time of the sale.

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

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

42

The fair value of derivatives in a gain position is presented on the consolidated balance sheet in derivatives and other invested assets in portfolio investments and in cash and investments of the holding company. The fair value of derivatives in a loss position and obligations to purchase securities sold short, if any, are presented on the consolidated balance sheet in short sale and derivative obligations. The initial premium paid for a derivative contract, if any, would be recorded as a derivative asset and subsequently adjusted for changes in the fair value of the contract at each balance sheet date. Changes in the fair value of a derivative are recorded as net gains (losses) on investments in the consolidated statement of earnings at each balance sheet date, with a corresponding adjustment to the carrying value of the derivative asset or liability.

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

Cash and securities delivered to counterparties as collateral for derivative contracts continue to be reflected as assets on the consolidated balance sheet within holding company cash and investments or within portfolio investments as assets pledged for short sale and derivative obligations.

Equity contracts – The company's long equity total return swaps allow the company to receive the total return on a notional amount of an equity index or individual equity (including dividends and capital gains or losses) in exchange for the payment of a floating rate of interest on the notional amount. Conversely, short equity total return swaps allow the company to pay the total return on a notional amount of an equity index or individual equity in exchange for the receipt of a floating rate of interest on the notional amount. The company classifies dividends and interest paid or received related to its long and short equity and equity index total return swaps on a net basis as interest and dividends in the consolidated statement of earnings. The company's equity and equity index total return swaps contain contractual reset provisions requiring counterparties to cash-settle monthly or quarterly any fair value movements arising subsequent to the prior settlement. Any cash amounts paid to settle unfavourable fair value changes and, conversely, any cash amounts received in settlement of favourable fair value changes, are recorded as net gains (losses) on investments in the consolidated statement of earnings. To the extent that a contractual reset date of a contract does not correspond to the balance sheet date, the company records net gains (losses) on investments in the consolidated statement of 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. Final cash settlements of total return swaps are recognized as net gains (losses) on investments net of any previously recorded unrealized fair value changes since the last quarterly reset date. Total return swaps require no initial net investment and have a fair value of nil at inception.

CPI-linked derivative contracts – The company's derivative contracts referenced to consumer price indexes ("CPI") in the geographic regions in which it operates serve as an economic hedge against the potential adverse financial impact on the company of decreasing price levels. These contracts may be structured to provide a payout at maturity if there is cumulative deflation over the life of the contract or if cumulative average inflation is below a specified floor rate over the life of the contract. As the average remaining life of a CPI-linked derivative declines, the fair value of the contract (excluding the impact of changes in the underlying CPI) will generally decline.

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

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

Level 2 – Inputs include directly or indirectly observable inputs (other than Level 1 inputs) such as quoted prices for similar financial instruments exchanged in active markets, quoted prices for identical or similar financial instruments exchanged in inactive markets and other market observable inputs. The fair value of the vast

43

majority of the company's investments in bonds are priced based on information provided by independent pricing service providers while much of the remainder, along with most derivative contracts (including total return swaps, U.S. treasury bond forward contracts and certain warrants) are based primarily on non-binding third party broker-dealer quotes that are prepared using Level 2 inputs. Where third party broker-dealer quotes are used, typically one quote is obtained from a broker-dealer with particular expertise in the instrument being priced. Preferred stocks are priced using a combination of independent pricing service providers and internal valuation models that rely on directly or indirectly observable inputs.

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

Level 3 – Inputs include unobservable inputs used in the measurement of financial instruments. Management is required to use its own assumptions regarding unobservable inputs as there is little, if any, market activity in these instruments or related observable inputs that can be corroborated at the measurement date. CPI-linked derivatives are classified as Level 3 and valued using broker-dealer quotes which management has determined utilize market observable inputs except for the inflation volatility input which is not market observable.

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

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

Fair values of CPI-linked derivative contracts received from third party broker-dealers are assessed by comparing the fair values to recent market transactions where available and values determined using third party pricing software based on the Black-Scholes option pricing model for European-style options that incorporates market observable and unobservable inputs such as the current value of the relevant CPI underlying the derivative, the inflation swap rate, nominal swap rate and inflation volatility. The fair values of CPI-linked derivative contracts are sensitive to assumptions such as market expectations of future rates of inflation and related inflation volatilities.

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

Accounts receivable and accounts payable

Accounts receivable and accounts payable are recognized initially at fair value. Due to their short-term nature, carrying value is considered to approximate fair value.

Insurance contracts

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

44

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

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

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

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

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

Estimation techniques – Provisions for losses and loss adjustment expenses and provisions for unearned premiums are determined based upon previous claims experience, knowledge of events, the terms and conditions of the relevant policies and on interpretation of circumstances. Particularly relevant is experience with similar cases and historical claims payment trends. The approach also includes consideration of the development of loss payment

45

trends, the potential longer term significance of large events, the levels of unpaid claims, legislative changes, judicial decisions and economic and political conditions.

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

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

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

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

Reinsurance

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

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

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

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

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

46

Income taxes

The provision for income taxes for the period comprises current and deferred income tax. Income taxes are recognized in the consolidated statement of earnings, except when related to items recognized in other comprehensive income or directly in equity. In those cases, the income taxes are also recognized in other comprehensive income or directly in equity, respectively.

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

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

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

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

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

On December 22, 2017 the United States enacted the Tax Cuts and Jobs Act ("U.S. tax reform") that, among other changes, introduced a new minimum base erosion and anti-abuse tax ("BEAT") on certain payments to foreign affiliates and a U.S. tax on foreign earnings for certain global intangible low-taxed income ("GILTI"), applicable to U.S. corporate income tax for tax years beginning after December 31, 2017. The company will recognize charges related to BEAT and GILTI, if any, in the periods in which they are incurred, and does not include their impacts in measuring its net deferred income tax asset.

Investment property

Real estate held by the company for investment purposes, such as capital appreciation or long-term rental yield, is initially recorded at cost (including transaction costs) and subsequently carried at historical cost less accumulated amortization and any accumulated impairment losses. On the consolidated balance sheet investment property held is included in portfolio investments by the insurance and reinsurance companies and in other assets by the non-insurance companies. Investment property rental income and gains or losses on disposal are recorded in the consolidated statement of earnings as interest and dividends and net gains (losses) on investments respectively by the insurance and reinsurance companies, and as other revenue by the non-insurance companies.

Other assets

Other assets consist of inventories, receivables and investment properties of non-insurance companies included in the Other reporting segment, premises and equipment, accrued interest and dividends, income taxes refundable, receivables for securities sold, pension assets, deferred compensation assets, prepaid expenses and other miscellaneous receivables.

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

47

Other revenue and expenses

Revenue from the sale of hospitality, travel and other non-insurance products and services are recognized when the price is fixed or determinable, collection is reasonably assured and the product or service has been delivered to the customer. The revenue and related cost of inventories sold or services provided are recorded in other revenue and other expenses respectively in the consolidated statement of earnings.

Borrowings

Borrowings are initially recognized at fair value, net of transaction costs incurred, and subsequently carried at amortized cost. Interest expense on borrowings is recognized in the consolidated statement of earnings using the effective interest rate method.

Equity

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

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

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

Share-based payments

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

Net earnings per share attributable to shareholders of Fairfax

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

Net earnings (loss) per diluted share – Diluted earnings (loss) per share is calculated by adjusting the weighted average number of subordinate and multiple voting shares outstanding during the period for the dilutive effect, if any, of share-based payments.

Pensions and post retirement benefits

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

Defined contribution plan – A defined contribution plan is a pension plan under which the company pays fixed contributions. Contributions to defined contribution pension plans are charged to operating expenses in the period in which the employment services qualifying for the benefit are provided. The company has no further payment obligations once the contributions have been paid.

48

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

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

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

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

Operating leases

The company and its subsidiaries are lessees under various operating leases relating to premises, automobiles and equipment. Payments made under an operating lease, net of any incentives received from the lessor, are recorded in operating expenses on a straight-line basis over the term of the lease.

New accounting pronouncements adopted in 2017

The company adopted the following amendments, effective January 1, 2017. These changes were adopted in accordance with the applicable transitional provisions of each amendment, and did not have a significant impact on the consolidated financial statements.

IFRS Annual Improvements 2014-2016

In December 2016 the IASB issued an amendment to clarify the scope of the disclosure requirements in IFRS 12 Disclosure of Interests in Other Entities.

Recognition of Deferred Tax Assets for Unrealised Losses (Amendments to IAS 12)

In January 2016 the IASB issued amendments to IAS 12 Income Taxes to clarify the requirements on recognition of deferred income tax assets for unrealized losses.

Disclosure Initiative (Amendments to IAS 7)

In January 2016 the IASB issued amendments to IAS 7 Statement of Cash Flows that require additional disclosures for cash and non-cash changes in liabilities arising from financing activities.

New accounting pronouncements issued but not yet effective

The following new standards have been issued by the IASB and were not yet effective for the fiscal year beginning January 1, 2017. The company is currently evaluating their impact on its consolidated financial statements and does not expect to adopt any of them in advance of their respective effective dates.

Foreign Currency Transactions and Advance Consideration ("IFRIC 22")

In December 2016 the IASB issued an interpretation by the IFRS Interpretations Committee to clarify the accounting for transactions that include the receipt or payment of advance consideration in a foreign currency. IFRIC 22 is effective for annual periods beginning on or after January 1, 2018, with a choice of prospective or retrospective application. Adoption of IFRIC 22 is not expected to have a significant impact on the company's consolidated financial statements.

Classification and Measurement of Share-based Payment Transactions (Amendments to IFRS 2)

In June 2016 the IASB issued narrow-scope amendments to clarify the classification and measurement requirements of IFRS 2 Share-based Payment. The amendments are effective for annual periods beginning on or after January 1,

49

2018, with prospective application in accordance with certain transitional provisions. Adoption of the amendments is not expected to have a significant impact on the company's consolidated financial statements.

IFRS 9 Financial Instruments ("IFRS 9")

In July 2014 the IASB issued the complete version of IFRS 9 which will supersede the 2010 version of IFRS 9 currently applied by the company ("IFRS 9 (2010)"). IFRS 9 is effective for annual periods beginning on or after January 1, 2018, with retrospective application, and includes requirements for the classification and measurement of financial assets and liabilities, an expected credit loss model that replaces the existing incurred loss impairment model, and new hedge accounting guidance. The company is nearing completion of its analysis of IFRS 9's accounting requirements and has determined that its current classifications of equity investments, derivatives, financial liabilities and hedge of net investment under IFRS 9 (2010) will remain substantially unchanged. The company continues to monitor and consider evolving guidance and interpretations related to IFRS 9 as it works through the classification analysis for its investments in debt instruments.

IFRS 15 Revenue from Contracts with Customers ("IFRS 15")

In May 2014 the IASB issued IFRS 15 which introduces a single model for recognizing revenue from contracts with customers. IFRS 15 excludes insurance contracts and financial instruments from its scope and is applicable primarily to the company's non-insurance companies. In April 2016 the IASB issued amendments to clarify certain aspects of IFRS 15 and to provide additional practical expedients upon transition. The standard is effective for annual periods beginning on or after January 1, 2018, with retrospective application. The company has substantially completed its analysis of the accounting requirements under IFRS 15 and does not expect the adoption of IFRS 15 to have a significant impact on the company's consolidated financial statements or to require any significant transition adjustments.

IFRS 16 Leases ("IFRS 16")

In January 2016 the IASB issued IFRS 16 which largely eliminates the distinction between finance and operating leases for lessees. With limited exceptions, a lessee will be required to recognize a right-of-use asset and a liability for its obligation to make lease payments. The standard is effective for annual periods beginning on or after January 1, 2019, with a choice of modified retrospective or full retrospective application. The company has commenced impact assessments and reviews of lease data at its operating companies in preparation for the adoption of IFRS 16.

IFRIC Interpretation 23 Uncertainty over Income Tax Treatments ("IFRIC 23")

In June 2017 the IASB issued IFRIC 23 to clarify how the requirements of IAS 12 Income Taxes should be applied when there is uncertainty over income tax treatments. The interpretation is effective for annual periods beginning on or after January 1, 2019, with modified retrospective or retrospective application. Adoption of IFRIC 23 is not expected to have a significant impact on the company's consolidated financial statements.

IFRS Annual Improvements 2015-2017

In December 2017 the IASB issued amendments to clarify the requirements of four IFRS standards. The amendments are effective for annual periods beginning on or after January 1, 2019, primarily with prospective application. Adoption of the amendments is not expected to have a significant impact on the company's consolidated financial statements.

IFRS 17 Insurance Contracts ("IFRS 17")

In May 2017 the IASB issued IFRS 17, a comprehensive standard that establishes principles for the recognition, measurement, presentation and disclosure of insurance contracts. The measurement approach is based on the following: (i) a current, unbiased probability-weighted estimate of future cash flows expected to arise as the insurer fulfills the contract; (ii) the effect of the time value of money; (iii) a risk adjustment that measures the effects of uncertainty about the amount and timing of future cash flows; and (iv) a contractual service margin which represents the unearned profit in a contract (that is recognized in net earnings as the insurer fulfills its performance obligations under the contract). Estimates are required to be re-measured each reporting period. In addition, a simplified measurement approach is permitted for short-duration contracts in which the coverage period is approximately one year or less. The standard is effective for annual periods beginning on or after January 1, 2021, with retrospective application and some practical expedients available on adoption. The company has commenced implementation planning, education workshops and impact assessments at its largest insurance and reinsurance companies in preparation for the adoption of IFRS 17.

50

4.    Critical Accounting Estimates and Judgments

In the preparation of the company's consolidated financial statements, management has made a number of critical accounting estimates and judgments which are discussed below, with the exception of the determination of fair value for financial instruments (notes 3 and 5), carrying value of associates (notes 3 and 6), charges related to U.S. tax reform (note 18) and contingencies (note 20). Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Provision for losses and loss adjustment expenses

Provisions for losses and loss adjustment expenses are estimated based on Canadian accepted actuarial practices, which are designed to ensure the company establishes an appropriate reserve on the consolidated balance sheet to cover insured losses with respect to reported and unreported claims incurred as of the end of each accounting period and related claims expenses. The assumptions underlying the estimation of provisions for losses and loss adjustment expenses are reviewed and updated by the company on an ongoing basis to reflect recent and emerging trends in experience and changes in the risk profile of the business. The estimation techniques employed by the company in determining provisions for losses and loss adjustment expenses and the inherent uncertainties associated with insurance contracts are described in the "Underwriting Risk" section of note 24 while the historic development of the company's insurance liabilities are presented in note 8.

Recoverability of deferred income tax assets

In determining the recoverability of deferred income tax assets, management exercises judgment in assessing recent and expected profitability of applicable operating companies and their ability to utilize any recorded income tax assets. The company reviews its deferred income tax assets quarterly, taking into consideration the availability of sufficient current and projected taxable profits, reversals of taxable temporary differences and tax planning strategies. Details of deferred income tax assets are presented in note 18.

Business combinations

Judgment may be required to determine whether a transaction qualifies as a business combination when it involves elements such as contractual arrangements between shareholders or potential voting rights. Accounting for business combinations requires fair values to be estimated for the consideration transferred, assets acquired and liabilities assumed. The company uses all available information, including external valuations and appraisals where appropriate, to determine these fair values. Changes in estimates of fair value due to additional information related to facts and circumstances that existed at the acquisition date would impact the amount of goodwill (or gain on bargain purchase) recognized. If necessary, the company has up to one year from the acquisition date to finalize the determination of fair values for a business combination. Details of business combinations are presented in note 23.

Assessment of goodwill for potential impairment

Goodwill is assessed annually for impairment or more frequently if there are potential indicators of impairment. Management estimates the recoverable amount of each of the company's cash-generating units using one or more generally accepted valuation techniques, which requires the making of a number of assumptions, including assumptions about future revenue, net earnings, corporate overhead costs, capital expenditures, cost of capital, and growth rate. The recoverable amount of each cash-generating unit to which goodwill has been assigned is compared to its carrying value (inclusive of assigned goodwill). If the recoverable amount of a cash-generating unit is determined to be less than its carrying value, the excess is recognized as a goodwill impairment loss in the consolidated statement of earnings. Given the variability of future-oriented financial information, goodwill impairment tests are subjected to sensitivity analysis. The critical estimates pertain to those cash-generating units where there is little difference between the recoverable amount and the related carrying amount. Details of goodwill are presented in note 12.

51

5.    Cash and Investments

Holding company cash and investments, portfolio investments and short sale and derivative obligations are classified as FVTPL, except for investments in associates and other invested assets which are classified as other, and are shown in the table below:

	December 31, 2017		December 31, 2016
Holding company
Cash and cash equivalents (note 27)	995.4		533.2
Short term investments	115.4		285.4
Bonds	380.9		264.8
Preferred stocks	2.8		1.0
Common stocks(1)	784.9		153.2
Derivatives (note 7)	11.2		39.6
	2,290.6		1,277.2
Assets pledged for short sale and derivative obligations:
Short term investments	77.8		82.6
Bonds	–		11.8
	77.8		94.4
	2,368.4		1,371.6
Short sale and derivative obligations (note 7)	(11.5	)	(42.2	)
	2,356.9		1,329.4
Portfolio investments
Cash and cash equivalents (note 27)	7,384.1		3,943.4
Short term investments	9,998.4		5,994.6
Bonds	9,164.1		9,323.2
Preferred stocks	296.8		69.6
Common stocks(1)	4,838.7		4,158.8
Investments in associates (note 6)	2,487.0		2,393.0
Derivatives (note 7)	192.6		163.7
Other invested assets	62.8		16.0
	34,424.5		26,062.3
Assets pledged for short sale and derivative obligations:
Cash and cash equivalents (note 27)	16.8		–
Short term investments	145.7		189.6
Bonds	32.2		38.9
	194.7		228.5
Fairfax India cash, portfolio investments and associates	1,762.5		1,002.6
Fairfax Africa cash, portfolio investments and associates	631.5		–
	2,394.0		1,002.6
	37,013.2		27,293.4
Short sale and derivative obligations (note 7)	(114.7	)	(192.1	)
	36,898.5		27,101.3
Total investments	39,255.4		28,430.7

(1)

Common stocks include investments in limited partnerships and other funds with carrying values of $1,903.7 and $90.9 respectively at December 31, 2017 (December 31, 2016 – $1,171.6 and $157.1).

52

Fairfax India and Fairfax Africa cash, portfolio investments and associates were comprised as follows:

	Fairfax India		Fairfax Africa
	December 31, 2017	December 31, 2016	December 31, 2017	December 31, 2016
Cash and cash equivalents (note 27)	44.0	173.2	329.7	–
Short term investments	34.3	33.6	57.2	–
Bonds	694.2	528.8	19.4	–
Common stocks	40.5	26.5	4.9	–
Investments in associates (note 6)	949.5	240.5	219.8	–
Derivatives and other invested assets	–	–	0.5	–
	1,762.5	1,002.6	631.5	–

Restricted cash and cash equivalents at December 31, 2017 of $835.0 (December 31, 2016 – $430.7) was comprised primarily of amounts required to be maintained on deposit with various regulatory authorities to support the subsidiaries' insurance and reinsurance operations. Restricted cash and cash equivalents are included on the consolidated balance sheet in holding company cash and investments, or in portfolio investments within subsidiary cash and short term investments, assets pledged for short sale and derivative obligations and Fairfax India and Fairfax Africa cash, portfolio investments and associates.

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

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

	December 31, 2017	December 31, 2016
Regulatory deposits	4,256.8	4,748.2
Security for reinsurance and other	1,449.2	732.8
	5,706.0	5,481.0

53

Fixed Income Maturity Profile

Bonds are summarized by their earliest contractual maturity date in the table below. Actual maturities may differ from maturities shown below due to the existence of call and put features. At December 31, 2017 bonds containing call and put features represented approximately $3,390.3 and $93.3 respectively (December 31, 2016 – $4,498.0 and $196.2) of the total fair value of bonds. The table below does not reflect the impact of $1,693.8 (December 31, 2016 – $3,013.4) notional amount of U.S. treasury bond forward contracts (described in note 7) that reduce the company's exposure to interest rate risk.

	December 31, 2017			December 31, 2016
	Amortized cost	Fair value		Amortized cost	Fair value
Due in 1 year or less	3,383.9	3,537.6		1,649.4	1,779.0
Due after 1 year through 5 years	3,540.7	3,720.2		3,245.9	3,447.6
Due after 5 years through 10 years	1,017.6	1,054.3		1,046.7	1,031.3
Due after 10 years	1,872.1	1,978.7		3,575.1	3,909.6
	9,814.3	10,290.8		9,517.1	10,167.5
Effective interest rate		4.0	%		4.7	%

The calculation of the effective interest rate of 4.0% (December 31, 2016 – 4.7%) is on a pre-tax basis and therefore does not give effect to the favourable tax treatment which the company expects to receive with respect to its tax advantaged U.S. state and municipal bond investments of approximately $2.3 billion (December 31, 2016 – $3.3 billion).

54

Fair Value Disclosures

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

		December 31, 2017						December 31, 2016
		Total fair value asset (liability)		Quoted prices (Level 1)	Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)	Total fair value asset (liability)		Quoted prices (Level 1)	Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Cash and cash equivalents		8,770.0		8,770.0	–		–	4,649.8		4,649.8	–		–
Short term investments:
	Canadian government	7.1		7.1	–		–	8.2		8.2	–		–
	Canadian provincials	281.9		281.9	–		–	261.7		261.7	–		–
	U.S. treasury	9,225.5		9,225.5	–		–	5,930.3		5,930.3	–		–
	Other government	403.0		307.0	96.0		–	212.2		212.2	–		–
	Corporate and other	511.3		–	466.3		45.0	173.4		–	173.4		–
		10,428.8		9,821.5	562.3		45.0	6,585.8		6,412.4	173.4		–
Bonds:
	Canadian government	84.4		–	84.4		–	311.4		–	311.4		–
	Canadian provincials	93.8		–	93.8		–	196.9		–	196.9		–
	U.S. treasury	1,779.3		–	1,779.3		–	1,117.3		–	1,117.3		–
	U.S. states and municipalities	2,452.1		–	2,452.1		–	4,732.2		–	4,732.2		–
	Other government	1,799.4		–	1,799.4		–	1,176.2		–	1,176.2		–
	Corporate and other	4,081.8		–	2,185.7		1,896.1	2,633.5		–	1,580.4		1,053.1
		10,290.8		–	8,394.7		1,896.1	10,167.5		–	9,114.4		1,053.1
Preferred stocks:
	Canadian	240.7		–	11.3		229.4	22.2		–	10.9		11.3
	U.S.	5.0		–	–		5.0	0.3		–	–		0.3
	Other	53.9		1.5	3.6		48.8	48.1		0.6	15.1		32.4
		299.6		1.5	14.9		283.2	70.6		0.6	26.0		44.0
Common stocks:
	Canadian	958.7		825.9	110.3		22.5	665.3		545.0	98.6		21.7
	U.S.	1,583.3		474.8	66.9		1,041.6	1,172.6		629.6	33.9		509.1
	Other funds	90.9		–	90.9		–	157.1		–	157.1		–
	Other	3,036.1		1,713.7	415.1		907.3	2,343.5		1,037.2	532.5		773.8
		5,669.0		3,014.4	683.2		1,971.4	4,338.5		2,211.8	822.1		1,304.6
Derivatives and other invested assets		267.1		–	89.5		177.6	219.3		–	121.5		97.8
Short sale and derivative obligations		(126.2	)	–	(126.2	)	–	(234.3	)	–	(234.3	)	–
Holding company cash and investments and portfolio investments measured at fair value		35,599.1		21,607.4	9,618.4		4,373.3	25,797.2		13,274.6	10,023.1		2,499.5
		100.0%		60.7%	27.0%		12.3%	100.0%		51.5%	38.9%		9.6%
Investments in associates (note 6)(1)		4,629.3		2,004.3	45.3		2,579.7	3,267.3		1,100.1	40.9		2,126.3

(1)

The carrying value of investments in associates is determined using the equity method of accounting so fair value is presented separately in the table above.

55

Transfers between fair value hierarchy levels are considered effective from the beginning of the reporting period in which the transfer is identified. The increase in the company's Level 3 financial assets during 2017 was partially due to the consolidation of certain Allied World investments in limited partnerships that were classified as Level 3 common stocks ($583.8) based on their unobservable net asset values and inability to be liquidated or redeemed within three months. In addition, during 2017 a private placement debt security was transferred from Level 2 to Level 3 due to the modification of its terms and its credit spread (a key valuation input) becoming unobservable. During 2017 and 2016 there were no significant transfers of financial instruments between Level 1 and Level 2 and there were no other significant transfers of financial instruments in or out of Level 3 as a result of changes in the observability of valuation inputs.

A summary of changes in Level 3 financial assets measured at fair value on a recurring basis for the years ended December 31 follows:

	2017
	Private placement debt securities		Private company preferred shares		Limited partnerships and other		Private equity funds		Private company common shares		Derivatives and other invested assets		Total
Balance – January 1	1,053.1		44.0		981.4		167.8		155.4		97.8		2,499.5
Net realized and unrealized gains (losses) included in the consolidated statement of earnings	190.2		1.3		243.4		(5.5	)	22.6		(9.9	)	442.1
Purchases	430.2		268.4		221.2		–		11.1		72.3		1,003.2
Sales and distributions	(209.7	)	(34.1	)	(443.4	)	–		(19.4	)	–		(706.6	)
Acquisitions of subsidiaries (note 23)	22.4		–		583.8		–		29.9		9.7		645.8
Transfer into category	384.0		–		–		–		–		7.1		391.1
Unrealized foreign currency translation gains on foreign operations included in other comprehensive income	70.9		3.6		12.3		8.2		2.6		0.6		98.2
Balance – December 31	1,941.1		283.2		1,598.7		170.5		202.2		177.6		4,373.3

	2016
	Private placement debt securities		Private company preferred shares		Limited partnerships and other		Private equity funds		Private company common shares		Derivatives and other invested assets		Total
Balance – January 1	696.4		7.7		960.9		171.0		138.0		285.4		2,259.4
Net realized and unrealized gains (losses) included in the consolidated statement of earnings	(52.9	)	2.5		102.7		(12.5	)	(21.6	)	(204.4	)	(186.2	)
Purchases	955.6		115.7		124.4		16.4		38.8		21.1		1,272.0
Sales and distributions	(548.2	)	(82.5	)	(202.9	)	(10.2	)	–		(4.9	)	(848.7	)
Transfer into category	9.4		0.4		–		–		–		–		9.8
Unrealized foreign currency translation gains (losses) on foreign operations included in other comprehensive income	(7.2	)	0.2		(3.7	)	3.1		0.2		0.6		(6.8	)
Balance – December 31	1,053.1		44.0		981.4		167.8		155.4		97.8		2,499.5

56

The table below presents the valuation techniques, range of values applied for significant unobservable inputs and the typical relationship between significant unobservable inputs and estimated fair values for the company's significant Level 3 financial assets:

				Input range used
	Carrying value at December 31, 2017					Effect on estimated fair value if input value is increased(a)
			Significant unobservable input
Asset class		Valuation technique		Low	High
Private placement debt securities(b)(1)	1,340.4	Discounted cash flow	Credit spread	1.6%	18.9%	Decrease
Private placement debt securities(b)(2)	402.0	Net asset valuation of secured loans	Recoverability of assets	60.0%	100.0%	Increase
Limited partnerships and other(c)(3)	1,598.7	Net asset value	Net asset value / Price	N/A	N/A	Increase
Private company preferred shares(d)(4)	207.3	Discounted cash flow	Credit spread	3.5%	3.6%	Decrease
Private equity funds(c)(3)	100.9	Net asset value	Net asset value / Price	N/A	N/A	Increase
Private equity funds(c)(5)	69.6	Market comparable	Price/Earnings multiple	10.0	10.0	Increase
Private company common shares(c)(5)	81.2	Market comparable	Book value multiple	1.3	1.3	Increase
Private company common shares(c)(5)	40.5	Market comparable	Price/Earnings multiple	26.2	26.2	Increase
Warrants(e)(6)	73.1	Option pricing model	Equity volatility	24.6%	39.3%	Increase
CPI-linked derivatives(e)(7)	39.6	Option pricing model	Inflation volatility	0.0%	3.7%	Increase

(a)

Decreasing the input value would have the opposite effect on the estimated fair value.

(b)

Classified within holding company cash and investments or bonds on the consolidated balance sheet.

(c)

Classified within holding company cash and investments or common stocks on the consolidated balance sheet.

(d)

Classified within preferred stocks on the consolidated balance sheet.

(e)

Classified within holding company cash and investments or derivatives and other invested assets on the consolidated balance sheet.

(1)

Valued using industry accepted discounted cash flow models that incorporate credit spreads of the issuers, which are not market observable. At December 31, 2017 this asset class consisted of 7 investments, the largest being $663.6. By increasing (decreasing) the credit spreads within a reasonably possible range, the fair value of these private placement debt securities would decrease by $41.6 (increase by $44.3).

(2)

At December 31, 2017 this asset class consisted of 2 investments, the larger being $253.0.

(3)

Valued primarily based on net asset value statements provided by the respective third party fund managers and general partners. The fair values in those statements are determined using quoted prices of the underlying assets, and to a lesser extent, observable inputs where available and unobservable inputs, in conjunction with industry accepted valuation models, where required. In some instances, such investments are classified as Level 3 because they may require at least three months' notice to liquidate. The company has not applied reasonably possible alternative assumptions to the estimated fair value of these investments due to their diverse nature and resulting dispersion of prices. At December 31, 2017 limited partnerships and other consisted of 47 investments, the largest being $355.3.

(4)

Valued using industry accepted discounted cash flow models that incorporate market unobservable credit spreads of the preferred shares.

(5)

Fair values are determined by reference to various valuation measures for comparable companies and transactions, including relevant valuation multiples. In some instances, such investments are classified as Level 3 because the valuation multiples applied by the company are adjusted for differences in attributes between the investment and the underlying companies or transactions from which the valuation multiples were derived.

(6)

Valued using industry accepted option pricing models that incorporate market unobservable long-dated equity volatilities. A higher equity volatility generally results in a higher fair value due to the higher probability of obtaining a greater return from the warrant.

57

(7)

Valued based on broker-dealer quotes which management has determined utilize market observable inputs except for inflation volatility which is an unobservable input.

Investment Income

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

Interest and dividends and share of profit of associates

		2017		2016
Interest income:
	Cash and short term investments	117.5		33.4
	Bonds	441.9		622.4
	Derivatives and other	(44.8	)	(141.4	)
		514.6		514.4
Dividends:
	Preferred stocks	2.1		11.2
	Common stocks	71.1		55.6
		73.2		66.8
Investment expenses		(28.8	)	(26.0	)
Interest and dividends		559.0		555.2
Share of profit of associates (note 6)		200.5		24.2

58

Net gains (losses) on investments

		2017						2016
		Net realized gains (losses)		Net change in unreal- ized gains (losses)		Net gains (losses) on investments		Net realized gains (losses)		Net change in unreal- ized gains (losses)		Net gains (losses) on investments
	Bonds	445.7		(167.7	)	278.0		683.7		(400.4	)	283.3
	Preferred stocks	0.2		(0.5	)	(0.3	)	(68.0)	(4)(5)	61.6	(4)(5)	(6.4	)
	Common stocks	126.5		585.7		712.2		(162.2)	(4)(6)	91.2	(4)(6)	(71.0	)
		572.4		417.5		989.9		453.5		(247.6	)	205.9
Derivatives:
	Common stock and equity index short positions	(485.6)	(1)	67.7		(417.9	)	(915.8)	(1)	(264.0	)	(1,179.8	)
	Common stock and equity index long positions	21.6	(1)	(2.0	)	19.6		10.4	(1)	12.9		23.3
	Equity index put options	–		–		–		(20.3	)	7.2		(13.1	)
	Equity warrants and call options	22.9		15.4		38.3		–		(4.0	)	(4.0	)
	CPI-linked derivatives	–		(71.0	)	(71.0	)	–		(196.2	)	(196.2	)
	U.S. treasury bond forwards	(174.5	)	21.3		(153.2	)	96.7		(49.7	)	47.0
	Other	(8.4	)	8.1		(0.3	)	(70.6	)	63.2		(7.4	)
		(624.0	)	39.5		(584.5	)	(899.6	)	(430.6	)	(1,330.2	)
Foreign currency net gains (losses) on:
	Investing activities	0.8		88.0		88.8		54.4		(191.3	)	(136.9	)
	Underwriting activities	(74.9	)	–		(74.9	)	19.7		–		19.7
	Foreign currency contracts	(21.0	)	9.9		(11.1	)	6.5		(18.8	)	(12.3	)
		(95.1	)	97.9		2.8		80.6		(210.1	)	(129.5	)
Gain on disposition of associates		999.9	(2)(3)	–		999.9		–		–		–
Other		2.1		57.3		59.4		3.2		47.0		50.2
Net gains (losses) on investments		855.3		612.2		1,467.5		(362.3	)	(841.3	)	(1,203.6	)

(1)

Amounts recorded in net realized gains (losses) include net gains (losses) on total return swaps where the counterparties are required to cash-settle on a quarterly or monthly basis the market value movement since the previous reset date notwithstanding that the total return swap positions remain open subsequent to the cash settlement. The company discontinued its economic equity hedging strategy during the fourth quarter of 2016 and closed out $6,350.6 notional amount of short positions effected through equity index total return swaps (comprised of Russell 2000, S&P 500 and S&P/TSX 60 short equity index total return swaps) (see notes 7 and 24).

(2)

During 2017 the company sold a 24.3% equity interest in ICICI Lombard for net proceeds of $908.5 and recorded a net realized gain of $595.6. The company's remaining 9.9% equity interest in ICICI Lombard was reclassified to common stock measured at FVTPL and re-measured to fair value for a net realized gain of $334.5 (see note 6).

(3)

During 2017 the company acquired control of Grivalia Properties by increasing its equity interest to 52.7% and commenced consolidating Grivalia Properties in the Other reporting segment. As a result, the company re-measured its equity accounted carrying value of Grivalia Properties to fair value and recorded a net realized gain of $51.3 (see note 6).

(4)

During 2016 the company recognized net realized losses of $220.3 and $103.7 on common and preferred stock investments pursuant to the issuer's plan of restructuring and subsequent emergence from bankruptcy protection. Prior period unrealized losses on the common and preferred stock investments of $209.5 and $99.6 were reclassified to net realized losses with a net impact of nil on the consolidated statement of earnings.

(5)

During 2016 the company was required to convert a preferred stock investment into common shares of the issuer, resulting in a net realized gain on investment of $35.1 (the difference between the share price of the underlying common stock at the date of conversion and the exercise price of the preferred stock). Prior period unrealized gains on the preferred stock investment of $41.7 were reclassified to net realized gains with a net impact of nil on the consolidated statement of earnings.

(6)

During 2016 the company increased its ownership interest in APR Energy to 49.0% and commenced applying the equity method of accounting, resulting in the reclassification of an unrealized loss of $68.1 on APR Energy to realized losses with a net impact of nil on the consolidated statement of earnings.

59

6.    Investments in Associates

The following summarizes the company's investments in associates:

		December 31, 2017
				Carrying value					Year ended December 31, 2017
				Associates and joint arrangements		Fairfax India and Fairfax Africa associates
		Ownership percentage	Fair value(a)					Total	Share of profit (loss)(8)
Insurance and reinsurance:
	Eurolife ERB Insurance Group Holdings S.A. ("Eurolife")	43.3%	303.0	298.0	(b)	–		298.0	117.6
	Gulf Insurance Company ("Gulf Insurance")	41.4%	233.1	185.4		–		185.4	7.7
	Thai Re Public Company Limited ("Thai Re")(1)	34.9%	80.5	80.3		–		80.3	(21.3	)
	Bank for Investment and Development of Vietnam Insurance Joint Stock Corporation ("BIC Insurance")	35.0%	66.7	48.6		–		48.6	1.6
	Singapore Reinsurance Corporation Limited ("Singapore Re")	27.8%	39.6	38.5		–		38.5	3.2
	Ambridge Partners LLC ("Ambridge Partners")	50.0%	34.9	34.9		–		34.9	4.4
	Go Digit Infoworks Services Private Limited ("Digit")(2)	45.3%	10.6	10.6		–		10.6	–
	Falcon Insurance PLC ("Falcon Thailand")	41.2%	9.2	9.2		–		9.2	–
	Camargue Underwriting Managers Group Ltd. ("Camargue")	50.0%	5.5	5.5		–		5.5	0.7
	ICICI Lombard General Insurance Company Limited ("ICICI Lombard")(3)	–	–	–		–		–	24.0
			783.1	711.0		–		711.0	137.9
Non-insurance:
Agriculture
	Astarta Holding N.V. ("Astarta")(4)	28.1%	101.2	140.6		–		140.6	15.8
	Farmers Edge Inc. ("Farmers Edge")(5)	46.1%	95.0	88.1		–		88.1	(10.5	)
			196.2	228.7		–		228.7	5.3
Real estate
	KWF Real Estate Ventures Limited Partnerships ("KWF LPs")(6)	–	213.4	213.4	(b)	–		213.4	12.2
	Grivalia Properties REIC ("Grivalia Properties")(7)	–	–	–		–		–	12.8
	Other	–	88.7	88.6	(b)	–		88.6	9.0
			302.1	302.0		–		302.0	34.0
India
	Bangalore International Airport Limited ("Bangalore Airport")(12)	48.0%	608.3	–		611.1	(c)	611.1	15.8
	IIFL Holdings Limited ("IIFL Holdings")(13)	35.5%	1,185.1	102.7		317.2	(c)	419.9	36.5
	5paisa Capital Limited ("5paisa")(13)	35.5%	26.6	6.6		20.2	(c)	26.8	–
	Fairchem Limited ("Fairchem")(14)	–	–	–		–		–	0.2
	Other	–	0.6	–		1.0	(c)	1.0	–
			1,820.6	109.3		949.5		1,058.8	52.5
Africa
	Atlas Mara Limited ("Atlas Mara")(15)	43.3%	168.7	–		170.3	(d)	170.3	1.6
	AFGRI Holdings Proprietary Limited ("AFGRI")(16)	60.0%	119.0	–		49.5	(d)	49.5	(0.4	)
			287.7	–		219.8		219.8	1.2
Other
	Resolute Forest Products Inc. ("Resolute")(8)	33.8%	334.0	320.6		–		320.6	0.3
	APR Energy plc ("APR Energy")(9)	67.8%	336.4	309.4	(b)	–		309.4	(3.1	)
	Peak Achievement Athletics ("Peak Achievement")(10)	42.6%	153.5	144.8	(b)	–		144.8	(6.2	)
	Arbor Memorial Services Inc. ("Arbor Memorial")	43.4%	111.8	61.4		–		61.4	10.6
	Partnerships, trusts and other(11)	–	303.9	299.8		–		299.8	(32.0	)
			1,239.6	1,136.0		–		1,136.0	(30.4	)
			3,846.2	1,776.0		1,169.3		2,945.3	62.6
Investments in associates			4,629.3	2,487.0		1,169.3		3,656.3	200.5
As presented on the consolidated balance sheet:
	Investments in associates		2,824.3					2,487.0
	Fairfax India cash and portfolio investments(12)(13)		1,517.3					949.5
	Fairfax Africa cash and portfolio investments(15)(16)		287.7					219.8
			4,629.3					3,656.3

(a)

See note 5 for fair value hierarchy information.

(b)

These investments are considered joint arrangements.

(c)

Fairfax India associate.

(d)

Fairfax Africa associate.

60

		December 31, 2016
				Carrying value					Year ended December 31, 2016
				Associates and joint arrangements
		Ownership percentage	Fair value(a)			Fairfax India associates		Total	Share of profit (loss)(8)
Insurance and reinsurance:
	Eurolife ERB Insurance Group Holdings S.A. ("Eurolife")	40.0%	171.4	150.6	(b)	–		150.6	(6.4	)
	Gulf Insurance Company ("Gulf Insurance")	41.4%	235.8	195.7		–		195.7	14.0
	Thai Re Public Company Limited ("Thai Re")	32.4%	80.2	94.7		–		94.7	(1.8	)
	Bank for Investment and Development of Vietnam Insurance Joint Stock Corporation ("BIC Insurance")	35.0%	68.5	48.4		–		48.4	1.8
	Singapore Reinsurance Corporation Limited ("Singapore Re")	27.8%	35.5	34.6		–		34.6	2.0
	Ambridge Partners LLC ("Ambridge Partners")	50.0%	31.4	31.4		–		31.4	3.4
	Falcon Insurance PLC ("Falcon Thailand")	41.2%	8.8	8.8		–		8.8	0.7
	Camargue Underwriting Managers Group Ltd. ("Camargue")	50.0%	5.2	5.2		–		5.2	0.2
	ICICI Lombard General Insurance Company Limited ("ICICI Lombard")	34.6%	878.0	371.1		–		371.1	44.1
			1,514.8	940.5		–		940.5	58.0
Non-insurance:
Real estate
	KWF Real Estate Ventures Limited Partnerships ("KWF LPs")(6)	–	202.8	202.8	(b)	–		202.8	13.9
	Grivalia Properties REIC ("Grivalia Properties")	40.6%	332.4	295.9		–		295.9	16.1
			535.2	498.7		–		498.7	30.0
India
	IIFL Holdings Limited ("IIFL Holdings")	30.5%	373.9	96.3		220.1	(c)	316.4	18.5
	Fairchem Limited ("Fairchem")	44.9%	45.5	–		19.4	(c)	19.4	0.3
	Other	–	0.4	–		1.0	(c)	1.0	–
			419.8	96.3		240.5		336.8	18.8
Other
	Resolute Forest Products Inc. ("Resolute")(8)	33.9%	162.5	304.5		–		304.5	(73.6	)
	APR Energy plc ("APR Energy")	45.0%	234.0	187.3	(b)	–		187.3	(29.0	)
	Peak Achievement Athletics ("Peak Achievement")	38.2%	83.0	82.7	(b)	–		82.7	–
	Arbor Memorial Services Inc. ("Arbor Memorial")	43.4%	93.6	56.0		–		56.0	9.0
	Partnerships, trusts and other	–	224.4	227.0		–		227.0	11.0
			797.5	857.5		–		857.5	(82.6	)
			1,752.5	1,452.5		240.5		1,693.0	(33.8	)
Investments in associates			3,267.3	2,393.0		240.5		2,633.5	24.2
As presented on the consolidated balance sheet:
	Investments in associates		2,955.4					2,393.0
	Fairfax India cash and portfolio investments		311.9					240.5
			3,267.3					2,633.5

(a)

See note 5 for fair value hierarchy information.

(b)

These investments are considered joint arrangements.

(c)

Fairfax India associate.

Insurance and reinsurance associates

(1)

At December 31, 2017 Thai Re Public Company Limited's ("Thai Re") recoverable amount of $80.3 was determined to be lower than its carrying value, resulting in a non-cash impairment charge of $17.7 recognized in share of profit (loss) of associates in the consolidated statement of earnings.

(2)

Through various transactions during 2017 the company acquired a 45.3% equity interest in Go Digit Infoworks Private Limited ("Digit") for cash consideration of $10.6 (694.4 million Indian rupees) and invested in convertible preferred shares of Digit for $48.9 (3.2 billion Indian rupees). Digit is a newly formed Indian company that has established and is operating an insurance company in India named Go Digit General Insurance Limited.

61

(3)

On July 6, 2017 the company sold a 12.2% equity interest in ICICI Lombard General Insurance Company Limited ("ICICI Lombard") to private equity investors for net proceeds of $376.3 and a net realized investment gain of $223.3. On September 19, 2017 the company sold an additional 12.1% equity interest through participation in ICICI Lombard's initial public offering for net proceeds of $532.2 and a net realized investment gain of $372.3. The company's remaining 9.9% equity interest in ICICI Lombard was reclassified from the equity method of accounting to common stock at FVTPL, resulting in a $334.5 re-measurement gain.

Non-insurance associates

(4)

Through various transactions between January 3, 2017 and May 10, 2017, the company acquired an aggregate equity interest in Astarta Holding N.V. ("Astarta") of 28.0% with an initial carrying value of $120.1 under the equity method of accounting, comprised of cash consideration of $104.4 (420.1 million Polish zlotys) and re-measurements to fair value of $15.7. Astarta specializes in sugar production, crop growing, soybean processing and cattle farming, primarily in Ukraine.

(5)

On March 1, 2017 the company acquired a 46.1% equity interest in Farmers Edge Inc. ("Farmers Edge") for purchase consideration of $95.0. Farmers Edge specializes in data science, precision agronomy (farming), geographic information systems, hardware engineering, software development, soil science and sustainability.

(6)

The KWF LPs are partnerships formed between the company and Kennedy-Wilson Holdings, Inc. and its affiliates ("Kennedy Wilson") to invest in U.S. and international real estate properties. The company participates as a limited partner in the KWF LPs, with limited partnership interests ranging from 50% to 90%. Kennedy Wilson is the general partner and holds the remaining limited partnership interest in each of the KWF LPs.

(7)

On July 4, 2017 the company acquired control of Grivalia Properties REIC ("Grivalia Properties") by increasing its equity interest to 52.6% through the purchase of an additional 10.3% equity interest from Eurobank Ergasias S.A. for cash consideration of $100.0 (€88.0). Accordingly, the company re-measured its equity accounted carrying value of Grivalia Properties to fair value, recorded a net realized gain of $51.3 and commenced consolidating Grivalia Properties (and its equity accounted investments with a fair value of $39.5) in the Other reporting segment. Pursuant to Greek securities law, the company then made a tender offer for all remaining outstanding shares of Grivalia Properties which expired on September 6, 2017, resulting in the company increasing its equity interest by 0.1% to 52.7% for cash consideration of $0.6 (€0.5). Grivalia Properties is a real estate investment company listed on the Athens Stock Exchange.

(8)

At December 31, 2016 the carrying value of the company's investment in Resolute Forest Products Inc. ("Resolute") exceeded its fair value as determined by the market price of Resolute shares. The company performed a value-in-use analysis to establish the recoverable amount of its investment in Resolute and recognized a non-cash impairment charge of $100.4 in share of profit of associates in the 2016 consolidated statement of earnings.

(9)

On July 20, 2017 the company increased its indirect equity interest in APR Energy plc ("APR Energy") to 67.9% through the acquisition of an additional 22.9% equity interest for purchase consideration of $109.0. APR Energy continues to be reported under the equity method of accounting due to certain contractual arrangements between Fairfax and the second-largest shareholder which preclude either party from exercising unilateral control over APR Energy's most relevant decisions governing its operations, including the appointment of executive management and the approval of the detailed annual business plan. On October 13, 2017 APR Energy obtained further capital financing through the issuance of common shares to existing shareholders for which the company participated by investing an additional $13.2. The net impact of the common share issuance reduced the company's indirect equity interest to 67.8%.

(10)

On March 1, 2017 the restructuring of Performance Sports Group Ltd. ("PSG") was substantially completed after all of the assets and certain related operating liabilities of PSG were sold to an intermediate holding company ("Performance Sports") co-owned by Fairfax and Sagard Holdings Inc. The company's $153.5 equity investment in Performance Sports represents a voting interest of 50.0% and an equity interest of 42.6%. On April 3, 2017 Performance Sports was renamed Peak Achievement Athletics Inc. ("Peak Achievement").

(11)

On August 2, 2017 the company acquired an 81.2% non-voting equity interest in Sigma Companies International Corp. ("Sigma") for cash consideration of $41.4. Sigma, through its subsidiary, is engaged in global water and wastewater infrastructure projects.

62

Fairfax India

(12)

On March 24, 2017 Fairfax India acquired a 38.0% equity interest in Bangalore International Airport Limited ("Bangalore Airport") for cash consideration of $385.5 (25.2 billion Indian rupees). On July 13, 2017 Fairfax India increased its equity interest in Bangalore Airport to 48.0% through the acquisition of an additional 10.0% equity interest from a wholly-owned subsidiary of GVK Power and Infrastructure Limited ("GVK") for purchase consideration of $200.1 (12.9 billion Indian rupees). A put option previously issued to GVK during the company's initial investment in Bangalore Airport was terminated by this transaction. Bangalore Airport, under a concession agreement with the Government of India, operates and manages the Kempegowda International Airport in Bengaluru, India through a public-private partnership.

(13)

On October 20, 2017 IIFL Holdings Limited ("IIFL Holdings") completed a spin-off of a wholly owned subsidiary resulting in the entity 5paisa Capital Limited ("5paisa"). IIFL Holdings investors received 5paisa shares pro rata based on existing ownership in IIFL Holdings. The transaction was recorded as a non-cash distribution that reduced the carrying value of the company's investment in IIFL Holdings. Subsequent to the spin-off transaction, the company holds a 35.5% equity interest in 5paisa recorded at an initial carrying value of $26.4. 5paisa is a provider of a web-based, mobile technology platform that facilitates trading of securities on the BSE and NSE of India.

(14)

On March 14, 2017 Fairchem Speciality Limited ("Fairchem") and Privi Organics Limited ("Privi Organics") completed their previously announced merger, with the merged entity continuing under the Fairchem name and being consolidated by Fairfax India (see note 23).

Fairfax Africa

(15)

On August 31, 2017 Fairfax Africa, through a series of transactions, acquired a 42.4% equity interest in Atlas Mara Limited ("Atlas Mara") for cash consideration of $155.8. On December 22, 2017 Fairfax Africa acquired an additional 0.9% equity interest in Atlas Mara for cash consideration of $2.4. Atlas Mara is a financial services institution listed on the London Stock Exchange that operates in seven sub-Saharan countries.

(16)

On February 17, 2017 the company contributed its indirect equity ownership interest in AFGRI Holdings Proprietary Limited ("AFGRI") to Fairfax Africa (fair value of $72.8 and carrying value of $40.5) in exchange for 7,284,606 multiple voting shares of Fairfax Africa valued at $10.00 per multiple voting share (see note 23). Despite the company's significant equity interest, AFGRI is reported under the equity method of accounting due to contractual arrangements between Fairfax Africa and certain other shareholders of AFGRI which preclude any shareholders from exercising unilateral control over AFGRI's most relevant decisions governing its operations, including approval of significant transactions and the five-year business plan.

63

Changes in the investments in associates balances for the years ended December 31 were as follows:

	2017
	Associates		Joint arrangements		Fairfax India associates		Fairfax Africa associates		Total
Balance – January 1	1,769.6		623.4		240.5		–		2,633.5
Share of pre-tax comprehensive income (loss) of associates and joint arrangements:
Share of profit of associates and joint arrangements	25.6		128.2		45.5		1.2		200.5
Share of other comprehensive income (loss), excluding gains (losses) on defined benefit plans	22.9		46.4		(0.1	)	(1.3	)	67.9
Share of gains (losses) on defined benefit plans	12.4		–		(0.1	)	–		12.3
	60.9		174.6		45.3		(0.1	)	280.7
Dividends and distributions received	(50.5	)	(57.0	)	(26.8	)	–		(134.3	)
Purchases and acquisitions	367.4		301.6		682.9		219.9		1,571.8
Divestitures and other net changes in capitalization	(290.5	)	(2.4	)	(0.7	)	–		(293.6	)
Reclassifications(1)	(440.4	)	–		(20.4	)	–		(460.8	)
Foreign exchange effect	20.5		9.8		28.7		–		59.0
Balance – December 31	1,437.0		1,050.0		949.5		219.8		3,656.3

(1)

Comprised of the consolidation of Grivalia Properties, the reduction of the company's investment in ICICI Lombard and the consolidation of Fairchem subsequent to its merger with Privi Organics.

	2016
	Associates		Joint arrangements		Fairfax India associates		Fairfax Africa associates	Total
Balance – January 1	1,538.7		191.5		202.7		–	1,932.9
Share of pre-tax comprehensive income (loss) of associates and joint arrangements:
Share of profit (loss) of associates and joint arrangements	32.1		(21.5	)	13.6		–	24.2
Share of other comprehensive loss, excluding losses on defined benefit plans	(24.9	)	(14.4	)	–		–	(39.3	)
Share of losses on defined benefit plans	(43.5	)	–		–		–	(43.5	)
	(36.3	)	(35.9	)	13.6		–	(58.6	)
Dividends and distributions received	(45.6	)	(47.8	)	(4.6	)	–	(98.0	)
Purchases and acquisitions	306.2		528.4		20.5		–	855.1
Divestitures and other net changes in capitalization	5.6		(11.6	)	13.7		–	7.7
Foreign exchange effect	1.0		(1.2	)	(5.4	)	–	(5.6	)
Balance – December 31	1,769.6		623.4		240.5		–	2,633.5

The company's strategic investment in 15.0% of Alltrust Insurance Company of China Ltd. had a carrying value of $81.2 at December 31, 2017 (December 31, 2016 – $76.1) and is classified as FVTPL within common stocks on the consolidated balance sheet.

64

7.    Short Sales and Derivatives

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

		December 31, 2017				December 31, 2016
				Fair value				Fair value
			Notional amount				Notional amount
		Cost		Assets	Liabilities	Cost		Assets	Liabilities
Equity derivatives:
	Equity index total return swaps – short positions	–	52.6	0.4	–	–	43.3	0.6	–
	Equity total return swaps – short positions	–	892.5	11.8	12.1	–	1,623.0	10.4	78.1
	Equity total return swaps – long positions	–	697.8	17.8	15.6	–	213.1	9.4	5.1
	Equity and equity index call options	0.4	8.2	3.9	–	16.2	1,104.4	12.8	–
	Warrants	64.8	607.1	73.7	–	6.5	32.2	6.5	–
CPI-linked derivative contracts		678.4	117,254.6	39.6	–	670.0	110,365.5	83.4	–
U.S. treasury bond forwards		–	1,693.8	–	28.8	–	3,013.4	–	49.7
Foreign exchange forward contracts		–	–	57.1	69.7	–	–	80.2	101.4
Total				204.3	126.2			203.3	234.3

The company is exposed to significant market risk (comprised of foreign currency risk, interest rate risk and other price risk) through its investing activities. Certain derivative contracts entered into by the company are considered economic hedges of certain market risks but are not designated as hedges for financial reporting.

Equity contracts

Throughout most of 2016 the company had economically hedged certain market risks associated with its equity and equity-related holdings (comprised of common stocks, convertible preferred stocks, convertible bonds, non-insurance investments in associates and equity-related derivatives) against a potential significant decline in equity markets by way of short positions effected through equity and equity index total return swaps (including short positions in certain equity indexes and individual equities) and equity index put options (S&P 500). The company's equity hedges were structured to provide a return that was inverse to changes in the fair values of the indexes and certain individual equities.

The company discontinued its economic equity hedging strategy in the fourth quarter of 2016 after giving consideration to the possible and actual outcome of the U.S. elections and the potential for fundamental changes that could improve U.S. economic growth and equity markets. During 2016 the company closed out $6,350.6 notional amount of short positions effected through equity index total return swaps (comprised of Russell 2000, S&P 500 and S&P/TSX 60 short equity index total return swaps) and recognized a net loss on investment of $955.2 (realized loss of $2,665.4 of which $1,710.2 had been recognized as unrealized losses in prior years). The company continues to hold short equity and equity index total return swaps for investment purposes, but no longer regards them as hedges of its equity and equity-related holdings. During 2017 the company paid net cash of $485.6 (2016 – $915.8) in connection with the closures and reset provisions of its short equity and equity index total return swaps (excluding the impact of collateral requirements).

During 2017 the company closed out $1,202.9 notional amount of short equity total return swaps and recognized a net loss on investment of $237.9 (realized loss of $553.1 of which $315.2 was recognized as unrealized losses in prior years). In the first quarter of 2018 the company closed out an additional $481.3 notional amount of short equity and equity index total return swaps and recognized a net loss on investment of $8.1 (realized loss of $199.0 of which $190.9 was recognized as unrealized losses in prior years), which reduced the notional amount of remaining short equity and equity index total return swaps to approximately $509. During 2017 the company closed out $1,100.0 notional amount of S&P 500 call options and recorded a net gain on investment of $10.1.

At December 31, 2017 the company had entered into long equity total return swaps on individual equities for investment purposes with an original notional amount of $706.3 (December 31, 2016 – $283.9). During 2017 the company received net cash of $21.6 (2016 – $10.4) in connection with the reset provisions of its long equity total return swaps (excluding the impact of collateral requirements).

65

At December 31, 2017 the fair value of collateral deposited for the benefit of derivative counterparties included in holding company cash and investments, or in assets pledged for short sale and derivative obligations, was $272.5 (December 31, 2016 – $322.9), comprised of collateral of $36.0 (December 31, 2016 – $86.4) securing amounts owed to counterparties in respect of fair value changes since the most recent reset date, and collateral of $236.5 (December 31, 2016 – $236.5) required to be deposited to enter into such derivative contracts (principally related to total return swaps).

U.S. treasury bond forward contracts

To reduce its exposure to interest rate risk (specifically with respect to U.S. state and municipal bonds and any remaining long dated U.S. treasury bonds held in its fixed income portfolio following sales which occurred late in 2016 and in the first quarter of 2017), the company entered into forward contracts to sell long dated U.S. treasury bonds. At December 31, 2017 these contracts had a notional amount of $1,693.8 (December 31, 2016 – $3,013.4) and an average term to maturity of less than three months, and could be renewed at market rates.

CPI-linked derivative contracts

The company has purchased derivative contracts referenced to consumer price indexes ("CPI") in the geographic regions in which it operates to serve as an economic hedge against the potential adverse financial impact on the company of decreasing price levels. At December 31, 2017 these contracts have a remaining weighted average life of 4.6 years (December 31, 2016 – 5.6 years) and notional amounts and fair values as shown in the table below. In the event of a sale, expiration or early settlement of any of these contracts, the company would receive the fair value of that contract on the date of the transaction. The company's maximum potential loss on a contract is limited to the original cost of that contract. The CPI-linked derivative contracts are summarized as follows:

	December 31, 2017
			Notional amount
		Averag life (in years)			Weighted average strike price	Index value at period end				Market value in bps(2)
Underlying CPI index	Floor rate(1)		Original currency	U.S. dollars			Cost	Cost in bps(2)	Market value		Unrealized gain (loss)
United States	0.0%	4.7	46,725.0	46,725.0	231.39	246.52	287.5	61.5	20.6	4.4	(266.9	)
United States	0.5%	6.8	12,600.0	12,600.0	238.30	246.52	39.9	31.7	17.2	13.7	(22.7	)
European Union	0.0%	4.0	41,375.0	49,683.0	96.09	102.57	307.1	61.8	1.4	0.3	(305.7	)
United Kingdom	0.0%	4.9	3,300.0	4,464.1	243.82	278.10	23.2	52.0	0.3	0.7	(22.9	)
France	0.0%	5.1	3,150.0	3,782.5	99.27	101.76	20.7	54.7	0.1	0.3	(20.6	)
		4.6		117,254.6			678.4		39.6		(638.8	)

	December 31, 2016
			Notional amount
		Average life (in years)			Weighted average strike price	Index value at period end				Market value in bps(2)
Underlying CPI index	Floor rate(1)		Original currency	U.S. dollars			Cost	Cost in bps(2)	Market value		Unrealized gain (loss)
United States	0.0%	5.7	46,725.0	46,725.0	231.39	241.43	286.9	61.4	35.2	7.5	(251.7	)
United States	0.5%	7.8	12,600.0	12,600.0	238.30	241.43	39.5	31.3	34.3	27.2	(5.2	)
European Union	0.0%	5.0	41,375.0	43,640.4	96.09	101.26	300.3	68.8	12.5	2.9	(287.8	)
United Kingdom	0.0%	5.9	3,300.0	4,077.6	243.82	267.10	22.6	55.4	0.5	1.2	(22.1	)
France	0.0%	6.1	3,150.0	3,322.5	99.27	100.66	20.7	62.3	0.9	2.7	(19.8	)
		5.6		110,365.5			670.0		83.4		(586.6	)

(1)

Contracts with a floor rate of 0.0% provide a payout at maturity if there is cumulative deflation over the life of the contract. Contracts with a floor rate of 0.5% provide a payout at maturity based on an equivalent weighted average strike price of 250.49 if cumulative inflation averages less than 0.5% per year over the life of the contract. At December 31, 2017 the equivalent weighted average strike price for the United States 0.5% CPI-linked derivative contracts was 242.20 (December 31, 2016 – 241.00).

(2)

Expressed as a percentage of the notional amount.

During 2017 the company did not enter into any new CPI-linked derivative contracts. The company's CPI-linked derivative contracts produced net unrealized losses of $71.0 in 2017 (2016 – $196.2).

66

Foreign exchange forward contracts

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

Counterparty collateral

The company endeavours to limit counterparty risk through diligent selection of counterparties to its derivative contracts and through the terms of negotiated agreements. The fair value of the collateral deposited for the benefit of the company at December 31, 2017 consisted of cash of $3.6 and government securities of $35.9 (December 31, 2016 – $8.3 and $54.4). The company has recognized the cash collateral within subsidiary cash and short term investments and recognized a corresponding liability within accounts payable and accrued liabilities. The company had not exercised its right to sell or repledge collateral at December 31, 2017. The company's exposure to counterparty risk and the management thereof are discussed in note 24.

Hedge of net investment in Canadian subsidiaries

At December 31, 2017 the company has designated the carrying value of Cdn$2,212.9 principal amount of its Canadian dollar denominated unsecured senior notes with a fair value of $1,868.6 (December 31, 2016 – principal amount of Cdn$1,975.0 with a fair value of $1,618.1) as a hedge of its net investment in its Canadian subsidiaries for financial reporting. During 2017 the company recognized pre-tax losses of $106.3 (2016 – $37.5) related to foreign currency movements on the unsecured senior notes in losses on hedge of net investment in Canadian subsidiaries in the consolidated statement of comprehensive income.

8.    Insurance Contract Liabilities

	December 31, 2017			December 31, 2016
	Gross	Ceded	Net	Gross	Ceded	Net
Provision for unearned premiums	5,951.7	1,169.0	4,782.7	3,740.4	539.8	3,200.6
Provision for losses and loss adjustment expenses	28,610.8	6,189.7	22,421.1	19,481.8	3,179.6	16,302.2
Total insurance contract liabilities	34,562.5	7,358.7	27,203.8	23,222.2	3,719.4	19,502.8
Current	13,405.0	2,975.9	10,429.1	9,013.9	1,586.8	7,427.1
Non-current	21,157.5	4,382.8	16,774.7	14,208.3	2,132.6	12,075.7
	34,562.5	7,358.7	27,203.8	23,222.2	3,719.4	19,502.8

At December 31, 2017 the company's net provision for losses and loss adjustment expenses of $22,421.1 (December 31, 2016 – $16,302.2) were comprised of case reserves of $9,731.5 and IBNR of $12,689.6 (December 31, 2016 – $7,537.2 and $8,765.0).

Provision for unearned premiums

Changes in the provision for unearned premiums for the years ended December 31 were as follows:

			2017		2016
Provision for unearned premiums – January 1			3,740.4		3,284.8
		Gross premiums written	12,207.5		9,534.3
		Less: gross premiums earned	(11,822.0	)	(9,209.7	)
	Acquisitions of subsidiaries (note 23)		1,906.2		111.1
	Divestiture of subsidiary (note 23)		(157.9	)	–
	Foreign exchange effect and other		77.5		19.9
Provision for unearned premiums – December 31			5,951.7		3,740.4

67

Provision for losses and loss adjustment expenses

Changes in the provision for losses and loss adjustment expenses for the years ended December 31 were as follows:

			2017		2016
Provision for losses and loss adjustment expenses – January 1			19,481.8		19,816.4
	Decrease in estimated losses and expenses for claims occurring in the prior years		(218.8	)	(559.8	)
	Losses and expenses for claims occurring in the current year		9,736.5		6,247.8
	Paid on claims occurring during:
		the current year	(2,263.9	)	(1,595.6	)
		the prior years	(5,526.0	)	(4,441.8	)
	Acquisitions of subsidiaries (note 23)		7,377.6		143.1
	Divestiture of subsidiary (note 23)		(546.6	)	–
	Foreign exchange effect and other		570.2		(128.3	)
Provision for losses and loss adjustment expenses – December 31			28,610.8		19,481.8

Development of insurance losses, gross

The development of insurance liabilities illustrates the estimation uncertainty associated with these liabilities and provides a measure of the company's ability to estimate the ultimate value of claims. The loss development table which follows shows the provision for losses and loss adjustment expenses at the end of each calendar year, the cumulative payments made in respect of those reserves in subsequent years and the re-estimated amount of each calendar year's provision for losses and loss adjustment expenses as at December 31, 2017.

		Calendar year
		2008		2009		2010	2011	2012	2013	2014	2015		2016		2017
Provision for losses and loss adjustment expenses		14,467.2		14,504.8		16,049.3	17,232.2	19,648.8	19,212.8	17,749.1	19,816.4		19,481.8		28,610.8
Less: CTR Life(1)		34.9		27.6		25.3	24.2	20.6	17.9	15.2	14.2		12.8		8.7
		14,432.3		14,477.2		16,024.0	17,208.0	19,628.2	19,194.9	17,733.9	19,802.2		19,469.0		28,602.1
Cumulative payments as of:
One year later		3,136.0		3,126.6		3,355.9	3,627.6	4,323.5	4,081.1	3,801.6	4,441.4		4,608.0
Two years later		5,336.4		5,307.6		5,441.4	6,076.7	7,153.1	6,787.6	6,364.5	7,283.6
Three years later		7,070.7		6,846.3		7,063.1	7,920.3	9,148.0	8,775.5	8,172.7
Four years later		8,318.7		7,932.7		8,333.3	9,333.4	10,702.8	10,212.4
Five years later		9,189.1		8,936.9		9,327.0	10,458.7	11,783.3
Six years later		10,039.4		9,721.1		10,202.6	11,263.6
Seven years later		10,705.5		10,456.1		10,823.4
Eight years later		11,379.9		10,975.6
Nine years later		11,857.8
Reserves re-estimated as of:
One year later		14,746.0		14,616.0		15,893.8	17,316.4	19,021.2	18,375.6	16,696.4	19,169.3		19,343.1
Two years later		14,844.4		14,726.6		15,959.7	17,013.6	18,529.4	17,475.0	16,269.2	18,973.6
Three years later		14,912.4		14,921.6		15,705.6	16,721.0	17,820.5	17,307.9	16,114.0
Four years later		15,127.5		14,828.9		15,430.4	16,233.9	17,735.5	17,287.2
Five years later		15,091.0		14,663.1		15,036.2	16,269.6	17,830.5
Six years later		15,011.7		14,433.0		15,099.0	16,331.8
Seven years later		14,873.6		14,551.5		15,252.1
Eight years later		15,028.8		14,744.2
Nine years later		15,231.4
Favourable (unfavourable) development		(799.1	)	(267.0	)	771.9	876.2	1,797.7	1,907.7	1,619.9	828.6		125.9
Comprised of favourable (unfavourable):
	Effect of foreign currency translation	(317.7	)	82.0		264.2	265.1	575.6	476.0	248.5	(252.3	)	(205.7	)
	Loss reserve development	(481.4	)	(349.0	)	507.7	611.1	1,222.1	1,431.7	1,371.4	1,080.9		331.6
		(799.1	)	(267.0	)	771.9	876.2	1,797.7	1,907.7	1,619.9	828.6		125.9

(1)

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

68

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

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

Favourable loss reserve development in calendar year 2017 of $331.6 in the table above was principally comprised of favourable loss emergence on the more recent accident years, partially offset by adverse development primarily relating to asbestos and other latent reserves.

Development of losses and loss adjustment expenses for asbestos

A number of the company's subsidiaries wrote general liability policies and reinsurance prior to their acquisition by the company under which policyholders continue to present asbestos-related injury claims. The vast majority of these claims are presented under policies written many years ago and reside primarily within the run-off group.

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

The following is an analysis of the changes which have occurred in the company's provision for losses and loss adjustment expenses related to asbestos exposure on a gross and net basis for the years ended December 31:

		2017				2016
		Gross		Net		Gross		Net
Provision for asbestos claims and loss adjustment expenses – January 1		1,347.7		1,065.5		1,381.0		1,043.8
	Losses and loss adjustment expenses incurred	153.0		141.8		219.9		218.7
	Losses and loss adjustment expenses paid	(208.6	)	(174.0	)	(253.2	)	(197.0	)
Provision for asbestos claims and loss adjustment expenses – December 31		1,292.1		1,033.3		1,347.7		1,065.5

Fair Value

The estimated fair value of insurance and reinsurance contracts is as follows:

	December 31, 2017		December 31, 2016
	Fair value	Carrying value	Fair value	Carrying value
Insurance contracts	33,807.2	34,562.5	22,598.3	23,222.2
Ceded reinsurance contracts	6,948.7	7,358.7	3,501.3	3,719.4

The fair value of insurance contracts is comprised of the fair value of both unpaid claim liabilities and unearned premiums. The fair value of ceded reinsurance contracts is comprised of the fair value of reinsurers' share of unpaid claim liabilities and unearned premiums. Both reflect the time value of money through discounting, whereas the carrying values (including the reinsurers' share thereof) do not. The calculation of the fair value of unearned premiums includes acquisition expenses to reflect the deferral of these expenses at the inception of the insurance contract. The estimated fair value of insurance and ceded reinsurance contracts is determined by projecting the expected future cash flows of the contracts, selecting the appropriate interest rates, and applying the resulting discount factors to the expected future cash flows. The difference between the sum of the undiscounted expected future cash flows and the sum of the discounted expected future cash flows represents the time value of money. A margin for risk and uncertainty is added to the discounted cash flows to reflect the volatility of the lines of business written, quantity of reinsurance purchased, credit quality of reinsurers and the possibility of future changes in interest rates.

69

The table that follows illustrates the potential impact of interest rate fluctuations on the fair value of the company's insurance and reinsurance contracts:

	December 31, 2017		December 31, 2016
Change in interest rates	Fair value of insurance contracts	Fair value of reinsurance contracts	Fair value of insurance contracts	Fair value of reinsurance contracts
100 basis point increase	32,820.7	6,764.1	21,973.4	3,425.7
100 basis point decrease	34,877.5	7,147.6	23,274.9	3,582.4

9.    Reinsurance

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

	December 31, 2017				December 31, 2016
	Gross recoverable from reinsurers	Provision for uncollectible reinsurance(1)		Recoverable from reinsurers	Gross recoverable from reinsurers	Provision for uncollectible reinsurance(1)		Recoverable from reinsurers
Provision for losses and loss adjustment expenses	6,216.2	(26.5	)	6,189.7	3,210.0	(30.4	)	3,179.6
Reinsurers' share of paid losses	593.7	(139.9	)	453.8	432.2	(141.3	)	290.9
Provision for unearned premiums	1,169.0	–		1,169.0	539.8	–		539.8
	7,978.9	(166.4	)	7,812.5	4,182.0	(171.7	)	4,010.3
Current				3,418.6				1,846.6
Non-current				4,393.9				2,163.7
				7,812.5				4,010.3

(1)

The company's management of credit risk associated with its reinsurance recoverables is discussed in note 24.

70

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

		2017
		Paid losses		Unpaid losses		Unearned premiums		Provision for uncollectible reinsurance		Recoverable from reinsurers
Balance – January 1, 2017		432.2		3,210.0		539.8		(171.7	)	4,010.3
	Reinsurers' share of losses paid to insureds	1,330.7		(1,330.7	)	–		–		–
	Reinsurance recoveries received	(1,314.0	)	–		–		–		(1,314.0	)
	Reinsurers' share of unpaid losses and premiums earned	–		2,367.1		(2,100.6	)	–		266.5
	Premiums ceded to reinsurers	–		–		2,224.0		–		2,224.0
	Change in provision, recovery or write-off of impaired balances	(0.2	)	0.7		–		7.2		7.7
	Acquisitions of subsidiaries (note 23)	162.7		2,115.2		586.0		–		2,863.9
	Divestiture of subsidiary (note 23)	(29.0	)	(237.8	)	(86.8	)	0.1		(353.5	)
	Foreign exchange effect and other	11.3		91.7		6.6		(2.0	)	107.6
Balance – December 31, 2017		593.7		6,216.2		1,169.0		(166.4	)	7,812.5

		2016
		Paid losses		Unpaid losses		Unearned premiums		Provision for uncollectible reinsurance		Recoverable from reinsurers
Balance – January 1, 2016		419.4		3,259.8		398.7		(187.0	)	3,890.9
	Reinsurers' share of losses paid to insureds	1,018.3		(1,018.3	)	–		–		–
	Reinsurance recoveries received	(1,017.4	)	–		–		–		(1,017.4	)
	Reinsurers' share of unpaid losses and premiums earned	–		952.1		(1,347.5	)	–		(395.4	)
	Premiums ceded to reinsurers	–		–		1,445.9		–		1,445.9
	Change in provision, recovery or write-off of impaired balances	0.7		(11.3	)	–		15.5		4.9
	Acquisitions of subsidiaries (note 23)	11.5		65.0		32.3		–		108.8
	Foreign exchange effect and other	(0.3	)	(37.3	)	10.4		(0.2	)	(27.4	)
Balance – December 31, 2016		432.2		3,210.0		539.8		(171.7	)	4,010.3

Commission income earned on premiums ceded to reinsurers in 2017 of $347.1 (2016 – $267.4) is included in commissions, net in the consolidated statement of earnings.

10.  Insurance Contract Receivables

Insurance contract receivables were comprised as follows:

	December 31, 2017		December 31, 2016
Insurance premiums receivable	2,752.3		1,906.2
Reinsurance premiums receivable	1,086.4		788.8
Funds withheld receivable	659.8		181.8
Other	218.7		68.3
Provision for uncollectible balances	(30.3	)	(27.6	)
	4,686.9		2,917.5

71

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

		Insurance premiums receivable				Reinsurance premiums receivable
		2017		2016		2017		2016
Balance – January 1		1,906.2		1,677.1		788.8		659.5
	Gross premiums written	9,329.9		6,930.2		2,877.6		2,604.1
	Premiums collected	(8,075.2	)	(6,050.5	)	(2,323.3	)	(1,876.5	)
	Recovery (impairments)	0.5		(1.6	)	(0.7	)	(1.2	)
	Amounts due to brokers and agents	(932.3	)	(707.8	)	(686.4	)	(581.2	)
	Acquisitions of subsidiaries (note 23)	604.1		54.7		445.2		0.8
	Divestiture of subsidiary (note 23)	(64.7	)	–		(48.5	)	–
	Foreign exchange effect and other	(16.2	)	4.1		33.7		(16.7	)
Balance – December 31		2,752.3		1,906.2		1,086.4		788.8

11.  Deferred Premium Acquisition Costs

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

		2017		2016
Balance – January 1		693.1		532.7
	Premium acquisition costs deferred	2,380.2		1,851.1
	Amortization	(2,140.7	)	(1,696.2	)
	Divestiture of subsidiary (note 23)	(15.8	)	–
	Foreign exchange effect and other	10.7		5.5
Balance – December 31		927.5		693.1

72

12.  Goodwill and Intangible Assets

Goodwill and intangible assets were comprised as follows:

		Goodwill		Intangible assets						Total
				Lloyd's participation rights(1)	Customer and broker relationships		Brand names(1)	Computer software and other
Balance – January 1, 2017		1,633.7		420.5	431.8		1,014.4	347.1		3,847.5
	Additions	1,212.3		87.4	672.8		87.5	172.9		2,232.9
	Disposals	(1.7	)	–	–		–	(0.2	)	(1.9	)
	Amortization and impairment	(0.1	)	–	(67.9	)	–	(91.5	)	(159.5	)
	Foreign exchange effect and other	60.5		–	11.1		69.5	12.4		153.5
Balance – December 31, 2017		2,904.7		507.9	1,047.8		1,171.4	440.7		6,072.5
Gross carrying amount		2,911.8		507.9	1,266.7		1,171.4	767.7		6,625.5
Accumulated amortization		–		–	(218.9	)	–	(311.5	)	(530.4	)
Accumulated impairment		(7.1	)	–	–		–	(15.5	)	(22.6	)
		2,904.7		507.9	1,047.8		1,171.4	440.7		6,072.5

		Goodwill		Intangible assets						Total
				Lloyd's participation rights(1)	Customer and broker relationships		Brand names(1)	Computer software and other
Balance – January 1, 2016		1,428.2		420.5	385.6		723.3	257.3		3,214.9
	Additions	216.0		–	73.8		280.9	163.4		734.1
	Disposals	–		–	–		–	(0.1	)	(0.1	)
	Amortization and impairment	(7.0	)	–	(35.3	)	–	(68.9	)	(111.2	)
	Foreign exchange effect and other	(3.5	)	–	7.7		10.2	(4.6	)	9.8
Balance – December 31, 2016		1,633.7		420.5	431.8		1,014.4	347.1		3,847.5
Gross carrying amount		1,640.7		420.5	578.6		1,014.4	599.5		4,253.7
Accumulated amortization		–		–	(146.8	)	–	(237.7	)	(384.5	)
Accumulated impairment		(7.0	)	–	–		–	(14.7	)	(21.7	)
		1,633.7		420.5	431.8		1,014.4	347.1		3,847.5

(1)

Not subject to amortization.

73

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

	December 31, 2017			December 31, 2016
	Goodwill	Intangible assets	Total	Goodwill	Intangible assets	Total
Allied World	938.9	763.7	1,702.6	–	–	–
Cara	222.3	1,073.6	1,295.9	211.5	990.3	1,201.8
Brit	154.3	571.3	725.6	154.3	576.6	730.9
Zenith National	317.6	115.5	433.1	317.6	121.4	439.0
Crum & Forster	188.8	129.4	318.2	186.5	145.1	331.6
Quess	229.0	21.8	250.8	23.7	18.5	42.2
Thomas Cook India	150.0	54.2	204.2	115.3	50.1	165.4
Northbridge	95.7	77.1	172.8	88.3	64.5	152.8
OdysseyRe	119.7	51.6	171.3	119.7	55.2	174.9
AMAG	44.7	110.2	154.9	72.6	63.0	135.6
All other(1)	443.7	199.4	643.1	344.2	129.1	473.3
	2,904.7	3,167.8	6,072.5	1,633.7	2,213.8	3,847.5

(1)

Comprised primarily of balances related to NCML, Fairchem, Mosaic Capital, Boat Rocker, The Keg, U.S. Run-off and Pethealth.

At December 31, 2017 goodwill and intangible assets were comprised primarily of amounts arising on the acquisitions of Allied World and Manipal (by Quess) during 2017, St-Hubert and Original Joe's (both by Cara) during 2016, Cara and Brit during 2015, Quess during 2013, Thomas Cook India during 2012, and Zenith National during 2010. Impairment tests for goodwill and intangible assets not subject to amortization were completed in 2017 and it was concluded that no impairments had occurred. Allied World's recoverable amount exceeded its carrying value (inclusive of goodwill), but the excess was not significant as a result of being acquired only on July 6, 2017.

When testing for impairment, the recoverable amount of each CGU or group of CGUs was based on the higher of fair value less costs of disposal or value in use, determined on the basis of market prices where available, or discounted cash flow models. Cash flow projections covering a five year period were derived from financial budgets approved by management. Cash flows beyond the five year period were extrapolated using estimated growth rates which do not exceed the long term average historic growth rate for the business in which each CGU operates.

A number of other assumptions and estimates including premium volumes, investment returns, revenues, expenses and working capital requirements were required to be incorporated into the discounted cash flow models. The forecasts were based on the best estimates of future premiums or revenues and operating expenses using historical trends, general geographical market conditions, industry trends and forecasts and other available information. These assumptions and estimates were reviewed by the applicable CGU's management and by head office management. The cash flow forecasts are adjusted by applying appropriate after-tax discount rates within a range of 7.8% to 15.4% for insurance business and 9.2% to 21.3% for non-insurance business. A long term investment return of 5.0% was applied to the investment portfolios of insurance businesses. The weighted average annual growth rate used to extrapolate cash flows beyond five years for the majority of the CGUs was 3.0%.

74

13.  Other Assets

Other assets were comprised as follows:

	December 31, 2017			December 31, 2016
	Insurance and reinsurance companies	Non- insurance companies	Total	Insurance and reinsurance companies	Non- insurance companies	Total
Premises and equipment	403.0	847.3	1,250.3	251.9	639.6	891.5
Other reporting segment investment properties (note 23)	–	1,168.4	1,168.4	–	–	–
Other reporting segment sales receivables	–	470.0	470.0	–	295.2	295.2
Other reporting segment inventories	–	320.7	320.7	–	235.5	235.5
Receivables for securities sold but not yet settled	207.3	–	207.3	15.6	26.5	42.1
Prepaid expenses	83.7	102.5	186.2	59.7	64.4	124.1
Income taxes refundable	83.1	63.9	147.0	174.7	28.0	202.7
Accrued interest and dividends	105.2	16.2	121.4	97.3	9.5	106.8
Deferred compensation plans	67.1	–	67.1	63.4	–	63.4
Pension surplus (note 21)	49.1	–	49.1	50.8	–	50.8
Other	565.5	275.3	840.8	307.3	199.0	506.3
	1,564.0	3,264.3	4,828.3	1,020.7	1,497.7	2,518.4
Current	788.5	1,069.0	1,857.5	487.5	792.9	1,280.4
Non-current	775.5	2,195.3	2,970.8	533.2	704.8	1,238.0
	1,564.0	3,264.3	4,828.3	1,020.7	1,497.7	2,518.4

14.  Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities were comprised as follows:

	December 31, 2017			December 31, 2016
	Insurance and reinsurance companies	Non- insurance companies	Total	Insurance and reinsurance companies	Non- insurance companies	Total
Other reporting segment payables related to cost of sales	–	530.8	530.8	–	416.7	416.7
Payable to reinsurers	428.2	–	428.2	498.3	–	498.3
Salaries and employee benefit liabilities	296.8	77.3	374.1	218.3	31.2	249.5
Deferred gift card, hospitality and other revenue	27.3	294.7	322.0	20.9	263.4	284.3
Pension and post retirement liabilities (note 21)	227.1	23.7	250.8	196.2	20.7	216.9
Amounts withheld and accrued taxes	205.2	43.4	248.6	169.7	48.5	218.2
Ceded deferred premium acquisition costs	161.4	–	161.4	84.7	–	84.7
Accrued rent, storage and facilities costs	33.1	59.7	92.8	17.1	47.7	64.8
Amounts payable to agents and brokers	90.4	0.1	90.5	30.5	0.1	30.6
Accrued commissions	79.8	0.4	80.2	85.4	–	85.4
Accrued premium taxes	66.6	–	66.6	55.2	–	55.2
Accrued interest expense	48.0	3.4	51.4	41.4	2.1	43.5
Accrued legal and professional fees	37.7	10.7	48.4	29.6	8.5	38.1
Amounts payable for securities purchased but not yet settled	18.2	–	18.2	14.4	–	14.4
Administrative and other	621.7	243.8	865.5	453.3	134.7	588.0
	2,341.5	1,288.0	3,629.5	1,915.0	973.6	2,888.6
Current	1,429.7	1,019.7	2,449.4	1,174.7	770.8	1,945.5
Non-current	911.8	268.3	1,180.1	740.3	202.8	943.1
	2,341.5	1,288.0	3,629.5	1,915.0	973.6	2,888.6

75

15.  Borrowings

		December 31, 2017			December 31, 2016
		Principal	Carrying value(a)	Fair value(b)	Principal	Carrying value(a)	Fair value(b)
Borrowings – holding company
Fairfax unsecured notes:
	7.375% due April 15, 2018(e)	144.2	144.2	146.4	144.2	144.2	153.8
	7.50% due August 19, 2019 (Cdn$400.0)(d)(1)(7)	–	–	–	298.3	297.0	334.4
	7.25% due June 22, 2020 (Cdn$275.0)(d)(7)	213.3	212.7	235.6	205.1	204.2	233.6
	5.80% due May 15, 2021(d)	500.0	498.0	534.1	500.0	497.4	538.9
	6.40% due May 25, 2021 (Cdn$400.0)(d)(7)	315.7	314.4	349.4	298.3	296.5	337.3
	5.84% due October 14, 2022 (Cdn$450.0)(d)	359.2	362.5	397.2	335.6	339.6	373.9
	4.50% due March 22, 2023 (Cdn$400.0)	319.2	316.8	333.5	298.3	295.4	310.6
	4.875% due August 13, 2024(d)	300.0	296.2	313.4	300.0	295.6	297.8
	4.95% due March 3, 2025 (Cdn$350.0)(d)	279.3	275.5	297.1	261.0	256.6	272.6
	8.30% due April 15, 2026(e)	91.8	91.6	116.3	91.8	91.6	109.9
	4.70% due December 16, 2026 (Cdn$450.0)	359.2	356.6	371.7	335.6	332.7	338.9
	4.25% due December 6, 2027 (Cdn$650.0)(3)	518.8	516.2	514.7	–	–	–
	7.75% due July 15, 2037(e)	91.3	90.4	114.1	91.3	90.4	104.2
Revolving credit facility		–	–	–	200.0	200.0	200.0
Purchase consideration payable due 2017 and other(2)		–	–	–	131.3	131.3	131.3
		3,492.0	3,475.1	3,723.5	3,490.8	3,472.5	3,737.2
Borrowings – insurance and reinsurance companies
Allied World senior notes:
	5.50% due November 1, 2020	300.0	320.4	320.0	–	–	–
	4.35% due October 29, 2025	500.0	508.4	507.3	–	–	–
Allied World revolving credit facility and other borrowings		45.0	49.2	49.2	–	–	–
OdysseyRe floating rate unsecured senior notes due 2021		90.0	89.8	93.0	90.0	89.8	94.1
Brit 6.625% subordinated notes due December 9, 2030 (£135.0)		182.6	188.5	199.0	166.8	175.9	169.0
Brit floating rate revolving credit facility(4)		45.0	45.0	45.0	–	–	–
First Mercury trust preferred securities due 2036 and 2037		41.4	41.4	41.4	41.4	41.4	41.4
Zenith National 8.55% debentures due August 1, 2028(d)		38.4	38.2	38.2	38.4	38.2	38.2
Advent floating rate subordinated notes due June 3, 2035(d)		48.4	47.1	47.8	46.7	45.4	41.5
Advent floating rate unsecured senior notes due 2026(d)		46.0	45.0	46.0	46.0	44.8	46.0
		1,336.8	1,373.0	1,386.9	429.3	435.5	430.2
Borrowings – non-insurance companies(c)
Fairfax India floating rate term loan due July 11, 2018(6)		400.0	400.0	400.0	225.0	223.8	223.8
Fairfax India subsidiary borrowings		186.1	186.1	186.1	80.8	80.8	80.8
Fairfax Africa floating rate term loan due January 31, 2018(5)		150.0	150.0	150.0	–	–	–
Grivalia Properties term loans and revolving facility		160.4	160.4	160.4	–	–	–
Cara floating rate term loan due September 2, 2019 (Cdn$150.0)		119.7	119.3	119.3	111.9	111.4	111.4
Cara floating rate credit facility expiring September 2, 2021		182.8	181.7	181.7	180.5	179.1	179.1
The Keg 7.5% note due May 31, 2042 (Cdn$57.0)		45.5	45.5	45.5	42.5	42.5	42.5
The Keg floating rate revolving facility and term loan due July 2, 2020		31.9	31.7	31.7	20.9	20.7	20.7
Loans and revolving credit facilities primarily at floating rates		291.7	291.3	291.4	201.8	201.3	200.7
		1,568.1	1,566.0	1,566.1	863.4	859.6	859.0
Total debt		6,396.9	6,414.1	6,676.5	4,783.5	4,767.6	5,026.4

(a)

Principal net of unamortized issue costs and discounts (premiums).

(b)

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

(c)

These borrowings are non-recourse to the holding company.

(d)

Redeemable at the issuer's option at any time at certain prices specified in the instrument's offering document.

(e)

This debt has no provision for redemption prior to the contractual maturity date.

76

During 2017 the company and its subsidiaries completed the following debt transactions:

(1)

On December 29, 2017 the company completed an early redemption of its remaining Cdn$388.4 principal amount 7.5% unsecured senior notes due August 19, 2019 for cash consideration of $340.6 (Cdn$430.6), including accrued interest, and recognized a loss on repurchase of long term debt of $26.0 (Cdn$32.8) in other expenses in the consolidated statement of earnings.

(2)

On December 13, 2017 the company repaid $124.9 principal amount of purchase consideration payable upon maturity.

(3)

On December 4, 2017 the company completed an underwritten public offering of Cdn$650.0 principal amount of 4.25% unsecured senior notes due December 6, 2027 at an issue price of 99.992 for net proceeds after discount, commissions and expenses of $509.5 (Cdn$646.8). Commissions and expenses of $2.4 (Cdn$3.1) were included as part of the carrying value of the notes. The notes are redeemable at any time prior to September 6, 2027, at the company's option, in whole or in part, at the greater of (i) a specified redemption price based on the then current yield of a Government of Canada bond with an equal term to maturity or (ii) par, and at any time on or after September 6, 2027 at par. The company has designated these senior notes as a hedge of a portion of its net investment in its Canadian subsidiaries.

(4)

On November 29, 2017 Brit drew $45.0 on its revolving credit facility that was subsequently repaid on January 5, 2018.

(5)

On August 31, 2017 Fairfax Africa entered into a $150.0 five-month floating rate term loan and a $153.9 (2 billion South African rand) non-revolving seven-month letter of credit facility with a Canadian chartered bank that required cash collateral of $150.0 and $162.0 respectively. On December 11, 2017 the letter of credit facility was terminated with the $162.0 cash collateral released on January 12, 2018. On January 31, 2018 Fairfax Africa extended the maturity of the $150.0 term loan to August 31, 2018.

(6)

On March 31, 2017 Fairfax India repaid its floating rate secured term loan of $225.0. On July 11, 2017 Fairfax India entered into a $400.0 one-year floating rate term loan with a Canadian chartered bank and used a portion of the proceeds to fund an additional investment in Bangalore Airport (note 6).

(7)

On March 15, 2017 the company closed its tender offers to purchase a targeted aggregate principal amount of up to Cdn$250.0 of certain of its outstanding senior notes. Pursuant to those tender offers, the company purchased principal amounts of $8.7, $5.8 and $3.3 of its notes due in 2019, 2020 and 2021 for cash consideration of $9.7, $6.6 and $3.7 respectively.

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

			2017					2016
			Holding company		Insurance and reinsurance companies	Non- insurance companies	Total	Holding company	Insurance and reinsurance companies		Non- insurance companies	Total
Balance – January 1			3,472.5		435.5	859.6	4,767.6	2,599.0	468.5		284.0	3,351.5
	Net cash inflows (outflows) from issuances and repayments		(174.2	)	67.5	425.6	318.9	832.3	–		515.2	1,347.5
	Non-cash changes:
		Acquisitions (note 23)	–		860.5	221.5	1,082.0	–	–		60.4	60.4
		Loss on redemption	28.6		–	–	28.6	–	–		–	–
		Foreign exchange effect and other	148.2		9.5	59.3	217.0	41.2	(33.0	)	–	8.2
Balance – December 31			3,475.1		1,373.0	1,566.0	6,414.1	3,472.5	435.5		859.6	4,767.6

77

Principal repayments on borrowings are due as follows:

	2018	2019	2020	2021	2022	Thereafter	Total
Holding company	144.2	–	213.3	815.7	359.2	1,959.6	3,492.0
Insurance and reinsurance companies	5.0	–	345.0	90.0	–	896.8	1,336.8
Non-insurance companies	855.9	187.8	131.4	242.5	49.4	101.1	1,568.1
Total	1,005.1	187.8	689.7	1,148.2	408.6	2,957.5	6,396.9

Credit Facility – Holding company

On December 21, 2017 the company increased its unsecured revolving credit facility with a syndicate of lenders to $2.0 billion from $1.0 billion and extended the expiry to December 21, 2021 from May 11, 2019. The credit facility contains certain financial covenants that require the company to maintain a ratio of consolidated debt to consolidated capitalization of not more than 0.35:1 and consolidated shareholders' equity attributable to shareholders of Fairfax of not less than $9.5 billion. At December 31, 2017 there were no amounts drawn on the credit facility and the company was in compliance with its covenants (consolidated debt to consolidated capitalization ratio of 0.24:1 and consolidated shareholders' equity attributable to shareholders of Fairfax of $13.8 billion).

16.  Total Equity

Equity attributable to shareholders of Fairfax

Authorized capital

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

Issued capital

Issued capital at December 31, 2017 included 1,548,000 (December 31, 2016 – 1,548,000) multiple voting shares and 27,904,801 (December 31, 2016 – 23,004,207) subordinate voting shares without par value prior to deducting 902,498 (December 31, 2016 – 659,411) subordinate voting shares reserved in treasury for share-based payment awards. The multiple voting shares are not traded.

Common stock

The number of shares outstanding was as follows:

		2017		2016
Subordinate voting shares – January 1		22,344,796		21,465,089
	Issuances during the year	5,084,961		1,000,000
	Repurchases for cancellation	(184,367	)	(30,732	)
	Treasury shares acquired	(277,364	)	(130,075	)
	Treasury shares reissued	34,277		40,514
Subordinate voting shares – December 31		27,002,303		22,344,796
Multiple voting shares – beginning and end of year		1,548,000		1,548,000
Interest in multiple and subordinate voting shares held through ownership interest in shareholder – beginning and end of year		(799,230	)	(799,230	)
Common stock effectively outstanding – December 31		27,751,073		23,093,566

During 2017 the company issued 5,084,961 subordinate voting shares, of which 5,075,894 shares with a fair value of $2,191.6 were issued pursuant to the acquisition of Allied World as described in note 23.

78

During 2017 the company repurchased for cancellation 184,367 subordinate voting shares (2016 – 30,732) under the terms of its normal course issuer bids at a cost of $96.2 (2016 – $14.1), of which $50.6 (2016 – $8.0) was charged to retained earnings. Subsequent to December 31, 2017 and up to March 9, 2018 the company repurchased for cancellation 20,000 subordinate voting shares under the terms of its normal course issuer bid at a cost of $9.9.

During 2017 the company repurchased for treasury 277,364 subordinate voting shares at a cost of $140.5 (2016 – 130,075 subordinate voting shares at a cost of $64.2) on the open market for use in its share-based payment awards. Subsequent to December 31, 2017 and up to March 9, 2018 the company repurchased for treasury 47,372 subordinate voting shares at a cost of $24.3 on the open market for use in its share-based payment awards.

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

Date of declaration	Date of record	Date of payment	Dividend per share	Total cash payment
January 3, 2018	January 18, 2018	January 25, 2018	$10.00	$283.2
January 4, 2017	January 19, 2017	January 26, 2017	$10.00	$237.4
January 5, 2016	January 20, 2016	January 27, 2016	$10.00	$227.8

Preferred stock

The number of preferred shares outstanding was as follows:

	Series C	Series D	Series E	Series F	Series G	Series H	Series I	Series J	Series K	Series M	Total
January 1, 2016	6,016,384	3,983,616	3,967,134	3,572,044	7,432,952	2,567,048	10,465,553	1,534,447	9,500,000	9,200,000	58,239,178
2016 activity:	–	–	–	–	–	–	–	–	–	–	–
December 31, 2016	6,016,384	3,983,616	3,967,134	3,572,044	7,432,952	2,567,048	10,465,553	1,534,447	9,500,000	9,200,000	58,239,178
2017 activity:	–	–	–	–	–	–	–	–	–	–	–
December 31, 2017	6,016,384	3,983,616	3,967,134	3,572,044	7,432,952	2,567,048	10,465,553	1,534,447	9,500,000	9,200,000	58,239,178

The carrying value of preferred shares outstanding was as follows:

		Series C	Series D	Series E	Series F	Series G	Series H	Series I	Series J	Series K	Series M	Total
January 1, 2016		136.7	90.5	90.8	81.8	175.3	60.6	251.6	36.9	231.7	179.0	1,334.9
2016 activity:
	Other	–	–	–	–	–	–	–	–	–	0.6	0.6
December 31, 2016		136.7	90.5	90.8	81.8	175.3	60.6	251.6	36.9	231.7	179.6	1,335.5
2017 activity:		–	–	–	–	–	–	–	–	–	–	–
December 31, 2017		136.7	90.5	90.8	81.8	175.3	60.6	251.6	36.9	231.7	179.6	1,335.5

The terms of the company's cumulative five-year rate reset preferred shares at December 31, 2017 were as follows:

	Next possible redemption and conversion date(1)(2)	Number of shares outstanding	Stated capital	Liquidation preference per share	Fixed dividend rate per annum	Floating dividend rate per annum(3)
Series C	December 31, 2019	6,016,384	Cdn$150.4	Cdn $25.00	4.58%	–
Series D	December 31, 2019	3,983,616	Cdn$99.6	Cdn $25.00	–	4.02%
Series E	March 31, 2020	3,967,134	Cdn$99.2	Cdn $25.00	2.91%	–
Series F	March 31, 2020	3,572,044	Cdn$89.3	Cdn $25.00	–	3.03%
Series G	September 30, 2020	7,432,952	Cdn$185.8	Cdn $25.00	3.32%	–
Series H	September 30, 2020	2,567,048	Cdn$64.2	Cdn $25.00	–	3.43%
Series I	December 31, 2020	10,465,553	Cdn$261.6	Cdn $25.00	3.71%	–
Series J	December 31, 2020	1,534,447	Cdn$38.4	Cdn $25.00	–	3.72%
Series K	March 31, 2022	9,500,000	Cdn$237.5	Cdn $25.00	4.67%	–
Series M	March 31, 2020	9,200,000	Cdn$230.0	Cdn $25.00	4.75%	–

(1)

Fixed and floating rate cumulative preferred shares are redeemable at the company's option at each stated redemption date and on each subsequent five-year anniversary date at Cdn$25.00 per share.

(2)

Holders of Series C, Series E, Series G, Series I, Series K and Series M fixed rate cumulative preferred shares will have the right, at their option, to convert their shares into floating rate cumulative preferred shares Series D, Series F, Series H,

79

Series J, Series L and Series N respectively, at the conversion dates specified in the table above, and on each subsequent five-year anniversary date. Holders of Series D, Series F, Series H and Series J floating rate cumulative preferred shares will have the right, at their option, to convert their shares into fixed rate cumulative preferred shares Series C, Series E, Series G and Series I respectively, at the conversion dates specified in the table above, and on each subsequent five-year anniversary date.

(3)

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

During 2017 the company paid aggregate preferred share dividends of $44.6 (2016 – $44.0).

Accumulated other comprehensive income (loss)

The amounts related to each component of accumulated other comprehensive income (loss) attributable to shareholders of Fairfax were as follows:

		December 31, 2017					December 31, 2016
		Pre-tax amount		Income tax (expense) recovery	After-tax amount		Pre-tax amount		Income tax (expense) recovery		After-tax amount
Items that may be subsequently reclassified to net earnings
	Currency translation account	(166.6	)	2.8	(163.8	)	(356.6	)	(7.6	)	(364.2	)
	Share of accumulated other comprehensive loss of associates, excluding share of net losses on defined benefit plans of associates	(22.0	)	0.5	(21.5	)	(157.1	)	26.3		(130.8	)
		(188.6	)	3.3	(185.3	)	(513.7	)	18.7		(495.0	)
Items that will not be subsequently reclassified to net earnings
	Share of net losses on defined benefit plans of associates	(30.3	)	3.5	(26.8	)	(42.6	)	10.8		(31.8	)
	Net losses on defined benefit plans	(60.9	)	8.9	(52.0	)	(28.0	)	6.9		(21.1	)
		(91.2	)	12.4	(78.8	)	(70.6	)	17.7		(52.9	)
Accumulated other comprehensive loss attributable to shareholders of Fairfax		(279.8	)	15.7	(264.1	)	(584.3	)	36.4		(547.9	)

Non-controlling interests

Non-controlling interests for the years ended December 31 were as follows:

						Net earnings (loss) attributable to non-controlling interests
		2017		2016
						Year ended December 31,
		Minority voting percentage		Minority voting percentage
			Carrying value		Carrying value
Subsidiary	Domicile					2017		2016
Allied World(1)	Switzerland	32.6%	1,229.4	–	–	(182.3	)	–
Fairfax India(2)	Canada	6.4%	1,110.7	4.7%	743.7	(59.9	)	24.4
Cara(3)	Canada	43.3%	578.0	43.4%	523.9	55.7		30.8
Grivalia Properties(4)	Greece	47.3%	517.6	–	–	20.0		–
Brit(5)	U.K.	27.5%	435.3	27.5%	463.4	(19.1	)	50.4
Thomas Cook India(6)	India	32.4%	391.2	32.3%	139.6	28.2		2.4
Fairfax Africa(7)	Canada	1.2%	191.6	–	–	4.3		–
All other	–		147.1		129.4	27.4		9.8
			4,600.9		2,000.0	(125.7	)	117.8

Pursuant to the transactions described in note 23:

(1)

During the third quarter of 2017 the company acquired an indirect 67.4% equity interest in Allied World.

80

(2)

The increase in carrying value of Fairfax India's non-controlling interests at December 31, 2017 compared to December 31, 2016 was primarily due to common shares issued as a result of Fairfax India's public offering and private placement on January 13, 2017, the acquisition of a 51.0% interest in Saurashtra Freight, the merger of Fairchem and Privi Organics, and the impact of foreign currency translation (principally the strengthening of the Indian rupee relative to the U.S. dollar), partially offset by non-controlling interests' share of net loss.

(3)

The increase in carrying value of Cara's non-controlling interests at December 31, 2017 compared to December 31, 2016 was primarily due to net earnings and the impact of foreign currency translation (strengthening of the Canadian dollar relative to the U.S. dollar), partially offset by repurchase of shares by Cara and dividends paid.

(4)

On July 4, 2017 the company increased its equity interest in Grivalia Properties to 52.6% and commenced consolidating Grivalia Properties in the Other reporting segment.

(5)

On March 3, 2017 Brit paid a dividend of $45.8 to its minority shareholder (OMERS).

(6)

The increase in carrying value of Thomas Cook India's non-controlling interests at December 31, 2017 compared to December 31, 2016 was primarily due to a reduction in the company's indirect ownership of Quess from 42.1% to 33.1%.

(7)

On February 17, 2017 the company acquired a 64.2% equity interest in Fairfax Africa.

Non-controlling interest voting percentages in the table above are consistent with economic ownership for each subsidiary at December 31, 2017 except for Fairfax India, Cara, and Fairfax Africa whose non-controlling interest economic ownership percentages were 69.8%, 59.8%, and 35.8% respectively.

Other net changes in capitalization

Other net changes in capitalization on the consolidated statement of changes in equity generally reflect the impact of capital transactions and changes in ownership interests of consolidated subsidiaries where the company maintains control after the transaction. During 2017 other net changes in capitalization increased both equity attributable to shareholders of Fairfax ($236.6) and non-controlling interests ($184.0), and principally reflected the impact of capital transactions and changes in ownership interest related to Fairfax India's public offering and private placement, Thomas Cook India's partial sale of Quess shares, Quess' private placement of its own shares, shares issued by Quess to acquire Manipal, and the acquisition of the remaining shares of Allied World AG. See note 23 for details.

17.  Earnings per Share

Net earnings (loss) per share is calculated based upon the weighted average common shares outstanding as follows:

	2017			2016
Net earnings (loss) attributable to shareholders of Fairfax		1,740.6			(512.5	)
Preferred share dividends		(44.6	)		(44.0	)
Net earnings (loss) attributable to common shareholders – basic and diluted		1,696.0			(556.5	)
Weighted average common shares outstanding – basic		25,411,246			23,017,184
Share-based payment awards		689,571			–
Weighted average common shares outstanding – diluted		26,100,817			23,017,184
Net earnings (loss) per common share – basic	$	66.74		$	(24.18	)
Net earnings (loss) per common share – diluted	$	64.98		$	(24.18	)

Share-based payment awards of 567,450 were not included in the calculation of net loss per diluted common share for the year ended December 31, 2016 as inclusion of the awards would be anti-dilutive.

81

18.  Income Taxes

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

		2017		2016
Current income tax
	Current year expense	200.6		95.1
	Adjustments to prior years' income taxes	(22.6	)	19.1
		178.0		114.2
Deferred income tax
	Origination and reversal of temporary differences	(22.5	)	(265.6	)
	Adjustments to prior years' deferred income taxes	24.3		2.9
	Change in tax rate related to U.S. tax reform	222.4		–
	Other	6.1		(11.1	)
		230.3		(273.8	)
Provision (recovery) for income taxes		408.3		(159.6	)

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

	2017								2016
	Canada(1)		U.S.(2)	U.K.(3)		Other(4)		Total	Canada(1)		U.S.(2)		U.K.(3)		Other(4)	Total
Earnings (loss) before income taxes	(141.3	)	543.5	(72.1	)	1,693.1		2,023.2	(258.5	)	(428.4	)	42.2		90.4	(554.3	)
Provision (recovery) for income taxes	52.9		420.5	(24.6	)	(40.5	)	408.3	69.6		(234.6	)	(23.7	)	29.1	(159.6	)
Net earnings (loss)	(194.2	)	123.0	(47.5	)	1,733.6		1,614.9	(328.1	)	(193.8	)	65.9		61.3	(394.7	)

(1)

Includes Fairfax India and Fairfax Africa.

(2)

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

(3)

Principally comprised of Brit, Riverstone UK, Advent and other associated holding company results.

(4)

Includes India, Asia, non-U.K. European companies and Allied World (acquired on July 6, 2017; notwithstanding that certain operations of Allied World conduct business in the U.S. and the U.K., the majority of Allied World's net earnings (loss) is sourced from its Bermuda operations).

The decrease in the pre-tax loss in Canada in 2017 compared to 2016 primarily reflected an improvement in investment results. The increase in pre-tax earnings in the U.S. in 2017 compared to 2016 primarily reflected an improvement in investment results, partially offset by weaker underwriting results (reflecting increased catastrophe losses). The increase in the pre-tax loss in the U.K. in 2017 compared to 2016 primarily reflected weaker underwriting results (reflecting increased catastrophe losses). The increase in pre-tax earnings in Other in 2017 compared to 2016 primarily reflected the gains on sale of First Capital and a portion of the company's investment in ICICI Lombard, partially offset by the underwriting loss at Allied World (reflecting catastrophe losses).

82

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

	2017		2016
Canadian statutory income tax rate	26.5%		26.5%
Provision (recovery) for income taxes at the Canadian statutory income tax rate	536.1		(146.9	)
Tax rate differential on income and losses incurred outside Canada	(445.3	)	(65.3	)
Non-taxable investment income	(116.2	)	(74.7	)
Change in unrecorded tax benefit of losses and temporary differences	210.2		117.5
Change in tax rate for deferred income taxes related to U.S. tax reform	222.4		–
Change in tax rate for deferred income taxes (excluding U.S. tax reform)	2.2		(15.1	)
Other including permanent differences	(15.6	)	11.3
Foreign exchange effect	12.8		(8.4	)
Provision relating to prior years	1.7		22.0
Provision (recovery) for income taxes	408.3		(159.6	)

The tax rate differential on income and losses incurred outside Canada of $445.3 in 2017 principally reflected the impact of net gains on the sales of ICICI Lombard and First Capital which were not taxable in the jurisdictions in which they were held (income tax rate benefits of $246.5 in Mauritius and $269.9 in Barbados respectively), partially offset by income in the U.S. that is taxed at rates higher than the Canadian statutory rate and losses at Allied World and in the U.K. that are taxed at rates lower than the Canadian statutory rate. The tax rate differential on income and losses incurred outside Canada of $65.3 in 2016 principally reflected income in the U.K. that is taxed at rates lower than the Canadian statutory rate and losses in the U.S. which are taxed at rates higher than the Canadian statutory rate.

Non-taxable investment income of $116.2 in 2017 (2016 – $74.7) was principally comprised of dividend income, non-taxable interest income, the 50% of net capital gains which are not taxable in Canada and share of profit of associates in certain jurisdictions.

The change in unrecorded tax benefit of losses and temporary differences of $210.2 in 2017 principally reflected deferred tax assets in Canada of $70.8 (2016 – $117.9) that were not recorded (as it was considered not probable that those losses could be utilized) and a reduction in tax credits and operating losses capitalized in prior years in the U.S. of $89.7 (2016 – nil), primarily driven by the effects of U.S. tax reform as discussed later in this note.

The change in tax rate related to U.S. tax reform of $222.4 (2016 – nil) principally reflected the impact of the reduction of the U.S. federal corporate income tax rate on the net deferred income tax asset. Other including permanent differences included an income tax rate benefit of $7.4 related to the impact of the transition tax under U.S. tax reform. The impact of U.S. tax reform on the company's consolidated financial statements is discussed later in this note.

Income taxes refundable and payable were as follows:

	December 31, 2017		December 31, 2016
Income taxes refundable	147.0		202.7
Income taxes payable	(95.6	)	(35.4	)
Net income taxes refundable	51.4		167.3

83

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

		2017		2016
Balance – January 1		167.3		12.1
	Amounts recorded in the consolidated statements of earnings	(178.0	)	(114.2	)
	Payments made during the year	33.4		267.1
	Acquisitions of subsidiaries (note 23)	18.8		3.9
	Foreign exchange effect and other	9.9		(1.6	)
Balance – December 31		51.4		167.3

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

		2017
		Operating and capital losses		Provision for losses and loss adjustment expenses		Provision for unearned premiums		Deferred premium acquisition costs		Intan- gible assets		Invest- ments		Tax credits		Other		Total
Balance – January 1, 2017		188.8		182.3		126.6		(120.0	)	(347.6	)	331.9		224.3		146.3		732.6
	Amounts recorded in the consolidated statement of earnings	(41.2	)	(72.3	)	(15.0	)	(0.6	)	111.0		(140.1	)	(106.0	)	33.9		(230.3	)
	Amounts recorded in total equity	–		–		–		–		–		(15.5	)	(0.1	)	(5.1	)	(20.7	)
	Acquisitions of subsidiaries (note 23)	33.1		20.5		(19.8	)	53.6		(195.2	)	0.9		–		5.4		(101.5	)
	Foreign exchange effect and other	7.0		0.8		0.1		0.3		(11.7	)	0.3		(0.1	)	4.0		0.7
Balance – December 31, 2017		187.7		131.3		91.9		(66.7	)	(443.5	)	177.5		118.1		184.5		380.8

		2016
		Operating and capital losses		Provision for losses and loss adjustment expenses		Provision for unearned premiums		Deferred premium acquisition costs		Intan- gible assets		Invest- ments		Tax credits	Other		Total
Balance – January 1, 2016		235.4		204.2		92.8		(96.9	)	(325.4	)	49.0		174.9	129.9		463.9
	Amounts recorded in the consolidated statement of earnings	(57.8	)	(22.7	)	31.8		(24.1	)	27.9		266.9		49.4	2.4		273.8
	Amounts recorded in total equity	–		–		–		–		–		17.7		–	19.6		37.3
	Acquisitions of subsidiaries (note 23)	9.7		–		(0.3	)	0.7		(47.7	)	(1.1	)	–	(14.5	)	(53.2	)
	Foreign exchange effect and other	1.5		0.8		2.3		0.3		(2.4	)	(0.6	)	–	8.9		10.8
Balance – December 31, 2016		188.8		182.3		126.6		(120.0	)	(347.6	)	331.9		224.3	146.3		732.6

Management expects that the deferred income tax asset will be realized in the normal course of operations. The most significant temporary differences included in the deferred income tax asset at December 31, 2017 related to investments and provision for losses and loss adjustment expenses, partially offset by a deferred income tax liability related to intangible assets. The temporary differences related to investments are primarily due to net unrealized investment losses in the U.S. In these consolidated financial statements, investment gains and losses are primarily recognized on a mark-to-market basis but are only recognized for tax purposes when realized (particularly in the U.S. and several other jurisdictions). The provision for losses and loss adjustment expenses is recorded on an undiscounted basis in these consolidated financial statements but is recorded on a discounted basis in certain jurisdictions for tax purposes, resulting in temporary differences. Deferred taxes on intangible assets primarily relates to intangible assets recognized on acquisitions (principally Allied World, Cara and Brit) that are typically not deductible in the determination of income taxes payable. Other deferred taxes include temporary differences related to pensions and premises and equipment.

Management conducts ongoing reviews of the recoverability of the deferred income tax asset and adjusts, as necessary, to reflect its anticipated realization. As at December 31, 2017 management has not recorded deferred income tax assets of $878.3 (December 31, 2016 – $590.0) related primarily to operating and capital losses and

84

U.S. foreign tax credits. The losses for which deferred income tax assets have not been recorded are comprised of $1,516.4 of losses in Canada (December 31, 2016 – $1,064.7), $635.7 of losses in Europe (December 31, 2016 – $585.7), $44.6 of losses in the U.S. (December 31, 2016 – $44.6), and $159.0 of foreign tax credits in the U.S. (December 31, 2016 – $59.0). The losses in Canada expire between 2026 and 2037. The losses and foreign tax credits in the U.S. expire between 2020 and 2035. Substantially all of the losses in Europe do not have an expiry date.

Deferred income tax has not been recognized for the withholding tax and other taxes that could be payable on the unremitted earnings of certain subsidiaries. Unremitted earnings amounted to approximately $3.1 billion at December 31, 2017 (December 31, 2016 – $3.1 billion) and are not likely to be repatriated in the foreseeable future.

The United States Tax Cuts and Jobs Act ("U.S. tax reform") that was signed into law on December 22, 2017 introduced a number of significant changes to U.S. corporate income tax for tax years beginning after December 31, 2017: it reduces the U.S. federal corporate income tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, repeals the alternative minimum tax ("AMT") regime, modifies rules pertaining to loss reserve discounting, introduces a new minimum base erosion and anti-abuse tax ("BEAT") on certain payments to foreign affiliates, and implements a U.S. tax on foreign earnings for certain global intangible low-taxed income ("GILTI").

Under IFRS, deferred income tax assets and liabilities are measured at the enacted or substantively enacted tax rate expected to apply when temporary differences are to be realized or settled. The resulting deferred income tax is recognized in the consolidated statement of earnings, except to the extent that it relates to items previously recognized directly in equity. The company selected December 31, 2017 as the revaluation date for its U.S. net deferred income tax asset as the impact between the date of enactment and December 31, 2017 was not considered significant. The reduction in the U.S. corporate income tax rate decreased the U.S. net deferred income tax asset related to operating and capital losses and other timing differences by $229.2, of which $222.4 was recorded in the consolidated statement of earnings and $6.8 was recorded in other comprehensive income. The company also decreased its recognized U.S. foreign tax credit carry forwards by $100.0 at December 31, 2017 as the reduction in the U.S. corporate income tax rate will make utilization of foreign tax credit carry forwards recognized in prior years more difficult, requiring increased U.S. and foreign source income in the future.

For tax years beginning before January 1, 2018, U.S. tax reform requires that U.S. companies include in income the mandatory deemed repatriation of post-1986 undistributed foreign earnings (the "transition tax"). For the year ended December 31, 2017, the company included $79.1 of previously untaxed foreign earnings in taxable income. Future repatriation of this amount will not incur additional U.S. tax. The company utilized current and prior year foreign tax credits (rather than net operating loss carry forwards) to offset this income to reduce the transition tax liability payable in cash to nil. The recognition of the transition tax caused the company to record reductions to a deferred tax liability of $34.5 related to previously deferred earnings of OdysseyRe's U.K. operations and to foreign tax credit carry forwards of $27.1 that no longer have value due to the mandatory repatriation.

The tax effects included in these consolidated financial statements represent the company's best estimate based upon the information available, notwithstanding that the company is still analyzing certain aspects of U.S. tax reform and may refine its computations, which could potentially affect the measurement of deferred taxes or give rise to additional current tax liabilities. The repeal of the AMT regime did not have a significant impact on the company and the company continues to reflect the AMT credit carryforwards as part of its net deferred income tax asset. The company will recognize charges related to BEAT and GILTI, if any, in the periods in which they are incurred, and has not included their impacts in measuring its net deferred income tax asset at December 31, 2017.

19.  Statutory Requirements

The retained earnings of the company are largely represented by retained earnings at the insurance and reinsurance subsidiaries. The insurance and reinsurance subsidiaries are subject to certain requirements and restrictions under their respective insurance company Acts including minimum capital requirements and dividend restrictions. The company's capital requirements and management thereof are discussed in note 24. The company's share of dividends paid in 2017 by the insurance and reinsurance subsidiaries, which are eliminated on consolidation, was $418.1 (2016 – $445.8). In addition, the company received proceeds from the sale of First Capital as described in note 23 and the partial sale of ICICI Lombard as described in note 6.

85

Based on the surplus and net earnings (loss) of the primary insurance and reinsurance subsidiaries as at and for the year ended December 31, 2017, the maximum dividend capacity available in 2018 at each of those subsidiaries, payable to all shareholders (including non-controlling interests) is as follows:

	December 31, 2017
Allied World	688.0
OdysseyRe	324.9
Northbridge(1)	149.1
Crum & Forster	130.2
Zenith National	86.0
Brit	195.1
	1,573.3

(1)

Subject to prior regulatory approval.

When determining the amount of dividends to be paid from its insurance and reinsurance subsidiaries, the company considers not only regulatory capital requirements, but also rating agency capital tests, future capital levels required to support growth and tax planning matters, among other factors. In addition, the co-investors in Allied World and Brit have a dividend in priority to the company.

20.  Contingencies and Commitments

Lawsuits

On July 26, 2006 Fairfax filed a lawsuit seeking $6 billion in damages from a number of defendants who, the complaint (as subsequently amended) alleges, participated in a stock market manipulation scheme involving Fairfax shares. The complaint, filed in Superior Court, Morris County, New Jersey, alleges violations of various state laws, including the New Jersey Racketeer Influenced and Corrupt Organizations Act, pursuant to which treble damages may be available. On September 12, 2012, before trial, and consequently without having heard or made any determination on the facts, the Court dismissed the lawsuit on legal grounds. In October 2012 Fairfax filed an appeal of this dismissal, as it believes that the legal basis for the dismissal is incorrect. On April 27, 2017, the appeals court issued a decision reinstating certain claims but affirming the dismissal of the major portion of the claims. On July 10, 2017, Fairfax filed with the New Jersey Supreme Court a petition for certification of the appeal court's decision. On October 20, 2017, that petition was denied by the court. The company is considering all its options. The ultimate outcome of any litigation is uncertain. The financial effects, if any, of this lawsuit cannot be practicably determined at this time, and the company's consolidated financial statements include no anticipated recovery from the lawsuit.

Other

The Autorité des marchés financiers (the "AMF"), the securities regulatory authority in the Province of Quebec, is conducting an investigation of Fairfax, its CEO, Prem Watsa, and its President, Paul Rivett. The investigation concerns the possibility of illegal insider trading and/or tipping (not involving any personal trading by the individuals) in connection with the December 15, 2011 takeover offer by Resolute Forest Products Inc. for shares of Fibrek Inc. Except as set out below, further details concerning the investigation are, by law, not permitted to be disclosed.

The AMF has authorized Fairfax to make the above-mentioned disclosure. Fairfax and its management are solely responsible for the content of the disclosure set out in the three following paragraphs; the AMF has not in any way endorsed that content.

Resolute's above-mentioned takeover offer was made to all Fibrek shareholders, including Fairfax. Fairfax agreed in that transaction to a hard lock-up agreement with Resolute whereby Fairfax agreed to tender its shares of Fibrek, representing approximately 26% of Fibrek's outstanding shares, to the Resolute takeover offer at the same price as all other Fibrek shareholders. At the time of the Resolute takeover offer for Fibrek, Fairfax's position in Fibrek was valued at approximately Cdn$32, representing less than ¹/6 of 1% of Fairfax's total invested assets at that time.

86

Fibrek actively opposed the Resolute takeover offer. ln 2012, the Fibrek transaction was the subject of numerous regulatory hearings in Quebec and court proceedings relating to Fibrek's anti-takeover tactics and the hard lock-ups given by various selling shareholders, including Fairfax. Allegations were made in those hearings concerning the possibility of non-compliance with the takeover bid rules. Resolute's takeover offer was allowed to proceed and resulted in Resolute acquiring Fibrek.

Fairfax believes it has an unblemished record for honesty and integrity and is fully cooperating with the AMF's investigation. Fairfax continues to be confident that in connection with the Resolute takeover offer, it had no material non-public information, that it did not engage in illegal insider trading or tipping, and that there is no reasonable basis for any proceedings in this connection. To the best of Fairfax's knowledge, the AMF investigation is still ongoing. If the AMF commences legal proceedings, no assurance can be given at this time by Fairfax as to the outcome.

Subsidiaries of the company are defendants in several damage suits and have been named as third party in other suits. The uninsured exposure to the company is not considered to be material to the company's financial position, financial performance or cash flows.

OdysseyRe, Brit, Allied World, Advent and RiverStone (UK) ("the Lloyd's participants") underwrite in the Lloyd's of London insurance market through their participation in certain Lloyd's syndicates. The Lloyd's participants have pledged cash and securities with fair values of $361.9 and $1,566.1 at December 31, 2017 as capital to support those underwriting activities. Pledged securities and restricted cash consist of cash, fixed income and equity investments which are included within portfolio investments on the consolidated balance sheet. The Lloyd's participants have the ability to substitute other securities for these pledged securities, subject to certain admissibility criteria. The Lloyd's participants' liability in respect of assets pledged as capital is limited to the aggregate amount of the pledged assets and their obligation to support these liabilities will continue until such liabilities are settled or are reinsured by a third party approved by Lloyd's. The company believes that the syndicates for which the Lloyd's participants are capital providers maintain sufficient liquidity and financial resources to support their ultimate liabilities and does not anticipate that the pledged assets will be utilized.

The company's maximum capital commitments for potential investments in common stocks, limited partnerships and associates at December 31, 2017 was $966.3, with a further amount of approximately $367 committed for investments described in note 23.

21.  Pensions and Post Retirement Benefits

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

	Defined benefit pension plans December 31				Post retirement benefit plans December 31
	2017		2016		2017		2016
Benefit obligation	(918.3	)	(803.7	)	(118.5	)	(109.3	)
Fair value of plan assets	836.1		747.9		–		–
Funded status of plans – deficit	(82.2	)	(55.8	)	(118.5	)	(109.3	)
Impact of asset ceiling	(1.0	)	(1.0	)	–		–
Net accrued liability (notes 13 and 14)(1)	(83.2	)	(56.8	)	(118.5	)	(109.3	)
Weighted average assumptions used to determine benefit obligations:
Discount rate	3.2	%	3.6	%	4.1	%	4.2	%
Rate of compensation increase	2.8	%	3.6	%	3.3	%	3.5	%
Health care cost trend	–		–		5.0	%	5.7	%

(1)

The defined benefit pension plan net accrued liability at December 31, 2017 of $83.2 (December 31, 2016 – $56.8) was comprised of pension surpluses of $49.1 and pension deficits of $132.3 (December 31, 2016 – $50.8 and $107.6).

87

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

	2017	2016
Defined benefit pension plan expense	17.3	27.7
Defined contribution pension plan expense	45.6	32.2
Defined benefit post retirement expense	10.3	8.0
	73.2	67.9

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

		2017		2016
Defined benefit pension plans
	Actuarial net gains on plan assets and change in asset ceiling	18.6		54.5
	Actuarial net losses on benefit obligations	(53.0	)	(76.4	)
		(34.4	)	(21.9	)
Post retirement benefit plans – actuarial net gains (losses) on benefit obligations		0.3		(1.4	)
		(34.1	)	(23.3	)

During 2017 the company contributed $30.7 (2016 – $21.8) to its defined benefit pension and post retirement benefit plans, and expects to make contributions of $28.2 in 2018.

22.  Operating Leases

During 2017 the company incurred operating lease costs of $216.2 (2016 – $155.7).

Aggregate future minimum operating lease commitments at December 31, 2017 relating to premises, automobiles and equipment for various terms up to ten years were as follows:

2018	188.5
2019	173.2
2020	153.4
2021	139.5
2022	113.0
Thereafter	458.2

23.  Acquisitions and Divestitures

Subsequent to December 31, 2017

Receipt of Fairfax India Performance Fee

Pursuant to the company's investment advisory agreement with Fairfax India, on March 9, 2018 the company received a performance fee of $114.4 for the period January 30, 2015 to December 31, 2017 in the form of 7,663,685 newly issued Fairfax India subordinate voting shares, which increased the company's equity interest in Fairfax India to 33.6% from 30.2% at December 31, 2017.

Acquisition of certain businesses of Carillion Canada Inc.

On March 7, 2018 the company acquired the services business carried on in Canada by Carillion Canada Inc. and certain affiliates thereof (collectively "Carillion") relating to facilities management of airports, commercial and retail properties, defense facilities, select healthcare facilities and on behalf of oil, gas and mining clients. The transaction was approved by the Ontario Superior Court of Justice in Carillion's proceedings under the Companies' Creditors Arrangement Act (Canada). Carillion is an infrastructure services company that provides asset management and operations solutions to industries and governments.

88

Sale of The Keg to Cara

On February 22, 2018 the company completed the sale of its 51.0% ownership interest in The Keg to Cara for consideration of $74.6 (Cdn$94.7), comprised of cash of $7.9 (Cdn$10.0) and 3,400,000 Cara subordinate voting shares. The other shareholders of The Keg sold their 49.0% ownership interest to Cara for $82.7 (Cdn$105.0), comprised of cash of $74.8 (Cdn$95.0) and 401,123 Cara subordinate voting shares. Cara may be required to pay up to an additional $24 (Cdn$30) of cash consideration to the other shareholders of The Keg, contingent on the achievement of certain financial objectives within the first three years subsequent to closing. The transaction increased the company's equity interest in Cara to 43.2% from 40.2% at December 31, 2017.

Investment in The Catholic Syrian Bank Ltd.

On February 20, 2018 Fairfax India entered into an agreement to acquire a 51.0% equity interest in The Catholic Syrian Bank Ltd. ("CS Bank") for approximately $186 (12.1 billion Indian rupees). The transaction is subject to customary closing conditions and is expected to close in the first half of 2018. CS Bank, headquartered in Thrissur, Kerala, offers banking services across India.

Year ended December 31, 2017

Divestiture of First Capital Insurance Limited

On December 28, 2017 the company completed the sale of its 97.7% interest in First Capital to Mitsui Sumitomo Insurance Company Limited of Tokyo, Japan ("Mitsui Sumitomo") for gross proceeds of $1,683.3 and realized a net after-tax gain of $1,018.6. The transaction was completed pursuant to an agreement with Mitsui Sumitomo to pursue a global strategic alliance. The company expects to enter into a quota share participation in First Capital's insurance portfolio in 2018.

Acquisition of Allied World Assurance Holdings AG

On July 6, 2017 the company completed the acquisition of 94.6% of the outstanding shares of Allied World Assurance Company Holdings, AG ("Allied World AG") for purchase consideration of $3,977.9, consisting of $1,905.6 in cash and $2,072.3 by the issuance of 4,799,497 subordinate voting shares. In addition, Allied World AG declared a special pre-closing cash dividend of $5.00 per share ($438.0). Contemporaneously with the closing of the acquisition of Allied World AG, Ontario Municipal Employees Retirement System ("OMERS"), the pension plan manager for government employees in the province of Ontario, Alberta Investment Management Corporation ("AIMCo"), an investment manager for pension, endowment and government funds in the province of Alberta, and certain other third parties (together "the co-investors") invested $1,580.0 for an indirect equity interest in Allied World AG. The remaining 5.4% of the outstanding shares of Allied World AG were acquired on August 17, 2017 for purchase consideration of $229.0, consisting of $109.7 in cash and $119.3 by the issuance of 276,397 subordinate voting shares, in a merger transaction under Swiss law pursuant to which Allied World Assurance Company Holdings, GmbH ("Allied World") became the surviving entity. This merger resulted in the co-investors holding an indirect ownership interest in Allied World of 32.6%. The co-investors will have a dividend in priority to the company, and the company will have the ability to purchase the shares owned by the co-investors over the next seven years. Allied World is a global property, casualty and specialty insurer and reinsurer.

Quess Corp. Transactions

On December 27, 2017 Quess acquired the facility management and catering business of Manipal Integrated Services Private Limited ("Manipal") for $152.5 (9.8 billion Indian rupees), primarily comprised of the issuance of $117.7 (7.5 billion Indian rupees) of Quess common shares to Manipal shareholders and the reinvestment of $34.3 (2.2 billion Indian rupees) of Quess' existing holdings of Manipal preferred shares upon cancellation of those shares. In November of 2017 Thomas Cook India sold a 5.4% equity interest in Quess for cash proceeds of $96.8 (6.3 billion Indian rupees). On August 18, 2017 Quess raised $132.2 (8.5 billion Indian rupees) in net proceeds following the completion of a private placement of common shares with institutional investors. These transactions at Thomas Cook India and Quess collectively reduced the company's indirect ownership of Quess from 42.1% to 33.1% and resulted in an increase in non-controlling interest of $210.0 and a dilution gain of $135.6, which are included in other net changes in capitalization in the consolidated statement of changes in equity. Quess is a provider of staffing and facilities management services.

89

Additional investment in Grivalia Properties REIC

On July 4, 2017 the company acquired control of Grivalia Properties REIC ("Grivalia Properties") by increasing its equity interest to 52.6% through the purchase of an additional 10.3% equity interest from Eurobank Ergasias S.A. for cash consideration of $100.0 (€88.0). Accordingly, the company re-measured its equity accounted carrying value of Grivalia Properties to fair value, recorded a net realized gain of $51.3 and commenced consolidating Grivalia Properties in the Other reporting segment. Pursuant to Greek securities law, the company then made a tender offer for all remaining outstanding shares of Grivalia Properties which expired on September 6, 2017, resulting in the company increasing its equity interest by 0.1% to 52.7% for cash consideration of $0.6 (€0.5). Grivalia Properties is a real estate investment company listed on the Athens Stock Exchange.

Acquisition of certain American International Group, Inc. operations in Latin America and Central and Eastern Europe

On October 18, 2016 the company agreed to acquire from American International Group, Inc. ("AIG") its insurance operations in Argentina, Chile, Colombia, Uruguay, Venezuela and Turkey, and certain assets and renewal rights with respect to the portfolio of local business written by AIG Europe in Bulgaria, Czech Republic, Hungary, Poland, Romania and Slovakia, for total consideration of approximately $240.

The company, through Colonnade Insurance, has completed the acquisition of the business and renewal rights of the insurance operations of AIG in Hungary, Czech Republic and Slovakia (effective from April 30, 2017), Turkey (on May 2, 2017 and sold to Gulf Insurance on the same day), Bulgaria (effective from May 31, 2017), Poland (effective from June 30, 2017) and Romania (effective October 31, 2017). Through an ongoing partnership, the company is providing claims handling and run-off management services to AIG in the European countries where business operations were acquired.

The company has completed the acquisition of the insurance operations of AIG in Chile and Colombia (effective from July 31, 2017), Argentina (effective from September 30, 2017) and Uruguay (effective from January 31, 2018) (collectively "Fairfax Latam"), and continues to work through the legal, regulatory and operational requirements to complete the acquisition in Venezuela.

Merger of Fairchem Speciality Limited and Privi Organics Limited

On March 14, 2017 Fairchem Speciality Limited ("Fairchem") and Privi Organics Limited ("Privi Organics") completed their previously announced merger, with the merged entity continuing under the Fairchem name. As a result of the merger, Fairfax India, which had acquired a 44.7% interest in Fairchem on February 8, 2016 and a 50.8% interest in Privi Organics on August 26, 2016, became the dominant shareholder in Fairchem with a 48.7% interest. Prior to the merger, the company consolidated Privi Organics and applied the equity method of accounting to its investment in Fairchem. Subsequent to the merger, the assets and liabilities and results of operations of Fairchem were consolidated in the Other reporting segment.

Investment in Fairfax Africa Holdings Corporation

On February 17, 2017 the company acquired 22,715,394 multiple voting shares in a private placement and 2,500,000 subordinate voting shares as part of the initial public offering of Fairfax Africa Holdings Corporation ("Fairfax Africa") for total cash consideration of $252.2. The company also contributed its indirect equity interest in AFGRI Proprietary Limited ("AFGRI") with a fair value of $72.8 to Fairfax Africa in exchange for 7,284,606 multiple voting shares. Through its initial public offering, private placements and exercise of the over-allotment option by the underwriters, Fairfax Africa raised net proceeds of $493.3 after issuance costs and expenses, inclusive of the contribution of the investment in AFGRI. Following those transactions, the company's $325.0 ($10.00 per share) investment represented 98.8% of the voting rights and 64.2% of the equity interest in Fairfax Africa. Fairfax Africa was established, with the support of Fairfax, to invest in public and private equity and debt instruments of African businesses or other businesses with customers, suppliers or business primarily conducted in, or dependent on, Africa. The assets and liabilities and results of operations of Fairfax Africa were consolidated in the Other reporting segment.

90

Acquisition of Saurashtra Freight Private Limited

On February 14, 2017 Fairfax India acquired a 51.0% interest in Saurashtra Freight Private Limited ("Saurashtra Freight") for cash consideration of $30.0 (2.0 billion Indian rupees). Saurashtra Freight operates a container freight station at the Mundra Port in the Indian state of Gujarat. The assets and liabilities and results of operations of Saurashtra Freight were consolidated in the Other reporting segment.

Investment in Mosaic Capital Corporation

On January 26, 2017 the company invested $114.5 (Cdn$150.0) in securities of Mosaic Capital Corporation ("Mosaic Capital") issued through a private placement comprised of: (i) Cdn$100.0 principal amount of 6.00% senior preferred securities; (ii) Cdn$50.0 principal amount of 5.00% senior secured debentures; and (iii) warrants entitling the company to acquire up to 17,026,106 common shares of Mosaic Capital at a price of Cdn$8.81 per common share at any time until January 26, 2024 (the "Mosaic warrants"). Pursuant to IFRS, the company's investment in Mosaic Capital warrants represent a potential voting interest of approximately 62% (assuming all holders of Mosaic Capital convertible securities, including the company, exercised their options to convert), giving the company the ability to control Mosaic Capital. Consequently, the assets and liabilities and results of operations of Mosaic Capital were consolidated in the Other reporting segment. Mosaic Capital is a Canadian investment company that owns a portfolio of established businesses in the infrastructure, printing, oil and gas services, technology, manufacturing and real estate industries.

Additional Investment in Fairfax India Holdings Corporation

On January 13, 2017 the company acquired 12,340,500 subordinate voting shares of Fairfax India for $145.0 ($11.75 per share) in a private placement. Through that private placement and a contemporaneous bought deal public offering, Fairfax India raised proceeds of $493.5 net of commissions and expenses. Combined with various open market purchases of Fairfax India subordinate voting shares, the company's multiple voting shares and subordinate voting shares represented 93.6% of the voting rights and 30.2% of the equity interest in Fairfax India at the close of the private placement and public offering. These transactions collectively resulted in an increase in non-controlling interest of $336.3 and a dilution loss of $3.3, which are included in other net changes in capitalization in the consolidated statement of changes in equity.

91

The determination of the fair value of assets acquired and liabilities assumed in connection with the acquisitions described above is currently underway and will be finalized within twelve months of the respective acquisition dates. Provisionally recorded amounts primarily include intangible assets, deferred income taxes, goodwill and the excess of fair value of net assets acquired over purchase consideration. The company has substantially completed its valuation of Allied World's intangible assets.

		Allied World		Grivalia Properties	Fairfax Latam	Other(1)
Acquisition date		July 6, 2017		July 4, 2017	Throughout 2017	Throughout 2017
Percentage of common shares acquired		94.6%		52.6%	100.0%
Assets:
	Insurance contract receivables	1,212.5		–	235.8	0.4
	Portfolio investments(2)	8,568.7		139.1	250.4	76.0
	Recoverable from reinsurers	2,363.6		–	597.7	0.7
	Deferred income taxes	–		0.3	48.3	5.0
	Goodwill and intangible assets	1,726.9	(3)	–	23.3	385.5
	Other assets	223.5		1,020.4	51.1	288.7
		14,095.2		1,159.8	1,206.6	756.3
Liabilities:
	Accounts payable and accrued liabilities	300.7		25.3	172.3	167.4
	Income taxes payable	3.4		4.2	9.0	1.1
	Deferred income taxes	118.0		–	21.5	4.3
	Funds withheld payable to reinsurers	193.5		–	9.8	0.1
	Insurance contract liabilities	8,467.7		–	826.1	3.0
	Borrowings	860.5		137.6	–	83.9
		9,943.8		167.1	1,038.7	259.8
Non-controlling interests		173.5		470.5	–	8.1
Purchase consideration		3,977.9		519.7	167.9	488.4
Excess of fair value of net assets acquired over purchase consideration		–		2.5	–	–
		14,095.2		1,159.8	1,206.6	756.3

(1)

Primarily comprised of the acquisitions of Mosaic Capital and certain AIG branches in Central and Eastern Europe, the acquisition of Pickle Barrel by Cara, the acquisition of Saurashtra Freight and consolidation of Fairchem by Fairfax India, and various acquisitions by Quess, Thomas Cook India, Mosaic Capital, and Boat Rocker.

(2)

Included subsidiary cash and cash equivalents of Allied World ($1,195.4, of which $4.8 was restricted), Grivalia Properties ($26.3) and Fairfax Latam ($67.2).

(3)

Comprised of goodwill of $937.9 and intangible assets of $789.0 (primarily broker relationships of $574.0, Lloyd's participation rights of $87.0 and brand names of $71.0).

Allied World contributed revenue of $1,050.5 and a net loss of $555.4 to the company's consolidated financial results for the year ended December 31, 2017. Had Allied World been acquired on January 1, 2017, the company's pro-forma consolidated revenue and net earnings would have been $17,514.6 and $1,766.4 for the year ended December 31, 2017.

Year ended December 31, 2016

Acquisition of Zurich Insurance Company South Africa Limited

On December 7, 2016 the company acquired a 100% interest in Zurich Insurance Company South Africa Limited (subsequently rebranded Bryte Insurance Company Limited ("Bryte Insurance")) from Zurich Insurance Company Ltd. for $128.0 (1.8 billion South African rand). Bryte Insurance is a property and casualty insurer in South Africa and Botswana. The assets and liabilities and results of operations of Bryte Insurance were consolidated in the Insurance and Reinsurance – Other reporting segment.

92

Acquisition of Original Joe's Franchise Group Inc.

On November 28, 2016 Cara acquired an 89.2% interest in Original Joe's Franchise Group Inc. ("Original Joe's") for $83.8 (Cdn$112.5), comprised of cash consideration of $69.3 (Cdn$93.0) and contingent consideration valued at $14.5 (Cdn$19.5). Original Joe's is a Canadian multi-brand restaurant company based in the province of Alberta.

Acquisition of Golf Town Limited

On October 31, 2016 the company acquired a 60.0% indirect interest in Golf Town Limited ("Golf Town") for $31.4 (Cdn$42.0). Golf Town is a Canadian specialty retailer of golf equipment, consumables, golf apparel and accessories. The assets and liabilities and results of operations of Golf Town were consolidated in the Other reporting segment.

Acquisition of PT Asuransi Multi Artha Guna Tbk

On October 10, 2016 the company acquired an 80.0% interest in PT Asuransi Multi Artha Guna Tbk. ("AMAG") from PT Bank Pan Indonesia Tbk. ("Panin Bank") for $178.9 (2.322 trillion Indonesian rupiah). AMAG will distribute its insurance products through a long-term bancassurance partnership with Panin Bank. AMAG is a general insurer in Indonesia. The assets and liabilities and results of operations of AMAG were consolidated in the Fairfax Asia reporting segment. On December 31, 2016 Fairfax Indonesia was merged into AMAG.

Acquisition of Asian Alliance General Insurance Limited

On October 3, 2016 Union Assurance acquired a 100% equity interest in Asian Alliance General Insurance Limited (subsequently renamed Fairfirst Insurance Limited ("Fairfirst Insurance")) for $10.2 (1,488.9 million Sri Lankan rupees). Fairfirst Insurance is a general insurer in Sri Lanka. The assets and liabilities and results of operations of Fairfirst Insurance were consolidated in the Fairfax Asia reporting segment. On February 28, 2017 Union Assurance was merged into Fairfirst Insurance.

Acquisition of Groupe St-Hubert Inc.

On September 2, 2016 Cara acquired a 100% equity interest in Groupe St-Hubert Inc. ("St-Hubert") for $413.8 (Cdn$538.7), comprised of cash consideration of $372.4 (Cdn$484.8) and the issuance of $41.4 (Cdn$53.9) of Cara subordinate voting shares to St-Hubert shareholders. A portion of the cash consideration was financed through a private placement of 7,863,280 Cara subordinate voting shares at a price of Cdn$29.25 for gross proceeds of $179.2 (Cdn$230.0), of which 3,418,804 shares were acquired by the company and its subsidiaries to maintain its equity and voting interests in Cara. St-Hubert is a Canadian full-service restaurant operator and fully integrated food manufacturer in the province of Quebec.

Acquisition of Privi Organics Limited

On August 26, 2016 Fairfax India acquired a 50.8% equity interest in Privi Organics for $55.0 (3.7 billion Indian rupees) through the purchase of newly issued shares and shares acquired from existing shareholders. Privi Organics is a supplier of aroma chemicals to the fragrance industry.

Acquisition of Eastern European Insurers

On December 16, 2014 the company entered into an agreement with QBE Insurance (Europe) Limited ("QBE") to acquire QBE's insurance operations in the Czech Republic, Hungary and Slovakia (the "QBE insurance operations"). A new Luxembourg insurer, Colonnade Insurance S.A. ("Colonnade Insurance"), was licensed in July 2015 and branches of Colonnade Insurance were established in each of the Czech Republic, Hungary and Slovakia during the fourth quarter of 2015. The business and renewal rights of QBE's Hungarian, Czech and Slovakian insurance operations were transferred to Colonnade Insurance on February 1, 2016, April 1, 2016 and May 2, 2016, respectively. The QBE insurance operations write business across a range of general insurance classes, including property, travel, general liability and product protection.

93

The fair value of assets acquired and liabilities assumed in connection with the 2016 acquisitions described above are summarized in the table that follows:

		Bryte Insurance		AMAG		St-Hubert		Other(1)
Acquisition date		December 7, 2016		October 10, 2016		September 2, 2016		Throughout 2016
Percentage of common shares acquired		100.0	%	80.0	%	100.0	%(2)
Assets:
	Insurance contract receivables	45.0		8.9		–		41.3
	Portfolio investments(3)	220.4		99.9		–		22.1
	Recoverable from reinsurers	85.8		26.4		–		1.1
	Deferred income taxes	11.4		–		–		8.5
	Goodwill and intangible assets	16.8	(4)	161.2	(5)	319.4	(6)	146.1
	Other assets	10.8		25.9		180.0		205.3
		390.2		322.3		499.4		424.4
Liabilities:
	Accounts payable and accrued liabilities	88.4		16.6		30.7		48.3
	Deferred income taxes	–		11.1		54.9		12.2
	Funds withheld payable to reinsurers	1.4		5.4		–		0.4
	Insurance contract liabilities	172.4		76.3		–		59.7
	Borrowings	–		–		–		48.1
		262.2		109.4		85.6		168.7
Non-controlling interests		–		34.0		–		57.3
Purchase consideration		128.0		178.9		413.8		191.6
Excess of fair value of net assets acquired over purchase consideration		–		–		–		6.8
		390.2		322.3		499.4		424.4

(1)

Includes the acquisitions of Fairfirst Insurance, Privi Organics, the QBE insurance operations and Golf Town, and Cara's acquisition of Original Joe's.

(2)

The company's economic interest in St-Hubert was 38.9% as a result of acquiring St-Hubert through 38.9%- owned Cara.

(3)

Included subsidiary cash and cash equivalents of Bryte Insurance ($48.4) and AMAG ($6.2).

(4)

Comprised of goodwill of $11.5 and intangible assets of $5.3.

(5)

Comprised of goodwill of $43.0 and intangible assets of $118.2.

(6)

Comprised of goodwill of $85.2 and intangible assets of $234.2 (primarily brand names of $183.1).

24.  Financial Risk Management

Overview

The primary goals of the company's financial risk management are to ensure that the outcomes of activities involving elements of risk are consistent with the company's objectives and risk tolerance, while maintaining an appropriate balance between risk and reward and protecting the company's consolidated balance sheet from events that have the potential to materially impair its financial strength. The company's exposure to potential loss from its insurance and reinsurance operations and investment activities primarily relates to underwriting risk, credit risk, liquidity risk and various market risks. Balancing risk and reward is achieved through identifying risk appropriately, aligning risk tolerances with business strategy, diversifying risk, pricing appropriately for risk, mitigating risk through preventive controls and transferring risk to third parties. There were no significant changes in the types of the company's risk exposures or the processes used by the company for managing those risk exposures at December 31, 2017 compared to those identified at December 31, 2016, except as discussed below.

94

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

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

Underwriting Risk

Underwriting risk is the risk that the total cost of claims, claims adjustment expenses and premium acquisition expenses will exceed premiums received and can arise as a result of numerous factors, including pricing risk, reserving risk and catastrophe risk. There were no significant changes to the company's exposure to underwriting risk or the framework used to monitor, evaluate and manage underwriting risk at December 31, 2017 compared to December 31, 2016. While the acquisition of Allied World was significant, the company has determined that Allied World's exposure to underwriting risk and framework to monitor, evaluate and manage underwriting risk are consistent with those of its own.

Principal lines of business

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

•

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



•

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



•

Specialty, which insures against marine, aerospace and surety risk, and other miscellaneous risks and liabilities that are not identified above; and



•

Reinsurance which includes, but is not limited to, property, casualty and liability exposures.

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

95

The table below shows the company's concentration of risk by region and line of business based on gross premiums written prior to giving effect to ceded reinsurance premiums. The company's exposure to general insurance risk varies by geographic region and may change over time. Premiums ceded to reinsurers (including retrocessions) in 2017 by line of business amounted to $992.3 for property (2016 – $463.5), $916.3 for casualty (2016 – $699.9) and $315.4 for specialty (2016 – $282.5).

	Canada		United States		Asia(1)		International(2)		Total
For the years ended December 31	2017	2016	2017	2016	2017	2016	2017	2016	2017	2016
Property	646.8	582.7	1,878.6	1,466.0	586.5	464.8	995.7	502.7	4,107.6	3,016.2
Casualty	602.6	528.5	4,899.4	4,002.9	400.8	352.3	805.0	465.1	6,707.8	5,348.8
Specialty	143.4	126.4	548.8	485.6	275.1	231.9	424.8	325.4	1,392.1	1,169.3
Total	1,392.8	1,237.6	7,326.8	5,954.5	1,262.4	1,049.0	2,225.5	1,293.2	12,207.5	9,534.3
Insurance	1,295.3	1,134.6	5,855.4	4,607.0	684.9	516.3	1,494.3	672.3	9,329.9	6,930.2
Reinsurance	97.5	103.0	1,471.4	1,347.5	577.5	532.7	731.2	620.9	2,877.6	2,604.1
	1,392.8	1,237.6	7,326.8	5,954.5	1,262.4	1,049.0	2,225.5	1,293.2	12,207.5	9,534.3

(1)

The Asia geographic segment comprises countries located throughout Asia, including China, India, Sri Lanka, Malaysia, Singapore, Indonesia and Thailand, and the Middle East.

(2)

The International geographic segment comprises Australia and countries located in Africa, Europe and South America.

Pricing risk

Pricing risk arises because actual claims experience can differ adversely from the assumptions included in pricing calculations. Historically the underwriting results of the property and casualty industry have fluctuated significantly due to the cyclicality of the insurance market. The market cycle is affected by the frequency and severity of losses, levels of capacity and demand, general economic conditions and competition on rates and terms of coverage. The operating companies focus on profitable underwriting using a combination of experienced underwriting and actuarial staff, pricing models and price adequacy monitoring tools.

Reserving risk

Reserving risk arises because actual claims experience can differ adversely from the assumptions included in setting reserves, in large part due to the length of time between the occurrence of a loss, the reporting of the loss to the insurer and the ultimate resolution of the claim. The degree of uncertainty will vary by line of business according to the characteristics of the insured risks and the cost of a claim will be determined by the actual loss suffered by the policyholder. Claims provisions reflect expectations of the ultimate cost of resolution and administration of claims based on an assessment of facts and circumstances then known, a review of historical settlement patterns, estimates of trends in claims severity and frequency, legal theories of liability and other factors.

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

The establishment of provisions for losses and loss adjustment expenses is an inherently uncertain process that can be affected by internal factors such as the inherent risk in estimating loss development patterns based on historical data that may not be representative of future loss payment patterns; assumptions built on industry loss ratios or industry benchmark development patterns that may not reflect actual experience; and the intrinsic risk as to the homogeneity of the underlying data used in carrying out the reserve analyses; and external factors such as trends

96

relating to jury awards; economic inflation; medical inflation; worldwide economic conditions; tort reforms; court interpretations of coverage; the regulatory environment; underlying policy pricing; claims handling procedures; inclusion of exposures not contemplated at the time of policy inception; and significant changes in severity or frequency of losses relative to historical trends. Due to the amount of time between the occurrence of a loss, the actual reporting of the loss and the ultimate payment for the loss, provisions may ultimately develop differently from the actuarial assumptions made when initially estimating the provision for claims.

The company has exposures to risks in each line of business that may develop adversely and that could have a material impact upon the company's financial position. The insurance risk diversity within the company's portfolio of issued policies makes it difficult to predict whether material prior year reserve development will occur and, if it does occur, the location and the timing of such an occurrence.

Catastrophe risk

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

Each operating company has developed and applies strict underwriting guidelines for the amount of catastrophe exposure it may assume as a standalone entity for any one risk and location. Those guidelines are regularly monitored and updated by the operating companies. Each of the operating companies also manages catastrophe exposure by diversifying risk across geographic regions, catastrophe types and other lines of business, factoring in levels of reinsurance protection, adjusting the amount of business written based on capital levels and adhering to risk tolerances. The company's head office aggregates catastrophe exposure company-wide and continually monitors the group's exposure. Independent exposure limits for each entity in the group are aggregated to produce an exposure limit for the group as there is presently no model capable of simultaneously projecting the magnitude and probability of loss in all geographic regions in which the company operates. Currently the company's objective is to limit its company-wide catastrophe loss exposure such that one year's aggregate pre-tax net catastrophe losses would not exceed one year's normalized net earnings before income taxes. The company takes a long term view and generally considers a 15% return on common shareholders' equity, adjusted to a pre-tax basis, to be representative of one year's normalized net earnings. The modeled probability of aggregate catastrophe losses in any one year exceeding this amount is generally more than once in every 250 years.

Management of underwriting risk

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

As part of its overall risk management strategy, the company cedes insurance risk through proportional, non-proportional and facultative reinsurance treaties. With proportional reinsurance, the reinsurer shares a pro rata portion of the company's losses and premium, whereas with non-proportional reinsurance, the reinsurer assumes payment of the company's loss above a specified retention, subject to a limit. Facultative reinsurance is the

97

reinsurance of individual risks as agreed by the company and the reinsurer. 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 on any policy to a maximum amount on any one loss. 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 company and to protect from losses on multiple risks arising from a single occurrence. This type of reinsurance includes what is generally referred to as catastrophe reinsurance. The company's reinsurance does not, however, relieve the company of its primary obligation to the policyholder.

The majority of reinsurance contracts purchased by the company provide coverage for a one year term and are negotiated annually. The ability of the company to obtain reinsurance on terms and prices consistent with historical results reflects, among other factors, recent loss experience of the company and of the industry in general. Notwithstanding the significant current period catastrophe losses suffered by the industry in 2017, capital adequacy within the reinsurance market remains strong and alternative forms of reinsurance capacity continue to be available. As a result, reinsurance pricing of loss affected business has increased modestly while non-loss affected property has increased to a lesser extent.

The company will remain opportunistic in its use of reinsurance, balancing capital requirements and the cost of reinsurance.

Credit Risk

Credit risk is the risk of loss resulting from the failure of a counterparty to honour its financial obligations to the company. Credit risk arises predominantly with respect to cash and short term investments, investments in debt instruments, insurance contract receivables, recoverable from reinsurers and receivable from counterparties to derivative contracts (primarily total return swaps and CPI-linked derivatives). There were no significant changes to the company's exposure to credit risk (except as set out in the discussion which follows) or the framework used to monitor, evaluate and manage credit risk at December 31, 2017 compared to December 31, 2016.

The company's gross credit risk exposure at December 31, 2017 (without taking into account amounts held by the company as collateral) was comprised as follows:

		December 31, 2017	December 31, 2016
Cash and short term investments		19,198.8	11,235.6
Investments in debt instruments:
	U.S. sovereign government	1,779.3	1,117.3
	Other sovereign government rated AA/Aa or higher(1)	615.4	596.1
	All other sovereign government(2)	1,268.4	891.5
	Canadian provincials	93.8	196.9
	U.S. states and municipalities	2,452.1	4,732.2
	Corporate and other	4,081.8	2,633.5
Receivable from counterparties to derivative contracts		126.7	196.4
Insurance contract receivables		4,686.9	2,917.5
Recoverable from reinsurers		7,812.5	4,010.3
Other assets		1,723.0	1,065.4
Total gross credit risk exposure		43,838.7	29,592.7

(1)

Primarily comprised of bonds issued by the governments of Germany, Australia, the U.K, and Canada with fair values of $105.3, $97.9, $90.9 and $84.4 (December 31, 2016 – $201.7, $31.7, $23.4 and $311.4).

(2)

Primarily comprised of bonds issued by the governments of India, Poland and Brazil with fair values of $734.7, $125.1 and $101.7 (December 31, 2016 – $602.2, $117.2 and $80.3).

The company had income taxes refundable of $147.0 at December 31, 2017 (December 31, 2016 – $202.7).

98

Cash and short term investments

The company's cash and short term investments (including at the holding company) are held at major financial institutions in the jurisdictions in which the company operates. At December 31, 2017, 87.4% of these balances were held in Canadian and U.S. financial institutions, 9.1% in European financial institutions and 3.5% in other foreign financial institutions (December 31, 2016 – 85.1%, 8.1% and 6.8% respectively). The company monitors risks associated with cash and short term investments by regularly reviewing the financial strength and creditworthiness of these financial institutions and more frequently during periods of economic volatility. As a result of these reviews, the company may transfer balances from financial institutions where it perceives heightened credit risk to others considered to be more stable.

Investments in debt instruments

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

Investment in sovereign bonds rated AA/Aa or higher, considered by the company to present only a nominal risk of default, with a fair value of $2,394.7 at December 31, 2017 (December 31, 2016 – $1,713.4), represented 6.1% of the total investment portfolio (December 31, 2016 – 6.0%) and consisted primarily of bonds issued by the governments of the U.S., U.K., Germany, Australia and Canada. Investments in debt instruments considered by the company to be subject to credit risk, with a fair value of $7,896.1 at December 31, 2017 (December 31, 2016 – $8,454.1), represented 20.1% of the total investment portfolio (December 31, 2016 – 29.7%) and consisted primarily of all other sovereign government bonds rated A/A or lower and all bonds included in Canadian provincials, U.S. states and municipalities and corporate and other.

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

	December 31, 2017			December 31, 2016
Issuer Credit Rating	Amortized cost	Fair value	%	Amortized cost	Fair value	%
AAA/Aaa	2,476.3	2,432.0	23.7	2,042.0	1,915.8	18.8
AA/Aa	2,149.5	2,408.8	23.4	3,669.1	4,383.3	43.1
A/A	823.1	819.8	8.0	649.3	728.5	7.2
BBB/Baa	1,617.1	1,764.8	17.1	910.4	1,024.0	10.1
BB/Ba	151.1	154.0	1.5	98.5	117.6	1.2
B/B	448.7	447.6	4.3	339.0	261.6	2.5
Lower than B/B(1)	554.1	432.7	4.2	392.1	320.5	3.2
Unrated(2)	1,594.4	1,831.1	17.8	1,416.7	1,416.2	13.9
Total	9,814.3	10,290.8	100.0	9,517.1	10,167.5	100.0

(1)

Lower than B/B is primarily comprised of the fair value of the company's investments in EXCO Resources, Inc. of $402.0 (December 31, 2016 – $292.4).

(2)

Unrated is primarily comprised of the fair value of the company's investments in Blackberry Limited of $663.6 (December 31, 2016 – $461.2), Sanmar Chemicals Group of $333.2 (December 31, 2016 – $299.1), Chorus Aviation Inc. $155.2 (December 31, 2016 – nil) and FBD Insurance plc. of $112.0 (December 31, 2016 – $76.8).

At December 31, 2017, 72.2% (December 31, 2016 – 79.2%) of the fixed income portfolio carrying value was rated investment grade or better, with 47.1% (December 31, 2016 – 61.9%) being rated AA or better (primarily consisting of government obligations). The increase in the fair value of bonds rated AAA/Aaa, A/A and BBB/Baa primarily reflected the consolidation of Allied World's bond portfolio. The decrease in the fair value of bonds rated AA/Aa primarily reflected net sales in 2017 of long dated U.S. state and municipal bonds (net proceeds of $2,346.5), partially offset by the consolidation of Allied World's bond portfolio. The increase in the fair value of bonds rated lower than B/B primarily reflected unrealized appreciation. The increase in bonds that were unrated primarily reflected unrealized appreciation related to convertible bonds and purchases of certain corporate and other bonds. Except as described

99

above, there were no other significant changes to the composition of the company's fixed income portfolio classified according to the higher of each security's respective S&P and Moody's issuer credit rating at December 31, 2017 compared to December 31, 2016.

At December 31, 2017 holdings of bonds in the ten issuers (excluding U.S., Canadian, U.K. and German sovereign government bonds) to which the company had the greatest exposure totaled $3,398.7 (December 31, 2016 – $4,178.6), which represented approximately 8.7% (December 31, 2016 – 14.7%) of the total investment portfolio. Exposure to the largest single issuer of corporate bonds at December 31, 2017 was $663.6 (December 31, 2016 – $461.2), which represented approximately 1.7% (December 31, 2016 – 1.6%) of the total investment portfolio.

The consolidated investment portfolio included $2.5 billion at December 31, 2017 (December 31, 2016 – $4.7 billion) of U.S. state and municipal bonds (approximately $2.3 billion tax-exempt, $0.2 billion taxable), a large portion of which were purchased during 2008 within subsidiary investment portfolios. At December 31, 2017 approximately $1.5 billion (December 31, 2016 – $2.1 billion) of those U.S. state and municipal bonds are insured by Berkshire Hathaway Assurance Corp. for the payment of interest and principal in the event of issuer default, and are therefore all rated AA or better.

Counterparties to derivative contracts

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

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

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

	December 31, 2017		December 31, 2016
Total derivative assets(1)	126.7		196.4
Impact of net settlement arrangements	(38.6	)	(53.8	)
Fair value of collateral deposited for the benefit of the company(2)	(39.1	)	(54.0	)
Excess collateral pledged by the company in favour of counterparties	9.0		12.2
Initial margin not held in segregated third party custodian accounts	8.2		5.0
Net derivative counterparty exposure after net settlement and collateral arrangements	66.2		105.8

(1)

Excludes equity warrants and equity call options which are not subject to counterparty risk.

(2)

Excludes $0.4 (December 31, 2016 – $8.7) of excess collateral pledged by counterparties.

Collateral deposited for the benefit of the company at December 31, 2017 consisted of cash of $3.6 and government securities of $35.9 (December 31, 2016 – $8.3 and $54.4). The company had not exercised its right to sell or repledge collateral at December 31, 2017.

100

Recoverable from reinsurers

Credit risk on the company's recoverable from reinsurers balance existed at December 31, 2017 to the extent that any reinsurer may be unable or unwilling to reimburse the company under the terms of the relevant reinsurance arrangements. The company is also exposed to the credit risk assumed in fronting arrangements and to potential reinsurance capacity constraints. The company regularly assesses the creditworthiness of reinsurers with whom it transacts business. Internal guidelines generally require reinsurers to have strong A.M. Best ratings and to maintain capital and surplus in excess of $500.0. Where contractually provided for, the company has collateral for outstanding balances in the form of cash, letters of credit, guarantees or assets held in trust accounts. This collateral may be drawn on when amounts remain unpaid beyond contractually specified time periods for each individual reinsurer.

The company's reinsurance security department conducts ongoing detailed assessments of current and potential reinsurers and annual reviews on impaired reinsurers, and provides recommendations for uncollectible reinsurance provisions for the group. This department also collects and maintains individual and group reinsurance exposures across the group. Most of the reinsurance balances for reinsurers rated B++ and lower or which are not rated were inherited by the company on acquisition of a subsidiary. The company's largest single recoverable from reinsurer (Munich Reinsurance Company) represented 6.5% of shareholders' equity attributable to shareholders of Fairfax at December 31, 2017 (December 31, 2016 – 3.6%) and is rated A+ by A.M. Best.

The company's gross exposure to credit risk from its reinsurers increased at December 31, 2017 compared to December 31, 2016, principally reflecting the impact from the consolidation of the recoverable from reinsurers of Allied World and Fairfax Latam and current period catastrophe losses ceded to reinsurers. Changes that occurred in the provision for uncollectible reinsurance during the period are disclosed in note 9.

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

	December 31, 2017					December 31, 2016
A.M. Best Rating (or S&P equivalent)	Gross recoverable from reinsurers		Outstanding balances for which security is held	Net unsecured recoverable from reinsurers		Gross recoverable from reinsurers		Outstanding balances for which security is held	Net unsecured recoverable from reinsurers
A++	429.6		31.9	397.7		390.0		27.2	362.8
A+	3,878.4		267.2	3,611.2		1,551.0		152.0	1,399.0
A	2,311.9		95.4	2,216.5		1,130.8		67.3	1,063.5
A-	245.5		15.1	230.4		299.7		19.9	279.8
B++	22.2		1.2	21.0		22.0		1.4	20.6
B+	3.1		0.8	2.3		2.0		1.2	0.8
B or lower	5.4		3.0	2.4		11.9		8.9	3.0
Not rated	948.2		493.8	454.4		703.3		218.5	484.8
Pools and associations	134.6		4.5	130.1		71.3		5.6	65.7
	7,978.9		912.9	7,066.0		4,182.0		502.0	3,680.0
Provision for uncollectible reinsurance	(166.4	)		(166.4	)	(171.7	)		(171.7	)
Recoverable from reinsurers	7,812.5			6,899.6		4,010.3			3,508.3

Liquidity Risk

Liquidity risk is the potential for loss if the company is unable to meet financial commitments in a timely manner at reasonable cost as they fall due. The company's policy is to ensure that sufficient liquid assets are available to meet financial commitments, including liabilities to policyholders and debt holders, dividends on preferred shares and investment commitments. Cash flow analysis is performed regularly at both the holding company and subsidiary company levels to ensure that future cash needs are met or exceeded by cash flows generated from operating companies.

101

The holding company's known significant commitments for 2018 consist of payment of the $283.2 dividend on common shares ($10.00 per share paid January 2018), interest and corporate overhead expenses, preferred share dividends, income tax payments, the purchase prices related to the acquisitions of certain businesses of Carillion and the insurance operations of AIG in Uruguay (completed January 31, 2018) and Venezuela, and potential cash outflows related to derivative contracts.

The company believes that holding company cash and investments, net of holding company short sale and derivative obligations at December 31, 2017 of $2,356.9 provides adequate liquidity to meet the holding company's known commitments in 2018. The holding company expects to continue to receive investment management and administration fees from its insurance and reinsurance subsidiaries, investment income on its holdings of cash and investments, and dividends from its insurance and reinsurance subsidiaries. To further augment its liquidity, the holding company can draw upon its $2.0 billion unsecured revolving credit facility (described in note 15).

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

The company's insurance and reinsurance subsidiaries (and the holding company on a consolidated basis) focus on the stress that could be placed on liquidity requirements as a result of severe disruption or volatility in the capital markets or extreme catastrophe activity or the combination of both. The insurance and reinsurance subsidiaries maintain investment strategies intended to provide adequate funds to pay claims or withstand disruption or volatility in the capital markets without forced sales of investments. The insurance and reinsurance subsidiaries hold highly liquid, high quality short-term investment securities and other liquid investment grade fixed maturity securities to fund anticipated claim payments, operating expenses and commitments related to investments. At December 31, 2017 portfolio investments net of short sale and derivative obligations totaled $36.9 billion (December 31, 2016 – $27.1 billion). Portfolio investments include investments that may lack liquidity or are inactively traded, including corporate debentures, preferred stocks, common stocks, limited partnership interests and other invested assets. At December 31, 2017 these asset classes represented approximately 12.3% (December 31, 2016 – 9.6%) of the carrying value of the insurance and reinsurance subsidiaries' portfolio investments. Fairfax India and Fairfax Africa held investments that may lack liquidity or are inactively traded with a carrying value of $1,054.7 at December 31, 2017 (December 31, 2016 – $326.6).

The insurance and reinsurance subsidiaries may experience cash inflows or outflows on occasion related to their derivative contracts, including collateral requirements. During 2017 the insurance and reinsurance subsidiaries paid net cash of $285.0 (2016 – $814.4) in connection with long and short equity and equity index total return swap derivative contracts (excluding the impact of collateral requirements). The closure in the fourth quarter of 2016 of all of the company's short positions effected through total return swaps in the Russell 2000, S&P 500 and S&P/TSX 60 equity indexes significantly reduced cash flow volatility related to derivatives in 2017.

The non-insurance companies have principal repayments coming due in 2018 of $855.9 primarily related to the Fairfax India and Fairfax Africa term loans. Borrowings of the non-insurance companies are non-recourse to the holding company and are generally expected to be settled through a combination of refinancing and operating cash flows.

102

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

	December 31, 2017
	Less than 3 months	3 months to 1 year	1 – 3 years	3 – 5 years	More than 5 years	Total
Accounts payable and accrued liabilities(1)	1,564.5	578.8	485.3	216.8	93.5	2,938.9
Funds withheld payable to reinsurers	186.6	553.2	41.9	1.4	67.1	850.2
Provision for losses and loss adjustment expenses	2,108.8	5,344.5	8,272.0	4,557.3	8,328.2	28,610.8
Borrowings – principal	47.1	958.0	877.5	1,556.8	2,957.5	6,396.9
Borrowings – interest	45.6	270.1	542.9	381.5	745.6	1,985.7
	3,952.6	7,704.6	10,219.6	6,713.8	12,191.9	40,782.5

	December 31, 2016
	Less than 3 months	3 months to 1 year	1 – 3 years	3 – 5 years	More than 5 years	Total
Accounts payable and accrued liabilities(1)	1,257.4	433.9	347.4	113.3	131.8	2,283.8
Funds withheld payable to reinsurers	125.1	252.0	25.8	1.5	11.8	416.2
Provision for losses and loss adjustment expenses	1,383.5	3,890.0	5,664.4	3,428.0	5,115.9	19,481.8
Borrowings – principal	478.1	237.6	650.8	1,299.6	2,117.4	4,783.5
Borrowings – interest	51.5	197.6	443.1	334.5	610.0	1,636.7
	3,295.6	5,011.1	7,131.5	5,176.9	7,986.9	28,602.0

(1)

Excludes pension and post retirement liabilities, ceded deferred premium acquisition costs and accrued interest. Operating lease commitments are described in note 22.

The timing of loss payments is not fixed and represents the company's best estimate. The payment obligations which are due beyond one year in accounts payable and accrued liabilities primarily relate to certain payables to brokers and reinsurers not expected to be settled in the short term. At December 31, 2017 the company had income taxes payable of $95.6 (December 31, 2016 – $35.4).

The following table provides a maturity profile of the company's short sale and derivative obligations based on the expected undiscounted cash flows from the end of the year to the contractual maturity date or the settlement date:

	December 31, 2017			December 31, 2016
	Less than 3 months	3 months to 1 year	Total	Less than 3 months	3 months to 1 year	Total
Equity total return swaps – short positions	12.1	–	12.1	78.1	–	78.1
Equity total return swaps – long positions	15.6	–	15.6	5.1	–	5.1
Foreign exchange forward contracts	58.1	11.6	69.7	89.0	12.4	101.4
U.S. treasury bond forwards	28.8	–	28.8	49.7	–	49.7
	114.6	11.6	126.2	221.9	12.4	234.3

Market Risk

Market risk (comprised of foreign currency risk, interest rate risk and other price risk) is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The company is exposed to market risk principally in its investing activities but also in its underwriting activities to the extent that those activities expose the company to foreign currency risk. The company's investment portfolios are managed with a long term, value-oriented investment philosophy emphasizing downside protection. The company has policies to limit and monitor its individual issuer exposures and aggregate equity exposure at the subsidiary level and in total at the holding company level. The following is a discussion of the company's primary market risk exposures and how those exposures are managed.

103

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Typically, as interest rates rise, the fair value of fixed income investments decline and, conversely, as interest rates decline, the fair value of fixed income investments rise. In each case, the longer the maturity of the financial instrument, the greater the consequence of a change in interest rates. The company's interest rate risk management strategy is to position its fixed income portfolio based on its view of future interest rates and the yield curve, balanced with liquidity requirements. The company may reposition the portfolio in response to changes in the interest rate environment. At December 31, 2017 the company's investment portfolio included fixed income securities with an aggregate fair value of $10.3 billion that is subject to interest rate risk.

The company's exposure to interest rate risk remained relatively unchanged in 2017 compared to 2016 on a pre-tax basis. Allied World's bond portfolio ($5,337.2, acquired on July 6, 2017) was re-balanced to reflect the company's interest rate risk tolerance. Net sales of long dated U.S. state and municipal bonds (net proceeds of $2,346.5) were broadly in line with the decrease in the notional amount of forward contracts to sell long dated U.S. treasury bonds (notional amount of $1,693.8 at December 31, 2017 compared to $3,013.4 at December 31, 2016). The table below, which displays the potential impact on net earnings of changes in interest rates on the company's fixed income portfolio, incorporates the anticipated effects of U.S. tax reform on the company's effective tax rate in 2017. There were no significant changes to the company's framework used to monitor, evaluate and manage interest rate risk at December 31, 2017 compared to December 31, 2016.

Movements in the term structure of interest rates affect the level and timing of recognition in earnings of gains and losses on fixed income securities held. Generally, the company's investment income may be reduced during sustained periods of lower interest rates as higher yielding fixed income securities are called, mature, or are sold and the proceeds are reinvested at lower rates. During periods of rising interest rates, the market value of the company's existing fixed income securities will generally decrease and gains on fixed income securities will likely be reduced. Losses are likely to be incurred following significant increases in interest rates. General economic conditions, political conditions and many other factors can also adversely affect the bond markets and, consequently, the value of fixed income securities held. These risks are monitored by the company's senior portfolio managers and CEO, and taken into consideration when managing the consolidated bond portfolio.

The table below displays the potential impact of changes in interest rates on the company's fixed income portfolio based on parallel 200 basis point shifts up and down, in 100 basis point increments. This analysis was performed on each individual security to determine the hypothetical effect on net earnings.

	December 31, 2017					December 31, 2016
	Fair value of fixed income portfolio	Hypothetical $ change effect on net earnings(1)		Hypothetical % change in fair value(1)		Fair value of fixed income portfolio	Hypothetical $ change effect on net earnings(1)		Hypothetical % change in fair value(1)
Change in interest rates
200 basis point increase	9,897.4	(306.2	)	(3.8	)	9,758.6	(295.1	)	(4.0	)
100 basis point increase	10,090.1	(155.6	)	(2.0	)	9,962.2	(148.2	)	(2.0	)
No change	10,290.8	–		–		10,167.5	–		–
100 basis point decrease	10,498.6	161.3		2.0		10,338.3	124.6		1.7
200 basis point decrease	10,720.5	332.0		4.2		10,480.2	228.6		3.1

(1)

Includes the impact of forward contracts to sell long dated U.S. treasury bonds with a notional amount of $1,693.8 (December 31, 2016 – $3,013.4). 

Certain shortcomings are inherent in the method of analysis presented above. Computations of the prospective effects of hypothetical interest rate changes are based on numerous assumptions, including the maintenance of the level and composition of fixed income securities at the indicated date, and should not be relied on as indicative of future results. Actual values may differ from the projections presented should market conditions vary from assumptions used in the calculation of the fair value of individual securities; such variations may include non-parallel shifts in the term structure of interest rates and changes in individual issuer credit spreads.

104

Market price fluctuations

Market price fluctuation is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or foreign currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or other factors affecting all similar financial instruments in the market. Changes to the company's exposure to equity price risk through its equity and equity-related holdings at December 31, 2017 compared to December 31, 2016 are described below.

The company holds significant investments in equity and equity-related instruments. The market value and the liquidity of these investments are volatile and may vary dramatically either up or down in short periods, and their ultimate value will therefore only be known over the long term or on disposition.

Throughout most of 2016 the company had economically hedged certain market risks associated with its equity and equity-related holdings (comprised of common stocks, convertible preferred stocks, convertible bonds, non-insurance investments in associates and equity-related derivatives) against a potential significant decline in equity markets by way of short positions effected through equity and equity index total return swaps (including short positions in certain equity indexes and individual equities) and equity index put options (S&P 500). The company's equity hedges were structured to provide a return that was inverse to changes in the fair values of the indexes and certain individual equities.

The company discontinued its economic equity hedging strategy in the fourth quarter of 2016 after giving consideration to the possible and actual outcome of the U.S. elections and the potential for fundamental changes that could improve U.S. economic growth and equity markets. During 2016 the company closed out $6,350.6 notional amount of short positions effected through equity index total return swaps (comprised of Russell 2000, S&P 500 and S&P/TSX 60 short equity index total return swaps) and recognized a net loss on investment of $955.2 (realized loss of $2,665.4 of which $1,710.2 had been recognized as unrealized losses in prior years). The company continues to hold short equity and equity index total return swaps for investment purposes, but no longer regards them as hedges of its equity and equity-related holdings. During 2017 the company closed out $1,202.9 notional amount of short equity total return swaps and recognized a net loss on investment of $237.9 (realized loss of $553.1 of which $315.2 was recognized as unrealized losses in prior years). In the first quarter of 2018 the company closed out an additional $481.3 notional amount of short equity and equity index total return swaps and recognized a net loss on investment of $8.1 (realized loss of $199.0 of which $190.9 was recognized as unrealized losses in prior years), which reduced the notional amount of remaining short equity and equity index total return swaps to approximately $509.

105

The following table summarizes the net effect of the company's equity and equity-related holdings (long exposures net of short exposures) on the company's financial position as at December 31, 2017 and 2016 and results of operations for the years then ended. The company considers the fair value of $3,846.2 (December 31, 2016 – $1,752.5) of its non-insurance investments in associates (see note 6) as a component of its equity and equity-related holdings when assessing its net equity exposures.

			December 31, 2017				December 31, 2016				Year ended December 31, 2017		Year ended December 31, 2016
			Exposure/ Notional amount		Carrying value		Exposure/ Notional amount		Carrying value		Pre-tax earnings (loss)		Pre-tax earnings (loss)
Long equity exposures:
	Common stocks(1)		5,578.1		5,578.1		4,181.4		4,181.4		707.8		(78.0	)
	Preferred stocks – convertible		68.1		68.1		9.1		9.1		(1.6	)	(6.6	)
	Bonds – convertible		833.8		833.8		638.2		638.2		233.1		(39.4	)
	Investments in associates(2)		3,846.2		2,945.3		1,752.5		1,693.0		69.8		–
	Derivatives and other invested assets:
		Equity total return swaps – long positions	697.8		2.2		213.1		4.3		19.6		23.3
		Equity warrants and call options(4)	77.6		77.6		19.3		19.3		38.3		(4.0	)
	Total equity and equity related holdings		11,101.6		9,505.1		6,813.6		6,545.3		1,067.0		(104.7	)
Short equity exposures and equity hedges(3):
	Derivatives and other invested assets:
		Equity total return swaps – short positions	(892.5	)	(0.3	)	(1,623.0	)	(67.7	)	(408.7	)	(208.0	)
		Equity index total return swaps – short positions	(52.6	)	0.4		(43.3	)	0.6		(9.2	)	(971.8	)
		Equity index put options(4)	–		–		–		–		–		(13.1	)
			(945.1	)	0.1		(1,666.3	)	(67.1	)	(417.9	)	(1,192.9	)
Net equity exposures and financial effects			10,156.5				5,147.3				649.1		(1,297.6	)

(1)

The company excludes other funds that are invested principally in fixed income securities with a carrying value of $90.9 at December 31, 2017 (December 31, 2016 – $157.1) when measuring its equity and equity-related exposure.

(2)

Excludes the company's insurance and reinsurance investments in associates which are considered long term strategic holdings. See note 6 for details.

(3)

Prior to the fourth quarter of 2016 the short equity exposures were considered economic hedges of certain market risks associated with the company's equity and equity-related holdings.

(4)

The company does not consider the notional amounts of the S&P 500 call options and put options in its assessment of its net equity exposures if they are out-of-the-money.

The table that follows illustrates the potential impact on net earnings of changes in the fair value of the company's equity and equity-related holdings (long exposures net of short exposures) as a result of changes in global equity markets at December 31, 2017 and 2016. The analysis assumes variations of 5% and 10% which the company

106

believes to be reasonably possible based on analysis of the return on various equity indexes and management's knowledge of global equity markets.

	December 31, 2017					December 31, 2016
	Fair value of equity and equity- related holdings	Hypothetical $ change effect on net earnings		Hypothetical % change in fair value		Fair value of equity and equity- related holdings	Hypothetical $ change effect on net earnings		Hypothetical % change in fair value
Change in global equity markets
10% increase	6,887.9	479.9		9.2		3,755.3	248.6		10.6
5% increase	6,597.9	239.0		4.6		3,569.7	119.6		5.2
No change	6,310.3	–		–		3,394.7	–		–
5% decrease	6,023.0	(238.5	)	(4.6	)	3,233.5	(106.7	)	(4.7	)
10% decrease	5,738.1	(475.0	)	(9.1	)	3,082.9	(204.5	)	(9.2	)

The changes in fair value of non-insurance investments in associates have been excluded from each of the scenarios presented above as any change in the fair value of an investment in associate is generally recognized in the company's consolidated financial reporting only upon ultimate disposition of the associate.

The company's risk management objective with respect to market price fluctuations places primary emphasis on the preservation of invested capital. Subsequent to the economic downturn in 2008, the company became increasingly concerned about the risk of a potential significant decline in global equity markets. From 2010 until the fourth quarter of 2016, the company relied on certain derivative financial instruments to protect its equity and equity-related holdings. In the latter part of 2016, the company's sentiment with respect to U.S. economic growth and improvements in the global equity markets improved, resulting in the discontinuation of the economic equity hedging strategy. In the foreseeable future, the company does not expect to apply equity hedging strategies and will remain focused on its long-term value-oriented investment philosophy, seeking investments that are attractively priced, are selling at a discount to intrinsic value and afford a margin of safety.

At December 31, 2017 the company's exposure to the ten largest issuers of common stock owned in its investment portfolio was $3,138.1, which represented 8.0% of the total investment portfolio (December 31, 2016 – $2,113.8, 7.4%). The exposure to the largest single issuer of common stock held at December 31, 2017 was $549.0, which represented 1.4% of the total investment portfolio (December 31, 2016 – $391.7, 1.4%).

Risk of decreasing price levels

The risk of decreases in the general price level of goods and services is the potential for negative impacts on the consolidated balance sheet (including the company's equity and equity-related holdings and fixed income investments in non-sovereign debt) and the consolidated statement of earnings. Among their effects on the economy, decreasing price levels typically result in decreased consumption, restriction of credit, shrinking output and investment and numerous bankruptcies.

The company has purchased derivative contracts referenced to consumer price indexes ("CPI") in the geographic regions in which it operates to serve as an economic hedge against the potential adverse financial impact on the company of decreasing price levels. At December 31, 2017 these contracts have a remaining weighted average life of 4.6 years (December 31, 2016 – 5.6 years), a notional amount of $117.3 billion (December 31, 2016 – $110.4 billion) and a fair value of $39.6 (December 31, 2016 -$83.4). As the average remaining life of a contract declines, the fair value of the contract (excluding the impact of CPI changes) will generally decline. The company's maximum potential loss on any contract is limited to the original cost of that contract. During 2017 the company did not enter into any new CPI-linked derivative contracts. The company's CPI-linked derivative contracts produced net unrealized losses of $71.0 in 2017 (2016 – $196.2).

Foreign currency risk

Foreign currency risk is the risk that the fair value or cash flows of a financial instrument or another asset will fluctuate because of changes in exchange rates and as a result, could produce an adverse effect on earnings and equity when measured in a company's functional currency. The company is exposed to foreign currency risk through

107

transactions conducted in currencies other than the U.S. dollar, and also through its investments in associates and net investment in subsidiaries that have a functional currency other than the U.S. dollar. Long and short foreign exchange forward contracts primarily denominated in the euro, the British pound sterling and the Canadian dollar are used to manage foreign currency exposure on foreign currency denominated transactions. Foreign currency denominated liabilities may be used to manage the company's foreign currency exposures to net investments in foreign operations having a functional currency other than the U.S. dollar. The company's exposure to foreign currency risk was not significantly different at December 31, 2017 compared to December 31, 2016.

The company's foreign currency risk management objective is to mitigate the impact of foreign currency exchange rate fluctuations on total equity, notwithstanding the company's exposure to the Indian rupee resulting from its investment in Fairfax India. At the consolidated level the company accumulates, and matches, all significant asset and liability foreign currency exposures, thereby identifying any net unmatched positions, whether long or short. The company may then take action to cure an unmatched position through the acquisition of a derivative contract or the purchase or sale of investments denominated in the exposed currency.

A portion of the company's premiums are written in foreign currencies and a portion of the company's loss reserves are denominated in foreign currencies. Moreover, a portion of the company's cash and investments are held in currencies other than the U.S. dollar. In general, the company manages foreign currency risk on liabilities by investing in financial instruments and other assets denominated in the same currency as the liabilities to which they relate. The company also monitors the exposure of invested assets to foreign currency risk and limits these amounts as deemed necessary. The company may nevertheless, from time to time, experience gains or losses resulting from fluctuations in the values of these foreign currencies, which may favourably or adversely affect operating results.

At December 31, 2017 the company had designated the carrying value of Cdn$2,212.9 principal amount of its Canadian dollar denominated unsecured senior notes with a fair value of $1,868.6 (December 31, 2016 – principal amount of Cdn$1,975.0 with a fair value of $1,618.1) as a hedge of its net investment in its Canadian subsidiaries for financial reporting. In 2017 the company recognized pre-tax losses of $106.3 (2016 – $37.5) related to exchange rate movements on the unsecured senior notes in losses on hedge of net investment in Canadian subsidiaries in the consolidated statement of comprehensive income.

The pre-tax foreign exchange effect on certain line items in the company's consolidated financial statements for the years ended December 31 follows:

		2017		2016
Net gains (losses) on investments
	Investing activities	88.8		(136.9	)
	Underwriting activities	(74.9	)	19.7
	Foreign currency forward contracts	(11.1	)	(12.3	)
Foreign currency net gains (losses) included in pre-tax earnings (loss)		2.8		(129.5	)

The table below shows the approximate effect of a 5% appreciation of the U.S. dollar against each of the Canadian dollar, euro, British pound sterling, Indian rupee and all other currencies, respectively, on pre-tax earnings (loss), net earnings (loss), pre-tax other comprehensive income (loss) and other comprehensive income (loss). Certain shortcomings are inherent in the method of analysis presented, including the assumption that the 5% appreciation of the U.S. dollar occurred at December 31, 2017 with all other variables held constant.

	Canadian dollar				Euro				British pound sterling				Indian rupee				All other currencies				Total
	2017		2016		2017		2016		2017		2016		2017		2016		2017		2016		2017		2016
Pre-tax earnings (loss)	32.5		40.6		6.2		9.5		5.7		15.6		(64.8	)	(31.2	)	(55.7	)	24.0		(76.1	)	58.5
Net earnings (loss)	24.3		28.0		5.0		7.8		5.4		11.7		(57.3	)	(21.9	)	(45.4	)	13.8		(68.0	)	39.4
Pre-tax other comprehensive income (loss)	(75.3	)	(66.1	)	(60.8	)	(1.7	)	(33.6	)	(29.9	)	(128.5	)	(99.3	)	(54.3	)	(60.0	)	(352.5	)	(257.0	)
Other comprehensive income (loss)	(73.8	)	(66.0	)	(54.7	)	4.3		(33.4	)	(28.5	)	(126.8	)	(94.0	)	(50.9	)	(60.0	)	(339.6	)	(244.2	)

108

The hypothetical impact in 2017 of the foreign currency movements on pre-tax earnings (loss) in the table above principally related to the following:

Canadian dollar:    Foreign exchange forward contracts used as economic hedges of operational exposure at OdysseyRe (including OdysseyRe's net investment in its Canadian branch where the net assets are translated through other comprehensive income), the translation of the company's Canadian dollar denominated senior notes not included as part of the hedge of net investment in Canadian subsidiaries and certain net assets of Allied World (consolidated during 2017).

Euro:    Foreign exchange forward contracts at OdysseyRe and Crum & Forster used as economic hedges of euro denominated operational exposure and portfolio investments, and certain net liabilities of Allied World (consolidated during 2017) and Run-off (principally provision for losses and loss adjustment expenses, partially offset by portfolio investments).

British pound sterling:    Certain net liabilities at OdysseyRe (principally insurance contract liabilities net of recoverable from reinsurers and portfolio investments) and Allied World (consolidated during 2017), partially offset by certain net assets at Brit (principally portfolio investments and recoverable from reinsurers, net of insurance contract liabilities).

Indian rupee:    The company's 9.9% equity interest in ICICI Lombard (reclassified from investments in associates to holding company cash and investments within Fairfax Asia during 2017) and portfolio investments held broadly across the company.

All other currencies:    U.S. dollar denominated portfolio investments held in entities where the functional currency is other than the U.S. dollar (primarily at OdysseyRe's Paris branch and Newline syndicate), foreign exchange forward contracts used as economic hedges of operational exposure at OdysseyRe and certain net assets of Allied World (consolidated during 2017), partially offset by certain net liabilities at Fairfax India (primarily U.S. dollar long term debt).

The hypothetical impact in 2017 of the foreign currency movements on pre-tax other comprehensive income (loss) in the table above principally related to the translation of the company's non-U.S. dollar net investments in subsidiaries and investments in associates as follows:

Canadian dollar:    Net investments in Northbridge and Canadian subsidiaries within the Other reporting segment, partially offset by the impact of the hedge of net investment in Canadian subsidiaries.

Euro:    Net investments in Grivalia Properties (consolidated during 2017) and investments in associates (primarily Eurolife, Astarta and KWF LPs), partially offset by net liabilities in OdysseyRe's Paris branch.

British pound sterling:    Net investments in Newline syndicate (OdysseyRe) and RiverStone Insurance in the U.K. (European Run-off).

Indian rupee:    Net investments in Fairfax India and Thomas Cook India.

All other currencies:    Net investments in Fairfax Latin America (Argentine peso, Chilean peso, Colombian peso), Bryte Insurance (South African rand), Polish Re (Polish zloty), AMAG (Indonesian rupiah), Fairfirst Insurance (Sri Lankan rupee) and Pacific Insurance (Malaysian ringgit), and investments in associates (primarily Kuwaiti dinar at Gulf Insurance, South African rand at AFGRI and Vietnamese dong at BIC Insurance).

109

Capital Management

The company's capital management framework is designed to protect, in the following order, its policyholders, its bondholders and its preferred shareholders and then finally to optimize returns to common shareholders. Effective capital management includes measures designed to maintain capital above minimum regulatory levels, above levels required to satisfy issuer credit ratings and financial strength ratings requirements, and above internally determined and calculated risk management levels. Total capital at December 31, 2017, comprising total debt, shareholders' equity attributable to shareholders of Fairfax and non-controlling interests, was $24,826.1 compared to $16,587.7 at December 31, 2016. The company manages its capital based on the following financial measurements and ratios to provide an indication of the company's ability to issue and service debt without impacting the operating companies or their portfolio investments:

	December 31, 2017	December 31, 2016
Holding company cash and investments (net of short sale and derivative obligations)	2,356.9	1,329.4
Borrowings – holding company	3,475.1	3,472.5
Borrowings – insurance and reinsurance companies	1,373.0	435.5
Borrowings – non-insurance companies	1,566.0	859.6
Total debt	6,414.1	4,767.6
Net debt(1)	4,057.2	3,438.2
Common shareholders' equity	12,475.6	8,484.6
Preferred stock	1,335.5	1,335.5
Non-controlling interests	4,600.9	2,000.0
Total equity	18,412.0	11,820.1
Net debt/total equity	22.0%	29.1%
Net debt/net total capital(2)	18.1%	22.5%
Total debt/total capital(3)	25.8%	28.7%
Interest coverage(4)	7.1x	n/a
Interest and preferred share dividend distribution coverage(5)	6.0x	n/a

(1)

Net debt is is calculated by the company as total debt less holding company cash and investments (net of short sale and derivative obligations).

(2)

Net total capital is calculated by the company as the sum of total equity and net debt.

(3)

Total capital is calculated by the company as the sum of total equity and total debt.

(4)

Interest coverage is calculated by the company as the sum of earnings (loss) before income taxes and interest expense divided by interest expense.

(5)

Interest and preferred share dividend distribution coverage is calculated by the company as the sum of earnings (loss) before income taxes and interest expense divided by interest expense and preferred share dividend distributions adjusted to a pre-tax equivalent at the company's Canadian statutory income tax rate.

During 2017 the company completed an underwritten public offering of Cdn$650.0 principal amount of 4.25% senior notes due 2027 for net proceeds of $509.5. Those net proceeds were used to redeem the company's remaining Cdn$388.4 principal amount 7.5% senior notes for cash consideration of $340.6 (including accrued interest), repay $124.9 principal amount of purchase consideration payable upon maturity and reduce the amount outstanding on the company's revolving credit facility (note 15). The company also issued 5,075,894 subordinate voting shares with a fair value of $2,191.6 as part of the acquisition of Allied World (note 23).

The company's capital management objectives include maintaining sufficient liquid resources at the holding company to be able to pay interest on debt, dividends to preferred shareholders and all other holding company obligations. Accordingly, the company monitors its interest and preferred share dividend distribution coverage ratio calculated as described in footnote 5 of the table above.

110

In the United States, the National Association of Insurance Commissioners ("NAIC") has developed a model law and risk-based capital ("RBC") formula designed to help regulators identify property and casualty insurers that may be inadequately capitalized. Under the NAIC's requirements, an insurer must maintain total capital and surplus above a calculated threshold or face varying levels of regulatory action. The threshold is based on a formula that attempts to quantify the risk of a company's insurance, investment and other business activities. At December 31, 2017 Crum & Forster, Zenith National, Allied World, OdysseyRe and U.S. Run-off subsidiaries had capital and surplus in excess of the regulatory minimum requirement of two times the authorized control level.

In Bermuda, the Bermuda Insurance Act 1978 imposes solvency and liquidity standards on Bermuda insurers and reinsurers. There is a requirement to hold available statutory economic capital and surplus equal to or in excess of an enhanced capital and target capital level as determined by the Bermuda Monetary Authority under the Bermuda Solvency Capital Requirement model. The target capital level is measured as 120% of the enhanced capital requirements. At December 31, 2017 Allied World was in compliance with Bermuda's regulatory requirements.

In Canada, property and casualty companies are regulated by the Office of the Superintendent of Financial Institutions on the basis of a minimum supervisory target of 150% of a minimum capital test ("MCT") formula. At December 31, 2017 Northbridge's subsidiaries had a weighted average MCT ratio in excess of the 150% minimum supervisory target.

The Lloyd's market is subject to the solvency and capital adequacy requirements of the Prudential Regulatory Authority in the U.K. The capital requirements of Brit are based on the output of an internal model which reflects the risk profile of the business. At December 31, 2017 Brit's available capital was in excess of its management capital requirements (capital required for business strategy and regulatory requirements).

In countries other than the U.S., Canada, the U.K. and Bermuda where the company operates, the company met or exceeded the applicable regulatory capital requirements at December 31, 2017.

25.  Segmented Information

The company identifies its operating segments by operating company, consistent with its management structure. Certain of the operating segments have been aggregated into reporting segments, with reporting segments categorized by type of business as described below. The accounting policies of the reporting segments are the same as those described in note 3. Transfer prices for inter-segment transactions are set at arm's length. Geographic premiums are determined based on the domicile of the various subsidiaries and where the primary underlying risk of the business resides.

Insurance and Reinsurance

Northbridge – A national commercial property and casualty insurer in Canada providing property and casualty insurance products through its Northbridge Insurance and Federated subsidiaries.

OdysseyRe – A U.S.-based reinsurer that provides a full range of property and casualty products on a worldwide basis, and that underwrites specialty insurance, primarily in the U.S. and in the U.K., both directly and through the Lloyd's market in London.

Crum & Forster – A national commercial property and casualty insurer in the U.S. writing a broad range of commercial coverages, principally specialty coverages.

Zenith National – An insurer primarily engaged in workers' compensation business in the U.S.

Brit – A market-leading global Lloyd's of London specialty insurer and reinsurer.

Allied World – A global property, casualty and specialty insurer and reinsurer with a presence at Lloyd's.

Fairfax Asia – This reporting segment includes the company's operations that underwrite insurance and reinsurance coverages in Singapore (First Capital, sold on December 28, 2017), Hong Kong (Falcon), Malaysia (Pacific Insurance), Indonesia (AMAG, acquired on October 10, 2016), and Sri Lanka (Fairfirst Insurance, acquired on October 3, 2016). Fairfax Asia also includes the company's equity accounted interests in Vietnam-based BIC Insurance (35.0%), Thailand-based Falcon Thailand (41.2%) and Mumbai-based ICICI Lombard (partially sold during 2017 and reclassified to a common stock investment).

111

Insurance and Reinsurance – Other – This reporting segment is comprised of Group Re, Bryte Insurance (acquired on December 7, 2016), Advent, Fairfax Latin America and Fairfax Central and Eastern Europe ("Fairfax CEE"). Group Re primarily constitutes the participation of CRC Re and Wentworth (both based in Barbados) in the reinsurance of Fairfax's subsidiaries by quota share or through participation in those subsidiaries' third party reinsurance programs on the same terms as third party reinsurers. Group Re also writes third party business. Bryte Insurance is an established property and casualty insurer in South Africa and Botswana. Advent is a specialty property reinsurance and insurance company operating through Syndicate 780 at Lloyd's. Fairfax Latin America is comprised of Fairfax Brasil, which writes commercial property and casualty insurance in Brazil, and Fairfax Latam, consisting of property and casualty insurance operations in Chile, Colombia and Argentina. Fairfax CEE is comprised of Polish Re, which writes reinsurance in Central and Eastern Europe, and Colonnade Insurance, a Luxembourg property and casualty insurer with branches in each of the Czech Republic, Hungary, Slovakia, Poland, Bulgaria and Romania, and an insurance subsidiary in Ukraine.

Run-off

The Run-off reporting segment principally comprises RiverStone (UK), Syndicate 3500 at Lloyd's (managed by RiverStone Managing Agency Limited), RiverStone Insurance (European Run-off) and TIG Insurance (U.S. Run-off).

Other

The Other reporting segment is comprised of the company's non-insurance operations, including Cara and its subsidiaries St-Hubert (acquired on September 2, 2016), Original Joe's (acquired on November 28, 2016) and Pickle Barrel (acquired on December 1, 2017), The Keg, Thomas Cook India and its subsidiaries Quess and Sterling Resorts, Grivalia Properties (consolidated on July 4, 2017), Mosaic Capital (consolidated on January 26, 2017), Pethealth, Praktiker, Sporting Life, William Ashley, Boat Rocker, Golf Town (acquired on October 31, 2016), Fairfax Africa (since its initial public offering on February 17, 2017), and Fairfax India and its subsidiaries NCML, Fairchem (merged on March 14, 2017 with Privi Organics (acquired on August 26, 2016)) and Saurashtra Freight (acquired on February 14, 2017).

Corporate and Other

Corporate and Other includes the parent entity (Fairfax Financial Holdings Limited), its subsidiary intermediate holding companies and Hamblin Watsa, an investment management company.

112

Sources of Earnings by Reporting Segment

Sources of earnings by reporting segment for the years ended December 31 were as follows:

2017

			Insurance and Reinsurance
																											Eliminations and adjustments
			Northbridge		OdysseyRe		Crum & Forster		Zenith National		Brit		Allied World(1)		Fairfax Asia		Other		Operating companies		Run-off		Other		Corporate and Other				Consolidated
Gross premiums written
External			1,180.4		2,725.7		2,120.0		849.0		2,048.1		1,447.6		667.9		1,160.4		12,199.1		8.4		–		–		–		12,207.5
Intercompany			6.6		57.4		54.5		–		8.9		–		2.5		83.9		213.8		–		–		–		(213.8	)	–
			1,187.0		2,783.1		2,174.5		849.0		2,057.0		1,447.6		670.4		1,244.3		12,412.9		8.4		–		–		(213.8	)	12,207.5
Net premiums written			1,064.9		2,495.9		1,863.4		837.4		1,530.9		991.9		327.5		863.3		9,975.2		8.3		–		–		–		9,983.5
Net premiums earned
External			1,023.7		2,318.3		1,822.1		814.1		1,537.3		1,041.3		369.3		775.2		9,701.3		20.1		–		–		–		9,721.4
Intercompany			(4.0	)	15.1		30.7		(2.5	)	(0.4	)	(12.6	)	(41.7	)	15.4		–		–		–		–		–		–
			1,019.7		2,333.4		1,852.8		811.6		1,536.9		1,028.7		327.6		790.6		9,701.3		20.1		–		–		–		9,721.4
Underwriting expenses(2)			(1,010.7	)	(2,273.4	)	(1,849.6	)	(694.4	)	(1,738.8	)	(1,615.3	)	(289.4	)	(871.2	)	(10,342.8	)	(227.5	)	–		–		–		(10,570.3	)
Underwriting profit (loss)			9.0		60.0		3.2		117.2		(201.9	)	(586.6	)	38.2		(80.6	)	(641.5	)	(207.4	)	–		–		–		(848.9	)
Interest income			56.1		131.0		53.4		26.8		41.9		76.8		31.3		38.7		456.0		37.2		29.7		(8.3	)	–		514.6
Dividends			9.5		15.6		3.4		3.8		3.7		2.2		3.2		11.8		53.2		4.6		9.1		6.3		–		73.2
Investment expenses			(11.5	)	(21.7	)	(23.0	)	(7.2	)	(13.0	)	(13.1	)	(5.4	)	(12.0	)	(106.9	)	(12.9	)	(143.7	)	(2.1	)	236.8		(28.8	)
Interest and dividends			54.1		124.9		33.8		23.4		32.6		65.9		29.1		38.5		402.3		28.9		(104.9	)	(4.1	)	236.8		559.0
Share of profit (loss) of associates			3.2		7.2		(1.1	)	(9.8	)	9.2		(17.6	)	29.4		3.0		23.5		(6.1	)	55.4		127.7		–		200.5
Other
		Revenue	–		–		–		–		–		–		–		–		–		–		3,257.6		–		–		3,257.6
		Expenses	–		–		–		–		–		–		–		–		–		–		(2,996.0	)	–		–		(2,996.0	)
			–		–		–		–		–		–		–		–		–		–		261.6		–		–		261.6
Operating income (loss)			66.3		192.1		35.9		130.8		(160.1	)	(538.3	)	96.7		(39.1	)	(215.7	)	(184.6	)	212.1		123.6		236.8		172.2
Net gains (losses) on investments			44.8		253.1		27.9		26.6		79.0		(26.5	)	1,083.9		69.5		1,558.3		73.3		7.2		(171.3	)	–		1,467.5
Gain on sale of subsidiary			–		–		–		–		–		–		1,018.6		–		1,018.6		–		–		–		–		1,018.6
Loss on repurchase of long term debt (note 15)			–		–		–		–		–		–		–		–		–		–		–		(28.6	)	–		(28.6	)
Interest expense			–		(3.3	)	(1.8	)	(3.3	)	(12.5	)	(15.6	)	–		(4.8	)	(41.3	)	–		(65.8	)	(224.1	)	–		(331.2	)
Corporate overhead			(8.7	)	(27.4	)	(25.4	)	(8.2	)	(9.2	)	(27.9	)	(2.6	)	(22.2	)	(131.6	)	–		–		93.1		(236.8	)	(275.3	)
Pre-tax income (loss)			102.4		414.5		36.6		145.9		(102.8	)	(608.3	)	2,196.6		3.4		2,188.3		(111.3	)	153.5		(207.3	)	–		2,023.2
Income taxes																													(408.3	)
Net earnings																													1,614.9
Attributable to:
	Shareholders of Fairfax																												1,740.6
	Non-controlling interests																												(125.7	)
																													1,614.9

(1)

Allied World is included in the company's financial reporting with effect from July 6, 2017.

(2)

Total underwriting expenses for the year ended December 31, 2017 are comprised as shown below. Accident year total underwriting expenses exclude the impact of favourable or unfavourable prior year claims reserve development.

	Insurance and Reinsurance
	Northbridge		OdysseyRe		Crum & Forster		Zenith National		Brit		Allied World	Fairfax Asia		Other		Operating companies
Loss & LAE – accident year	760.1		1,827.7		1,209.8		477.9		1,117.8		1,293.1	263.1		563.8		7,513.3
Commissions	164.5		492.5		292.4		83.5		424.8		32.6	4.7		148.4		1,643.4
Premium acquisition costs and other underwriting expenses	179.6		241.3		357.6		209.4		205.7		217.7	73.9		192.6		1,677.8
Total underwriting expenses – accident year	1,104.2		2,561.5		1,859.8		770.8		1,748.3		1,543.4	341.7		904.8		10,834.5
Unfavourable (favourable) claims reserve development	(93.5	)	(288.1	)	(10.2	)	(76.4	)	(9.5	)	71.9	(52.3	)	(33.6	)	(491.7	)
Total underwriting expenses – calendar year	1,010.7		2,273.4		1,849.6		694.4		1,738.8		1,615.3	289.4		871.2		10,342.8

113

2016

		Insurance and Reinsurance
																								Eliminations and adjustments
		Northbridge		OdysseyRe		Crum & Forster		Zenith National		Brit		Fairfax Asia		Other		Operating companies		Run-off		Other		Corporate and Other				Consolidated
Gross premiums written
External		1,052.3		2,355.8		2,011.8		831.7		1,904.3		636.1		558.4		9,350.4		183.9		–		–		–		9,534.3
Intercompany		2.8		24.9		43.2		–		7.9		12.6		84.9		176.3		–		–		–		(176.3	)	–
		1,055.1		2,380.7		2,055.0		831.7		1,912.2		648.7		643.3		9,526.7		183.9		–		–		(176.3	)	9,534.3
Net premiums written		942.6		2,100.2		1,801.1		819.4		1,480.2		303.1		458.4		7,905.0		183.4		–		–		–		8,088.4
Net premiums earned
External		915.8		2,083.9		1,738.6		809.3		1,396.5		348.5		406.1		7,698.7		163.5		–		–		–		7,862.2
Intercompany		(7.0	)	(9.8	)	30.9		(2.0	)	2.8		(46.0	)	31.1		–		–		–		–		–		–
		908.8		2,074.1		1,769.5		807.3		1,399.3		302.5		437.2		7,698.7		163.5		–		–		–		7,862.2
Underwriting expenses(1)		(862.5	)	(1,838.9	)	(1,737.1	)	(643.2	)	(1,370.2	)	(261.4	)	(409.5	)	(7,122.8	)	(348.6	)	–		–		–		(7,471.4	)
Underwriting profit (loss)		46.3		235.2		32.4		164.1		29.1		41.1		27.7		575.9		(185.1	)	–		–		–		390.8
Interest income		56.6		158.5		72.8		33.0		66.5		26.6		32.2		446.2		58.6		21.3		(11.7	)	–		514.4
Dividends		8.4		23.9		5.8		4.3		2.6		3.4		2.7		51.1		5.9		8.2		1.6		–		66.8
Investment expenses		(12.8	)	(28.7	)	(12.8	)	(7.7	)	(13.7	)	(3.3	)	(8.3	)	(87.3	)	(13.3	)	(12.8	)	(1.4	)	88.8		(26.0	)
Interest and dividends		52.2		153.7		65.8		29.6		55.4		26.7		26.6		410.0		51.2		16.7		(11.5	)	88.8		555.2
Share of profit (loss) of associates		5.2		17.3		(22.6	)	1.2		3.4		48.1		0.7		53.3		(15.5	)	13.6		(27.2	)	–		24.2
Other
	Revenue	–		–		–		–		–		–		–		–		–		2,061.6		–		–		2,061.6
	Expenses	–		–		–		–		–		–		–		–		–		(1,958.4	)	–		–		(1,958.4	)
		–		–		–		–		–		–		–		–		–		103.2		–		–		103.2
Operating income (loss)		103.7		406.2		75.6		194.9		87.9		115.9		55.0		1,039.2		(149.4	)	133.5		(38.7	)	88.8		1,073.4
Net gains (losses) on investments(3)		(161.3	)	(318.7	)	(184.7	)	(168.2	)	87.3		(1.7	)	(90.0	)	(837.3	)	(225.2	)	30.1		(171.2	)	–		(1,203.6	)
Interest expense		–		(2.8	)	(1.6	)	(3.3	)	(14.2	)	–		(4.2	)	(26.1	)	–		(28.3	)	(188.4	)	–		(242.8	)
Corporate overhead		(6.6	)	(30.2	)	(20.4	)	(8.4	)	(9.2	)	(0.1	)	–		(74.9	)	–		–		(17.6	)	(88.8	)	(181.3	)
Pre-tax income (loss)		(64.2	)	54.5		(131.1	)	15.0		151.8		114.1		(39.2	)	100.9		(374.6	)	135.3		(415.9	)	–		(554.3	)
Income taxes																										159.6
Net loss																										(394.7	)
Attributable to:
	Shareholders of Fairfax																									(512.5	)
	Non-controlling interests																									117.8
																										(394.7	)

(1)

Total underwriting expenses for the year ended December 31, 2016 are comprised as shown below. Accident year total underwriting expenses exclude the impact of favourable or unfavourable prior year claims reserve development.

	Insurance and Reinsurance
	Northbridge		OdysseyRe		Crum & Forster		Zenith National		Brit(1)		Fairfax Asia		Other		Operating companies
Loss & LAE – accident year	651.1		1,438.4		1,136.1		459.3		909.7		252.5		290.1		5,137.2
Commissions	150.6		431.4		283.2		81.9		292.3		(6.5	)	101.8		1,334.7
Premium acquisition costs and other underwriting expenses	173.6		235.6		326.1		203.0		221.7		67.5		78.0		1,305.5
Total underwriting expenses – accident year	975.3		2,105.4		1,745.4		744.2		1,423.7		313.5		469.9		7,777.4
Favourable claims reserve development	(112.8	)	(266.5	)	(8.3	)	(101.0	)	(53.5	)	(52.1	)	(60.4	)	(654.6	)
Total underwriting expenses – calendar year	862.5		1,838.9		1,737.1		643.2		1,370.2		261.4		409.5		7,122.8

114

Investments in Associates, Additions to Goodwill, Segment Assets and Segment Liabilities

Investments in associates, additions to goodwill, segment assets and segment liabilities by reporting segment as at and for the years ended December 31 were as follows:

		Investments in associates		Additions to goodwill			Segment assets				Segment liabilities
		2017	2016	2017		2016	2017		2016		2017	2016
Insurance and Reinsurance
	Northbridge	218.6	206.9	1.1		–	4,527.2		4,149.9		2,804.6	2,630.2
	OdysseyRe	355.7	373.5	–		–	11,316.1		10,334.8		7,248.4	6,370.5
	Crum & Forster	263.2	153.5	–		7.8	6,290.6		6,294.1		4,651.1	4,625.7
	Zenith National	162.9	146.9	–		–	2,586.8		2,590.7		1,653.8	1,633.1
	Brit	231.4	217.8	–		–	7,480.1		6,579.5		5,930.1	4,915.7
	Allied World(1)	210.5	–	937.9		–	14,584.4		–		10,937.2	–
	Fairfax Asia	100.9	487.3	(24.2	)	69.5	1,930.7		2,684.7		674.5	1,457.7
	Other	92.0	127.4	19.6		11.5	4,321.3		2,656.2		3,223.5	1,850.1
Operating companies		1,635.2	1,713.3	934.4		88.8	53,037.2		35,289.9		37,123.2	23,483.0
Run-off		252.0	308.2	–		–	5,207.2		5,709.5		3,456.5	3,970.4
Other		1,250.8	255.3	277.9		127.2	8,684.0		4,740.2		3,245.8	2,029.8
Corporate and Other and eliminations and adjustments		518.3	356.7	–		–	(2,838.3	)	(2,355.2	)	1,852.6	2,081.1
Consolidated		3,656.3	2,633.5	1,212.3		216.0	64,090.1		43,384.4		45,678.1	31,564.3

(1)

Allied World is included in the company's financial reporting with effect from July 6, 2017.

Product Line

Net premiums earned by product line for the years ended December 31 was as follows:

		Property		Casualty		Specialty			Total
		2017	2016	2017	2016	2017		2016	2017	2016
Net premiums earned – Insurance and Reinsurance
	Northbridge	449.1	395.6	474.4	423.8	96.2		89.4	1,019.7	908.8
	OdysseyRe	1,206.0	1,159.9	901.5	714.5	225.9		199.7	2,333.4	2,074.1
	Crum & Forster	238.9	237.0	1,518.0	1,426.6	95.9		105.9	1,852.8	1,769.5
	Zenith National	32.1	29.3	779.5	778.0	–		–	811.6	807.3
	Brit	427.1	402.7	755.7	664.3	354.1		332.3	1,536.9	1,399.3
	Allied World(1)	360.9	–	607.4	–	60.4		–	1,028.7	–
	Fairfax Asia	65.6	57.4	219.2	191.2	42.8		53.9	327.6	302.5
	Other	405.9	191.9	221.9	146.1	162.8		99.2	790.6	437.2
Operating companies		3,185.6	2,473.8	5,477.6	4,344.5	1,038.1		880.4	9,701.3	7,698.7
Run-off		–	0.4	22.9	162.6	(2.8	)	0.5	20.1	163.5
Consolidated net premiums earned		3,185.6	2,474.2	5,500.5	4,507.1	1,035.3		880.9	9,721.4	7,862.2
Interest and dividends									559.0	555.2
Share of profit of associates									200.5	24.2
Net gains (losses) on investments									1,467.5	(1,203.6	)
Gain on sale of subsidiary									1,018.6	–
Other									3,257.6	2,061.6
Consolidated revenue									16,224.6	9,299.6
Allocation of net premiums earned		32.8%	31.5%	56.6%	57.3%	10.6%		11.2%

(1)

Allied World is included in the company's financial reporting with effect from July 6, 2017.

115

Geographic Region

Net premiums earned by geographic region for the years ended December 31 was as follows:

		Canada		United States		Asia(1)		International(2)			Total
		2017	2016	2017	2016	2017	2016	2017		2016	2017	2016
Net premiums earned – Insurance and Reinsurance
	Northbridge	1,007.2	899.5	12.5	9.3	–	–	–		–	1,019.7	908.8
	OdysseyRe	76.8	72.5	1,539.2	1,319.3	247.2	231.4	470.2		450.9	2,333.4	2,074.1
	Crum & Forster	–	–	1,852.6	1,769.3	–	–	0.2		0.2	1,852.8	1,769.5
	Zenith National	–	–	811.6	807.3	–	–	–		–	811.6	807.3
	Brit	83.1	77.1	1,036.5	942.1	60.3	54.0	357.0		326.1	1,536.9	1,399.3
	Allied World(3)	20.5	–	773.7	–	88.2	–	146.3		–	1,028.7	–
	Fairfax Asia	0.1	0.1	–	0.3	319.0	293.2	8.5		8.9	327.6	302.5
	Other	9.1	3.9	98.9	142.6	108.0	105.7	574.6		185.0	790.6	437.2
Operating companies		1,196.8	1,053.1	6,125.0	4,990.2	822.7	684.3	1,556.8		971.1	9,701.3	7,698.7
Run-off		–	–	23.7	162.6	–	–	(3.6	)	0.9	20.1	163.5
Consolidated net premiums earned		1,196.8	1,053.1	6,148.7	5,152.8	822.7	684.3	1,553.2		972.0	9,721.4	7,862.2
Interest and dividends											559.0	555.2
Share of profit of associates											200.5	24.2
Net gains (losses) on investments											1,467.5	(1,203.6	)
Gain on sale of subsidiary											1,018.6	–
Other											3,257.6	2,061.6
Consolidated revenue											16,224.6	9,299.6
Allocation of net premiums earned		12.3%	13.4%	63.2%	65.5%	8.5%	8.7%	16.0%		12.4%

(1)

The Asia geographic segment comprises countries located throughout Asia, including China, India, Sri Lanka, Malaysia, Singapore, Indonesia and Thailand, and the Middle East.

(2)

The International geographic segment comprises Australia and countries located in Africa, Europe and South America.

(3)

Allied World is included in the company's financial reporting with effect from July 6,  2017.

116

26. Expenses  

Losses on claims, net, operating expenses and other expenses for the years ended December 31 were comprised as follows:

	2017			2016
	Insurance and reinsurance companies(1)	Non-insurance companies(2)	Total	Insurance and reinsurance companies(1)	Non-insurance companies(2)	Total
Losses and loss adjustment expenses	6,880.0	–	6,880.0	4,478.3	–	4,478.3
Other reporting segment cost of sales	–	1,821.4	1,821.4	–	1,095.2	1,095.2
Wages and salaries	1,072.0	495.2	1,567.2	876.6	351.8	1,228.4
Employee benefits	242.1	76.9	319.0	213.1	63.8	276.9
Depreciation, amortization and impairment charges	136.5	144.0	280.5	98.4	93.3	191.7
Operating lease costs	79.3	136.9	216.2	60.6	95.1	155.7
Audit, legal and tax professional fees	155.7	27.2	182.9	116.2	17.4	133.6
Premium taxes	152.7	–	152.7	101.4	–	101.4
Information technology costs	122.2	16.2	138.4	99.8	6.7	106.5
Other reporting segment marketing costs	–	65.4	65.4	–	43.9	43.9
Share-based payments to directors and employees	58.4	5.4	63.8	48.1	5.5	53.6
Restructuring costs	30.6	3.1	33.7	2.9	0.3	3.2
Loss on repurchase of long term debt (note 15)(2)	–	28.6	28.6	–	–	–
Administrative expense and other	266.9	204.3	471.2	220.9	185.4	406.3
	9,196.4	3,024.6	12,221.0	6,316.3	1,958.4	8,274.7

(1)

Total expense of the insurance and reinsurance companies is comprised of losses on claims, net and operating expenses as presented in the consolidated statement of earnings.

(2)

Other expenses as presented in the consolidated statement of earnings is comprised of cost of sales and operating expenses of the non-insurance companies, and loss on repurchase of long term debt of the holding company.

117

27.  Supplementary Cash Flow Information

Cash and cash equivalents as presented in the consolidated balance sheets and the consolidated statements of cash flows were comprised as follows:

			December 31, 2017	December 31, 2016
Holding company cash and investments:
	Cash and balances with banks		129.1	131.9
	Treasury bills and other eligible bills		866.3	401.3
			995.4	533.2
Subsidiary cash and short term investments:
	Cash and balances with banks		2,355.5	1,668.2
	Treasury bills and other eligible bills		5,028.6	2,275.2
			7,384.1	3,943.4
Subsidiary assets pledged for short sale and derivative obligations:
	Treasury bills and other eligible bills		16.8	–
Fairfax India:
	Cash and balances with banks		44.0	44.5
	Treasury bills and other eligible bills		–	128.7
			44.0	173.2
Fairfax Africa:
	Cash and balances with banks		329.7	–
Cash and cash equivalents as presented in the consolidated balance sheet			8,770.0	4,649.8
Less: Cash and cash equivalents – restricted(1)
	Holding company cash and cash equivalents – restricted:
		Cash and balances with banks	1.7	2.8
	Subsidiary cash and cash equivalents – restricted:
		Cash and balances with banks	546.8	180.8
		Treasury bills and other eligible bills	286.5	247.1
			835.0	430.7
Cash and cash equivalents as presented in the consolidated statement of cash flows			7,935.0	4,219.1

(1)

Cash, cash equivalents and bank overdrafts as presented in the consolidated statements of cash flows excludes balances that are restricted. Restricted cash and cash equivalents are comprised primarily of amounts required to be maintained on deposit with various regulatory authorities to support the operations of the insurance and reinsurance subsidiaries.

118

Details of certain cash flows included in the consolidated statements of cash flows for the years ended December 31 were as follows:

		2017		2016
(a)	Net sales of securities classified as FVTPL
	Short term investments	(2,816.5	)	(2,688.0	)
	Bonds	5,677.1		4,514.5
	Preferred stocks	(249.6	)	(42.4	)
	Common stocks	778.3		170.4
	Derivatives, short sales and other invested assets	(710.9	)	(835.2	)
		2,678.4		1,119.3
(b)	Changes in operating assets and liabilities
	Net increase in restricted cash and cash equivalents	(245.4	)	(55.1	)
	Provision for losses and loss adjustment expenses	1,842.1		(355.7	)
	Provision for unearned premiums	395.2		326.2
	Insurance contract receivables	(428.4	)	(296.6	)
	Recoverable from reinsurers	(1,168.5	)	(34.6	)
	Other receivables	(32.4	)	(36.5	)
	Funds withheld payable to reinsurers	182.0		87.9
	Accounts payable and accrued liabilities	174.0		110.6
	Income taxes payable	46.5		(54.1	)
	Other	(209.7	)	(300.0	)
		555.4		(607.9	)
(c)	Net interest and dividends received
	Interest and dividends received	531.9		782.4
	Interest paid	(277.9	)	(216.2	)
		254.0		566.2
(d)	Net income taxes paid	(33.4	)	(267.1	)

28.  Related Party Transactions

Compensation for the company's key management team for the years ended December 31 determined in accordance with the company's IFRS accounting policies was as follows:

	2017	2016
Salaries and other short-term employee benefits	9.7	8.2
Share-based payments	3.1	2.5
	12.8	10.7

Compensation for the company's Board of Directors for the years ended December 31 was as follows:

	2017	2016
Retainers and fees	0.8	0.8
Share-based payments	0.3	0.1
	1.1	0.9

During 2017 the company entered into an investment management contract on normal commercial terms pursuant to which effectively Benjamin Watsa, a member of the company's Board of Directors and the son of Prem Watsa, the company's Chairman and CEO and effectively controlling shareholder, would manage up to $50.0 for operating companies within the Fairfax group.

119

Subsequent to December 31, 2017

Pursuant to the company's investment advisory agreement with Fairfax India, a performance fee of $114.4 in the form of newly issued Fairfax India subordinate voting shares was received on March 9, 2018. See note 23.

29.  Subsidiaries

During 2017 the company acquired controlling interests in Allied World, Grivalia Properties, Mosaic Capital, Saurashtra Freight and Fairchem (through Fairfax India), and sold First Capital. The foregoing transactions are described in note 23. The company has wholly-owned subsidiaries not presented in the tables below that are intermediate holding companies of investments in subsidiaries and intercompany balances, all of which are eliminated on consolidation.

December 31, 2017		Domicile	Fairfax's ownership (100% other than as shown below)
Insurance and Reinsurance
Northbridge Financial Corporation (Northbridge)		Canada
Odyssey Re Holdings Corp. (OdysseyRe)		United States
	Hudson Insurance Company (Hudson Insurance)	United States
Crum & Forster Holdings Corp. (Crum & Forster)		United States
Zenith National Insurance Corp. (Zenith National)		United States
Brit Limited (Brit)		United Kingdom	72.5%
Allied World Assurance Company Holdings, GmbH (Allied World)		Switzerland	67.4%
Advent Capital (Holdings) Ltd. (Advent)		United Kingdom
Fairfax Central and Eastern Europe, which consists of:
	Polskie Towarzystwo Reasekuracji Spólka Akcyjna (Polish Re)	Poland
	Colonnade Insurance S.A. (Colonnade Insurance)	Luxembourg
Fairfax Latin America, which consists of:
	Fairfax Brasil Seguros Corporativos S.A. (Fairfax Brasil)	Brazil
	SBS Seguros Colombia S.A. (SouthBridge Colombia)	Colombia
	Southbridge Compañía de Seguros Generales S.A. (SouthBridge Chile)	Chile
	La Meridional Compañía Argentina de Seguros S.A. (La Meridional Argentina)	Argentina
Bryte Insurance Company Limited (Bryte Insurance)		South Africa
Group Re, which underwrites business in:
	CRC Reinsurance Limited (CRC Re)	Barbados
	Wentworth Insurance Company Ltd. (Wentworth)	Barbados
Fairfax Asia, which consists of:
	Falcon Insurance Company (Hong Kong) Limited (Falcon)	Hong Kong
	The Pacific Insurance Berhad (Pacific Insurance)	Malaysia	85.0%
	PT Asuransi Multi Artha Guna TBK (AMAG)	Indonesia	80.0%
	Fairfirst Insurance Limited (Fairfirst Insurance)	Sri Lanka	78.0%
Run-off
TIG Insurance Company (TIG Insurance)		United States
RiverStone Insurance (UK) Limited (RiverStone (UK))		United Kingdom
RiverStone Insurance Limited (RiverStone Insurance)		United Kingdom
RiverStone Managing Agency Limited		United Kingdom

120

December 31, 2017		Domicile	Fairfax's ownership		Primary business
Other reporting segment
Hamblin Watsa Investment Counsel Ltd. (Hamblin Watsa)		Canada	100.0%		Investment management
Fairfax Africa Holdings Corporation (Fairfax Africa)		Canada	64.2%	(1)	Invests in public and private African businesses
Grivalia Properties Real Estate Investment Company S.A. (Grivalia Properties)		Greece	52.7%		Real Estate investment company
Mosaic Capital Corporation (Mosaic Capital)		Canada	—	(2)	Invests in private Canadian businesses
Pethealth Inc. (Pethealth)		Canada	100.0%		Pet medical insurance and database services
Boat Rocker Media Inc. (Boat Rocker)		Canada	58.2%		Development, production, marketing and distribution of television programs
Restaurants and Retail
Cara Operations Limited (Cara) which owns:		Canada	40.2%	(1)	Franchisor, owner and operator of restaurants
	100.0% of Groupe St-Hubert Inc. (St-Hubert)	Canada	40.2%		Full-service restaurant operator and a fully integrated food manufacturer
	89.2% of Original Joe's Franchise Group Inc. (Original Joe's)	Canada	35.9%		Multi-brand restaurant owner and operator
	100.0% of Pickle Barrel Restaurants Inc. (Pickle Barrel)	Canada	40.2%		Owner and operator of restaurants and catering business
Keg Restaurants Ltd. (The Keg)		Canada	51.0%		Owner and operator of premium dining restaurants
Praktiker Hellas Commercial Societe Anonyme (Praktiker)		Greece	100.0%		Retailer of home improvement goods
Sporting Life Inc. (Sporting Life)		Canada	75.0%		Retailer of sporting goods and sports apparel
William Ashley China Corporation (William Ashley)		Canada	100.0%		Retailer of tableware and gifts
Golf Town Limited (Golf Town)		Canada	60.0%	(3)	Retailer of golf equipment, consumables, athletic apparel and accessories
India focused
Fairfax India Holdings Limited (Fairfax India) which owns:		Canada	30.2%	(1)	Invests in public and private Indian businesses
	89.5% of National Collateral Management Services Limited (NCML)	India	27.0%		Provider of agricultural commodities storage
	48.7% of Fairchem Specialty Limited (Fairchem)	India	14.7%		Manufacturer, supplier and exporter of aroma chemicals
	51.0% of Saurashtra Freight Private Limited (Saurashtra Freight)	India	15.4%		Container freight station operator
Thomas Cook (India) Limited (Thomas Cook India) which owns:		India	67.6%		Provider of integrated travel and travel-related financial services
	49.0% of Quess Corp Limited (Quess)	India	33.1%		Provider of staffing and facilities management services
	100.0% of Sterling Holiday Resorts Limited (Sterling Resorts)	India	67.6%		Owner and operator of holiday resorts

(1)

The company holds multiple voting shares that give it voting rights of 56.7% in Cara, 98.8% in Fairfax Africa and 93.6% in Fairfax India.

(2)

The company holds Mosaic Capital warrants representing a potential voting interest of approximately 62%.

(3)

The company holds 100% of the voting rights in Golf Town.

121

QuickLinks

Exhibit 99.2

Consolidated Financial Statements

EX-99.3

QuickLinks -- Click here to rapidly navigate through this document

Exhibit 99.3

Management's Discussion and Analysis of Financial Condition and Results of Operations
(as of March 9, 2018)

(Figures and amounts are in US$ and $ millions except per share amounts and as otherwise indicated. Figures may not add due to rounding.)

Notes to Management's Discussion and Analysis of Financial Condition and Results of Operations

(1)

Readers of the Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should review the entire Annual Report for additional commentary and information. Additional information relating to the company, including its annual information form, can be found on SEDAR at www.sedar.com. Additional information can also be accessed from the company's website www.fairfax.ca.



(2)

Management analyzes and assesses the underlying insurance, reinsurance and run-off operations and the financial position of the consolidated group in various ways. Certain of the measures and ratios provided in this Annual Report, which have been used historically and disclosed regularly in Fairfax's Annual Reports and interim financial reporting, do not have a prescribed meaning under IFRS and may not be comparable to similar measures presented by other companies.



(3)

The company presents information on gross premiums written and net premiums written throughout this MD&A. These two measures are used in the insurance industry and by management in evaluating operating results. Gross premiums written represents the total premiums on policies issued during a specified period, irrespective of the portion earned, and is an indicator of the volume of new business generated by the company. Net premiums written represents gross premiums written less amounts ceded to reinsurers and is considered a measure of the insurance risk that the company has chosen to retain from the new business it has generated.



(4)

The combined ratio is the traditional performance measure of underwriting results of property and casualty companies and is calculated by the company as the sum of the loss ratio (claims losses and loss adjustment expenses expressed as a percentage of net premiums earned) and the expense ratio (commissions, premium acquisition costs and other underwriting expenses expressed as a percentage of net premiums earned). Other ratios used by the company include the commission expense ratio (commissions expressed as a percentage of net premiums earned) and the accident year combined ratio (calculated in the same manner as the combined ratio but excluding the net favourable or adverse development of reserves established for claims that occurred in previous accident years). These ratios are calculated from information disclosed in note 25 (Segmented Information) to the consolidated financial statements for the year ended December 31, 2017 and are used by management for comparisons to historical underwriting results and to the underwriting results of competitors and the broader property and casualty industry.



(5)

The company's long equity total return swaps allow the company to receive the total return on a notional amount of an equity index or individual equity instrument (including dividends and capital gains or losses) in exchange for the payment of a floating rate of interest on the notional amount. Conversely, short equity total return swaps allow the company to pay the total return on a notional amount of an equity index or individual equity instrument in exchange for the receipt of a floating rate of interest on the notional amount. Throughout this MD&A, the term "total return swap expense" refers to the net dividends and interest paid or received related to the company's long and short equity and equity index total return swaps. The company's consolidated interest and dividend income is shown net of total return swap expense.



(6)

The measures "pre-tax income before net gains (losses) on investments", "net realized gains (losses) on investments", and "net change in unrealized gains (losses) on investments" are each shown separately in this MD&A to present more meaningfully the results of the company's investment management strategies. The two measures "net realized gains (losses) on investments", and "net change in unrealized gains (losses) on investments" are derived from the details of net gains (losses) on investments as presented in note 5 (Cash and Investments) to the consolidated financial statements for the year ended December 31, 2017, and their sum is equal to "net gains (losses) on investments" as presented in the consolidated statement of earnings.



(7)

In this MD&A the term "equity hedges" refers to equity and equity-related short positions held in the company's investment portfolio as part of the company's economic hedging strategy that was discontinued

123

in the fourth quarter of 2016; the term "short equity exposures" refers to equity and equity-related short positions held for investment purposes since discontinuing the economic hedging strategy.

(8)

Ratios included in the Capital Resources and Management section of this MD&A include: net debt divided by total equity, net debt divided by net total capital and total debt divided by total capital. Those performance measures are used by the company to assess the amount of leverage employed in its operations. The company also calculates an interest coverage ratio and an interest and preferred share dividend distribution coverage ratio as measures of its ability to service its debt and pay dividends to its preferred shareholders. These ratios are calculated using amounts presented in the company's consolidated financial statements for the year ended December 31, 2017 and are explained in detail in note 24 (Financial Risk Management, under the heading of Capital Management).



(9)

Average annual return on average equity is a performance measure calculated for a reporting segment as the cumulative net earnings for a specified period of time expressed as a percentage of average equity over the same period, using net earnings and equity amounts from segment operating results and segment balance sheets respectively.



(10)

Book value per basic share (also referred to as book value per share) is a performance measure calculated by the company as common shareholders' equity divided by the number of common shares outstanding.



(11)

Intercompany shareholdings of insurance and reinsurance affiliates are presented as "Investments in Fairfax insurance and reinsurance affiliates" and intercompany shareholdings of non-insurance affiliates are presented within "Portfolio investments" on the segmented balance sheets and carried at cost. Total intercompany shareholdings are presented as "Investments in Fairfax affiliates" within the "Capital" section of the segmented balance sheets.



(12)

References in this MD&A to the company's insurance and reinsurance operations do not include its run-off operations.

Overview of Consolidated Performance

The insurance and reinsurance operations produced an underwriting loss of $641.5 and a combined ratio of 106.6% in 2017 compared to an underwriting profit of $575.9 and a combined ratio of 92.5% in 2016. The underwriting loss in 2017 principally reflected the impact of higher current period catastrophe losses, lower net favourable prior year reserve development and an increase in non-catastrophe loss experience related to the current accident year. The insurance and reinsurance operations reported an operating loss (excluding net gains (losses) on investments) of $215.7 in 2017 compared to operating income of $1,039.2 in 2016 primarily as a result of the underwriting loss incurred in 2017, and lower share of profit of associates. Net premiums written by the insurance and reinsurance operations increased by 26.2% in 2017, principally reflecting the acquisition of Allied World on July 6, 2017, increased business volumes at OdysseyRe, and the consolidation of full year results for acquisitions made in 2016 (primarily Bryte Insurance, AMAG and Fairfirst Insurance).

Net investment gains of $1,467.5 in 2017 (compared to net investment losses of $1,203.6 in 2016) were principally due to the gain on the company's reduction of its equity accounted interest in ICICI Lombard, and net gains on net equity exposure, partially offset by net losses on CPI-linked derivatives and U.S. treasury bond forward contracts that reduce exposure to interest rate risk. Interest and dividends increased to $559.0 in 2017 from $555.2 in 2016, primarily reflecting lower total return swap expense, the consolidation of Allied World's interest and dividends of ($65.9) and increased interest income earned on cash equivalents and short term investments, partially offset by lower interest income earned as a result of sales of U.S. treasury and municipal bonds late in 2016 and in the first quarter of 2017. At December 31, 2017 subsidiary cash and short term investments of $17,545.0 (excluding Fairfax India and Fairfax Africa) accounted for 47.5% of portfolio investments.

Net earnings of $1,740.6 in 2017 (compared to a net loss of $512.5 in 2016) primarily reflected net investment gains (compared to net investment losses in 2016), a gain on the sale of the company's 97.7% interest in First Capital, and an increase in share of profit of associates, partially offset by underwriting losses due to current period catastrophe losses and an increased provision for income taxes primarily due to the impact of U.S. tax reform. The company's consolidated total debt to total capital ratio decreased to 25.8% at December 31, 2017 from 28.7% at December 31, 2016 primarily as a result of increased total capital, partially offset by increased total debt. The increase in total capital primarily reflected increases in common shareholders' equity (principally from the issuance of 5,075,894 subordinate voting shares pursuant to the acquisition of Allied World), non-controlling interests

124

(principally from consolidating Allied World, Grivalia Properties and Fairfax Africa) and total debt (principally from consolidating the borrowings of Allied World, Grivalia Properties and Fairfax Africa, and increased borrowings by Fairfax India). Common shareholders' equity increased to $12,475.6 ($449.55 per basic share) at December 31, 2017 from $8,484.6 ($367.40 per basic share) at December 31, 2016 (an increase of 24.7%, adjusted for the $10.00 per common share dividend paid in the first quarter of 2017).

Maintaining its emphasis on financial soundness, the company held $2,368.4 of cash and investments at the holding company level ($2,356.9 net of $11.5 of holding company short sale and derivative obligations) at December 31, 2017 compared to $1,371.6 ($1,329.4 net of $42.2 of holding company short sale and derivative obligations) at December 31, 2016.

Business Developments

Acquisitions and Divestitures

The following narrative sets out the company's key business developments in 2017 and 2016 by reporting segment. Unless indicated otherwise, all completed acquisitions described in the following paragraphs resulted in a 100% ownership interest in the acquiree. For further details about these acquisitions and transactions (including definitions of terms set out in italics), refer to note 23 (Acquisitions and Divestitures) to the consolidated financial statements for the year ended December 31, 2017 or the Components of Net Earnings section of this MD&A under the relevant reporting segment heading.

Crum & Forster

On October 4, 2016 Crum & Forster acquired Trinity, which focuses on occupational accident insurance and produces approximately $26 of gross premiums written annually.

Allied World

On July 6, 2017 the company acquired 94.6% of Allied World AG. Contemporaneously with the closing of the acquisition of Allied World AG, OMERS, AIMCo and certain other third parties ("the co-investors") invested funds for an indirect equity interest in Allied World AG. The remaining 5.4% of Allied World AG was acquired on August 17, 2017 in a merger transaction under Swiss law pursuant to which Allied World became the surviving entity. This merger resulted in the co-investors holding an indirect ownership in Allied World of 32.6%. Allied World is a global property, casualty and specialty insurer and reinsurer with gross written premiums of approximately $3.1 billion in 2017 (inclusive of gross written premiums prior to the acquisition by Fairfax).

Fairfax Asia

On December 28, 2017 the company completed the sale of its 97.7% interest in First Capital to Mitsui Sumitomo.

On August 30, 2017 Pacific Insurance acquired Prudential Assurance Malaysia, a general insurer in Malaysia.

On July 6, 2017 the company sold a 12.2% equity interest in ICICI Lombard to private equity investors. On September 19, 2017 the company sold an additional 12.1% equity interest through participation in ICICI Lombard's initial public offering. The company's remaining 9.9% equity interest in ICICI Lombard was reclassified from the equity method of accounting to common stock at FVTPL (fair value of $549.0 at December 31, 2017). On March 31, 2016 the company increased its ownership interest in ICICI Lombard to 34.6% by acquiring an additional 9.0% of ICICI Lombard from ICICI Bank.

On October 10, 2016 the company acquired an 80.0% interest in AMAG, an established general insurer in Indonesia. On December 31, 2016 Fairfax Indonesia was merged into AMAG.

On October 3, 2016 Union Assurance acquired Fairfirst Insurance, a general insurer in Sri Lanka. On February 28, 2017 Union Assurance was merged into Fairfirst Insurance.

Insurance and Reinsurance – Other

During 2017 the company completed the acquisition of the business and renewal rights of the insurance operations of AIG in Hungary, Czech Republic and Slovakia (effective from April 30, 2017), Turkey (on May 2, 2017 and sold to Gulf Insurance on the same day), Bulgaria (effective from May 31, 2017), Poland (effective from June 30, 2017) and

125

Romania (effective October 31, 2017). Further, the company completed the acquisition of the insurance operations of AIG in Chile and Colombia (effective from July 31, 2017), Argentina (effective from September 30, 2017) and Uruguay (effective January 31, 2018).

On December 7, 2016 the company acquired Bryte Insurance, a property and casualty insurer in South Africa and Botswana.

Other

Subsequent to December 31, 2017

On March 9, 2018 the company received a performance fee of $114.4 for the period January 30, 2015 to December 31, 2017 in the form of 7,663,685 newly issued Fairfax India subordinate voting shares, which increased the company's equity interest in Fairfax India to 33.6% from 30.2% at December 31, 2017.

On March 7, 2018 the company acquired the services business of Carillion, an infrastructure services company.

On February 22, 2018 the company sold its 51.0% ownership interest in The Keg to Cara for consideration of $74.6 (Cdn$94.7), comprised of cash consideration of $7.9 (Cdn$10.0) and 3,400,000 Cara subordinate voting shares. The transaction increased the company's equity interest in Cara to 43.2% from 40.2% at December 31, 2017.

On February 20, 2018 Fairfax India entered into an agreement to acquire a 51.0% equity interest in The Catholic Syrian Bank Ltd. ("CS Bank") for approximately $186 (12.1 billion Indian rupees). CS Bank, headquartered in Thrissur, Kerala, offers banking services across India.

Years ended December 31, 2017 and 2016

On December 27, 2017 Quess acquired the facility management and catering business of Manipal primarily through issuance of Quess common shares to Manipal shareholders and the reinvestment of Quess' existing holdings of Manipal preferred shares upon cancellation of those shares. In November of 2017 Thomas Cook India sold a 5.4% interest in Quess. On August 18, 2017 Quess completed a private placement of common shares with institutional investors. These transactions collectively reduced the company's indirect ownership of Quess from 42.1% to 33.1%.

On December 1, 2017 Cara acquired Pickle Barrel, which operates restaurants and provides catering services in the province of Ontario, Canada.

On July 4, 2017 the company acquired control of Grivalia Properties by increasing its equity interest to 52.6% through the purchase of an additional 10.3% equity interest from Eurobank Ergasias S.A. Accordingly, the company re-measured its equity accounted carrying value of Grivalia Properties to fair value and commenced consolidating Grivalia Properties.

On March 14, 2017 Fairchem and Privi Organics completed their previously announced merger, with the merged entity continuing under the Fairchem name. Subsequent to the merger, Fairfax India, which had acquired a 44.7% interest in Fairchem on February 8, 2016 and a 50.8% interest in Privi Organics on August 26, 2016, became the dominant shareholder in Fairchem with a 48.7% interest. Privi Organics is a supplier of aroma chemicals to the fragrances industry and Fairchem is a specialty chemical manufacturer of oleochemicals used in the paints, inks and adhesives industries, as well as intermediate nutraceutical and health products.

On February 17, 2017 the company acquired 98.8% of the voting rights and 64.2% of the equity interest in Fairfax Africa, which was established, with the support of Fairfax, to invest in public and private equity and debt instruments of African businesses or other businesses with customers, suppliers or business primarily conducted in, or dependent on, Africa.

On February 14, 2017 Fairfax India acquired a 51.0% interest in Saurashtra Freight, which operates a container freight station at the Mundra Port in the Indian state of Gujarat.

On January 26, 2017 the company invested in securities of Mosaic Capital through purchases of 6.00% senior preferred securities, 5.00% senior secured debentures and warrants entitling the company to acquire up to 17,026,106 common shares of Mosaic Capital at any time until January 26, 2024. The company's investment in Mosaic Capital warrants represents a potential voting interest of approximately 62%.

On January 13, 2017 the company acquired an additional 12,340,500 subordinate voting shares of Fairfax India for $145.0 in a private placement.

126

On November 28, 2016 Cara acquired an 89.2% interest in Original Joe's, a Canadian multi-brand restaurant company. On September 2, 2016 Cara acquired St-Hubert, a Canadian full-service restaurant operator and fully integrated food manufacturer.

On October 31, 2016 the company acquired a 60.0% indirect interest in Golf Town, a Canadian specialty retailer of golf equipment, consumables, golf apparel and accessories.

Operating Environment

Insurance Environment

The property and casualty insurance and reinsurance industry is expected to report a moderate underwriting loss in 2017 driven by an active Atlantic hurricane season and wildfire activity on the U.S. west coast. This marks the first year of deteriorating underwriting results relative to the past several years, reflecting the above average catastrophe losses and the expectation that the benefit from prior year reserve releases may diminish somewhat, combined with the challenging market conditions that persist across many lines of business. The industry continues to feel the effects of low interest rates that negatively affect operating income, although investments results have been bolstered by strong equity markets throughout 2017. Despite interest rates having increased recently, the interest rates that currently prevail for reinvestment are still lower than those on maturing fixed income securities, with the gap narrowing as the 10-year anniversary of the financial crisis approaches. Strong performance in the equity markets, partially offset by the impact of underwriting losses, is expected to contribute to low single digit growth in capital for the industry. Insurance pricing on property and casualty lines of business shows signs of firming as catastrophe losses have focused attention on pricing across all segments, some of which were being subsidized by property lines of business that were benefiting from lower than average catastrophe losses in recent years.

The reinsurance sector remains well capitalized despite the significant catastrophe losses in 2017. Pricing on many reinsurance lines remains attractive: property catastrophe-exposed business has experienced significant rate increases for loss affected lines of business with non-loss affected lines of business experiencing low single digit price increases and non-catastrophe property and casualty reinsurance business experiencing flat or nominal price increases after several years of price decreases.

127

Sources of Revenue

Revenue for the most recent three years is shown in the table that follows.

		2017	2016		2015
Net premiums earned – Insurance and Reinsurance
	Northbridge	1,019.7	908.8		874.7
	OdysseyRe	2,333.4	2,074.1		2,204.1
	Crum & Forster	1,852.8	1,769.5		1,522.0
	Zenith National	811.6	807.3		766.4
	Brit	1,536.9	1,399.3		892.5
	Allied World(1)	1,028.7	–		–
	Fairfax Asia	327.6	302.5		287.0
	Other	790.6	437.2		442.7
Run-off		20.1	163.5		381.6
		9,721.4	7,862.2		7,371.0
Interest and dividends		559.0	555.2		512.2
Share of profit of associates		200.5	24.2		172.9
Net gains (losses) on investments		1,467.5	(1,203.6	)	(259.2	)
Gain on sale of subsidiary		1,018.6	–		–
Other revenue(2)		3,257.6	2,061.6		1,783.5
		16,224.6	9,299.6		9,580.4

(1)

Allied World is included in the company's financial reporting with effect from July 6, 2017.

(2)

Other revenue comprises the revenue earned by the Other reporting segment, which primarily comprises the revenue earned by William Ashley, Sporting Life, Praktiker, The Keg, Thomas Cook India and its subsidiaries Quess and Sterling Resorts, Pethealth, Cara and its subsidiaries St-Hubert (acquired on September 2, 2016), Original Joe's (acquired on November 28, 2016) and Pickle Barrel (acquired on December 1, 2017), Boat Rocker, Golf Town (acquired on October 31, 2016), Mosaic Capital (consolidated on January 26, 2017), Grivalia Properties (consolidated on July 4, 2017), Fairfax Africa (since its initial public offering on February 17, 2017), and Fairfax India and its subsidiaries NCML, Fairchem (merged on March 14, 2017 with Privi Organics (acquired on August 26, 2016)) and Saurashtra Freight (acquired on February 14, 2017).

The increase in revenue to $16,224.6 in 2017 from $9,299.6 in 2016 principally reflected increased net gains on investments, a gain of $1,018.6 on the sale of the company's 97.7% interest in First Capital, higher net premiums earned (including the consolidation of the net premiums earned of Allied World of $1,028.7), higher other revenue and increased share of profit of associates. The increase in net gains on investments principally reflected the net gain of $930.1 related to the reduction in the company's shareholding in ICICI Lombard in 2017, higher net gains on common stocks and lower net losses on short equity exposures and equity hedges, partially offset by higher net losses on U.S. treasury bond forward contracts. Interest and dividends increased modestly to $559.0 in 2017 from $555.2 in 2016, primarily reflecting lower total return swap expense, the consolidation of the interest and dividends of Allied World ($65.9) and increased interest income earned on cash equivalents and short term investments, partially offset by lower interest income earned as a result of sales of U.S. treasury and municipal bonds late in 2016 and in the first quarter of 2017. Share of profit of associates of $200.5 in 2017 increased from $24.2 in 2016, primarily due to an increase at Eurolife in 2017 and a non-cash impairment charge of $100.4 recognized on Resolute in 2016.

The increase in net premiums earned by the company's insurance and reinsurance operations in 2017 reflected the consolidation of the net premiums earned by Allied World ($1,028.7), increases at Insurance and Reinsurance – Other ($353.4, 80.8% inclusive of the consolidation of the $241.1, $68.5 and $23.7 of net premiums earned by Bryte Insurance, Fairfax Latam and Colonnade Insurance related to the AIG branches in Central and Eastern Europe respectively), OdysseyRe ($259.3, 12.5%), Brit ($137.6, 9.8%), Northbridge ($110.9, 12.2% including the favourable effect of foreign currency translation), Crum & Forster ($83.3, 4.7%), Fairfax Asia ($25.1, 8.3% including the consolidation of year-over-year increases of $34.4 and $8.6 of net premiums earned by AMAG and Fairfirst Insurance) and Zenith National ($4.3, 0.5%). Net premiums earned at Run-off in 2016 principally reflected the

128

impacts of the second quarter 2016 construction defect reinsurance transaction and the habitational casualty reinsurance transaction.

The decrease in revenue to $9,299.6 in 2016 from $9,580.4 in 2015 principally reflected increased net losses on investments and lower share of profit of associates, partially offset by higher net premiums earned, increased other revenue and higher interest and dividends. The increase in net losses on investments principally reflected net losses on equity and equity-related holdings after equity hedges (primarily realized losses) and CPI-linked derivatives, partially offset by net gains on bonds. Interest and dividends increased to $555.2 in 2016 from $512.2 in 2015 reflecting higher interest earned (primarily due to increased holdings of higher yielding government and corporate bonds for most of 2016, partially offset by lower holdings of U.S. state and municipal bonds), lower total return swap expense and lower interest on funds withheld expense. Share of profit of associates decreased to $24.2 in 2016 from $172.9 in 2015 primarily reflecting a non-cash impairment charge of $100.4 recognized on Resolute and lower share of profit from the KWF LPs (a Kennedy Wilson real estate partnership recognized a significant gain on disposition of its investment properties in 2015), partially offset by a higher share of profit of ICICI Lombard.

The increase in net premiums earned by the company's insurance and reinsurance operations in 2016 compared to 2015 reflected the consolidation of a full year of net premiums earned by Brit ($506.8 incremental increase year-over-year), increases at Crum & Forster ($247.5, 16.3%), Zenith National ($40.9, 5.3%), Northbridge ($34.1, 3.9% including the unfavourable effect of foreign currency translation) and Fairfax Asia ($15.5, 5.4%), partially offset by decreases at OdysseyRe ($130.0, 5.9%) and Insurance and Reinsurance – Other ($5.5, 1.2%). The decrease in net premiums earned at Run-off in 2016 principally reflected the impact of two significant reinsurance transactions in 2016 compared to the completion of four significant reinsurance transactions in 2015.

In order to better compare 2017 to 2016, the table which follows presents net premiums written by the company's insurance and reinsurance operations excluding the impact of the acquisition of Allied World (acquired July 6, 2017) and other smaller acquisitions as described in the footnotes.

		2017	2016	% change year-over- year
Net premiums written
	Northbridge	1,064.9	942.6	13.0
	OdysseyRe	2,495.9	2,100.2	18.8
	Crum & Forster	1,863.4	1,801.1	3.5
	Zenith National	837.4	819.4	2.2
	Brit	1,530.9	1,480.2	3.4
	Fairfax Asia(1)	272.2	290.1	(6.2	)
	Other(2)	480.7	458.4	4.9
Insurance and reinsurance operations		8,545.4	7,892.0	8.3

(1)

Excludes AMAG (acquired October 10, 2016) and Fairfirst Insurance (acquired October 3, 2016).

(2)

Excludes Bryte Insurance (acquired December 7, 2016), Fairfax Latam (Chile and Colombia (effective from July 31, 2017) and Argentina (effective from September 30, 2017)) and the AIG branches in Central and Eastern Europe (Hungary, Czech Republic and Slovakia (effective from April 30, 2017), Bulgaria (effective from May 31, 2017), Poland (effective from June 30, 2017) and Romania (effective from October 31, 2017).

Northbridge's net premiums written increased by 13.0% in 2017 including the favourable effect of foreign currency translation. In Canadian dollar terms, Northbridge's net premiums written increased by 10.7% in 2017, primarily reflecting increased renewal and new business writings, and price increases across the group.

OdysseyRe's net premiums written increased by 18.8% in 2017, principally reflecting increases in the U.S. Insurance division (automobile, crop and liability package lines of business), North America division (property and casualty reinsurance lines of business), EuroAsia division (crop, commercial automobile and credit and bond reinsurance lines of business) and the London Market division (affinity and liability insurance lines of business).

129

Crum & Forster's net premiums written increased by 3.5% in 2017, principally reflecting growth in the accident and health and commercial transportation lines of business, partially offset by decreases in excess and surplus and marine lines of business.

Zenith National's net premiums written increased by 2.2% in 2017, primarily reflecting increased exposure, partially offset by price decreases.

Brit's net premiums written increased by 3.4% in 2017, principally reflecting better than expected development on 2016 and prior underwriting years, inwards reinstatement premiums following the current period catastrophe losses, increased contribution from initiatives launched in recent years and measured growth in core lines of business, partially offset by modest price decreases and reductions in other lines of business through active portfolio management, the unfavourable impact of foreign currency translation and the impact of additional reinsurance purchased.

Net premiums written by Fairfax Asia decreased by 6.2% in 2017, principally reflecting lower writings in the commercial automobile, property and marine lines of business and the impact of lower premium retention (primarily at First Capital).

Net premiums written by the Insurance and Reinsurance – Other reporting segment increased by 4.9% in 2017, principally reflecting increases at Fairfax CEE (primarily at Colonnade Insurance), Advent and Fairfax Brasil, partially offset by decreases at Group Re.

Net gains (losses) on investments in 2017 and 2016 were comprised as shown in the following table:

		2017		2016
	Common stocks	707.8		(78.0	)
	Preferred stocks – convertible	(1.6	)	(6.6	)
	Bonds – convertible	233.1		(39.4	)
	Gain on disposition of associates(1)	69.8		–
	Other equity derivatives(2)	57.9		19.3
Long equity exposures		1,067.0		(104.7	)
	Short equity exposures and equity hedges	(417.9	)	(1,192.9	)
Net equity exposure and financial effects		649.1		(1,297.6	)
	Bonds	44.9		322.7
	CPI-linked derivatives	(71.0	)	(196.2	)
	U.S. treasury bond forwards	(153.2	)	47.0
	Other derivatives	(0.3	)	(7.4	)
	Foreign currency	2.8		(129.5	)
	Gain on disposition of insurance and reinsurance associates(3)	930.1		–
	Other	65.1		57.4
Net gains (losses) on investments		1,467.5		(1,203.6	)
Net gains (losses) on bonds is comprised as follows:
	Government bonds	24.2		256.8
	U.S. states and municipalities	67.3		(29.5	)
	Corporate and other	(46.6	)	95.4
		44.9		322.7

(1)

During 2017 the company acquired control of Grivalia Properties by increasing its equity interest to 52.7% and commenced consolidating Grivalia Properties in the Other reporting segment. As a result, the company re-measured its equity accounted carrying value of Grivalia Properties to fair value and recorded a net realized gain of $51.3. Refer to note 6 (Investments in Associates) to the consolidated financial statements for the year ended December 31, 2017.

(2)

Other equity derivatives include long equity total return swaps, equity warrants and equity index call options.

(3)

During 2017 the company sold a 24.3% equity interest in ICICI Lombard for net proceeds of $908.5 and recorded a net realized gain of $595.6. The company's remaining 9.9% equity interest in ICICI Lombard was reclassified to common stock measured at FVTPL and re-measured to fair value for a net realized gain of $334.5. Refer to note 6 (Investments in Associates) to the consolidated financial statements for the year ended December 31, 2017.

130

The company discontinued its economic equity hedging strategy in the fourth quarter of 2016 after giving consideration to the possible and actual outcome of the U.S. elections and the potential for fundamental changes that could improve U.S. economic growth and equity markets. During 2016 the company closed out $6,350.6 notional amount of short positions effected through equity index total return swaps (comprised of Russell 2000, S&P 500 and S&P/TSX 60 short equity index total return swaps) and recognized a net loss on investment of $955.2 (realized loss of $2,665.4 of which $1,710.2 had been recognized as unrealized losses in prior years). The company continues to hold short equity and equity index total return swaps for investment purposes, but no longer regards them as hedges of its equity and equity-related holdings.

During 2017 the company closed out $1,202.9 notional amount of short equity total return swaps and recognized a net loss on investment of $237.9 (realized loss of $553.1 of which $315.2 was recognized as unrealized losses in prior years). In the first quarter of 2018 the company closed out an additional $481.3 notional amount of short equity and equity index total return swaps and recognized a net loss on investment of $8.1 (realized loss of $199.0 of which $190.9 was recognized as unrealized losses in prior years), which reduced the notional amount of remaining short equity and equity index total return swaps to approximately $509. Refer to note 24 (Financial Risk Management) under the heading Market Price Fluctuations in the company's consolidated financial statements for the year ended December 31, 2017 for a tabular analysis followed by a discussion of the net effect of the company's equity and equity-related holdings (long exposures net of short exposures) and to the tabular analysis in the Investments section of this MD&A for further details about the components of net gains (losses) on investments.

Net gains on bonds of $44.9 in 2017 were primarily comprised of net gains on U.S. treasury bonds ($52.8) and U.S. state and municipal bonds ($67.3), partially offset by losses on Indian government bonds ($40.5) and corporate and other bonds ($46.6).

The company's CPI-linked derivative contracts produced net unrealized losses of $71.0 and $196.2 in 2017 and 2016 respectively. Net unrealized losses on CPI-linked derivative contracts typically reflect the market's expectation of increases in the values of the CPI indexes underlying those contracts at their respective maturities during the periods presented (those contracts are structured to benefit the company during periods of decreasing CPI index values).

The increase in other revenue to $3,257.6 in 2017 from $2,061.6 in 2016 principally reflected increases at Cara (reflecting the inclusion of the full year revenue of St-Hubert and Original Joe's, and the consolidation of Pickle Barrel on December 1, 2017), Thomas Cook India (reflecting increased business volumes at Quess), Fairfax India (reflecting the consolidation of Fairchem on March 14, 2017, the inclusion of the full year revenue of Privi Organics and increased business volumes at NCML), Golf Town (reflecting the inclusion of the full year revenue), and the consolidation of Mosaic Capital (on January 26, 2017) and Grivalia Properties (on July 4, 2017).

Net Premiums Earned by Geographic Region

As presented in note 25 (Segmented Information) to the consolidated financial statements for the year ended December 31, 2017, the United States, Canada, International and Asia accounted for 63.2%, 12.3%, 16.0% and 8.5% respectively, of net premiums earned by geographic region in 2017, compared to 65.5%, 13.4%, 12.4% and 8.7% respectively, in 2016.

United States

Net premiums earned in the United States geographic region increased by 19.3% from $5,152.8 in 2016 to $6,148.7 in 2017 primarily reflecting the consolidation of Allied World ($773.7 for the period July 6, 2017 to December 31, 2017) and increases at OdysseyRe (growth in the property and casualty reinsurance segments and the commercial automobile, casualty and crop insurance segments), Brit (organic growth and new initiatives) and Crum & Forster (growth in accident and health and commercial transportation lines of business), partially offset by lower net premiums earned at Run-off reflecting non-recurring transactions in 2016 involving the reinsurance of third party runoff portfolios.

131

Canada

Net premiums earned in the Canada geographic region increased by 13.6% from $1,053.1 in 2016 to $1,196.8 in 2017 primarily reflecting increased net premiums earned at Northbridge (increased new business writings, modest price increases across the group and the favourable effect of the strengthening of the Canadian dollar relative to the U.S. dollar as measured by average annual rates of exchange) and the consolidation of Allied World ($20.5 for the period July 6, 2017 to December 31, 2017).

International

Net premiums earned in the International geographic region increased by 59.8% from $972.0 in 2016 to $1,553.2 in 2017 primarily reflecting the consolidation of Bryte Insurance ($241.1), Allied World ($146.3 for the period July 6, 2017 to December 31, 2017), and Fairfax Latam ($68.5), the impact of the expansion at Colonnade Insurance and modest increases in net premiums earned at Brit and OdysseyRe.

Asia

Net premiums earned in the Asia geographic region increased by 20.2% from $684.3 in 2016 to $822.7 in 2017 primarily as a result of the consolidation of Allied World ($88.2 for the period July 6, 2017 to December 31, 2017), year-over-year increases at AMAG and Fairfirst Insurance and modest increases in net premiums earned at Brit and OdysseyRe.

132

Sources of Net Earnings

The following table presents the combined ratios and underwriting and operating results for each of the insurance and reinsurance operations and, as applicable, for run-off operations, as well as the earnings contributions from the Other reporting segment for the years ended December 31, 2017, 2016 and 2015. In that table, interest and dividends and share of profit (loss) of associates are presented separately as they relate to the insurance and reinsurance reporting segments, and included in Run-off, Corporate overhead and other, and Other as they relate to those segments. Pre-tax income before net gains (losses) on investments, net realized gains (losses) on investments, pre-tax income (loss) including net realized gains (losses) on investments, and net change in unrealized gains (losses) on investments are each shown separately to present more meaningfully the results of the company's investment management strategies.

			2017			2016			2015
Combined ratios – Insurance and Reinsurance
		Northbridge		99.1	%		94.9	%		91.8	%
		OdysseyRe		97.4	%		88.7	%		84.7	%
		Crum & Forster		99.8	%		98.2	%		97.7	%
		Zenith National		85.6	%		79.7	%		82.5	%
		Brit		113.1	%		97.9	%		94.9	%
		Allied World(1)		157.0	%		–	%		–	%
		Fairfax Asia		88.4	%		86.4	%		87.9	%
		Other		110.2	%		93.7	%		89.6	%
Consolidated				106.6	%		92.5	%		89.9	%
Sources of net earnings
Underwriting – Insurance and Reinsurance
		Northbridge		9.0			46.3			71.4
		OdysseyRe		60.0			235.2			336.9
		Crum & Forster		3.2			32.4			35.4
		Zenith National		117.2			164.1			134.4
		Brit		(201.9	)		29.1			45.4
		Allied World(1)		(586.6	)		–			–
		Fairfax Asia		38.2			41.1			34.8
		Other		(80.6	)		27.7			46.2
Underwriting profit (loss) – Insurance and Reinsurance				(641.5	)		575.9			704.5
Interest and dividends – Insurance and Reinsurance				402.3			410.0			338.9
Share of profit of associates – Insurance and Reinsurance				23.5			53.3			138.1
Operating income (loss) – Insurance and Reinsurance				(215.7	)		1,039.2			1,181.5
Run-off (excluding net gains (losses) on investments)				(184.6	)		(149.4	)		(74.1	)
Other reporting segment (excluding net gains (losses) on investments)				212.1			133.5			127.8
Interest expense				(331.2	)		(242.8	)		(219.0	)
Corporate overhead and other				56.5			(131.2	)		(132.5	)
Gain on sale of subsidiary				1,018.6			–			–
Pre-tax income before net gains (losses) on investments				555.7			649.3			883.7
Net realized gains (losses) on investments				723.4			(2,071.4	)		1,176.4
Pre-tax income (loss) including net realized gains (losses) on investments				1,279.1			(1,422.1	)		2,060.1
Net change in unrealized gains (losses) on investments				744.1			867.8			(1,435.6	)
Pre-tax income (loss)				2,023.2			(554.3	)		624.5
Income taxes				(408.3	)		159.6			17.5
Net earnings (loss)				1,614.9			(394.7	)		642.0
Attributable to:
	Shareholders of Fairfax			1,740.6			(512.5	)		567.7
	Non-controlling interests			(125.7	)		117.8			74.3
				1,614.9			(394.7	)		642.0
Net earnings (loss) per share			$	66.74		$	(24.18	)	$	23.67
Net earnings (loss) per diluted share			$	64.98		$	(24.18	)	$	23.15
Cash dividends paid per share			$	10.00		$	10.00		$	10.00

(1)

Allied World is included in the company's financial reporting with effect from July 6, 2017.

133

The company's insurance and reinsurance operations produced an underwriting loss of $641.5 (combined ratio of 106.6%) in 2017 compared to an underwriting profit of $575.9 (combined ratio of 92.5%) in 2016. The increase in the combined ratio in 2017 principally reflected the impact of higher current period catastrophe losses, lower net favourable prior year reserve development and an increase in non-catastrophe loss experience related to the current accident year.

Net favourable prior year reserve development of $491.7 (5.1 combined ratio points) in 2017 decreased from $654.6 (8.5 combined ratio points) in 2016 and was comprised as follows:

		2017		2016
Insurance and Reinsurance
	Northbridge	(93.5	)	(112.8	)
	OdysseyRe	(288.1	)	(266.5	)
	Crum & Forster	(10.2	)	(8.3	)
	Zenith National	(76.4	)	(101.0	)
	Brit	(9.5	)	(53.5	)
	Allied World(1)	71.9		–
	Fairfax Asia	(52.3	)	(52.1	)
	Other	(33.6	)	(60.4	)
Net favourable development		(491.7	)	(654.6	)

(1)

Allied World is included in the company's financial reporting with effect from July 6, 2017.

Current period catastrophe losses of $1,330.4 (13.7 combined ratio points) in 2017 increased from $352.7 (4.6 combined ratio points) in 2016 and were comprised as follows:

	2017			2016
	Catastrophe losses(1)	Combined ratio impact		Catastrophe losses(1)	Combined ratio impact
Hurricane Irma	372.0	3.8		–	–
Hurricane Maria	281.7	2.9		–	–
Hurricane Harvey	252.4	2.6		–	–
California wildfires	185.4	1.9		–	–
Mexico earthquakes	24.1	0.2		–	–
Hurricane Matthew	–	–		67.9	0.9
Fort McMurray wildfires	–	–		61.8	0.8
Other	214.8	2.3		223.0	2.9
	1,330.4	13.7	points	352.7	4.6	points

(1)

Net of reinstatement premiums.

The following table presents the components of the company's combined ratios for the years ended December 31:

		2017		2016
Underwriting profit (loss) – Insurance and Reinsurance		(641.5	)	575.9
	Loss & LAE – accident year	77.4	%	66.7	%
	Commissions	16.9	%	17.3	%
	Underwriting expense	17.4	%	17.0	%
Combined ratio – accident year		111.7	%	101.0	%
	Net favourable development	(5.1	)%	(8.5	)%
Combined ratio – calendar year		106.6	%	92.5	%

134

The commission expense ratio decreased to 16.9% in 2017 from 17.3% in 2016, primarily reflecting the consolidation of Allied World (non-recurring acquisition accounting adjustments reduced net premiums earned and commission expense in the period July 6, 2017 to December 31, 2017 and resulted in a commission expense ratio that was generally lower than Fairfax's other operating companies), partially offset by an increased commission expense ratio at Brit (primarily the impacts of non-recurring acquisition accounting adjustments which reduced net premiums earned and commission expense in 2016, partially offset by changes in the mix of business written, reinsurance purchased and higher net premiums earned in 2017).

The underwriting expense ratio increased to 17.4% in 2017 from 17.0% in 2016, primarily reflecting the consolidation of Allied World (Allied World's underwriting expense ratio of 21.1% for the period July 6, 2017 to December 31, 2017 was generally higher than Fairfax's other operating companies), partially offset by increased net premiums earned relative to underwriting expenses at OdysseyRe and Northbridge.

Underwriting expenses increased by 4.8% in 2017 (excluding the combined underwriting expenses of $310.2 of Allied World, Bryte Insurance and Fairfax Latam in 2017), primarily reflecting increases at Crum & Forster (primarily due to increased compensation costs related to new underwriting initiatives), Colonnade Insurance (primarily reflecting its start-up costs), Zenith National (primarily reflecting higher underwriting expenses attributable to ongoing investment in personnel) and Fairfax Asia (primarily reflecting the year-over-year impact of the consolidation of the underwriting expenses of AMAG and Fairfirst Insurance and increased compensation costs), partially offset by a decrease at Brit (primarily reflecting the favourable effect of foreign currency translation and increased fee income earned from the management of third party underwriting capital)

Operating expenses in the consolidated statements of earnings include only the operating expenses of the company's insurance and reinsurance and run-off operations and corporate overhead. Operating expenses increased to $2,049.5 in 2017 from $1,597.7 in 2016 primarily as a result of increased underwriting expenses of the insurance and reinsurance operations as described in the preceding paragraph and increased Fairfax and subsidiary holding companies' corporate overhead, partially offset by lower operating expenses at Run-off.

Other expenses increased to $3,024.6 in 2017 from $1,958.4 in 2016 primarily as a result of increases at Cara (reflecting the inclusion of the full year expenses of St-Hubert and Original Joe's, and the consolidation of Pickle Barrel on December 1, 2017), Thomas Cook India (reflecting increased business volumes at Quess), Fairfax India (reflecting the consolidation of Fairchem on March 14, 2017, the inclusion of the full year expenses of Privi Organics and increased business volume at NCML) and Golf Town (reflecting the inclusion of the full year expenses), and the consolidation of Mosaic Capital (on January 26, 2017) and Grivalia Properties (on July 4, 2017).

The company reported net earnings attributable to shareholders of Fairfax of $1,740.6 (net earnings of $66.74 per basic share and$64.98 per diluted share) in 2017 compared to a net loss attributable to shareholders of Fairfax of $512.5 (net loss of $24.18 per basic and diluted share) in 2016. The year-over-year increase in profitability primarily reflected increased net gains on investments and the gain on the sale of the company's 97.7% interest in First Capital, partially offset by a decrease in underwriting profit and increased provision for income taxes.

Common shareholders' equity increased from $8,484.6 at December 31, 2016 to $12,475.6 at December 31, 2017, primarily reflecting the issuance of 5,075,894 shares with a fair value of $2,191.6 pursuant to the acquisition of Allied World, net earnings attributable to shareholders of Fairfax of $1,740.6 and other comprehensive income of $283.8 (comprised of net unrealized foreign currency translation gains on foreign operations of $200.4 and the company's share of other comprehensive income of associates of $114.3, partially offset by net losses on defined benefit plans of $30.9), partially offset by dividends paid of $282.0 on the company's common and preferred shares. Common shareholders' equity per basic share at December 31, 2017 was $449.55 compared to $367.40 per basic share at December 31, 2016, representing an increase of 22.4% (without adjustment for the $10.00 per common share dividend paid in the first quarter of 2017, or an increase of 24.7% adjusted to include that dividend).

135

Net Earnings by Reporting Segment

The company's sources of net earnings (loss) shown by reporting segment are set out below for the years ended December 31, 2017 and 2016. The intercompany adjustment for gross premiums written eliminates premiums on reinsurance ceded within the group, primarily to OdysseyRe and Group Re.

Year ended December 31, 2017

		Insurance and Reinsurance
																										Eliminations and adjustments
		Northbridge		OdysseyRe		Crum & Forster		Zenith National		Brit		Allied World(1)		Fairfax Asia		Other		Operating companies		Run-off		Other		Corporate and Other				Consolidated
Gross premiums written		1,187.0		2,783.1		2,174.5		849.0		2,057.0		1,447.6		670.4		1,244.3		12,412.9		8.4		–		–		(213.8	)	12,207.5
Net premiums written		1,064.9		2,495.9		1,863.4		837.4		1,530.9		991.9		327.5		863.3		9,975.2		8.3		–		–		–		9,983.5
Net premiums earned		1,019.7		2,333.4		1,852.8		811.6		1,536.9		1,028.7		327.6		790.6		9,701.3		20.1		–		–		–		9,721.4
Underwriting profit (loss)		9.0		60.0		3.2		117.2		(201.9	)	(586.6	)	38.2		(80.6	)	(641.5	)	(207.4	)	–		–		–		(848.9	)
Interest and dividends		54.1		124.9		33.8		23.4		32.6		65.9		29.1		38.5		402.3		28.9		(104.9	)	(4.1	)	236.8		559.0
Share of profit (loss) of associates		3.2		7.2		(1.1	)	(9.8	)	9.2		(17.6	)	29.4		3.0		23.5		(6.1	)	55.4		127.7		–		200.5
Operating income (loss)		66.3		192.1		35.9		130.8		(160.1	)	(538.3	)	96.7		(39.1	)	(215.7	)	(184.6	)	(49.5	)	123.6		236.8		(89.4	)
Net gains (losses) on investments		44.8		253.1		27.9		26.6		79.0		(26.5	)	1,083.9		69.5		1,558.3		73.3		7.2		(171.3	)	–		1,467.5
Gain on sale of subsidiary		–		–		–		–		–		–		1,018.6		–		1,018.6		–		–		–		–		1,018.6
Other reporting segment		–		–		–		–		–		–		–		–		–		–		261.6		–		–		261.6
Interest expense		–		(3.3	)	(1.8	)	(3.3	)	(12.5	)	(15.6	)	–		(4.8	)	(41.3	)	–		(65.8	)	(224.1	)	–		(331.2	)
Corporate overhead and other		(8.7	)	(27.4	)	(25.4	)	(8.2	)	(9.2	)	(27.9	)	(2.6	)	(22.2	)	(131.6	)	–		–		64.5		(236.8	)	(303.9	)
Pre-tax income (loss)		102.4		414.5		36.6		145.9		(102.8	)	(608.3	)	2,196.6		3.4		2,188.3		(111.3	)	153.5		(207.3	)	–		2,023.2
Income taxes																												(408.3	)
Net earnings																												1,614.9
Attributable to:
	Shareholders of Fairfax																											1,740.6
	Non-controlling interests																											(125.7	)
																												1,614.9

Year ended December 31, 2016

		Insurance and Reinsurance
																									Eliminations and adjustments
		Northbridge		OdysseyRe		Crum & Forster		Zenith National		Brit		Allied World(1)	Fairfax Asia		Other		Operating companies		Run-off		Other		Corporate and Other				Consolidated
Gross premiums written		1,055.1		2,380.7		2,055.0		831.7		1,912.2		–	648.7		643.3		9,526.7		183.9		–		–		(176.3	)	9,534.3
Net premiums written		942.6		2,100.2		1,801.1		819.4		1,480.2		–	303.1		458.4		7,905.0		183.4		–		–		–		8,088.4
Net premiums earned		908.8		2,074.1		1,769.5		807.3		1,399.3		–	302.5		437.2		7,698.7		163.5		–		–		–		7,862.2
Underwriting profit (loss)		46.3		235.2		32.4		164.1		29.1		–	41.1		27.7		575.9		(185.1	)	–		–		–		390.8
Interest and dividends		52.2		153.7		65.8		29.6		55.4		–	26.7		26.6		410.0		51.2		16.7		(11.5	)	88.8		555.2
Share of profit (loss) of associates		5.2		17.3		(22.6	)	1.2		3.4		–	48.1		0.7		53.3		(15.5	)	13.6		(27.2	)	–		24.2
Operating income (loss)		103.7		406.2		75.6		194.9		87.9		–	115.9		55.0		1,039.2		(149.4	)	30.3		(38.7	)	88.8		970.2
Net gains (losses) on investments		(161.3	)	(318.7	)	(184.7	)	(168.2	)	87.3		–	(1.7	)	(90.0	)	(837.3	)	(225.2	)	30.1		(171.2	)	–		(1,203.6	)
Other reporting segment		–		–		–		–		–		–	–		–		–		–		103.2		–		–		103.2
Interest expense		–		(2.8	)	(1.6	)	(3.3	)	(14.2	)	–	–		(4.2	)	(26.1	)	–		(28.3	)	(188.4	)	–		(242.8	)
Corporate overhead and other		(6.6	)	(30.2	)	(20.4	)	(8.4	)	(9.2	)	–	(0.1	)	–		(74.9	)	–		–		(17.6	)	(88.8	)	(181.3	)
Pre-tax income (loss)		(64.2	)	54.5		(131.1	)	15.0		151.8		–	114.1		(39.2	)	100.9		(374.6	)	135.3		(415.9	)	–		(554.3	)
Income taxes																											159.6
Net loss																											(394.7	)
Attributable to:
	Shareholders of Fairfax																										(512.5	)
	Non-controlling interests																										117.8
																											(394.7	)

(1)

Allied World is included in the company's financial reporting with effect from July 6, 2017.

136

Balance Sheets by Reporting Segment

The company's segmented balance sheets as at December 31, 2017 and 2016 present the assets and liabilities of, and the capital invested by the company in, each of the company's reporting segments. The segmented balance sheets have been prepared on the following basis:

(a)

The balance sheet for each reporting segment is on a legal entity basis for the subsidiaries within that segment, in accordance with Fairfax's IFRS accounting policies and includes, where applicable, acquisition accounting adjustments principally related to goodwill and intangible assets which arose on initial acquisition of the subsidiaries or on a subsequent step acquisition.



(b)

Certain of the company's subsidiaries held ownership interests in other Fairfax subsidiaries ("Fairfax affiliates") at December 31, 2017. These investments in Fairfax affiliates are carried at cost and are disclosed in the table below. Affiliated insurance and reinsurance balances, including premiums receivable (included in insurance contracts receivable), deferred premium acquisition costs, recoverable from reinsurers, funds withheld payable to reinsurers, provision for losses and loss adjustment expenses and provision for unearned premiums, are not shown separately but are eliminated in Corporate and Other.



(c)

Corporate and Other includes the Fairfax holding company and its subsidiary intermediate holding companies as well as the consolidating and eliminating entries required under IFRS to prepare consolidated financial statements. The most significant of those entries are derived from the elimination of intercompany reinsurance (primarily consisting of reinsurance provided by Group Re and reinsurance between OdysseyRe and the primary insurers), which affects recoverable from reinsurers, provision for losses and loss adjustment expenses and unearned premiums. Corporate and Other borrowings of $3,445.1 as at December 31, 2017 primarily consisted of Fairfax holding company debt of $3,475.1, partially offset by the elimination of intercompany debt. Corporate and Other borrowings of $3,479.6 as at December 31, 2016 primarily consisted of Fairfax holding company debt of $3,341.2 and purchase consideration payable of $129.2 (repaid in 2017) related to the TRG acquisition.

	Economic ownership percentage in Fairfax affiliates
	Northbridge	OdysseyRe	Crum & Forster	Zenith National	Brit	Allied World	Fairfax Asia	Insurance & Reinsurance – Other	Run-off	Corporate & Other	Consolidated
Investments in insurance and reinsurance affiliates(1)(2)
Zenith National	–	6.1%	2.0%	–	–	–	–	–	–	91.9%	100.0%
Advent	–	15.7%	12.7%	–	–	–	–	–	13.8%	57.8%	100.0%
TRG (Run-off)	–	–	5.2%	–	–	–	–	31.5%	44.9%	18.4%	100.0%
Investments in non-insurance affiliates(3)
Thomas Cook India	–	11.0%	1.5%	0.4%	–	1.8%	0.6%	1.7%	4.9%	45.7%	67.6%
Fairfax India	–	6.9%	3.5%	1.0%	4.1%	4.8%	1.0%	2.0%	5.4%	1.5%	30.2%
The Keg	11.0%	14.7%	7.3%	8.0%	–	–	–	6.6%	3.4%	–	51.0%
Cara	8.5%	10.5%	4.9%	–	3.8%	5.7%	–	–	6.3%	0.5%	40.2%
Boat Rocker Media	–	27.3%	–	20.1%	–	–	–	10.8%	–	–	58.2%
Fairfax Africa	1.7%	20.1%	4.8%	9.1%	9.9%	4.2%	0.6%	7.6%	1.5%	4.7%	64.2%
Grivalia Properties	3.9%	18.8%	5.1%	1.4%	1.7%	5.0%	–	5.0%	9.2%	2.6%	52.7%

(1)

This table excludes subsidiaries where the company's equity interest is entirely held by the holding company including Northbridge, OdysseyRe, Crum & Forster, Brit, Allied World, Fairfax Asia, Fairfax Brasil, Fairfax Latam, Bryte Insurance and Polish Re.

(2)

Investments in insurance and reinsurance affiliates are reported in Investment in Fairfax insurance and reinsurance affiliates on the segmented balance sheet.

(3)

Investments in non-insurance affiliates are reported within Portfolio investments on the segmented balance sheet.

137

Segmented Balance Sheet as at December 31, 2017

	Insurance and Reinsurance
	Northbridge	OdysseyRe	Crum & Forster	Zenith National	Brit	Allied World(1)	Fairfax Asia	Other	Operating companies	Run-off	Other	Corporate and Other		Consolidated
Assets
Holding company cash and investments	107.0	557.8	5.3	9.4	–	–	549.0	–	1,228.5	–	–	1,139.9		2,368.4
Insurance contract receivables	327.4	995.9	315.4	260.7	774.0	1,336.7	97.8	621.6	4,729.5	73.8	–	(116.4	)	4,686.9
Portfolio investments(2)	3,008.1	7,979.8	4,024.2	1,716.0	4,245.1	8,162.9	632.9	2,145.7	31,914.7	3,710.0	3,176.8	(1,788.3	)	37,013.2
Deferred premium acquisition costs	116.4	223.4	126.0	12.2	207.1	146.6	16.8	94.4	942.9	–	–	(15.4	)	927.5
Recoverable from reinsurers	441.5	976.1	1,033.7	53.1	1,437.6	2,879.6	275.9	1,110.2	8,207.7	737.9	–	(1,133.1	)	7,812.5
Deferred income taxes	81.6	195.7	151.6	29.9	–	–	–	66.3	525.1	25.3	–	(169.6	)	380.8
Goodwill and intangible assets	172.8	171.3	318.2	433.1	725.6	1,702.6	196.4	66.6	3,786.6	36.8	2,242.7	6.4		6,072.5
Due from affiliates	205.4	1.6	3.0	–	–	–	8.6	32.0	250.6	437.6	–	(688.2	)	–
Other assets	67.0	82.6	243.0	72.4	90.7	356.0	153.3	149.4	1,214.4	79.7	3,264.5	269.7		4,828.3
Investments in Fairfax insurance and reinsurance affiliates	–	131.9	70.2	–	–	–	–	35.1	237.2	106.1	–	(343.3	)	–
Total assets	4,527.2	11,316.1	6,290.6	2,586.8	7,480.1	14,584.4	1,930.7	4,321.3	53,037.2	5,207.2	8,684.0	(2,838.3	)	64,090.1
Liabilities
Accounts payable and accrued liabilities	187.2	533.0	309.9	108.6	156.5	272.2	114.2	442.0	2,123.6	90.4	1,288.0	127.5		3,629.5
Income taxes payable	16.2	34.4	–	–	7.4	1.7	1.9	5.2	66.8	–	12.8	16.0		95.6
Short sale and derivative obligations	2.7	61.0	19.1	4.3	12.5	0.6	0.1	1.6	101.9	13.0	12.6	(1.3	)	126.2
Due to affiliates	0.9	5.1	10.9	2.8	–	6.0	0.7	13.4	39.8	1.6	189.8	(231.2	)	–
Funds withheld payable to reinsurers	4.9	94.2	21.4	–	450.1	270.3	12.5	103.2	956.6	12.5	–	(118.9	)	850.2
Provision for losses and loss adjustment expenses	1,964.3	5,521.8	3,535.4	1,194.2	4,136.1	7,787.9	359.5	1,836.5	26,335.7	3,331.0	–	(1,055.9	)	28,610.8
Provision for unearned premiums	628.4	909.1	713.0	305.7	891.2	1,653.0	177.1	726.3	6,003.8	8.0	–	(60.1	)	5,951.7
Deferred income taxes	–	–	–	–	42.8	67.5	8.5	3.2	122.0	–	146.6	(268.6	)	–
Borrowings	–	89.8	41.4	38.2	233.5	878.0	–	92.1	1,373.0	–	1,596.0	3,445.1		6,414.1
Total liabilities	2,804.6	7,248.4	4,651.1	1,653.8	5,930.1	10,937.2	674.5	3,223.5	37,123.2	3,456.5	3,245.8	1,852.6		45,678.1
Equity
Shareholders' equity attributable to shareholders of Fairfax	1,722.5	4,067.7	1,639.5	933.0	1,550.0	3,641.6	1,195.0	1,095.7	15,845.0	1,750.7	5,092.5	(8,877.1	)	13,811.1
Non-controlling interests	0.1	–	–	–	–	5.6	61.2	2.1	69.0	–	345.7	4,186.2		4,600.9
Total equity	1,722.6	4,067.7	1,639.5	933.0	1,550.0	3,647.2	1,256.2	1,097.8	15,914.0	1,750.7	5,438.2	(4,690.9	)	18,412.0
Total liabilities and total equity	4,527.2	11,316.1	6,290.6	2,586.8	7,480.1	14,584.4	1,930.7	4,321.3	53,037.2	5,207.2	8,684.0	(2,838.3	)	64,090.1
Capital
Borrowings	–	89.8	41.4	38.2	233.5	878.0	–	92.1	1,373.0	–	1,596.0	3,445.1		6,414.1
Investments in Fairfax affiliates	154.3	824.2	298.6	106.0	193.4	244.1	26.0	195.2	2,041.8	629.0	–	(2,670.8	)	–
Shareholders' equity attributable to shareholders of Fairfax	1,568.2	3,243.5	1,340.9	827.0	921.3	2,173.7	1,169.0	902.6	12,146.2	1,121.7	2,563.3	(2,020.1	)	13,811.1
Non-controlling interests	0.1	–	–	–	435.3	1,229.4	61.2	–	1,726.0	–	2,874.9	–		4,600.9
Total capital	1,722.6	4,157.5	1,680.9	971.2	1,783.5	4,525.2	1,256.2	1,189.9	17,287.0	1,750.7	7,034.2	(1,245.8	)	24,826.1
% of consolidated total capital	6.9%	16.7%	6.8%	3.9%	7.2%	18.2%	5.1%	4.8%	69.6%	7.1%	28.3%	(5.0	)%	100.0%

(1)

Allied World is included in the company's financial reporting with effect from July 6, 2017.

(2)

Includes investments in non-insurance affiliates.

138

Segmented Balance Sheet as at December 31, 2016

	Insurance and Reinsurance
	Northbridge	OdysseyRe	Crum & Forster	Zenith National	Brit	Fairfax Asia	Other	Operating companies	Run-off	Other	Corporate and Other		Consolidated
Assets
Holding company cash and investments	125.9	508.6	7.2	10.3	–	–	–	652.0	–	–	719.6		1,371.6
Insurance contract receivables	272.7	830.8	279.1	238.2	639.2	169.6	385.7	2,815.3	196.8	–	(94.6	)	2,917.5
Portfolio investments(1)	2,748.8	7,243.8	3,907.7	1,708.7	3,986.7	1,568.8	1,680.6	22,845.1	3,847.2	1,476.5	(875.4	)	27,293.4
Deferred premium acquisition costs	96.4	182.5	122.0	10.9	192.7	30.6	72.0	707.1	–	–	(14.0	)	693.1
Recoverable from reinsurers	463.3	774.8	1,104.1	68.0	923.7	634.3	346.3	4,314.5	835.8	–	(1,140.0	)	4,010.3
Deferred income taxes	65.9	300.5	257.3	55.0	–	–	18.9	697.6	11.6	–	23.4		732.6
Goodwill and intangible assets	152.8	174.9	331.6	439.0	730.9	173.1	33.9	2,036.2	37.1	1,766.0	8.2		3,847.5
Due from affiliates	120.9	4.0	31.4	–	0.3	23.3	35.1	215.0	575.3	–	(790.3	)	–
Other assets	103.2	182.9	183.5	60.6	106.0	85.0	51.0	772.2	99.6	1,497.7	148.9		2,518.4
Investments in Fairfax insurance and reinsurance affiliates	–	132.0	70.2	–	–	–	32.7	234.9	106.1	–	(341.0	)	–
Total assets	4,149.9	10,334.8	6,294.1	2,590.7	6,579.5	2,684.7	2,656.2	35,289.9	5,709.5	4,740.2	(2,355.2	)	43,384.4
Liabilities
Accounts payable and accrued liabilities	161.3	511.0	282.2	94.6	79.4	273.7	261.1	1,663.3	104.2	973.8	147.3		2,888.6
Income taxes payable	6.3	–	–	1.5	–	13.0	0.2	21.0	–	2.2	12.2		35.4
Short sale and derivative obligations	40.9	79.5	37.2	3.1	11.8	–	5.0	177.5	41.9	–	14.9		234.3
Due to affiliates	0.9	9.2	0.6	3.0	–	5.5	2.2	21.4	1.0	48.3	(70.7	)	–
Funds withheld payable to reinsurers	3.3	61.6	18.2	–	302.3	51.8	66.0	503.2	13.3	–	(100.3	)	416.2
Provision for losses and loss adjustment expenses	1,875.0	4,896.9	3,562.3	1,212.5	3,406.7	800.0	1,019.1	16,772.5	3,790.1	–	(1,080.8	)	19,481.8
Provision for unearned premiums	542.5	722.5	683.8	280.2	836.8	308.9	403.1	3,777.8	19.9	–	(57.3	)	3,740.4
Deferred income taxes	–	–	–	–	102.8	4.8	3.2	110.8	–	153.0	(263.8	)	–
Borrowings	–	89.8	41.4	38.2	175.9	–	90.2	435.5	–	852.5	3,479.6		4,767.6
Total liabilities	2,630.2	6,370.5	4,625.7	1,633.1	4,915.7	1,457.7	1,850.1	23,483.0	3,970.4	2,029.8	2,081.1		31,564.3
Equity
Shareholders' equity attributable to shareholders of Fairfax	1,519.7	3,964.3	1,668.4	957.6	1,663.8	1,166.9	806.1	11,746.8	1,739.1	2,622.9	(6,288.7	)	9,820.1
Non-controlling interests	–	–	–	–	–	60.1	–	60.1	–	87.5	1,852.4		2,000.0
Total equity	1,519.7	3,964.3	1,668.4	957.6	1,663.8	1,227.0	806.1	11,806.9	1,739.1	2,710.4	(4,436.3	)	11,820.1
Total liabilities and total equity	4,149.9	10,334.8	6,294.1	2,590.7	6,579.5	2,684.7	2,656.2	35,289.9	5,709.5	4,740.2	(2,355.2	)	43,384.4
Capital
Borrowings	–	89.8	41.4	38.2	175.9	–	90.2	435.5	–	852.5	3,479.6		4,767.6
Investments in Fairfax affiliates	110.6	544.0	197.5	40.8	74.7	44.8	99.3	1,111.7	523.3	–	(1,635.0	)	–
Shareholders' equity attributable to shareholders of Fairfax	1,409.1	3,420.3	1,470.9	916.8	1,125.7	1,122.1	706.8	10,171.7	1,215.8	1,233.9	(2,801.3	)	9,820.1
Non-controlling interests	–	–	–	–	463.4	60.1	–	523.5	–	1,476.5	–		2,000.0
Total capital	1,519.7	4,054.1	1,709.8	995.8	1,839.7	1,227.0	896.3	12,242.4	1,739.1	3,562.9	(956.7	)	16,587.7
% of consolidated total capital	9.2%	24.4%	10.3%	6.0%	11.1%	7.4%	5.4%	73.8%	10.5%	21.5%	(5.8	)%	100.0%

(1)

Includes investments in non-insurance affiliates.

Components of Net Earnings

Underwriting and Operating Income

Set out and discussed below are the underwriting and operating results of Fairfax's insurance and reinsurance operations, Run-off and Other by reporting segment for the years ended December 31, 2017 and 2016.

139

Northbridge⁽¹⁾

		Cdn$
		2017		2016		2017		2016
Underwriting profit		11.6		61.3		9.0		46.3
	Loss & LAE – accident year	74.5	%	71.6	%	74.5	%	71.6	%
	Commissions	16.1	%	16.6	%	16.1	%	16.6	%
	Underwriting expenses	17.7	%	19.1	%	17.7	%	19.1	%
Combined ratio – accident year		108.3	%	107.3	%	108.3	%	107.3	%
	Net favourable development	(9.2	)%	(12.4	)%	(9.2	)%	(12.4	)%
Combined ratio – calendar year		99.1	%	94.9	%	99.1	%	94.9	%
Gross premiums written		1,539.4		1,395.9		1,187.0		1,055.1
Net premiums written		1,381.0		1,247.0		1,064.9		942.6
Net premiums earned		1,322.4		1,202.3		1,019.7		908.8
Underwriting profit		11.6		61.3		9.0		46.3
Interest and dividends		70.2		69.0		54.1		52.2
Share of profit of associates		4.1		6.9		3.2		5.2
Operating income		85.9		137.2		66.3		103.7

(1)

These results differ from those published by Northbridge primarily due to purchase accounting adjustments related to the privatization of Northbridge in 2009.

The Canadian dollar strengthened relative to the U.S. dollar (measured using average foreign exchange rates) by 2.0% in 2017 compared to 2016. To avoid the distortion caused by foreign currency translation, the table above presents Northbridge's underwriting and operating results in both U.S. dollars and Canadian dollars (Northbridge's functional currency). The discussion which follows makes reference to those Canadian dollar figures unless indicated otherwise.

Northbridge reported an underwriting profit of Cdn$11.6 ($9.0) and a combined ratio of 99.1% in 2017 compared to an underwriting profit of Cdn$61.3 ($46.3) and a combined ratio of 94.9% in 2016. The decrease in underwriting profit in 2017 principally reflected an increase in non-catastrophe loss experience related to the current accident year (particularly in personal lines and commercial property lines of business) and lower net favourable prior year reserve development, partially offset by the impact of higher net premiums earned and lower current period catastrophe losses.

Net favourable prior year reserve development in 2017 of Cdn$121.3 ($93.5) representing 9.2 combined ratio points principally reflected better than expected emergence on automobile and casualty lines of business related to accident years 2009 to 2014. Net favourable prior year reserve development in 2016 of Cdn$149.2 ($112.8) representing 12.4 combined ratio points principally reflected better than expected emergence on automobile and casualty lines of business related to accident years 2008 through 2014.

Current period catastrophe losses in 2017 of Cdn$11.6 ($8.9) (0.9 of a combined ratio point, principally the impact of storms in central Canada) decreased from Cdn$38.0 ($28.7) in 2016 (3.2 combined ratio points, principally the impact of the Fort McMurray wildfires). The decrease in Northbridge's underwriting expense ratio to 17.7% in 2017 from 19.1% in 2016 principally reflected the impact of higher net premiums earned, partially offset by higher underwriting expenses.

The increase in gross premiums written of 10.3% from Cdn$1,395.9 in 2016 to Cdn$1,539.4 in 2017, primarily reflected increased renewal and new business writings, and price increases across the group. Net premiums written increased by 10.7% in 2017, consistent with the growth in gross premiums written. Net premiums earned increased by 10.0% in 2017, reflecting the growth in net premiums written during 2016 and 2017.

Interest and dividends of Cdn$70.2 ($54.1) in 2017, while comparable to Cdn$69.0 ($52.2) in 2016, principally reflected lower total return swap expense in 2017, partially offset by lower interest income earned (reflecting sales of U.S. treasury and municipal bonds late in 2016 and in the first quarter of 2017).

140

Cash provided by operating activities (excluding operating cash flow activity related to securities recorded at FVTPL) increased to Cdn$113.6 ($87.6) in 2017 from Cdn$67.4 ($51.0) in 2016, primarily due to higher net premiums collected and lower income taxes paid, partially offset by higher net claims paid.

Northbridge's average annual return on average equity over the past 32 years since inception in 1985 was 12.9% at December 31, 2017 (December 31, 2016 – 13.1%) (expressed in Canadian dollars).

OdysseyRe⁽¹⁾

		2017		2016
Underwriting profit		60.0		235.2
	Loss & LAE – accident year	78.3	%	69.3	%
	Commissions	21.1	%	20.8	%
	Underwriting expenses	10.3	%	11.4	%
Combined ratio – accident year		109.7	%	101.5	%
	Net favourable development	(12.3	)%	(12.8	)%
Combined ratio – calendar year		97.4	%	88.7	%
Gross premiums written		2,783.1		2,380.7
Net premiums written		2,495.9		2,100.2
Net premiums earned		2,333.4		2,074.1
Underwriting profit		60.0		235.2
Interest and dividends		124.9		153.7
Share of profit of associates		7.2		17.3
Operating income		192.1		406.2

(1)

These results differ from those published by Odyssey Re Holdings Corp. primarily due to differences between IFRS and U.S. GAAP and purchase accounting adjustments (principally goodwill and intangible assets) recorded by Fairfax related to the privatization of OdysseyRe in 2009.

OdysseyRe reported an underwriting profit of $60.0 and a combined ratio of 97.4% in 2017 compared to an underwriting profit of $235.2 and a combined ratio of 88.7% in 2016. The decrease in underwriting profit in 2017 principally reflected increased current period catastrophe losses (as set out in the table below), partially offset by modestly higher net favourable prior year reserve development and lower current year extraordinary losses.

	2017			2016
	Catastrophe losses(1)	Combined ratio impact		Catastrophe losses(1)	Combined ratio impact
Hurricane Maria	103.0	4.4		–	–
Hurricane Irma	70.4	3.0		–	–
Hurricane Harvey	51.6	2.2		–	–
California wildfires	46.6	2.0		–	–
Mexico earthquakes	8.2	0.4		–	–
Hurricane Matthew	–	–		30.0	1.4
Fort McMurray wildfires	–	–		14.1	0.7
France floods	–	–		10.0	0.5
Belgium floods	–	–		9.0	0.4
Other	111.9	4.8		128.8	6.2
	391.7	16.8	points	191.9	9.2	points

(1)

Net of reinstatement premiums.

141

Net favourable prior year reserve development increased to $288.1 (12.3 combined ratio points) in 2017 from $266.5 (12.8 combined ratio points) in 2016, principally related to net favourable emergence on casualty and catastrophe loss reserves respectively in each of those periods. Current year extraordinary losses decreased to $28.4 (1.2 combined ratio points) in 2017 from $61.9 (3.0 combined ratio points) in 2016. The decrease in OdysseyRe's underwriting expense ratio to 10.3% in 2017 from 11.4% in 2016 principally reflected the impact of increased net premiums earned. The increase in OdysseyRe's commission expense ratio to 21.1% in 2017 from 20.8% in 2016 principally reflected changes in the mix of business and commission expense adjustments.

The increase in gross premiums written and net premiums written of 16.9% and 18.8% in 2017 principally reflected increases in the U.S. Insurance division (automobile, crop and liability package lines of business), North America division (property and casualty reinsurance lines of business), EuroAsia division (crop, commercial automobile and credit and bond reinsurance lines of business) and the London Market division (affinity and liability insurance lines of business). Net premiums earned in 2017 increased 12.5%, consistent with the growth in net premiums written.

The decrease in interest and dividends to $124.9 in 2017 from $153.7 in 2016 principally reflected lower interest income earned (reflecting sales of U.S. treasury and municipal bonds late in 2016 and in the first quarter of 2017), partially offset by lower total return swap expense.

Cash provided by operating activities (excluding operating cash flow activity related to securities recorded at FVTPL) increased to $389.9 in 2017 from $268.9 in 2016, primarily due to lower income taxes paid and increased net premiums collected, partially offset by increased net claims paid related to current period catastrophes losses and lower investment income received.

Crum & Forster

		2017		2016
Underwriting profit		3.2		32.4
	Loss & LAE – accident year	65.3	%	64.2	%
	Commissions	15.8	%	16.0	%
	Underwriting expenses	19.3	%	18.5	%
Combined ratio – accident year		100.4	%	98.7	%
	Net favourable development	(0.6	)%	(0.5	)%
Combined ratio – calendar year		99.8	%	98.2	%
Gross premiums written		2,174.5		2,055.0
Net premiums written		1,863.4		1,801.1
Net premiums earned		1,852.8		1,769.5
Underwriting profit		3.2		32.4
Interest and dividends		33.8		65.8
Share of loss of associates		(1.1	)	(22.6	)
Operating income		35.9		75.6

On October 4, 2016 Crum & Forster acquired a 100% interest in Trinity Risk LLC ("Trinity") for consideration of $12.0. Trinity focuses on occupational accident insurance and produces approximately $26 of gross premiums written annually.

142

Crum & Forster reported an underwriting profit of $3.2 and a combined ratio of 99.8% in 2017 compared to an underwriting profit of $32.4 and a combined ratio of 98.2% in 2016. The decrease in underwriting profit in 2017 principally reflected the impact of higher current period catastrophe losses (as set out in the table below) and increased underwriting expenses, partially offset by increased net favourable prior year reserve development.

	2017			2016
	Catastrophe losses(1)	Combined ratio impact		Catastrophe losses(1)	Combined ratio impact
Hurricane Irma	16.5	0.9		–	–
Hurricane Harvey	5.0	0.3		–	–
California wildfires	2.1	0.1		–	–
Texas hailstorms	–	–		10.5	0.6
Hurricane Matthew	–	–		5.0	0.3
Other	18.4	1.0		10.5	0.6
	42.0	2.3	points	26.0	1.5	points

(1)

Net of reinstatement premiums.

Net favourable prior year reserve development in 2017 of $10.2 (0.6 of a combined ratio point, principally related to excess and surplus lines loss reserves, partially offset by net adverse development on commercial transportation loss reserves) increased from $8.3 in 2016 (0.5 of a combined ratio point, principally related to net favourable emergence on workers' compensation and professional risk loss reserves, partially offset by an increase in construction defect loss reserves).

The decrease in Crum & Forster's commission expense ratio to 15.8% in 2017 from 16.0% in 2016, principally reflected the impact of higher ceding commission income in 2017. The increase in Crum & Forster's underwriting expense ratio to 19.3% in 2017 from 18.5% in 2016 principally reflected increased compensation costs related to new underwriting initiatives.

The increase in gross premiums written of 5.8% in 2017 principally reflected growth in the accident and health and commercial transportation lines of business, partially offset by decreases in excess and surplus and marine lines of business. Net premiums written increased by 3.5% in 2017, consistent with the growth in gross premiums written. Net premiums earned increased by 4.7% in 2017, reflecting the growth in net premiums written during 2016 and 2017.

The decrease in interest and dividends to $33.8 in 2017 from $65.8 in 2016 principally reflected lower interest income earned (reflecting sales of U.S. treasury and municipal bonds late in 2016 and in the first quarter of 2017) and increased investment management and administration fees, partially offset by lower total return swap expense. Share of loss of associates in 2016 included a non-cash impairment charge of $25.3 related to Resolute.

Cash provided by operating activities (excluding operating cash flow activity related to securities recorded at FVTPL) of $111.6 in 2017 decreased from $238.5 in 2016 primarily due to higher net paid losses and lower interest and dividend income received, partially offset by higher net premiums collected and lower income taxes paid.

Crum & Forster's cumulative net earnings since acquisition on August 13, 1998 was $1,816.4 and its average annual return on average equity since acquisition was 8.7% (December 31, 2016 – 9.4%).

143

Zenith National⁽¹⁾

		2017		2016
Underwriting profit		117.2		164.1
	Loss & LAE – accident year	58.9	%	56.9	%
	Commissions	10.3	%	10.1	%
	Underwriting expenses	25.8	%	25.2	%
Combined ratio – accident year		95.0	%	92.2	%
	Net favourable development	(9.4	)%	(12.5	)%
Combined ratio – calendar year		85.6	%	79.7	%
Gross premiums written		849.0		831.7
Net premiums written		837.4		819.4
Net premiums earned		811.6		807.3
Underwriting profit		117.2		164.1
Interest and dividends		23.4		29.6
Share of profit (loss) of associates		(9.8	)	1.2
Operating income		130.8		194.9

(1)

These results differ from those published by Zenith National primarily due to differences between IFRS and U.S. GAAP, intercompany investment transactions and acquisition accounting adjustments recorded by Fairfax related to the acquisition of Zenith National in 2010.

Zenith National reported an underwriting profit of $117.2 and a combined ratio of 85.6% in 2017 compared to an underwriting profit of $164.1 and a combined ratio of 79.7% in 2016. The decrease in underwriting profit in 2017 principally reflected lower net favourable prior year reserve development, an increase in non-catastrophe property loss experience related to the current accident year and higher current period catastrophe losses.

Net favourable prior year reserve development in 2017 of $76.4 (9.4 combined ratio points) decreased from $101.0 in 2016 (12.5 combined ratio points), principally reflecting net favourable emergence related to accident years 2013 through 2016 in 2017 and net favourable emergence related to accident years 2012 through 2015 in 2016.

In 2017 Zenith National's agriculture property and casualty line of business incurred current period catastrophe losses of $8.2 (1.0 combined ratio point) related to the California wildfires and other large losses of $6.7 (0.8 of a combined ratio point). Excluding these incurred losses, the estimated accident year loss and LAE ratio in 2017 was comparable to 2016 and reflected favourable loss development trends for accident year 2016, offset by modest earned price decreases and estimated loss trends for accident year 2017. The increase in Zenith National's underwriting expense ratio to 25.8% in 2017 from 25.2% in 2016 principally reflected flat net premiums earned and higher underwriting expenses, primarily attributable to ongoing investment in personnel.

The increase in gross premiums written and net premiums written of 2.1% and 2.2% in 2017 principally reflected increased exposure, partially offset by price decreases. The increase in net premiums earned of 0.5% in 2017 principally reflected the growth in net premiums written during 2016 and 2017.

The decrease in interest and dividends to $23.4 in 2017 from $29.6 in 2016 principally reflected lower interest income earned (reflecting sales of U.S. treasury and municipal bonds late in 2016 and in the first quarter of 2017), partially offset by lower total return swap expense. Share of loss of associates in 2017 included a non-cash impairment charge of $5.5 related to Thai Re.

Cash provided by operating activities (excluding operating cash flow activity related to securities recorded at FVTPL) of $95.5 in 2017 decreased from $141.2 in 2016, primarily due to higher income taxes paid, higher net paid losses and expenses and lower investment income received, partially offset by higher net premiums collected.

144

Brit⁽¹⁾

		2017		2016
Underwriting profit (loss)		(201.9	)	29.1
	Loss & LAE – accident year	72.7	%	65.0	%
	Commissions	27.6	%	20.9	%
	Underwriting expenses	13.4	%	15.8	%
Combined ratio – accident year		113.7	%	101.7	%
	Net favourable development	(0.6	)%	(3.8	)%
Combined ratio – calendar year		113.1	%	97.9	%
Gross premiums written		2,057.0		1,912.2
Net premiums written		1,530.9		1,480.2
Net premiums earned		1,536.9		1,399.3
Underwriting profit (loss)		(201.9	)	29.1
Interest and dividends		32.6		55.4
Share of profit of associates		9.2		3.4
Operating income (loss)		(160.1	)	87.9

(1)

These results differ from those published by Brit primarily due to differences in presentation of net gains on investments and acquisition accounting adjustments recorded by Fairfax related to the acquisition of Brit on June 5, 2015.

On August 3, 2016 Brit purchased shares for cancellation from its minority shareholder Ontario Municipal Employees Retirement System ("OMERS") for cash consideration of $57.8, which increased the company's ownership interest in Brit from 70.1% to 72.5%. On March 3, 2017 Brit paid a dividend of $45.8 to OMERS.

Brit reported an underwriting loss of $201.9 and a combined ratio of 113.1% in 2017 compared to an underwriting profit of $29.1 and a combined ratio of 97.9% in 2016. The decrease in underwriting profit in 2017 principally reflected an increase in current period catastrophe losses (as set out in the table below), lower net favourable prior year reserve development and an increase in commission expense (described below).

	2017			2016
	Catastrophe losses(1)	Combined ratio impact		Catastrophe losses(1)	Combined ratio impact
Hurricane Irma	110.5	7.2		–	–
Hurricane Harvey	54.3	3.5		–	–
Hurricane Maria	45.6	3.0		–	–
California wildfires	34.2	2.2		–	–
Mexico earthquakes	6.8	0.4		–	–
Hurricane Matthew	–	–		26.1	1.9
Fort McMurray wildfire	–	–		17.8	1.3
Other	7.5	0.5		32.5	2.3
	258.9	16.8	points	76.4	5.5	points

(1)

Net of reinstatement premiums.

Net favourable prior year reserve development in 2017 decreased to $9.5 (0.6 of a combined ratio point, principally related to favourable emergence on casualty and property reinsurance and energy lines of business, partially offset by net reserve strengthening of $13.1 resulting from a change in the Ogden discount rate that was effective from March 2017) from $53.5 in 2016 (3.8 combined ratio points, principally related to favourable emergence on casualty and property reinsurance lines of business). The Ogden discount rate is set and revised periodically by the U.K. government and is used by the U.K. courts in the assessment of lump sum awards for personal injury claimants.

145

The increase in Brit's commission expense ratio to 27.6% in 2017 from 20.9% in 2016 principally reflected the impacts of non-recurring acquisition accounting adjustments which reduced net premiums earned and commission expense in 2016, partially offset by changes in the mix of business written, reinsurance purchased and higher net premiums earned in 2017. The decrease in Brit's underwriting expense ratio to 13.4% in 2017 from 15.8% in 2016 principally reflected the favourable effect of foreign currency translation and increased fee income earned from the management of third party underwriting capital, partially offset by higher compensation costs.

The increase in gross premiums written and net premiums written of 7.6% and 3.4% in 2017 principally reflected better than expected development on 2016 and prior underwriting years, inwards reinstatement premiums following the current period catastrophe losses, increased contribution from initiatives launched in recent years and measured growth in core lines of business, partially offset by modest price decreases and reductions in other lines of business through active portfolio management and the unfavourable impact of foreign currency translation. The increase in net premiums written was tempered by the impact of additional reinsurance purchased. The increase in net premiums earned of 9.8% in 2017 principally reflected the same factors that affected net premiums written and the impact of the acquisition accounting adjustments described in the preceding paragraph.

The decrease in interest and dividends to $32.6 in 2017 from $55.4 in 2016 principally reflected lower interest income earned (reflecting sales of U.S. treasury and municipal bonds late in 2016 and in the first quarter of 2017).

Cash provided by operating activities (excluding operating cash flow activity related to securities recorded at FVTPL) of $17.2 in 2017 decreased from $148.3 in 2016, primarily due to higher net paid losses and lower interest and dividend income received, partially offset by higher net premiums collected.

Allied World⁽¹⁾

		For the period July 6, 2017 to December 31, 2017
Underwriting loss		(586.6	)
	Loss & LAE – accident year	125.7	%
	Commissions	3.2	%
	Underwriting expenses	21.1	%
Combined ratio – accident year		150.0	%
	Net adverse development	7.0	%
Combined ratio – calendar year		157.0	%
Gross premiums written		1,447.6
Net premiums written		991.9
Net premiums earned		1,028.7
Underwriting loss		(586.6	)
Interest and dividends		65.9
Share of loss of associates		(17.6	)
Operating loss		(538.3	)

(1)

These results differ from those published by Allied World primarily due to differences between IFRS and U.S. GAAP and acquisition accounting adjustments (principally goodwill and intangible assets) recorded by Fairfax related to the acquisition of Allied World on July 6, 2017.

On July 6, 2017 the company completed the acquisition of 94.6% of the outstanding shares of Allied World Assurance Company Holdings, AG ("Allied World AG") for purchase consideration of $3,977.9, consisting of $1,905.6 in cash and $2,072.3 by the issuance of 4,799,497 subordinate voting shares. In addition, Allied World AG declared a special pre-closing cash dividend of $5.00 per share ($438.0). Contemporaneously with the closing of the acquisition of Allied World AG, Ontario Municipal Employees Retirement System ("OMERS"), the pension plan manager for government employees in the province of Ontario, Alberta Investment Management Corporation

146

("AIMCo"), an investment manager for pension, endowment and government funds in the province of Alberta, and certain other third parties (together, "the co-investors") invested $1,580.0 for an indirect equity interest in Allied World AG. The remaining 5.4% of the outstanding shares of Allied World AG were acquired on August 17, 2017 for purchase consideration of $229.0, consisting of $109.7 in cash and $119.3 by the issuance of 276,397 subordinate voting shares, in a merger transaction under Swiss law pursuant to which Allied World Assurance Company Holdings, GmbH ("Allied World") became the surviving entity. This merger resulted in the co-investors holding an indirect ownership interest in Allied World of 32.6%. The co-investors will have a dividend in priority to the company, and the company will have the ability to purchase the shares owned by the co-investors over the next seven years. Allied World is a global property, casualty and specialty insurer and reinsurer.

Allied World reported an underwriting loss of $586.6 and a combined ratio of 157.0% in the period July 6, 2017 to December 31, 2017, which included current period catastrophe losses (as set out in the table below) and net adverse prior year reserve development of $71.9 (7.0 combined ratio points). Net adverse development principally related to the insurance segment (due to higher than expected claims development within the professional liability line of business for the 2012 and 2013 accident years and the primary casualty line of business), partially offset by net favourable development in the reinsurance segment (due to net favourable prior year reserve development in the specialty and casualty lines of business, partially offset by net adverse prior year reserve development in the property line of business related to U.S. storms in 2015 and 2016). Allied World's gross premiums written of $1,447.6 in the period July 6, 2017 to December 31, 2017 included assumed reinstatement premiums of $19.8 related to current period catastrophe losses.

	For the period July 6, 2017 to December 31, 2017
	Catastrophe losses(1)	Combined ratio impact
Hurricane Irma	153.9	15.1
Hurricane Maria	124.9	12.0
Hurricane Harvey	122.9	11.8
California wildfires	87.3	8.4
Mexico earthquakes	9.1	0.9
Other	43.5	4.5
	541.6	52.7	points

(1)

Net of reinstatement premiums.

Share of loss of associates in the period July 6, 2017 to December 31, 2017 included a non-cash impairment charge of $19.2 related to an associate.

147

Fairfax Asia

		2017		2016
Underwriting profit		38.2		41.1
	Loss & LAE – accident year	80.3	%	83.4	%
	Commissions	1.4	%	(2.1	)%
	Underwriting expenses	22.7	%	22.3	%
Combined ratio – accident year		104.4	%	103.6	%
	Net favourable development	(16.0	)%	(17.2	)%
Combined ratio – calendar year		88.4	%	86.4	%
Gross premiums written		670.4		648.7
Net premiums written		327.5		303.1
Net premiums earned		327.6		302.5
Underwriting profit		38.2		41.1
Interest and dividends		29.1		26.7
Share of profit of associates		29.4		48.1
Operating income		96.7		115.9

Fairfax Asia comprises the company's Asian holdings and operations: 97.7%-owned Singapore-based First Capital Insurance Limited ("First Capital", sold on December 28, 2017), Hong Kong-based Falcon Insurance (Hong Kong) Company Ltd. ("Falcon"), 85.0%-owned Malaysia-based The Pacific Insurance Berhad ("Pacific Insurance"), 80.0%-owned Indonesia-based PT Asuransi Multi Artha Guna Tbk. ("AMAG"), 78.0%-owned Sri Lanka-based Fairfirst Insurance Limited ("Fairfirst Insurance"), 35.0%-owned Vietnam-based Bank for Investment and Development of Vietnam Insurance Joint Stock Corporation ("BIC Insurance"), 41.2%-owned Bangkok-based Falcon Insurance PLC ("Falcon Thailand") and Mumbai-based ICICI Lombard General Insurance Company Limited ("ICICI Lombard", partially sold during 2017 and reclassified to a common stock investment).

On December 28, 2017 the company completed the sale of its 97.7% interest in First Capital to Mitsui Sumitomo Insurance Company Limited of Tokyo, Japan ("Mitsui Sumitomo") for gross proceeds of $1,683.3 and realized a net after-tax gain of $1,018.6. The transaction was completed pursuant to an agreement with Mitsui Sumitomo to pursue a global strategic alliance. The company expects to enter into a quota share participation in First Capital's insurance portfolio in 2018.

On August 30, 2017 Pacific Insurance acquired the assets and liabilities of the general insurance business of Prudential Assurance Malaysia Berhad ("Prudential Assurance Malaysia") for $2.3. Prudential Assurance Malaysia is a general insurer in Malaysia.

On July 6, 2017 the company sold a 12.2% equity interest in ICICI Lombard to private equity investors for net proceeds of $376.3 and a net realized investment gain of $223.3. On September 19, 2017 the company sold an additional 12.1% equity interest through participation in ICICI Lombard's initial public offering for net proceeds of $532.2 and a net realized investment gain of $372.3. The company's remaining 9.9% equity interest in ICICI Lombard (fair value of $549.0 at December 31, 2017) was reclassified from the equity method of accounting to common stock at FVTPL (included in holding company cash and investments in the Fairfax Asia reporting segment), resulting in a $334.5 re-measurement gain. In 2017, Fairfax Asia paid dividends to Fairfax of $2,429.7 primarily comprised of the proceeds from the partial sale of ICICI Lombard and the sale of the company's 97.7% interest in First Capital. On March 31, 2016 the company increased its ownership interest in ICICI Lombard to 34.6% by acquiring an additional 9.0% of the issued and outstanding shares of ICICI Lombard from ICICI Bank for $234.1 (15.5 billion Indian rupees).

On October 10, 2016 the company acquired an 80.0% interest in AMAG from PT Bank Pan Indonesia Tbk. ("Panin Bank") for $178.9 (2.322 trillion Indonesian rupiah). AMAG will distribute its insurance products through a long-term bancassurance partnership with Panin Bank. AMAG is a general insurer in Indonesia. On December 31, 2016 Fairfax Indonesia was merged into AMAG.

148

On October 3, 2016 Union Assurance acquired a 100% equity interest in Asian Alliance General Insurance Limited (subsequently renamed Fairfirst Insurance Limited) for $10.2 (1,488.9 million Sri Lankan rupees). Fairfirst Insurance is a general insurer in Sri Lanka. On February 28, 2017 Union Assurance was merged into Fairfirst Insurance.

Fairfax Asia reported an underwriting profit of $38.2 and a combined ratio of 88.4% in 2017, compared to an underwriting profit of $41.1 and a combined ratio of 86.4% in 2016. The entities comprising Fairfax Asia produced combined ratios as set out in the following table:

	2017		2016
First Capital	69.5	%	64.9	%
Falcon	99.1	%	97.6	%
Pacific Insurance	99.6	%	95.6%	(1)
AMAG	95.9	%	128.0	%
Fairfirst Insurance	99.0	%	105.2	%

(1)

Excludes the impact of an intercompany loss portfolio transfer in 2016 of commercial automobile loss reserves ($15.8) and the related premiums ceded to reinsurers ($15.8) (the "2016 LPT"). Underwriting profit remained unchanged.

Net favourable prior year reserve development in 2017 of $52.3 (16.0 combined ratios points, principally related to commercial automobile, health, marine and property loss reserves) increased nominally from $52.1 in 2016 (17.2 combined ratio points, principally related to commercial automobile, engineering and marine hull loss reserves).

Fairfax Asia's commission expense ratio of 1.4% in 2017 compared to its commission income ratio of 2.1% in 2016 primarily reflected decreased profit commission on reinsurance ceded by First Capital related to commercial property and marine lines of business and the consolidation of the higher commission expense ratios of recent acquisitions AMAG and Fairfirst Insurance.

The consolidation of AMAG, Fairfirst Insurance and the 2016 LPT affected gross premiums written, net premiums written and net premiums earned as set out in the following table:

	2017						2016
	Gross premiums written		Net premiums written		Net premiums earned		Gross premiums written		Net premiums written		Net premiums earned
Fairfax Asia – as reported	670.4		327.5		327.6		648.7		303.1		302.5
Fairfirst Insurance	(11.9	)	(11.4	)	(12.4	)	(4.1	)	(3.9	)	(3.8	)
AMAG	(62.9	)	(43.9	)	(45.1	)	(11.8	)	(9.1	)	(10.7	)
Pacific Insurance – 2016 LPT	–		–		–		–		15.8		15.8
Fairfax Asia – as adjusted	595.6		272.2		270.1		632.8		305.9		303.8
Percentage change (year-over-year)	(5.9	)%	(11.0	)%	(11.1	)%

The decrease in gross premiums written of 5.9% in 2017 principally reflected lower writings in the commercial automobile, property and marine lines of business. The decrease in net premiums written of 11.0% in 2017 principally reflected the impact of lower premium retention (primarily at First Capital) and the same factors which affected gross premiums written. Net premiums earned decreased by 11.1% in 2017 reflecting the decreases in net premiums written during 2016 and 2017.

The decrease in share of profit of associates to $29.4 in 2017 from $48.1 in 2016 primarily reflected the impact of reclassifying the remaining 9.9% equity interest in ICICI Lombard from the equity method of accounting to common stock at FVTPL during the third quarter of 2017.

149

Insurance and Reinsurance – Other

		2017
		Group Re		Bryte Insurance		Advent		Fairfax Latin America		Fairfax Central and Eastern Europe		Inter-company		Total
Underwriting profit (loss)		7.1		(3.0	)	(48.7	)	(22.2	)	(13.8	)	–		(80.6	)
	Loss & LAE – accident year	96.1	%	68.6	%	81.7	%	54.8	%	51.5	%	–		71.3	%
	Commissions	29.0	%	17.9	%	24.3	%	1.1	%	19.1	%	–		18.8	%
	Underwriting expenses	4.3	%	17.2	%	21.1	%	57.5	%	31.2	%	–		24.3	%
Combined ratio – accident year		129.4	%	103.7	%	127.1	%	113.4	%	101.8	%	–		114.4	%
	Net adverse (favourable) development	(35.2	)%	(2.5	)%	(0.8	)%	5.1	%	9.7	%	–		(4.2	)%
Combined ratio – calendar year		94.2	%	101.2	%	126.3	%	118.5	%	111.5	%	–		110.2	%
Gross premiums written		147.9		348.9		271.2		314.1		168.6		(6.4	)	1,244.3
Net premiums written		129.2		240.8		184.4		160.6		148.3		–		863.3
Net premiums earned		124.4		241.1		185.1		120.1		119.9		–		790.6
Underwriting profit (loss)		7.1		(3.0	)	(48.7	)	(22.2	)	(13.8	)	–		(80.6	)
Interest and dividends		1.9		16.8		5.9		12.7		1.2		–		38.5
Share of profit (loss) of associates		3.4		–		(1.2	)	–		0.8		–		3.0
Operating income (loss)		12.4		13.8		(44.0	)	(9.5	)	(11.8	)	–		(39.1	)

		2016
		Group Re		Bryte Insurance	Advent		Fairfax Latin America		Fairfax Central and Eastern Europe		Inter- company		Total
Underwriting profit (loss)		35.4		–	0.5		0.5		(8.7	)	–		27.7
	Loss & LAE – accident year	66.0	%	–	70.7	%	61.4	%	59.1	%	–		66.4	%
	Commissions	30.9	%	–	22.3	%	12.6	%	18.5	%	–		23.3	%
	Underwriting expenses	5.2	%	–	19.3	%	32.6	%	28.1	%	–		17.8	%
Combined ratio – accident year		102.1	%	–	112.3	%	106.6	%	105.7	%	–		107.5	%
	Net adverse (favourable) development	(28.5	)%	–	(12.6	)%	(7.7	)%	6.3	%	–		(13.8	)%
Combined ratio – calendar year		73.6	%	–	99.7	%	98.9	%	112.0	%	–		93.7	%
Gross premiums written		156.9		–	257.8		144.8		90.4		(6.6	)	643.3
Net premiums written		140.6		–	177.0		58.3		82.5		–		458.4
Net premiums earned		133.8		–	185.1		45.6		72.7		–		437.2
Underwriting profit (loss)		35.4		–	0.5		0.5		(8.7	)	–		27.7
Interest and dividends		8.7		–	10.6		5.5		1.8		–		26.6
Share of profit (loss) of associates		0.8		–	(0.1	)	–		–		–		0.7
Operating income (loss)		44.9		–	11.0		6.0		(6.9	)	–		55.0

On December 7, 2016 the company acquired a 100% interest in Zurich Insurance Company South Africa Limited (subsequently rebranded Bryte Insurance Company Limited ("Bryte Insurance")) from Zurich Insurance Company Ltd. for $128.0 (1.8 billion South African rand). Bryte Insurance is a property and casualty insurer in South Africa and Botswana.

150

Fairfax Latin America is comprised of Fairfax Brasil (established by Fairfax in 2010) and Fairfax Latam, which consists of the insurance operations acquired from AIG in Chile and Colombia (effective from July 31, 2017), Argentina (effective from September 30, 2017) and Uruguay (effective from January 31, 2018). Fairfax Latam continues to work through the legal, regulatory and operational requirements to complete the acquisition of the insurance operations of AIG in Venezuela.

Fairfax Central and Eastern Europe ("Fairfax CEE") is comprised of Colonnade Insurance and Polish Re (acquired in 2009). Colonnade Insurance includes the following: the business and renewal rights of the insurance operations acquired from QBE in Hungary, Czech Republic and Slovakia (effective from February 1, 2016, April 1, 2016 and May 2, 2016 respectively); the business and renewal rights of the insurance operations acquired from AIG in Hungary, Czech Republic and Slovakia (effective from April 30, 2017), Bulgaria (effective from May 31, 2017), Poland (effective from June 30, 2017) and Romania (effective from October 31, 2017); and Colonnade Ukraine (acquired in 2015). On July 31, 2017 ("the effective date") a Part VII transfer pursuant to the U.K. Financial Services and Markets Act 2000 was completed to legally transfer the run-off of the business written by QBE's insurance operations in Hungary, Czech Republic and Slovakia prior to the effective date ("the transferring business") from QBE to Colonnade Insurance. The net liabilities relating to the transferring business have been fully reinsured by Polish Re since December 31, 2014 through various 100% quota share transactions with QBE. All reinsurance protection that benefited the transferring business was transferred from QBE to Colonnade Insurance at the effective date.

The Insurance and Reinsurance – Other reporting segment produced an underwriting loss of $80.6 and a combined ratio of 110.2% in 2017 compared to an underwriting profit of $27.7 and a combined ratio of 93.7% in 2016. The decrease in underwriting profit in 2017 principally reflected increased current period catastrophe losses (as set out in the table below), lower net favourable prior year reserve development and higher non-catastrophe loss experience related to the current accident year.

	2017			2016
	Catastrophe losses(1)	Combined ratio impact		Catastrophe losses(1)	Combined ratio impact
Hurricane Irma	20.7	2.6		–	–
Hurricane Harvey	18.6	2.4		–	–
Hurricane Maria	8.2	1.0		–	–
California wildfires	7.0	0.9		–	–
Fort McMurray wildfire	–	–		7.3	1.7
Hurricane Matthew	–	–		5.7	1.3
Other	24.6	3.1		16.7	3.8
	79.1	10.0	points	29.7	6.8	points

(1)

Net of reinstatement premiums.

The underwriting results in 2017 included net favourable prior year reserve development of $33.6 (4.2 combined ratio points), primarily reflecting net favourable development at Group Re (property and liability loss reserves), partially offset by net adverse development at Fairfax CEE (liability loss reserves at Polish Re) and Fairfax Latin America (general liability loss reserves in Argentina). The underwriting results in 2016 included net favourable prior year reserve development of $60.4 (13.8 combined ratio points), primarily reflecting net favourable development at Group Re (property and liability loss reserves including net favourable emergence on the run-off of the intercompany quota share reinsurance contract with Northbridge), Advent (property and casualty reinsurance loss reserves) and Fairfax Latin America (Fairfax Brasil).

The expense ratio increased to 24.3% in 2017 from 17.8% in 2016, principally reflecting higher operating expenses at Fairfax Brasil, the impact of the start-up of Colonnade Insurance and a higher expense ratio at Fairfax Latam due to lower net premium earned from changes to its reinsurance structure subsequent to its acquisition by Fairfax, partially offset by lower operating expenses at Polish Re. The commission expense ratio decreased to 18.8% in 2017 from 23.3% in 2016, primarily reflecting the impact of the consolidation of Bryte Insurance and Fairfax Latam which have commission expense ratios that are generally lower than the other companies within the Insurance and Reinsurance – Other segment. Fairfax Latam's commission income ratio reflected the impact of the lag from changing from proportional reinsurance (with high ceding commissions) to a combination of proportional reinsurance and non-proportional reinsurance (with lower ceding commissions).

151

The consolidation of Bryte Insurance, Fairfax Latam and the business and renewal rights of the insurance operations acquired from AIG in Central and Eastern Europe affected gross premiums written, net premiums written and net premiums earned as set out in the following table:

	2017			2016
	Gross premiums written	Net premiums written	Net premiums earned	Gross premiums written	Net premiums written	Net premiums earned
Insurance and Reinsurance – Other – as reported	1,244.3	863.3	790.6	643.3	458.4	437.2
Bryte Insurance	(348.9)	(240.8)	(241.1)	–	–	–
Insurance operations acquired from AIG in Latin America	(166.5)	(97.7)	(68.5)	–	–	–
Business and renewal rights of the insurance operations acquired from AIG in CEE	(57.0)	(44.1)	(23.7)	–	–	–
Insurance and Reinsurance – Other – as adjusted	671.9	480.7	457.3	643.3	458.4	437.2
Percentage change (year-over-year)	4.4%	4.9%	4.6%

The increase in gross premiums written, net premiums written and net premiums earned by 4.4%, 4.9% and 4.6% in 2017 principally reflected increases at Fairfax CEE (primarily related to inward reinstatement premiums related to a large loss in the commercial automobile line of business at Polish Re and organic growth at Colonnade Insurance) and Advent (primarily reflecting organic growth in property binders and consumer products lines of business), partially offset by decreases at Group Re (primarily reflecting the non-renewal in 2017 of certain reinsurance contracts). Net premiums written in 2017 was also affected by increased premium retention at Polish Re and Fairfax Brasil, partially offset by outwards reinstatement premiums on current period catastrophe losses at Advent and purchases of additional reinsurance at Advent and Group Re. The increase in net premiums earned reflected the growth in net premiums written during 2016 and 2017.

The increase in interest and dividends to $38.5 in 2017 from $26.6 in 2016 principally reflected the consolidation of the interest and dividends of Bryte Insurance and Fairfax Latam, and lower total return swap expense, partially offset by lower interest income earned (reflecting sales of U.S. treasury and municipal bonds late in 2016 and in the first quarter of 2017).

Run-off

The Run-off business segment was formed with the acquisition of the company's interest in The Resolution Group ("TRG") on August 11, 1999, and currently consists of two groups: the U.S. Run-off group, principally consisting of TIG Insurance Company, and the European Run-off group, principally consisting of RiverStone (UK), Syndicate 3500 at Lloyd's and RiverStone Insurance. The Run-off reporting segment also includes Resolution Group Reinsurance (Barbados) Limited and TIG Insurance (Barbados) Limited, formed to facilitate certain reinsurance transactions. Both groups are managed by the dedicated RiverStone Run-off management operation which has 406 employees in the U.S. and the U.K.

On December 13, 2017 U.S. Run-off repaid $124.9 aggregate principal amount of purchase consideration payable upon maturity.

On December 31, 2016 U.S. Run-off agreed to reinsure a portfolio of casualty exposures associated with habitational risks (commercial residential properties such as apartment buildings and condominiums) relating to accident years 2011 through 2016 from a U.S.-based insurer (the "habitational casualty reinsurance transaction"). The 2016 U.S. Run-off results reflected premiums of $110.7 as consideration for the assumption of $90.2 of net loss reserves and net provision for unearned premiums of $19.9.

On April 1, 2016 U.S. Run-off agreed to reinsure a portfolio of business comprised of construction defect exposures in various states in the western U.S. relating to accident years 2008 to 2013 (the "second quarter 2016 construction defect reinsurance transaction"). U.S. Run-off received a cash premium of $71.5 as consideration for the assumption of $70.5 of net loss reserves and paid a commission of $1.0 to a third party for facilitating the transaction.

152

Set out below is a summary of the operating results of Run-off for the years ended December 31, 2017 and 2016.

	2017		2016
Gross premiums written	8.4		183.9
Net premiums written	8.3		183.4
Net premiums earned	20.1		163.5
Losses on claims	(125.4	)	(236.2	)
Operating expenses	(102.1	)	(112.4	)
Interest and dividends	28.9		51.2
Share of loss of associates	(6.1	)	(15.5	)
Operating loss	(184.6	)	(149.4	)

Run-off reported an operating loss of $184.6 in 2017 compared to an operating loss of $149.4 in 2016. Net premiums earned of $20.1 in 2017 principally reflected the run-off of the unearned premium related to the habitational casualty reinsurance transaction (net premiums earned of $15.1 and losses on claims of $12.9). Losses on claims of $125.4 in 2017 principally reflected net adverse prior year reserve development of $145.9 at U.S. Run-off, partially offset by net favourable prior year reserve development of $33.4 at European Run-off. Net adverse prior year reserve development at U.S. Run-off was principally comprised of $182.5 related to APH exposures assumed primarily from Crum & Forster and in the legacy portfolio of Clearwater Insurance, partially offset by $39.0 of net favourable prior year reserve development at TIG Insurance related to workers' compensation loss reserves. Net favourable prior year reserve development of $33.4 at European Run-off principally related to the World Trade Center aviation market settlement.

Net premiums earned of $163.5 and losses on claims of $236.2 in 2016 principally reflected the impact of the habitational casualty reinsurance transaction and the second quarter 2016 construction defect reinsurance transaction. Losses on claims in 2016 also reflected net adverse prior year reserve development of $96.6 at U.S. Run-off, partially offset by net favourable prior year reserve development of $17.1 at European Run-off. Net adverse prior year reserve development of $96.6 at U.S. Run-off was principally comprised of $149.1 related to APH exposures assumed from Crum & Forster and in the legacy portfolio of Clearwater Insurance (including $50.0 related to a single assumed excess of loss contract with exposures to APH that was triggered and a loss of $18.8 incurred in connection with the commutation of certain assumed long tail APH liabilities) and $30.2 of non-APH loss reserve strengthening, partially offset by $89.5 of net favourable prior year reserve development at TIG Insurance principally related to workers' compensation loss reserves. Net favourable prior year reserve development at European Run-off was across various lines of business.

Operating expenses decreased to $102.1 in 2017 from $112.4 in 2016 principally reflecting a decrease in the provision for reinsurance recoverables.

Interest and dividends decreased to $28.9 in 2017 from $51.2 in 2016 primarily as a result of lower interest income earned (reflecting sales of U.S. treasury and municipal bonds late in 2016 and in the first quarter of 2017), partially offset by lower total return swap expense. Share of loss of associates in 2016 included a non-cash impairment charge of $23.6 related to Resolute.

Run-off's cash flows may be volatile as to timing and amount, with potential variability arising principally from the requirement to pay gross claims initially while third party reinsurance is only subsequently collected in accordance with its terms and from the delay, until some time after claims are paid, of the release of assets pledged to secure the payment of those claims.

153

Other

	2017
	Restaurants and retail(1)		Fairfax India(2)		Thomas Cook India(3)		Other(4)		Total
Revenue	1,441.7		336.0		1,009.6		470.3		3,257.6
Expenses	(1,322.5	)	(315.9	)	(953.1	)	(404.5	)	(2,996.0	)
Interest and dividends	7.7		(116.8	)	–		4.2		(104.9	)
Share of profit of associates	–		45.5		0.3		9.6		55.4
Operating income (loss)	126.9		(51.2	)	56.8		79.6		212.1
Net gains (losses) on investments	(0.4	)	(4.6	)	0.6		11.6		7.2
Pre-tax income (loss) before interest expense	126.5		(55.8	)	57.4		91.2		219.3

	2016
	Restaurants and retail(1)		Fairfax India(2)		Thomas Cook India(3)		Other(4)		Total
Revenue	978.3		154.6		786.4		142.3		2,061.6
Expenses	(897.0	)	(151.5	)	(769.5	)	(140.4	)	(1,958.4	)
Interest and dividends	7.2		9.5		–		–		16.7
Share of profit of associates	–		13.6		–		–		13.6
Operating income	88.5		26.2		16.9		1.9		133.5
Net gains (losses) on investments	8.8		20.4		1.5		(0.6	)	30.1
Pre-tax income before interest expense	97.3		46.6		18.4		1.3		163.6

(1)

Comprised primarily of Cara and its subsidiaries Pickle Barrel (acquired on December 1, 2017), St. Hubert (acquired on September 2, 2016) and Original Joe's (acquired on November 28, 2016), The Keg, Praktiker, William Ashley, Sporting Life and Golf Town (acquired on October 31, 2016).

(2)

Comprised of Fairfax India and its subsidiaries NCML, Fairchem (merged on March 14, 2017 with Privi Organics) and Saurashtra Freight (acquired on February 14, 2017). These results differ from those published by Fairfax India primarily due to Fairfax India's application of investment entity accounting under IFRS. Interest and dividends at Fairfax India in 2017 is net of a performance fee accrual of $114.4 (2016 – nil).

(3)

Comprised of Thomas Cook India and its subsidiaries Quess and Sterling Resorts. These results differ from those published by Thomas Cook India primarily due to differences between IFRS and Indian GAAP, and acquisition accounting adjustments.

(4)

Comprised primarily of Grivalia Properties (consolidated on July 4, 2017), Fairfax Africa (since its initial public offering on February 17, 2017), Mosaic Capital (consolidated on January 26, 2017), Pethealth and Boat Rocker.

Restaurants and retail

Subsequent to December 31, 2017

On February 22, 2018 the company sold its 51.0% ownership interest in The Keg to Cara for consideration of $74.6 (Cdn$94.7), comprised of cash consideration of $7.9 (Cdn$10.0) and 3,400,000 Cara subordinate voting shares. The transaction increased the company's equity interest in Cara to 43.2% from 40.2% at December 31, 2017.

Year ended December 31, 2017

On December 1, 2017 Cara acquired a 100% equity interest in Pickle Barrel Restaurants Inc. ("Pickle Barrel") for purchase consideration of $16.9 (Cdn$21.5). Pickle Barrel operates restaurants and provides catering services in the province of Ontario.

154

Year ended December 31, 2016

On November 28, 2016 Cara acquired an 89.2% interest in Original Joe's Franchise Group Inc. ("Original Joe's") for $83.8 (Cdn$112.5), comprised of cash consideration of $69.3 (Cdn$93.0) and contingent consideration valued at $14.5 (Cdn$19.5). Original Joe's is a Canadian multi-brand restaurant company based in the province of Alberta.

On September 2, 2016 Cara acquired a 100% equity interest in Groupe St-Hubert Inc. ("St-Hubert") for $413.8 (Cdn$538.7), comprised of cash consideration of $372.4 (Cdn$484.8) and the issuance of $41.4 (Cdn$53.9) of Cara subordinate voting shares to St-Hubert shareholders. A portion of the cash consideration was financed through a private placement of 7,863,280 Cara subordinate voting shares at a price of Cdn$29.25 for gross proceeds of $179.2 (Cdn$230.0), of which 3,418,804 shares were acquired by the company and its subsidiaries to maintain its equity and voting interests in Cara. St-Hubert is a Canadian full-service restaurant operator and fully integrated food manufacturer in the province of Quebec.

The year-over-year increases in the revenues and expenses of Restaurants and retail in 2017 primarily reflected increased revenue and expenses at Cara due to the inclusion of the full year results of St-Hubert and Original Joe's, and the consolidation of Pickle Barrel on December 1, 2017.

Fairfax India

Subsequent to December 31, 2017

On March 9, 2018 the company received a performance fee of $114.4 for the period January 30, 2015 to December 31, 2017 in the form of 7,663,685 newly issued Fairfax India subordinate voting shares, which increased the company's equity interest in Fairfax India to 33.6% from 30.2% at December 31, 2017.

On February 20, 2018 Fairfax India entered into an agreement to acquire a 51.0% equity interest in The Catholic Syrian Bank Ltd. ("CS Bank") for approximately $186 (12.1 billion Indian rupees). The transaction is subject to customary closing conditions and is expected to close in the first half of 2018. CS Bank, headquartered in Thrissur, Kerala, offers banking services across India.

Year ended December 31, 2017

On March 14, 2017 Fairchem Speciality Limited ("Fairchem") and Privi Organics Limited ("Privi Organics") completed their previously announced merger, with the merged entity continuing under the Fairchem name. As a result of the merger, Fairfax India, which had acquired a 44.7% interest in Fairchem on February 8, 2016 and a 50.8% interest in Privi Organics on August 26, 2016, became the dominant shareholder in Fairchem with a 48.7% interest. Prior to the merger, the company consolidated Privi Organics and applied the equity method of accounting to its investment in Fairchem.

On February 14, 2017 Fairfax India acquired a 51.0% interest in Saurashtra Freight Private Limited ("Saurashtra Freight") for cash consideration of $30.0 (2.0 billion Indian rupees). Saurashtra Freight operates a container freight station at the Mundra Port in the Indian state of Gujarat.

On January 13, 2017 the company acquired 12,340,500 subordinate voting shares of Fairfax India for $145.0 ($11.75 per share) in a private placement. Through that private placement and a contemporaneous bought deal public offering, Fairfax India raised proceeds of $493.5 net of commissions and expenses. Combined with various open market purchases of Fairfax India subordinate voting shares, the company's multiple voting shares and subordinate voting shares represented 93.6% of the voting rights and 30.2% of the equity interest in Fairfax India at the close of the aforementioned private placement and public offering.

Year ended December 31, 2016

On August 26, 2016 Fairfax India acquired a 50.8% equity interest in Privi Organics for $55.0 (3.7 billion Indian rupees) through the purchase of newly issued shares and shares acquired from existing shareholders. Privi Organics is a supplier of aroma chemicals to the fragrance industry.

On February 8, 2016 Fairfax India acquired a 44.7% interest in Adi Finechem Limited (subsequently renamed Fairchem Specialty Limited ("Fairchem")) for $19.4 (1.3 billion Indian rupees). Fairchem is a specialty chemical manufacturer in India of oleochemicals used in the paints, inks and adhesives industries, as well as intermediate nutraceutical and health products.

155

The year-over-year increases in the revenues and expenses of Fairfax India in 2017 primarily reflected the consolidation of Fairchem on March 14, 2017, the inclusion of the full year results of Privi Organics and increased business volumes at NCML. Interest and dividends in 2017 included the accrual of a performance fee of $114.4 payable to Fairfax for the period January 30, 2015 to December 31, 2017 (subsequently settled on March 9, 2018) as Fairfax India's common shareholders' equity at December 31, 2017 exceeded a specified hurdle rate for that period. The performance fee is an intercompany transaction that is eliminated on consolidation. The increase in share of profit of associates in 2017 primarily reflected the contribution from Bangalore Airport since March 24, 2017 and a year-over-year increase related to IIFL Holdings. Net losses on investments in 2017 primarily reflected net losses on Indian government bonds.

Thomas Cook India

Year ended December 31, 2017

On December 27, 2017 Quess acquired the facility management and catering business of Manipal Integrated Services Private Limited ("Manipal") for $152.5 (9.8 billion Indian rupees), primarily comprised of the issuance of $117.7 (7.5 billion Indian rupees) of Quess common shares to Manipal shareholders and the reinvestment of $34.3 (2.2 billion Indian rupees) of Quess' existing holdings of Manipal preferred shares upon cancellation of those shares. In November of 2017 Thomas Cook India sold a 5.4% equity interest in Quess for cash proceeds of $96.8 (6.3 billion Indian rupees). On August 18, 2017 Quess raised $132.2 (8.5 billion Indian rupees) in net proceeds following the completion of a private placement of common shares with institutional investors. These transactions at Thomas Cook India and Quess collectively reduced the company's indirect ownership of Quess from 42.1% to 33.1%. Quess is a provider of staffing and facilities management services.

The year-over-year increases in the revenues and expenses of Thomas Cook India in 2017 primarily reflected increased revenue and expenses at Quess driven by the growth in its business.

Other

Subsequent to December 31, 2017

On March 7, 2018 the company acquired the services business carried on in Canada by Carillion Canada Inc. and certain affiliates thereof (collectively "Carillion") relating to facilities management of airports, commercial and retail properties, defense facilities, select healthcare facilities and on behalf of oil, gas and mining clients. The transaction was approved by the Ontario Superior Court of Justice in Carillion's proceedings under the Companies' Creditors Arrangement Act (Canada). Carillion is an infrastructure services company that provides asset management and operations solutions to industries and governments.

Year ended December 31, 2017

On July 4, 2017 the company acquired control of Grivalia Properties REIC ("Grivalia Properties") by increasing its equity interest to 52.6% through the acquisition of an additional 10.3% equity interest from Eurobank Ergasias S.A. for cash consideration of $100.0 (€88.0) and commenced consolidating Grivalia Properties in the Other reporting segment. Grivalia Properties is a real estate investment company listed on the Athens Stock Exchange.

On February 17, 2017 the company acquired 22,715,394 multiple voting shares in a private placement and 2,500,000 subordinate voting shares as part of the initial public offering of Fairfax Africa Holdings Corporation ("Fairfax Africa") for total cash consideration of $252.2. The company also contributed its indirect equity interest in AFGRI Proprietary Limited ("AFGRI") with a fair value of $72.8 to Fairfax Africa in exchange for 7,284,606 multiple voting shares. Through its initial public offering, private placements and exercise of the over-allotment option by the underwriters, Fairfax Africa raised net proceeds of $493.3 after issuance costs and expenses, inclusive of the contribution of the investment in AFGRI. Following those transactions, the company's $325.0 ($10.00 per share) investment represented 98.8% of the voting rights and 64.2% of the equity interest in Fairfax Africa. Fairfax Africa was established, with the support of Fairfax, to invest in public and private equity and debt instruments of African businesses or other businesses with customers, suppliers or business primarily conducted in, or dependent on, Africa.

On January 26, 2017 the company invested $114.5 (Cdn$150.0) in securities of Mosaic Capital Corporation ("Mosaic Capital") issued through a private placement comprised of: (i) Cdn$100.0 principal amount of 6.00% senior preferred securities; (ii) Cdn$50.0 principal amount of 5.00% senior secured debentures; and (iii) warrants entitling the company to acquire up to 17,026,106 common shares of Mosaic Capital at a price of Cdn$8.81 per common

156

share at any time until January 26, 2024 (the "Mosaic warrants"). The company's Mosaic Capital warrants represent a potential voting interest of approximately 62% (assuming all holders of Mosaic Capital convertible securities, including the company, exercised their options to convert), giving the company the ability to control Mosaic Capital.

Year ended December 31, 2016

On October 31, 2016 the company acquired a 60.0% indirect interest in Golf Town Limited ("Golf Town") for $31.4 (Cdn$42.0). Golf Town is a Canadian specialty retailer of golf equipment, consumables, golf apparel and accessories.

The year-over-year increases in the revenues and expenses of Other in 2017 reflected the inclusion of the full year results of Golf Town and the consolidation of Mosaic Capital (on January 26, 2017) and Grivalia Properties (on July 4, 2017). Share of profit of associates in 2017 primarily reflected the contribution from joint ventures held by Grivalia Properties. Net gains on investments in 2017 primarily reflected net gains on Atlas Mara convertible bonds and equity call options held by Fairfax Africa.

Interest and Dividends

An analysis of interest and dividends is presented in the Investments section of this MD&A.

Net Gains (Losses) on Investments

An analysis of consolidated net gains (losses) on investments is provided in the Investments section of this MD&A.

Interest Expense

Consolidated interest expense increased to $331.2 in 2017 from $242.8 in 2016, primarily reflecting the impact of increased borrowings at Fairfax India and its subsidiaries, the issuance on December 16, 2016 of Cdn$450.0 principal amount of 4.70% unsecured senior notes due 2026, consolidation of the interest expense of Allied World, increased borrowings in 2017 on the holding company's revolving credit facility, increased subsidiary borrowings (primarily at Cara), consolidation of the interest expense of Grivalia Properties and Mosaic Capital and the issuance on December 4, 2017 of Cdn$650.0 principal amount of 4.25% unsecured senior notes due 2027.

Consolidated interest expense in 2017 of $331.2 (2016 – $242.8) was primarily attributable to interest expense at the holding company of $224.1 (2016 – $188.4). Interest expense by reporting segment is set out in the Sources of Net Earnings section of this MD&A.

Corporate Overhead and Other

Corporate overhead and other consists of the expenses of all of the group holding companies, net of investment management and administration fees earned by the holding company and the interest and dividend income earned on holding company cash and investments.

	2017		2016
Fairfax corporate overhead	143.7		106.4
Subsidiary holding companies' corporate overhead	49.5		15.5
Subsidiary holding companies' non-cash intangible asset amortization(1)	82.1		59.4
Holding company interest and dividends	4.1		11.5
Holding company share of (profit) loss of associates	(127.7	)	27.2
Investment management and administration fees	(236.8	)	(88.8	)
Loss on repurchase of long term debt	28.6		–
	(56.5	)	131.2

(1)

Non-cash amortization of intangible assets is principally comprised of customer and broker relationships.

Fairfax corporate overhead increased to $143.7 in 2017 from $106.4 in 2016, primarily reflecting increases in charitable donations and consulting fees, and fees related to the renegotiation of the company's revolving credit facility, partially offset by non-recurring expenses incurred in connection with business acquisitions in 2016 (principally Fairfax Latam).

157

Subsidiary holding companies' corporate overhead increased to $49.5 in 2017 from $15.5 in 2016, primarily reflecting restructuring costs incurred in 2017 at Bryte Insurance and Fairfax Latam, non-recurring expenses incurred in connection with the acquisition of Allied World, the consolidation of the corporate overhead of Allied World and increased charitable donations. Subsidiary holding companies' non-cash intangible asset amortization increased to $82.1 in 2017 from $59.4 in 2016, primarily due to amortization of intangible assets related to the acquisition of Allied World.

Holding company interest and dividends included total return swap expense which decreased to $16.8 in 2017 from $27.9 in 2016, primarily reflecting a reduction in short equity and equity index total return swaps in 2017. Excluding the impact of total return swap expense, holding company interest and dividends decreased to $12.7 in 2017 from $16.4 in 2016, primarily reflecting decreased interest income on bonds, partially offset by increased dividend income.

Holding company share of profit of associates of $127.7 in 2017 primarily reflected increased share of profit of Eurolife, partially offset by decreased share of profit of Gulf Insurance. Holding company share of loss of associates of $27.2 in 2016 included a non-cash impairment charge related to Resolute of $34.8.

Investment management and administration fees increased to $236.8 in 2017 from $88.8 in 2016, primarily reflecting the performance fee receivable from Fairfax India of $114.4 (2016 – nil) and increased investment and advisory fees earned on the investment portfolios of Allied World, Fairfax India and Fairfax Africa.

Loss on repurchase of long term debt arose on the early redemption of Cdn$388.4 principal amount 7.5% unsecured senior notes due 2019 and the purchase of principal amounts of $8.7, $5.8 and $3.3 of the holding company's unsecured senior notes due in 2019, 2020 and 2021. Refer to note 15 (Borrowings) to the consolidated financial statements for the year ended December 31, 2017.

Net gains (losses) on investments attributable to the Corporate and Other reporting segment are set out in the Investments section of this MD&A.

Income Taxes

The company's effective income tax rate in 2017 of 20.2% ($408.3 provision for income taxes) was lower than the company's Canadian statutory income tax rate of 26.5% primarily due to the impact of net gains on the sales of ICICI Lombard and First Capital which were not taxable in the jurisdictions in which they were held (income tax rate benefits of $246.5 in Mauritius and $269.9 in Barbados respectively) and non-taxable investment income (principally comprised of dividend income, non-taxable interest income and share of profit of associates in certain jurisdictions), partially offset by the revaluation of U.S. deferred tax assets as a result of U.S. tax reform (income tax rate charge of $222.4), losses at Allied World that are taxed at rates lower than the Canadian statutory income tax rate and a reduction in U.S. tax credits and operating losses capitalized in prior years primarily driven by the effects of U.S. tax reform (income tax rate charge of $89.7).

The company's effective income tax recovery rate in 2016 of 28.8% ($159.6 recovery of income taxes) was higher than the company's Canadian statutory income tax rate of 26.5% primarily due to non-taxable investment income (including dividend income and non-taxable interest income), losses incurred in the U.S. that are taxed at rates higher than the Canadian statutory income tax rate and income in the U.K. that is taxed at rates lower than the Canadian statutory rate, partially offset by deferred taxes not recorded in Canada.

For further details related to the impact of U.S. tax reform on the company's financial reporting, please refer to note 18 (Income Taxes) to the consolidated financial statements for the year ended December 31, 2017.

Non-controlling Interests

Non-controlling interests principally relate to Allied World, Fairfax India, Cara, Grivalia Properties, Brit, Thomas Cook India and Fairfax Africa. For further details refer to note 16 (Total Equity) to the consolidated financial statements for the year ended December 31, 2017.

158

Components of Consolidated Balance Sheets

Consolidated Balance Sheet Summary

The assets and liabilities reflected on the company's consolidated balance sheet at December 31, 2017 were primarily impacted by the acquisitions of Allied World and Fairfax Latam, the consolidation of Grivalia Properties and the divestiture of the company's 97.7% interest in First Capital. Refer to note 23 (Acquisitions and Divestitures) to the consolidated financial statements for the year ended December 31, 2017 for additional details related to these transactions.

Holding company cash and investments increased to $2,368.4 ($2,356.9 net of $11.5 of holding company short sale and derivative obligations) at December 31, 2017 from $1,371.6 at December 31, 2016 ($1,329.4 net of $42.2 of holding company short sale and derivative obligations). Significant cash movements at the holding company level in 2017 are as set out in the Financial Condition section of this MD&A under the heading Liquidity.

Insurance contract receivables increased by $1,769.4 to $4,686.9 at December 31, 2017 from $2,917.5 at December 31, 2016 primarily reflecting the impact of the consolidation of Allied World ($1,336.7) and Fairfax Latam ($162.9) and growth in business volumes at OdysseyRe and Brit, partially offset by the impact of the divestiture of First Capital ($113.1).

Portfolio investments comprise investments carried at fair value and equity accounted investments, the aggregate carrying value of which was $37,013.2 at December 31, 2017 ($36,898.5 net of subsidiary short sale and derivative obligations) compared to an aggregate carrying value at December 31, 2016 of $27,293.4 ($27,101.3 net of subsidiary short sale and derivative obligations). The increase of $9,797.2 primarily reflected the consolidation of the investment portfolios of Allied World ($7,918.8) and Fairfax Latam ($248.6), the net proceeds received from Fairfax Africa's initial public offering and Fairfax India's secondary offering and the favourable impact of foreign currency translation (principally the strengthening of the euro, Canadian dollar and the British pound relative to the U.S. dollar), partially offset by the divestiture of First Capital's investment portfolio ($686.7) and the reduction in ownership of ICICI Lombard (see the discussion of investments in associates below), in addition to the specific factors which caused movements in portfolio investments as discussed in the subsequent paragraphs.

Subsidiary cash and short term investments (including cash and short term investments pledged for short sale and derivative obligations) increased by $7,675.8, primarily reflecting the consolidation of the cash and short term investments of Allied World ($4,509.0) and Fairfax Latam ($77.2), the proceeds received from net sales of long dated U.S. state and municipal and corporate and other bonds (primarily corporate and other bonds that were part of the acquisition of Allied World) where a portion of the proceeds was retained in cash or invested in short term investments, and net proceeds received from Fairfax Africa's initial public offering, partially offset by the divestiture of the cash and short term investments of First Capital ($362.4).

Bonds (including bonds pledged for short sale derivative obligations) increased by $19.0 primarily reflecting the consolidation of the bond portfolios of Allied World ($2,306.2) and Fairfax Latam ($148.9), partially offset by net sales of U.S. state and municipal and corporate and other bonds (primarily corporate and other bonds that were part of the acquisition of Allied World), and the divestiture of the bond portfolio of First Capital ($140.9).

Common stocks increased by $698.8 primarily reflecting the consolidation of the common stock portfolios of Allied World ($833.8) and Fairfax Latam ($13.5), net unrealized appreciation and the favourable impact of foreign currency translation (principally the strengthening of the euro, Canadian dollar and the British pound relative to the U.S. dollar), partially offset by net sales of certain common stock investments and the divestiture of the common stock portfolio of First Capital ($117.0).

Investments in associates increased by $1,022.8 primarily reflecting associates acquired in 2017 by Fairfax India (Bangalore Airport) and Fairfax Africa (Atlas Mara) and the insurance and reinsurance companies (Farmers Edge, Astarta and Sigma), increased investments in associates owned prior to 2017 (APR Energy, IIFL Holdings and Peak Achievement) and the share of profit of associates ($200.5), partially offset by the reduction in ownership of ICICI Lombard (proceeds from the sale of a 24.3% equity interest in ICICI Lombard were remitted to the holding company and the remaining 9.9% equity interest in ICICI Lombard, previously reflected as an investment in associate within portfolio investments, was reclassified to common stock at FVTPL within holding company cash and investments (fair value of $549.0 at December 31, 2017).

Derivatives and other invested assets net of short sale and derivative obligations increased by $153.6 primarily due to investments in equity warrants, the closure of various short equity total return swaps and decreased payables to

159

counterparties to the company's U.S. treasury bond forward contracts (excluding the impact of collateral requirements), partially offset by net unrealized losses on CPI-linked derivatives.

Recoverable from reinsurers increased by $3,802.2 to $7,812.5 at December 31, 2017 from $4,010.3 at December 31, 2016 primarily reflecting the consolidation of Allied World ($2,879.6) and Fairfax Latam ($572.6) and the impact of current period catastrophe losses ceded to reinsurers (primarily by Brit, OdysseyRe and Advent), partially offset by a decrease at Run-off and the divestiture of the recoverable from reinsurers of First Capital ($447.1).

Deferred income taxes decreased by $351.8 to $380.8 at December 31, 2017 from $732.6 at December 31, 2016 primarily due to the revaluation of the net U.S. deferred tax asset to the lower corporate income tax rate as a result of U.S. tax reform, a reduction in tax credits and operating losses capitalized in prior years and deferred tax liabilities related to intangible assets recognized in connection with the acquisition of Allied World. Refer to note 18 (Income Taxes) to the consolidated financial statements for the year ended December 31, 2017 for additional details related to the impact of U.S. tax reform on the company's financial reporting.

Goodwill and intangible assets increased by $2,225.0 to $6,072.5 at December 31, 2017 from $3,847.5 at December 31, 2016 primarily as a result of the acquisitions of Allied World ($1,726.9) and Fairfax Latam ($23.3), the consolidation of Mosaic Capital ($49.0), various acquisitions by Quess ($204.5, including $154.2 related to Quess' acquisition of Manipal) and the favourable impact of foreign currency translation (principally the strengthening of the Canadian dollar and Indian rupee relative to the U.S. dollar), partially offset by non-cash intangible asset amortization ($159.5).

The aforementioned acquisitions, and the allocation of goodwill of $2,904.7 and intangible assets of $3,167.8 at December 31, 2017 (December 31, 2016 – $1,633.7 and $2,213.8) by operating segment, are described in note 23 (Acquisitions and Divestitures) to the consolidated financial statements for the year ended December 31, 2017. Impairment tests for goodwill and intangible assets not subject to amortization were completed in 2017 and it was concluded that no impairments had occurred.

Other assets increased by $2,309.9 to $4,828.3 at December 31, 2017 from $2,518.4 at December 31, 2016 primarily as a result of the consolidation of Grivalia Properties ($1,170.4 comprised principally of its portfolio of investment properties), Allied World ($356.0) and Fairfax Latam ($96.5). Acquisitions completed in 2017 and recorded in the Other reporting segment also contributed to increased other assets, primarily related to premises and equipment, inventories and sales receivables.

Provision for losses and loss adjustment expenses increased by $9,129.0 to $28,610.8 at December 31, 2017 from $19,481.8 at December 31, 2016 primarily reflecting the consolidation of Allied World ($7,787.9) and Fairfax Latam ($581.1), the impact of significant current period catastrophe losses (primarily related to Hurricanes Harvey, Irma and Maria and the California wildfires) and the impact on loss reserves of the strengthening of certain foreign currencies relative to the U.S. dollar (principally at OdysseyRe, Brit and Northbridge), partially offset by Runoff's continued progress settling its claims liabilities, the divestiture of the provision for loss and loss adjustment expenses of First Capital ($512.5) and prior year favourable reserve development (principally at OdysseyRe, Northbridge, Zenith National, Fairfax Asia and Group Re).

Non-controlling interests increased by $2,600.9 to $4,600.9 at December 31, 2017 from $2,000.0 at December 31, 2016 principally reflecting the consolidation of Allied World ($1,229.4) and Grivalia Properties ($517.6), Fairfax India's secondary offering in January 2017, Fairfax Africa's initial public offering in February 2017, the reduction in the company's indirect ownership of Quess from 42.1% to 33.1% and foreign currency translation (principally the strengthening of the Canadian dollar relative to the U.S. dollar), partially offset by the net loss attributable to non-controlling interests ($125.7) and dividends paid to non-controlling interests (principally the dividend paid by Brit to its minority shareholder OMERS). For further details refer to note 16 (Total Equity) and note 23 (Acquisitions and Divestitures) to the consolidated financial statements for the year ended December 31, 2017.

Comparison of 2016 to 2015 – Total assets increased to $43,384.4 at December 31, 2016 from $41,529.0 at December 31, 2015 primarily reflecting the acquisitions of Bryte Insurance, AMAG, St-Hubert and Original Joe's (at Cara) and Privi Organics (at Fairfax India) pursuant to the transactions described in note 23 (Acquisitions and Divestitures) to the consolidated financial statements for the year ended December 31, 2017.

160

Provision for Losses and Loss Adjustment Expenses

Since 1985, in order to ensure so far as possible that the company's provision for losses and loss adjustment expenses ("LAE") (often called "loss reserves" or "provision for claims") is adequate, management has established procedures so that the provision for losses and loss adjustment expenses at the company's insurance, reinsurance and run-off operations are subject to several reviews, including by one or more independent actuaries. The reserves are reviewed separately by, and must be acceptable to, internal actuaries at each operating company, the Chief Risk Officer at Fairfax, and one or more independent actuaries.

The tables below present the company's gross provision for losses and loss adjustment expenses by reporting segment and line of business for the years ended December 31:

2017

	Insurance and Reinsurance
	Northbridge	OdysseyRe	Crum & Forster	Zenith National	Brit	Allied World(1)	Fairfax Asia	Other	Operating Companies	Run-off	Corporate and Other		Consolidated
Property	285.5	1,575.6	146.9	23.6	674.7	1,382.8	99.8	604.5	4,793.4	32.9	–		4,826.3
Casualty	1,614.6	3,451.5	3,171.9	1,162.9	2,637.5	5,940.7	159.4	813.1	18,951.6	2,491.9	–		21,443.5
Specialty	57.6	348.5	149.8	7.7	782.2	452.3	100.2	272.6	2,170.9	170.1	–		2,341.0
	1,957.7	5,375.6	3,468.6	1,194.2	4,094.4	7,775.8	359.4	1,690.2	25,915.9	2,694.9	–		28,610.8
Intercompany	6.6	146.2	66.8	–	41.7	12.1	0.1	146.3	419.8	636.1	(1,055.9	)	–
Provision for losses and LAE	1,964.3	5,521.8	3,535.4	1,194.2	4,136.1	7,787.9	359.5	1,836.5	26,335.7	3,331.0	(1,055.9	)	28,610.8

2016

	Insurance and Reinsurance
	Northbridge	OdysseyRe	Crum & Forster	Zenith National	Brit	Allied World(1)	Fairfax Asia	Other	Operating Companies	Run-off	Corporate and Other		Consolidated
Property	251.3	1,199.2	147.9	10.1	378.4	–	239.0	283.4	2,509.3	120.9	–		2,630.2
Casualty	1,570.6	3,312.5	3,140.5	1,193.7	2,280.0	–	274.8	346.8	12,118.9	2,668.8	–		14,787.7
Specialty	47.4	328.3	210.8	8.7	703.5	–	284.6	181.3	1,764.6	299.3	–		2,063.9
	1,869.3	4,840.0	3,499.2	1,212.5	3,361.9	–	798.4	811.5	16,392.8	3,089.0	–		19,481.8
Intercompany	5.7	56.9	63.1	–	44.8	–	1.6	207.6	379.7	701.1	(1,080.8	)	–
Provision for losses and LAE	1,875.0	4,896.9	3,562.3	1,212.5	3,406.7	–	800.0	1,019.1	16,772.5	3,790.1	(1,080.8	)	19,481.8

(1)

Allied World is included in the company's financial reporting with effect from July 6, 2017.

In the ordinary course of carrying on business, the company's insurance, reinsurance and run-off companies may pledge their own assets as security for their own obligations to pay claims or to make premium (and accrued interest) payments. Circumstances where assets may be pledged (either directly or to support letters of credit) include: regulatory deposits (such as with U.S. states for workers' compensation business); deposits of funds at Lloyd's in support of London market underwriting; and by a non-admitted company under U.S. insurance regulations as security for claims assumed or to support funds withheld obligations. Generally, the pledged assets are released as the underlying payment obligation is fulfilled. The $5.7 billion of cash and investments pledged by the company's subsidiaries at December 31, 2017, as described in note 5 (Cash and Investments) to the consolidated financial statements for the year ended December 31, 2017, represented the aggregate amount at that date that had been pledged in the ordinary course of business to support each pledging subsidiary's respective obligations (these pledges do not involve the cross-collateralization by one group company of another group company's obligations).

Claims provisions are established by the company's primary insurance companies by the case method as claims are initially reported. The provisions are subsequently adjusted as additional information on the estimated ultimate amount of a claim becomes known during the course of its settlement. The company's reinsurance companies rely on initial and subsequent claims reports received from ceding companies to establish estimates of provision for claims.

161

In determining the provision to cover the estimated ultimate liability for all of the company's insurance and reinsurance obligations, a provision is also made for management's calculation of factors affecting the future development of claims including incurred but not reported claims based on the volume of business currently in force, the historical experience on claims and potential changes, such as changes in the underlying book of business, in law and in cost factors.

As time passes, more information about the claims becomes known and provision estimates are consequently adjusted upward or downward. Because of the various elements of estimation encompassed in this process and the time it takes to settle many of the more substantial claims, several years may be required before a meaningful comparison of actual losses to the original estimates of provision for claims can be developed.

The development of the provision for claims is often measured as the difference between estimates of reserves as of the initial year-end and the re-estimated liability at each subsequent year-end. This is based on actual payments in full or partial settlement of claims, plus re-estimates of the reserves required for claims still open or claims still unreported. Favourable development (or redundancies) means that subsequent reserve estimates are lower than originally indicated, while unfavourable development (or deficiencies) means that the original reserve estimates were lower than subsequently indicated. The net favourable reserve development in the two tables that follow excludes the loss reserve development of a subsidiary in the year it is acquired. In the second table below, a subsidiary's provision for claims balance at December 31 in the year of acquisition is included in the line 'Provision for claims of companies acquired during the year at December 31', whereas the net favourable reserve development as set out in the Sources of Net Earnings section of this MD&A and the consolidated statement of earnings includes the loss reserve development of a subsidiary from its acquisition date.

Aggregate net favourable development for the years ended December 31, 2017 and 2016 were comprised as shown in the following table:

		Favourable/(Unfavourable)
		2017(1)		2016(2)
Insurance and Reinsurance
	Northbridge	93.5		112.8
	OdysseyRe	288.1		266.5
	Crum & Forster	10.2		8.3
	Zenith National	76.4		101.0
	Brit	9.5		53.5
	Fairfax Asia	53.1		50.7
	Other	36.3		60.4
Operating companies		567.1		653.2
Run-off		(112.5	)	(79.5	)
		454.6		573.7

(1)

Excludes net unfavourable development of companies acquired in 2017 – Allied World ($71.9), Fairfax Latam ($6.7) and Prudential Assurance Malaysia ($0.8). Also excluded in 2017 is net favourable development on the CTR Life business ($4.0).

(2)

Excludes net favourable development of companies acquired in 2016 – Fairfirst Insurance ($1.4).

162

Changes in provision for losses and loss adjustment expenses recorded on the consolidated balance sheets and the related impact on unpaid claims and allocated loss adjustment expenses for the years ended December 31 were as shown in the following table:

Reconciliation of Provision for Claims – Consolidated

		2017		2016		2015		2014		2013
Provision for claims at January 1 – net		16,289.4		16,596.3		14,378.2		14,981.6		15,075.8
Foreign exchange effect of change in provision for claims		463.3		(103.7	)	(559.3	)	(496.2	)	(128.0	)
Provision for claims occurring:
	In the current year	6,192.9		5,286.9		4,307.0		4,166.2		4,151.2
	In the prior years	(454.6	)	(573.7	)	(467.5	)	(374.4	)	(476.0	)
Paid on claims during the year related to:
	The current year	(1,691.3	)	(1,304.5	)	(1,055.3	)	(1,076.7	)	(1,050.8	)
	The prior years	(3,876.8	)	(3,695.2	)	(2,688.4	)	(2,822.7	)	(3,068.7	)
Provision for claims of companies acquired during the year at December 31		5,725.0		83.3		2,681.6		0.4		478.1
Divestiture of subsidiary		(235.5	)	–		–		–		–
Provision for claims at December 31 before the undernoted		22,412.4		16,289.4		16,596.3		14,378.2		14,981.6
CTR Life(1)		8.7		12.8		14.2		15.2		17.9
Provision for claims at December 31 – net		22,421.1		16,302.2		16,610.5		14,393.4		14,999.5
Reinsurers' share of provision for claims at December 31		6,189.7		3,179.6		3,205.9		3,355.7		4,213.3
Provision for claims at December 31 – gross		28,610.8		19,481.8		19,816.4		17,749.1		19,212.8

(1)

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

The foreign exchange effect of change in provision for claims principally related to the impact in 2017 of the strengthening of the the Canadian dollar, British pound and the euro relative to the U.S. dollar (principally at OdysseyRe, Northbridge, Brit and Run-off). In general, the company manages foreign currency risk on claims liabilities by investing in financial instruments and other assets denominated in the same currency as the liabilities to which they relate.

The company endeavours to establish adequate provisions for losses and loss adjustment expenses at the original valuation date, with the objective of achieving net favourable prior period reserve development at subsequent valuation dates. The reserves will always be subject to upward or downward development in the future and future development could be significantly different from the past due to many unknown factors.

Available on Fairfax's website (www.fairfax.ca) in the Annual Financial Supplement for the year ended December 31, 2017 are tables that show the historical reserve reconciliation and the reserve development of Northbridge, OdysseyRe, Crum & Forster, Zenith National, Fairfax Asia and Insurance and Reinsurance – Other (comprised of Group Re, Bryte Insurance, Advent, Fairfax Latin America and Fairfax Central and Eastern Europe), and Run-off's reconciliation of provision for claims.

Asbestos, Pollution and Other Hazards

General Discussion

The company's exposure to asbestos claims, environmental pollution and other types of mass tort or health hazard claims (collectively "APH exposures") are described in more detail in the following paragraphs.

A number of the company's subsidiaries wrote general liability policies and reinsurance prior to their acquisition by Fairfax under which policyholders continue to present asbestos-related injury claims. Substantially all of the company's exposure to asbestos losses are now under the management of Run-off. The vast majority of these claims are presented under policies written many years ago. There is a great deal of uncertainty surrounding these types of claims, which impacts the ability of insurers and reinsurers to estimate the ultimate amount of unpaid claims and

163

related settlement expenses. The majority of these claims differ from most other types of claims because there is inconsistent precedent, if any at all, to determine what, if any, coverage exists or which, if any, policy years and insurers/reinsurers may be liable. These uncertainties are exacerbated by judicial and legislative interpretations of coverage that in some cases have eroded the clear and express intent of the parties to the insurance contracts, and in others have expanded theories of liability. Further, asbestos litigation itself continues to be an imperfect process for resolving asbestos claims fairly and cost effectively. The insurance industry as a whole is engaged in extensive litigation over these coverage and liability issues and is thus confronted with continuing uncertainty in its efforts to quantify asbestos exposures.

The company also faces exposure to other types of mass tort or health hazard claims including claims related to environmental pollution and exposure to potentially harmful products or substances such as breast implants, pharmaceutical products, chemical products, lead-based pigments, tobacco, hepatitis C, talc, head trauma and in utero exposure to diethylstilbestrol ("DES"). Tobacco, although a significant potential risk to the company, has not presented significant actual exposure to date. Methyl tertiary butyl ether ("MTBE") contamination of underground drinking water supplies was a significant potential health hazard, and while the company has resolved most of its potential MBTE exposures, some exposure lingers. Although still a risk due to occasional unfavourable court decisions, lead pigment has had some favourable underlying litigation developments resulting in this hazard presenting less of a risk to the company. The company has been monitoring claims alleging breast cancer as a result of in utero exposure to DES, a synthetic estrogen supplement prescribed to prevent miscarriages or premature births. Since first emerging several years ago, the DES breast cancer claims have not progressed due to a lack of widely accepted scientific support for such claims. The company is also monitoring an emerging body of claims by women who claim exposure to talc as an ingredient of consumer products such as powders and cosmetics resulted in ovarian cancer. Since 2016, a number of large talc verdicts have been awarded against a number of defendants. However, there have been developments in defendants' favour in 2017, including the reversal of two sizeable plaintiff verdicts by appellate courts based on jurisdictional and scientific defenses as well as a defense verdict.

Asbestos Claims Discussion

Tort reform in the first decade of the millennium, both legislative and judicial, has had a significant impact on the asbestos litigation landscape. The majority of claims now being filed and litigated continue to be mesothelioma and lung cancer claims, with cases alleging less serious injury continuing to be brought in a small number of jurisdictions. With unimpaired and non-malignant claims brought much less frequently, the litigation industry has focused on the more seriously injured plaintiffs, and the number of mesothelioma cases has not tailed off as expected. Though there are fewer cases overall, the average number of defendants named in each case continues to rise, and each year more defendants not previously sued for asbestos liability are named in lawsuits for the first time. Furthermore, there continues to be an increase in the settlement value of asbestos cases involving malignancies. Defense costs have also increased because the malignancy cases often are more heavily litigated than the non-malignancy cases and because the asbestos litigation process and practices in the U.S. continue to be inefficient. Asbestos trial results have been mixed, with both plaintiff and defense verdicts having been rendered in courts throughout the U.S. Some plaintiffs continue to focus their efforts on maximizing their recoveries in the U.S. tort system from solvent defendants by heavily emphasizing their exposure to these defendants' products and operations, however limited that exposure may have been. Separately, these plaintiffs also seek to recover from the trusts established by the bankruptcies of large asbestos manufacturing defendants associated with significant and prolonged worksite contamination, which, in some cases, is not identified in the allegations in the tort system. The unfortunate result in these instances is a disproportionate shift in financial responsibility for alleged asbestos injuries from large bankrupt entities to solvent peripheral defendants. The company continues to implement strategies and initiatives to address these issues and will prudently evaluate and adjust its asbestos reserves as necessary as the litigation landscape continues to evolve. As set out in the table that follows, the company has strengthened asbestos reserves by $153.0 or 11.4% in 2017.

In November 2016 A.M. Best Company issued its Asbestos Review, where it estimated net ultimate asbestos losses in the U.S. property and casualty industry at $100 billion, an increase of more than $15 billion from its previous review, citing "an unstable environment faced with evolving litigation, increasing secondary exposure cases, and an increase in life expectancy." The company has seen some of the underlying litigation factors that A.M. Best cites in the asbestos claims in the Run-off portfolio. The policyholders with the most significant asbestos exposure continue to be defendants who manufactured, distributed or installed asbestos products on a nationwide basis. The run-off companies are exposed to these risks and have the bulk of the direct asbestos exposure within Fairfax. While these

164

insureds are relatively small in number, asbestos exposures for such entities have increased over the past decade due to the rising volume of claims, the erosion of underlying limits, and the bankruptcies of target defendants. In addition, less prominent or "peripheral" defendants, including a mix of manufacturers, distributors, and installers of asbestos-containing products, as well as premises owners continue to present with new reports. For the most part, these insureds are defendants on a regional rather than nationwide basis. Reinsurance contracts entered into before 1984 also continue to present exposure to asbestos.

Reserves for asbestos cannot be estimated using traditional loss reserving techniques that rely on historical accident year loss development factors. Because each insured presents different liability and coverage issues, the company evaluates its asbestos exposure on an insured-by-insured basis. Since the mid-1990's Fairfax has utilized a sophisticated, non-traditional methodology that draws upon company experience and asbestos claim data sets to assess asbestos liabilities on reported claims. The methodology utilizes a ground-up, exposure-based analysis that constitutes the industry "best practice" approach for asbestos reserving. The methodology was initially critiqued by outside legal and actuarial consultants, and the results are reviewed annually by actuaries, all of whom have consistently found the methodology comprehensive and the results reasonable.

In the course of the insured-by-insured evaluation of exposure the following factors are considered: available insurance coverage, including any umbrella or excess insurance that has been issued to the insured; limits, deductibles, and self-insured retentions; an analysis of each insured's potential liability; the jurisdictions involved; past and anticipated future asbestos claim filings against the insured; loss development on pending claims; past settlement values of similar claims; allocated claim adjustment expenses; applicable coverage defenses and the impact of the defense strategies and initiatives advanced on behalf of each insured.

Following is an analysis of the company's gross and net loss and ALAE reserves from asbestos exposures as at December 31, 2017 and 2016, and the movement in gross and net reserves for those years:

	2017				2016
	Gross		Net		Gross		Net
Asbestos
Provision for asbestos claims and ALAE at January 1	1,347.7		1,065.5		1,381.0		1,043.8
Asbestos losses and ALAE incurred during the year	153.0		141.8		219.9		218.7
Asbestos losses and ALAE paid during the year	(208.6	)	(174.0	)	(253.2	)	(197.0	)
Provision for asbestos claims and ALAE at December 31	1,292.1		1,033.3		1,347.7		1,065.5

Summary

Management believes that the asbestos reserves reported at December 31, 2017 are reasonable estimates of the ultimate remaining liability for these claims based on facts currently known, the present state of the law and coverage litigation, current assumptions, and the reserving methodologies employed. These asbestos reserves are continually monitored by management and reviewed by actuaries. To the extent that future social, scientific, economic, legal, or legislative developments alter the volume of claims, the liabilities of policyholders, the original intent of the policies and the ability to recover reinsurance, adjustments to loss reserves may emerge in future periods.

Recoverable from Reinsurers

The company's subsidiaries purchase reinsurance to reduce their exposure on the insurance and reinsurance risks they underwrite. Credit risk associated with reinsurance is managed through adherence to internal reinsurance guidelines whereby the company`s ongoing reinsurers generally must have high A.M. Best and/or Standard & Poor's financial strength ratings and maintain capital and surplus exceeding $500.0. Most of the reinsurance balances for reinsurers rated B++ and lower or which are not rated were inherited by the company on acquisition of a subsidiary.

Recoverable from reinsurers of $7,812.5 on the consolidated balance sheet at December 31, 2017 consisted of future recoverables from reinsurers on unpaid claims ($6,216.2), reinsurance receivable on paid losses ($593.7) and the unearned portion of premiums ceded to reinsurers ($1,169.0), net of provision for uncollectible balances ($166.4). Recoverables from reinsurers on unpaid claims increased by $3,006.2 to $6,216.2 at December 31, 2017 from $3,210.0 at December 31, 2016 principally reflecting the consolidation of the recoverable from reinsurers of Allied

165

World and Fairfax Latam (refer to note 23 (Acquisitions and Divestitures) to the consolidated financial statements for the year ended December 31, 2017) and current period catastrophe losses ceded to reinsurers.

The following table presents the company's top 25 reinsurance groups (ranked by gross recoverable from reinsurers) at December 31, 2017, which represented 81.0% (December 31, 2016 – 72.2%) of total recoverable from reinsurers.

Reinsurance group	Principal reinsurers	A.M. Best rating (or S&P equivalent)(1)	Gross recoverable from reinsurers(2)		Net unsecured recoverable from reinsurers(3)
Munich	Munich Reinsurance Company	A+	1,181.5		1,027.1
Swiss Re	Swiss Reinsurance America Corporation	A+	737.0		726.7
Lloyd's	Lloyd's	A	520.5		516.4
AIG	American Home Assurance Company	A	520.2		510.9
Markel	Markel CATCo Reinsurance Ltd	A	462.6		235.0
Everest	Everest Reinsurance (Bermuda), Ltd	A+	372.4		328.2
AXIS	AXIS Reinsurance Company	A+	329.8		318.1
HDI	Hannover Rück SE	A+	317.5		307.4
Berkshire Hathaway	General Reinsurance Corporation	A++	259.5		258.3
Alleghany	Transatlantic Reinsurance Company	A+	194.2		191.3
SCOR	SCOR Global P&C SE	A+	152.6		151.2
Arch Capital	Arch Reinsurance Company	A+	149.6		144.7
XL	XL Insurance Company of New York, Inc.	A	145.7		139.6
RenaissanceRe	Renaissance Reinsurance US Inc	A	145.7		138.7
Liberty Mutual	Liberty Mutual Insurance Company	A	130.7		130.6
WR Berkley	Berkley Insurance Company	A+	113.2		109.7
EXOR	Partner Reinsurance Company of the U.S.	A	110.1		106.2
QBE	QBE Reinsurance Corporation	A	104.0		103.3
Chubb	Chubb Tempest Reinsurance Ltd	A++	98.8		70.5
Tokio Marine	Tokio Millennium Re AG	A++	84.9		81.4
Aspen	Aspen Insurance UK Ltd	A	78.8		78.8
Singapore Re	Singapore Reinsurance Corporation Ltd	A-	66.2		66.2
Nationwide	Nationwide Mutual Insurance Company	A+	65.9		65.7
Validus	AlphaCat Reinsurance Limited	A	61.4		24.4
ARAG Holding	ARAG Allgemeine Versicherungs-AG	NR	60.1		60.1
Top 25 reinsurance groups			6,462.9		5,890.5
Other reinsurers			1,516.0		1,175.5
Total recoverable from reinsurers			7,978.9		7,066.0
Provision for uncollectible reinsurance			(166.4	)	(166.4	)
Recoverable from reinsurers			7,812.5		6,899.6

(1)

Financial strength rating of principal reinsurer (or, if principal reinsurer is not rated, of the group).

(2)

Excludes specific provisions for uncollectible reinsurance.

(3)

Net of outstanding balances for which security was held, and excludes specific provisions for uncollectible reinsurance.

The following table presents the classification of the $7,812.5 recoverable from reinsurers according to the financial strength rating of the responsible reinsurers at December 31, 2017, shown separately for the insurance and reinsurance operations and for the run-off operations. At December 31, 2017 approximately 8.7% (December 31,

166

2016 – 19.3%) of the consolidated recoverable from reinsurers related to run-off operations. Pools and associations, shown separately, generally consist of government or similar insurance funds carrying limited credit risk.

	Insurance and Reinsurance					Run-off					Consolidated
A.M. Best rating (or S&P equivalent)	Gross recoverable from reinsurers		Balance for which security is held	Net unsecured recoverable from reinsurers		Gross recoverable from reinsurers		Balance for which security is held	Net unsecured recoverable from reinsurers		Gross recoverable from reinsurers		Balance for which security is held	Net unsecured recoverable from reinsurers
A++	353.0		30.9	322.1		76.6		1.0	75.6		429.6		31.9	397.7
A+	3,596.3		242.8	3,353.5		282.1		24.4	257.7		3,878.4		267.2	3,611.2
A	2,178.8		81.8	2,097.0		133.1		13.6	119.5		2,311.9		95.4	2,216.5
A-	235.6		9.4	226.2		9.9		5.7	4.2		245.5		15.1	230.4
B++	20.2		0.2	20.0		2.0		1.0	1.0		22.2		1.2	21.0
B+	2.2		0.4	1.8		0.9		0.4	0.5		3.1		0.8	2.3
B or lower	3.1		3.0	0.1		2.3		–	2.3		5.4		3.0	2.4
Not rated	649.1		413.4	235.7		299.1		80.4	218.7		948.2		493.8	454.4
Pools and associations	125.0		4.5	120.5		9.6		–	9.6		134.6		4.5	130.1
	7,163.3		786.4	6,376.9		815.6		126.5	689.1		7,978.9		912.9	7,066.0
Provision for uncollectible reinsurance	(31.9	)		(31.9	)	(134.5	)		(134.5	)	(166.4	)		(166.4	)
Recoverable from reinsurers	7,131.4			6,345.0		681.1			554.6		7,812.5			6,899.6

To support recoverable from reinsurers balances, the company had the benefit of letters of credit or trust funds totaling $912.9 at December 31, 2017 as follows:

•

for reinsurers rated A – or better, security of $409.6 against outstanding reinsurance recoverables of $6,865.4;



•

for reinsurers rated B++ or lower, security of $5.0 against outstanding reinsurance recoverables of $30.7;



•

for unrated reinsurers, security of $493.8 against outstanding reinsurance recoverables of $948.2; and



•

for pools and associations, security of $4.5 against outstanding reinsurance recoverables of $134.6.

In addition to the above security arrangements, Lloyd's is also required to maintain funds in Canada and the United States that are monitored by the applicable regulatory authorities in those jurisdictions.

Substantially all of the provision for uncollectible reinsurance of $166.4 at December 31, 2017 related to the $480.1 of net unsecured reinsurance recoverables from reinsurers rated B++ or lower or which are unrated (which excludes pools and associations).

Based on the preceding analysis of the company's recoverable from reinsurers and on the credit risk analysis performed by the company's reinsurance security department as described below, the company believes that its provision for uncollectible reinsurance has reasonably estimated all incurred losses arising from uncollectible reinsurance at December 31, 2017.

The company's reinsurance security department, with its dedicated specialized personnel and expertise in analyzing and managing credit risk, is responsible for the following with respect to recoverable from reinsurers: evaluating the creditworthiness of all reinsurers and recommending to the company's reinsurance committee those reinsurers which should be included on the list of approved reinsurers; on a quarterly basis, monitoring reinsurance recoverables by reinsurer, by operating company, and in aggregate, and recommending the appropriate provision for uncollectible reinsurance; and pursuing collections from, and global commutations with, reinsurers which are either impaired or considered to be financially challenged.

The insurance and reinsurance companies purchase reinsurance to achieve various objectives including protection from catastrophic financial loss resulting from a single event, such as the total loss of a large manufacturing plant from a fire, protection against the aggregation of many smaller claims resulting from a single event, such as an earthquake or major hurricane, that may affect many policyholders simultaneously and generally to protect capital by limiting loss exposure to acceptable levels. Consolidated net earnings included the pre-tax benefit of ceded reinsurance of $621.3 (2016 – pre-tax cost of $123.1). The consolidated pre-tax impact of ceded reinsurance was comprised as follows: reinsurers' share of premiums earned (see tables which follow this paragraph); commissions earned on reinsurers' share of premiums earned of $347.1 (2016 – $267.4); losses on claims ceded to reinsurers of $2,367.1 (2016 – $952.1); and recovery of uncollectible reinsurance of $7.7 (2016 – $4.9).

167

Year ended December 31, 2017

	Insurance and Reinsurance
															Corporate and Other
	Northbridge		OdysseyRe	Crum & Forster	Zenith National		Brit	Allied World(1)	Fairfax Asia		Other	Operating companies	Run-off	Other		Inter- company		Consolidated
Reinsurers' share of premiums earned	121.2		283.1	292.6	11.9		465.8	390.7	330.8		414.1	2,310.2	0.1	–	–	(209.7	)	2,100.6
Pre-tax benefit (cost) of ceded reinsurance	(60.2	)	156.4	90.1	(11.8	)	155.8	318.7	(75.8	)	19.0	592.2	68.7	–	–	(39.6	)	621.3

Year ended December 31, 2016

	Insurance and Reinsurance
																			Corporate and Other
	Northbridge		OdysseyRe		Crum & Forster	Zenith National		Brit		Allied World(1)	Fairfax Asia		Other		Operating companies		Run-off	Other		Inter- company		Consolidated
Reinsurers' share of premiums earned	113.5		300.3		258.7	11.9		341.0		–	338.9		155.1		1,519.4		0.5	–	–	(172.4	)	1,347.5
Pre-tax benefit (cost) of ceded reinsurance	(36.5	)	(16.6	)	128.0	(12.5	)	(113.8	)	–	(11.2	)	(85.6	)	(148.2	)	77.9	–	–	(52.8	)	(123.1	)

(1)

Allied World is included in the company's financial reporting with effect from July 6, 2017.

Reinsurers' share of premiums earned increased from $1,347.5 in 2016 to $2,100.6 in 2017 primarily reflecting the consolidation of Allied World and Fairfax Latam, the inclusion of the full year results of Bryte Insurance, increases at Crum & Forster (consistent with increased business volumes) and Brit (primarily reflecting lower risk retention), and higher reinstatement premiums paid as a result of current period catastrophe losses in 2017, partially offset by a decrease at OdysseyRe (primarily reflecting the non-renewal in 2017 of a specific fronting arrangement).

Commissions earned on reinsurers' share of premiums earned increased from $267.4 in 2016 to $347.1 in 2017 primarily reflecting the consolidation of Allied World and Fairfax Latam, the inclusion of the full year results of Bryte Insurance and increases at Crum & Forster and Brit consistent with the increase in reinsurers' share of premiums earned.

Reinsurers' share of losses on claims increased from $952.1 in 2016 to $2,367.1 in 2017 primarily reflecting the consolidation of Allied World and Fairfax Latam, the inclusion of the full year results of Bryte Insurance and significant current period catastrophe losses in 2017. The company recorded net recoveries of uncollectible reinsurance of $7.7 in 2017 (2016 – $4.9).

The use of reinsurance in 2017 decreased cash provided by operating activities by approximately $469 (2016 – $152). The increase in cash used in operating activities in 2017 primarily reflected the timing of premiums paid to reinsurers ($2,224.0 in 2017 compared to $1,445.9 in 2016) being sooner than the receipt of reinsurance recoverables, primarily related to significant current period catastrophe losses in 2017 (total reinsurance recoveries received of $1,314.0 in 2017 compared to $1,017.4 in 2016).

Investments

Hamblin Watsa Investment Counsel Ltd.

Hamblin Watsa Investment Counsel Ltd. ("Hamblin Watsa") is a wholly owned subsidiary of the company that serves as the investment manager for Fairfax, its insurance, reinsurance and run-off companies, Fairfax India and Fairfax Africa. Following a long-term value-oriented investment philosophy with primary emphasis on the preservation of invested capital, Hamblin Watsa looks for investments with a margin of safety by conducting thorough proprietary analysis of investment opportunities and markets to assess the financial strength of issuers, identifying attractively priced securities selling at discounts to intrinsic value and hedging risks where appropriate. Hamblin Watsa is opportunistic and disciplined in seeking undervalued securities in the market, often investing in out-of-favour securities when sentiment is negative, and willing to maintain a large proportion of its investment portfolio in cash and cash equivalents when it perceives markets to be over-valued.

Hamblin Watsa generally operates as a separate investment management entity, with Fairfax's CEO and one other corporate officer being members of Hamblin Watsa's investment committee. This investment committee is responsible for making all investment decisions, subject to relevant regulatory guidelines and constraints, and oversight by management of Hamblin Watsa. Fairfax's Board of Directors, its insurance, reinsurance and run-off

168

companies, Fairfax India and Fairfax Africa are kept apprised of significant investment decisions through the financial reporting process as well as periodic presentations by Hamblin Watsa management.

Overview of Investment Performance

Investments at their year-end carrying values (including at the holding company) for the company's first year and for the past ten years are presented in the following table. Included in bonds are U.S. treasury bond forward contracts, CPI-linked derivatives and credit default swaps and included in common stocks are investments in associates and equity derivatives.

Year(1)	Cash and short term investments	Bonds(2)	Preferred stocks	Common stocks	Real estate(3)	Total(4)	Per share ($)
1985	6.4	14.1	1.0	2.5	–	24.0	4.80
--
2008	6,343.5	9,069.6	50.3	4,480.0	6.4	19,949.8	1,140.85
2009	3,658.8	11,550.7	357.6	5,697.9	8.0	21,273.0	1,064.24
2010	4,073.4	13,353.5	627.3	5,095.3	150.5	23,300.0	1,139.07
2011	6,899.1	12,074.7	608.3	4,448.8	291.6	24,322.5	1,193.70
2012	8,085.4	11,545.9	651.4	5,397.6	413.9	26,094.2	1,288.89
2013	7,988.0	10,710.3	764.8	4,951.0	447.5	24,861.6	1,172.72
2014	6,428.5	12,660.3	520.6	5,968.1	615.2	26,192.7	1,236.90
2015	7,368.7	14,905.0	116.9	6,124.4	501.1	29,016.1	1,306.22
2016	11,214.4	10,358.3	70.6	6,281.1	506.3	28,430.7	1,231.11
2017(5)	19,186.2	10,392.5	299.6	9,014.1	363.0	39,255.4	1,414.55

(1)

IFRS basis for 2010 to 2017; Canadian GAAP basis for 2009 and prior. Under Canadian GAAP, investments were generally carried at cost or amortized cost in 2006 and prior.

(2)

Includes the company's investment in other funds with a carrying value of $90.9 at December 31, 2017 (December 31, 2016 – $157.1, December 31, 2015 – $1.094.0) that are invested principally in fixed income securities.

(3)

Includes the company's equity-accounted investments in KWF LPs, and Grivalia Properties prior to its consolidation effective July 4, 2017.

(4)

Net of short sale and derivative obligations of both the holding company and the operating companies commencing in 2004.

(5)

Includes Allied World's investment portfolio of $7,918.8, which the company commenced consolidating on July 6, 2017.

Investments per share increased by $183.44 to $1,414.55 at December 31, 2017 from $1,231.11 at December 31, 2016. Approximately $106 of the increase in investments per share reflected the factors that increased investments described under the heading "Components of Consolidated Balance Sheets" in this MD&A (excluding the impact of the acquisition of Allied World). Approximately $56 of the increase in investments per share reflected the consolidation of Allied World's investment portfolio of $7,918.8 relative to the 5,075,894 subordinate voting shares issued to acquire Allied World. The remaining increase in investments per share of approximately $21 reflected the impact of net repurchases of shares by the company for treasury for use in its share-based payment awards and for cancellation pursuant to normal course issuer bids. Fairfax common shares effectively outstanding increased to 27,751,073 at December 31, 2017 from 23,093,566 at December 31, 2016. Since 1985, investments per share have compounded at a rate of 19.4% per year, including the impact of acquisitions.

Interest and Dividends

The majority of interest and dividends is earned by the insurance, reinsurance and run-off companies. Interest and dividends on holding company cash and investments was $12.7 in 2017 (2016 – $16.4) prior to giving effect to total

169

return swap expense of $16.8 (2016 – $27.9). Interest and dividends earned in the company's first year and for the past ten years is presented in the following table.

		Interest and dividends
	Average	Pre-tax			After tax
Year(1)	Investments at carrying value(2)	Amount	Yield(3) (%)	Per share ($)	Amount(4)	Yield(3) (%)	Per share ($)
1986	46.3	3.4	7.34	0.70	1.8	3.89	0.38
--
2008	19,468.8	626.4	3.22	34.73	416.6	2.14	23.10
2009	20,604.2	712.7	3.46	38.94	477.5	2.32	26.09
2010	22,270.2	711.5	3.20	34.82	490.9	2.20	24.02
2011	23,787.5	705.3	2.97	34.56	505.7	2.13	24.78
2012	25,185.2	409.3	1.63	19.90	300.8	1.19	14.63
2013	25,454.7	376.9	1.48	18.51	277.0	1.09	13.60
2014	25,527.2	403.8	1.58	18.70	296.8	1.16	13.74
2015	27,604.4	512.2	1.86	22.70	376.5	1.36	16.69
2016	28,723.4	555.2	1.93	24.12	408.1	1.42	17.73
2017	33,843.1	559.0	1.65	21.42	410.9	1.21	15.74

(1)

IFRS basis for 2010 to 2017; Canadian GAAP basis for 2009 and prior. Under Canadian GAAP, investments were generally carried at cost or amortized cost in 2006 and prior.

(2)

Comprised of cash and investments at both the holding company and operating companies, net of short sale and derivative obligations commencing in 2004.

(3)

Interest and dividends, on a pre-tax and after-tax basis, expressed as a percentage of average investments at carrying value.

(4)

Tax effected at the company's Canadian statutory income tax rate.

Interest and dividends increased modestly to $559.0 in 2017 from $555.2 in 2016, primarily reflecting lower total return swap expense, partially offset by lower interest earned. Lower interest earned principally reflected sales of U.S. treasury and municipal bonds late in 2016 and in the first quarter of 2017, partially offset by the impact of consolidating Allied World's investment portfolio and the higher interest earned on increased holdings of cash and short term investments. Total return swap expense decreased to $53.2 in 2017 from $146.4 in 2016, primarily reflecting the closure of the Russell 2000 short equity index total return swaps in the fourth quarter of 2016.

The company's pre-tax interest and dividends yield decreased from 1.93% in 2016 to 1.65% in 2017 and the company's after-tax interest and dividends yield decreased from 1.42% in 2016 to 1.21% in 2017. Prior to giving effect to the interest which accrued to reinsurers on funds withheld of $2.8 (2016 – $0.9) and total return swap expense of $53.2 (2016 – $146.4), interest and dividends in 2017 of $609.4 (2016 – $700.7) produced a pre-tax gross portfolio yield of 1.80% (2016 – 2.44%). The decline in the pre-tax gross portfolio yield was primarily due to lower interest earned on bonds as the result of sales of U.S. treasury and municipal bonds late in 2016 and in the first quarter of 2017 as described in the preceding paragraph.

Share of Profit of Associates

Share of profit of associates increased to $200.5 in 2017 from $24.2 in 2016, primarily due to year-over-year increases of $124.0 related to Eurolife and a non-cash impairment charge of $100.4 recognized on Resolute in 2016. Details of the company's associates and transactions related to associates are described in note 6 (Investments in Associates) to the consolidated financial statements for the year ended December 31, 2017.

170

Net Gains (Losses) on Investments

Net gains on investments of $1,467.5 in 2017 (2016 – net losses on investments of $1,203.6) were comprised as shown in the following table:

		2017						2016
		Net realized gains (losses)		Net change in unrealized gains (losses)		Net gains (losses) on investments		Net realized gains (losses)		Net change in unrealized gains (losses)		Net gains (losses) on investments
	Common stocks	125.1		582.7		707.8		(151.2)	(5)(6)	73.2	(5)(6)	(78.0	)
	Preferred stocks – convertible	–		(1.6	)	(1.6	)	(68.0)	(5)(7)	61.4	(5)(7)	(6.6	)
	Bonds – convertible	25.9		207.2		233.1		35.0		(74.4	)	(39.4	)
	Gain on disposition of associates(1)	69.8		–		69.8		–		–		–
	Other equity derivatives(2)(3)	(19.9	)	77.8		57.9		–		19.3		19.3
Long equity exposures		200.9		866.1		1,067.0		(184.2	)	79.5		(104.7	)
	Short equity exposures and equity hedges(3)	(553.1	)	135.2		(417.9	)	(2,634.8	)	1,441.9		(1,192.9	)
Net equity exposure and financial effects		(352.2	)	1,001.3		649.1		(2,819.0	)	1,521.4		(1,297.6	)
	Bonds	419.8		(374.9	)	44.9		648.7		(326.0	)	322.7
	CPI-linked derivatives	–		(71.0	)	(71.0	)	–		(196.2	)	(196.2	)
	U.S. treasury bond forwards	(174.5	)	21.3		(153.2	)	96.7		(49.7	)	47.0
	Other derivatives	(8.4	)	8.1		(0.3	)	(70.6	)	63.2		(7.4	)
	Foreign currency	(95.1	)	97.9		2.8		80.6		(210.1	)	(129.5	)
	Gain on disposition of insurance and reinsurance associates(4)	930.1		–		930.1		–		–		–
	Other	3.7		61.4		65.1		(7.8	)	65.2		57.4
Net gains (losses) on investments		723.4		744.1		1,467.5		(2,071.4	)	867.8		(1,203.6	)
Net gains (losses) on bonds is comprised as follows:
	Government bonds	(2.6	)	26.8		24.2		334.3		(77.5	)	256.8
	U.S. states and municipalities	437.5		(370.2	)	67.3		321.4		(350.9	)	(29.5	)
	Corporate and other	(15.1	)	(31.5	)	(46.6	)	(7.0	)	102.4		95.4
		419.8		(374.9	)	44.9		648.7		(326.0	)	322.7

(1)

During 2017 the company acquired control of Grivalia Properties by increasing its equity interest to 52.7% and commenced consolidating Grivalia Properties in the Other reporting segment. As a result, the company re-measured its equity accounted carrying value of Grivalia Properties to fair value and recorded a net realized gain of $51.3. Refer to note 6 (Investments in Associates) to the consolidated financial statements for the year ended December 31, 2017.

(2)

Other equity derivatives include long equity total return swaps, equity warrants and equity index call options.

(3)

Gains and losses on equity and equity index total return swaps that are regularly renewed as part of the company's long term investment strategy are presented within net change in unrealized gains (losses). During 2017 the company closed out $1,202.9 notional amount of short equity total return swaps and recogonized a net loss on investment of $237.9 (realized loss of $553.1, of which $315.2 was recognized as unrealized losses in prior years). In the fourth quarter of 2016 the company discontinued its economic hedging strategy and recorded a net loss on investment of $955.2 (realized loss of $2,665.4, of which $1,710.2 had been recogonized as unrealized losses in prior years).

(4)

During 2017 the company sold a 24.3% equity interest in ICICI Lombard for net proceeds of $908.5 and recorded a net realized gain of $595.6. The company's remaining 9.9% equity interest in ICICI Lombard was reclassified to common stock measured at FVTPL and re-measured to fair value for a net realized gain of $334.5. Refer to note 6 (Investments in Associates) to the consolidated financial statements for the year ended December 31, 2017.

(5)

During 2016 the company recognized net realized losses of $220.3 and $103.7 on common and preferred stock investments pursuant to the issuer's plan of restructuring and subsequent emergence from bankruptcy protection. Prior period unrealized losses on the common and preferred stock investments of $209.5 and $99.6 were reclassified to net realized losses with a net impact of nil on the consolidated statement of earnings.

171

(6)

During 2016 the company increased its ownership interest in APR Energy to 49.0% and commenced applying the equity method of accounting, resulting in the reclassification of an unrealized loss of $68.1 on APR Energy to realized losses with a net impact of nil on the consolidated statement of earnings.

(7)

During 2016 the company was required to convert a preferred stock investment into common shares of the issuer, resulting in a net realized gain on investment of $35.1 (the difference between the share price of the underlying common stock at the date of conversion and the exercise price of the preferred stock). Prior period unrealized gains on the preferred stock investment of $41.7 were reclassified to net realized gains with a net impact of nil on the consolidated statement of earnings.

Net equity exposure and financial effects:    During 2017 the company's net equity exposure (long equity exposures net of short equity exposures) produced net gains of $649.1 (2016 – net losses of $1,297.6).

Throughout most of 2016 the company had economically hedged certain market risks associated with its equity and equity-related holdings (comprised of common stocks, convertible preferred stocks, convertible bonds, non-insurance investments in associates and equity-related derivatives) against a potential significant decline in equity markets by way of short positions effected through equity and equity index total return swaps (including short positions in certain equity indexes and individual equities) and equity index put options (S&P 500). The company's equity hedges were structured to provide a return that was inverse to changes in the fair values of the indexes and certain individual equities.

The company discontinued its economic equity hedging strategy in the fourth quarter of 2016 after giving consideration to the possible and actual outcome of the U.S. elections and the potential for fundamental changes that could improve U.S. economic growth and equity markets. During 2016 the company closed out $6,350.6 notional amount of short positions effected through equity index total return swaps (comprised of Russell 2000, S&P 500 and S&P/TSX 60 short equity index total return swaps) and recognized a net loss on investment of $955.2 (realized loss of $2,665.4 of which $1,710.2 had been recognized as unrealized losses in prior years). The company continues to hold short equity and equity index total return swaps for investment purposes, but no longer regards them as hedges of its equity and equity-related holdings. During 2017 the company closed out $1,202.9 notional amount of short equity total return swaps and recognized a net loss on investment of $237.9 (realized loss of $553.1 of which $315.2 was recognized as unrealized losses in prior years). In the first quarter of 2018 the company closed out an additional $481.3 notional amount of short equity and equity index total return swaps and recognized a net loss on investment of $8.1 (realized loss of $199.0 of which $190.9 was recognized as unrealized losses in prior years), which reduced the notional amount of remaining short equity and equity index total return swaps to approximately $509.

At December 31, 2017 the company had entered into long equity total return swaps on individual equities for investment purposes with an original notional amount of $706.3 (December 31, 2016 – $283.9).

Bonds:    Net gains on bonds of $44.9 in 2017 were primarily comprised of net gains on U.S. treasury bonds ($52.8) and U.S. state and municipal bonds ($67.3), partially offset by losses on Indian government bonds ($40.5) and corporate and other bonds ($46.6).

CPI-linked derivatives:    The company has purchased derivative contracts referenced to consumer price indexes ("CPI") in the geographic regions in which it operates to serve as an economic hedge against the potential adverse financial impact on the company of decreasing price levels. During 2017 the company did not enter into any new CPI-linked derivative contracts. The company's CPI-linked derivative contracts produced net unrealized losses of $71.0 in 2017 (2016 – $196.2).

Net unrealized losses on CPI-linked derivative contracts typically reflect increases in the values of the CPI indexes underlying those contracts during the periods presented (those contracts are structured to benefit the company during periods of decreasing CPI index values). Refer to the analysis in note 7 (Short Sales and Derivatives) under the heading CPI-linked derivatives in the company's consolidated financial statements for the year ended December 31, 2017 for a discussion and analysis of the company's CPI-linked derivatives.

172

Net gains (losses) on investments by reporting segment: Net gains (losses) on investments by reporting segment for 2017 and 2016 were comprised as shown in the following tables:

Year ended December 31, 2017

		Insurance and Reinsurance
		Northbridge		OdysseyRe		Crum & Forster		Zenith National		Brit		Allied World(1)		Fairfax Asia	Other		Operating companies		Run-off		Other		Corporate and Other		Consolidated
	Long equity exposures	114.4		362.0		119.1		24.6		80.9		0.6		130.5	80.8		912.9		129.9		23.6		0.6		1,067.0
	Short equity exposures	(35.7	)	(46.2	)	(114.5	)	–		–		–		–	(8.3	)	(204.7	)	(35.1	)	–		(178.1	)	(417.9	)
	Bonds	(21.9	)	(13.5	)	102.6		5.1		(10.4	)	(35.5	)	11.9	6.9		45.2		8.0		(2.5	)	(5.8	)	44.9
	U.S treasury bond forwards	(2.3	)	(29.0	)	(84.0	)	(8.5	)	(1.2	)	–		–	(2.4	)	(127.4	)	(23.5	)	–		(2.3	)	(153.2	)
	CPI-linked derivatives	(5.5	)	(22.2	)	(5.0	)	(5.5	)	(7.6	)	–		–	(17.3	)	(63.1	)	(1.9	)	–		(6.0	)	(71.0	)
	Foreign currency	(5.9	)	0.1		9.6		10.3		15.5		10.1		10.7	2.8		53.2		(4.1	)	(13.4	)	(32.9	)	2.8
	Other(2)	1.7		1.9		0.1		0.6		1.8		(1.7	)	930.8	7.0		942.2		–		(0.5	)	53.2		994.9
Net gains (losses) on investments		44.8		253.1		27.9		26.6		79.0		(26.5	)	1,083.9	69.5		1,558.3		73.3		7.2		(171.3	)	1,467.5

Year ended December 31, 2016

		Insurance and Reinsurance
		Northbridge		OdysseyRe		Crum & Forster		Zenith National		Brit		Allied World(1)	Fairfax Asia		Other		Operating companies		Run-off		Other		Corporate and Other		Consolidated
	Long equity exposures	42.6		(16.1	)	31.1		(43.2	)	(36.9	)	–	5.2		(9.6	)	(26.9	)	(32.4	)	13.5		(58.9	)	(104.7	)
	Short equity exposures	(181.8	)	(389.0	)	(155.0	)	(107.0	)	(13.1	)	–	–		(62.1	)	(908.0	)	(159.0	)	–		(125.9	)	(1,192.9	)
	Bonds	67.6		90.9		(27.9	)	19.8		110.6		–	0.4		33.9		295.3		7.1		19.0		1.3		322.7
	CPI-linked derivatives	(20.3	)	(43.8	)	(16.7	)	(15.5	)	(20.6	)	–	–		(44.1	)	(161.0	)	(11.2	)	–		(24.0	)	(196.2	)
	Foreign currency	(67.8	)	27.8		(35.1	)	(20.7	)	41.5		–	(7.0	)	(5.7	)	(67.0	)	(48.6	)	(5.9	)	(8.0	)	(129.5	)
	Other	(1.6	)	11.5		18.9		(1.6	)	5.8		–	(0.3	)	(2.4	)	30.3		18.9		3.5		44.3		97.0
Net gains (losses) on investments		(161.3	)	(318.7	)	(184.7	)	(168.2	)	87.3		–	(1.7	)	(90.0	)	(837.3	)	(225.2	)	30.1		(171.2	)	(1,203.6	)

(1)

Allied World is included in the company's financial reporting with effect from July 6, 2017.

(2)

Includes net realized gains of $930.1 on partial disposition of the company's investment in ICICI Lombard at Fairfax Asia, refer to note 6 (Investments in Associates) to the consolidated financial statements for the year ended December 31, 2017.

Total Return on the Investment Portfolio

The following table presents the performance of the investment portfolio since Fairfax's inception in 1985. For the years 1986 to 2006, the calculation of total return on average investments included interest and dividends, net realized gains (losses) and changes in net unrealized gains (losses) as the majority of the company's investment portfolio was carried at cost or amortized cost under Canadian GAAP. For the years 2007 to 2009, Canadian GAAP required the company to carry the majority of its investments at fair value and as a result, the calculation of total return on average investments during this period included interest and dividends, net investment gains (losses) recorded in net earnings, net unrealized gains (losses) recorded in other comprehensive income and changes in net unrealized gains (losses) on equity accounted investments in associates. Effective January 1, 2010 the company adopted IFRS and was required to carry the majority of its investments at FVTPL and as a result, the calculation of total return on average investments for the years 2010 to 2017 includes interest and dividends, net investment gains (losses) recorded in net earnings and changes in net unrealized gains (losses) on equity accounted investments in associates. All noted amounts above are included on a pre-tax basis in the calculation of total return on average investments.

173

							Net gains (losses) recorded in:
											Change in unrealized gains (losses) on investments in associates(8)		Total return on average investments(8)
	Average investments at carrying value(2)	Interest and dividends	Net realized gains (losses)		Change in unrealized gains (losses)		Net earnings (loss)(3)		Other comprehensive income (loss)
Year(1)															(%)
1986	46.3	3.4	0.7		(0.2	)	–		–		–		3.9		8.4
1987	81.2	6.2	7.1		(6.1	)	–		–		–		7.2		8.9
1988	102.6	7.5	6.5		9.5		–		–		–		23.5		22.9
1989	112.4	10.0	13.4		(5.1	)	–		–		–		18.3		16.3
1990	201.2	17.7	2.0		(28.5	)	–		–		–		(8.8	)	(4.4	)
1991	292.3	22.7	(3.9	)	24.0		–		–		–		42.8		14.6
1992	301.8	19.8	2.8		(8.3	)	–		–		–		14.3		4.7
1993	473.1	18.1	21.6		22.2		–		–		–		61.9		13.1
1994	871.5	42.6	14.6		(30.7	)	–		–		–		26.5		3.0
1995	1,163.4	65.3	52.5		32.7		–		–		–		150.5		12.9
1996	1,861.5	111.0	96.3		82.1		–		–		–		289.4		15.5
1997	3,258.6	183.8	149.3		(6.9	)	–		–		–		326.2		10.0
1998	5,911.2	303.7	314.3		(78.3	)	–		–		–		539.7		9.1
1999	10,020.3	532.7	63.8		(871.4	)	–		–		–		(274.9	)	(2.7	)
2000	11,291.5	534.0	259.1		584.1		–		–		–		1,377.2		12.2
2001	10,264.3	436.9	121.0		194.0		–		–		–		751.9		7.3
2002	10,377.9	436.1	465.0		263.2		–		–		–		1,164.3		11.2
2003	11,527.5	331.9	826.1		142.4		–		–		–		1,300.4		11.3
2004	12,955.8	375.7	300.5	(4)	165.6		–		–		–		841.8		6.5
2005	14,142.4	466.1	385.7		73.0		–		–		–		924.8		6.5
2006	15,827.0	746.5	789.4	(5)	(247.8	)	–		–		–		1,288.1		8.1
2007	17,898.0	761.0	–		–		1,639.5		304.5		(131.2	)	2,573.8		14.4
2008	19,468.8	626.4	–		–		2,718.6		(426.7	)	278.3		3,196.6		16.4
2009	20,604.2	712.7	–		–		904.3	(6)	1,076.7		(185.2	)	2,508.5		12.2
2010	22,270.2	711.5	–		–		28.7		–		98.2		838.4		3.8
2011	23,787.5	705.3	–		–		737.7		–		78.5		1,521.5		6.4
2012	25,185.2	409.3	–		–		639.4		–		79.6		1,128.3		4.5
2013	25,454.7	376.9	–		–		(1,579.8	)	–		(44.6	)	(1,247.5	)	(4.9	)
2014	25,527.2	403.8	–		–		1,682.7		–		70.3		2,156.8		8.4
2015	27,604.4	512.2	–		–		(341.3	)	–		20.9		191.8		0.7
2016	28,723.4	555.2	–		–		(1,223.3	)	–		160.1		(508.0	)	(1.8	)
2017	33,843.1	559.0	–		–		1,542.4		–		339.2		2,440.6		7.2
Cumulative from inception		11,005.0	3,887.8				6,748.9								8.2	(7)

(1)

IFRS basis for 2010 to 2017; Canadian GAAP for 2009 and prior. Under Canadian GAAP, investments were generally carried at cost or amortized cost in 2006 and prior.

(2)

Comprised of cash and investments at both the holding company and operating companies, net of short sale and derivative obligations commencing in 2004.

(3)

Excludes net gains (losses) recognized on the company's underwriting activities related to foreign currency since 2008.

(4)

Excludes the $40.1 gain on the company's secondary offering of Northbridge and the $27.0 loss in connection with the company's repurchase of outstanding debt at a premium to par during 2004.

(5)

Excludes the $69.7 gain on the company's secondary offering of OdysseyRe, the $15.7 loss on the company's repurchase of outstanding debt at a premium to par and the $8.1 dilution loss on conversions of the OdysseyRe convertible senior debenture during 2006.

(6)

Net gains on investments in 2009 excluded $25.9 of gains recognized on transactions involving the common and preferred shares of the company's consolidated subsidiaries.

(7)

Simple average of the total return on average investments for each of the 32 years.

(8)

Total return on average investments is considered a non-IFRS measure as it includes changes in net unrealized gains (losses) on equity accounted investments in associates and excludes share of profit (loss) of associates.

174

Investment gains have been an important component of Fairfax's financial results since 1985, having contributed an aggregate $11,695.4 (pre-tax) to total equity since inception. The contribution has fluctuated significantly from period to period; the amount of investment gains (losses) for any period has no predictive value and variations in amount from period to period have no practical analytical value. From inception in 1985 to 2017, total return on average investments has averaged 8.2%.

The company has a long term, value-oriented investment philosophy. It continues to expect fluctuations in the global financial markets for common stocks, bonds, derivatives and other securities.

Bonds

Credit Risk

At December 31, 2017, 72.2% (December 31, 2016 – 79.2%) of the fixed income portfolio carrying value was rated investment grade or better, with 47.1% (December 31, 2016 – 61.9%) being rated AA or better (primarily consisting of government obligations). Refer to note 24 (Financial Risk Management) under the heading Investments in Debt Instruments in the consolidated financial statements for the year ended December 31, 2017 for a discussion of the company's exposure to the credit risk of individual issuers, sovereign and U.S. state and municipal governments.

Interest Rate Risk

Hypothetical parallel upward shifts in the term structure of interest rates by 100 basis points and 200 basis points would potentially decrease net earnings by $155.6 and $306.2 respectively (2016 – $148.2 and $295.1). The company's exposure to interest rate risk did not change significantly during 2017 compared to 2016. Allied World's bond portfolio ($5,337.2, acquired on July 6, 2017) was re-balanced to reflect the company's interest rate risk tolerance. To reduce its exposure to interest rate risk (specifically exposure to U.S. state and municipal bonds and long dated U.S. treasury bonds held in its fixed income portfolio), the company entered into forward contracts to sell long dated U.S. treasury bonds with a notional amount of $1,693.8 as at December 31, 2017 (December 31, 2016 – $3,013.4). These contracts have an average term to maturity of less than three months and may be renewed at market rates.

The company's exposure to interest rate risk is discussed further in note 24 (Financial Risk Management) to the consolidated financial statements for the year ended December 31, 2017.

Common Stocks

The company holds significant investments in equity and equity-related instruments. The market value and the liquidity of these investments are volatile and may vary dramatically either up or down in short periods, and their ultimate value will therefore only be known over the long term or on disposition. Throughout most of 2016 the company had economically hedged its equity and equity-related holdings. The company discontinued its economic equity hedging strategy in the fourth quarter of 2016 after giving consideration to the possible and actual outcome of the U.S. elections and the potential for fundamental changes that could improve U.S. economic growth and equity markets. During 2017 the company's equity and equity-related exposure increased, primarily reflecting the consolidation of the common stock portfolio of Allied World ($833.8), net acquisitions of non-insurance and reinsurance associates, purchases of common stocks and the continued reduction of the notional amount of short equity total return swaps.

The company's risk management objective with respect to market price fluctuations places primary emphasis on the preservation of invested capital. Subsequent to the economic downturn in 2008, the company became increasingly concerned about the risk of a potential significant decline in global equity markets. From 2010 until the fourth quarter of 2016, the company relied on certain derivative financial instruments to protect its equity and equity-related holdings. In the latter part of 2016, the company's sentiment with respect to U.S. economic growth and improvements in the global equity markets improved, resulting in the discontinuation of the economic equity hedging strategy. In the foreseeable future, the company does not expect to apply equity hedging strategies and will remain focused on its long-term value-oriented investment philosophy, seeking investments that are attractively priced, are selling at a discount to intrinsic value and afford a margin of safety.

As a result of the increase in its net equity exposures and the termination of its economic equity hedging strategy, a hypothetical decrease in global equity markets of 5% and 10% at December 31, 2017 would potentially decrease the company's net earnings by $238.5 and $475.0 respectively (2016 – $106.7 and $204.5). The company's net equity

175

exposure and exposure to market price fluctuations are discussed further in note 24 (Financial Risk Management) to the consolidated financial statements for the year ended December 31, 2017.

The company's holdings of common stocks and long equity total return swaps at December 31, 2017 and 2016 are summarized by the issuer's primary industry in the table below.

	December 31, 2017(1)	December 31, 2016(1)
Financials and investment funds	4,171.6	2,988.2
Commercial and industrial	1,356.1	571.5
Consumer products and other	748.2	834.8
	6,275.9	4,394.5

(1)

Excludes other funds of $90.9 at December 31, 2017 (December 31, 2016 – $157.1) that are invested principally in fixed income securities.

The company's holdings of common stocks and long equity total return swaps at December 31, 2017 and 2016 are summarized by the issuer's country of domicile in the table below.

	December 31, 2017(1)	December 31, 2016(1)
United States	2,078.2	1,266.9
Canada	1,060.7	755.6
India	621.2	247.8
Greece	434.1	297.0
Egypt	367.1	331.5
Netherlands	355.8	231.9
China	214.3	167.2
Singapore	122.9	182.3
Hong Kong	115.2	66.8
Thailand	111.0	105.5
United Kingdom	94.3	35.8
Nigeria	78.4	74.4
Kuwait	47.7	70.3
Germany	29.5	30.3
Ireland	0.8	102.8
All other	544.7	428.4
	6,275.9	4,394.5

(1)

Excludes other funds of $90.9 at December 31, 2017 (December 31, 2016 – $157.1) that are invested principally in fixed income securities.

Derivatives and Derivative Counterparties

The company endeavours to limit counterparty risk through diligent selection of counterparties to its derivative contracts and through the terms of negotiated agreements. Pursuant to these agreements, counterparties are contractually required to deposit eligible collateral in collateral accounts (subject to certain minimum thresholds) for the benefit of the company based on the then daily fair value of the derivative contracts. Agreements negotiated with counterparties provide for a single net settlement of all financial instruments covered by the agreement in the event of default by the counterparty, thereby permitting obligations owed by the company to a counterparty to be offset to the extent of the aggregate amount receivable by the company from that counterparty. The company's exposure to derivative counterparty risk at December 31, 2017 was estimated to be $66.2 (December 31, 2016 – $105.8).

Refer to note 24 (Financial Risk Management) under the heading Credit Risk – Counterparties to Derivative Contracts in the company's consolidated financial statements for the year ended December 31, 2017 for a discussion and tabular analysis of the company's exposure to derivative counterparty risk.

176

Float

Fairfax's float (a non-IFRS measure) is the sum of its loss reserves, including loss adjustment expense reserves, unearned premiums and other insurance contract liabilities, less insurance contract receivables, recoverable from reinsurers and deferred premium acquisition costs. The annual benefit (cost) of float is calculated by dividing the underwriting profit (loss) by the average float in that year. Float arises as an insurance or reinsurance business receives premiums in advance of the payment of claims.

The following table presents the accumulated float and the cost of generating that float for Fairfax's insurance and reinsurance operations. The average float from those operations increased by 23.5% in 2017 to $16,977.9, at a cost of 3.8%.

Year	Underwriting profit (loss)(1)		Average float	Cost (benefit) of float	Average long term Canada treasury bond yield
1986	2.5		21.6	(11.6)%	9.6%
--
2013	440.0		12,045.7	(3.7)%	2.8%
2014	552.0		11,707.4	(4.7)%	2.8%
2015	704.5		12,634.9	(5.6)%	2.2%
2016	575.9		13,748.6	(4.2)%	1.9%
2017	(641.5	)	16,977.9	3.8%	2.3%
Weighted average since inception				0.7%	3.7%
Fairfax's weighted average net benefit of float since inception: 3.0%

(1)

IFRS basis for 2010 to 2017; Canadian GAAP basis for 2009 and prior.

The following table presents a breakdown of total year-end float for the most recent five years.

	Insurance and Reinsurance
Year	Northbridge(1)	OdysseyRe(2)	Crum & Forster(3)	Zenith National(4)	Brit(5)	Allied World(6)	Fairfax Asia(7)	Other(8)	Ongoing operations	Run-off(9)	Total
2013	2,112.0	4,673.5	2,338.7	1,202.3	–	–	519.3	1,003.2	11,849.0	3,701.5	15,550.5
2014	1,910.8	4,492.3	2,562.7	1,195.2	–	–	524.4	880.4	11,565.8	3,499.2	15,065.0
2015	1,626.1	4,172.2	2,593.6	1,217.1	2,731.8	–	570.7	792.5	13,704.0	3,367.6	17,071.6
2016	1,670.7	4,024.6	2,706.5	1,179.1	2,795.8	–	561.1	855.4	13,793.2	2,879.7	16,672.9
2017	1,760.2	4,439.6	2,860.8	1,177.2	3,078.3	5,457.2	233.5	1,155.8	20,162.6	2,566.9	22,729.5

During 2017 the company's total float increased by $6,056.6 to $22,729.5.

(1)

Northbridge's float increased by 5.4% primarily due to the effect of the strengthening of the Canadian dollar relative to the U.S. dollar. In Canadian dollar terms, Northbridge's float decreased by 1.7% primarily due to a decrease in loss reserves reflecting favourable prior year development and an increase in insurance balances receivables.

(2)

OdysseyRe's float increased by 10.3% primarily due to increases in loss reserves and unearned premiums, partially offset by increases in insurance balances receivable and reinsurance recoverables. The increases in loss reserves and reinsurance recoverables were principally due to increased catastrophe losses in 2017. The increase in unearned premiums primarily reflected higher business volumes.

(3)

Crum & Forster's float increased by 5.7% primarily due to an increase in unearned premiums from higher business volumes, partially offset by lower loss reserves and reinsurance recoverables.

(4)

Zenith National's float was consistent year-over-year (decreased by 0.2%) but reflected an increase in unearned premiums due to slightly higher business volumes, largely offset by an increase in insurance balances receivable.

(5)

Brit's float increased by 10.1% due to increases in loss reserves and unearned premiums, partially offset by increases in reinsurance recoverables and insurance balances receivable. The increases in loss reserves and reinsurance recoverables were principally due to increased catastrophe losses in 2017.

(6)

Allied World increased the company's float with effect from its acquisition date of July 6, 2017.

177

(7)

Fairfax Asia's float decreased by 58.4% primarily due to the sale of its 97.7% interest in First Capital in 2017. Excluding the impact of the First Capital sale, Fairfax Asia's float decreased by 2.6%.

(8)

Insurance and Reinsurance – Other's float increased by 35.1% primarily due the consolidation of Fairfax Latam and the strengthening of the Canadian dollar, South African rand and Polish zloty relative to the U.S. dollar, partially offset by the strengthening of the U.S. dollar relative to the Brazilian real. The increase in float also reflected increases in loss reserves and reinsurance recoverables principally due to increased catastrophe losses in 2017.

(9)

Run-off's float decreased by 10.9% primarily due to lower loss reserves, partially offset by lower insurance balances receivable and reinsurance recoverables. Lower loss reserves and reinsurance recoverables were principally due to normal course cession and collection activity, partially offset by net adverse prior year reserve development. The decrease in insurance balances receivable reflected the settlement of a large receivable balance which was outstanding at the end of 2016.

Financial Condition

Capital Resources and Management

The company manages its capital based on the following financial measurements and ratios:

	December 31,
	2017		2016		2015		2014		2013
Holding company cash and investments (net of short sale and derivative obligations)	2,356.9		1,329.4		1,275.9		1,212.7		1,241.6
Borrowings – holding company	3,475.1		3,472.5		2,599.0		2,656.5		2,491.0
Borrowings – insurance and reinsurance companies	1,373.0		435.5		468.5		385.9		458.8
Borrowings – non-insurance companies	1,566.0		859.6		284.0		136.6		44.7
Total debt	6,414.1		4,767.6		3,351.5		3,179.0		2,994.5
Net debt(1)	4,057.2		3,438.2		2,075.6		1,966.3		1,752.9
Common shareholders' equity	12,475.6		8,484.6		8,952.5		8,361.0		7,186.7
Preferred stock	1,335.5		1,335.5		1,334.9		1,164.7		1,166.4
Non-controlling interests	4,600.9		2,000.0		1,731.5		218.1		107.4
Total equity	18,412.0		11,820.1		12,018.9		9,743.8		8,460.5
Net debt/total equity	22.0	%	29.1	%	17.3	%	20.2	%	20.7	%
Net debt/net total capital(2)	18.1	%	22.5	%	14.7	%	16.8	%	17.2	%
Total debt/total capital(3)	25.8	%	28.7	%	21.8	%	24.6	%	26.1	%
Interest coverage(4)	7.1	x	n/a		3.9	x	12.3	x	n/a
Interest and preferred share dividend distribution coverage(5)	6.0	x	n/a		2.9	x	9.0	x	n/a

(1)

Net debt is calculated by the company as total debt less holding company cash and investments (net of short sale and derivative obligations).

(2)

Net total capital is calculated by the company as the sum of total equity and net debt.

(3)

Total capital is calculated by the company as the sum of total equity and total debt.

(4)

Interest coverage is calculated by the company as the sum of earnings (loss) before income taxes and interest expense divided by interest expense.

(5)

Interest and preferred share dividend distribution coverage is calculated by the company as the sum of earnings (loss) before income taxes and interest expense divided by interest expense and preferred share dividend distributions adjusted to a pre-tax equivalent at the company's Canadian statutory income tax rate.

Holding company cash and investments increased to $2,356.9 at December 31, 2017 from $1,329.4 at December 31, 2016. Significant cash movements at the Fairfax holding company level during 2017 are as set out in the Financial Condition section of this MD&A under the heading Liquidity.

Borrowings – holding company increased by $2.6 to $3,475.1 at December 31, 2017 from $3,472.5 at December 31, 2016 primarily reflecting the issuance of Cdn$650.0 principal amount of 4.25% unsecured senior notes due

178

December 6, 2027 and the impact of foreign currency translation on the company's Canadian dollar denominated long term debt, partially offset by the early redemption of the Cdn$388.4 principal amount of 7.50% unsecured senior notes due 2019, the repayment of the amount drawn on the revolving credit facility, the repayment of purchase consideration payable upon maturity and the repurchases of $17.8 principal amount of Fairfax senior notes due 2019, 2020 and 2021.

Borrowings – insurance and reinsurance companies increased by $937.5 to $1,373.0 at December 31, 2017 from $435.5 at December 31, 2016 primarily reflecting the consolidation of the borrowings of Allied World ($878.0) and borrowings of $45.0 on Brit's revolving credit facility which was repaid in January 2018.

Borrowings – non-insurance companies increased by $706.4 to $1,566.0 at December 31, 2017 from $859.6 at December 31, 2016 primarily reflecting the consolidation of the borrowings of Grivalia Properties ($160.4), Mosaic Capital ($54.0) and Fairfax Africa (term loan of $150.0) and increased borrowings at Fairfax India (term loan of $400.0 at December 31, 2017 compared to $225.0 at December 31, 2016).

Common shareholders' equity increased from $8,484.6 at December 31, 2016 to $12,475.6 at December 31, 2017 primarily reflecting the issuance of 5,075,894 subordinate voting shares pursuant to the acquisition of Allied World ($2,191.6), net earnings attributable to shareholders of Fairfax ($1,740.6) and other comprehensive income ($283.8, comprised of net unrealized foreign currency translation gains on foreign operations of $200.4 and share of other comprehensive income of associates of $114.3, partially offset by net losses on defined benefit plans of $30.9), partially offset by the payment of dividends on the company's common and preferred shares ($282.0).

Non-controlling interests increased from $2,000.0 at December 31, 2016 to $4,600.9 at December 31, 2017 principally reflecting the impact of the consolidation of Allied World ($1,229.4) and Grivalia Properties ($517.6), Fairfax India's secondary offering in January 2017 and Fairfax Africa's initial public offering in February 2017, the reduction in the company's indirect ownership of Quess from 42.1% to 33.1% and foreign currency translation (principally the strengthening of the Canadian dollar relative to the U.S. dollar), partially offset by the net loss attributable to non-controlling interests ($125.7) and dividends paid to non-controlling interests (principally the dividend paid by Brit to its minority shareholder OMERS).

The changes in holding company borrowings, subsidiary borrowings (comprised of the borrowings of the insurance and reinsurance companies and the non-insurance companies) and common shareholders' equity affected the company's leverage ratios as follows: the consolidated net debt/net total capital ratio decreased from 22.5% at December 31, 2016 to 18.1% at December 31, 2017 primarily as a result of increased net total capital, partially offset by increased net debt. The increase in net debt was primarily due to increased subsidiary borrowings, partially offset by increased holding company cash and investments. The increase in net total capital was primarily due to increases in common shareholders' equity, non-controlling interests and net debt. The consolidated total debt/total capital ratio decreased from 28.7% at December 31, 2016 to 25.8% at December 31, 2017 primarily as a result of increased total capital (reflecting increases in common shareholders' equity, non-controlling interests and total debt), partially offset by increased total debt.

The company believes that holding company cash and investments, net of short sale and derivative obligations, at December 31, 2017 of $2,356.9 (December 31, 2016 – $1,329.4) provide adequate liquidity to meet the holding company's known commitments in 2018. Refer to the Liquidity section of this MD&A for a discussion of the holding company's available sources of liquidity and known significant commitments for 2018.

The company's insurance and reinsurance companies continue to maintain capital above minimum regulatory levels, at levels adequate to support their issuer credit and financial strength ratings, and above internally calculated risk management levels as discussed below. A common non-IFRS measure of capital adequacy in the property and

179

casualty industry is the ratio of net premiums written to statutory surplus (or total equity). This ratio is shown for the insurance and reinsurance companies for the most recent five years in the following table:

		Net premiums written to statutory surplus (total equity)
		2017	2016	2015	2014	2013
Insurance and Reinsurance
	Northbridge (Canada)	1.0	0.9	0.9	0.8	0.9
	OdysseyRe (U.S.)	0.6	0.5	0.5	0.6	0.6
	Crum & Forster (U.S.)	1.4	1.5	1.3	1.1	1.1
	Zenith National (U.S.)	1.5	1.5	1.3	1.3	1.4
	Brit(1)	1.4	1.3	1.4	n/a	n/a
	Allied World(2)	0.9	–	–	–	–
	Fairfax Asia(3)	0.4	0.4	0.5	0.5	0.5
	Other(4)	0.8	0.7	0.7	0.5	0.6
Canadian insurance industry		1.1	1.0	1.0	1.0	1.0
U.S. insurance industry		0.8	0.7	0.7	0.7	0.7

(1)

The 2015 ratio presented for Brit includes net premiums written by Brit prior its acquisition by the company on June 5, 2015.

(2)

The 2017 ratio presented for Allied World includes net premiums written by Allied World prior its acquisition by the company on July 6, 2017 and its U.S. GAAP equity of $2,523.8 at December 31, 2017.

(3)

Total equity excludes certain holding company investments.

(4)

Other includes Group Re, Bryte Insurance, Advent, Fairfax Latin America (Fairfax Brasil and Fairfax Latam) and Fairfax CEE (Colonnade Insurance and Polish Re).

In the U.S., the National Association of Insurance Commissioners ("NAIC") has developed a model law and risk-based capital ("RBC") formula designed to help regulators identify property and casualty insurers that may be inadequately capitalized. Under the NAIC's requirements, an insurer must maintain total capital and surplus above a calculated threshold or face varying levels of regulatory action. The threshold is based on a formula that attempts to quantify the risk of a company's insurance and reinsurance, investment and other business activities. At December 31, 2017 OdysseyRe, Crum & Forster, Zenith National, Allied World and U.S. Run-off subsidiaries had capital and surplus in excess of the regulatory minimum requirement of two times the authorized control level; each subsidiary had capital and surplus of at least 3.3 times (December 31, 2016 – 3.4 times) the authorized control level, except for TIG Insurance which had 2.3 times (December 31, 2016 – 2.2 times).

In Canada, property and casualty companies are regulated by the Office of the Superintendent of Financial Institutions on the basis of a minimum supervisory target of 150% of a minimum capital test ("MCT") formula. At December 31, 2017 Northbridge's subsidiaries had a weighted average MCT ratio of 205% of the minimum statutory capital required, compared to 211% at December 31, 2016.

In Bermuda, insurance and reinsurance companies are regulated by the Bermuda Monetary Authority and are subject to the statutory requirements of the Bermuda Insurance Act 1978. There is a requirement to hold available statutory economic capital and surplus equal to or in excess of an enhanced capital and target capital level as determined under the Bermuda Solvency Capital Requirement model. The target capital level is measured as 120% of the enhanced capital requirements. At December 31, 2017 Allied World was in compliance with Bermuda's regulatory requirements.

The Lloyd's market is subject to the solvency and capital adequacy requirements of the Prudential Regulatory Authority in the U.K. The capital requirements of Brit are based on the output of an internal model which reflects the risk profile of the business. At December 31, 2017 Brit's available capital consisted of net tangible assets (total assets less any intangible assets and all liabilities), subordinated debt and contingent funding in the form of letters of credit and amounted to $1,468.5 (December 31, 2016 – $1,457.3). This represented a surplus of $395.1 (December 31, 2016 – $297.1) over the management capital requirements (capital required for business strategy and regulatory requirements), compared to Brit's minimum targeted surplus of $200.0 (December 31, 2016 – $200.0).

180

In countries other than the U.S., Canada, the U.K. and Bermuda where the company operates, the company met or exceeded the applicable regulatory capital requirements at December 31, 2017.

The issuer credit ratings and financial strength ratings of Fairfax and its insurance and reinsurance operating companies at December 31, 2017 were as follows:

Issuer Credit Ratings	A.M. Best	Standard & Poor's	Moody's	DBRS
Fairfax Financial Holdings Limited	bbb	BBB-	Baa3	BBB (high)
Financial Strength Ratings
Crum & Forster Holdings Corp.(1)	A	A-	Baa1	–
Zenith National Insurance Corp.(1)	A	A-	Baa1	–
Odyssey Re Holdings Corp.(1)	A	A-	A3	–
Brit Limited(2)	A	A+	–	–
Northbridge General Insurance Corp.	A	A-	A3	A
Federated Insurance Company of Canada	A	A-	–	A
Allied World Assurance Company Holdings, GmbH(1)	A	A-	A3	–
Wentworth Insurance Company Ltd.	A	–	–	–
Falcon Insurance Company (Hong Kong) Limited	–	A-	–	–
Advent Capital (Holdings) Ltd.(2)	A	A+	–	–
Polish Re	A-	–	–	–
Colonnade Insurance S.A.	A-	–	–	–

(1)

Financial strength ratings apply to the operating companies.

(2)

Advent and Brit's ratings are the A.M. Best and Standard & Poor's ratings assigned to Lloyd's.

During 2017 DBRS upgraded the Issuer Credit Rating of Fairfax to "BBB (high)" from "BBB" and the Financial Strength Ratings of Northbridge General Insurance Corp. and Federated Insurance Company of Canada to "A" from "A (low)". Standard & Poor's and Moody's downgraded the Financial Strength Ratings of Allied World's operating companies to "A-" and "A3" from "A" and "A2" respectively subsequent to the acquisition by Fairfax. A.M. Best assigned a Financial Strength Rating of "A-" to Colonnade Insurance.

Book Value Per Share

Common shareholders' equity at December 31, 2017 of $12,475.6 or $449.55 per basic share (excluding the unrecorded $1,233.0 pre-tax excess of fair value over the carrying value of investments in associates and certain consolidated non-insurance subsidiaries) compared to $8,484.6 or $367.40 per basic share (excluding the unrecorded $1,001.7 pre-tax excess of fair value over the carrying value of investments in associates and certain consolidated non-insurance subsidiaries) at December 31, 2016, representing an increase per basic share in 2017 of 22.4% (without adjustment for the $10.00 per common share dividend paid in the first quarter of 2017, or a increase of 24.7% adjusted to include that dividend). During 2017 the number of basic shares increased primarily as a result of the issuance of 5,075,894 subordinate voting shares related to the acquisition of Allied World, partially offset by net repurchases of 243,087 subordinate voting shares for treasury (for use in the company's share-based payment awards) and purchases of 184,367 subordinate voting shares for cancellation. At December 31, 2017 there were 27,751,073 common shares effectively outstanding.

181

The company has issued and repurchased common shares in the most recent five years as follows:

Date	Number of subordinate voting shares		Average issue/repurchase price per share	Net proceeds/ (repurchase cost)
2013 – issuance of shares	1,000,000		399.49	399.5
2013 – repurchase of shares	(36	)	402.78	–
2014 – repurchase of shares	(8	)	430.98	–
2015 – issuance of shares	1,169,294		502.01	587.0
2016 – issuance of shares	1,000,000		523.50	523.5
2016 – repurchase of shares	(30,732	)	458.81	(14.1	)
2017 – issuance of shares	5,084,961		431.94	2,196.4
2017 – repurchase of shares	(184,367	)	521.79	(96.2	)

On September 28, 2017 the company commenced its normal course issuer bid by which it is authorized, until expiry of the bid on September 27, 2018, to acquire up to 2,672,504 subordinate voting shares, 601,538 Series C preferred shares, 344,111 Series D preferred shares, 396,713 Series E preferred shares, 357,204 Series F preferred shares, 743,295 Series G preferred shares, 256,704 Series H preferred shares, 1,046,555 Series I preferred shares, 153,444 Series J preferred shares, 950,000 Series K preferred shares and 920,000 Series M preferred shares, representing at that date approximately 10% of the public float in respect of the subordinate voting shares and 10% of the public float in respect of each series of preferred shares. Decisions regarding any future repurchases will be based on market conditions, share price and other factors including opportunities to invest capital for growth. The Notice of Intention to Make a Normal Course Issuer Bid is available by contacting the Corporate Secretary of the company.

Virtually all of the common share issuances in 2013, 2015 and 2016 were pursuant to public offerings. During 2013 and 2014 the company repurchased 36 and 8 subordinate voting shares respectively for cancellation from former employees. During 2016 and 2017 the company repurchased 30,732 and 184,367 subordinate voting shares respectively for cancellation under the terms of its normal course issuer bids.

The company's indirect ownership of its own shares through The Sixty Two Investment Company Limited results in an effective reduction of shares outstanding by 799,230, and this reduction has been reflected in the earnings per share and book value per share figures.

The table below presents the pre-tax excess (deficiency) of fair value over carrying value of investments in associates and certain non-insurance subsidiaries the company considers to be portfolio investments but that are required to be consolidated under IFRS. The aggregate pre-tax excess of fair value over carrying value of these investments is not included in the calculation of book value per share.

	December 31, 2017				December 31, 2016
	Fair value	Carrying value(1)	Excess (deficiency) of fair value over carrying value		Fair value	Carrying value(1)	Excess (deficiency) of fair value over carrying value
Insurance and reinsurance associates	783.1	711.0	72.1		1,514.8	940.5	574.3
Non-insurance associates(2)	2,041.2	1,776.0	265.2		1,440.6	1,452.5	(11.9	)
Cara(3)	486.3	519.5	(33.2	)	433.9	454.9	(21.0	)
Grivalia Properties	568.6	573.2	(4.6	)	–	–	–
Thomas Cook India	996.6	449.7	546.9		691.2	296.2	395.0
Fairfax India	666.4	448.4	218.0		355.7	290.4	65.3
Fairfax Africa	460.2	291.6	168.6		–	–	–
	6,002.4	4,769.4	1,233.0		4,436.2	3,434.5	1,001.7

(1)

The carrying values of Cara, Grivalia Properties, Thomas Cook India, Fairfax India and Fairfax Africa represent their approximate carrying values under the equity method of accounting.

(2)

Excludes investments in associates held by Fairfax India and Fairfax Africa.

(3)

Impairment tests for goodwill and intangible assets not subject to amortization were completed in 2017 and 2016. It was concluded that no impairment had occurred in each year.

182

Liquidity

Holding company cash and investments at December 31, 2017 totaled $2,368.4 ($2,356.9 net of $11.5 of holding company short sale and derivative obligations) compared to $1,371.6 at December 31, 2016 ($1,329.4 net of $42.2 of holding company short sale and derivative obligations).

Significant cash and investment movements at the holding company level during 2017 included the following significant inflows: dividends from Fairfax Asia ($2,429.7 comprised of net proceeds from the partial sale of ICICI Lombard and the sale of First Capital), net proceeds of $509.5 from the issuance of Cdn$650.0 principal amount of 4.25% unsecured senior notes due 2027 and dividends from other subsidiaries (primarily Zenith National ($102.0), OdysseyRe ($100.0) and Northbridge ($213.2)). The company's remaining 9.9% equity interest in ICICI Lombard, previously reflected as an investment in associate within portfolio investments, was reclassified to common stock at FVTPL within holding company cash and investments (fair value of $549.0 at December 31, 2017).

Significant holding company outflows during 2017 included the following: cash consideration of $435.3 paid to partially fund the acquisition of Allied World, the redemption of Cdn$388.4 principal amount of 7.5% unsecured senior notes due 2019 ($340.6), payment of common and preferred share dividends ($282.0), repayment of the amount drawn on the revolving credit facility ($200.0), net cash paid of $179.0 with respect to the reset provisions of long and short equity and equity index total return swaps (excluding the impact of collateral requirements), cash consideration of $167.9 paid to acquire Fairfax Latam, repayment of purchase consideration payable upon maturity ($124.9) and purchases of subordinate voting shares for cancellation under the terms of normal course issuer bids ($96.2).

The carrying value of holding company cash and investments was also affected by the following: receipt of investment management and administration fees, disbursements associated with corporate overhead expenses and interest paid on long term debt. The carrying value of holding company cash and investments will vary with changes in the fair values of those investments (including derivative contracts that may have collateral and cash settlement requirements).

The company believes that holding company cash and investments, net of holding company short sale and derivative obligations at December 31, 2017 of $2,356.9 provides adequate liquidity to meet the holding company's known commitments in 2018. The holding company expects to continue to receive investment management and administration fees from its insurance and reinsurance subsidiaries, investment income on its holdings of cash and investments, and dividends from its insurance and reinsurance subsidiaries. To further augment its liquidity, the holding company can draw upon its $2.0 billion unsecured revolving credit facility (for further details related to the revolving credit facility, refer to note 15 (Borrowings) to the consolidated financial statements for the year ended December 31, 2017).

The holding company's known significant commitments for 2018 consist of payment of the $283.2 dividend on common shares ($10.00 per share paid January 2018), interest and corporate overhead expenses, preferred share dividends, income tax payments, the purchase prices related to the acquisitions of certain businesses of Carillion and the insurance operations of AIG in Uruguay (completed January 31, 2018) and Venezuela, and potential cash outflows related to derivative contracts.

During 2017 subsidiary cash and short term investments (including cash and short term investments pledged for short sale and derivative obligations) increased by $7,675.8 primarily reflecting the consolidation of the cash and short term investments of Allied World ($4,509.0) and Fairfax Latam ($77.2), the proceeds received from net sales of long dated U.S. state and municipal and corporate and other bonds (primarily corporate and other bonds that were part of the acquisition of Allied World) where a portion of the proceeds was retained in cash or invested in short term investments, and net proceeds received from Fairfax Africa's initial public offering, partially offset by the impact of the divestiture of the cash and short term investments of First Capital ($362.4).

The insurance and reinsurance subsidiaries may experience cash inflows or outflows on occasion related to their derivative contracts, including collateral requirements. During 2017 the insurance and reinsurance subsidiaries paid net cash of $285.0 (2016 – $814.4) in connection with long and short equity and equity index total return swaps (excluding the impact of collateral requirements). The closure in the fourth quarter of 2016 of all of the company's short positions effected through total return swaps in the Russell 2000, S&P 500 and S&P/TSX 60 equity indexes significantly reduced cash flow volatility related to derivatives in 2017.

183

The non-insurance companies have principal repayments coming due in 2018 of $855.9 primarily related to Fairfax India and Fairfax Africa term loans. Borrowings of the non-insurance companies are non-recourse to the holding company and are generally expected to be settled through a combination of refinancing and operating cash flows.

The following table presents major components of cash flows for the years ended December 31, 2017 and 2016:

		2017		2016
Operating activities
	Cash provided by operating activities before the undernoted	22.2		138.9
	Net sales of investments classified as FVTPL	2,678.4		1,119.3
Investing activities
	Purchases of investments in associates	(1,026.5	)	(735.3	)
	Sales of investments in associates	1,014.9		45.8
	Purchases of subsidiaries, net of cash acquired	(1,107.7	)	(779.1	)
	Sale of subsidiary, net of cash divested	640.4		–
	Net purchases of premises and equipment and intangible assets	(415.2	)	(208.3	)
	Decrease in restricted cash for purchase of subsidiary	–		6.5
Financing activities
	Net proceeds from borrowings – holding company and insurance and reinsurance companies	577.0		637.7
	Repayment of borrowings – holding company and insurance and reinsurance companies	(483.7	)	(5.4	)
	Net borrowings from (repayments to) holding company revolving credit facility	(200.0	)	200.0
	Net proceeds from borrowings – non-insurance companies	500.6		360.5
	Repayment of borrowings – non-insurance companies	(268.7	)	(38.9	)
	Net borrowings from revolving credit facilities – non-insurance companies	193.7		193.6
	Increase in restricted cash related to financing activities	(150.8	)	(18.9	)
	Issuances of subordinate voting shares	–		523.5
	Purchases of subordinate voting shares for treasury	(140.5	)	(64.2	)
	Purchases of subordinate voting shares for cancellation	(96.2	)	(14.1	)
	Issuances of subsidiary common shares to non-controlling interests	2,223.2		157.1
	Purchases of subsidiary common shares from non-controlling interests	(140.3	)	(87.2	)
	Sales of subsidiary common shares to non-controlling interests	96.8		12.7
	Common and preferred share dividends paid	(282.0	)	(271.8	)
	Dividends paid to non-controlling interests	(67.5	)	(41.2	)
Increase in cash and cash equivalents during the year		3,568.1		1,131.2

Cash provided by operating activities (excluding net purchases of investments classified as FVTPL) decreased from $138.9 in 2016 to $22.2 in 2017, principally reflecting higher net paid losses and expenses and lower interest and dividends received, partially offset by higher net premium collections and lower income taxes paid. Refer to note 27 (Supplementary Cash Flow Information) to the consolidated financial statements for the year ended December 31, 2017 for details of net purchases of securities classified as FVTPL.

Purchases of investments in associates of $1,026.5 in 2017 primarily reflected investments in Astarta (28.1%), Farmers Edge (46.1%), Sigma (81.2%), Bangalore Airport (48.0% by Fairfax India), Atlas Mara (43.3% by Fairfax Africa) and the purchase of an additional indirect interest in APR Energy (ownership increased by 22.9%). Purchases of investments in associates of $735.3 in 2016 primarily reflected the purchase of an additional ownership interest in ICICI Lombard (ownership increased by 9.0%), an additional indirect interest in APR Energy, an investment in Fairchem (44.7% by Fairfax India), and the acquisition of indirect interests in Eurolife (40.0%) and Peak Achievement (38.2%). Sales of associates of $1,014.9 in 2017 primarily reflected net proceeds received on the sale of a 24.3% equity interest in ICICI Lombard ($908.5) and distributions received from the company's insurance and non-insurance associates.

Purchases of subsidiaries, net of cash acquired of $1,107.7 in 2017 primarily related to the acquisitions of Allied World and Fairfax Latam (100%), an additional investment in Grivalia Properties (ownership increased by 10.3%), and the acquisition of Saurashtra Freight (51.0% by Fairfax India). Purchases of subsidiaries, net of cash acquired of $779.1 in 2016 primarily related to the acquisitions of St-Hubert (100% by Cara), Original Joe's (89.2% by Cara),

184

AMAG (80.0%), Privi Organics (50.8% by Fairfax India), Bryte Insurance (100%) and Golf Town (60.0%). Sale of subsidiary, net of cash divested in 2017 related to the divestiture of a 97.7% equity interest in First Capital.

Net proceeds from borrowings – holding company and insurance and reinsurance companies of $577.0 in 2017 primarily reflected net proceeds from the issuance of Cdn$650.0 principal amount of 4.25% unsecured senior notes due December 6, 2027. Net proceeds from borrowings – holding company and insurance and reinsurance companies of $637.7 in 2016 primarily reflected net proceeds from the issuance of Cdn$400.0 principal amount of 4.50% unsecured senior notes due March 22, 2023 and Cdn$450.0 principal amount of 4.70% unsecured senior notes due December 16, 2026. Repayment of borrowings – holding company and insurance and reinsurance companies of $483.7 in 2017 primarily reflected the early redemption of Cdn$388.4 principal amount of 7.5% unsecured senior notes due 2019 and repayment of $124.9 principal amount of purchase consideration payable upon maturity.

Net proceeds from borrowings by non-insurance companies of $500.6 in 2017 primarily reflected net proceeds from Fairfax India's term loan ($400.0). Repayment of borrowings by non-insurance companies of $268.7 in 2017 primarily reflected Fairfax India's repayment of a previous term loan ($225.0). Net borrowings from revolving credit facilities and short term loans by non-insurance companies of $193.7 in 2017 primarily reflected proceeds from Fairfax Africa's term loan ($150.0) that required cash collateral of $150.0 (included in restricted cash related to financing activities). Net proceeds from borrowings – non-insurance companies of $360.5 in 2016 reflected net proceeds from Cara's floating rate term loan of $115.2 (Cdn $150.0) to finance its acquisition of St-Hubert and Fairfax India's term loan ($225.0). Net borrowings from revolving credit facilities – non-insurance companies of $193.6 in 2016 principally reflected Cara's borrowing on its floating rate revolving credit facility to finance its acquisitions of St-Hubert and Original Joe's.

Purchases of subordinate voting shares for treasury in 2017 of $140.5 (2016 – $64.2) were for the company's share-based payment awards. Issuance of subsidiary common shares to non-controlling interests of $2,223.2 in 2017 primarily reflected certain co-investors acquiring an indirect equity interest in Allied World, the public offerings by Fairfax Africa and Fairfax India and the issuance of common shares by Quess. Purchases of subsidiary common shares from non-controlling interests of $140.3 in 2017 primarily reflected Mosaic Capital's redemption of certain of its preferred shares and other equity instruments. Sales of subsidiary common shares to non-controlling interests of $96.8 in 2017 reflected Thomas Cook India's sale of a 5.4% equity interest in Quess.

Issuance of subordinate voting shares of $523.5 in 2016 reflected net proceeds received from the underwritten public offering of 1.0 million subordinate voting shares. Issuance of subsidiary common shares to non-controlling interests of $157.1 in 2016 primarily reflected Cara's issuance of subordinate voting shares to finance its acquisition of St-Hubert and the issuance of common shares by Quess through its initial public offering. Purchases of subsidiary common shares from non-controlling interests of $87.2 in 2016 primarily reflected the repurchase by Brit of its common shares from OMERS and the repurchase of subordinate voting shares for cancellation by Fairfax India.

Contractual Obligations

The following table sets out the expected payment schedule of the company's significant contractual obligations as at December 31, 2017:

	Less than 1 year	1-3 years	3-5 years	More than 5 years	Total
Provision for losses and loss adjustment expenses	7,453.3	8,272.0	4,557.3	8,328.2	28,610.8
Borrowings – principal	1,005.1	877.5	1,556.8	2,957.5	6,396.9
Borrowings – interest	315.7	542.9	381.5	745.6	1,985.7
Operating leases	188.5	326.6	252.5	458.2	1,225.8
	8,962.6	10,019.0	6,748.1	12,489.5	38,219.2

For further detail on the maturity profile of the company's financial liabilities, please see the heading Liquidity Risk in note 24 (Financial Risk Management) to the consolidated financial statements for the year ended December 31, 2017.

185

Contingencies and Commitments

For a full description of these matters, please see note 20 (Contingencies and Commitments) to the consolidated financial statements for the year ended December 31, 2017.

Accounting and Disclosure Matters

Management's Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of the company's management, including the company's CEO and CFO, the company conducted an evaluation of the effectiveness of its disclosure controls and procedures as of December 31, 2017, as required by Canadian securities legislation. Disclosure controls and procedures are designed to ensure that the information required to be disclosed by the company in the reports it files or submits under securities legislation is recorded, processed, summarized and reported on a timely basis and that such information is accumulated and reported to management, including the company's CEO and CFO, as appropriate, to allow required disclosures to be made in a timely fashion. Based on their evaluation, the CEO and CFO have concluded that as of December 31, 2017, the company's disclosure controls and procedures were effective.

Management's Report on Internal Control Over Financial Reporting

The company's management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934 and under National Instrument 52-109). The company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"). A company's internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS as issued by the IASB, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

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

The company's management assessed the effectiveness of the company's internal control over financial reporting as of December 31, 2017. In making this assessment, the company's management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control – Integrated Framework (2013). Based on this assessment, except as described below under "Limitation on scope of design and evaluation", the company's management, including the CEO and CFO, concluded that, as of December 31, 2017, the company's internal control over financial reporting was effective based on the criteria in Internal Control – Integrated Framework (2013) issued by COSO.

Pursuant to the requirements of the U.S. Securities Exchange Act, the effectiveness of the company's internal control over financial reporting as of December 31, 2017 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in its report which appears within this Annual Report.

Limitation on scope of design and evaluation

On July 6, 2017 the company completed the acquisition of Allied World Assurance Company Holdings, AG, which was subsequently renamed Allied World Assurance Company Holdings, GmbH ("Allied World"). Management has determined to limit the scope of the design and evaluation of the company's internal control over financial reporting to exclude the controls, policies and procedures of Allied World, the results of which are included in the consolidated financial statements of the company for the year ended December 31, 2017 since the acquisition date. The scope limitation is in accordance with Canadian and U.S. securities laws, which allow an issuer to limit its design and evaluation of internal control over financial reporting to exclude the controls, policies and procedures of a company

186

acquired not more than 365 days before the end of the financial period to which the applicable certifications relate. The operations of Allied World represented 6.5% of the company's consolidated revenue for the year ended December 31, 2017 and represented 22.8% and 23.9% of the company's consolidated assets and liabilities respectively as at December 31, 2017. In addition, the table that follows presents a summary of financial information for Allied World.

	For the period July 6, 2017 to December 31, 2017
Revenue	1,050.5
Net loss	(555.4	)

		As at December 31, 2017
Assets
	Insurance contract receivables	1,336.7
	Portfolio investments	8,162.9
	Deferred premium acquisition costs	146.6
	Recoverable from reinsurers	2,879.6
	Goodwill and intangible assets	1,702.6
	Other assets	356.0
		14,584.4
Liabilities
	Accounts payable and accrued liabilities	272.2
	Income taxes payable	1.7
	Short sale and derivative obligations	0.6
	Due to affiliates	6.0
	Funds withheld payable to reinsurers	270.3
	Insurance contract liabilities	9,440.9
	Deferred income taxes	67.5
	Borrowings	878.0
		10,937.2
Equity		3,647.2
		14,584.4

Critical Accounting Estimates and Judgments

Please refer to note 4 (Critical Accounting Estimates and Judgments) to the consolidated financial statements for the year ended December 31, 2017.

Significant Accounting Policy Changes

There were no significant accounting policy changes during 2017. Please refer to note 3 (Summary of Significant Accounting Policies) to the consolidated financial statements for the year ended December 31, 2017 for a detailed description of the company's accounting policies.

Future Accounting Changes

Certain new IFRS standards may have a significant impact on the company's consolidated financial reporting in the future. Each of those standards will require a moderate to high degree of implementation effort within the next three years as described below. The company does not expect to adopt any of these new standards in advance of their respective effective dates. New standards and amendments that have been issued but are not yet effective are also described in note 3 (Summary of Significant Accounting Policies) to the consolidated financial statements for the year ended December 31, 2017.

187

IFRS 9 Financial Instruments ("IFRS 9")

In July 2014 the IASB issued the complete version of IFRS 9 which will supersede the 2010 version of IFRS 9 currently applied by the company ("IFRS 9 (2010)"). IFRS 9 is effective for annual periods beginning on or after January 1, 2018, with retrospective application, and includes requirements for the classification and measurement of financial assets and liabilities, an expected credit loss model that replaces the existing incurred loss impairment model, and new hedge accounting guidance.

The company evaluated the impact of IFRS 9 by assessing its business models and the cash flow characteristics of its financial assets to determine their appropriate classifications under the new standard, and is nearing completion of that analysis. The company expects equities and derivative instruments held within the company's investment portfolio to continue to be classified as FVTPL, and the classification of financial liabilities and its hedge of net investment to also remain substantially unchanged from IFRS 9 (2010). The company continues to monitor and consider evolving guidance and interpretations related to IFRS 9 as it works through the classification analysis for its investments in debt instruments.

IFRS 15 Revenue from Contracts with Customers ("IFRS 15")

In May 2014 the IASB issued IFRS 15 which introduces a single model for recognizing revenue from contracts with customers. IFRS 15 excludes insurance contracts and financial instruments from its scope and is applicable primarily to the company's non-insurance companies. In April 2016 the IASB issued amendments to clarify certain aspects of IFRS 15 and to provide additional practical expedients upon transition. The standard is effective for annual periods beginning on or after January 1, 2018, with retrospective application.

During 2016 the company developed a detailed project plan for the implementation of IFRS 15 and conducted an impact assessment, involving all of its significant operating companies, that focused on identifying, by industry and key revenue streams, potential measurement differences under IFRS 15 compared to current accounting policies. Further study of a limited number of potential issues for certain of the non-insurance companies, particularly in the restaurant and staffing industries, was undertaken in 2017. Based on the cumulative work performed, the company has substantially completed its analysis of the accounting requirements under IFRS 15 and does not anticipate recording any significant transition adjustments upon adoption on January 1, 2018.

IFRS 16 Leases ("IFRS 16")

In January 2016 the IASB issued IFRS 16 which largely eliminates the distinction between finance and operating leases for lessees. With limited exceptions, a lessee will be required to recognize a right-of-use asset and a liability for its obligation to make lease payments. The standard is effective for annual periods beginning on or after January 1, 2019, with a choice of modified retrospective or full retrospective application.

During 2017 the company developed an implementation plan for IFRS 16 and had its operating companies undertake a detailed inventory of leases to determine the characteristics of their leases and the completeness of historic lease data required for IFRS 16 transition calculations. Further work will be undertaken in 2018 to develop IFRS 16 lease liability calculations and to identify and implement enhancements to current processes and information systems that may be required to embed such calculations within the company's financial reporting.

IFRS 17 Insurance Contracts ("IFRS 17")

In May 2017 the IASB issued IFRS 17, a comprehensive standard that establishes principles for the recognition, measurement, presentation and disclosure of insurance contracts. The measurement approach is based on the following: (i) a current, unbiased probability-weighted estimate of future cash flows expected to arise as the insurer fulfills the contract; (ii) the effect of the time value of money; (iii) a risk adjustment that measures the effects of uncertainty about the amount and timing of future cash flows; and (iv) a contractual service margin which represents the unearned profit in a contract (that is recognized in net earnings as the insurer fulfills its performance obligations under the contract). Estimates are required to be re-measured each reporting period. In addition, a simplified measurement approach is permitted for short-duration contracts in which the coverage period is approximately one year or less. The standard is effective for annual periods beginning on or after January 1, 2021, with retrospective application and some practical expedients available on adoption.

188

The company is currently evaluating the impact of the new standard on its financial reporting, and potentially, its business activities. The new measurement approach and its need for current estimates is expected to significantly increase operational complexity compared to existing practice. The use of different measurement models depending on whether an insurance contract is considered short-duration or long-duration under the standard presents certain implementation challenges and the presentation requirements significantly alter the disclosure of profit and loss from insurance contracts in the consolidated financial statements. The company is devoting significant effort to the analysis of IFRS 17, including education workshops and impact assessments at its largest insurance and reinsurance companies. Findings from those impact assessments will support implementation planning and analysis for all insurance and reinsurance operations in 2018.

Risk Management

Overview

The primary goals of the company's financial risk management program are to ensure that the outcomes of activities involving elements of risk are consistent with the company's objectives and risk tolerance, while maintaining an appropriate balance between risk and reward and protecting the company's consolidated balance sheet from events that have the potential to materially impair its financial strength. Please refer to note 24 (Financial Risk Management) to the consolidated financial statements for the year ended December 31, 2017 for a detailed discussion of the company's risk management policies.

Issues and Risks

The following issues and risks, among others, should be considered in evaluating the outlook of the company. For further detail about the issues and risks relating to the company, please see Risk Factors in Fairfax's most recent Short Form Base Shelf Prospectus and Supplements filed with the securities regulatory authorities in Canada, which are available on SEDAR at www.sedar.com.

Claims Reserves

Reserves are maintained to cover the estimated ultimate unpaid liability for losses and loss adjustment expenses with respect to reported and unreported claims incurred as of the end of each accounting period. The company's success is dependent upon its ability to accurately assess the risks associated with the businesses being insured or reinsured. Failure to accurately assess the risks assumed may lead to the setting of inappropriate premium rates and establishing reserves that are inadequate to cover losses. This could adversely affect the company's net earnings and financial condition.

Reserves do not represent an exact calculation of liability, but instead represent estimates at a given point in time involving actuarial and statistical projections of the company's expectations of the ultimate settlement and administration costs of claims incurred. Establishing an appropriate level of claims reserves is an inherently uncertain process. Both proprietary and commercially available actuarial models, as well as historical insurance industry loss development patterns, are utilized to establish appropriate claims reserves. The company's management of pricing risk is discussed in note 24 (Financial Risk Management), and management of claims reserves is discussed in note 4 (Critical Accounting Estimates and Judgments) and note 8 (Insurance Contract Liabilities), to the consolidated financial statements for the year ended December 31, 2017.

Catastrophe Exposure

The company's insurance and reinsurance operations are exposed to claims arising out of catastrophes. Catastrophes can be caused by various events, including natural events such as hurricanes, windstorms, earthquakes, tornadoes, hailstorms, severe winter weather and fires, and unnatural events such as terrorist attacks and riots. The incidence and severity of catastrophes are inherently unpredictable.

The extent of losses from a catastrophe is a function of both the total amount of insured exposure in the area affected by the event and the severity of the event. Most catastrophes are restricted to small geographic areas; however, hurricanes, windstorms and earthquakes may produce significant damage in large, heavily populated areas. Catastrophes can cause losses in a variety of property and casualty lines, including losses relating to business interruptions occurring in the same geographic area as the catastrophic event or in the other geographic areas. It is possible that a catastrophic event or multiple catastrophic events could have a material adverse effect upon the

189

company's financial condition, profitability or cash flows. The company believes that increases in the value and geographic concentration of insured property, higher construction costs due to labour and raw material shortages following a significant catastrophe event, and climate change could increase the severity of claims from catastrophic events in the future. The company's management of catastrophe risk is discussed in note 24 (Financial Risk Management) to the consolidated financial statements for the year ended December 31, 2017.

Cyclical Nature of the Property & Casualty Business

The financial performance of the insurance and reinsurance industries has historically tended to fluctuate due to competition, frequency of occurrence or severity of catastrophic events, levels of capacity, general economic conditions and other factors. Demand for insurance and reinsurance is influenced significantly by underwriting results of primary insurers and prevailing general economic conditions. Factors such as changes in the level of employment, wages, consumer spending, business investment and government spending, the volatility and strength of the global capital markets and inflation or deflation all affect the business and economic environment and, ultimately, the demand for insurance and reinsurance products, and therefore may affect the company's net earnings, financial position or cash flows.

The property and casualty insurance business historically has been characterized by periods of intense price competition due to excess underwriting capacity, as well as periods when shortages of underwriting capacity have permitted attractive premium levels. The company expects to continue to experience the effects of this cyclicality, which, during down periods, could reduce the premiums the company writes and could harm its financial position, profitability or cash flows.

In the reinsurance industry, the supply of reinsurance is related to prevailing prices and levels of surplus capacity that, in turn, may fluctuate in response to changes in rates of return being realized. It is possible that premium rates or other terms and conditions of trade could vary in the future, that the present level of demand will not continue because insurers, including the larger insurers created by industry consolidation, may require less reinsurance or that the present level of supply of reinsurance could increase as a result of capital provided by existing reinsurers or alternative forms of reinsurance capacity entering the market from recent or future market entrants. If any of these events transpire, the profitability of the company's reinsurance business could be adversely affected.

The company actively manages its operations to withstand the cyclical nature of the property and casualty business by maintaining sound liquidity and strong capital management as discussed in note 24 (Financial Risk Management) to the consolidated financial statements for the year ended December 31, 2017.

Investment Portfolio

Investment returns are an important part of the company's overall profitability as the company's operating results depend in part on the performance of its investment portfolio. The company's investment portfolio includes bonds and other debt instruments, common stocks, preferred stocks, equity-related securities and derivative instruments. Accordingly, fluctuations in the fixed income or equity markets could impair the company's financial condition, profitability or cash flows. Investment income is derived from interest and dividends, together with net gains or losses on investments. The portion derived from net gains or losses on investments generally fluctuates from year to year and is typically a less predictable source of investment income than interest and dividends, particularly in the short term. The return on the portfolio and the risks associated with the investments are affected by the asset mix, which can change materially depending on market conditions.

The ability of the company to achieve its investment objectives is affected by general economic conditions that are beyond its control. General economic conditions can adversely affect the markets for interest-rate-sensitive securities, including the extent and timing of investor participation in such markets, the level and volatility of interest rates and, consequently, the value of fixed income securities. Interest rates are highly sensitive to many factors, including governmental monetary policies, domestic and international economic and political conditions and other factors beyond the company's control. General economic conditions, stock market conditions and many other factors can also adversely affect the equity markets and, consequently, the value of the equities owned. In addition, defaults by third parties who fail to pay or perform on their obligations could reduce the company's investment income and net gains on investment or result in investment losses. The company's management of credit risk, liquidity risk, market risk and interest rate risk is discussed in note 24 (Financial Risk Management) to the consolidated financial statements for the year ended December 31, 2017.

190

Derivative Instruments

The company may be a counterparty to various derivative instruments, primarily for general protection against declines in the fair value of its financial assets. Derivative instruments may be used to manage or reduce risks or as a cost-effective way to synthetically replicate the investment characteristics of an otherwise permitted investment. The market value and liquidity of these investments are volatile and may vary dramatically up or down in short periods, and their ultimate value will therefore only be known upon their disposition or settlement.

The use of derivative instruments is governed by the company's investment policies and exposes the company to a number of risks, including credit risk, interest rate risk, liquidity risk, inflation risk, market risk, basis risk and counterparty risk, although these risks are diminished because the company's principal use of derivative instruments is to hedge exposures to various risks. The company endeavors to limit counterparty risk through diligent selection of counterparties to its derivative instruments and through the terms of agreements negotiated with counterparties. Pursuant to these agreements, both parties are required to deposit eligible collateral in collateral accounts for either the benefit of the company or the counterparty depending on the then current fair value or change in the fair value of the derivative contract.

The company may not be able to realize its investment objectives with respect to derivative instruments, which could have a material adverse effect upon its financial position, profitability or cash flows. The company's use of derivatives is discussed in note 7 (Short Sales and Derivatives) and management of credit risk, liquidity risk, market risk and interest rate risk is discussed in note 24 (Financial Risk Management) to the consolidated financial statements for the year ended December 31, 2017.

Economic Hedging Strategies

The company may use derivative instruments from time to time to manage or reduce its exposure to credit risk and various market risks, including interest rate risk, equity market risk, inflation/deflation risk and foreign currency risk. The company may choose to hedge risks associated with a specific financial instrument, asset or liability or at a macro level to hedge systemic financial risk and the impact of potential future economic crisis and credit related problems on its operations and the value of its financial assets. Credit default swaps, total return swaps and consumer price index-linked derivative instruments have typically been used to hedge macro level risks, although the company does not expect to undertake hedges of such risks in the foreseeable future. The company's use of derivatives is discussed in note 7 (Short Sales and Derivatives) to the consolidated financial statements for the year ended December 31, 2017.

The company's derivative instruments may expose it to basis risk. Basis risk is the risk that the fair value or cash flows of derivative instruments applied as economic hedges will not experience changes in exactly the opposite directions from those of the underlying hedged exposure. This imperfect correlation may adversely impact the net effectiveness of the hedge and may diminish the financial viability of maintaining the hedging strategy and therefore adversely impact the company's financial condition, profitability or cash flows.

The company regularly monitors the prospective and retrospective effectiveness of any hedging instruments and will adjust the amount and/or type of hedging instruments as required to achieve its risk management goals. The management of credit risk and various market risks is discussed in note 24 (Financial Risk Management) to the consolidated financial statements for the year ended December 31, 2017.

Latent Claims

The company has established loss reserves for asbestos, environmental and other latent claims that represent its best estimate of ultimate claims and claims adjustment expenses based upon known facts and current law. As a result of significant issues surrounding liabilities of insurers, risks inherent in major litigation and diverging legal interpretations and judgments in different jurisdictions, actual liability for these types of claims could exceed the loss reserves set by the company by an amount that could be material to the company's financial condition, profitability or cash flows in future periods.

The company's exposure to asbestos, environmental and other latent claims is discussed in the Asbestos, Pollution and Other Hazards section of this MD&A. The company's management of reserving risk is discussed in note 24 (Financial Risk Management) and in note 8 (Insurance Contract Liabilities) to the consolidated financial statements for the year ended December 31, 2017.

191

Recoverable from Reinsurers and Insureds

Most insurance and reinsurance companies reduce their exposure to any individual claim by reinsuring amounts in excess of their maximum desired retention. Reinsurance is an arrangement in which an insurer, called the cedant, transfers insurance risk to another insurer, called the reinsurer, which accepts the risk in return for a premium payment. This third party reinsurance does not relieve the company, as a cedant, of its primary obligation to the insured. Recoverable from reinsurers balances may become an issue mainly due to reinsurer solvency and credit concerns, due to the potentially long time period over which claims may be paid and the resulting recoveries are received from the reinsurers, or due to policy disputes. If reinsurers are unwilling or unable to pay amounts due under reinsurance contracts, the company will incur unexpected losses and its operations, financial positions and cash flows will be adversely affected. The credit risk associated with the company's reinsurance recoverable balances is described in note 24 (Financial Risk Management) to the consolidated financial statements for the year ended December 31, 2017 and in the Recoverable from Reinsurers section of this MD&A.

The company's insurance and reinsurance companies write certain insurance policies, such as large deductible policies (policies where the insured retains a specific amount of any potential loss), in which the insured must reimburse the company's insurance and reinsurance companies for certain losses. Accordingly, the company's insurance and reinsurance companies bear credit risk on these policies as there is no assurance that the insureds will provide reimbursement on a timely basis or at all.

Acquisitions and Divestitures

The company may periodically and opportunistically acquire other insurance and reinsurance companies or execute other strategic initiatives developed by management. Although the company undertakes due diligence prior to the completion of an acquisition, it is possible that unanticipated factors could arise and there is no assurance that the anticipated financial or strategic objectives following an integration effort or the implementation of a strategic initiative will be achieved which could adversely affect the company's financial condition, profitability or cash flows. The company may periodically explore opportunities to make strategic investments in all or part of certain businesses or companies. Acquisitions may involve a number of special risks, including failure to retain key personnel, unanticipated events or circumstances and legal liabilities, some or all of which could have a material adverse effect on the company's business, results of operations and financial position. The company cannot be sure that any acquired businesses will achieve the anticipated revenues, income and synergies. Failure on the company's part to manage its acquisition strategy successfully could have a material adverse effect on its business, results of operations and financial position. The company cannot be sure that it will be able to identify appropriate targets, profitably manage additional businesses or successfully integrate any acquired business into its operations.

The strategies and performance of operating companies, and the alignment of those strategies throughout the organization, are regularly assessed through various processes involving senior management and the company's Board of Directors.

Ratings

Financial strength and credit ratings by the major North American rating agencies are important factors in establishing competitive position for insurance and reinsurance companies. Third-party rating agencies assess and rate the claims-paying ability of reinsurers and insurers based upon the criteria of such rating agencies. Periodically the rating agencies evaluate the company's insurance and reinsurance subsidiaries to confirm that they continue to meet the criteria of the ratings previously assigned to them. The claims-paying ability ratings assigned by rating agencies to reinsurance or insurance companies represent independent opinions of financial strength and ability to meet policyholder obligations. A downgrade in these ratings could lead to a significant reduction in the number of insurance policies the company's insurance subsidiaries write and could cause early termination of contracts written by the company's reinsurance subsidiaries or a requirement for them to post collateral at the direction of their counterparts. A downgrade of the company's long term debt ratings by the major rating agencies could require the company and/or its subsidiaries to accelerate their cash settlement obligations for certain derivative transactions to which they are a party, and could result in the termination of certain other derivative transactions. In addition, a downgrade of the company's credit rating may affect the cost and availability of unsecured financing. Ratings are subject to periodic review at the discretion of each respective rating agency and may be revised downward or revoked at their sole discretion. Rating agencies may also increase their scrutiny of rated companies, revise their rating

192

standards or take other action. The company has dedicated personnel that manage the company's relationships with its various rating agencies.

Competition

The property and casualty insurance industry and the reinsurance industry are both highly competitive, and will likely remain highly competitive in the foreseeable future. Competition in these industries is based on many factors, including premiums charged and other terms and conditions offered, products and services provided, commission structure, financial ratings assigned by independent rating agencies, speed of claims payment, reputation, selling effort, perceived financial strength and the experience of the insurer or reinsurer in the line of insurance or reinsurance to be written. The company competes with a large number of Canadian, U.S. and foreign insurers and reinsurers, as well as certain underwriting syndicates, some of which have greater financial, marketing and management resources than the company. In addition, some financial institutions, such as banks, are now able to offer services similar to those offered by the company's reinsurance subsidiaries while in recent years, capital market participants have also created alternative products that are intended to compete with reinsurance products.

Consolidation within the insurance industry could result in insurance and reinsurance market participants using their market power to implement price reductions. If competitive pressures compel the company to reduce its prices, the company's operating margins would decrease. As the insurance industry consolidates, competition for customers could become more intense and the importance of acquiring and properly servicing each customer could become greater, causing the company to incur greater expenses relating to customer acquisition and retention and further reducing operating margins. The company's management of pricing risk is discussed in note 24 (Financial Risk Management) to the consolidated financial statements for the year ended December 31, 2017.

Emerging Claim and Coverage Issues

The provision for claims is an estimate and may be found to be deficient, perhaps very significantly, in the future as a result of unanticipated frequency or severity of claims or for a variety of other reasons including unpredictable jury verdicts, expansion of insurance coverage to include exposures not contemplated at the time of policy issue (as was the case with asbestos and pollution exposures) and extreme weather events. Unanticipated developments in the law as well as changes in social and environmental conditions could result in unexpected claims for coverage under insurance and reinsurance contracts. With respect to casualty lines of business, these legal, social and environmental changes may not become apparent until some time after their occurrence.

The full effects of these and other unforeseen emerging claim and coverage issues are extremely hard to predict. As a result, the full extent of the company's liability under its coverages, and in particular its casualty insurance policies and reinsurance contracts, may not be known until many years after a policy or contract is issued. The company's exposure to this uncertainty is greatest in its "long-tail" casualty lines of business where claims can typically be made for many years, rendering them more susceptible to these trends than in the property insurance lines of business, which is more typically "short-tail". In addition, the company could be adversely affected by the growing trend of plaintiffs targeting participants in the property-liability insurance industry in purported class action litigation relating to claims handling and other practices.

The company seeks to limit its loss exposure by employing a variety of policy limits and other terms and conditions and through prudent underwriting of each program written. Loss exposure is also limited by geographic diversification. The company's management of reserving risk is discussed in note 24 (Financial Risk Management) and in note 8 (Insurance Contract Liabilities) to the consolidated financial statements for the year ended December 31, 2017 and in the Asbestos, Pollution and Other Hazards section of this MD&A.

Cost of Reinsurance and Adequate Protection

The company uses reinsurance arrangements, including reinsurance of its own reinsurance business purchased from other reinsurers, referred to as retrocessionaires, to help manage its exposure to property and casualty risks. The availability of reinsurance and the rates charged by reinsurers are subject to prevailing market conditions, both in terms of price and available capacity, which can affect the company's business volume and profitability. Reinsurance companies can also add or exclude certain coverages from, or alter terms in, the policies they offer. Reinsurers may also impose terms, such as lower per occurrence and aggregate limits, on primary insurers that are inconsistent with corresponding terms in the policies written by these primary insurers. As a result, the company's insurance subsidiaries, like other primary insurance companies, increasingly are writing insurance policies which to some

193

extent do not have the benefit of reinsurance protection. These gaps in reinsurance protection expose the company to greater risk and greater potential losses.

The rates charged by reinsurers and the availability of reinsurance to the company's 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. In 2011 the insurance industry experienced the second highest number of insured losses in history, primarily due to numerous catastrophes. The significant catastrophe losses incurred by reinsurers worldwide resulted in higher costs for reinsurance protection in 2012. More recently, there has been excess capital within the reinsurance market due to favourable operating results of reinsurers and alternative forms of reinsurance capacity entering the market. As a result, the market has become very competitive with prices decreasing for most lines of business. However, significant hurricane loss activity in 2017 may again result in higher costs for reinsurance protection going forward. Each of the company's subsidiaries continue to evaluate the relative costs and benefits of accepting more risk on a net basis, reducing exposure on a direct basis, and paying additional premiums for reinsurance.

Holding Company Liquidity

Fairfax is a holding company that conducts substantially all of its business through its subsidiaries and receives substantially all of its earnings from them. The holding company controls the operating insurance and reinsurance companies, each of which must comply with applicable insurance regulations of the jurisdictions in which it operates. Each operating company must maintain reserves for losses and loss adjustment expenses to cover the risks it has underwritten.

Although substantially all of the holding company's operations are conducted through its subsidiaries, none of its subsidiaries are obligated to make funds available to the holding company for payment of its outstanding debt. Accordingly, the holding company's ability to meet financial obligations, including the ability to make payments on outstanding debt, is dependent on the distribution of earnings from its subsidiaries. The ability of subsidiaries to pay dividends in the future will depend on their statutory surplus, on earnings and on regulatory restrictions. Dividends, distributions or returns of capital to the holding company are subject to restrictions set forth in the insurance laws and regulations of the countries where the company operates (principally the U.S., Canada, the United Kingdom and Bermuda) (in each case, including the provinces, states or other jurisdictions therein) and is affected by the subsidiaries' credit agreements, indentures, rating agencies, the discretion of insurance regulatory authorities and capital support agreements with subsidiaries. The holding company strives to be soundly financed and maintains high levels of liquid assets as discussed in note 24 (Financial Risk Management) to the consolidated financial statements for the year ended December 31, 2017 and in the Liquidity section of this MD&A.

Access to Capital

The company's future capital requirements depend on many factors, including its ability to successfully write new business and to establish premium rates and reserves at levels sufficient to cover losses. To the extent that the funds generated by the company's business are insufficient to fund future operations, additional funds may need to be raised through equity or debt financings. If the company requires additional capital or liquidity but cannot obtain it on reasonable terms or at all, its business, financial condition and profitability would be materially adversely affected.

The company's ability and/or the ability of its subsidiaries to obtain additional financing for working capital, capital expenditures or acquisitions in the future may also be limited under the terms of its revolving credit facility discussed in note 15 (Borrowings) to the consolidated financial statements for the year ended December 31, 2017. The revolving credit facility contains various covenants that may restrict, among other things, the company's ability or the ability of its subsidiaries to incur additional indebtedness, to create liens or other encumbrances and to sell or otherwise dispose of assets and merge or consolidate with another entity. In addition, the revolving credit facility contains certain financial covenants that require the company to maintain a ratio of consolidated debt to consolidated capitalization of not more than 0.35:1 and consolidated shareholders' equity of not less than $9.5 billion. A failure to comply with the obligations and covenants under the revolving credit facility could result in an event of default under such agreement which, if not cured or waived, could permit acceleration of indebtedness, including other indebtedness of Fairfax or its subsidiaries. If such indebtedness were to be accelerated, there can be no assurance that the company's assets would be sufficient to repay that indebtedness in full. This risk is mitigated by maintaining high levels of liquid assets at the holding company. The company's management of liquidity risk is

194

discussed further in note 24 (Financial Risk Management) to the consolidated financial statements for the year ended December 31, 2017 and in the Liquidity section of this MD&A.

Key Employees

The company is substantially dependent on a small number of key employees, including its Chairman, Chief Executive Officer and significant shareholder, Mr. Prem Watsa, and the senior management of the company and its operating subsidiaries. The industry experience and reputations of these individuals are important factors in the company's ability to attract new business. The company's success has been, and will continue to be, dependent on its ability to retain the services of existing key employees and to attract and retain additional qualified personnel in the future. At the operating subsidiaries, employment agreements have been entered into with key employees. The company does not maintain key employee insurance with respect to any of its employees.

Regulatory, Political and other Influences

The insurance and reinsurance industries are highly regulated and are subject to changing political, economic and regulatory influences. These factors affect the practices and operation of insurance and reinsurance organizations. Federal, state and provincial governments in the United States and Canada, as well as governments in foreign jurisdictions in which the company operates, have periodically considered programs to reform or amend the insurance systems at both the federal and local levels. For example, in recent years the company has had to implement the following: new regulatory capital guidelines for the company's European operations due to Solvency II; the Dodd-Frank Act created a new framework for regulation of over-the-counter derivatives in the United States which could increase the cost of the company's use of derivatives for investment and hedging purposes; the activities of the International Association of Insurance Supervisors has resulted in additional regulatory oversight of the company; and the Canadian and U.S. insurance regulators' Own Risk and Solvency Assessment ("ORSA") initiatives have required the company's North American operations to perform self-assessments of the capital available to support their business risks. Such initiatives could adversely affect the financial results of the company's subsidiaries, including their ability to pay dividends, cause unplanned modifications of products or services, or result in delays or cancellations of sales of products and services by insurers or reinsurers. Insurance industry participants may respond to changes by reducing their investments or postponing investment decisions, including investments in the company's products and services. The company's management of the risks associated with its capital within the various regulatory regimes in which it operates is discussed in note 24 (Financial Risk Management) under the heading of Capital Management in the consolidated financial statements for the year ended December 31, 2017 and in the Capital Resources and Management section of this MD&A.

Information Requests or Proceedings by Government Authorities

From time to time, the insurance industry has been subject to investigations, litigation and regulatory activity by various insurance, governmental and enforcement authorities, concerning certain practices within the industry. The company sometimes receives inquiries and informational requests from insurance regulators in the jurisdictions in which its insurance and reinsurance subsidiaries operate. From time to time, consumer advocacy groups or the media also focus attention on certain insurance industry practices. The company cannot predict at this time the effect that investigations, litigation and regulatory activity or negative publicity from consumers or the media will have on the insurance or reinsurance industry or its business, or whether activities or practices currently thought to be lawful will be characterized in the future as unlawful or will become subject to negative scrutiny from consumer advocacy groups or the media. The company's involvement in any investigations and related lawsuits would cause it to incur legal costs and, if the company were found to have violated any laws, could be required to pay fines and damages, perhaps in material amounts. In addition, the company could be materially adversely affected by the negative publicity for the insurance industry related to any such proceedings, and by any new industry-wide regulations or practices that may result from such proceedings or publicity. It is possible that future investigations or related regulatory developments will mandate changes in industry practices in a fashion that increases the company's costs of doing business or requires the company to alter aspects of the manner in which it conducts its business. The company's internal and external legal counsels coordinate with operating companies in responding to information requests and government proceedings.

195

Regional or Geographical Limitations and Risks

The company's international operations are regulated in various jurisdictions with respect to licensing requirements, currency, amount and type of security deposits, amount and type of reserves, amount and type of local investment and other matters. International operations and assets held abroad may be adversely affected by political and other developments in foreign countries, including possibilities of tax changes, nationalization and changes in regulatory policy, as well as by consequences of hostilities and unrest. The risks of such occurrences and their overall effect upon the company vary from country to country and cannot easily be predicted.

The company regularly monitors for political and other changes in each country where it operates. The decentralized nature of the company's operations permits quick adaptation to, or mitigation of, evolving regional risks. Furthermore, the company's international operations are widespread and therefore not dependent on the economic stability of any one particular region.

Lawsuits

The company may, from time to time, become party to a variety of legal claims and regulatory proceedings including, but not limited to: disputes over coverage or claims adjudication; disputes regarding sales practices, disclosures, premium refunds, licensing, regulatory compliance and compensation arrangements; disputes with its agents, brokers or network providers over compensation and termination of contracts and related claims; regulatory actions relating to consumer pressure in relation to benefits realized by insurers; disputes with taxing authorities regarding its tax liabilities and tax assets; regulatory proceedings and litigation related to acquisitions or divestitures made or proposed by the company or its subsidiaries or in connection with subsidiaries in which the company holds an investment; and disputes relating to certain businesses acquired or disposed of by the company. The existence of such claims against the company or its affiliates, directors or officers could have various adverse effects, including the incurrence of significant legal expenses defending claims, even those without merit.

Operating companies manage day-to-day regulatory and legal risk primarily by implementing appropriate policies, procedures and controls. Internal and external legal counsels also work closely with the operating companies to identify and mitigate areas of potential regulatory and legal risk. The company's legal and regulatory matters are discussed in note 20 (Contingencies and Commitments) to the consolidated financial statements for the year ended December 31, 2017.

Significant Shareholder

The company's Chairman and Chief Executive Officer, Mr. Prem Watsa, owns, directly or indirectly, or exercises control or direction over shares representing 42.5% of the voting power of the company's outstanding shares. Mr. Watsa has the ability to substantially influence certain actions requiring shareholder approval, including approving a business combination or consolidation, liquidation or sale of assets, electing members of the Board of Directors and adopting amendments to articles of incorporation and by-laws.

Amendments were made to the terms of the company's multiple voting shares, which are controlled by Mr. Watsa, in August of 2015 having the effect of preserving the voting power represented by the multiple voting shares at 41.8% even if additional subordinate voting shares are issued in the future. The amendments are described in note 16 (Total Equity) to the consolidated financial statements for the year ended December 31, 2015 and in the company's annual information form filed with the securities regulatory authorities in Canada, which are available on SEDAR at www.sedar.com.

Foreign Exchange

The company's reporting currency is the U.S. dollar. A portion of the company's premiums and expenses are denominated in foreign currencies and a portion of assets (including investments) and loss reserves are also denominated in foreign currencies. The company may, from time to time, experience losses resulting from fluctuations in the values of foreign currencies (including when certain foreign currency assets and liabilities are hedged) which could adversely affect the company's financial condition, profitability or cash flows. The company's management of foreign currency risk is discussed in note 24 (Financial Risk Management) to the consolidated financial statements for the year ended December 31, 2017.

196

Reliance on Distribution Channels

The company uses brokers to distribute its business and in some instances will distribute through agents or directly to customers. The company may also conduct business through third parties such as managing general agents where it is cost effective to do so and where the company can control the underwriting process to ensure its risk management criteria are met. Each of these channels has its own distinct distribution characteristics and customers. A large majority of the company's business is generated by brokers (including international reinsurance brokers with respect to the company's reinsurance operations), with the remainder split among the other distribution channels. This is substantially consistent across the company's insurance and reinsurance subsidiaries.

The company's insurance operations have relationships with many different types of brokers including independent retail brokers, wholesale brokers and national brokers depending on the particular jurisdiction, while the company's reinsurance operations are dependent primarily on a limited number of international reinsurance brokers. The company transacts business with these brokers on a non-exclusive basis. These independent brokers also transact the business of the company's competitors and there can be no assurance as to their continuing commitment to distribute the company's insurance and reinsurance products. The continued profitability of the company depends, in part, on the marketing efforts of independent brokers and the ability of the company to offer insurance and reinsurance products and maintain financial ratings that meet the requirements and preferences of such brokers and their policyholders.

Because the majority of the company's brokers are independent, there is limited ability to exercise control over them. In the event that an independent broker exceeds its authority by binding the company on a risk which does not comply with the company's underwriting guidelines, the company may be at risk for that policy until the application is received and a cancellation effected. Although to date the company has not experienced a material loss from improper use of binding authority by its brokers, any improper use of such authority may result in losses that could have a material adverse effect on the business, financial condition, profitability or cash flows of the company. The company's insurance and reinsurance subsidiaries closely manage and monitor broker relationships and regularly audit broker compliance with the company's established underwriting guidelines.

Goodwill and Intangible Assets

The goodwill and intangible assets on the company's consolidated balance sheet originated from various acquisitions made by the company or its operating subsidiaries. Continued profitability of acquired businesses is a key driver for there to be no impairment in the carrying value of goodwill and intangible assets. An intangible asset may be impaired if the economic benefit to be derived from its use is unexpectedly diminished.

Management regularly reviews the current and expected profitability of the operating companies relative to plan in assessing the carrying value of goodwill. The intended use, expected life, and economic benefit to be derived from intangible assets are evaluated by the company when there are potential indicators of impairment. The carrying values of goodwill and indefinite-lived intangible assets are tested for impairment at least annually or more often if events or circumstances indicate there may be potential impairment.

Taxation

Realization of deferred income tax assets is dependent upon the generation of taxable income in those jurisdictions where the relevant tax losses and temporary differences exist. Failure to achieve projected levels of profitability could lead to a reduction in the company's deferred income tax asset if it is no longer probable that the amount of the asset will be realized.

The company is subject to income taxes in Canada, the U.S. and many foreign jurisdictions where it operates, and the company's determination of its tax liability is subject to review by applicable domestic and foreign tax authorities. While the company believes its tax positions to be reasonable, where the company's interpretations differ from those of tax authorities or the timing of realization is not as expected, the provision for income taxes may increase or decrease in future periods to reflect actual experience.

The company has specialist tax personnel responsible for assessing the income tax consequences of planned transactions and events and undertaking the appropriate tax planning. The company also consults with external tax professionals as needed. Tax legislation of each jurisdiction in which the company operates is interpreted to determine the provision for income taxes and expected timing of the reversal of deferred income tax assets and liabilities.

197

Guaranty Funds and Shared Markets

Virtually all U.S. states require insurers licensed to do business in their state to bear a portion of the loss suffered by some insureds as a result of impaired or insolvent insurance companies. Many states also have laws that establish second-injury funds to provide compensation to injured employees for aggravation of a prior condition or injury, which are funded by either assessments based on paid losses or premium surcharge mechanisms. In addition, as a condition to the ability to conduct business in various jurisdictions, the company's insurance subsidiaries are required to participate in mandatory property and casualty shared market mechanisms or pooling arrangements, which provide various types of insurance coverage to individuals or other entities that otherwise are unable to purchase that coverage from private insurers. The effect of these assessments and mandatory shared-market mechanisms or changes in them could reduce the profitability of the company's U.S. insurance subsidiaries in any given period or limit their ability to grow their business. Similarly, the company's Canadian insurance subsidiaries contribute to a mandatory guaranty fund that protects insureds in the event of a Canadian property and casualty insurer becoming insolvent.

Technological Changes

Technological changes could have unpredictable effects on the insurance and reinsurance industries. It is expected that new services and technologies will continue to emerge that will affect the demand for insurance and reinsurance products and services, the premiums payable, the profitability of such products and services and the risks associated with underwriting certain lines of business, including new lines of business. Failure to understand evolving technologies, or to position the company in the appropriate direction, or to deploy new products and services in a timely way that considers customer demand and competitor activities could have an adverse impact on the company's business, financial condition, profitability or cash flows. The company maintains an innovation working group comprised of members with diverse backgrounds from across its global operating companies to regularly assess new services and technologies that that may be applicable or disruptive to the insurance and reinsurance industries.

Technology Infrastructure

The company's business is highly dependent upon the successful and uninterrupted functioning of its computer and data processing systems which are relied upon to perform actuarial and other modeling functions necessary for writing business, to process and make claim payments and to process and summarize investment transactions. Third parties provide certain of the key components of the company's business infrastructure such as voice and data communications and network access. Given the high volume of transactions processed daily, the company is reliant on such third party provided services to successfully deliver its products and services. The failure of these systems could interrupt the company's operations or impact its ability to rapidly evaluate and commit to new business opportunities. If sustained or repeated, a system failure could result in the loss of existing or potential business relationships, or compromise the company's ability to pay claims in a timely manner.

In addition, a security breach of the company's computer systems could damage its reputation or result in liability. The company retains confidential information regarding its business dealings in its computer systems, including, in some cases, confidential personal information regarding insureds. Significant capital and other resources may be required to protect against security breaches or to alleviate problems caused by such breaches. Any well publicized compromise of security could deter people from conducting transactions that involve transmitting confidential information to the company's systems. Therefore, it is critical that these facilities and infrastructure remain secure and are perceived by the marketplace to be secure. This infrastructure may be vulnerable to physical break-ins, computer viruses, programming errors, attacks by third parties or similar disruptive problems. In addition, the company could be subject to liability if hackers were able to penetrate its network security or otherwise misappropriate confidential information.

The company has highly trained staff that is committed to the continual development and maintenance of its technology infrastructure. Security measures, including data security programs specific to confidential personal information, have been implemented and are regularly upgraded. The company and its third party service providers also maintain contingency plans specific to its technology infrastructure.

Systemic Cyber-Attacks

The company relies on information technology in virtually all aspects of its business. A significant disruption or failure of the company's information technology systems could result in service interruptions, safety failures,

198

security violations, regulatory compliance failures, and inability to protect information and assets against intruders, and other operational difficulties. Attacks perpetrated against those information systems could result in loss of assets and critical information, expose the company to remediation costs and reputational damage, and adversely affect the company's results of operations, financial condition and liquidity.

Cyber-attacks could further adversely affect the company's ability to operate facilities, information technology and business systems, or compromise confidential customer and employee information. Cyber-attacks resulting in political, economic, social or financial market instability or damage to or interference with the company's assets, or its customers or suppliers may result in business interruptions, lost revenue, higher commodity prices, disruption in fuel supplies, lower energy consumption, unstable markets, increased security and repair or other costs, any of which may affect the company's consolidated financial results. Furthermore, instability in the financial markets as a result of terrorism, sustained or significant cyber-attacks, or war could also adversely affect the company's ability to raise capital.

The company has taken steps intended to mitigate these risks, including implementation of cyber security measures, business continuity planning, disaster recovery planning and business impact analysis, and regularly updates these plans and security measures.

Other

Quarterly Data (unaudited)

Years ended December 31

		First Quarter			Second Quarter		Third Quarter			Fourth Quarter			Full Year
2017
	Revenue		2,737.6			3,258.2		4,907.3			5,321.5			16,224.6
	Net earnings		75.3			312.6		370.2			856.8			1,614.9
	Net earnings attributable to shareholders of Fairfax		82.6			311.6		476.9			869.5			1,740.6
	Net earnings per share	$	3.11		$	13.04	$	16.85		$	30.87		$	66.74
	Net earnings per diluted share	$	3.03		$	12.67	$	16.42		$	30.06		$	64.98
2016
	Revenue		2,186.5			2,907.0		2,431.4			1,774.7			9,299.6
	Net earnings (loss)		(16.7	)		293.5		32.7			(704.2	)		(394.7	)
	Net earnings (loss) attributable to shareholders of Fairfax		(51.0	)		238.7		1.3			(701.5	)		(512.5	)
	Net earnings (loss) per share	$	(2.76	)	$	9.81	$	(0.42	)	$	(30.77	)	$	(24.18	)
	Net earnings (loss) per diluted share	$	(2.76	)	$	9.58	$	(0.42	)	$	(30.77	)	$	(24.18	)

Revenue of $4,907.3 and $5,321.5 in the third and fourth quarter of 2017 increased from $2,431.4 and $1,774.7 in the third and fourth quarter of 2016, principally as a result of net gains from the partial sale of ICICI Lombard in the third quarter of 2017, the sale of the company's 97.7% interest in First Capital in the fourth quarter of 2017, and the consolidation of the net premiums earned by Allied World from July 6, 2017.

Net earnings attributable to shareholders of Fairfax of $476.9 (net earnings of $16.85 per basic share and $16.42 per diluted share) in the third quarter of 2017 compared to net earnings attributable to shareholders of Fairfax of $1.3 (net loss of $0.42 per basic and diluted share) in the third quarter of 2016, reflected higher net gains on investments (which primarily resulted from the partial sale of ICICI Lombard and increased net gains on net equity exposure), partially offset by underwriting losses (which primarily resulted from current period catastrophe losses related to Hurricanes Harvey, Irma and Maria).

Net earnings attributable to shareholders of Fairfax of $869.5 (net earnings of $30.87 per basic share and $30.06 per diluted share) in the fourth quarter of 2017 compared to a net loss attributable to shareholders of Fairfax of $701.5 (net loss of $30.77 per basic and diluted share) in the fourth quarter of 2016, reflected higher net gains on investments (which primarily resulted from decreased net losses on bonds and increased net gains on net equity exposure) and the net gain on the sale of the company's 97.7% interest in First Capital, partially offset by decreased underwriting profit (which primarily resulted from current period catastrophe losses related to the California wildfires) and increased provision for income taxes.

199

Operating results at the company's insurance and reinsurance operations continue to be affected by a difficult competitive environment. Individual quarterly results have been (and may in the future be) affected by losses from significant natural or other catastrophes, by favourable or adverse reserve development and by settlements or commutations, the occurrence of which are not predictable, and have been (and are expected to continue to be) significantly impacted by net gains or losses on investments, the timing of which are not predictable.

Stock Prices and Share Information

At March 9, 2018, Fairfax had 26,934,931 subordinate voting shares and 1,548,000 multiple voting shares outstanding (an aggregate of 27,683,701 shares effectively outstanding after an intercompany holding). Each subordinate voting share carries one vote per share at all meetings of shareholders except for separate meetings of holders of another class of shares. The multiple voting shares cumulatively carry 41.8% voting power at all meetings of shareholders except in certain circumstances (which have not occurred) and except for separate meetings of holders of another class of shares. The multiple voting shares are not publicly traded.

The table that follows presents the Toronto Stock Exchange high, low and closing Canadian dollar prices of subordinate voting shares of Fairfax for each quarter of 2017 and 2016.

	First Quarter	Second Quarter	Third Quarter	Fourth Quarter
	(Cdn$)
2017
High	663.63	628.42	652.89	708.99
Low	598.00	547.95	552.01	639.00
Close	605.20	562.01	649.33	669.34
2016
High	780.13	736.54	774.90	777.45
Low	646.03	637.17	673.00	586.00
Close	727.07	695.83	768.72	648.50

Compliance with Corporate Governance Rules

Fairfax is a Canadian reporting issuer with securities listed on the Toronto Stock Exchange and trading in Canadian dollars under the symbol FFH and in U.S. dollars under the symbol FFH.U. It has in place corporate governance practices that comply with all applicable rules and substantially comply with all applicable guidelines and policies of the Canadian Securities Administrators and the practices set out therein.

The company's Board of Directors has adopted a set of Corporate Governance Guidelines (which include a written mandate of the Board), established an Audit Committee, a Governance and Nominating Committee and a Compensation Committee, approved written charters for all of its committees, approved a Code of Business Conduct and Ethics applicable to all directors, officers and employees of the company and established, in conjunction with the Audit Committee, a Whistleblower Policy. The company continues to monitor developments in the area of corporate governance as well as its own procedures.

Forward-Looking Statements

Certain statements contained herein may constitute forward-looking statements and are made pursuant to the "safe harbour" provisions of the United States Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Fairfax to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

Such factors include, but are not limited to: a reduction in net earnings if our loss reserves are insufficient; underwriting losses on the risks we insure that are higher or lower than expected; the occurrence of catastrophic events with a frequency or severity exceeding our estimates; changes in market variables, including interest rates, foreign exchange rates, equity prices and credit spreads, which could negatively affect our investment portfolio; the cycles of the insurance market and general economic conditions, which can substantially influence our and our competitors' premium rates and capacity to write new business; insufficient reserves for asbestos, environmental and

200

other latent claims; exposure to credit risk in the event our reinsurers fail to make payments to us under our reinsurance arrangements; exposure to credit risk in the event our insureds, insurance producers or reinsurance intermediaries fail to remit premiums that are owed to us or failure by our insureds to reimburse us for deductibles that are paid by us on their behalf; our inability to maintain our long term debt ratings, the inability of our subsidiaries to maintain financial or claims paying ability ratings and the impact of a downgrade of such ratings on derivative transactions that we or our subsidiaries have entered into; risks associated with implementing our business strategies; the timing of claims payments being sooner or the receipt of reinsurance recoverables being later than anticipated by us; risks associated with any use we may make of derivative instruments; the failure of any hedging methods we may employ to achieve their desired risk management objective; a decrease in the level of demand for insurance or reinsurance products, or increased competition in the insurance industry; the impact of emerging claim and coverage issues or the failure of any of the loss limitation methods we employ; our inability to access cash of our subsidiaries; our inability to obtain required levels of capital on favourable terms, if at all; the loss of key employees; our inability to obtain reinsurance coverage in sufficient amounts, at reasonable prices or on terms that adequately protect us; the passage of legislation subjecting our businesses to additional supervision or regulation, including additional tax regulation, in the United States, Canada or other jurisdictions in which we operate; risks associated with government investigations of, and litigation and negative publicity related to, insurance industry practice or any other conduct; risks associated with political and other developments in foreign jurisdictions in which we operate; risks associated with legal or regulatory proceedings or significant litigation; failures or security breaches of our computer and data processing systems; the influence exercisable by our significant shareholder; adverse fluctuations in foreign currency exchange rates; our dependence on independent brokers over whom we exercise little control; an impairment in the carrying value of our goodwill and indefinite-lived intangible assets; our failure to realize deferred income tax assets; technological or other change which adversely impacts demand, or the premiums payable, for the insurance coverages we offer; disruptions of our information technology systems; and assessments and shared market mechanisms which may adversely affect our insurance subsidiaries. Additional risks and uncertainties are described in this Annual Report, which is available at www.fairfax.ca, and in our Supplemental and Base Shelf Prospectus (under "Risk Factors") filed with the securities regulatory authorities in Canada, which is available on SEDAR at www.sedar.com. Fairfax disclaims any intention or obligation to update or revise any forward-looking statements.

201

QuickLinks

Exhibit 99.3

EX-99.5

Exhibit 99.5

Consent of Independent Registered Public Accounting Firm

We hereby consent to the inclusion in this Annual Report on Form 40-F for the year ended December 31, 2017 of Fairfax Financial Holdings Limited of our report dated March 9, 2018, relating to the consolidated financial statements and the effectiveness of internal control over financial reporting, which appears in this Annual Report on Form 40-F.

We also consent to the incorporation by reference in the Registration Statements on Form S-8 of Fairfax Financial Holdings Limited (File Nos.333-221676, 333-165730, 333-168835, 333-170873, 333-200235, 333-200658 and 333-207812)  of our report dated March 9, 2018 referred to above.

We also consent to reference to us under the heading “Interests of Experts” which appears in the Annual Information Form filed as Exhibit 99.1 attached to this Annual Report on Form 40-F, which is incorporated by reference in such Registration Statements.

/s/ PricewaterhouseCoopers LLP

Chartered Professional Accountants, Licensed Public Accountants

Toronto, Canada

March 9, 2018

EX-99.6

QuickLinks -- Click here to rapidly navigate through this document

Exhibit 99.6

RULE 13a-14(a)/15d-14(a) CERTIFICATIONS

I, V. Prem Watsa, certify that:

1.

I have reviewed this annual report on Form 40-F of Fairfax Financial Holdings Limited;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

4.

The issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the issuer's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer's internal control over financial reporting; and

5.

The issuer's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer's auditors and the audit committee of the issuer's board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer's ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer's internal control over financial reporting.

Date: March 9, 2018

/s/ V. Prem Watsa
V. Prem Watsa
Chairman and Chief Executive Officer

I, David Bonham, certify that:

1.

I have reviewed this annual report on Form 40-F of Fairfax Financial Holdings Limited;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

4.

The issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the issuer's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer's internal control over financial reporting; and

5.

The issuer's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer's auditors and the audit committee of the issuer's board of directors (or persons performing the equivalent functions):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer's ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer's internal control over financial reporting.

Date: March 9, 2018

/s/ David Bonham
David Bonham
Vice President and Chief Financial Officer

QuickLinks

Exhibit 99.6

RULE 13a-14(a)/15d-14(a) CERTIFICATIONS

EX-99.7

QuickLinks -- Click here to rapidly navigate through this document

Exhibit 99.7

SECTION 1350 CERTIFICATIONS

        Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), the undersigned officer of Fairfax Financial Holdings Limited (the "Company"), hereby certifies, to such officer's knowledge, that:

        The Annual Report on Form 40-F for the year ended December 31, 2017 (the "Report") of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ V. Prem Watsa
V. Prem Watsa
Chairman and Chief Executive Officer
Date: March 9, 2018

A signed original of this written statement required by Section 906 has been provided to Fairfax Financial Holdings Limited and will be retained by Fairfax Financial Holdings Limited and furnished to the Securities and Exchange Commission or its staff upon request.

        Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), the undersigned officer of Fairfax Financial Holdings Limited (the "Company"), hereby certifies, to such officer's knowledge, that:

        The Annual Report on Form 40-F for the year ended December 31, 2017 (the "Report") of the Company fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ David Bonham
David Bonham
Vice President and Chief Financial Officer
Date: March 9, 2018

A signed original of this written statement required by Section 906 has been provided to Fairfax Financial Holdings Limited and will be retained by Fairfax Financial Holdings Limited and furnished to the Securities and Exchange Commission or its staff upon request.

QuickLinks

Exhibit 99.7

SECTION 1350 CERTIFICATIONS

XML

DEI	12 Months Ended
	Dec. 31, 2017 shares
Document Information [Abstract]
Entity Registrant Name	FAIRFAX FINANCIAL HOLDINGS LTD/ CAN
Entity Central Index Key	0000915191
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	FY
Document Type	40-F
Amendment Flag	false
Document Period End Date	Dec. 31, 2017
Entity Common Stock, Shares Outstanding	27,751,073
Entity Current Reporting Status	Yes

XML

Consolidated Balance Sheets - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Assets
Insurance contract receivables	$ 4,686.9	$ 2,917.5
Portfolio investments
Subsidiary cash and short term investments	8,770.0	4,649.8
Investments in associates (fair value $2,824.3; December 31, 2016 – $2,955.4)	3,656.3	2,633.5
Deferred premium acquisition costs	927.5	693.1
Recoverable from reinsurers (including recoverables on paid losses – $453.8; December 31, 2016 – $290.9)	7,812.5
Deferred income taxes	380.8	732.6
Goodwill and intangible assets	6,072.5	3,847.5
Other assets	4,828.3	2,518.4
Total assets	64,090.1	43,384.4
Liabilities
Accounts payable and accrued liabilities	3,629.5	2,888.6
Income taxes payable	95.6	35.4
Short sale and derivative obligations (including at the holding company – $11.5; December 31, 2016 – $42.2)	126.2	234.3
Funds withheld payable to reinsurers	850.2	416.2
Insurance contract liabilities	34,562.5	23,222.2
Total liabilities	45,678.1	31,564.3
Equity
Shareholders’ equity attributable to shareholders of Fairfax	13,811.1	9,820.1
Non-controlling interests	4,600.9	2,000.0
Total equity	18,412.0	11,820.1
Equity and liabilities	64,090.1	43,384.4
Common shareholders’ equity
Equity
Equity in stock	12,475.6	8,484.6
Preferred shares
Equity
Equity in stock	1,335.5	1,335.5
Holding Company
Assets
Holding company cash and investments (including assets pledged for short sale and derivative obligations – $77.8; December 31, 2016 – $94.4)	2,368.4	1,371.6
Portfolio investments
Subsidiary cash and short term investments	995.4	533.2
Assets pledged for short sale and derivative obligations (cost $197.5; December 31, 2016 – $223.9)	77.8	94.4
Portfolio investments	2,368.4	1,371.6
Liabilities
Short sale and derivative obligations (including at the holding company – $11.5; December 31, 2016 – $42.2)	11.5	42.2
Portfolio Investments
Assets
Holding company cash and investments (including assets pledged for short sale and derivative obligations – $77.8; December 31, 2016 – $94.4)	37,013.2	27,293.4
Portfolio investments
Subsidiary cash and short term investments	17,382.5	9,938.0
Bonds (cost $8,764.6; December 31, 2016 – $8,699.1)	9,164.1	9,323.2
Preferred stocks (cost $338.5; December 31, 2016 – $111.2)	296.8	69.6
Common stocks (cost $4,877.5; December 31, 2016 – $4,824.0)	4,838.7	4,158.8
Investments in associates (fair value $2,824.3; December 31, 2016 – $2,955.4)	2,487.0	2,393.0
Derivatives and other invested assets (cost $585.7; December 31, 2016 – $546.2)	255.4	179.7
Assets pledged for short sale and derivative obligations (cost $197.5; December 31, 2016 – $223.9)	194.7	228.5
Portfolio investments	37,013.2	27,293.4
Portfolio Investments | Fairfax India and Fairfax Africa
Assets
Holding company cash and investments (including assets pledged for short sale and derivative obligations – $77.8; December 31, 2016 – $94.4)	2,394.0	1,002.6
Portfolio investments
Portfolio investments	2,394.0	1,002.6
Holding Company, Insurance, and Reinsurance Companies
Liabilities
Borrowings	4,848.1	3,908.0
Non-insurance companies
Portfolio investments
Other assets	3,264.3	1,497.7
Liabilities
Accounts payable and accrued liabilities	1,288.0	973.6
Borrowings	$ 1,566.0	$ 859.6

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Statement [Line Items]
Financial assets pledged as liabilities	$ 5,706.0	$ 5,481.0
Assets pledged for short sale and derivative obligations, at cost	272.5	322.9
Recoverables on paid losses	453.8	290.9
Short sale and derivative obligations, holding company	126.2	234.3
Holding Company
Statement [Line Items]
Financial assets pledged as liabilities	77.8	94.4
Short sale and derivative obligations, holding company	11.5	42.2
Portfolio Investments
Statement [Line Items]
Bonds, at cost	8,764.6	8,699.1
Preferred stocks, at cost	338.5	111.2
Common stocks, at cost	4,877.5	4,824.0
Fair value of investments in associates	2,824.3	2,955.4
Derivatives and other invested assets, at cost	585.7	546.2
Assets pledged for short sale and derivative obligations, at cost	$ 197.5	$ 223.9

XML

Consolidated Statements of Earnings - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Revenue
Gross premiums written	$ 12,207.5	$ 9,534.3
Net premiums written	9,983.5	8,088.4
Gross premiums earned	11,822.0	9,209.7
Premiums ceded to reinsurers	(2,100.6)	(1,347.5)
Net premiums earned	9,721.4	7,862.2
Interest and dividends	559.0	555.2
Share of profit of associates	200.5	24.2
Net gains (losses) on investments	1,467.5	(1,203.6)
Gain on sale of subsidiary	1,018.6	0.0
Other revenue	3,257.6	2,061.6
Revenue	16,224.6	9,299.6
Expenses
Losses on claims, gross	9,518.7	5,682.9
Losses on claims ceded to reinsurers	(2,371.8)	(964.3)
Losses on claims, net	7,146.9	4,718.6
Operating expenses	2,049.5	1,597.7
Commissions, net	1,649.2	1,336.4
Interest expense	331.2	242.8
Other expenses	3,024.6	1,958.4
Expenses	14,201.4	9,853.9
Earnings (loss) before income taxes	2,023.2	(554.3)
Provision (recovery) for income taxes	408.3	(159.6)
Net earnings (loss)	1,614.9	(394.7)
Attributable to:
Shareholders of Fairfax	1,740.6	(512.5)
Non-controlling interests	(125.7)	117.8
Net earnings (loss)	$ 1,614.9	$ (394.7)
Net earnings (loss) per share (in dollars per share)	$ 66.74	$ (24.18)
Net earnings (loss) per diluted share (in dollars per share)	64.98	(24.18)
Cash dividends paid per share (in dollars per share)	$ 10	$ 10
Shares outstanding (weighted average) (in shares)	25,411,246	23,017,184

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Statement of comprehensive income [abstract]
Net earnings (loss)	$ 1,614.9	$ (394.7)
Items that may be subsequently reclassified to net earnings
Net unrealized foreign currency translation gains (losses) on foreign operations	461.7	(80.2)
Losses on hedge of net investment in Canadian subsidiaries	(106.3)	(37.5)
Share of other comprehensive income (loss) of associates, excluding net gains (losses) on defined benefit plans	110.1	(35.6)
Items that may be subsequently reclassified to net earnings	465.5	(153.3)
Items that will not be subsequently reclassified to net earnings
Share of net gains (losses) on defined benefit plans of associates	5.2	(33.2)
Net losses on defined benefit plans	(31.8)	(18.3)
Items that will not be subsequently reclassified to net earnings	(26.6)	(51.5)
Other comprehensive income (loss), net of income taxes	438.9	(204.8)
Comprehensive income (loss)	2,053.8	(599.5)
Attributable to:
Shareholders of Fairfax	2,024.4	(696.4)
Non-controlling interests	29.4	96.9
Comprehensive income (loss)	2,053.8	(599.5)
Income tax on items that may be subsequently reclassified to net earnings
Net unrealized foreign currency translation gains (losses) on foreign operations	10.4	14.0
Share of other comprehensive income (loss) of associates, excluding net gains (losses) on defined benefit plans	(25.9)	3.7
Income tax on items that may be subsequently reclassified to net earnings	(15.5)	17.7
Income tax on items that will not be subsequently reclassified to net earnings
Share of net gains (losses) on defined benefit plans of associates	(7.4)	10.5
Net losses on defined benefit plans	2.3	5.0
Income tax on items that will not be subsequently reclassified to net earnings	(5.1)	15.5
Total income tax (expense) recovery	$ (20.6)	$ 33.2

XML

Consolidated Statements of Changes in Equity - USD ($) $ in Millions	Total	Treasury shares (at cost)	Share- based payments and other reserves	Retained earnings	Accumulated other comprehensive income (loss)	Equity attributable to shareholders of Fairfax	Non- controlling interests	Subordinate voting shares Equity issued	Multiple voting shares Equity issued	Common shareholders’ equity Equity issued	Preferred shares	Preferred shares Equity issued
Beginning balance at Dec. 31, 2015	$ 12,018.9	$ (236.0)	$ 88.2	$ 5,230.7	$ (364.0)	$ 10,287.4	$ 1,731.5	$ 4,229.8	$ 3.8	$ 8,952.5		$ 1,334.9
Changes in equity [abstract]
Net earnings (loss) for the year	(394.7)			(512.5)		(512.5)	117.8			(512.5)
Net unrealized foreign currency translation gains (losses) on foreign operations	(80.2)				(61.4)	(61.4)	(18.8)			(61.4)
Losses on hedge of net investment in Canadian subsidiaries	(37.5)				(37.5)	(37.5)				(37.5)
Share of other comprehensive income (loss) of associates, excluding net gains (losses) on defined benefit plans	(35.6)				(35.4)	(35.4)	(0.2)			(35.4)
Share of net gains (losses) on defined benefit plans of associates	(33.2)				(32.0)	(32.0)	(1.2)			(32.0)
Net losses on defined benefit plans	(18.3)				(17.6)	(17.6)	(0.7)			(17.6)
Issuance of shares	521.0	15.1	(17.6)			521.0		523.5		521.0
Purchases and amortization	(30.5)	(64.2)	40.6			(29.7)	(0.8)	(6.1)		(29.7)
Excess of book value over consideration of common shares purchased for cancellation	(8.0)			(8.0)		(8.0)				(8.0)
Common share dividends	(269.0)			(227.8)		(227.8)	(41.2)			(227.8)
Preferred share dividends	(44.0)			(44.0)		(44.0)				(44.0)
Acquisitions of subsidiaries (note 23)	86.8						86.8
Other net changes in capitalization (note 16)	144.4		(4.4)	17.8		17.6	126.8	3.6		17.0	$ 0.6	0.6
Ending balance at Dec. 31, 2016	11,820.1	(285.1)	106.8	4,456.2	(547.9)	9,820.1	2,000.0	4,750.8	3.8	8,484.6		1,335.5
Changes in equity [abstract]
Net earnings (loss) for the year	1,614.9			1,740.6		1,740.6	(125.7)			1,740.6
Net unrealized foreign currency translation gains (losses) on foreign operations	461.7				306.7	306.7	155.0			306.7
Losses on hedge of net investment in Canadian subsidiaries	(106.3)				(106.3)	(106.3)				(106.3)
Share of other comprehensive income (loss) of associates, excluding net gains (losses) on defined benefit plans	110.1				109.3	109.3	0.8			109.3
Share of net gains (losses) on defined benefit plans of associates	5.2				5.0	5.0	0.2			5.0
Net losses on defined benefit plans	(31.8)				(30.9)	(30.9)	(0.9)			(30.9)
Issuance of shares	2,196.9	17.4	(16.9)			2,196.9		2,196.4		2,196.9	$ 0.0
Purchases and amortization	(130.5)	(140.5)	51.8			(134.3)	3.8	(45.6)		(134.3)
Excess of book value over consideration of common shares purchased for cancellation	(50.6)			(50.6)		(50.6)				(50.6)
Common share dividends	(304.9)			(237.4)		(237.4)	(67.5)			(237.4)
Preferred share dividends	(44.6)			(44.6)		(44.6)				(44.6)
Acquisitions of subsidiaries (note 23)	2,451.2						2,451.2
Other net changes in capitalization (note 16)	420.6		52.8	183.8		236.6	184.0			236.6
Ending balance at Dec. 31, 2017	$ 18,412.0	$ (408.2)	$ 194.5	$ 6,048.0	$ (264.1)	$ 13,811.1	$ 4,600.9	$ 6,901.6	$ 3.8	$ 12,475.6		$ 1,335.5

XML

Consolidated Statements of Cash Flows - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Operating activities
Net earnings (loss)	$ 1,614.9	$ (394.7)
Depreciation, amortization and impairment charges	280.5	191.7
Net bond premium (discount) amortization	(52.7)	3.6
Amortization of share-based payment awards	51.8	40.6
Share of profit of associates	(200.5)	(24.2)
Deferred income taxes	230.3	(273.8)
Net (gains) losses on investments	(1,467.5)	1,203.6
Gain on sale of subsidiary	(1,018.6)	0.0
Loss on repurchase of borrowings	28.6	0.0
Net sales of securities classified as FVTPL	2,678.4	1,119.3
Changes in operating assets and liabilities	555.4	(607.9)
Cash provided by operating activities	2,700.6	1,258.2
Investing activities
Sales of investments in associates	1,014.9	45.8
Purchases of investments in associates	(1,026.5)	(735.3)
Net purchases of premises and equipment and intangible assets	(415.2)	(208.3)
Purchases of subsidiaries, net of cash acquired	(1,107.7)	(779.1)
Sale of subsidiary, net of cash divested	640.4	0.0
Decrease in restricted cash for purchase of subsidiary	0.0	6.5
Cash used in investing activities	(894.1)	(1,670.4)
Financing activities
Issuances, net of issuance costs	0.0	523.5
Repurchases for treasury	(140.5)	(64.2)
Repurchases for cancellation	(96.2)	(14.1)
Common share dividends	(237.4)	(227.8)
Preferred share dividends	44.6	44.0
Issuances to non-controlling interests, net of issuance costs	2,223.2	157.1
Purchases of non-controlling interests	(140.3)	(87.2)
Proceeds From Sales Of Interests In Associates, Financing Activities	96.8	12.7
Increase in restricted cash related to financing activities	(150.8)	(18.9)
Dividends paid to non-controlling interests	(67.5)	(41.2)
Cash provided by financing activities	1,761.6	1,543.4
Increase in cash and cash equivalents	3,568.1	1,131.2
Cash and cash equivalents – beginning of year	4,219.1	3,125.6
Foreign currency translation	147.8	(37.7)
Cash and cash equivalents – end of year	7,935.0	4,219.1
Holding Company, Insurance, and Reinsurance Companies
Financing activities
Proceeds, net of issuance costs	577.0	637.7
Repayments	(483.7)	(5.4)
Net borrowings from (repayments to) revolving credit facility	(200.0)	200.0
Non-insurance companies
Operating activities
Loss on repurchase of borrowings	28.6	0.0
Financing activities
Proceeds, net of issuance costs	500.6	360.5
Repayments	(268.7)	(38.9)
Net borrowings from (repayments to) revolving credit facility	$ 193.7	$ 193.6

XML

Business Operations

12 Months Ended

Dec. 31, 2017

Corporate Information And Statement Of IFRS Compliance [Abstract]

Business Operations

Business Operations

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

XML

Basis of Presentation

12 Months Ended

Dec. 31, 2017

Corporate Information And Statement Of IFRS Compliance [Abstract]

Basis of Presentation

Basis of Presentation

The company's consolidated financial statements for the year ended December 31, 2017 are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) effective as at December 31, 2017, except IFRS 9 (2010) Financial Instruments which was adopted early. The consolidated financial statements have been prepared on a historical cost basis, except for derivative financial instruments and fair value through profit and loss (“FVTPL”) financial assets and liabilities that have been measured at fair value.

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

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

These consolidated financial statements were approved for issue by the company’s Board of Directors on March 9, 2018.

XML

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2017

Corporate Information And Statement Of IFRS Compliance [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

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

Consolidation

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

The consolidated financial statements were prepared as of December 31, 2017 and 2016 based on individual holding companies' and subsidiary companies' financial statements at those dates. Accounting policies of subsidiaries have been aligned with those of the company where necessary. The company's significant subsidiaries are identified in note 29.

Non-controlling interests - A non-controlling interest is initially recognized as the proportionate share of the identifiable net assets of a subsidiary on its acquisition date and is subsequently adjusted for the non-controlling interest's share of changes in the acquired subsidiary's earnings and capital. Effects of transactions with non-controlling interests are recorded in equity if there is no change in control.

Business combinations

Business combinations are accounted for using the acquisition method of accounting whereby the consideration transferred is measured at fair value at the date of acquisition. This consideration may include cash paid and the fair value at the date of exchange of assets given, liabilities incurred and equity instruments issued by the company or its subsidiaries. The consideration transferred also includes any contingent consideration arrangements, recorded at fair value. Directly attributable acquisition-related costs are expensed in the current period and reported within operating expenses. At the date of acquisition, the company recognizes the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquired business. The identifiable assets acquired and liabilities assumed are initially recognized at fair value. If the consideration transferred is less than the fair value of identifiable net assets acquired, the excess is recognized in the consolidated statement of earnings.

A pre-existing equity interest is re-measured to fair value at the date of a business combination with any gain or loss recognized in net gains (losses) on investments in the consolidated statement of earnings.

Goodwill and intangible assets

Goodwill - Goodwill is recorded as the excess of consideration transferred over the fair value of the identifiable net assets acquired in a business combination, less accumulated impairment charges, and is allocated to the cash-generating units expected to benefit from the acquisition for the purpose of impairment testing. On an annual basis or more frequently if there are potential indicators of impairment, the carrying value of a cash-generating unit inclusive of its allocated goodwill is compared to its recoverable amount, with any goodwill impairment measured as the excess of the carrying amount over the recoverable amount. Goodwill is derecognized on disposal of a cash-generating unit to which goodwill was previously allocated.

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

Intangible assets are initially recognized at cost (fair value when acquired through a business combination) and subsequently measured at cost less accumulated amortization and impairment, where amortization is calculated using the straight-line method based on the estimated useful life of those intangible assets with a finite life. The carrying value of intangible assets with a finite life are re-evaluated by the company when there are potential indicators of impairment. Indefinite-lived intangible assets are not subject to amortization but are assessed for impairment annually or more frequently if there are potential indicators of impairment.

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

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

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

Investments in associates

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

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

Upon loss of significant influence, any retained interest classified as a financial asset is re-measured to fair value and all amounts previously recognized in other comprehensive income in relation to that investee are reclassified to the consolidated statement of earnings. Gains and losses on loss of significant influence or disposition of an associate are recognized in net gains (losses) on investments in the consolidated statement of earnings.

Foreign currency translation

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

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

Translation of foreign subsidiaries - The functional currencies of some of the company's subsidiaries (principally in Canada, the United Kingdom and Asia) differ from the consolidated group U.S. dollar presentation currency. As a result, the assets and liabilities of these foreign subsidiaries (including goodwill and fair value adjustments arising on their acquisition, where applicable) are translated on consolidation at the rates of exchange prevailing at the balance sheet date. Revenue and expenses are translated at the average rate of exchange for the period. The net unrealized gain or loss resulting from this translation is recognized in accumulated other comprehensive income, and only recycled to the consolidated statement of earnings upon reduction of an investment in a foreign subsidiary.

Net investment hedge - The company has designated a portion of the principal amount of its Canadian dollar denominated borrowings as a hedge of its net investment in its Canadian subsidiaries. The cumulative unrealized gain or loss relating to the effective portion of the hedge is recognized in accumulated other comprehensive income, and only recycled to the consolidated statement of earnings upon reduction of an investment in a hedged foreign subsidiary. Gains and losses relating to any ineffective portion of the hedge are recorded in net gains (losses) on investments in the consolidated statement of earnings.

Comprehensive income (loss)

Comprehensive income (loss) consists of net earnings (loss) and other comprehensive income (loss) and includes all changes in total equity during a period, except for those resulting from investments by owners or distributions to owners. Unrealized foreign currency translation amounts arising from foreign subsidiaries and associates that do not have U.S. dollar functional currencies and the effective portion of changes in the fair value of hedging instruments on hedges of net investments in foreign subsidiaries are recognized in other comprehensive income (loss) and included in accumulated other comprehensive income (loss) until recycled to the consolidated statement of earnings on reduction of an investment in a foreign subsidiary or associate. Actuarial gains and losses and changes in asset limitation amounts on defined benefit pension and post retirement plans are recorded in other comprehensive income (loss) and included in accumulated other comprehensive income (loss) without recycling. Upon settlement of the defined benefit plan or disposal of the related associate or subsidiary, those amounts are reclassified directly to retained earnings. Accumulated other comprehensive income (loss), net of income taxes, is included on the consolidated balance sheet as a component of common shareholders' equity.

Consolidated statement of cash flows

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

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

Investments

Investments include cash and cash equivalents, short term investments, equity instruments, debt instruments, securities sold short, derivatives, investment property and investments in associates. Management determines the appropriate classifications of investments at their acquisition date. The company has not designated any financial assets or liabilities (including derivatives) as accounting hedges except for the hedge of its net investment in Canadian subsidiaries as described in note 7.

Classification - Short term investments, equity instruments, bonds, securities sold short and derivatives are classified as FVTPL.

An investment in a debt instrument is measured at amortized cost if (i) the objective of the company's business model is to hold the instrument in order to collect contractual cash flows and (ii) the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The company's business model currently does not permit any of its short term investments or bonds to be measured at amortized cost.

Recognition and measurement - The company recognizes purchases and sales of investments on the trade date, which is the date on which the company commits to purchase or sell the asset. Transactions pending settlement are reflected on the consolidated balance sheet in other assets or in accounts payable and accrued liabilities.

Investments classified as FVTPL are carried at fair value on the consolidated balance sheet, with transaction costs expensed as incurred and changes in fair value reported in the consolidated statement of earnings as interest and dividends and net gains (losses) on investments. Interest and dividends comprises dividends received on holdings of common stocks and preferred stocks, and interest income on short term investments and bonds calculated using the effective interest method, net of investment expenses. All other changes in fair value of investments classified as FVTPL are reported in net gains (losses) on investments in the consolidated statement of earnings, such that the sum of interest income and net gains (losses) on short term investments and bonds is equal to their total change in fair value for the reporting period.

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

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

Short term investments - Debt instruments with maturity dates between three months and twelve months when purchased are presented as short term investments.

Bonds - Debt instruments with maturity dates greater than twelve months when purchased are presented as bonds.

Securities sold short - Securities sold short ("short sales") represent obligations to deliver securities which were not owned at the time of the sale.

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

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

The fair value of derivatives in a gain position is presented on the consolidated balance sheet in derivatives and other invested assets in portfolio investments and in cash and investments of the holding company. The fair value of derivatives in a loss position and obligations to purchase securities sold short, if any, are presented on the consolidated balance sheet in short sale and derivative obligations. The initial premium paid for a derivative contract, if any, would be recorded as a derivative asset and subsequently adjusted for changes in the fair value of the contract at each balance sheet date. Changes in the fair value of a derivative are recorded as net gains (losses) on investments in the consolidated statement of earnings at each balance sheet date, with a corresponding adjustment to the carrying value of the derivative asset or liability.

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

Cash and securities delivered to counterparties as collateral for derivative contracts continue to be reflected as assets on the consolidated balance sheet within holding company cash and investments or within portfolio investments as assets pledged for short sale and derivative obligations.

Equity contracts - The company's long equity total return swaps allow the company to receive the total return on a notional amount of an equity index or individual equity (including dividends and capital gains or losses) in exchange for the payment of a floating rate of interest on the notional amount. Conversely, short equity total return swaps allow the company to pay the total return on a notional amount of an equity index or individual equity in exchange for the receipt of a floating rate of interest on the notional amount. The company classifies dividends and interest paid or received related to its long and short equity and equity index total return swaps on a net basis as interest and dividends in the consolidated statement of earnings. The company's equity and equity index total return swaps contain contractual reset provisions requiring counterparties to cash-settle monthly or quarterly any fair value movements arising subsequent to the prior settlement. Any cash amounts paid to settle unfavourable fair value changes and, conversely, any cash amounts received in settlement of favourable fair value changes, are recorded as net gains (losses) on investments in the consolidated statement of earnings. To the extent that a contractual reset date of a contract does not correspond to the balance sheet date, the company records net gains (losses) on investments in the consolidated statement of 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. Final cash settlements of total return swaps are recognized as net gains (losses) on investments net of any previously recorded unrealized fair value changes since the last quarterly reset date. Total return swaps require no initial net investment and have a fair value of nil at inception.

CPI-linked derivative contracts - The company's derivative contracts referenced to consumer price indexes (“CPI”) in the geographic regions in which it operates serve as an economic hedge against the potential adverse financial impact on the company of decreasing price levels. These contracts may be structured to provide a payout at maturity if there is cumulative deflation over the life of the contract or if cumulative average inflation is below a specified floor rate over the life of the contract. As the average remaining life of a CPI-linked derivative declines, the fair value of the contract (excluding the impact of changes in the underlying CPI) will generally decline.

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

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

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

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

Level 3 - Inputs include unobservable inputs used in the measurement of financial instruments. Management is required to use its own assumptions regarding unobservable inputs as there is little, if any, market activity in these instruments or related observable inputs that can be corroborated at the measurement date. CPI-linked derivatives are classified as Level 3 and valued using broker-dealer quotes which management has determined utilize market observable inputs except for the inflation volatility input which is not market observable.

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

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

Fair values of CPI-linked derivative contracts received from third party broker-dealers are assessed by comparing the fair values to recent market transactions where available and values determined using third party pricing software based on the Black-Scholes option pricing model for European-style options that incorporates market observable and unobservable inputs such as the current value of the relevant CPI underlying the derivative, the inflation swap rate, nominal swap rate and inflation volatility. The fair values of CPI-linked derivative contracts are sensitive to assumptions such as market expectations of future rates of inflation and related inflation volatilities.

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

Accounts receivable and accounts payable

Accounts receivable and accounts payable are recognized initially at fair value. Due to their short-term nature, carrying value is considered to approximate fair value.

Insurance contracts

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

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

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

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

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

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

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

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

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

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

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

Reinsurance

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

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

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

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

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

Income taxes

The provision for income taxes for the period comprises current and deferred income tax. Income taxes are recognized in the consolidated statement of earnings, except when related to items recognized in other comprehensive income or directly in equity. In those cases, the income taxes are also recognized in other comprehensive income or directly in equity, respectively.

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

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

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

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

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

On December 22, 2017 the United States enacted the Tax Cuts and Jobs Act ("U.S. tax reform") that, among other changes, introduced a new minimum base erosion and anti-abuse tax (“BEAT”) on certain payments to foreign affiliates and a U.S. tax on foreign earnings for certain global intangible low-taxed income ("GILTI"), applicable to U.S. corporate income tax for tax years beginning after December 31, 2017. The company will recognize charges related to BEAT and GILTI, if any, in the periods in which they are incurred, and does not include their impacts in measuring its net deferred income tax asset.

Investment property

Real estate held by the company for investment purposes, such as capital appreciation or long-term rental yield, is initially recorded at cost (including transaction costs) and subsequently carried at historical cost less accumulated amortization and any accumulated impairment losses. On the consolidated balance sheet investment property held is included in portfolio investments by the insurance and reinsurance companies and in other assets by the non-insurance companies. Investment property rental income and gains or losses on disposal are recorded in the consolidated statement of earnings as interest and dividends and net gains (losses) on investments respectively by the insurance and reinsurance companies, and as other revenue by the non-insurance companies.

Other assets

Other assets consist of inventories, receivables and investment properties of non-insurance companies included in the Other reporting segment, premises and equipment, accrued interest and dividends, income taxes refundable, receivables for securities sold, pension assets, deferred compensation assets, prepaid expenses and other miscellaneous receivables.

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

Other revenue and expenses

Revenue from the sale of hospitality, travel and other non-insurance products and services are recognized when the price is fixed or determinable, collection is reasonably assured and the product or service has been delivered to the customer. The revenue and related cost of inventories sold or services provided are recorded in other revenue and other expenses respectively in the consolidated statement of earnings.

Borrowings

Borrowings are initially recognized at fair value, net of transaction costs incurred, and subsequently carried at amortized cost. Interest expense on borrowings is recognized in the consolidated statement of earnings using the effective interest rate method.

Equity

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

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

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

Share-based payments

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

Net earnings per share attributable to shareholders of Fairfax

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

Net earnings (loss) per diluted share - Diluted earnings (loss) per share is calculated by adjusting the weighted average number of subordinate and multiple voting shares outstanding during the period for the dilutive effect, if any, of share-based payments.

Pensions and post retirement benefits

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

Defined contribution plan - A defined contribution plan is a pension plan under which the company pays fixed contributions. Contributions to defined contribution pension plans are charged to operating expenses in the period in which the employment services qualifying for the benefit are provided. The company has no further payment obligations once the contributions have been paid.

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

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

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

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

Operating leases

The company and its subsidiaries are lessees under various operating leases relating to premises, automobiles and equipment. Payments made under an operating lease, net of any incentives received from the lessor, are recorded in operating expenses on a straight-line basis over the term of the lease.

New accounting pronouncements adopted in 2017

The company adopted the following amendments, effective January 1, 2017. These changes were adopted in accordance with the applicable transitional provisions of each amendment, and did not have a significant impact on the consolidated financial statements.

IFRS Annual Improvements 2014-2016

In December 2016 the IASB issued an amendment to clarify the scope of the disclosure requirements in IFRS 12 Disclosure of Interests in Other Entities.

Recognition of Deferred Tax Assets for Unrealised Losses (Amendments to IAS 12)

In January 2016 the IASB issued amendments to IAS 12 Income Taxes to clarify the requirements on recognition of deferred income tax assets for unrealized losses.

Disclosure Initiative (Amendments to IAS 7)

In January 2016 the IASB issued amendments to IAS 7 Statement of Cash Flows that require additional disclosures for cash and non-cash changes in liabilities arising from financing activities.

New accounting pronouncements issued but not yet effective

The following new standards have been issued by the IASB and were not yet effective for the fiscal year beginning January 1, 2017. The company is currently evaluating their impact on its consolidated financial statements and does not expect to adopt any of them in advance of their respective effective dates.

Foreign Currency Transactions and Advance Consideration ("IFRIC 22")

In December 2016 the IASB issued an interpretation by the IFRS Interpretations Committee to clarify the accounting for transactions that include the receipt or payment of advance consideration in a foreign currency. IFRIC 22 is effective for annual periods beginning on or after January 1, 2018, with a choice of prospective or retrospective application. Adoption of IFRIC 22 is not expected to have a significant impact on the company's consolidated financial statements.

Classification and Measurement of Share-based Payment Transactions (Amendments to IFRS 2)

In June 2016 the IASB issued narrow-scope amendments to clarify the classification and measurement requirements of IFRS 2 Share-based Payment. The amendments are effective for annual periods beginning on or after January 1, 2018, with prospective application in accordance with certain transitional provisions. Adoption of the amendments is not expected to have a significant impact on the company's consolidated financial statements.

IFRS 9 Financial Instruments ("IFRS 9")

In July 2014 the IASB issued the complete version of IFRS 9 which will supersede the 2010 version of IFRS 9 currently applied by the company ("IFRS 9 (2010)"). IFRS 9 is effective for annual periods beginning on or after January 1, 2018, with retrospective application, and includes requirements for the classification and measurement of financial assets and liabilities, an expected credit loss model that replaces the existing incurred loss impairment model, and new hedge accounting guidance. The company is nearing completion of its analysis of IFRS 9's accounting requirements and has determined that its current classifications of equity investments, derivatives, financial liabilities and hedge of net investment under IFRS 9 (2010) will remain substantially unchanged. The company continues to monitor and consider evolving guidance and interpretations related to IFRS 9 as it works through the classification analysis for its investments in debt instruments.

IFRS 15 Revenue from Contracts with Customers ("IFRS 15")

In May 2014 the IASB issued IFRS 15 which introduces a single model for recognizing revenue from contracts with customers. IFRS 15 excludes insurance contracts and financial instruments from its scope and is applicable primarily to the company’s non-insurance companies. In April 2016 the IASB issued amendments to clarify certain aspects of IFRS 15 and to provide additional practical expedients upon transition. The standard is effective for annual periods beginning on or after January 1, 2018, with retrospective application. The company has substantially completed its analysis of the accounting requirements under IFRS 15 and does not expect the adoption of IFRS 15 to have a significant impact on the company's consolidated financial statements or to require any significant transition adjustments.

IFRS 16 Leases ("IFRS 16")

In January 2016 the IASB issued IFRS 16 which largely eliminates the distinction between finance and operating leases for lessees. With limited exceptions, a lessee will be required to recognize a right-of-use asset and a liability for its obligation to make lease payments. The standard is effective for annual periods beginning on or after January 1, 2019, with a choice of modified retrospective or full retrospective application. The company has commenced impact assessments and reviews of lease data at its operating companies in preparation for the adoption of IFRS 16.

IFRIC Interpretation 23 Uncertainty over Income Tax Treatments ("IFRIC 23")

In June 2017 the IASB issued IFRIC 23 to clarify how the requirements of IAS 12 Income Taxes should be applied when there is uncertainty over income tax treatments. The interpretation is effective for annual periods beginning on or after January 1, 2019, with modified retrospective or retrospective application. Adoption of IFRIC 23 is not expected to have a significant impact on the company's consolidated financial statements.

IFRS Annual Improvements 2015-2017

In December 2017 the IASB issued amendments to clarify the requirements of four IFRS standards. The amendments are effective for annual periods beginning on or after January 1, 2019, primarily with prospective application. Adoption of the amendments is not expected to have a significant impact on the company's consolidated financial statements.

IFRS 17 Insurance Contracts ("IFRS 17")

In May 2017 the IASB issued IFRS 17, a comprehensive standard that establishes principles for the recognition, measurement, presentation and disclosure of insurance contracts. The measurement approach is based on the following: (i) a current, unbiased probability-weighted estimate of future cash flows expected to arise as the insurer fulfills the contract; (ii) the effect of the time value of money; (iii) a risk adjustment that measures the effects of uncertainty about the amount and timing of future cash flows; and (iv) a contractual service margin which represents the unearned profit in a contract (that is recognized in net earnings as the insurer fulfills its performance obligations under the contract). Estimates are required to be re-measured each reporting period. In addition, a simplified measurement approach is permitted for short-duration contracts in which the coverage period is approximately one year or less. The standard is effective for annual periods beginning on or after January 1, 2021, with retrospective application and some practical expedients available on adoption. The company has commenced implementation planning, education workshops and impact assessments at its largest insurance and reinsurance companies in preparation for the adoption of IFRS 17.

XML

Critical Accounting Estimates and Judgments

12 Months Ended

Dec. 31, 2017

Disclosure of changes in accounting policies, accounting estimates and errors [Abstract]

Critical Accounting Estimates and Judgments

Critical Accounting Estimates and Judgments

In the preparation of the company's consolidated financial statements, management has made a number of critical accounting estimates and judgments which are discussed below, with the exception of the determination of fair value for financial instruments (notes 3 and 5), carrying value of associates (notes 3 and 6), charges related to U.S. tax reform (note 18) and contingencies (note 20). Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Provision for losses and loss adjustment expenses

Provisions for losses and loss adjustment expenses are estimated based on Canadian accepted actuarial practices, which are designed to ensure the company establishes an appropriate reserve on the consolidated balance sheet to cover insured losses with respect to reported and unreported claims incurred as of the end of each accounting period and related claims expenses. The assumptions underlying the estimation of provisions for losses and loss adjustment expenses are reviewed and updated by the company on an ongoing basis to reflect recent and emerging trends in experience and changes in the risk profile of the business. The estimation techniques employed by the company in determining provisions for losses and loss adjustment expenses and the inherent uncertainties associated with insurance contracts are described in the “Underwriting Risk” section of note 24 while the historic development of the company's insurance liabilities are presented in note 8.

Recoverability of deferred income tax assets

In determining the recoverability of deferred income tax assets, management exercises judgment in assessing recent and expected profitability of applicable operating companies and their ability to utilize any recorded income tax assets. The company reviews its deferred income tax assets quarterly, taking into consideration the availability of sufficient current and projected taxable profits, reversals of taxable temporary differences and tax planning strategies. Details of deferred income tax assets are presented in note 18.

Business combinations

Judgment may be required to determine whether a transaction qualifies as a business combination when it involves elements such as contractual arrangements between shareholders or potential voting rights. Accounting for business combinations requires fair values to be estimated for the consideration transferred, assets acquired and liabilities assumed. The company uses all available information, including external valuations and appraisals where appropriate, to determine these fair values. Changes in estimates of fair value due to additional information related to facts and circumstances that existed at the acquisition date would impact the amount of goodwill (or gain on bargain purchase) recognized. If necessary, the company has up to one year from the acquisition date to finalize the determination of fair values for a business combination. Details of business combinations are presented in note 23.

Assessment of goodwill for potential impairment

Goodwill is assessed annually for impairment or more frequently if there are potential indicators of impairment. Management estimates the recoverable amount of each of the company's cash-generating units using one or more generally accepted valuation techniques, which requires the making of a number of assumptions, including assumptions about future revenue, net earnings, corporate overhead costs, capital expenditures, cost of capital, and growth rate. The recoverable amount of each cash-generating unit to which goodwill has been assigned is compared to its carrying value (inclusive of assigned goodwill). If the recoverable amount of a cash-generating unit is determined to be less than its carrying value, the excess is recognized as a goodwill impairment loss in the consolidated statement of earnings. Given the variability of future-oriented financial information, goodwill impairment tests are subjected to sensitivity analysis. The critical estimates pertain to those cash-generating units where there is little difference between the recoverable amount and the related carrying amount. Details of goodwill are presented in note 12.

XML

Cash and Investments

12 Months Ended

Dec. 31, 2017

Investments and Cash1 [Abstract]

Cash and Investments

Cash and Investments

Holding company cash and investments, portfolio investments and short sale and derivative obligations are classified as FVTPL, except for investments in associates and other invested assets which are classified as other, and are shown in the table below:

	December 31, 2017			December 31, 2016
Holding company
Cash and cash equivalents (note 27)		995.4			533.2
Short term investments		115.4			285.4
Bonds		380.9			264.8
Preferred stocks		2.8			1.0
Common stocks(1)		784.9			153.2
Derivatives (note 7)		11.2			39.6
		2,290.6			1,277.2
Assets pledged for short sale and derivative obligations:
Short term investments		77.8			82.6
Bonds		—			11.8
		77.8			94.4
		2,368.4			1,371.6
Short sale and derivative obligations (note 7)		(11.5	)		(42.2	)
		2,356.9			1,329.4
Portfolio investments
Cash and cash equivalents (note 27)		7,384.1			3,943.4
Short term investments		9,998.4			5,994.6
Bonds		9,164.1			9,323.2
Preferred stocks		296.8			69.6
Common stocks(1)		4,838.7			4,158.8
Investments in associates (note 6)		2,487.0			2,393.0
Derivatives (note 7)		192.6			163.7
Other invested assets		62.8			16.0
		34,424.5			26,062.3
Assets pledged for short sale and derivative obligations:
Cash and cash equivalents (note 27)		16.8			—
Short term investments		145.7			189.6
Bonds		32.2			38.9
		194.7			228.5
Fairfax India cash, portfolio investments and associates		1,762.5			1,002.6
Fairfax Africa cash, portfolio investments and associates		631.5			—
		2,394.0			1,002.6
		37,013.2			27,293.4
Short sale and derivative obligations (note 7)		(114.7	)		(192.1	)
		36,898.5			27,101.3
Total investments		39,255.4			28,430.7

(1) Common stocks include investments in limited partnerships and other funds with carrying values of $1,903.7 and $90.9 respectively at December 31, 2017 (December 31, 2016 - $1,171.6 and $157.1).

Fairfax India and Fairfax Africa cash, portfolio investments and associates were comprised as follows:

	Fairfax India		Fairfax Africa
	December 31, 2017	December 31, 2016	December 31, 2017	December 31, 2016
Cash and cash equivalents (note 27)	44.0	173.2	329.7	—
Short term investments	34.3	33.6	57.2	—
Bonds	694.2	528.8	19.4	—
Common stocks	40.5	26.5	4.9	—
Investments in associates (note 6)	949.5	240.5	219.8	—
Derivatives and other invested assets	—	—	0.5	—
	1,762.5	1,002.6	631.5	—

Restricted cash and cash equivalents at December 31, 2017 of $835.0 (December 31, 2016 - $430.7) was comprised primarily of amounts required to be maintained on deposit with various regulatory authorities to support the subsidiaries' insurance and reinsurance operations. Restricted cash and cash equivalents are included on the consolidated balance sheet in holding company cash and investments, or in portfolio investments within subsidiary cash and short term investments, assets pledged for short sale and derivative obligations and Fairfax India and Fairfax Africa cash, portfolio investments and associates.

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

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

	December 31, 2017	December 31, 2016
Regulatory deposits	4,256.8	4,748.2
Security for reinsurance and other	1,449.2	732.8
	5,706.0	5,481.0

Fixed Income Maturity Profile

Bonds are summarized by their earliest contractual maturity date in the table below. Actual maturities may differ from maturities shown below due to the existence of call and put features. At December 31, 2017 bonds containing call and put features represented approximately $3,390.3 and $93.3 respectively (December 31, 2016 - $4,498.0 and $196.2) of the total fair value of bonds. The table below does not reflect the impact of $1,693.8 (December 31, 2016 - $3,013.4) notional amount of U.S. treasury bond forward contracts (described in note 7) that reduce the company's exposure to interest rate risk.

	December 31, 2017			December 31, 2016
	Amortizedcost	Fairvalue		Amortized cost	Fair value
Due in 1 year or less	3,383.9	3,537.6		1,649.4	1,779.0
Due after 1 year through 5 years	3,540.7	3,720.2		3,245.9	3,447.6
Due after 5 years through 10 years	1,017.6	1,054.3		1,046.7	1,031.3
Due after 10 years	1,872.1	1,978.7		3,575.1	3,909.6
	9,814.3	10,290.8		9,517.1	10,167.5
Effective interest rate		4.0	%		4.7	%

The calculation of the effective interest rate of 4.0% (December 31, 2016 - 4.7%) is on a pre-tax basis and therefore does not give effect to the favourable tax treatment which the company expects to receive with respect to its tax advantaged U.S. state and municipal bond investments of approximately $2.3 billion (December 31, 2016 - $3.3 billion).

Fair Value Disclosures

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

	December 31, 2017									December 31, 2016
	Total fairvalue asset(liability)		Quotedprices(Level 1)		Significantotherobservableinputs(Level 2)		Significantunobservableinputs(Level 3)			Total fair value asset (liability)		Quoted prices (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Cash and cash equivalents	8,770.0		8,770.0		—			—		4,649.8		4,649.8		—			—
Short term investments:
Canadian government	7.1		7.1		—			—		8.2		8.2		—			—
Canadian provincials	281.9		281.9		—			—		261.7		261.7		—			—
U.S. treasury	9,225.5		9,225.5		—			—		5,930.3		5,930.3		—			—
Other government	403.0		307.0		96.0			—		212.2		212.2		—			—
Corporate and other	511.3		—		466.3			45.0		173.4		—		173.4			—
	10,428.8		9,821.5		562.3			45.0		6,585.8		6,412.4		173.4			—
Bonds:
Canadian government	84.4		—		84.4			—		311.4		—		311.4			—
Canadian provincials	93.8		—		93.8			—		196.9		—		196.9			—
U.S. treasury	1,779.3		—		1,779.3			—		1,117.3		—		1,117.3			—
U.S. states and municipalities	2,452.1		—		2,452.1			—		4,732.2		—		4,732.2			—
Other government	1,799.4		—		1,799.4			—		1,176.2		—		1,176.2			—
Corporate and other	4,081.8		—		2,185.7			1,896.1		2,633.5		—		1,580.4			1,053.1
	10,290.8		—		8,394.7			1,896.1		10,167.5		—		9,114.4			1,053.1
Preferred stocks:
Canadian	240.7		—		11.3			229.4		22.2		—		10.9			11.3
U.S.	5.0		—		—			5.0		0.3		—		—			0.3
Other	53.9		1.5		3.6			48.8		48.1		0.6		15.1			32.4
	299.6		1.5		14.9			283.2		70.6		0.6		26.0			44.0
Common stocks:
Canadian	958.7		825.9		110.3			22.5		665.3		545.0		98.6			21.7
U.S.	1,583.3		474.8		66.9			1,041.6		1,172.6		629.6		33.9			509.1
Other funds	90.9		—		90.9			—		157.1		—		157.1			—
Other	3,036.1		1,713.7		415.1			907.3		2,343.5		1,037.2		532.5			773.8
	5,669.0		3,014.4		683.2			1,971.4		4,338.5		2,211.8		822.1			1,304.6
Derivatives and other invested assets	267.1		—		89.5			177.6		219.3		—		121.5			97.8
Short sale and derivative obligations	(126.2	)	—		(126.2	)		—		(234.3	)	—		(234.3	)		—
Holding company cash and investments and portfolio investments measured at fair value	35,599.1		21,607.4		9,618.4			4,373.3		25,797.2		13,274.6		10,023.1			2,499.5
	100.0	%	60.7	%	27.0	%		12.3	%	100.0	%	51.5	%	38.9	%		9.6	%
Investments in associates (note 6)(1)	4,629.3		2,004.3		45.3			2,579.7		3,267.3		1,100.1		40.9			2,126.3

(1) The carrying value of investments in associates is determined using the equity method of accounting so fair value is presented separately in the table above.

Transfers between fair value hierarchy levels are considered effective from the beginning of the reporting period in which the transfer is identified. The increase in the company's Level 3 financial assets during 2017 was partially due to the consolidation of certain Allied World investments in limited partnerships that were classified as Level 3 common stocks ($583.8) based on their unobservable net asset values and inability to be liquidated or redeemed within three months. In addition, during 2017 a private placement debt security was transferred from Level 2 to Level 3 due to the modification of its terms and its credit spread (a key valuation input) becoming unobservable. During 2017 and 2016 there were no significant transfers of financial instruments between Level 1 and Level 2 and there were no other significant transfers of financial instruments in or out of Level 3 as a result of changes in the observability of valuation inputs.

A summary of changes in Level 3 financial assets measured at fair value on a recurring basis for the years ended December 31 follows:

	2017
	Private placement debt securities		Private company preferred shares			Limited partnerships and other			Private equity funds		Private company common shares			Derivatives and other invested assets			Total
Balance - January 1	1,053.1			44.0			981.4		167.8			155.4			97.8		2,499.5
Net realized and unrealized gains (losses) included in the consolidated statement of earnings	190.2			1.3			243.4		(5.5	)		22.6			(9.9	)	442.1
Purchases	430.2			268.4			221.2		—			11.1			72.3		1,003.2
Sales and distributions	(209.7	)		(34.1	)		(443.4	)	—			(19.4	)		—		(706.6	)
Acquisitions of subsidiaries (note 23)	22.4			—			583.8		—			29.9			9.7		645.8
Transfer into category	384.0			—			—		—			—			7.1		391.1
Unrealized foreign currency translation gains on foreign operations included in other comprehensive income	70.9			3.6			12.3		8.2			2.6			0.6		98.2
Balance - December 31	1,941.1			283.2			1,598.7		170.5			202.2			177.6		4,373.3

	2016
	Private placement debt securities		Private company preferred shares			Limited partnerships and other			Private equity funds		Private company common shares			Derivatives and other invested assets			Total
Balance - January 1	696.4			7.7			960.9		171.0			138.0			285.4		2,259.4
Net realized and unrealized gains (losses) included in the consolidated statement of earnings	(52.9	)		2.5			102.7		(12.5	)		(21.6	)		(204.4	)	(186.2	)
Purchases	955.6			115.7			124.4		16.4			38.8			21.1		1,272.0
Sales and distributions	(548.2	)		(82.5	)		(202.9	)	(10.2	)		—			(4.9	)	(848.7	)
Transfer into category	9.4			0.4			—		—			—			—		9.8
Unrealized foreign currency translation gains (losses) on foreign operations included in other comprehensive income	(7.2	)		0.2			(3.7	)	3.1			0.2			0.6		(6.8	)
Balance - December 31	1,053.1			44.0			981.4		167.8			155.4			97.8		2,499.5

The table below presents the valuation techniques, range of values applied for significant unobservable inputs and the typical relationship between significant unobservable inputs and estimated fair values for the company's significant Level 3 financial assets:

Asset class	Carrying value at December 31, 2017	Valuation technique	Significant unobservable input	Input range used				Effect on estimated fair value if input value is increased(a)
				Low		High
Private placement debt securities(b)(1)	1,340.4	Discounted cash flow	Credit spread	1.6	%	18.9	%	Decrease
Private placement debt securities(b)(2)	402.0	Net asset valuation of secured loans	Recoverability of assets	60.0	%	100.0	%	Increase
Limited partnerships and other(c)(3)	1,598.7	Net asset value	Net asset value / Price	N/A		N/A		Increase
Private company preferred shares(d)(4)	207.3	Discounted cash flow	Credit spread	3.5	%	3.6	%	Decrease
Private equity funds(c)(3)	100.9	Net asset value	Net asset value / Price	N/A		N/A		Increase
Private equity funds(c)(5)	69.6	Market comparable	Price/Earnings multiple	10.0		10.0		Increase
Private company common shares(c)(5)	81.2	Market comparable	Book value multiple	1.3		1.3		Increase
Private company common shares(c)(5)	40.5	Market comparable	Price/Earnings multiple	26.2		26.2		Increase
Warrants(e)(6)	73.1	Option pricing model	Equity volatility	24.6	%	39.3	%	Increase
CPI-linked derivatives(e)(7)	39.6	Option pricing model	Inflation volatility	0.0	%	3.7	%	Increase

(a) Decreasing the input value would have the opposite effect on the estimated fair value.

(b) Classified within holding company cash and investments or bonds on the consolidated balance sheet.

(c) Classified within holding company cash and investments or common stocks on the consolidated balance sheet.

(d) Classified within preferred stocks on the consolidated balance sheet.

(e) Classified within holding company cash and investments or derivatives and other invested assets on the consolidated balance sheet.

(1) Valued using industry accepted discounted cash flow models that incorporate credit spreads of the issuers, which are not market observable. At December 31, 2017 this asset class consisted of 7 investments, the largest being $663.6. By increasing (decreasing) the credit spreads within a reasonably possible range, the fair value of these private placement debt securities would decrease by $41.6 (increase by $44.3).

(2) At December 31, 2017 this asset class consisted of 2 investments, the larger being $253.0.

(3) Valued primarily based on net asset value statements provided by the respective third party fund managers and general partners. The fair values in those statements are determined using quoted prices of the underlying assets, and to a lesser extent, observable inputs where available and unobservable inputs, in conjunction with industry accepted valuation models, where required. In some instances, such investments are classified as Level 3 because they may require at least three months' notice to liquidate. The company has not applied reasonably possible alternative assumptions to the estimated fair value of these investments due to their diverse nature and resulting dispersion of prices. At December 31, 2017 limited partnerships and other consisted of 47 investments, the largest being $355.3.

(4) Valued using industry accepted discounted cash flow models that incorporate market unobservable credit spreads of the preferred shares.

(5) Fair values are determined by reference to various valuation measures for comparable companies and transactions, including relevant valuation multiples. In some instances, such investments are classified as Level 3 because the valuation multiples applied by the company are adjusted for differences in attributes between the investment and the underlying companies or transactions from which the valuation multiples were derived.

(6) Valued using industry accepted option pricing models that incorporate market unobservable long-dated equity volatilities. A higher equity volatility generally results in a higher fair value due to the higher probability of obtaining a greater return from the warrant.

(7) Valued based on broker-dealer quotes which management has determined utilize market observable inputs except for inflation volatility which is an unobservable input.

Investment Income

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

Interest and dividends and share of profit of associates

	2017		2016
Interest income:
Cash and short term investments	117.5		33.4
Bonds	441.9		622.4
Derivatives and other	(44.8	)	(141.4	)
	514.6		514.4
Dividends:
Preferred stocks	2.1		11.2
Common stocks	71.1		55.6
	73.2		66.8
Investment expenses	(28.8	)	(26.0	)
Interest and dividends	559.0		555.2
Share of profit of associates (note 6)	200.5		24.2

Net gains (losses) on investments

		2017									2016
	Net realized gains (losses)				Net change in unrealized gains (losses)			Net gains (losses) on investments			Net realized gains (losses)				Net change in unrealized gains (losses)				Net gains (losses) on investments
Bonds		445.7				(167.7	)		278.0			683.7				(400.4	)			283.3
Preferred stocks		0.2				(0.5	)		(0.3	)		(68.0	)	(4)(5)		61.6		(4)(5)		(6.4	)
Common stocks		126.5				585.7			712.2			(162.2	)	(4)(6)		91.2		(4)(6)		(71.0	)
		572.4				417.5			989.9			453.5				(247.6	)			205.9
Derivatives:
Common stock and equity index short positions		(485.6	)	(1)		67.7			(417.9	)		(915.8	)	(1)		(264.0	)			(1,179.8	)
Common stock and equity index long positions		21.6		(1)		(2.0	)		19.6			10.4		(1)		12.9				23.3
Equity index put options		—				—			—			(20.3	)			7.2				(13.1	)
Equity warrants and call options		22.9				15.4			38.3			—				(4.0	)			(4.0	)
CPI-linked derivatives		—				(71.0	)		(71.0	)		—				(196.2	)			(196.2	)
U.S. treasury bond forwards		(174.5	)			21.3			(153.2	)		96.7				(49.7	)			47.0
Other		(8.4	)			8.1			(0.3	)		(70.6	)			63.2				(7.4	)
		(624.0	)			39.5			(584.5	)		(899.6	)			(430.6	)			(1,330.2	)
Foreign currency net gains (losses) on:
Investing activities		0.8				88.0			88.8			54.4				(191.3	)			(136.9	)
Underwriting activities		(74.9	)			—			(74.9	)		19.7				—				19.7
Foreign currency contracts		(21.0	)			9.9			(11.1	)		6.5				(18.8	)			(12.3	)
		(95.1	)			97.9			2.8			80.6				(210.1	)			(129.5	)
Gain on disposition of associates		999.9		(2)(3)		—			999.9			—				—				—
Other		2.1				57.3			59.4			3.2				47.0				50.2
Net gains (losses) on investments		855.3				612.2			1,467.5			(362.3	)			(841.3	)			(1,203.6	)

(1) Amounts recorded in net realized gains (losses) include net gains (losses) on total return swaps where the counterparties are required to cash-settle on a quarterly or monthly basis the market value movement since the previous reset date notwithstanding that the total return swap positions remain open subsequent to the cash settlement. The company discontinued its economic equity hedging strategy during the fourth quarter of 2016 and closed out $6,350.6 notional amount of short positions effected through equity index total return swaps (comprised of Russell 2000, S&P 500 and S&P/TSX 60 short equity index total return swaps) (see notes 7 and 24).

(2) During 2017 the company sold a 24.3% equity interest in ICICI Lombard for net proceeds of $908.5 and recorded a net realized gain of $595.6. The company's remaining 9.9% equity interest in ICICI Lombard was reclassified to common stock measured at FVTPL and re-measured to fair value for a net realized gain of $334.5 (see note 6).

(3) During 2017 the company acquired control of Grivalia Properties by increasing its equity interest to 52.7% and commenced consolidating Grivalia Properties in the Other reporting segment. As a result, the company re-measured its equity accounted carrying value of Grivalia Properties to fair value and recorded a net realized gain of $51.3 (see note 6).

(4) During 2016 the company recognized net realized losses of $220.3 and $103.7 on common and preferred stock investments pursuant to the issuer's plan of restructuring and subsequent emergence from bankruptcy protection. Prior period unrealized losses on the common and preferred stock investments of $209.5 and $99.6 were reclassified to net realized losses with a net impact of nil on the consolidated statement of earnings.

(5) During 2016 the company was required to convert a preferred stock investment into common shares of the issuer, resulting in a net realized gain on investment of $35.1 (the difference between the share price of the underlying common stock at the date of conversion and the exercise price of the preferred stock). Prior period unrealized gains on the preferred stock investment of $41.7 were reclassified to net realized gains with a net impact of nil on the consolidated statement of earnings.

(6) During 2016 the company increased its ownership interest in APR Energy to 49.0% and commenced applying the equity method of accounting, resulting in the reclassification of an unrealized loss of $68.1 on APR Energy to realized losses with a net impact of nil on the consolidated statement of earnings.

XML

Investments in Associates

12 Months Ended

Dec. 31, 2017

Interests In Other Entities [Abstract]

Investments in Associates

Investments in Associates

The following summarizes the company's investments in associates:

	December 31, 2017									Year ended December 31, 2017
				Carrying value
	Ownership percentage		Fair value(a)		Associates and joint arrangements		Fairfax India and Fairfax Africa associates		Total	Share of profit (loss)(8)
Insurance and reinsurance:
Eurolife ERB Insurance Group Holdings S.A. ("Eurolife")	43.3	%	303.0		298.0	(b)	—		298.0	117.6
Gulf Insurance Company ("Gulf Insurance")	41.4	%	233.1		185.4		—		185.4	7.7
Thai Re Public Company Limited ("Thai Re")(1)	34.9	%	80.5		80.3		—		80.3	(21.3	)
Bank for Investment and Development of Vietnam Insurance Joint Stock Corporation (“BIC Insurance”)	35.0	%	66.7		48.6		—		48.6	1.6
Singapore Reinsurance Corporation Limited ("Singapore Re")	27.8	%	39.6		38.5		—		38.5	3.2
Ambridge Partners LLC ("Ambridge Partners")	50.0	%	34.9		34.9		—		34.9	4.4
Go Digit Infoworks Services Private Limited ("Digit")(2)	45.3	%	10.6		10.6		—		10.6	—
Falcon Insurance PLC ("Falcon Thailand")	41.2	%	9.2		9.2		—		9.2	—
Camargue Underwriting Managers Group Ltd. ("Camargue")	50.0	%	5.5		5.5		—		5.5	0.7
ICICI Lombard General Insurance Company Limited ("ICICI Lombard")(3)	—		—		—		—		—	24.0
			783.1		711.0		—		711.0	137.9
Non-insurance:
Agriculture
Astarta Holding N.V. ("Astarta")(4)	28.1	%	101.2		140.6		—		140.6	15.8
Farmers Edge Inc. ("Farmers Edge")(5)	46.1	%	95.0		88.1		—		88.1	(10.5	)
			196.2		228.7		—		228.7	5.3
Real estate
KWF Real Estate Ventures Limited Partnerships ("KWF LPs")(6)	—		213.4		213.4	(b)	—		213.4	12.2
Grivalia Properties REIC ("Grivalia Properties")(7)	—		—		—		—		—	12.8
Other	—		88.7		88.6	(b)	—		88.6	9.0
			302.1		302.0		—		302.0	34.0
India
Bangalore International Airport Limited ("Bangalore Airport")(12)	48.0	%	608.3		—		611.1	(c)	611.1	15.8
IIFL Holdings Limited (“IIFL Holdings”)(13)	35.5	%	1,185.1		102.7		317.2	(c)	419.9	36.5
5paisa Capital Limited ("5paisa")(13)	35.5	%	26.6		6.6		20.2	(c)	26.8	—
Fairchem Limited ("Fairchem")(14)	—		—		—		—		—	0.2
Other	—		0.6		—		1.0	(c)	1.0	—
			1,820.6		109.3		949.5		1,058.8	52.5
Africa
Atlas Mara Limited ("Atlas Mara")(15)	43.3	%	168.7		—		170.3	(d)	170.3	1.6
AFGRI Holdings Proprietary Limited ("AFGRI")(16)	60.0	%	119.0		—		49.5	(d)	49.5	(0.4	)
			287.7		—		219.8		219.8	1.2
Other
Resolute Forest Products Inc. ("Resolute")(8)	33.8	%	334.0		320.6		—		320.6	0.3
APR Energy plc ("APR Energy")(9)	67.8	%	336.4		309.4	(b)	—		309.4	(3.1	)
Peak Achievement Athletics ("Peak Achievement")(10)	42.6	%	153.5		144.8	(b)	—		144.8	(6.2	)
Arbor Memorial Services Inc. ("Arbor Memorial")	43.4	%	111.8		61.4		—		61.4	10.6
Partnerships, trusts and other(11)	—		303.9		299.8		—		299.8	(32.0	)
			1,239.6		1,136.0		—		1,136.0	(30.4	)
			3,846.2		1,776.0		1,169.3		2,945.3	62.6
Investments in associates			4,629.3		2,487.0		1,169.3		3,656.3	200.5
As presented on the consolidated balance sheet:
Investments in associates			2,824.3						2,487.0
Fairfax India cash and portfolio investments(12)(13)			1,517.3						949.5
Fairfax Africa cash and portfolio investments(15)(16)			287.7						219.8
			4,629.3						3,656.3

(a) See note 5 for fair value hierarchy information.

(b) These investments are considered joint arrangements.

(c) Fairfax India associate.

(d) Fairfax Africa associate.

	December 31, 2016									Year ended December 31, 2016
				Carrying value
	Ownership percentage		Fair value(a)		Associates and joint arrangements		Fairfax India associates		Total	Share of profit (loss)(8)
Insurance and reinsurance:
Eurolife ERB Insurance Group Holdings S.A. ("Eurolife")	40.0	%	171.4		150.6	(b)	—		150.6	(6.4	)
Gulf Insurance Company ("Gulf Insurance")	41.4	%	235.8		195.7		—		195.7	14.0
Thai Re Public Company Limited ("Thai Re")	32.4	%	80.2		94.7		—		94.7	(1.8	)
Bank for Investment and Development of Vietnam Insurance Joint Stock Corporation (“BIC Insurance”)	35.0	%	68.5		48.4		—		48.4	1.8
Singapore Reinsurance Corporation Limited ("Singapore Re")	27.8	%	35.5		34.6		—		34.6	2.0
Ambridge Partners LLC ("Ambridge Partners")	50.0	%	31.4		31.4		—		31.4	3.4
Falcon Insurance PLC ("Falcon Thailand")	41.2	%	8.8		8.8		—		8.8	0.7
Camargue Underwriting Managers Group Ltd. ("Camargue")	50.0	%	5.2		5.2		—		5.2	0.2
ICICI Lombard General Insurance Company Limited ("ICICI Lombard")	34.6	%	878.0		371.1		—		371.1	44.1
			1,514.8		940.5		—		940.5	58.0
Non-insurance:
Real estate
KWF Real Estate Ventures Limited Partnerships ("KWF LPs")(6)	—		202.8		202.8	(b)	—		202.8	13.9
Grivalia Properties REIC ("Grivalia Properties")	40.6	%	332.4		295.9		—		295.9	16.1
			535.2		498.7		—		498.7	30.0
India
IIFL Holdings Limited (“IIFL Holdings”)	30.5	%	373.9		96.3		220.1	(c)	316.4	18.5
Fairchem Limited ("Fairchem")	44.9	%	45.5		—		19.4	(c)	19.4	0.3
Other	—		0.4		—		1.0	(c)	1.0	—
			419.8		96.3		240.5		336.8	18.8
Other
Resolute Forest Products Inc. ("Resolute")(8)	33.9	%	162.5		304.5		—		304.5	(73.6	)
APR Energy plc (‘‘APR Energy’’)	45.0	%	234.0		187.3	(b)	—		187.3	(29.0	)
Peak Achievement Athletics ("Peak Achievement")	38.2	%	83.0		82.7	(b)	—		82.7	—
Arbor Memorial Services Inc. ("Arbor Memorial")	43.4	%	93.6		56.0		—		56.0	9.0
Partnerships, trusts and other	—		224.4		227.0		—		227.0	11.0
			797.5		857.5		—		857.5	(82.6	)
			1,752.5		1,452.5		240.5		1,693.0	(33.8	)
Investments in associates			3,267.3		2,393.0		240.5		2,633.5	24.2
As presented on the consolidated balance sheet:
Investments in associates			2,955.4						2,393.0
Fairfax India cash and portfolio investments			311.9						240.5
			3,267.3						2,633.5

(a) See note 5 for fair value hierarchy information.

(b) These investments are considered joint arrangements.

(c) Fairfax India associate.

Insurance and reinsurance associates

(1) At December 31, 2017 Thai Re Public Company Limited's ("Thai Re") recoverable amount of $80.3 was determined to be lower than its carrying value, resulting in a non-cash impairment charge of $17.7 recognized in share of profit (loss) of associates in the consolidated statement of earnings.

(2) Through various transactions during 2017 the company acquired a45.3% equity interest in Go Digit Infoworks Private Limited ("Digit”) for cash consideration of $10.6 (694.4 million Indian rupees) and invested in convertible preferred shares of Digit for $48.9 (3.2 billion Indian rupees). Digit is a newly formed Indian company that has established and is operating an insurance company in India named Go Digit General Insurance Limited.

(3) On July 6, 2017 the company sold a 12.2% equity interest in ICICI Lombard General Insurance Company Limited ("ICICI Lombard") to private equity investors for net proceeds of $376.3 and a net realized investment gain of $223.3. On September 19, 2017 the company sold an additional 12.1% equity interest through participation in ICICI Lombard's initial public offering for net proceeds of $532.2 and a net realized investment gain of $372.3. The company's remaining 9.9% equity interest in ICICI Lombard was reclassified from the equity method of accounting to common stock at FVTPL, resulting in a $334.5 re-measurement gain.

Non-insurance associates

(4) Through various transactions between January 3, 2017 and May 10, 2017, the company acquired an aggregate equity interest in Astarta Holding N.V. (“Astarta”) of 28.0% with an initial carrying value of $120.1 under the equity method of accounting, comprised of cash consideration of $104.4 (420.1 million Polish zlotys) and re-measurements to fair value of $15.7. Astarta specializes in sugar production, crop growing, soybean processing and cattle farming, primarily in Ukraine.

(5) On March 1, 2017 the company acquired a 46.1% equity interest in Farmers Edge Inc. ("Farmers Edge") for purchase consideration of $95.0. Farmers Edge specializes in data science, precision agronomy (farming), geographic information systems, hardware engineering, software development, soil science and sustainability.

(6) The KWF LPs are partnerships formed between the company and Kennedy-Wilson Holdings, Inc. and its affiliates ("Kennedy Wilson") to invest in U.S. and international real estate properties. The company participates as a limited partner in the KWF LPs, with limited partnership interests ranging from 50% to 90%. Kennedy Wilson is the general partner and holds the remaining limited partnership interest in each of the KWF LPs.

(7) On July 4, 2017 the company acquired control of Grivalia Properties REIC ("Grivalia Properties") by increasing its equity interest to 52.6% through the purchase of an additional 10.3% equity interest from Eurobank Ergasias S.A. for cash consideration of $100.0 (€88.0). Accordingly, the company re-measured its equity accounted carrying value of Grivalia Properties to fair value, recorded a net realized gain of$51.3and commenced consolidating Grivalia Properties (and its equity accounted investments with a fair value of $39.5) in the Other reporting segment.Pursuant to Greek securities law, the company then made a tender offer for all remaining outstanding shares of Grivalia Properties which expired on September 6, 2017, resulting in the company increasing its equity interest by 0.1% to 52.7% for cash consideration of $0.6 (€0.5).Grivalia Properties is a real estate investment company listed on the Athens Stock Exchange.

(8) At December 31, 2016 the carrying value of the company's investment in Resolute Forest Products Inc. ("Resolute") exceeded its fair value as determined by the market price of Resolute shares. The company performed a value-in-use analysis to establish the recoverable amount of its investment in Resolute and recognized a non-cash impairment charge of $100.4 in share of profit of associates in the 2016 consolidated statement of earnings.

(9) On July 20, 2017 the company increased its indirect equity interest in APR Energy plc ("APR Energy") to 67.9% through the acquisition of an additional 22.9% equity interest for purchase consideration of $109.0. APR Energy continues to be reported under the equity method of accounting due to certain contractual arrangements between Fairfax and the second-largest shareholder which preclude either party from exercising unilateral control over APR Energy's most relevant decisions governing its operations, including the appointment of executive management and the approval of the detailed annual business plan. On October 13, 2017 APR Energy obtained further capital financing through the issuance of common shares to existing shareholders for which the company participated by investing an additional $13.2. The net impact of the common share issuance reduced the company's indirect equity interest to 67.8%.

(10) On March 1, 2017 the restructuring of Performance Sports Group Ltd. ("PSG") was substantially completed after all of the assets and certain related operating liabilities of PSG were sold to an intermediate holding company ("Performance Sports") co-owned by Fairfax and Sagard Holdings Inc. The company's $153.5 equity investment in Performance Sports represents a voting interest of 50.0% and an equity interest of 42.6%. On April 3, 2017 Performance Sports was renamed Peak Achievement Athletics Inc. ("Peak Achievement").

(11) On August 2, 2017 the company acquired an 81.2% non-voting equity interest in Sigma Companies International Corp. ("Sigma") for cash consideration of $41.4. Sigma, through its subsidiary, is engaged in global water and wastewater infrastructure projects.

Fairfax India

(12) On March 24, 2017 Fairfax India acquired a 38.0% equity interest in Bangalore International Airport Limited (“Bangalore Airport”) for cash consideration of $385.5 (25.2 billion Indian rupees). On July 13, 2017 Fairfax India increased its equity interest in Bangalore Airport to 48.0% through the acquisition of an additional 10.0% equity interest from a wholly-owned subsidiary of GVK Power and Infrastructure Limited ("GVK") for purchase consideration of $200.1 (12.9 billion Indian rupees). A put option previously issued to GVK during the company's initial investment in Bangalore Airport was terminated by this transaction. Bangalore Airport, under a concession agreement with the Government of India, operates and manages the Kempegowda International Airport in Bengaluru, India through a public-private partnership.

(13) On October 20, 2017 IIFL Holdings Limited ("IIFL Holdings") completed a spin-off of a wholly owned subsidiary resulting in the entity 5paisa Capital Limited ("5paisa"). IIFL Holdings investors received 5paisa shares pro rata based on existing ownership in IIFL Holdings. The transaction was recorded as a non-cash distribution that reduced the carrying value of the company's investment in IIFL Holdings. Subsequent to the spin-off transaction, the company holds a 35.5% equity interest in 5paisa recorded at an initial carrying value of$26.4. 5paisa is a provider of a web-based, mobile technology platform that facilitates trading of securities on the BSE and NSE of India.

(14) On March 14, 2017 Fairchem Speciality Limited ("Fairchem") and Privi Organics Limited ("Privi Organics") completed their previously announced merger, with the merged entity continuing under the Fairchem name and being consolidated by Fairfax India (see note 23).

Fairfax Africa

(15) On August 31, 2017 Fairfax Africa, through a series of transactions, acquired a 42.4% equity interest in Atlas Mara Limited ("Atlas Mara") for cash consideration of $155.8. On December 22, 2017 Fairfax Africa acquired an additional 0.9% equity interest in Atlas Mara for cash consideration of $2.4. Atlas Mara is a financial services institution listed on the London Stock Exchange that operates in seven sub-Saharan countries.

(16) On February 17, 2017 the company contributed its indirect equity ownership interest in AFGRI Holdings Proprietary Limited ("AFGRI") to Fairfax Africa (fair value of $72.8 and carrying value of $40.5) in exchange for 7,284,606 multiple voting shares of Fairfax Africa valued at $10.00 per multiple voting share (see note 23). Despite the company's significant equity interest, AFGRI is reported under the equity method of accounting due to contractual arrangements between Fairfax Africa and certain other shareholders of AFGRI which preclude any shareholders from exercising unilateral control over AFGRI's most relevant decisions governing its operations, including approval of significant transactions and the five-year business plan.

Changes in the investments in associates balances for the years ended December 31 were as follows:

	2017
	Associates		Joint arrangements		Fairfax India associates		Fairfax Africa associates		Total
Balance - January 1	1,769.6		623.4		240.5		—		2,633.5
Share of pre-tax comprehensive income (loss) of associates and joint arrangements:
Share of profit of associates and joint arrangements	25.6		128.2		45.5		1.2		200.5
Share of other comprehensive income (loss), excluding gains (losses) on defined benefit plans	22.9		46.4		(0.1	)	(1.3	)	67.9
Share of gains (losses) on defined benefit plans	12.4		—		(0.1	)	—		12.3
	60.9		174.6		45.3		(0.1	)	280.7
Dividends and distributions received	(50.5	)	(57.0	)	(26.8	)	—		(134.3	)
Purchases and acquisitions	367.4		301.6		682.9		219.9		1,571.8
Divestitures and other net changes in capitalization	(290.5	)	(2.4	)	(0.7	)	—		(293.6	)
Reclassifications(1)	(440.4	)	—		(20.4	)	—		(460.8	)
Foreign exchange effect	20.5		9.8		28.7		—		59.0
Balance - December 31	1,437.0		1,050.0		949.5		219.8		3,656.3

(1) Comprised of the consolidation of Grivalia Properties, the reduction of the company's investment in ICICI Lombard and the consolidation of Fairchem subsequent to its merger with Privi Organics.

	2016
	Associates		Joint arrangements		Fairfax India associates		Fairfax Africa associates	Total
Balance - January 1	1,538.7		191.5		202.7		—	1,932.9
Share of pre-tax comprehensive income (loss) of associates and joint arrangements:
Share of profit (loss) of associates and joint arrangements	32.1		(21.5	)	13.6		—	24.2
Share of other comprehensive loss, excluding losses on defined benefit plans	(24.9	)	(14.4	)	—		—	(39.3	)
Share of losses on defined benefit plans	(43.5	)	—		—		—	(43.5	)
	(36.3	)	(35.9	)	13.6		—	(58.6	)
Dividends and distributions received	(45.6	)	(47.8	)	(4.6	)	—	(98.0	)
Purchases and acquisitions	306.2		528.4		20.5		—	855.1
Divestitures and other net changes in capitalization	5.6		(11.6	)	13.7		—	7.7
Foreign exchange effect	1.0		(1.2	)	(5.4	)	—	(5.6	)
Balance - December 31	1,769.6		623.4		240.5		—	2,633.5

The company's strategic investment in 15.0% of Alltrust Insurance Company of China Ltd. had a carrying value of $81.2 at December 31, 2017 (December 31, 2016 - $76.1) and is classified as FVTPL within common stocks on the consolidated balance sheet.

XML

Short Sales and Derivatives

12 Months Ended

Dec. 31, 2017

Disclosure of notes and other explanatory information [Abstract]

Short Sales and Derivatives

Short Sales and Derivatives

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

	December 31, 2017					December 31, 2016
	Cost	Notionalamount	Fair value			Cost	Notional amount	Fair value
			Assets	Liabilities				Assets	Liabilities
Equity derivatives:
Equity index total return swaps – short positions	—	52.6	0.4		—	—	43.3	0.6		—
Equity total return swaps – short positions	—	892.5	11.8		12.1	—	1,623.0	10.4		78.1
Equity total return swaps – long positions	—	697.8	17.8		15.6	—	213.1	9.4		5.1
Equity and equity index call options	0.4	8.2	3.9		—	16.2	1,104.4	12.8		—
Warrants	64.8	607.1	73.7		—	6.5	32.2	6.5		—
CPI-linked derivative contracts	678.4	117,254.6	39.6		—	670.0	110,365.5	83.4		—
U.S. treasury bond forwards	—	1,693.8	—		28.8	—	3,013.4	—		49.7
Foreign exchange forward contracts	—	—	57.1		69.7	—	—	80.2		101.4
Total			204.3		126.2			203.3		234.3

The company is exposed to significant market risk (comprised of foreign currency risk, interest rate risk and other price risk) through its investing activities. Certain derivative contracts entered into by the company are considered economic hedges of certain market risks but are not designated as hedges for financial reporting.

Equity contracts

Throughout most of 2016 the company had economically hedged certain market risks associated with its equity and equity-related holdings (comprised of common stocks, convertible preferred stocks, convertible bonds, non-insurance investments in associates and equity-related derivatives) against a potential significant decline in equity markets by way of short positions effected through equity and equity index total return swaps (including short positions in certain equity indexes and individual equities) and equity index put options (S&P 500). The company's equity hedges were structured to provide a return that was inverse to changes in the fair values of the indexes and certain individual equities.

The company discontinued its economic equity hedging strategy in the fourth quarter of 2016 after giving consideration to the possible and actual outcome of the U.S. elections and the potential for fundamental changes that could improve U.S. economic growth and equity markets.During 2016 the company closed out $6,350.6 notional amount of short positions effected through equity index total return swaps (comprised of Russell 2000, S&P 500 and S&P/TSX 60 short equity index total return swaps) and recognized a net loss on investment of $955.2 (realized loss of $2,665.4 of which $1,710.2 had been recognized as unrealized losses in prior years).The company continues to hold short equity and equity index total return swaps for investment purposes, but no longer regards them as hedges of its equity and equity-related holdings. During 2017 the company paid net cash of $485.6 (2016 - $915.8) in connection with the closures and reset provisions of its short equity and equity index total return swaps (excluding the impact of collateral requirements).

During 2017 the company closed out $1,202.9 notional amount of short equity total return swaps and recognized a net loss on investment of $237.9 (realized loss of $553.1 of which $315.2 was recognized as unrealized losses in prior years).In the first quarter of 2018 the company closed out an additional $481.3 notional amount of short equity and equity index total return swaps and recognized a net loss on investment of $8.1 (realized loss of $199.0 of which $190.9 was recognized as unrealized losses in prior years), which reduced the notional amount of remaining short equity and equity index total return swaps to approximately $509. During 2017 the company closed out $1,100.0 notional amount of S&P 500 call options and recorded a net gain on investment of $10.1.

At December 31, 2017the company had entered into long equity total return swaps on individual equities for investment purposes with an original notional amount of $706.3 (December 31, 2016 - $283.9). During 2017 the company received net cash of $21.6 (2016 - $10.4) in connection with the reset provisions of its long equity total return swaps (excluding the impact of collateral requirements).

At December 31, 2017 the fair value of collateral deposited for the benefit of derivative counterparties included in holding company cash and investments, or in assets pledged for short sale and derivative obligations, was $272.5 (December 31, 2016 - $322.9), comprised of collateral of $36.0 (December 31, 2016 - $86.4) securing amounts owed to counterparties in respect of fair value changes since the most recent reset date, and collateral of $236.5 (December 31, 2016 - $236.5) required to be deposited to enter into such derivative contracts (principally related to total return swaps).

U.S. treasury bond forward contracts

To reduce its exposure to interest rate risk (specifically with respect to U.S. state and municipal bonds and any remaining long dated U.S. treasury bonds held in its fixed income portfolio following sales which occurred late in 2016 and in the first quarter of 2017), the company entered into forward contracts to sell long dated U.S. treasury bonds. At December 31, 2017 these contracts had a notional amount of $1,693.8 (December 31, 2016 - $3,013.4) and an average term to maturity of less than three months, and could be renewed at market rates.

CPI-linked derivative contracts

The company has purchased derivative contracts referenced to consumer price indexes (“CPI”) in the geographic regions in which it operates to serve as an economic hedge against the potential adverse financial impact on the company of decreasing price levels. At December 31, 2017 these contracts have a remaining weighted average life of 4.6 years (December 31, 2016 - 5.6 years) and notional amounts and fair values as shown in the table below. In the event of a sale, expiration or early settlement of any of these contracts, the company would receive the fair value of that contract on the date of the transaction. The company's maximum potential loss on a contract is limited to the original cost of that contract. The CPI-linked derivative contracts are summarized as follows:

	December 31, 2017
	Floor rate(1)		Average life (in years)	Notional amount		Weighted average strike price	Index value at period end	Cost	Cost in bps(2)	Market value	Market value in bps(2)	Unrealized gain (loss)
Underlying CPI index				Original currency	U.S. dollars
United States	0.0	%	4.7	46,725.0	46,725.0	231.39	246.52	287.5	61.5	20.6	4.4	(266.9	)
United States	0.5	%	6.8	12,600.0	12,600.0	238.30	246.52	39.9	31.7	17.2	13.7	(22.7	)
European Union	0.0	%	4.0	41,375.0	49,683.0	96.09	102.57	307.1	61.8	1.4	0.3	(305.7	)
United Kingdom	0.0	%	4.9	3,300.0	4,464.1	243.82	278.10	23.2	52.0	0.3	0.7	(22.9	)
France	0.0	%	5.1	3,150.0	3,782.5	99.27	101.76	20.7	54.7	0.1	0.3	(20.6	)
			4.6		117,254.6			678.4		39.6		(638.8	)

	December 31, 2016
	Floor rate(1)		Average life (in years)	Notional amount		Weighted average strike price	Index value at period end	Cost	Cost in bps(2)	Market value	Market value in bps(2)	Unrealized gain (loss)
Underlying CPI index				Original currency	U.S. dollars
United States	0.0	%	5.7	46,725.0	46,725.0	231.39	241.43	286.9	61.4	35.2	7.5	(251.7	)
United States	0.5	%	7.8	12,600.0	12,600.0	238.30	241.43	39.5	31.3	34.3	27.2	(5.2	)
European Union	0.0	%	5.0	41,375.0	43,640.4	96.09	101.26	300.3	68.8	12.5	2.9	(287.8	)
United Kingdom	0.0	%	5.9	3,300.0	4,077.6	243.82	267.10	22.6	55.4	0.5	1.2	(22.1	)
France	0.0	%	6.1	3,150.0	3,322.5	99.27	100.66	20.7	62.3	0.9	2.7	(19.8	)
			5.6		110,365.5			670.0		83.4		(586.6	)

(1) Contracts with a floor rate of 0.0% provide a payout at maturity if there is cumulative deflation over the life of the contract. Contracts with a floor rate of 0.5% provide a payout at maturity based on an equivalent weighted average strike price of 250.49 if cumulative inflation averages less than 0.5% per year over the life of the contract.At December 31, 2017 the equivalent weighted average strike price for the United States 0.5% CPI-linked derivative contracts was 242.20 (December 31, 2016 - 241.00).

(2) Expressed as a percentage of the notional amount.

During 2017the company did not enter into any new CPI-linked derivative contracts.The company's CPI-linked derivative contracts produced net unrealized losses of $71.0 in 2017 (2016 - $196.2).

Foreign exchange forward contracts

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

Counterparty collateral

The company endeavours to limit counterparty risk through diligent selection of counterparties to its derivative contracts and through the terms of negotiated agreements. The fair value of the collateral deposited for the benefit of the company at December 31, 2017 consisted of cash of $3.6 and government securities of $35.9 (December 31, 2016 - $8.3 and $54.4). The company has recognized the cash collateral within subsidiary cash and short term investments and recognized a corresponding liability within accounts payable and accrued liabilities. The company had not exercised its right to sell or repledge collateral at December 31, 2017. The company's exposure to counterparty risk and the management thereof are discussed in note 24.

Hedge of net investment in Canadian subsidiaries

At December 31, 2017 the company has designated the carrying value of Cdn$2,212.9 principal amount of its Canadian dollar denominated unsecured senior notes with a fair value of $1,868.6 (December 31, 2016 - principal amount of Cdn$1,975.0 with a fair value of $1,618.1) as a hedge of its net investment in its Canadian subsidiaries for financial reporting. During 2017 the company recognized pre-tax losses of $106.3 (2016 - $37.5) related to foreign currency movements on the unsecured senior notes in losses on hedge of net investment in Canadian subsidiaries in the consolidated statement of comprehensive income.

XML

Insurance Contract Liabilities

12 Months Ended

Dec. 31, 2017

Insurance Contracts [Abstract]

Insurance Contract Liabilities

Insurance Contract Liabilities

	December 31, 2017			December 31, 2016
	Gross	Ceded	Net	Gross	Ceded	Net
Provision for unearned premiums	5,951.7	1,169.0	4,782.7	3,740.4	539.8	3,200.6
Provision for losses and loss adjustment expenses	28,610.8	6,189.7	22,421.1	19,481.8	3,179.6	16,302.2
Total insurance contract liabilities	34,562.5	7,358.7	27,203.8	23,222.2	3,719.4	19,502.8
Current	13,405.0	2,975.9	10,429.1	9,013.9	1,586.8	7,427.1
Non-current	21,157.5	4,382.8	16,774.7	14,208.3	2,132.6	12,075.7
	34,562.5	7,358.7	27,203.8	23,222.2	3,719.4	19,502.8

At December 31, 2017 the company's net provision for losses and loss adjustment expenses of $22,421.1 (December 31, 2016 - $16,302.2) were comprised of case reserves of $9,731.5 and IBNR of $12,689.6 (December 31, 2016 - $7,537.2 and $8,765.0).

Provision for unearned premiums

Changes in the provision for unearned premiums for the years ended December 31 were as follows:

	2017		2016
Provision for unearned premiums – January 1	3,740.4		3,284.8
Gross premiums written	12,207.5		9,534.3
Less: gross premiums earned	(11,822.0	)	(9,209.7	)
Acquisitions of subsidiaries (note 23)	1,906.2		111.1
Divestiture of subsidiary (note 23)	(157.9	)	—
Foreign exchange effect and other	77.5		19.9
Provision for unearned premiums - December 31	5,951.7		3,740.4

Provision for losses and loss adjustment expenses

Changes in the provision for losses and loss adjustment expenses for the years ended December 31 were as follows:

	2017		2016
Provision for losses and loss adjustment expenses – January 1	19,481.8		19,816.4
Decrease in estimated losses and expenses for claims occurring in the prior years	(218.8	)	(559.8	)
Losses and expenses for claims occurring in the current year	9,736.5		6,247.8
Paid on claims occurring during:
the current year	(2,263.9	)	(1,595.6	)
the prior years	(5,526.0	)	(4,441.8	)
Acquisitions of subsidiaries (note 23)	7,377.6		143.1
Divestiture of subsidiary (note 23)	(546.6	)	—
Foreign exchange effect and other	570.2		(128.3	)
Provision for losses and loss adjustment expenses – December 31	28,610.8		19,481.8

Development of insurance losses, gross

The development of insurance liabilities illustrates the estimation uncertainty associated with these liabilities and provides a measure of the company's ability to estimate the ultimate value of claims. The loss development table which follows shows the provision for losses and loss adjustment expenses at the end of each calendar year, the cumulative payments made in respect of those reserves in subsequent years and the re-estimated amount of each calendar year's provision for losses and loss adjustment expenses as at December 31, 2017.

	Calendar year
	2008		2009		2010	2011	2012	2013	2014	2015		2016		2017
Provision for losses and loss adjustment expenses	14,467.2		14,504.8		16,049.3	17,232.2	19,648.8	19,212.8	17,749.1	19,816.4		19,481.8		28,610.8
Less: CTR Life(1)	34.9		27.6		25.3	24.2	20.6	17.9	15.2	14.2		12.8		8.7
	14,432.3		14,477.2		16,024.0	17,208.0	19,628.2	19,194.9	17,733.9	19,802.2		19,469.0		28,602.1
Cumulative payments as of:
One year later	3,136.0		3,126.6		3,355.9	3,627.6	4,323.5	4,081.1	3,801.6	4,441.4		4,608.0
Two years later	5,336.4		5,307.6		5,441.4	6,076.7	7,153.1	6,787.6	6,364.5	7,283.6
Three years later	7,070.7		6,846.3		7,063.1	7,920.3	9,148.0	8,775.5	8,172.7
Four years later	8,318.7		7,932.7		8,333.3	9,333.4	10,702.8	10,212.4
Five years later	9,189.1		8,936.9		9,327.0	10,458.7	11,783.3
Six years later	10,039.4		9,721.1		10,202.6	11,263.6
Seven years later	10,705.5		10,456.1		10,823.4
Eight years later	11,379.9		10,975.6
Nine years later	11,857.8
Reserves re-estimated as of:
One year later	14,746.0		14,616.0		15,893.8	17,316.4	19,021.2	18,375.6	16,696.4	19,169.3		19,343.1
Two years later	14,844.4		14,726.6		15,959.7	17,013.6	18,529.4	17,475.0	16,269.2	18,973.6
Three years later	14,912.4		14,921.6		15,705.6	16,721.0	17,820.5	17,307.9	16,114.0
Four years later	15,127.5		14,828.9		15,430.4	16,233.9	17,735.5	17,287.2
Five years later	15,091.0		14,663.1		15,036.2	16,269.6	17,830.5
Six years later	15,011.7		14,433.0		15,099.0	16,331.8
Seven years later	14,873.6		14,551.5		15,252.1
Eight years later	15,028.8		14,744.2
Nine years later	15,231.4
Favourable (unfavourable) development	(799.1	)	(267.0	)	771.9	876.2	1,797.7	1,907.7	1,619.9	828.6		125.9
Comprised of favourable (unfavourable):
Effect of foreign currency translation	(317.7	)	82.0		264.2	265.1	575.6	476.0	248.5	(252.3	)	(205.7	)
Loss reserve development	(481.4	)	(349.0	)	507.7	611.1	1,222.1	1,431.7	1,371.4	1,080.9		331.6
	(799.1	)	(267.0	)	771.9	876.2	1,797.7	1,907.7	1,619.9	828.6		125.9

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

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

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

Favourable loss reserve development in calendar year 2017 of $331.6 in the table above was principally comprised of favourable loss emergence on the more recent accident years, partially offset by adverse development primarily relating to asbestos and other latent reserves.

Development of losses and loss adjustment expenses for asbestos

A number of the company's subsidiaries wrote general liability policies and reinsurance prior to their acquisition by the company under which policyholders continue to present asbestos-related injury claims. The vast majority of these claims are presented under policies written many years ago and reside primarily within the run-off group.

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

The following is an analysis of the changes which have occurred in the company's provision for losses and loss adjustment expenses related to asbestos exposure on a gross and net basis for the years ended December 31:

	2017				2016
	Gross		Net		Gross		Net
Provision for asbestos claims and loss adjustment expenses - January 1	1,347.7		1,065.5		1,381.0		1,043.8
Losses and loss adjustment expenses incurred	153.0		141.8		219.9		218.7
Losses and loss adjustment expenses paid	(208.6	)	(174.0	)	(253.2	)	(197.0	)
Provision for asbestos claims and loss adjustment expenses - December 31	1,292.1		1,033.3		1,347.7		1,065.5

Fair Value

The estimated fair value of insurance and reinsurance contracts is as follows:

	December 31, 2017		December 31, 2016
	Fair value	Carrying value	Fair value	Carrying value
Insurance contracts	33,807.2	34,562.5	22,598.3	23,222.2
Ceded reinsurance contracts	6,948.7	7,358.7	3,501.3	3,719.4

The fair value of insurance contracts is comprised of the fair value of both unpaid claim liabilities and unearned premiums. The fair value of ceded reinsurance contracts is comprised of the fair value of reinsurers' share of unpaid claim liabilities and unearned premiums. Both reflect the time value of money through discounting, whereas the carrying values (including the reinsurers' share thereof) do not. The calculation of the fair value of unearned premiums includes acquisition expenses to reflect the deferral of these expenses at the inception of the insurance contract. The estimated fair value of insurance and ceded reinsurance contracts is determined by projecting the expected future cash flows of the contracts, selecting the appropriate interest rates, and applying the resulting discount factors to the expected future cash flows. The difference between the sum of the undiscounted expected future cash flows and the sum of the discounted expected future cash flows represents the time value of money. A margin for risk and uncertainty is added to the discounted cash flows to reflect the volatility of the lines of business written, quantity of reinsurance purchased, credit quality of reinsurers and the possibility of future changes in interest rates.

The table that follows illustrates the potential impact of interest rate fluctuations on the fair value of the company's insurance and reinsurance contracts:

	December 31, 2017		December 31, 2016
Change in interest rates	Fair value of insurance contracts	Fair value of reinsurance contracts	Fair value of insurance contracts	Fair value of reinsurance contracts
100 basis point increase	32,820.7	6,764.1	21,973.4	3,425.7
100 basis point decrease	34,877.5	7,147.6	23,274.9	3,582.4

Insurance Contract Receivables

Insurance contract receivables were comprised as follows:

	December 31, 2017			December 31, 2016
Insurance premiums receivable		2,752.3			1,906.2
Reinsurance premiums receivable		1,086.4			788.8
Funds withheld receivable		659.8			181.8
Other		218.7			68.3
Provision for uncollectible balances		(30.3	)		(27.6	)
		4,686.9			2,917.5

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

	Insurance premiums receivable				Reinsurance premiums receivable
	2017		2016		2017		2016
Balance – January 1	1,906.2		1,677.1		788.8		659.5
Gross premiums written	9,329.9		6,930.2		2,877.6		2,604.1
Premiums collected	(8,075.2	)	(6,050.5	)	(2,323.3	)	(1,876.5	)
Recovery (impairments)	0.5		(1.6	)	(0.7	)	(1.2	)
Amounts due to brokers and agents	(932.3	)	(707.8	)	(686.4	)	(581.2	)
Acquisitions of subsidiaries (note 23)	604.1		54.7		445.2		0.8
Divestiture of subsidiary (note 23)	(64.7	)	—		(48.5	)	—
Foreign exchange effect and other	(16.2	)	4.1		33.7		(16.7	)
Balance – December 31	2,752.3		1,906.2		1,086.4		788.8

XML

Reinsurance

12 Months Ended

Dec. 31, 2017

Insurance Contracts [Abstract]

Reinsurance

Reinsurance

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

	December 31, 2017				December 31, 2016
	Gross recoverable from reinsurers	Provision for uncollectible reinsurance(1)		Recoverable from reinsurers	Gross recoverable from reinsurers	Provision for uncollectible reinsurance(1)		Recoverable from reinsurers
Provision for losses and loss adjustment expenses	6,216.2	(26.5	)	6,189.7	3,210.0	(30.4	)	3,179.6
Reinsurers’ share of paid losses	593.7	(139.9	)	453.8	432.2	(141.3	)	290.9
Provision for unearned premiums	1,169.0	—		1,169.0	539.8	—		539.8
	7,978.9	(166.4	)	7,812.5	4,182.0	(171.7	)	4,010.3
Current				3,418.6				1,846.6
Non-current				4,393.9				2,163.7
				7,812.5				4,010.3

(1) The company's management of credit risk associated with its reinsurance recoverables is discussed in note 24.

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

	2017
	Paidlosses		Unpaidlosses		Unearned premiums			Provision for uncollectible reinsurance		Recoverable from reinsurers
Balance – January 1, 2017	432.2		3,210.0			539.8		(171.7	)		4,010.3
Reinsurers’ share of losses paid to insureds	1,330.7		(1,330.7	)		—		—			—
Reinsurance recoveries received	(1,314.0	)	—			—		—			(1,314.0	)
Reinsurers’ share of unpaid losses and premiums earned	—		2,367.1			(2,100.6	)	—			266.5
Premiums ceded to reinsurers	—		—			2,224.0		—			2,224.0
Change in provision, recovery or write-off of impaired balances	(0.2	)	0.7			—		7.2			7.7
Acquisitions of subsidiaries (note 23)	162.7		2,115.2			586.0		—			2,863.9
Divestiture of subsidiary (note 23)	(29.0	)	(237.8	)		(86.8	)	0.1			(353.5	)
Foreign exchange effect and other	11.3		91.7			6.6		(2.0	)		107.6
Balance – December 31, 2017	593.7		6,216.2			1,169.0		(166.4	)		7,812.5

	2016
	Paidlosses		Unpaidlosses		Unearned premiums			Provision for uncollectible reinsurance		Recoverable from reinsurers
Balance – January 1, 2016	419.4		3,259.8			398.7		(187.0	)		3,890.9
Reinsurers’ share of losses paid to insureds	1,018.3		(1,018.3	)		—		—			—
Reinsurance recoveries received	(1,017.4	)	—			—		—			(1,017.4	)
Reinsurers’ share of unpaid losses and premiums earned	—		952.1			(1,347.5	)	—			(395.4	)
Premiums ceded to reinsurers	—		—			1,445.9		—			1,445.9
Change in provision, recovery or write-off of impaired balances	0.7		(11.3	)		—		15.5			4.9
Acquisitions of subsidiaries (note 23)	11.5		65.0			32.3		—			108.8
Foreign exchange effect and other	(0.3	)	(37.3	)		10.4		(0.2	)		(27.4	)
Balance – December 31, 2016	432.2		3,210.0			539.8		(171.7	)		4,010.3

Commission income earned on premiums ceded to reinsurers in 2017 of $347.1 (2016 - $267.4) is included in commissions, net in the consolidated statement of earnings.

XML

Insurance Contract Receivables

12 Months Ended

Dec. 31, 2017

Insurance Contracts [Abstract]

Insurance Contract Receivables

Insurance Contract Liabilities

	December 31, 2017			December 31, 2016
	Gross	Ceded	Net	Gross	Ceded	Net
Provision for unearned premiums	5,951.7	1,169.0	4,782.7	3,740.4	539.8	3,200.6
Provision for losses and loss adjustment expenses	28,610.8	6,189.7	22,421.1	19,481.8	3,179.6	16,302.2
Total insurance contract liabilities	34,562.5	7,358.7	27,203.8	23,222.2	3,719.4	19,502.8
Current	13,405.0	2,975.9	10,429.1	9,013.9	1,586.8	7,427.1
Non-current	21,157.5	4,382.8	16,774.7	14,208.3	2,132.6	12,075.7
	34,562.5	7,358.7	27,203.8	23,222.2	3,719.4	19,502.8

At December 31, 2017 the company's net provision for losses and loss adjustment expenses of $22,421.1 (December 31, 2016 - $16,302.2) were comprised of case reserves of $9,731.5 and IBNR of $12,689.6 (December 31, 2016 - $7,537.2 and $8,765.0).

Provision for unearned premiums

Changes in the provision for unearned premiums for the years ended December 31 were as follows:

	2017		2016
Provision for unearned premiums – January 1	3,740.4		3,284.8
Gross premiums written	12,207.5		9,534.3
Less: gross premiums earned	(11,822.0	)	(9,209.7	)
Acquisitions of subsidiaries (note 23)	1,906.2		111.1
Divestiture of subsidiary (note 23)	(157.9	)	—
Foreign exchange effect and other	77.5		19.9
Provision for unearned premiums - December 31	5,951.7		3,740.4

Provision for losses and loss adjustment expenses

Changes in the provision for losses and loss adjustment expenses for the years ended December 31 were as follows:

	2017		2016
Provision for losses and loss adjustment expenses – January 1	19,481.8		19,816.4
Decrease in estimated losses and expenses for claims occurring in the prior years	(218.8	)	(559.8	)
Losses and expenses for claims occurring in the current year	9,736.5		6,247.8
Paid on claims occurring during:
the current year	(2,263.9	)	(1,595.6	)
the prior years	(5,526.0	)	(4,441.8	)
Acquisitions of subsidiaries (note 23)	7,377.6		143.1
Divestiture of subsidiary (note 23)	(546.6	)	—
Foreign exchange effect and other	570.2		(128.3	)
Provision for losses and loss adjustment expenses – December 31	28,610.8		19,481.8

Development of insurance losses, gross

The development of insurance liabilities illustrates the estimation uncertainty associated with these liabilities and provides a measure of the company's ability to estimate the ultimate value of claims. The loss development table which follows shows the provision for losses and loss adjustment expenses at the end of each calendar year, the cumulative payments made in respect of those reserves in subsequent years and the re-estimated amount of each calendar year's provision for losses and loss adjustment expenses as at December 31, 2017.

	Calendar year
	2008		2009		2010	2011	2012	2013	2014	2015		2016		2017
Provision for losses and loss adjustment expenses	14,467.2		14,504.8		16,049.3	17,232.2	19,648.8	19,212.8	17,749.1	19,816.4		19,481.8		28,610.8
Less: CTR Life(1)	34.9		27.6		25.3	24.2	20.6	17.9	15.2	14.2		12.8		8.7
	14,432.3		14,477.2		16,024.0	17,208.0	19,628.2	19,194.9	17,733.9	19,802.2		19,469.0		28,602.1
Cumulative payments as of:
One year later	3,136.0		3,126.6		3,355.9	3,627.6	4,323.5	4,081.1	3,801.6	4,441.4		4,608.0
Two years later	5,336.4		5,307.6		5,441.4	6,076.7	7,153.1	6,787.6	6,364.5	7,283.6
Three years later	7,070.7		6,846.3		7,063.1	7,920.3	9,148.0	8,775.5	8,172.7
Four years later	8,318.7		7,932.7		8,333.3	9,333.4	10,702.8	10,212.4
Five years later	9,189.1		8,936.9		9,327.0	10,458.7	11,783.3
Six years later	10,039.4		9,721.1		10,202.6	11,263.6
Seven years later	10,705.5		10,456.1		10,823.4
Eight years later	11,379.9		10,975.6
Nine years later	11,857.8
Reserves re-estimated as of:
One year later	14,746.0		14,616.0		15,893.8	17,316.4	19,021.2	18,375.6	16,696.4	19,169.3		19,343.1
Two years later	14,844.4		14,726.6		15,959.7	17,013.6	18,529.4	17,475.0	16,269.2	18,973.6
Three years later	14,912.4		14,921.6		15,705.6	16,721.0	17,820.5	17,307.9	16,114.0
Four years later	15,127.5		14,828.9		15,430.4	16,233.9	17,735.5	17,287.2
Five years later	15,091.0		14,663.1		15,036.2	16,269.6	17,830.5
Six years later	15,011.7		14,433.0		15,099.0	16,331.8
Seven years later	14,873.6		14,551.5		15,252.1
Eight years later	15,028.8		14,744.2
Nine years later	15,231.4
Favourable (unfavourable) development	(799.1	)	(267.0	)	771.9	876.2	1,797.7	1,907.7	1,619.9	828.6		125.9
Comprised of favourable (unfavourable):
Effect of foreign currency translation	(317.7	)	82.0		264.2	265.1	575.6	476.0	248.5	(252.3	)	(205.7	)
Loss reserve development	(481.4	)	(349.0	)	507.7	611.1	1,222.1	1,431.7	1,371.4	1,080.9		331.6
	(799.1	)	(267.0	)	771.9	876.2	1,797.7	1,907.7	1,619.9	828.6		125.9

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

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

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

Favourable loss reserve development in calendar year 2017 of $331.6 in the table above was principally comprised of favourable loss emergence on the more recent accident years, partially offset by adverse development primarily relating to asbestos and other latent reserves.

Development of losses and loss adjustment expenses for asbestos

A number of the company's subsidiaries wrote general liability policies and reinsurance prior to their acquisition by the company under which policyholders continue to present asbestos-related injury claims. The vast majority of these claims are presented under policies written many years ago and reside primarily within the run-off group.

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

The following is an analysis of the changes which have occurred in the company's provision for losses and loss adjustment expenses related to asbestos exposure on a gross and net basis for the years ended December 31:

	2017				2016
	Gross		Net		Gross		Net
Provision for asbestos claims and loss adjustment expenses - January 1	1,347.7		1,065.5		1,381.0		1,043.8
Losses and loss adjustment expenses incurred	153.0		141.8		219.9		218.7
Losses and loss adjustment expenses paid	(208.6	)	(174.0	)	(253.2	)	(197.0	)
Provision for asbestos claims and loss adjustment expenses - December 31	1,292.1		1,033.3		1,347.7		1,065.5

Fair Value

The estimated fair value of insurance and reinsurance contracts is as follows:

	December 31, 2017		December 31, 2016
	Fair value	Carrying value	Fair value	Carrying value
Insurance contracts	33,807.2	34,562.5	22,598.3	23,222.2
Ceded reinsurance contracts	6,948.7	7,358.7	3,501.3	3,719.4

The fair value of insurance contracts is comprised of the fair value of both unpaid claim liabilities and unearned premiums. The fair value of ceded reinsurance contracts is comprised of the fair value of reinsurers' share of unpaid claim liabilities and unearned premiums. Both reflect the time value of money through discounting, whereas the carrying values (including the reinsurers' share thereof) do not. The calculation of the fair value of unearned premiums includes acquisition expenses to reflect the deferral of these expenses at the inception of the insurance contract. The estimated fair value of insurance and ceded reinsurance contracts is determined by projecting the expected future cash flows of the contracts, selecting the appropriate interest rates, and applying the resulting discount factors to the expected future cash flows. The difference between the sum of the undiscounted expected future cash flows and the sum of the discounted expected future cash flows represents the time value of money. A margin for risk and uncertainty is added to the discounted cash flows to reflect the volatility of the lines of business written, quantity of reinsurance purchased, credit quality of reinsurers and the possibility of future changes in interest rates.

The table that follows illustrates the potential impact of interest rate fluctuations on the fair value of the company's insurance and reinsurance contracts:

	December 31, 2017		December 31, 2016
Change in interest rates	Fair value of insurance contracts	Fair value of reinsurance contracts	Fair value of insurance contracts	Fair value of reinsurance contracts
100 basis point increase	32,820.7	6,764.1	21,973.4	3,425.7
100 basis point decrease	34,877.5	7,147.6	23,274.9	3,582.4

Insurance Contract Receivables

Insurance contract receivables were comprised as follows:

	December 31, 2017			December 31, 2016
Insurance premiums receivable		2,752.3			1,906.2
Reinsurance premiums receivable		1,086.4			788.8
Funds withheld receivable		659.8			181.8
Other		218.7			68.3
Provision for uncollectible balances		(30.3	)		(27.6	)
		4,686.9			2,917.5

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

	Insurance premiums receivable				Reinsurance premiums receivable
	2017		2016		2017		2016
Balance – January 1	1,906.2		1,677.1		788.8		659.5
Gross premiums written	9,329.9		6,930.2		2,877.6		2,604.1
Premiums collected	(8,075.2	)	(6,050.5	)	(2,323.3	)	(1,876.5	)
Recovery (impairments)	0.5		(1.6	)	(0.7	)	(1.2	)
Amounts due to brokers and agents	(932.3	)	(707.8	)	(686.4	)	(581.2	)
Acquisitions of subsidiaries (note 23)	604.1		54.7		445.2		0.8
Divestiture of subsidiary (note 23)	(64.7	)	—		(48.5	)	—
Foreign exchange effect and other	(16.2	)	4.1		33.7		(16.7	)
Balance – December 31	2,752.3		1,906.2		1,086.4		788.8

XML

Deferred Premium Acquisition Costs

12 Months Ended

Dec. 31, 2017

Insurance Contracts [Abstract]

Deferred Premium Acquisition Costs

Deferred Premium Acquisition Costs

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

	2017		2016
Balance – January 1	693.1		532.7
Premium acquisition costs deferred	2,380.2		1,851.1
Amortization	(2,140.7	)	(1,696.2	)
Divestiture of subsidiary (note 23)	(15.8	)	—
Foreign exchange effect and other	10.7		5.5
Balance – December 31	927.5		693.1

XML

Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2017

Disclosure of reconciliation of changes in intangible assets and goodwill [abstract]

Goodwill and Intangible Assets

Goodwill and Intangible Assets

Goodwill and intangible assets were comprised as follows:

	Goodwill			Intangible assets						Total
			Lloyd's participation rights(1)		Customer and broker relationships		Brand  names(1)	Computer software and other
Balance - January 1, 2017	1,633.7			420.5	431.8		1,014.4	347.1		3,847.5
Additions	1,212.3			87.4	672.8		87.5	172.9		2,232.9
Disposals	(1.7	)		—	—		—	(0.2	)	(1.9	)
Amortization and impairment	(0.1	)		—	(67.9	)	—	(91.5	)	(159.5	)
Foreign exchange effect and other	60.5			—	11.1		69.5	12.4		153.5
Balance - December 31, 2017	2,904.7			507.9	1,047.8		1,171.4	440.7		6,072.5
Gross carrying amount	2,911.8			507.9	1,266.7		1,171.4	767.7		6,625.5
Accumulated amortization	—			—	(218.9	)	—	(311.5	)	(530.4	)
Accumulated impairment	(7.1	)		—	—		—	(15.5	)	(22.6	)
	2,904.7			507.9	1,047.8		1,171.4	440.7		6,072.5

	Goodwill			Intangible assets						Total
			Lloyd's participation rights(1)		Customer and broker relationships		Brand  names(1)	Computer software and other
Balance - January 1, 2016	1,428.2			420.5	385.6		723.3	257.3		3,214.9
Additions	216.0			—	73.8		280.9	163.4		734.1
Disposals	—			—	—		—	(0.1	)	(0.1	)
Amortization and impairment	(7.0	)		—	(35.3	)	—	(68.9	)	(111.2	)
Foreign exchange effect and other	(3.5	)		—	7.7		10.2	(4.6	)	9.8
Balance - December 31, 2016	1,633.7			420.5	431.8		1,014.4	347.1		3,847.5
Gross carrying amount	1,640.7			420.5	578.6		1,014.4	599.5		4,253.7
Accumulated amortization	—			—	(146.8	)	—	(237.7	)	(384.5	)
Accumulated impairment	(7.0	)		—	—		—	(14.7	)	(21.7	)
	1,633.7			420.5	431.8		1,014.4	347.1		3,847.5

(1) Not subject to amortization.

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

	December 31, 2017			December 31, 2016
	Goodwill	Intangible assets	Total	Goodwill	Intangible assets	Total
Allied World	938.9	763.7	1,702.6	—	—	—
Cara	222.3	1,073.6	1,295.9	211.5	990.3	1,201.8
Brit	154.3	571.3	725.6	154.3	576.6	730.9
Zenith National	317.6	115.5	433.1	317.6	121.4	439.0
Crum & Forster	188.8	129.4	318.2	186.5	145.1	331.6
Quess	229.0	21.8	250.8	23.7	18.5	42.2
Thomas Cook India	150.0	54.2	204.2	115.3	50.1	165.4
Northbridge	95.7	77.1	172.8	88.3	64.5	152.8
OdysseyRe	119.7	51.6	171.3	119.7	55.2	174.9
AMAG	44.7	110.2	154.9	72.6	63.0	135.6
All other(1)	443.7	199.4	643.1	344.2	129.1	473.3
	2,904.7	3,167.8	6,072.5	1,633.7	2,213.8	3,847.5

(1) Comprised primarily of balances related to NCML, Fairchem, Mosaic Capital, Boat Rocker, The Keg, U.S. Run-off and Pethealth.

At December 31, 2017 goodwill and intangible assets were comprised primarily of amounts arising on the acquisitions of Allied World and Manipal (by Quess) during 2017, St-Hubert and Original Joe's (both by Cara) during 2016, Cara and Brit during 2015, Quess during 2013, Thomas Cook India during 2012, and Zenith National during 2010. Impairment tests for goodwill and intangible assets not subject to amortization were completed in2017 and it was concluded that no impairments had occurred. Allied World's recoverable amount exceeded its carrying value (inclusive of goodwill), but the excess was not significant as a result of being acquired only on July 6, 2017.

When testing for impairment, the recoverable amount of each CGU or group of CGUs was based on the higher of fair value less costs of disposal or value in use, determined on the basis of market prices where available, or discounted cash flow models. Cash flow projections covering a five year period were derived from financial budgets approved by management. Cash flows beyond the five year period were extrapolated using estimated growth rates which do not exceed the long term average historic growth rate for the business in which each CGU operates.

A number of other assumptions and estimates including premium volumes, investment returns, revenues, expenses and working capital requirements were required to be incorporated into the discounted cash flow models. The forecasts were based on the best estimates of future premiums or revenues and operating expenses using historical trends, general geographical market conditions, industry trends and forecasts and other available information. These assumptions and estimates were reviewed by the applicable CGU's management and by head office management. The cash flow forecasts are adjusted by applying appropriate after-tax discount rates within a range of 7.8% to 15.4% for insurance business and 9.2% to 21.3% for non-insurance business. A long term investment return of 5.0% was applied to the investment portfolios of insurance businesses. The weighted average annual growth rate used to extrapolate cash flows beyond five years for the majority of the CGUs was 3.0%.

XML

Other Assets

12 Months Ended

Dec. 31, 2017

Subclassifications of assets, liabilities and equities [abstract]

Other Assets

Other Assets

Other assets were comprised as follows:  

	December 31, 2017			December 31, 2016
	Insurance and reinsurance companies	Non-insurance companies	Total	Insurance and reinsurance companies	Non-insurance companies	Total
Premises and equipment	403.0	847.3	1,250.3	251.9	639.6	891.5
Other reporting segment investment properties (note 23)	—	1,168.4	1,168.4	—	—	—
Other reporting segment sales receivables	—	470.0	470.0	—	295.2	295.2
Other reporting segment inventories	—	320.7	320.7	—	235.5	235.5
Receivables for securities sold but not yet settled	207.3	—	207.3	15.6	26.5	42.1
Prepaid expenses	83.7	102.5	186.2	59.7	64.4	124.1
Income taxes refundable	83.1	63.9	147.0	174.7	28.0	202.7
Accrued interest and dividends	105.2	16.2	121.4	97.3	9.5	106.8
Deferred compensation plans	67.1	—	67.1	63.4	—	63.4
Pension surplus (note 21)	49.1	—	49.1	50.8	—	50.8
Other	565.5	275.3	840.8	307.3	199.0	506.3
	1,564.0	3,264.3	4,828.3	1,020.7	1,497.7	2,518.4
Current	788.5	1,069.0	1,857.5	487.5	792.9	1,280.4
Non-current	775.5	2,195.3	2,970.8	533.2	704.8	1,238.0
	1,564.0	3,264.3	4,828.3	1,020.7	1,497.7	2,518.4

XML

Accounts Payable and Accrued Liabilities

12 Months Ended

Dec. 31, 2017

Subclassifications of assets, liabilities and equities [abstract]

Accounts Payable and Accrued Liabilities

Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities were comprised as follows:

	December 31, 2017			December 31, 2016
	Insurance and reinsurance companies	Non-insurance companies	Total	Insurance and reinsurance companies	Non-insurance companies	Total
Other reporting segment payables related to cost of sales	—	530.8	530.8	—	416.7	416.7
Payable to reinsurers	428.2	—	428.2	498.3	—	498.3
Salaries and employee benefit liabilities	296.8	77.3	374.1	218.3	31.2	249.5
Deferred gift card, hospitality and other revenue	27.3	294.7	322.0	20.9	263.4	284.3
Pension and post retirement liabilities (note 21)	227.1	23.7	250.8	196.2	20.7	216.9
Amounts withheld and accrued taxes	205.2	43.4	248.6	169.7	48.5	218.2
Ceded deferred premium acquisition costs	161.4	—	161.4	84.7	—	84.7
Accrued rent, storage and facilities costs	33.1	59.7	92.8	17.1	47.7	64.8
Amounts payable to agents and brokers	90.4	0.1	90.5	30.5	0.1	30.6
Accrued commissions	79.8	0.4	80.2	85.4	—	85.4
Accrued premium taxes	66.6	—	66.6	55.2	—	55.2
Accrued interest expense	48.0	3.4	51.4	41.4	2.1	43.5
Accrued legal and professional fees	37.7	10.7	48.4	29.6	8.5	38.1
Amounts payable for securities purchased but not yet settled	18.2	—	18.2	14.4	—	14.4
Administrative and other	621.7	243.8	865.5	453.3	134.7	588.0
	2,341.5	1,288.0	3,629.5	1,915.0	973.6	2,888.6
Current	1,429.7	1,019.7	2,449.4	1,174.7	770.8	1,945.5
Non-current	911.8	268.3	1,180.1	740.3	202.8	943.1
	2,341.5	1,288.0	3,629.5	1,915.0	973.6	2,888.6

XML

Borrowings

12 Months Ended

Dec. 31, 2017

Borrowings [abstract]

Borrowings

Borrowings

	December 31, 2017			December 31, 2016
	Principal	Carrying value(a)	Fair value(b)	Principal	Carrying value(a)	Fair value(b)
Borrowings - holding company
Fairfax unsecured notes:
7.375% due April 15, 2018(e)	144.2	144.2	146.4	144.2	144.2	153.8
7.50% due August 19, 2019 (Cdn$400.0)(d)(1)(7)	—	—	—	298.3	297.0	334.4
7.25% due June 22, 2020 (Cdn$275.0)(d)(7)	213.3	212.7	235.6	205.1	204.2	233.6
5.80% due May 15, 2021(d)	500.0	498.0	534.1	500.0	497.4	538.9
6.40% due May 25, 2021 (Cdn$400.0)(d)(7)	315.7	314.4	349.4	298.3	296.5	337.3
5.84% due October 14, 2022 (Cdn$450.0)(d)	359.2	362.5	397.2	335.6	339.6	373.9
4.50% due March 22, 2023 (Cdn$400.0)	319.2	316.8	333.5	298.3	295.4	310.6
4.875% due August 13, 2024(d)	300.0	296.2	313.4	300.0	295.6	297.8
4.95% due March 3, 2025 (Cdn$350.0)(d)	279.3	275.5	297.1	261.0	256.6	272.6
8.30% due April 15, 2026(e)	91.8	91.6	116.3	91.8	91.6	109.9
4.70% due December 16, 2026 (Cdn$450.0)	359.2	356.6	371.7	335.6	332.7	338.9
4.25% due December 6, 2027 (Cdn$650.0)(3)	518.8	516.2	514.7	—	—	—
7.75% due July 15, 2037(e)	91.3	90.4	114.1	91.3	90.4	104.2
Revolving credit facility	—	—	—	200.0	200.0	200.0
Purchase consideration payable due 2017 and other(2)	—	—	—	131.3	131.3	131.3
	3,492.0	3,475.1	3,723.5	3,490.8	3,472.5	3,737.2
Borrowings - insurance and reinsurance companies
Allied World senior notes:
5.50% due November 1, 2020	300.0	320.4	320.0	—	—	—
4.35% due October 29, 2025	500.0	508.4	507.3	—	—	—
Allied World revolving credit facility and other borrowings	45.0	49.2	49.2	—	—	—
OdysseyRe floating rate unsecured senior notes due 2021	90.0	89.8	93.0	90.0	89.8	94.1
Brit 6.625% subordinated notes due December 9, 2030 (£135.0)	182.6	188.5	199.0	166.8	175.9	169.0
Brit floating rate revolving credit facility(4)	45.0	45.0	45.0	—	—	—
First Mercury trust preferred securities due 2036 and 2037	41.4	41.4	41.4	41.4	41.4	41.4
Zenith National 8.55% debentures due August 1, 2028(d)	38.4	38.2	38.2	38.4	38.2	38.2
Advent floating rate subordinated notes due June 3, 2035(d)	48.4	47.1	47.8	46.7	45.4	41.5
Advent floating rate unsecured senior notes due 2026(d)	46.0	45.0	46.0	46.0	44.8	46.0
	1,336.8	1,373.0	1,386.9	429.3	435.5	430.2
Borrowings - non-insurance companies(c)
Fairfax India floating rate term loan due July 11, 2018(6)	400.0	400.0	400.0	225.0	223.8	223.8
Fairfax India subsidiary borrowings	186.1	186.1	186.1	80.8	80.8	80.8
Fairfax Africa floating rate term loan due January 31, 2018(5)	150.0	150.0	150.0	—	—	—
Grivalia Properties term loans and revolving facility	160.4	160.4	160.4	—	—	—
Cara floating rate term loan due September 2, 2019 (Cdn$150.0)	119.7	119.3	119.3	111.9	111.4	111.4
Cara floating rate credit facility expiring September 2, 2021	182.8	181.7	181.7	180.5	179.1	179.1
The Keg 7.5% note due May 31, 2042 (Cdn$57.0)	45.5	45.5	45.5	42.5	42.5	42.5
The Keg floating rate revolving facility and term loan due July 2, 2020	31.9	31.7	31.7	20.9	20.7	20.7
Loans and revolving credit facilities primarily at floating rates	291.7	291.3	291.4	201.8	201.3	200.7
	1,568.1	1,566.0	1,566.1	863.4	859.6	859.0
Total debt	6,396.9	6,414.1	6,676.5	4,783.5	4,767.6	5,026.4

(a) Principal net of unamortized issue costs and discounts (premiums).

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

(c) These borrowings are non-recourse to the holding company.

(d) Redeemable at the issuer's option at any time at certain prices specified in the instrument's offering document.

(e) This debt has no provision for redemption prior to the contractual maturity date.

During 2017 the company and its subsidiaries completed the following debt transactions:

(1) On December 29, 2017 the company completed an early redemption of its remaining Cdn$388.4 principal amount 7.5% unsecured senior notes due August 19, 2019 for cash consideration of $340.6 (Cdn$430.6), including accrued interest, and recognized a loss on repurchase of long term debt of $26.0 (Cdn$32.8) in other expenses in the consolidated statement of earnings.

(2) On December 13, 2017 the company repaid $124.9 principal amount of purchase consideration payable upon maturity.

(3) On December 4, 2017 the company completed an underwritten public offering of Cdn$650.0 principal amount of 4.25% unsecured senior notes due December 6, 2027 at an issue price of 99.992 for net proceeds after discount, commissions and expenses of $509.5 (Cdn$646.8). Commissions and expenses of $2.4 (Cdn$3.1) were included as part of the carrying value of the notes. The notes are redeemable at any time prior to September 6, 2027, at the company's option, in whole or in part, at the greater of (i) a specified redemption price based on the then current yield of a Government of Canada bond with an equal term to maturity or (ii) par, and at any time on or after September 6, 2027 at par. The company has designated these senior notes as a hedge of a portion of its net investment in its Canadian subsidiaries.

(4) On November 29, 2017 Brit drew $45.0 on its revolving credit facility that was subsequently repaid on January 5, 2018.

(5) On August 31, 2017 Fairfax Africa entered into a $150.0 five-month floating rate term loan and a $153.9 (2 billion South African rand) non-revolving seven-month letter of credit facility with a Canadian chartered bank that required cash collateral of $150.0 and $162.0 respectively. On December 11, 2017 the letter of credit facility was terminated with the $162.0 cash collateral released on January 12, 2018. On January 31, 2018 Fairfax Africa extended the maturity of the $150.0 term loan to August 31, 2018.

(6) On March 31, 2017 Fairfax India repaid its floating rate secured term loan of $225.0. On July 11, 2017 Fairfax India entered into a $400.0 one-year floating rate term loan with a Canadian chartered bank and used a portion of the proceeds to fund an additional investment in Bangalore Airport (note 6).

(7) On March 15, 2017 the company closed its tender offers to purchase a targeted aggregate principal amount of up to Cdn$250.0 of certain of its outstanding senior notes. Pursuant to those tender offers, the company purchased principal amounts of $8.7, $5.8 and $3.3 of its notes due in 2019, 2020 and 2021 for cash consideration of $9.7, $6.6 and $3.7 respectively.

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

	2017					2016
	Holding company		Insurance and reinsurance companies	Non-insurance companies	Total	Holding company	Insurance and reinsurance companies		Non-insurance companies	Total
Balance – January 1	3,472.5		435.5	859.6	4,767.6	2,599.0	468.5		284.0	3,351.5
Net cash inflows (outflows) from issuances and repayments	(174.2	)	67.5	425.6	318.9	832.3	—		515.2	1,347.5
Non-cash changes:
Acquisitions (note 23)	—		860.5	221.5	1,082.0	—	—		60.4	60.4
Loss on redemption	28.6		—	—	28.6	—	—		—	—
Foreign exchange effect and other	148.2		9.5	59.3	217.0	41.2	(33.0	)	—	8.2
Balance – December 31	3,475.1		1,373.0	1,566.0	6,414.1	3,472.5	435.5		859.6	4,767.6

Principal repayments on borrowings are due as follows:

	2018	2019	2020	2021	2022	Thereafter	Total
Holding company	144.2	—	213.3	815.7	359.2	1,959.6	3,492.0
Insurance and reinsurance companies	5.0	—	345.0	90.0	—	896.8	1,336.8
Non-insurance companies	855.9	187.8	131.4	242.5	49.4	101.1	1,568.1
Total	1,005.1	187.8	689.7	1,148.2	408.6	2,957.5	6,396.9

Credit Facility - Holding company

On December 21, 2017 the company increased its unsecured revolving credit facility with a syndicate of lenders to $2.0 billion from $1.0 billion and extended the expiry to December 21, 2021 from May 11, 2019. The credit facility contains certain financial covenants that require the company to maintain a ratio of consolidated debt to consolidated capitalization of not more than 0.35:1 and consolidated shareholders’ equity attributable to shareholders of Fairfax of not less than $9.5 billion. At December 31, 2017 there were no amounts drawn on the credit facility and the company was in compliance with its covenants (consolidated debt to consolidated capitalization ratio of 0.24:1 and consolidated shareholders’ equity attributable to shareholders of Fairfax of $13.8 billion).

XML

Total Equity

12 Months Ended

Dec. 31, 2017

Share Capital, Reserves And Other Equity Interest [Abstract]

Total Equity

Total Equity

Equity attributable to shareholders of Fairfax

Authorized capital

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

Issued capital

Issued capital at December 31, 2017 included 1,548,000 (December 31, 2016 - 1,548,000) multiple voting shares and 27,904,801 (December 31, 2016 - 23,004,207) subordinate voting shares without par value prior to deducting 902,498 (December 31, 2016 - 659,411) subordinate voting shares reserved in treasury for share-based payment awards. The multiple voting shares are not traded.

Common stock

The number of shares outstanding was as follows:

	2017		2016
Subordinate voting shares – January 1	22,344,796		21,465,089
Issuances during the year	5,084,961		1,000,000
Repurchases for cancellation	(184,367	)	(30,732	)
Treasury shares acquired	(277,364	)	(130,075	)
Treasury shares reissued	34,277		40,514
Subordinate voting shares – December 31	27,002,303		22,344,796
Multiple voting shares – beginning and end of year	1,548,000		1,548,000
Interest in multiple and subordinate voting shares held through ownership interest in shareholder – beginning and end of year	(799,230	)	(799,230	)
Common stock effectively outstanding – December 31	27,751,073		23,093,566

During 2017 the company issued 5,084,961 subordinate voting shares, of which 5,075,894 shares with a fair value of $2,191.6 were issued pursuant to the acquisition of Allied World as described in note 23.

During 2017 the company repurchased for cancellation 184,367 subordinate voting shares (2016 - 30,732) under the terms of its normal course issuer bids at a cost of $96.2 (2016 - $14.1), of which $50.6 (2016 - $8.0) was charged to retained earnings. Subsequent to December 31, 2017 and up to March 9, 2018 the company repurchased for cancellation 20,000 subordinate voting shares under the terms of its normal course issuer bid at a cost of $9.9.

During 2017 the company repurchased for treasury 277,364 subordinate voting shares at a cost of $140.5 (2016 - 130,075 subordinate voting shares at a cost of $64.2) on the open market for use in its share-based payment awards. Subsequent to December 31, 2017 and up to March 9, 2018 the company repurchased for treasury 47,372 subordinate voting shares at a cost of $24.3 on the open market for use in its share-based payment awards.

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

Date of declaration	Date of record	Date of payment	Dividend per share	Total cash payment
January 3, 2018	January 18, 2018	January 25, 2018	$10.00	$283.2
January 4, 2017	January 19, 2017	January 26, 2017	$10.00	$237.4
January 5, 2016	January 20, 2016	January 27, 2016	$10.00	$227.8

Preferred stock

The number of preferred shares outstanding was as follows:

	Series C	Series D	Series E	Series F	Series G	Series H	Series I	Series J	Series K	Series M	Total
January 1, 2016	6,016,384	3,983,616	3,967,134	3,572,044	7,432,952	2,567,048	10,465,553	1,534,447	9,500,000	9,200,000	58,239,178
2016 activity:	—	—	—	—	—	—	—	—	—	—	—
December 31, 2016	6,016,384	3,983,616	3,967,134	3,572,044	7,432,952	2,567,048	10,465,553	1,534,447	9,500,000	9,200,000	58,239,178
2017 activity:	—	—	—	—	—	—	—	—	—	—	—
December 31, 2017	6,016,384	3,983,616	3,967,134	3,572,044	7,432,952	2,567,048	10,465,553	1,534,447	9,500,000	9,200,000	58,239,178

The carrying value of preferred shares outstanding was as follows:

	Series C	Series D	Series E	Series F	Series G	Series H	Series I	Series J	Series K	Series M	Total
January 1, 2016	136.7	90.5	90.8	81.8	175.3	60.6	251.6	36.9	231.7	179.0	1,334.9
2016 activity:
Other	—	—	—	—	—	—	—	—	—	0.6	0.6
December 31, 2016	136.7	90.5	90.8	81.8	175.3	60.6	251.6	36.9	231.7	179.6	1,335.5
2017 activity:	—	—	—	—	—	—	—	—	—	—	—
December 31, 2017	136.7	90.5	90.8	81.8	175.3	60.6	251.6	36.9	231.7	179.6	1,335.5

The terms of the company's cumulative five-year rate reset preferred shares at December 31, 2017 were as follows:

	Next possible redemption and conversion date(1)(2)	Number of shares outstanding	Stated capital			Liquidation preference per share	Fixed dividend rate per annum		Floating dividend rate per annum(3)
Series C	December 31, 2019	6,016,384	Cdn	$	150.4	Cdn $25.00	4.58	%	—
Series D	December 31, 2019	3,983,616	Cdn	$	99.6	Cdn $25.00	—		4.02	%
Series E	March 31, 2020	3,967,134	Cdn	$	99.2	Cdn $25.00	2.91	%	—
Series F	March 31, 2020	3,572,044	Cdn	$	89.3	Cdn $25.00	—		3.03	%
Series G	September 30, 2020	7,432,952	Cdn	$	185.8	Cdn $25.00	3.32	%	—
Series H	September 30, 2020	2,567,048	Cdn	$	64.2	Cdn $25.00	—		3.43	%
Series I	December 31, 2020	10,465,553	Cdn	$	261.6	Cdn $25.00	3.71	%	—
Series J	December 31, 2020	1,534,447	Cdn	$	38.4	Cdn $25.00	—		3.72	%
Series K	March 31, 2022	9,500,000	Cdn	$	237.5	Cdn $25.00	4.67	%	—
Series M	March 31, 2020	9,200,000	Cdn	$	230.0	Cdn $25.00	4.75	%	—

(1) Fixed and floating rate cumulative preferred shares are redeemable at the company's option at each stated redemption date and on each subsequent five-year anniversary date at Cdn$25.00 per share.

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

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

During 2017 the company paid aggregate preferred share dividends of $44.6 (2016 - $44.0).

Accumulated other comprehensive income (loss)

The amounts related to each component of accumulated other comprehensive income (loss) attributable to shareholders of Fairfax were as follows:

	December 31, 2017						December 31, 2016
	Pre-tax amount		Income tax (expense) recovery		After-tax amount		Pre-tax amount		Income tax (expense) recovery			After-tax amount
Items that may be subsequently reclassified to net earnings
Currency translation account	(166.6	)		2.8	(163.8	)	(356.6	)		(7.6	)	(364.2	)
Share of accumulated other comprehensive loss of associates, excluding share of net losses on defined benefit plans of associates	(22.0	)		0.5	(21.5	)	(157.1	)		26.3		(130.8	)
	(188.6	)		3.3	(185.3	)	(513.7	)		18.7		(495.0	)
Items that will not be subsequently reclassified to net earnings
Share of net losses on defined benefit plans of associates	(30.3	)		3.5	(26.8	)	(42.6	)		10.8		(31.8	)
Net losses on defined benefit plans	(60.9	)		8.9	(52.0	)	(28.0	)		6.9		(21.1	)
	(91.2	)		12.4	(78.8	)	(70.6	)		17.7		(52.9	)
Accumulated other comprehensive loss attributable to shareholders of Fairfax	(279.8	)		15.7	(264.1	)	(584.3	)		36.4		(547.9	)

Non-controlling interests

Non-controlling interests for the years ended December 31 were as follows:

								Net earnings (loss) attributable to non-controlling interests
		2017			2016			Year ended December 31,
Subsidiary	Domicile	Minority voting percentage		Carrying value	Minority voting percentage		Carrying value	2017		2016
Allied World(1)	Switzerland	32.6	%	1,229.4	—		—	(182.3	)	—
Fairfax India(2)	Canada	6.4	%	1,110.7	4.7	%	743.7	(59.9	)	24.4
Cara(3)	Canada	43.3	%	578.0	43.4	%	523.9	55.7		30.8
Grivalia Properties(4)	Greece	47.3	%	517.6	—		—	20.0		—
Brit(5)	U.K.	27.5	%	435.3	27.5	%	463.4	(19.1	)	50.4
Thomas Cook India(6)	India	32.4	%	391.2	32.3	%	139.6	28.2		2.4
Fairfax Africa(7)	Canada	1.2	%	191.6	—		—	4.3		—
All other	—			147.1			129.4	27.4		9.8
				4,600.9			2,000.0	(125.7	)	117.8

Pursuant to the transactions described in note 23:

(1) During the third quarter of 2017 the company acquired an indirect 67.4% equity interest in Allied World.

(2) The increase in carrying value of Fairfax India's non-controlling interests at December 31, 2017 compared to December 31, 2016 was primarily due to common shares issued as a result of Fairfax India's public offering and private placement on January 13, 2017, the acquisition of a 51.0% interest in Saurashtra Freight, the merger of Fairchem and Privi Organics, and the impact of foreign currency translation (principally the strengthening of the Indian rupee relative to the U.S. dollar), partially offset by non-controlling interests' share of net loss.

(3) The increase in carrying value of Cara's non-controlling interests at December 31, 2017 compared to December 31, 2016 was primarily due to net earnings and the impact of foreign currency translation (strengthening of the Canadian dollar relative to the U.S. dollar), partially offset by repurchase of shares by Cara and dividends paid.

(4) On July 4, 2017 the company increased its equity interest in Grivalia Properties to 52.6% and commenced consolidating Grivalia Properties in the Other reporting segment.

(5) On March 3, 2017 Brit paid a dividend of $45.8 to its minority shareholder (OMERS).

(6) The increase in carrying value of Thomas Cook India's non-controlling interests at December 31, 2017 compared to December 31, 2016 was primarily due to a reduction in the company's indirect ownership of Quess from 42.1% to 33.1%.

(7) On February 17, 2017 the company acquired a 64.2% equity interest in Fairfax Africa.

Non-controlling interest voting percentages in the table above are consistent with economic ownership for each subsidiary at December 31, 2017 except for Fairfax India, Cara, and Fairfax Africa whose non-controlling interest economic ownership percentages were 69.8%, 59.8%, and 35.8% respectively.

Other net changes in capitalization

Other net changes in capitalization on the consolidated statement of changes in equity generally reflect the impact of capital transactions and changes in ownership interests of consolidated subsidiaries where the company maintains control after the transaction. During 2017 other net changes in capitalization increased both equity attributable to shareholders of Fairfax ($236.6) and non-controlling interests ($184.0), and principally reflected the impact of capital transactions and changes in ownership interest related to Fairfax India's public offering and private placement, Thomas Cook India's partial sale of Quess shares, Quess' private placement of its own shares, shares issued by Quess to acquire Manipal, and the acquisition of the remaining shares of Allied World AG. See note 23 for details.

XML

Earnings per Share

12 Months Ended

Dec. 31, 2017

Earnings per share [abstract]

Earnings per Share

Earnings per Share

Net earnings (loss) per share is calculated based upon the weighted average common shares outstanding as follows:

	2017			2016
Net earnings (loss) attributable to shareholders of Fairfax	1,740.6			(512.5		)
Preferred share dividends	(44.6		)	(44.0		)
Net earnings (loss) attributable to common shareholders – basic and diluted	1,696.0			(556.5		)
Weighted average common shares outstanding – basic	25,411,246			23,017,184
Share-based payment awards	689,571			—
Weighted average common shares outstanding – diluted	26,100,817			23,017,184
Net earnings (loss) per common share – basic		$66.74			($24.18	)
Net earnings (loss) per common share – diluted		$64.98			($24.18	)

Share-based payment awards of 567,450 were not included in the calculation of net loss per diluted common share for the year ended December 31, 2016 as inclusion of the awards would be anti-dilutive.

XML

Income Taxes

12 Months Ended

Dec. 31, 2017

Income Taxes [Abstract]

Income Taxes

Income Taxes

The company’s provision (recovery) for income taxes for the years ended December 31 were as follows:

	2017		2016
Current income tax
Current year expense	200.6		95.1
Adjustments to prior years’ income taxes	(22.6	)	19.1
	178.0		114.2
Deferred income tax
Origination and reversal of temporary differences	(22.5	)	(265.6	)
Adjustments to prior years' deferred income taxes	24.3		2.9
Change in tax rate related to U.S. tax reform	222.4		—
Other	6.1		(11.1	)
	230.3		(273.8	)
Provision (recovery) for income taxes	408.3		(159.6	)

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

	2017								2016
	Canada(1)		U.S.(2)	U.K.(3)		Other(4)		Total	Canada(1)		U.S.(2)		U.K.(3)		Other(4)	Total
Earnings (loss) before income taxes	(141.3	)	543.5	(72.1	)	1,693.1		2,023.2	(258.5	)	(428.4	)	42.2		90.4	(554.3	)
Provision (recovery) for income taxes	52.9		420.5	(24.6	)	(40.5	)	408.3	69.6		(234.6	)	(23.7	)	29.1	(159.6	)
Net earnings (loss)	(194.2	)	123.0	(47.5	)	1,733.6		1,614.9	(328.1	)	(193.8	)	65.9		61.3	(394.7	)

(1) Includes Fairfax India and Fairfax Africa.

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

(3) Principally comprised of Brit, Riverstone UK, Advent and other associated holding company results.

(4) Includes India, Asia, non-U.K. European companies and Allied World (acquired on July 6, 2017; notwithstanding that certain operations of Allied World conduct business in the U.S. and the U.K., the majority of Allied World's net earnings (loss) is sourced from its Bermuda operations).

The decrease in the pre-tax loss in Canada in 2017 compared to 2016 primarily reflected an improvement in investment results. The increase in pre-tax earnings in the U.S. in 2017 compared to 2016 primarily reflected an improvement in investment results, partially offset by weaker underwriting results (reflecting increased catastrophe losses). The increase in the pre-tax loss in the U.K. in 2017 compared to 2016 primarily reflected weaker underwriting results (reflecting increased catastrophe losses). The increase in pre-tax earnings in Other in 2017 compared to 2016 primarily reflected the gains on sale of First Capital and a portion of the company's investment in ICICI Lombard, partially offset by the underwriting loss at Allied World (reflecting catastrophe losses).

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

	2017		2016
Canadian statutory income tax rate	26.5	%	26.5	%
Provision (recovery) for income taxes at the Canadian statutory income tax rate	536.1		(146.9	)
Tax rate differential on income and losses incurred outside Canada	(445.3	)	(65.3	)
Non-taxable investment income	(116.2	)	(74.7	)
Change in unrecorded tax benefit of losses and temporary differences	210.2		117.5
Change in tax rate for deferred income taxes related to U.S. tax reform	222.4		—
Change in tax rate for deferred income taxes (excluding U.S. tax reform)	2.2		(15.1	)
Other including permanent differences	(15.6	)	11.3
Foreign exchange effect	12.8		(8.4	)
Provision relating to prior years	1.7		22.0
Provision (recovery) for income taxes	408.3		(159.6	)

The tax rate differential on income and losses incurred outside Canada of $445.3 in 2017 principally reflected the impact of net gains on the sales of ICICI Lombard and First Capital which were not taxable in the jurisdictions in which they were held (income tax rate benefits of $246.5 in Mauritius and $269.9 in Barbados respectively), partially offset by income in the U.S. that is taxed at rates higher than the Canadian statutory rate and losses at Allied World and in the U.K. that are taxed at rates lower than the Canadian statutory rate. The tax rate differential on income and losses incurred outside Canada of $65.3 in 2016 principally reflected income in the U.K. that is taxed at rates lower than the Canadian statutory rate and losses in the U.S. which are taxed at rates higher than the Canadian statutory rate.

Non-taxable investment income of $116.2 in 2017 (2016 - $74.7) was principally comprised of dividend income, non-taxable interest income, the 50% of net capital gains which are not taxable in Canada and share of profit of associates in certain jurisdictions.

The change in unrecorded tax benefit of losses and temporary differences of $210.2 in 2017 principally reflected deferred tax assets in Canada of $70.8 (2016 - $117.9) that were not recorded (as it was considered not probable that those losses could be utilized) and a reduction in tax credits and operating losses capitalized in prior years in the U.S. of $89.7 (2016 - nil), primarily driven by the effects of U.S. tax reform as discussed later in this note.

The change in tax rate related to U.S. tax reform of $222.4 (2016 - nil) principally reflected the impact of the reduction of the U.S. federal corporate income tax rate on the net deferred income tax asset. Other including permanent differences included an income tax rate benefit of $7.4 related to the impact of the transition tax under U.S. tax reform. The impact of U.S. tax reform on the company's consolidated financial statements is discussed later in this note.

Income taxes refundable and payable were as follows:

	December 31, 2017			December 31, 2016
Income taxes refundable		147.0			202.7
Income taxes payable		(95.6	)		(35.4	)
Net income taxes refundable		51.4			167.3

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

	2017		2016
Balance - January 1	167.3		12.1
Amounts recorded in the consolidated statements of earnings	(178.0	)	(114.2	)
Payments made during the year	33.4		267.1
Acquisitions of subsidiaries (note 23)	18.8		3.9
Foreign exchange effect and other	9.9		(1.6	)
Balance - December 31	51.4		167.3

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

	2017
	Operating and capital losses		Provision for losses and loss adjustment expenses		Provision for unearned premiums		Deferred premium acquisition costs		Intangible assets		Investments		Tax credits		Other		Total
Balance - January 1, 2017	188.8		182.3		126.6		(120.0	)	(347.6	)	331.9		224.3		146.3		732.6
Amounts recorded in the consolidated statement of earnings	(41.2	)	(72.3	)	(15.0	)	(0.6	)	111.0		(140.1	)	(106.0	)	33.9		(230.3	)
Amounts recorded in total equity	—		—		—		—		—		(15.5	)	(0.1	)	(5.1	)	(20.7	)
Acquisitions of subsidiaries (note 23)	33.1		20.5		(19.8	)	53.6		(195.2	)	0.9		—		5.4		(101.5	)
Foreign exchange effect and other	7.0		0.8		0.1		0.3		(11.7	)	0.3		(0.1	)	4.0		0.7
Balance - December 31, 2017	187.7		131.3		91.9		(66.7	)	(443.5	)	177.5		118.1		184.5		380.8
	2016
	Operating and capital losses		Provision for losses and loss adjustment expenses		Provision for unearned premiums		Deferred premium acquisition costs		Intangible assets		Investments		Tax credits		Other		Total
Balance - January 1, 2016	235.4		204.2		92.8		(96.9	)	(325.4	)	49.0		174.9		129.9		463.9
Amounts recorded in the consolidated statement of earnings	(57.8	)	(22.7	)	31.8		(24.1	)	27.9		266.9		49.4		2.4		273.8
Amounts recorded in total equity	—		—		—		—		—		17.7		—		19.6		37.3
Acquisitions of subsidiaries (note 23)	9.7		—		(0.3	)	0.7		(47.7	)	(1.1	)	—		(14.5	)	(53.2	)
Foreign exchange effect and other	1.5		0.8		2.3		0.3		(2.4	)	(0.6	)	—		8.9		10.8
Balance - December 31, 2016	188.8		182.3		126.6		(120.0	)	(347.6	)	331.9		224.3		146.3		732.6

Management expects that the deferred income tax asset will be realized in the normal course of operations. The most significant temporary differences included in the deferred income tax asset at December 31, 2017 related to investments and provision for losses and loss adjustment expenses, partially offset by a deferred income tax liability related to intangible assets. The temporary differences related to investments are primarily due to net unrealized investment losses in the U.S.  In these consolidated financial statements, investment gains and losses are primarily recognized on a mark-to-market basis but are only recognized for tax purposes when realized (particularly in the U.S. and several other jurisdictions). The provision for losses and loss adjustment expenses is recorded on an undiscounted basis in these consolidated financial statements but is recorded on a discounted basis in certain jurisdictions for tax purposes, resulting in temporary differences. Deferred taxes on intangible assets primarily relates to intangible assets recognized on acquisitions (principally Allied World, Cara and Brit) that are typically not deductible in the determination of income taxes payable. Other deferred taxes include temporary differences related to pensions and premises and equipment.

Management conducts ongoing reviews of the recoverability of the deferred income tax asset and adjusts, as necessary, to reflect its anticipated realization. As at December 31, 2017 management has not recorded deferred income tax assets of $878.3 (December 31, 2016 - $590.0) related primarily to operating and capital losses and U.S. foreign tax credits. The losses for which deferred income tax assets have not been recorded are comprised of $1,516.4 of losses in Canada (December 31, 2016 - $1,064.7), $635.7 of losses in Europe (December 31, 2016 - $585.7), $44.6 of losses in the U.S. (December 31, 2016 - $44.6), and $159.0 of foreign tax credits in the U.S. (December 31, 2016 - $59.0). The losses in Canada expire between 2026 and 2037. The losses and foreign tax credits in the U.S. expire between 2020 and 2035. Substantially all of the losses in Europe do not have an expiry date.

Deferred income tax has not been recognized for the withholding tax and other taxes that could be payable on the unremitted earnings of certain subsidiaries. Unremitted earnings amounted to approximately $3.1 billion at December 31, 2017 (December 31, 2016 - $3.1 billion) and are not likely to be repatriated in the foreseeable future.

The United States Tax Cuts and Jobs Act (“U.S. tax reform”) that was signed into law on December 22, 2017 introduced a number of significant changes to U.S. corporate income tax for tax years beginning after December 31, 2017: it reduces the U.S. federal corporate income tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, repeals the alternative minimum tax ("AMT") regime, modifies rules pertaining to loss reserve discounting, introduces a new minimum base erosion and anti-abuse tax (“BEAT”) on certain payments to foreign affiliates, and implements a U.S. tax on foreign earnings for certain global intangible low-taxed income ("GILTI").

Under IFRS, deferred income tax assets and liabilities are measured at the enacted or substantively enacted tax rate expected to apply when temporary differences are to be realized or settled. The resulting deferred income tax is recognized in the consolidated statement of earnings, except to the extent that it relates to items previously recognized directly in equity. The company selected December 31, 2017 as the revaluation date for its U.S. net deferred income tax asset as the impact between the date of enactment and December 31, 2017 was not considered significant. The reduction in the U.S. corporate income tax rate decreased the U.S. net deferred income tax asset related to operating and capital losses and other timing differences by $229.2, of which $222.4 was recorded in the consolidated statement of earnings and $6.8 was recorded in other comprehensive income. The company also decreased its recognized U.S. foreign tax credit carry forwards by $100.0 at December 31, 2017 as the reduction in the U.S. corporate income tax rate will make utilization of foreign tax credit carry forwards recognized in prior years more difficult, requiring increased U.S. and foreign source income in the future.

For tax years beginning before January 1, 2018, U.S. tax reform requires that U.S. companies include in income the mandatory deemed repatriation of post-1986 undistributed foreign earnings (the "transition tax"). For the year ended December 31, 2017, the company included $79.1 of previously untaxed foreign earnings in taxable income. Future repatriation of this amount will not incur additional U.S. tax. The company utilized current and prior year foreign tax credits (rather than net operating loss carry forwards) to offset this income to reduce the transition tax liability payable in cash to nil. The recognition of the transition tax caused the company to record reductions to a deferred tax liability of $34.5 related to previously deferred earnings of OdysseyRe's U.K. operations and to foreign tax credit carry forwards of $27.1 that no longer have value due to the mandatory repatriation.

The tax effects included in these consolidated financial statements represent the company's best estimate based upon the information available, notwithstanding that the company is still analyzing certain aspects of U.S. tax reform and may refine its computations, which could potentially affect the measurement of deferred taxes or give rise to additional current tax liabilities. The repeal of the AMT regime did not have a significant impact on the company and the company continues to reflect the AMT credit carryforwards as part of its net deferred income tax asset. The company will recognize charges related to BEAT and GILTI, if any, in the periods in which they are incurred, and has not included their impacts in measuring its net deferred income tax asset at December 31, 2017.

XML

Statutory Requirements

12 Months Ended

Dec. 31, 2017

Statutory Requirements [Abstract]

Statutory Requirements

Statutory Requirements

The retained earnings of the company are largely represented by retained earnings at the insurance and reinsurance subsidiaries. The insurance and reinsurance subsidiaries are subject to certain requirements and restrictions under their respective insurance company Acts including minimum capital requirements and dividend restrictions. The company's capital requirements and management thereof are discussed in note 24. The company's share of dividends paid in 2017 by the insurance and reinsurance subsidiaries, which are eliminated on consolidation, was $418.1 (2016 - $445.8). In addition, the company received proceeds from the sale of First Capital as described in note 23 and the partial sale of ICICI Lombard as described in note 6.

Based on the surplus and net earnings (loss) of the primary insurance and reinsurance subsidiaries as at and for the year ended December 31, 2017, the maximum dividend capacity available in 2018 at each of those subsidiaries, payable to all shareholders (including non-controlling interests) is as follows:

	December 31, 2017
Allied World		688.0
OdysseyRe		324.9
Northbridge(1)		149.1
Crum & Forster		130.2
Zenith National		86.0
Brit		195.1
		1,573.3

(1) Subject to prior regulatory approval.

When determining the amount of dividends to be paid from its insurance and reinsurance subsidiaries, the company considers not only regulatory capital requirements, but also rating agency capital tests, future capital levels required to support growth and tax planning matters, among other factors. In addition, the co-investors in Allied World and Brit have a dividend in priority to the company.

XML

Contingencies and Commitments

12 Months Ended

Dec. 31, 2017

Other Provisions, Contingent Liabilities And Contingent Assets [Abstract]

Contingencies and Commitments

Contingencies and Commitments

Lawsuits

On July 26, 2006 Fairfax filed a lawsuit seeking $6 billion in damages from a number of defendants who, the complaint (as subsequently amended) alleges, participated in a stock market manipulation scheme involving Fairfax shares. The complaint, filed in Superior Court, Morris County, New Jersey, alleges violations of various state laws, including the New Jersey Racketeer Influenced and Corrupt Organizations Act, pursuant to which treble damages may be available. On September 12, 2012, before trial, and consequently without having heard or made any determination on the facts, the Court dismissed the lawsuit on legal grounds. In October 2012 Fairfax filed an appeal of this dismissal, as it believes that the legal basis for the dismissal is incorrect. On April 27, 2017, the appeals court issued a decision reinstating certain claims but affirming the dismissal of the major portion of the claims. On July 10, 2017, Fairfax filed with the New Jersey Supreme Court a petition for certification of the appeal court’s decision. On October 20, 2017, that petition was denied by the court. The company is considering all its options. The ultimate outcome of any litigation is uncertain. The financial effects, if any, of this lawsuit cannot be practicably determined at this time, and the company's consolidated financial statements include no anticipated recovery from the lawsuit.

Other

The Autorité des marchés financiers (the “AMF”), the securities regulatory authority in the Province of Quebec, is conducting an investigation of Fairfax, its CEO, Prem Watsa, and its President, Paul Rivett. The investigation concerns the possibility of illegal insider trading and/or tipping (not involving any personal trading by the individuals) in connection with the December 15, 2011 takeover offer by Resolute Forest Products Inc. for shares of Fibrek Inc. Except as set out below, further details concerning the investigation are, by law, not permitted to be disclosed.

The AMF has authorized Fairfax to make the above-mentioned disclosure. Fairfax and its management are solely responsible for the content of the disclosure set out in the three following paragraphs; the AMF has not in any way endorsed that content.

Resolute’s above-mentioned takeover offer was made to all Fibrek shareholders, including Fairfax. Fairfax agreed in that transaction to a hard lock-up agreement with Resolute whereby Fairfax agreed to tender its shares of Fibrek, representing approximately 26% of Fibrek's outstanding shares, to the Resolute takeover offer at the same price as all other Fibrek shareholders. At the time of the Resolute takeover offer for Fibrek, Fairfax's position in Fibrek was valued at approximately Cdn$32, representing less than 1/6 of 1% of Fairfax's total invested assets at that time.

Fibrek actively opposed the Resolute takeover offer. ln 2012, the Fibrek transaction was the subject of numerous regulatory hearings in Quebec and court proceedings relating to Fibrek's anti-takeover tactics and the hard lock-ups given by various selling shareholders, including Fairfax. Allegations were made in those hearings concerning the possibility of non-compliance with the takeover bid rules. Resolute’s takeover offer was allowed to proceed and resulted in Resolute acquiring Fibrek.

Fairfax believes it has an unblemished record for honesty and integrity and is fully cooperating with the AMF’s investigation. Fairfax continues to be confident that in connection with the Resolute takeover offer, it had no material non-public information, that it did not engage in illegal insider trading or tipping, and that there is no reasonable basis for any proceedings in this connection. To the best of Fairfax's knowledge, the AMF investigation is still ongoing. If the AMF commences legal proceedings, no assurance can be given at this time by Fairfax as to the outcome.

Subsidiaries of the company are defendants in several damage suits and have been named as third party in other suits. The uninsured exposure to the company is not considered to be material to the company's financial position, financial performance or cash flows.

OdysseyRe, Brit, Allied World, Advent and RiverStone (UK) (“the Lloyd's participants”) underwrite in the Lloyd's of London insurance market through their participation in certain Lloyd's syndicates. The Lloyd's participants have pledged cash and securities with fair values of $361.9 and $1,566.1 at December 31, 2017 as capital to support those underwriting activities. Pledged securities and restricted cash consist of cash, fixed income and equity investments which are included within portfolio investments on the consolidated balance sheet. The Lloyd's participants have the ability to substitute other securities for these pledged securities, subject to certain admissibility criteria. The Lloyd's participants' liability in respect of assets pledged as capital is limited to the aggregate amount of the pledged assets and their obligation to support these liabilities will continue until such liabilities are settled or are reinsured by a third party approved by Lloyd's. The company believes that the syndicates for which the Lloyd's participants are capital providers maintain sufficient liquidity and financial resources to support their ultimate liabilities and does not anticipate that the pledged assets will be utilized.

The company's maximum capital commitments for potential investments in common stocks, limited partnerships and associates at December 31, 2017 was $966.3, with a further amount of approximately $367 committed for investments described in note 23.

XML

Pensions and Post Retirement Benefits

12 Months Ended

Dec. 31, 2017

Pension And Post Retirement Benefits [Abstract]

Pensions and Post Retirement Benefits

Pensions and Post Retirement Benefits

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

	Defined benefit pension plans December 31				Post retirement benefit plans December 31
	2017		2016		2017		2016
Benefit obligation	(918.3	)	(803.7	)	(118.5	)	(109.3	)
Fair value of plan assets	836.1		747.9		—		—
Funded status of plans - deficit	(82.2	)	(55.8	)	(118.5	)	(109.3	)
Impact of asset ceiling	(1.0	)	(1.0	)	—		—
Net accrued liability (notes 13 and 14)(1)	(83.2	)	(56.8	)	(118.5	)	(109.3	)

Weighted average assumptions used to determine benefit obligations:
Discount rate	3.2	%	3.6	%	4.1	%	4.2	%
Rate of compensation increase	2.8	%	3.6	%	3.3	%	3.5	%
Health care cost trend	—		—		5.0	%	5.7	%

(1) The defined benefit pension plan net accrued liability at December 31, 2017 of $83.2 (December 31, 2016 - $56.8) was comprised of pension surpluses of $49.1 and pension deficits of $132.3 (December 31, 2016 - $50.8 and $107.6).

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

	2017	2016
Defined benefit pension plan expense	17.3	27.7
Defined contribution pension plan expense	45.6	32.2
Defined benefit post retirement expense	10.3	8.0
	73.2	67.9

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

	2017		2016
Defined benefit pension plans
Actuarial net gains on plan assets and change in asset ceiling	18.6		54.5
Actuarial net losses on benefit obligations	(53.0	)	(76.4	)
	(34.4	)	(21.9	)
Post retirement benefit plans - actuarial net gains (losses) on benefit obligations	0.3		(1.4	)
	(34.1	)	(23.3	)

During 2017 the company contributed $30.7 (2016 - $21.8) to its defined benefit pension and post retirement benefit plans, and expects to make contributions of $28.2 in 2018.

XML

Operating Leases

12 Months Ended

Dec. 31, 2017

Leases1 [Abstract]

Operating Leases

Operating Leases

During 2017 the company incurred operating lease costs of $216.2 (2016 - $155.7).

Aggregate future minimum operating lease commitments at December 31, 2017 relating to premises, automobiles and equipment for various terms up to ten years were as follows:

2018	188.5
2019	173.2
2020	153.4
2021	139.5
2022	113.0
Thereafter	458.2

XML

Acquisitions and Divestitures

12 Months Ended

Dec. 31, 2017

Business Combinations1 [Abstract]

Acquisitions and Divestitures

Acquisitions and Divestitures

Subsequent to December 31, 2017

Receipt of Fairfax India Performance Fee

Pursuant to the company's investment advisory agreement with Fairfax India, on March 9, 2018 the company received a performance fee of $114.4 for the period January 30, 2015 to December 31, 2017 in the form of 7,663,685 newly issued Fairfax India subordinate voting shares, which increased the company's equity interest in Fairfax India to 33.6% from 30.2%at December 31, 2017.

Acquisition of certain businesses of Carillion Canada Inc.

On March 7, 2018 the company acquired the services business carried on in Canada by Carillion Canada Inc. and certain affiliates thereof (collectively “Carillion”) relating to facilities management of airports, commercial and retail properties, defense facilities, select healthcare facilities and on behalf of oil, gas and mining clients. The transaction was approved by the Ontario Superior Court of Justice in Carillion’s proceedings under the Companies’ Creditors Arrangement Act (Canada). Carillion is an infrastructure services company that provides asset management and operations solutions to industries and governments.

Sale of The Keg to Cara

On February 22, 2018 the company completed the sale of its 51.0% ownership interest in The Keg to Cara for consideration of $74.6 (Cdn$94.7), comprised of cash of $7.9 (Cdn$10.0) and 3,400,000 Cara subordinate voting shares. The other shareholders of The Keg sold their 49.0% ownership interest to Cara for $82.7 (Cdn$105.0), comprised of cash of $74.8 (Cdn$95.0) and 401,123 Cara subordinate voting shares. Cara may be required to pay up to an additional $24 (Cdn$30) of cash consideration to the other shareholders of The Keg, contingent on the achievement of certain financial objectives within the first three years subsequent to closing. The transaction increased the company's equity interest in Cara to 43.2% from 40.2% at December 31, 2017.

Investment in The Catholic Syrian Bank Ltd. 

On February 20, 2018 Fairfax India entered into an agreement to acquire a 51.0% equity interest in The Catholic Syrian Bank Ltd. (“CS Bank”) for approximately $186 (12.1 billion Indian rupees). The transaction is subject to customary closing conditions and is expected to close in the first half of 2018. CS Bank, headquartered in Thrissur, Kerala, offers banking services across India.

Year ended December 31, 2017

Divestiture of First Capital Insurance Limited

On December 28, 2017 the company completed the sale of its 97.7% interest in First Capital to Mitsui Sumitomo Insurance Company Limited of Tokyo, Japan (“Mitsui Sumitomo”) for gross proceeds of $1,683.3 and realized a net after-tax gain of $1,018.6. The transaction was completed pursuant to an agreement with Mitsui Sumitomo to pursue a global strategic alliance. The company expects to enter into a quota share participation in First Capital’s insurance portfolio in 2018.

Acquisition of Allied World Assurance Holdings AG

On July 6, 2017 the company completed the acquisition of 94.6% of the outstanding shares of Allied World Assurance Company Holdings, AG ("Allied World AG") for purchase consideration of $3,977.9, consisting of $1,905.6 in cash and $2,072.3 by the issuance of 4,799,497 subordinate voting shares. In addition, Allied World AG declared a special pre-closing cash dividend of $5.00 per share ($438.0). Contemporaneously with the closing of the acquisition of Allied World AG, Ontario Municipal Employees Retirement System ("OMERS"), the pension plan manager for government employees in the province of Ontario, Alberta Investment Management Corporation (“AIMCo”), an investment manager for pension, endowment and government funds in the province of Alberta, and certain other third parties (together “the co-investors”) invested $1,580.0 for an indirect equity interest in Allied World AG. The remaining 5.4% of the outstanding shares of Allied World AG were acquired on August 17, 2017 for purchase consideration of $229.0, consisting of $109.7 in cash and $119.3 by the issuance of 276,397 subordinate voting shares, in a merger transaction under Swiss law pursuant to which Allied World Assurance Company Holdings, GmbH ("Allied World") became the surviving entity. This merger resulted in the co-investors holding an indirect ownership interest in Allied World of 32.6%. The co-investors will have a dividend in priority to the company, and the company will have the ability to purchase the shares owned by the co-investors over the next seven years. Allied World is a global property, casualty and specialty insurer and reinsurer.

Quess Corp. Transactions

On December 27, 2017 Quess acquired the facility management and catering business of Manipal Integrated Services Private Limited ("Manipal") for $152.5(9.8 billion Indian rupees), primarily comprised of the issuance of $117.7 (7.5 billion Indian rupees) of Quess common shares to Manipal shareholders and the reinvestment of $34.3 (2.2 billion Indian rupees) of Quess' existing holdings of Manipal preferred shares upon cancellation of those shares. In November of 2017 Thomas Cook India sold a 5.4% equity interest in Quess for cash proceeds of $96.8 (6.3 billion Indian rupees). On August 18, 2017 Quess raised $132.2 (8.5 billion Indian rupees) in net proceeds following the completion of a private placement of common shares with institutional investors. These transactions at Thomas Cook India and Quess collectively reduced the company's indirect ownership of Quess from 42.1% to 33.1% and resulted in an increase in non-controlling interest of $210.0 and a dilution gain of $135.6, which are included in other net changes in capitalization in the consolidated statement of changes in equity. Quess is a provider of staffing and facilities management services.

Additional investment in Grivalia Properties REIC

On July 4, 2017 the company acquired control of Grivalia Properties REIC ("Grivalia Properties") by increasing its equity interest to 52.6% through the purchase of an additional 10.3% equity interest from Eurobank Ergasias S.A. for cash consideration of $100.0 (€88.0). Accordingly, the company re-measured its equity accounted carrying value of Grivalia Properties to fair value, recorded a net realized gain of$51.3and commenced consolidating Grivalia Propertiesin the Other reporting segment.Pursuant to Greek securities law, the company then made a tender offer for all remaining outstanding shares of Grivalia Properties which expired on September 6, 2017, resulting in the company increasing its equity interest by 0.1% to 52.7% for cash consideration of $0.6 (€0.5).Grivalia Properties is a real estate investment company listed on the Athens Stock Exchange.

Acquisition of certain American International Group, Inc. operations in Latin America and Central and Eastern Europe

On October 18, 2016 the company agreed to acquire from American International Group, Inc. ("AIG") its insurance operations in Argentina, Chile, Colombia, Uruguay, Venezuela and Turkey, and certain assets and renewal rights with respect to the portfolio of local business written by AIG Europe in Bulgaria, Czech Republic, Hungary, Poland, Romania and Slovakia, for total consideration of approximately $240.

The company, through Colonnade Insurance, has completed the acquisition of the business and renewal rights of the insurance operations of AIG in Hungary, Czech Republic and Slovakia (effective from April 30, 2017), Turkey (on May 2, 2017 and sold to Gulf Insurance on the same day), Bulgaria (effective from May 31, 2017), Poland (effective from June 30, 2017) and Romania (effective October 31, 2017). Through an ongoing partnership, the company is providing claims handling and run-off management services to AIG in the European countries where business operations were acquired.

The company has completed the acquisition of the insurance operations of AIG in Chile and Colombia (effective from July 31, 2017), Argentina (effective from September 30, 2017) and Uruguay (effective from January 31, 2018) (collectively "Fairfax Latam"), and continues to work through the legal, regulatory and operational requirements to complete the acquisition in Venezuela.

Merger of Fairchem Speciality Limited and Privi Organics Limited

On March 14, 2017 Fairchem Speciality Limited ("Fairchem") and Privi Organics Limited ("Privi Organics") completed their previously announced merger, with the merged entity continuing under the Fairchem name. As a result of the merger, Fairfax India, which had acquired a 44.7% interest in Fairchem on February 8, 2016 and a 50.8% interest in Privi Organics on August 26, 2016, became the dominant shareholder in Fairchem with a 48.7% interest. Prior to the merger, the company consolidated Privi Organics and applied the equity method of accounting to its investment in Fairchem. Subsequent to the merger, the assets and liabilities and results of operations of Fairchem were consolidated in the Other reporting segment.

Investment in Fairfax Africa Holdings Corporation

On February 17, 2017 the company acquired 22,715,394 multiple voting shares in a private placement and 2,500,000 subordinate voting shares as part of the initial public offering of Fairfax Africa Holdings Corporation ("Fairfax Africa") for total cash consideration of $252.2. The company also contributed its indirect equity interest in AFGRI Proprietary Limited ("AFGRI") with a fair value of $72.8 to Fairfax Africa in exchange for 7,284,606 multiple voting shares. Through its initial public offering, private placements and exercise of the over-allotment option by the underwriters, Fairfax Africa raised net proceeds of $493.3after issuance costs and expenses, inclusive of the contribution of the investment in AFGRI. Following those transactions, the company's $325.0 ($10.00 per share) investment represented 98.8% of the voting rights and 64.2% of the equity interest in Fairfax Africa. Fairfax Africa was established, with the support of Fairfax, to invest in public and private equity and debt instruments of African businesses or other businesses with customers, suppliers or business primarily conducted in, or dependent on, Africa. The assets and liabilities and results of operations of Fairfax Africa were consolidated in the Other reporting segment.

Acquisition of Saurashtra Freight Private Limited

On February 14, 2017 Fairfax India acquired a 51.0% interest in Saurashtra Freight Private Limited ("Saurashtra Freight") for cash consideration of $30.0 (2.0 billion Indian rupees). Saurashtra Freight operates a container freight station at the Mundra Port in the Indian state of Gujarat. The assets and liabilities and results of operations of Saurashtra Freight were consolidated in the Other reporting segment.

Investment in Mosaic Capital Corporation

On January 26, 2017 the company invested $114.5 (Cdn$150.0) in securities of Mosaic Capital Corporation ("Mosaic Capital") issued through a private placement comprised of: (i) Cdn$100.0 principal amount of 6.00% senior preferred securities; (ii) Cdn$50.0 principal amount of 5.00% senior secured debentures; and (iii) warrants entitling the company to acquire up to 17,026,106 common shares of Mosaic Capital at a price of Cdn$8.81 per common share at any time until January 26, 2024 (the "Mosaic warrants"). Pursuant to IFRS, the company’s investment in Mosaic Capital warrants represent a potential voting interest of approximately 62% (assuming all holders of Mosaic Capital convertible securities, including the company, exercised their options to convert), giving the company the ability to control Mosaic Capital. Consequently, the assets and liabilities and results of operations of Mosaic Capital were consolidated in the Other reporting segment. Mosaic Capital is a Canadian investment company that owns a portfolio of established businesses in the infrastructure, printing, oil and gas services, technology, manufacturing and real estate industries.

Additional Investment in Fairfax India Holdings Corporation

On January 13, 2017 the company acquired12,340,500subordinate voting shares of Fairfax India for$145.0($11.75per share) in a private placement. Through that private placement and a contemporaneous bought deal public offering, Fairfax India raised proceeds of$493.5net of commissions and expenses. Combined with various open market purchases of Fairfax India subordinate voting shares, the company's multiple voting shares and subordinate voting shares represented93.6%of the voting rights and30.2%of the equity interest in Fairfax India at the close of the private placement and public offering. These transactions collectively resulted in an increase in non-controlling interest of $336.3 and a dilution loss of $3.3, which are included in other net changes in capitalization in the consolidated statement of changes in equity.

The determination of the fair value of assets acquired and liabilities assumed in connection with the acquisitions described above is currently underway and will be finalized within twelve months of the respective acquisition dates. Provisionally recorded amounts primarily include intangible assets, deferred income taxes, goodwill and the excess of fair value of net assets acquired over purchase consideration. The company has substantially completed its valuation of Allied World's intangible assets.

	Allied World			Grivalia Properties		Fairfax Latam		Other(1)
Acquisition date	July 6, 2017			July 4, 2017		Throughout 2017		Throughout 2017
Percentage of common shares acquired	94.6	%		52.6	%	100.0	%
Assets:
Insurance contract receivables	1,212.5			—		235.8		0.4
Portfolio investments(2)	8,568.7			139.1		250.4		76.0
Recoverable from reinsurers	2,363.6			—		597.7		0.7
Deferred income taxes	—			0.3		48.3		5.0
Goodwill and intangible assets	1,726.9		(3)	—		23.3		385.5
Other assets	223.5			1,020.4		51.1		288.7
	14,095.2			1,159.8		1,206.6		756.3
Liabilities:
Accounts payable and accrued liabilities	300.7			25.3		172.3		167.4
Income taxes payable	3.4			4.2		9.0		1.1
Deferred income taxes	118.0			—		21.5		4.3
Funds withheld payable to reinsurers	193.5			—		9.8		0.1
Insurance contract liabilities	8,467.7			—		826.1		3.0
Borrowings	860.5			137.6		—		83.9
	9,943.8			167.1		1,038.7		259.8
Non-controlling interests	173.5			470.5		—		8.1
Purchase consideration	3,977.9			519.7		167.9		488.4
Excess of fair value of net assets acquired over purchase consideration	—			2.5		—		—
	14,095.2			1,159.8		1,206.6		756.3

(1) Primarily comprised of the acquisitions of Mosaic Capital and certain AIG branches in Central and Eastern Europe, the acquisition of Pickle Barrel by Cara, the acquisition of Saurashtra Freight and consolidation of Fairchem by Fairfax India, and various acquisitions by Quess, Thomas Cook India, Mosaic Capital and Boat Rocker.

(2) Included subsidiary cash and cash equivalents of Allied World ($1,195.4, of which $4.8 was restricted), Grivalia Properties ($26.3) and Fairfax Latam ($67.2).

(3) Comprised of goodwill of $937.9 and intangible assets of $789.0 (primarily broker relationships of $574.0, Lloyd's participation rights of $87.0 and brand names of $71.0).

Allied World contributed revenue of $1,050.5 and a net loss of $555.4 to the company's consolidated financial results for the year ended December 31, 2017. Had Allied World been acquired on January 1, 2017, the company's pro-forma consolidated revenue and net earnings would have been $17,514.6 and $1,766.4 for the year ended December 31, 2017.

Year ended December 31, 2016

Acquisition of Zurich Insurance Company South Africa Limited

On December 7, 2016 the company acquired a 100% interest in Zurich Insurance Company South Africa Limited (subsequently rebranded Bryte Insurance Company Limited ("Bryte Insurance")) from Zurich Insurance Company Ltd. for $128.0(1.8 billion South African rand). Bryte Insurance is a property and casualty insurer in South Africa and Botswana. The assets and liabilities and results of operations of Bryte Insurance were consolidated in the Insurance and Reinsurance - Other reporting segment.

Acquisition of Original Joe's Franchise Group Inc.

On November 28, 2016 Cara acquired an 89.2% interest in Original Joe's Franchise Group Inc. ("Original Joe's") for $83.8(Cdn$112.5), comprised of cash consideration of $69.3 (Cdn$93.0) and contingent consideration valued at $14.5 (Cdn$19.5). Original Joe's is a Canadian multi-brand restaurant company based in the province of Alberta.

Acquisition of Golf Town Limited

On October 31, 2016 the company acquired a 60.0% indirect interest in Golf Town Limited ("Golf Town") for $31.4 (Cdn$42.0). Golf Town is a Canadian specialty retailer of golf equipment, consumables, golf apparel and accessories. The assets and liabilities and results of operations of Golf Town were consolidated in the Other reporting segment.

Acquisition of PT Asuransi Multi Artha Guna Tbk

On October 10, 2016 the company acquired an 80.0% interest in PT Asuransi Multi Artha Guna Tbk. ("AMAG") from PT Bank Pan Indonesia Tbk. ("Panin Bank") for $178.9 (2.322 trillion Indonesian rupiah). AMAG will distribute its insurance products through a long-term bancassurance partnership with Panin Bank. AMAG is a general insurer in Indonesia. The assets and liabilities and results of operations of AMAG were consolidated in the Fairfax Asia reporting segment. On December 31, 2016 Fairfax Indonesia was merged into AMAG.

Acquisition of Asian Alliance General Insurance Limited

On October 3, 2016 Union Assurance acquired a 100% equity interest in Asian Alliance General Insurance Limited (subsequently renamed Fairfirst Insurance Limited ("Fairfirst Insurance")) for $10.2 (1,488.9 million Sri Lankan rupees). Fairfirst Insurance is a general insurer in Sri Lanka. The assets and liabilities and results of operations of Fairfirst Insurance were consolidated in the Fairfax Asia reporting segment. On February 28, 2017 Union Assurance was merged into Fairfirst Insurance.

Acquisition of Groupe St-Hubert Inc.

On September 2, 2016 Cara acquired a 100% equity interest in Groupe St-Hubert Inc. ("St-Hubert") for $413.8 (Cdn$538.7), comprised of cash consideration of $372.4 (Cdn$484.8) and the issuance of $41.4 (Cdn$53.9) of Cara subordinate voting shares to St-Hubert shareholders. A portion of the cash consideration was financed through a private placement of 7,863,280 Cara subordinate voting shares at a price of Cdn$29.25 for gross proceeds of $179.2 (Cdn$230.0), of which 3,418,804 shares were acquired by the company and its subsidiaries to maintain its equity and voting interests in Cara. St-Hubert is a Canadian full-service restaurant operator and fully integrated food manufacturer in the province of Quebec.

Acquisition of Privi Organics Limited

On August 26, 2016 Fairfax India acquired a 50.8% equity interest in Privi Organics for $55.0 (3.7 billion Indian rupees) through the purchase of newly issued shares and shares acquired from existing shareholders. Privi Organics is a supplier of aroma chemicals to the fragrance industry.

Acquisition of Eastern European Insurers

On December 16, 2014 the company entered into an agreement with QBE Insurance (Europe) Limited ("QBE") to acquire QBE's insurance operations in the Czech Republic, Hungary and Slovakia (the "QBE insurance operations"). A new Luxembourg insurer, Colonnade Insurance S.A. (“Colonnade Insurance”), was licensed in July 2015 and branches of Colonnade Insurance were established in each of the Czech Republic, Hungary and Slovakia during the fourth quarter of 2015. The business and renewal rights of QBE's Hungarian, Czech and Slovakian insurance operations were transferred to Colonnade Insurance on February 1, 2016, April 1, 2016 and May 2, 2016, respectively. The QBE insurance operations write business across a range of general insurance classes, including property, travel, general liability and product protection.

The fair value of assets acquired and liabilities assumed in connection with the 2016 acquisitions described above are summarized in the table that follows:

	Bryte Insurance			AMAG			St-Hubert			Other(1)
Acquisition date	December 7, 2016			October 10, 2016			September 2, 2016			Throughout 2016
Percentage of common shares acquired	100.0	%		80.0	%		100.0	%	(2)
Assets:
Insurance contract receivables	45.0			8.9			—			41.3
Portfolio investments(3)	220.4			99.9			—			22.1
Recoverable from reinsurers	85.8			26.4			—			1.1
Deferred income taxes	11.4			—			—			8.5
Goodwill and intangible assets	16.8		(4)	161.2		(5)	319.4		(6)	146.1
Other assets	10.8			25.9			180.0			205.3
	390.2			322.3			499.4			424.4
Liabilities:
Accounts payable and accrued liabilities	88.4			16.6			30.7			48.3
Deferred income taxes	—			11.1			54.9			12.2
Funds withheld payable to reinsurers	1.4			5.4			—			0.4
Insurance contract liabilities	172.4			76.3			—			59.7
Borrowings	—			—			—			48.1
	262.2			109.4			85.6			168.7
Non-controlling interests	—			34.0			—			57.3
Purchase consideration	128.0			178.9			413.8			191.6
Excess of fair value of net assets acquired over purchase consideration	—			—			—			6.8
	390.2			322.3			499.4			424.4

(1) Includes the acquisitions of Fairfirst Insurance, Privi Organics, the QBE insurance operations and Golf Town, and Cara's acquisition of Original Joe's.

(2) The company's economic interest in St-Hubert was 38.9% as a result of acquiring St-Hubert through 38.9%-owned Cara.

(3) Included subsidiary cash and cash equivalents of Bryte Insurance ($48.4) and AMAG ($6.2).

(4) Comprised of goodwill of $11.5 and intangible assets of $5.3.

(5) Comprised of goodwill of $43.0 and intangible assets of $118.2.

(6) Comprised of goodwill of $85.2 and intangible assets of $234.2 (primarily brand names of $183.1).

XML

Financial Risk Management

12 Months Ended

Dec. 31, 2017

Disclosure of nature and extent of risks arising from financial instruments [abstract]

Financial Risk Management

Financial Risk Management

Overview

The primary goals of the company's financial risk management are to ensure that the outcomes of activities involving elements of risk are consistent with the company's objectives and risk tolerance, while maintaining an appropriate balance between risk and reward and protecting the company's consolidated balance sheet from events that have the potential to materially impair its financial strength. The company's exposure to potential loss from its insurance and reinsurance operations and investment activities primarily relates to underwriting risk, credit risk, liquidity risk and various market risks. Balancing risk and reward is achieved through identifying risk appropriately, aligning risk tolerances with business strategy, diversifying risk, pricing appropriately for risk, mitigating risk through preventive controls and transferring risk to third parties. There were no significant changes in the types of the company's risk exposures or the processes used by the company for managing those risk exposures at December 31, 2017 compared to those identified at December 31, 2016, except as discussed below.

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

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

Underwriting Risk

Underwriting risk is the risk that the total cost of claims, claims adjustment expenses and premium acquisition expenses will exceed premiums received and can arise as a result of numerous factors, including pricing risk, reserving risk and catastrophe risk. There were no significant changes to the company's exposure to underwriting risk or the framework used to monitor, evaluate and manage underwriting risk at December 31, 2017 compared to December 31, 2016. While the acquisition of Allied World was significant, the company has determined that Allied World's exposure to underwriting risk and framework to monitor, evaluate and manage underwriting risk are consistent with those of its own.

Principal lines of business

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

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

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

• Specialty, which insures against marine, aerospace and surety risk, and other miscellaneous risks and liabilities that are not identified above; and

• Reinsurance which includes, but is not limited to, property, casualty and liability exposures.

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

The table below shows the company's concentration of risk by region and line of business based on gross premiums written prior to giving effect to ceded reinsurance premiums. The company's exposure to general insurance risk varies by geographic region and may change over time. Premiums ceded to reinsurers (including retrocessions) in 2017 by line of business amounted to $992.3 for property (2016 - $463.5), $916.3 for casualty (2016 - $699.9) and $315.4 for specialty (2016 - $282.5).

	Canada		United States		Asia(1)		International(2)		Total
For the years ended December 31	2017	2016	2017	2016	2017	2016	2017	2016	2017	2016
Property	646.8	582.7	1,878.6	1,466.0	586.5	464.8	995.7	502.7	4,107.6	3,016.2
Casualty	602.6	528.5	4,899.4	4,002.9	400.8	352.3	805.0	465.1	6,707.8	5,348.8
Specialty	143.4	126.4	548.8	485.6	275.1	231.9	424.8	325.4	1,392.1	1,169.3
Total	1,392.8	1,237.6	7,326.8	5,954.5	1,262.4	1,049.0	2,225.5	1,293.2	12,207.5	9,534.3
Insurance	1,295.3	1,134.6	5,855.4	4,607.0	684.9	516.3	1,494.3	672.3	9,329.9	6,930.2
Reinsurance	97.5	103.0	1,471.4	1,347.5	577.5	532.7	731.2	620.9	2,877.6	2,604.1
	1,392.8	1,237.6	7,326.8	5,954.5	1,262.4	1,049.0	2,225.5	1,293.2	12,207.5	9,534.3

(1) The Asia geographic segment comprises countries located throughout Asia, including China, India, Sri Lanka, Malaysia, Singapore, Indonesia and Thailand, and the Middle East.

(2) The International geographic segment comprises Australia and countries located in Africa, Europe and South America.

Pricing risk

Pricing risk arises because actual claims experience can differ adversely from the assumptions included in pricing calculations. Historically the underwriting results of the property and casualty industry have fluctuated significantly due to the cyclicality of the insurance market. The market cycle is affected by the frequency and severity of losses, levels of capacity and demand, general economic conditions and competition on rates and terms of coverage. The operating companies focus on profitable underwriting using a combination of experienced underwriting and actuarial staff, pricing models and price adequacy monitoring tools.

Reserving risk

Reserving risk arises because actual claims experience can differ adversely from the assumptions included in setting reserves, in large part due to the length of time between the occurrence of a loss, the reporting of the loss to the insurer and the ultimate resolution of the claim. The degree of uncertainty will vary by line of business according to the characteristics of the insured risks and the cost of a claim will be determined by the actual loss suffered by the policyholder. Claims provisions reflect expectations of the ultimate cost of resolution and administration of claims based on an assessment of facts and circumstances then known, a review of historical settlement patterns, estimates of trends in claims severity and frequency, legal theories of liability and other factors.

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

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

The company has exposures to risks in each line of business that may develop adversely and that could have a material impact upon the company's financial position. The insurance risk diversity within the company's portfolio of issued policies makes it difficult to predict whether material prior year reserve development will occur and, if it does occur, the location and the timing of such an occurrence.

Catastrophe risk

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

Each operating company has developed and applies strict underwriting guidelines for the amount of catastrophe exposure it may assume as a standalone entity for any one risk and location. Those guidelines are regularly monitored and updated by the operating companies. Each of the operating companies also manages catastrophe exposure by diversifying risk across geographic regions, catastrophe types and other lines of business, factoring in levels of reinsurance protection, adjusting the amount of business written based on capital levels and adhering to risk tolerances. The company's head office aggregates catastrophe exposure company-wide and continually monitors the group's exposure. Independent exposure limits for each entity in the group are aggregated to produce an exposure limit for the group as there is presently no model capable of simultaneously projecting the magnitude and probability of loss in all geographic regions in which the company operates. Currently the company's objective is to limit its company-wide catastrophe loss exposure such that one year's aggregate pre-tax net catastrophe losses would not exceed one year's normalized net earnings before income taxes. The company takes a long term view and generally considers a 15% return on common shareholders' equity, adjusted to a pre-tax basis, to be representative of one year's normalized net earnings. The modeled probability of aggregate catastrophe losses in any one year exceeding this amount is generally more than once in every 250 years.

Management of underwriting risk

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

As part of its overall risk management strategy, the company cedes insurance risk through proportional, non-proportional and facultative reinsurance treaties. With proportional reinsurance, the reinsurer shares a pro rata portion of the company's losses and premium, whereas with non-proportional reinsurance, the reinsurer assumes payment of the company's loss above a specified retention, subject to a limit. Facultative reinsurance is the reinsurance of individual risks as agreed by the company and the reinsurer. The company follows 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 on any policy to a maximum amount on any one loss. 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 company and to protect from losses on multiple risks arising from a single occurrence. This type of reinsurance includes what is generally referred to as catastrophe reinsurance. The company's reinsurance does not, however, relieve the company of its primary obligation to the policyholder.

The majority of reinsurance contracts purchased by the company provide coverage for a one year term and are negotiated annually. The ability of the company to obtain reinsurance on terms and prices consistent with historical results reflects, among other factors, recent loss experience of the company and of the industry in general. Notwithstanding the significant current period catastrophe losses suffered by the industry in 2017, capital adequacy within the reinsurance market remains strong and alternative forms of reinsurance capacity continue to be available. As a result, reinsurance pricing of loss affected business has increased modestly while non-loss affected property has increased to a lesser extent.

The company will remain opportunistic in its use of reinsurance, balancing capital requirements and the cost of reinsurance.

Credit Risk

Credit risk is the risk of loss resulting from the failure of a counterparty to honour its financial obligations to the company. Credit risk arises predominantly with respect to cash and short term investments, investments in debt instruments, insurance contract receivables, recoverable from reinsurers and receivable from counterparties to derivative contracts (primarily total return swaps and CPI-linked derivatives). There were no significant changes to the company's exposure to credit risk (except as set out in the discussion which follows) or the framework used to monitor, evaluate and manage credit risk at December 31, 2017 compared to December 31, 2016.

The company's gross credit risk exposure at December 31, 2017 (without taking into account amounts held by the company as collateral) was comprised as follows:

	December 31, 2017		December 31, 2016
Cash and short term investments		19,198.8		11,235.6
Investments in debt instruments:
U.S. sovereign government		1,779.3		1,117.3
Other sovereign government rated AA/Aa or higher(1)		615.4		596.1
All other sovereign government(2)		1,268.4		891.5
Canadian provincials		93.8		196.9
U.S. states and municipalities		2,452.1		4,732.2
Corporate and other		4,081.8		2,633.5
Receivable from counterparties to derivative contracts		126.7		196.4
Insurance contract receivables		4,686.9		2,917.5
Recoverable from reinsurers		7,812.5		4,010.3
Other assets		1,723.0		1,065.4
Total gross credit risk exposure		43,838.7		29,592.7

(1) Primarily comprised of bonds issued by the governments of Germany, Australia, the U.K, and Canada with fair values of $105.3, $97.9, $90.9 and $84.4 (December 31, 2016 - $201.7, $31.7, $23.4 and $311.4).

(2) Primarily comprised of bonds issued by the governments of India, Poland and Brazil with fair values of $734.7, $125.1 and $101.7 (December 31, 2016 - $602.2, $117.2 and $80.3).

The company had income taxes refundable of $147.0 at December 31, 2017 (December 31, 2016 - $202.7).

Cash and short term investments

The company's cash and short term investments (including at the holding company) are held at major financial institutions in the jurisdictions in which the company operates. At December 31, 2017, 87.4% of these balances were held in Canadian and U.S. financial institutions, 9.1% in European financial institutions and 3.5% in other foreign financial institutions (December 31, 2016 - 85.1%, 8.1% and 6.8% respectively). The company monitors risks associated with cash and short term investments by regularly reviewing the financial strength and creditworthiness of these financial institutions and more frequently during periods of economic volatility. As a result of these reviews, the company may transfer balances from financial institutions where it perceives heightened credit risk to others considered to be more stable.

Investments in debt instruments

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

Investment in sovereign bonds rated AA/Aa or higher, considered by the company to present only a nominal risk of default, with a fair value of $2,394.7 at December 31, 2017 (December 31, 2016 - $1,713.4), represented 6.1% of the total investment portfolio (December 31, 2016 - 6.0%) and consisted primarily of bonds issued by the governments of the U.S., U.K., Germany, Australia and Canada. Investments in debt instruments considered by the company to be subject to credit risk, with a fair value of $7,896.1 at December 31, 2017 (December 31, 2016 - $8,454.1), represented 20.1% of the total investment portfolio (December 31, 2016 - 29.7%) and consisted primarily of all other sovereign government bonds rated A/A or lower and all bonds included in Canadian provincials, U.S. states and municipalities and corporate and other.

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

	December 31, 2017			December 31, 2016
Issuer Credit Rating	Amortized cost	Fair value	%	Amortized cost	Fair value	%
AAA/Aaa	2,476.3	2,432.0	23.7	2,042.0	1,915.8	18.8
AA/Aa	2,149.5	2,408.8	23.4	3,669.1	4,383.3	43.1
A/A	823.1	819.8	8.0	649.3	728.5	7.2
BBB/Baa	1,617.1	1,764.8	17.1	910.4	1,024.0	10.1
BB/Ba	151.1	154.0	1.5	98.5	117.6	1.2
B/B	448.7	447.6	4.3	339.0	261.6	2.5
Lower than B/B(1)	554.1	432.7	4.2	392.1	320.5	3.2
Unrated(2)	1,594.4	1,831.1	17.8	1,416.7	1,416.2	13.9
Total	9,814.3	10,290.8	100.0	9,517.1	10,167.5	100.0

(1) Lower than B/B is primarily comprised of the fair value of the company's investments in EXCO Resources, Inc. of $402.0 (December 31, 2016 - $292.4).

(2) Unrated is primarily comprised of the fair value of the company's investments in Blackberry Limited of $663.6 (December 31, 2016 - $461.2), Sanmar Chemicals Group of $333.2 (December 31, 2016 - $299.1), Chorus Aviation Inc. $155.2 (December 31, 2016 - nil) and FBD Insurance plc. of $112.0 (December 31, 2016 - $76.8).

At December 31, 2017, 72.2%(December 31, 2016 - 79.2%) of the fixed income portfolio carrying value was rated investment grade or better, with 47.1% (December 31, 2016 - 61.9%) being rated AA or better (primarily consisting of government obligations). The increase in the fair value of bonds rated AAA/Aaa, A/A and BBB/Baa primarily reflected the consolidation of Allied World's bond portfolio. The decrease in the fair value of bonds rated AA/Aa primarily reflected net sales in 2017 of long dated U.S. state and municipal bonds (net proceeds of $2,346.5), partially offset by the consolidation of Allied World's bond portfolio. The increase in the fair value of bonds rated lower than B/B primarily reflected unrealized appreciation. The increase in bonds that were unrated primarily reflected unrealized appreciation related to convertible bonds and purchases of certain corporate and other bonds. Except as described above, there were no other significant changes to the composition of the company's fixed income portfolio classified according to the higher of each security's respective S&P and Moody's issuer credit rating at December 31, 2017 compared to December 31, 2016.

At December 31, 2017 holdings of bonds in the ten issuers (excluding U.S., Canadian, U.K. and German sovereign government bonds) to which the company had the greatest exposure totaled $3,398.7 (December 31, 2016 - $4,178.6), which represented approximately 8.7% (December 31, 2016 - 14.7%) of the total investment portfolio. Exposure to the largest single issuer of corporate bonds at December 31, 2017 was $663.6 (December 31, 2016 - $461.2), which represented approximately 1.7% (December 31, 2016 - 1.6%) of the total investment portfolio.

The consolidated investment portfolio included $2.5 billion at December 31, 2017 (December 31, 2016 - $4.7 billion) of U.S. state and municipal bonds (approximately $2.3 billion tax-exempt, $0.2 billion taxable), a large portion of which were purchased during 2008 within subsidiary investment portfolios. At December 31, 2017 approximately $1.5 billion (December 31, 2016 - $2.1 billion) of those U.S. state and municipal bonds are insured by Berkshire Hathaway Assurance Corp. for the payment of interest and principal in the event of issuer default, and are therefore all rated AA or better.

Counterparties to derivative contracts

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

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

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

	December 31, 2017			December 31, 2016
Total derivative assets(1)		126.7			196.4
Impact of net settlement arrangements		(38.6	)		(53.8	)
Fair value of collateral deposited for the benefit of the company(2)		(39.1	)		(54.0	)
Excess collateral pledged by the company in favour of counterparties		9.0			12.2
Initial margin not held in segregated third party custodian accounts		8.2			5.0
Net derivative counterparty exposure after net settlement and collateral arrangements		66.2			105.8

(1) Excludes equity warrants and equity call options which are not subject to counterparty risk.

(2) Excludes $0.4 (December 31, 2016 - $8.7) of excess collateral pledged by counterparties.

Collateral deposited for the benefit of the company at December 31, 2017 consisted of cash of $3.6 and government securities of $35.9 (December 31, 2016 - $8.3 and $54.4). The company had not exercised its right to sell or repledge collateral at December 31, 2017.

Recoverable from reinsurers

Credit risk on the company's recoverable from reinsurers balance existed at December 31, 2017 to the extent that any reinsurer may be unable or unwilling to reimburse the company under the terms of the relevant reinsurance arrangements. The company is also exposed to the credit risk assumed in fronting arrangements and to potential reinsurance capacity constraints. The company regularly assesses the creditworthiness of reinsurers with whom it transacts business. Internal guidelines generally require reinsurers to have strong A.M. Best ratings and to maintain capital and surplus in excess of $500.0. Where contractually provided for, the company has collateral for outstanding balances in the form of cash, letters of credit, guarantees or assets held in trust accounts. This collateral may be drawn on when amounts remain unpaid beyond contractually specified time periods for each individual reinsurer.

The company’s reinsurance security department conducts ongoing detailed assessments of current and potential reinsurers and annual reviews on impaired reinsurers, and provides recommendations for uncollectible reinsurance provisions for the group. This department also collects and maintains individual and group reinsurance exposures across the group. Most of the reinsurance balances for reinsurers rated B++ and lower or which are not rated were inherited by the company on acquisition of a subsidiary. The company’s largest single recoverable from reinsurer (Munich Reinsurance Company) represented 6.5% of shareholders’ equity attributable to shareholders of Fairfax at December 31, 2017 (December 31, 2016 - 3.6%) and is rated A+ by A.M. Best.

The company's gross exposure to credit risk from its reinsurers increased at December 31, 2017 compared to December 31, 2016, principally reflecting the impact from the consolidation of the recoverable from reinsurers of Allied World and Fairfax Latam and current period catastrophe losses ceded to reinsurers. Changes that occurred in the provision for uncollectible reinsurance during the period are disclosed in note 9.

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

	December 31, 2017								December 31, 2016
A.M. Best Rating (or S&P equivalent)	Gross recoverable from reinsurers			Outstanding balances for which security  is held		Net unsecured recoverable from reinsurers			Gross recoverable from reinsurers			Outstanding balances for which security  is held		Net unsecured recoverable from reinsurers
A++		429.6			31.9		397.7			390.0			27.2		362.8
A+		3,878.4			267.2		3,611.2			1,551.0			152.0		1,399.0
A		2,311.9			95.4		2,216.5			1,130.8			67.3		1,063.5
A-		245.5			15.1		230.4			299.7			19.9		279.8
B++		22.2			1.2		21.0			22.0			1.4		20.6
B+		3.1			0.8		2.3			2.0			1.2		0.8
B or lower		5.4			3.0		2.4			11.9			8.9		3.0
Not rated		948.2			493.8		454.4			703.3			218.5		484.8
Pools and associations		134.6			4.5		130.1			71.3			5.6		65.7
		7,978.9			912.9		7,066.0			4,182.0			502.0		3,680.0
Provision for uncollectible reinsurance		(166.4	)				(166.4	)		(171.7	)				(171.7	)
Recoverable from reinsurers		7,812.5					6,899.6			4,010.3					3,508.3

Liquidity Risk

Liquidity risk is the potential for loss if the company is unable to meet financial commitments in a timely manner at reasonable cost as they fall due. The company's policy is to ensure that sufficient liquid assets are available to meet financial commitments, including liabilities to policyholders and debt holders, dividends on preferred shares and investment commitments. Cash flow analysis is performed regularly at both the holding company and subsidiary company levels to ensure that future cash needs are met or exceeded by cash flows generated from operating companies.

The holding company's known significant commitments for 2018 consist of payment of the$283.2dividend on common shares ($10.00 per share paid January 2018), interest and corporate overhead expenses, preferred share dividends, income tax payments, the purchase prices related to the acquisitions of certain businesses of Carillion and the insurance operations of AIG in Uruguay (completed January 31, 2018) and Venezuela, and potential cash outflows related to derivative contracts.

The company believes that holding company cash and investments, net of holding company short sale and derivative obligations at December 31, 2017 of $2,356.9 provides adequate liquidity to meet the holding company’s known commitments in 2018. The holding company expects to continue to receive investment management and administration fees from its insurance and reinsurance subsidiaries, investment income on its holdings of cash and investments, and dividends from its insurance and reinsurance subsidiaries. To further augment its liquidity, the holding company can draw upon its $2.0 billion unsecured revolving credit facility (described in note 15).

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

The company's insurance and reinsurance subsidiaries (and the holding company on a consolidated basis) focus on the stress that could be placed on liquidity requirements as a result of severe disruption or volatility in the capital markets or extreme catastrophe activity or the combination of both. The insurance and reinsurance subsidiaries maintain investment strategies intended to provide adequate funds to pay claims or withstand disruption or volatility in the capital markets without forced sales of investments. The insurance and reinsurance subsidiaries hold highly liquid, high quality short-term investment securities and other liquid investment grade fixed maturity securities to fund anticipated claim payments, operating expenses and commitments related to investments. At December 31, 2017 portfolio investments net of short sale and derivative obligations totaled $36.9 billion (December 31, 2016 - $27.1 billion). Portfolio investments include investments that may lack liquidity or are inactively traded, including corporate debentures, preferred stocks, common stocks, limited partnership interests and other invested assets. At December 31, 2017 these asset classes represented approximately 12.3% (December 31, 2016 - 9.6%) of the carrying value of the insurance and reinsurance subsidiaries' portfolio investments. Fairfax India and Fairfax Africa held investments that may lack liquidity or are inactively traded with a carrying value of $1,054.7 at December 31, 2017 (December 31, 2016 - $326.6).

The insurance and reinsurance subsidiaries may experience cash inflows or outflows on occasion related to their derivative contracts, including collateral requirements. During 2017 the insurance and reinsurance subsidiaries paid net cash of $285.0 (2016 - $814.4) in connection with long and short equity and equity index total return swap derivative contracts (excluding the impact of collateral requirements). The closure in the fourth quarter of 2016 of all of the company's short positions effected through total return swaps in the Russell 2000, S&P 500 and S&P/TSX 60 equity indexes significantly reduced cash flow volatility related to derivatives in 2017.

The non-insurance companies have principal repayments coming due in 2018 of $855.9 primarily related to the Fairfax India and Fairfax Africa term loans. Borrowings of the non-insurance companies are non-recourse to the holding company and are generally expected to be settled through a combination of refinancing and operating cash flows.

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

	December 31, 2017
	Less than 3 months	3 months to 1 year	1 - 3 years	3 - 5 years	More than 5 years	Total
Accounts payable and accrued liabilities(1)	1,564.5	578.8	485.3	216.8	93.5	2,938.9
Funds withheld payable to reinsurers	186.6	553.2	41.9	1.4	67.1	850.2
Provision for losses and loss adjustment expenses	2,108.8	5,344.5	8,272.0	4,557.3	8,328.2	28,610.8
Borrowings - principal	47.1	958.0	877.5	1,556.8	2,957.5	6,396.9
Borrowings - interest	45.6	270.1	542.9	381.5	745.6	1,985.7
	3,952.6	7,704.6	10,219.6	6,713.8	12,191.9	40,782.5

	December 31, 2016
	Less than 3 months	3 months to 1 year	1 - 3 years	3 - 5 years	More than 5 years	Total
Accounts payable and accrued liabilities(1)	1,257.4	433.9	347.4	113.3	131.8	2,283.8
Funds withheld payable to reinsurers	125.1	252.0	25.8	1.5	11.8	416.2
Provision for losses and loss adjustment expenses	1,383.5	3,890.0	5,664.4	3,428.0	5,115.9	19,481.8
Borrowings - principal	478.1	237.6	650.8	1,299.6	2,117.4	4,783.5
Borrowings - interest	51.5	197.6	443.1	334.5	610.0	1,636.7
	3,295.6	5,011.1	7,131.5	5,176.9	7,986.9	28,602.0

(1) Excludes pension and post retirement liabilities, ceded deferred premium acquisition costs and accrued interest. Operating lease commitments are described in note 22.

The timing of loss payments is not fixed and represents the company's best estimate. The payment obligations which are due beyond one year in accounts payable and accrued liabilities primarily relate to certain payables to brokers and reinsurers not expected to be settled in the short term. At December 31, 2017 the company had income taxes payable of $95.6 (December 31, 2016 - $35.4).

The following table provides a maturity profile of the company's short sale and derivative obligations based on the expected undiscounted cash flows from the end of the year to the contractual maturity date or the settlement date:

	December 31, 2017			December 31, 2016
	Less than 3 months	3 months to 1 year	Total	Less than 3 months	3 months to 1 year	Total
Equity total return swaps - short positions	12.1	—	12.1	78.1	—	78.1
Equity total return swaps - long positions	15.6	—	15.6	5.1	—	5.1
Foreign exchange forward contracts	58.1	11.6	69.7	89.0	12.4	101.4
U.S. treasury bond forwards	28.8	—	28.8	49.7	—	49.7
	114.6	11.6	126.2	221.9	12.4	234.3

Market Risk

Market risk (comprised of foreign currency risk, interest rate risk and other price risk) is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The company is exposed to market risk principally in its investing activities but also in its underwriting activities to the extent that those activities expose the company to foreign currency risk. The company's investment portfolios are managed with a long term, value-oriented investment philosophy emphasizing downside protection. The company has policies to limit and monitor its individual issuer exposures and aggregate equity exposure at the subsidiary level and in total at the holding company level. The following is a discussion of the company's primary market risk exposures and how those exposures are managed.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Typically, as interest rates rise, the fair value of fixed income investments decline and, conversely, as interest rates decline, the fair value of fixed income investments rise. In each case, the longer the maturity of the financial instrument, the greater the consequence of a change in interest rates. The company's interest rate risk management strategy is to position its fixed income portfolio based on its view of future interest rates and the yield curve, balanced with liquidity requirements. The company may reposition the portfolio in response to changes in the interest rate environment. At December 31, 2017 the company's investment portfolio included fixed income securities with an aggregate fair value of $10.3 billion that is subject to interest rate risk.

The company's exposure to interest rate risk remained relatively unchanged in 2017 compared to 2016 on a pre-tax basis. Allied World's bond portfolio ($5,337.2, acquired on July 6, 2017) was re-balanced to reflect the company's interest rate risk tolerance. Net sales of long dated U.S. state and municipal bonds (net proceeds of $2,346.5) were broadly in line with the decrease in the notional amount of forward contracts to sell long dated U.S. treasury bonds (notional amount of $1,693.8 at December 31, 2017 compared to $3,013.4 at December 31, 2016). The table below, which displays the potential impact on net earnings of changes in interest rates on the company's fixed income portfolio, incorporates the anticipated effects of U.S. tax reform on the company's effective tax rate in 2017. There were no significant changes to the company's framework used to monitor, evaluate and manage interest rate risk at December 31, 2017 compared to December 31, 2016.

Movements in the term structure of interest rates affect the level and timing of recognition in earnings of gains and losses on fixed income securities held. Generally, the company's investment income may be reduced during sustained periods of lower interest rates as higher yielding fixed income securities are called, mature, or are sold and the proceeds are reinvested at lower rates. During periods of rising interest rates, the market value of the company's existing fixed income securities will generally decrease and gains on fixed income securities will likely be reduced. Losses are likely to be incurred following significant increases in interest rates. General economic conditions, political conditions and many other factors can also adversely affect the bond markets and, consequently, the value of fixed income securities held. These risks are monitored by the company's senior portfolio managers and CEO, and taken into consideration when managing the consolidated bond portfolio.

The table below displays the potential impact of changes in interest rates on the company's fixed income portfolio based on parallel 200 basis point shifts up and down, in 100 basis point increments. This analysis was performed on each individual security to determine the hypothetical effect on net earnings.

		December 31, 2017								December 31, 2016
	Fair value offixed incomeportfolio		Hypothetical$ change effect on net earnings(1)			Hypothetical% changein fair value(1)			Fair value of fixed income portfolio		Hypothetical$ change effect on net earnings(1)			Hypothetical% changein fair value(1)
Change in interest rates
200 basis point increase		9,897.4		(306.2	)		(3.8	)		9,758.6		(295.1	)		(4.0	)
100 basis point increase		10,090.1		(155.6	)		(2.0	)		9,962.2		(148.2	)		(2.0	)
No change		10,290.8		—			—			10,167.5		—			—
100 basis point decrease		10,498.6		161.3			2.0			10,338.3		124.6			1.7
200 basis point decrease		10,720.5		332.0			4.2			10,480.2		228.6			3.1

(1) Includes the impact of forward contracts to sell long dated U.S. treasury bonds with a notional amount of $1,693.8 (December 31, 2016 - $3,013.4).

Certain shortcomings are inherent in the method of analysis presented above. Computations of the prospective effects of hypothetical interest rate changes are based on numerous assumptions, including the maintenance of the level and composition of fixed income securities at the indicated date, and should not be relied on as indicative of future results. Actual values may differ from the projections presented should market conditions vary from assumptions used in the calculation of the fair value of individual securities; such variations may include non-parallel shifts in the term structure of interest rates and changes in individual issuer credit spreads.

Market price fluctuations

Market price fluctuation is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or foreign currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or other factors affecting all similar financial instruments in the market. Changes to the company's exposure to equity price risk through its equity and equity-related holdings at December 31, 2017 compared to December 31, 2016 are described below.

The company holds significant investments in equity and equity-related instruments. The market value and the liquidity of these investments are volatile and may vary dramatically either up or down in short periods, and their ultimate value will therefore only be known over the long term or on disposition.

Throughout most of 2016 the company had economically hedged certain market risks associated with its equity and equity-related holdings (comprised of common stocks, convertible preferred stocks, convertible bonds, non-insurance investments in associates and equity-related derivatives) against a potential significant decline in equity markets by way of short positions effected through equity and equity index total return swaps (including short positions in certain equity indexes and individual equities) and equity index put options (S&P 500). The company's equity hedges were structured to provide a return that was inverse to changes in the fair values of the indexes and certain individual equities.

The company discontinued its economic equity hedging strategy in the fourth quarter of 2016 after giving consideration to the possible and actual outcome of the U.S. elections and the potential for fundamental changes that could improve U.S. economic growth and equity markets. During 2016 the company closed out $6,350.6 notional amount of short positions effected through equity index total return swaps (comprised of Russell 2000, S&P 500 and S&P/TSX 60 short equity index total return swaps) and recognized a net loss on investment of $955.2 (realized loss of $2,665.4 of which $1,710.2 had been recognized as unrealized losses in prior years). The company continues to hold short equity and equity index total return swaps for investment purposes, but no longer regards them as hedges of its equity and equity-related holdings.During 2017 the company closed out $1,202.9 notional amount of short equity total return swaps and recognized a net loss on investment of $237.9 (realized loss of $553.1 of which $315.2 was recognized as unrealized losses in prior years).In the first quarter of 2018 the company closed out an additional $481.3 notional amount of short equity and equity index total return swaps and recognized a net loss on investment of $8.1 (realized loss of $199.0 of which $190.9 was recognized as unrealized losses in prior years), which reduced the notional amount of remaining short equity and equity index total return swaps to approximately $509.

The following table summarizes the net effect of the company's equity and equity-related holdings (long exposures net of short exposures) on the company's financial position as at December 31, 2017 and 2016 and results of operations for the years then ended. The company considers the fair value of $3,846.2 (December 31, 2016 – $1,752.5) of its non-insurance investments in associates (see note 6) as a component of its equity and equity-related holdings when assessing its net equity exposures.

	December 31, 2017				December 31, 2016				Year ended December 31, 2017			Year ended December 31, 2016
	Exposure/Notional amount		Carrying value		Exposure/Notional amount		Carrying value		Pre-tax earnings (loss)			Pre-tax earnings (loss)
Long equity exposures:
Common stocks(1)	5,578.1		5,578.1		4,181.4		4,181.4			707.8			(78.0	)
Preferred stocks – convertible	68.1		68.1		9.1		9.1			(1.6	)		(6.6	)
Bonds – convertible	833.8		833.8		638.2		638.2			233.1			(39.4	)
Investments in associates(2)	3,846.2		2,945.3		1,752.5		1,693.0			69.8			—
Derivatives and other invested assets:
Equity total return swaps – long positions	697.8		2.2		213.1		4.3			19.6			23.3
Equity warrants and call options(4)	77.6		77.6		19.3		19.3			38.3			(4.0	)
Total equity and equity related holdings	11,101.6		9,505.1		6,813.6		6,545.3			1,067.0			(104.7	)
Short equity exposures and equity hedges(3):
Derivatives and other invested assets:
Equity total return swaps – short positions	(892.5	)	(0.3	)	(1,623.0	)	(67.7	)		(408.7	)		(208.0	)
Equity index total return swaps – short positions	(52.6	)	0.4		(43.3	)	0.6			(9.2	)		(971.8	)
Equity index put options(4)	—		—		—		—			—			(13.1	)
	(945.1	)	0.1		(1,666.3	)	(67.1	)		(417.9	)		(1,192.9	)
Net equity exposures and financial effects	10,156.5				5,147.3					649.1			(1,297.6	)

(1) The company excludes other funds that are invested principally in fixed income securities with a carrying value of $90.9 at December 31, 2017 (December 31, 2016 - $157.1) when measuring its equity and equity-related exposure.

(2) Excludes the company’s insurance and reinsurance investments in associates which are considered long term strategic holdings. See note 6 for details.

(3) Prior to the fourth quarter of 2016 the short equity exposures were considered economic hedges of certain market risks associated with the company's equity and equity-related holdings.

(4) The company does not consider the notional amounts of the S&P 500 call options and put options in its assessment of its net equity exposures if they are out-of-the-money.

The table that follows illustrates the potential impact on net earnings of changes in the fair value of the company's equity and equity-related holdings (long exposures net of short exposures) as a result of changes in global equity markets at December 31, 2017 and 2016. The analysis assumes variations of 5% and 10% which the company believes to be reasonably possible based on analysis of the return on various equity indexes and management's knowledge of global equity markets.

		December 31, 2017								December 31, 2016
	Fair value of equity and equity-related holdings		Hypothetical$ change effecton net earnings			Hypothetical% changein fair value			Fair value of equity and equity-related holdings		Hypothetical $ change effect on net earnings			Hypothetical % change in fair value
Change in global equity markets
10% increase		6,887.9		479.9			9.2			3,755.3		248.6			10.6
5% increase		6,597.9		239.0			4.6			3,569.7		119.6			5.2
No change		6,310.3		—			—			3,394.7		—			—
5% decrease		6,023.0		(238.5	)		(4.6	)		3,233.5		(106.7	)		(4.7	)
10% decrease		5,738.1		(475.0	)		(9.1	)		3,082.9		(204.5	)		(9.2	)

The changes in fair value of non-insurance investments in associates have been excluded from each of the scenarios presented above as any change in the fair value of an investment in associate is generally recognized in the company’s consolidated financial reporting only upon ultimate disposition of the associate.

The company's risk management objective with respect to market price fluctuations places primary emphasis on the preservation of invested capital. Subsequent to the economic downturn in 2008, the company became increasingly concerned about the risk of a potential significant decline in global equity markets. From 2010 until the fourth quarter of 2016, the company relied on certain derivative financial instruments to protect its equity and equity-related holdings. In the latter part of 2016, the company's sentiment with respect to U.S. economic growth and improvements in the global equity markets improved, resulting in the discontinuation of the economic equity hedging strategy. In the foreseeable future, the company does not expect to apply equity hedging strategies and will remain focused on its long-term value-oriented investment philosophy, seeking investments that are attractively priced, are selling at a discount to intrinsic value and afford a margin of safety.

At December 31, 2017 the company's exposure to the ten largest issuers of common stock owned in its investment portfolio was $3,138.1, which represented 8.0% of the total investment portfolio (December 31, 2016 - $2,113.8, 7.4%). The exposure to the largest single issuer of common stock held at December 31, 2017 was $549.0, which represented 1.4% of the total investment portfolio (December 31, 2016 - $391.7, 1.4%).

Risk of decreasing price levels

The risk of decreases in the general price level of goods and services is the potential for negative impacts on the consolidated balance sheet (including the company's equity and equity-related holdings and fixed income investments in non-sovereign debt) and the consolidated statement of earnings. Among their effects on the economy, decreasing price levels typically result in decreased consumption, restriction of credit, shrinking output and investment and numerous bankruptcies.

The company has purchased derivative contracts referenced to consumer price indexes (“CPI”) in the geographic regions in which it operates to serve as an economic hedge against the potential adverse financial impact on the company of decreasing price levels. At December 31, 2017 these contracts have a remaining weighted average life of 4.6 years (December 31, 2016 - 5.6 years), a notional amount of $117.3 billion (December 31, 2016 - $110.4 billion) and a fair value of $39.6 (December 31, 2016 -$83.4). As the average remaining life of a contract declines, the fair value of the contract (excluding the impact of CPI changes) will generally decline. The company's maximum potential loss on any contract is limited to the original cost of that contract. During 2017the company did not enter into any new CPI-linked derivative contracts.The company's CPI-linked derivative contracts produced net unrealized losses of $71.0 in 2017 (2016 - $196.2).

Foreign currency risk

Foreign currency risk is the risk that the fair value or cash flows of a financial instrument or another asset will fluctuate because of changes in exchange rates and as a result, could produce an adverse effect on earnings and equity when measured in a company's functional currency. The company is exposed to foreign currency risk through transactions conducted in currencies other than the U.S. dollar, and also through its investments in associates and net investment in subsidiaries that have a functional currency other than the U.S. dollar. Long and short foreign exchange forward contracts primarily denominated in the euro, the British pound sterling and the Canadian dollar are used to manage foreign currency exposure on foreign currency denominated transactions. Foreign currency denominated liabilities may be used to manage the company's foreign currency exposures to net investments in foreign operations having a functional currency other than the U.S. dollar. The company's exposure to foreign currency risk was not significantly different at December 31, 2017 compared to December 31, 2016.

The company's foreign currency risk management objective is to mitigate the impact of foreign currency exchange rate fluctuations on total equity, notwithstanding the company's exposure to the Indian rupee resulting from its investment in Fairfax India. At the consolidated level the company accumulates, and matches, all significant asset and liability foreign currency exposures, thereby identifying any net unmatched positions, whether long or short. The company may then take action to cure an unmatched position through the acquisition of a derivative contract or the purchase or sale of investments denominated in the exposed currency.

A portion of the company's premiums are written in foreign currencies and a portion of the company's loss reserves are denominated in foreign currencies. Moreover, a portion of the company's cash and investments are held in currencies other than the U.S. dollar. In general, the company manages foreign currency risk on liabilities by investing in financial instruments and other assets denominated in the same currency as the liabilities to which they relate. The company also monitors the exposure of invested assets to foreign currency risk and limits these amounts as deemed necessary. The company may nevertheless, from time to time, experience gains or losses resulting from fluctuations in the values of these foreign currencies, which may favourably or adversely affect operating results.

At December 31, 2017 the company had designated the carrying value of Cdn$2,212.9 principal amount of its Canadian dollar denominated unsecured senior notes with a fair value of $1,868.6 (December 31, 2016 - principal amount of Cdn$1,975.0 with a fair value of $1,618.1) as a hedge of its net investment in its Canadian subsidiaries for financial reporting. In 2017 the company recognized pre-tax losses of $106.3 (2016 - $37.5) related to exchange rate movements on the unsecured senior notes in losses on hedge of net investment in Canadian subsidiaries in the consolidated statement of comprehensive income.

The pre-tax foreign exchange effect on certain line items in the company's consolidated financial statements for the years ended December 31 follows:

	2017		2016
Net gains (losses) on investments
Investing activities	88.8		(136.9	)
Underwriting activities	(74.9	)	19.7
Foreign currency forward contracts	(11.1	)	(12.3	)
Foreign currency net gains (losses) included in pre-tax earnings (loss)	2.8		(129.5	)

The table below shows the approximate effect of a 5% appreciation of the U.S. dollar against each of the Canadian dollar, euro, British pound sterling, Indian rupee and all other currencies, respectively, on pre-tax earnings (loss), net earnings (loss), pre-tax other comprehensive income (loss) and other comprehensive income (loss). Certain shortcomings are inherent in the method of analysis presented, including the assumption that the 5% appreciation of the U.S. dollar occurred at December 31, 2017 with all other variables held constant.

	Canadian dollar				Euro				British pound sterling				Indian rupee				All other currencies				Total
	2017		2016		2017		2016		2017		2016		2017		2016		2017		2016		2017		2016
Pre-tax earnings (loss)	32.5		40.6		6.2		9.5		5.7		15.6		(64.8	)	(31.2	)	(55.7	)	24.0		(76.1	)	58.5
Net earnings (loss)	24.3		28.0		5.0		7.8		5.4		11.7		(57.3	)	(21.9	)	(45.4	)	13.8		(68.0	)	39.4
Pre-tax other comprehensive income (loss)	(75.3	)	(66.1	)	(60.8	)	(1.7	)	(33.6	)	(29.9	)	(128.5	)	(99.3	)	(54.3	)	(60.0	)	(352.5	)	(257.0	)
Other comprehensive income (loss)	(73.8	)	(66.0	)	(54.7	)	4.3		(33.4	)	(28.5	)	(126.8	)	(94.0	)	(50.9	)	(60.0	)	(339.6	)	(244.2	)

The hypothetical impact in 2017 of the foreign currency movements on pre-tax earnings (loss) in the table above principally related to the following:

Canadian dollar:  Foreign exchange forward contracts used as economic hedges of operational exposure at OdysseyRe (including OdysseyRe's net investment in its Canadian branch where the net assets are translated through other comprehensive income), the translation of the company's Canadian dollar denominated senior notes not included as part of the hedge of net investment in Canadian subsidiaries and certain net assets of Allied World (consolidated during 2017).

Euro: Foreign exchange forward contracts at OdysseyRe and Crum & Forster used as economic hedges of euro denominated operational exposure and portfolio investments, and certain net liabilities of Allied World (consolidated during 2017) and Run-off (principally provision for losses and loss adjustment expenses, partially offset by portfolio investments).

British pound sterling: Certain net liabilities at OdysseyRe (principally insurance contract liabilities net of recoverable from reinsurers and portfolio investments) and Allied World (consolidated during 2017), partially offset by certain net assets at Brit (principally portfolio investments and recoverable from reinsurers, net of insurance contract liabilities).

Indian rupee:  The company's 9.9% equity interest in ICICI Lombard (reclassified from investments in associates to holding company cash and investments within Fairfax Asia during 2017) and portfolio investments held broadly across the company.

All other currencies: U.S. dollar denominated portfolio investments held in entities where the functional currency is other than the U.S. dollar (primarily at OdysseyRe’s Paris branch and Newline syndicate), foreign exchange forward contracts used as economic hedges of operational exposure at OdysseyRe and certain net assets of Allied World (consolidated during 2017), partially offset by certain net liabilities at Fairfax India (primarily U.S. dollar long term debt).

The hypothetical impact in 2017 of the foreign currency movements on pre-tax other comprehensive income (loss) in the table above principally related to the the translation of the company's non-U.S. dollar net investments in subsidiaries and investments in associates as follows:

Canadian dollar: Net investments in Northbridge and Canadian subsidiaries within the Other reporting segment, partially offset by the impact of the hedge of net investment in Canadian subsidiaries.

Euro: Net investments in Grivalia Properties (consolidated during 2017) and investments in associates (primarily Eurolife, Astarta and KWF LPs), partially offset by net liabilities in OdysseyRe's Paris branch.

British pound sterling: Net investments in Newline syndicate (OdysseyRe) and RiverStone Insurance in the U.K. (European Run-off).

Indian rupee:  Net investments in Fairfax India and Thomas Cook India.

All other currencies: Net investments in Fairfax Latin America (Argentine peso, Chilean peso, Colombian peso), Bryte Insurance (South African rand), Polish Re (Polish zloty), AMAG (Indonesian rupiah), Fairfirst Insurance (Sri Lankan rupee) and Pacific Insurance (Malaysian ringgit), and investments in associates (primarily Kuwaiti dinar at Gulf Insurance, South African rand at AFGRI and Vietnamese dong at BIC Insurance).

Capital Management

The company's capital management framework is designed to protect, in the following order, its policyholders, its bondholders and its preferred shareholders and then finally to optimize returns to common shareholders. Effective capital management includes measures designed to maintain capital above minimum regulatory levels, above levels required to satisfy issuer credit ratings and financial strength ratings requirements, and above internally determined and calculated risk management levels. Total capital at December 31, 2017, comprising total debt, shareholders' equity attributable to shareholders of Fairfax and non-controlling interests, was $24,826.1 compared to $16,587.7 at December 31, 2016. The company manages its capital based on the following financial measurements and ratios to provide an indication of the company's ability to issue and service debt without impacting the operating companies or their portfolio investments:

	December 31, 2017			December 31, 2016
Holding company cash and investments (net of short sale and derivative obligations)		2,356.9			1,329.4
Borrowings – holding company		3,475.1			3,472.5
Borrowings – insurance and reinsurance companies		1,373.0			435.5
Borrowings – non-insurance companies		1,566.0			859.6
Total debt		6,414.1			4,767.6
Net debt(1)		4,057.2			3,438.2
Common shareholders’ equity		12,475.6			8,484.6
Preferred stock		1,335.5			1,335.5
Non-controlling interests		4,600.9			2,000.0
Total equity		18,412.0			11,820.1
Net debt/total equity		22.0	%		29.1	%
Net debt/net total capital(2)		18.1	%		22.5	%
Total debt/total capital(3)		25.8	%		28.7	%
Interest coverage(4)		7.1x			n/a
Interest and preferred share dividend distribution coverage(5)		6.0x			n/a

(1) Net debt is is calculated by the company as total debt less holding company cash and investments (net of short sale and derivative obligations).

(2) Net total capital is calculated by the company as the sum of total equity and net debt.

(3) Total capital is calculated by the company as the sum of total equity and total debt.

(4) Interest coverage is calculated by the company as the sum of earnings (loss) before income taxes and interest expense divided by interest expense.

(5) Interest and preferred share dividend distribution coverage is calculated by the company as the sum of earnings (loss) before income taxes and interest expense divided by interest expense and preferred share dividend distributions adjusted to a pre-tax equivalent at the company’s Canadian statutory income tax rate.

During 2017 the company completed an underwritten public offering of Cdn$650.0 principal amount of 4.25% senior notes due 2027 for net proceeds of $509.5. Those net proceeds were used to redeem the company's remaining Cdn$388.4 principal amount 7.5% senior notes for cash consideration of $340.6 (including accrued interest), repay $124.9 principal amount of purchase consideration payable upon maturity and reduce the amount outstanding on the company's revolving credit facility (note 15). The company also issued 5,075,894 subordinate voting shares with a fair value of $2,191.6 as part of the acquisition of Allied World (note 23).

The company's capital management objectives include maintaining sufficient liquid resources at the holding company to be able to pay interest on debt, dividends to preferred shareholders and all other holding company obligations. Accordingly, the company monitors its interest and preferred share dividend distribution coverage ratio calculated as described in footnote 5 of the table above.

In the United States, the National Association of Insurance Commissioners ("NAIC") has developed a model law and risk-based capital ("RBC") formula designed to help regulators identify property and casualty insurers that may be inadequately capitalized. Under the NAIC's requirements, an insurer must maintain total capital and surplus above a calculated threshold or face varying levels of regulatory action. The threshold is based on a formula that attempts to quantify the risk of a company's insurance, investment and other business activities. At December 31, 2017 Crum & Forster, Zenith National, Allied World, OdysseyRe and U.S. Run-off subsidiaries had capital and surplus in excess of the regulatory minimum requirement of two times the authorized control level.

In Bermuda, the Bermuda Insurance Act 1978 imposes solvency and liquidity standards on Bermuda insurers and reinsurers. There is a requirement to hold available statutory economic capital and surplus equal to or in excess of an enhanced capital and target capital level as determined by the Bermuda Monetary Authority under the Bermuda Solvency Capital Requirement model. The target capital level is measured as 120% of the enhanced capital requirements. At December 31, 2017 Allied World was in compliance with Bermuda's regulatory requirements.

In Canada, property and casualty companies are regulated by the Office of the Superintendent of Financial Institutions on the basis of a minimum supervisory target of 150% of a minimum capital test ("MCT") formula. At December 31, 2017 Northbridge's subsidiaries had a weighted average MCT ratio in excess of the 150% minimum supervisory target.

The Lloyd's market is subject to the solvency and capital adequacy requirements of the Prudential Regulatory Authority in the U.K. The capital requirements of Brit are based on the output of an internal model which reflects the risk profile of the business. At December 31, 2017 Brit’s available capital was in excess of its management capital requirements (capital required for business strategy and regulatory requirements).

In countries other than the U.S., Canada, the U.K. and Bermuda where the company operates, the company met or exceeded the applicable regulatory capital requirements at December 31, 2017.

XML

Segmented Information

12 Months Ended

Dec. 31, 2017

Operating Segments [Abstract]

Segmented Information

Segmented Information

The company identifies its operating segments by operating company, consistent with its management structure. Certain of the operating segments have been aggregated into reporting segments, with reporting segments categorized by type of business as described below. The accounting policies of the reporting segments are the same as those described in note 3. Transfer prices for inter-segment transactions are set at arm's length. Geographic premiums are determined based on the domicile of the various subsidiaries and where the primary underlying risk of the business resides.

Insurance and Reinsurance

Northbridge - A national commercial property and casualty insurer in Canada providing property and casualty insurance products through its Northbridge Insurance and Federated subsidiaries.

OdysseyRe - A U.S.-based reinsurer that provides a full range of property and casualty products on a worldwide basis, and that underwrites specialty insurance, primarily in the U.S. and in the U.K., both directly and through the Lloyd's market in London.

Crum & Forster - A national commercial property and casualty insurer in the U.S. writing a broad range of commercial coverages, principally specialty coverages.

Zenith National - An insurer primarily engaged in workers' compensation business in the U.S.

Brit - A market-leading global Lloyd's of London specialty insurer and reinsurer.

Allied World - A global property, casualty and specialty insurer and reinsurer with a presence at Lloyd's.

Fairfax Asia - This reporting segment includes the company's operations that underwrite insurance and reinsurance coverages in Singapore (First Capital, sold on December 28, 2017), Hong Kong (Falcon), Malaysia (Pacific Insurance), Indonesia (AMAG, acquired on October 10, 2016), and Sri Lanka (Fairfirst Insurance, acquired on October 3, 2016). Fairfax Asia also includes the company's equity accounted interests in Vietnam-based BIC Insurance (35.0%), Thailand-based Falcon Thailand (41.2%) and Mumbai-based ICICI Lombard (partially sold during 2017 and reclassified to a common stock investment).

Insurance and Reinsurance - Other - This reporting segment is comprised of Group Re, Bryte Insurance (acquired on December 7, 2016), Advent, Fairfax Latin America and Fairfax Central and Eastern Europe ("Fairfax CEE"). Group Re primarily constitutes the participation of CRC Re and Wentworth (both based in Barbados) in the reinsurance of Fairfax’s subsidiaries by quota share or through participation in those subsidiaries’ third party reinsurance programs on the same terms as third party reinsurers. Group Re also writes third party business. Bryte Insurance is an established property and casualty insurer in South Africa and Botswana. Advent is a specialty property reinsurance and insurance company operating through Syndicate 780 at Lloyd’s. Fairfax Latin America is comprised of Fairfax Brasil, which writes commercial property and casualty insurance in Brazil, and Fairfax Latam, consisting of property and casualty insurance operations in Chile, Colombia and Argentina. Fairfax CEE is comprised of Polish Re, which writes reinsurance in Central and Eastern Europe, and Colonnade Insurance, a Luxembourg property and casualty insurer with branches in each of the Czech Republic, Hungary, Slovakia, Poland, Bulgaria and Romania, and an insurance subsidiary in Ukraine.

Run-off

The Run-off reporting segment principally comprises RiverStone (UK), Syndicate 3500 at Lloyd's (managed by RiverStone Managing Agency Limited), RiverStone Insurance (European Run-off) and TIG Insurance (U.S. Run-off).

Other

The Other reporting segment is comprised of the company's non-insurance operations, including Cara and its subsidiaries St-Hubert (acquired on September 2, 2016), Original Joe's (acquired on November 28, 2016) and Pickle Barrel (acquired on December 1, 2017), The Keg, Thomas Cook India and its subsidiaries Quess and Sterling Resorts, Grivalia Properties (consolidated on July 4, 2017), Mosaic Capital (consolidated on January 26, 2017),Pethealth, Praktiker, Sporting Life, William Ashley, Boat Rocker, Golf Town (acquired on October 31, 2016), Fairfax Africa (since its initial public offering on February 17, 2017), and Fairfax India and its subsidiaries NCML, Fairchem (merged on March 14, 2017 with Privi Organics (acquired on August 26, 2016)) and Saurashtra Freight (acquired on February 14, 2017).

Corporate and Other

Corporate and Other includes the parent entity (Fairfax Financial Holdings Limited), its subsidiary intermediate holding companies and Hamblin Watsa, an investment management company.

by Reporting Segment

Sources of earnings by reporting segment for the years ended December 31 were as follows:

2017

	Insurance and Reinsurance
	Northbridge			OdysseyRe				Crum & Forster		Zenith National		Brit		Allied World(1)		FairfaxAsia		Other		Operating companies		Run-off		Other		Corporate and Other		Eliminations and adjustments			Consolidated
Gross premiums written
External		1,180.4			2,725.7			2,120.0		849.0		2,048.1		1,447.6		667.9		1,160.4		12,199.1		8.4		—		—			—			12,207.5
Intercompany		6.6			57.4			54.5		—		8.9		—		2.5		83.9		213.8		—		—		—			(213.8	)		—
		1,187.0			2,783.1			2,174.5		849.0		2,057.0		1,447.6		670.4		1,244.3		12,412.9		8.4		—		—			(213.8	)		12,207.5
Net premiums written		1,064.9			2,495.9			1,863.4		837.4		1,530.9		991.9		327.5		863.3		9,975.2		8.3		—		—			—			9,983.5
Net premiums earned
External		1,023.7			2,318.3			1,822.1		814.1		1,537.3		1,041.3		369.3		775.2		9,701.3		20.1		—		—			—			9,721.4
Intercompany		(4.0	)		15.1			30.7		(2.5	)	(0.4	)	(12.6	)	(41.7	)	15.4		—		—		—		—			—			—
		1,019.7			2,333.4			1,852.8		811.6		1,536.9		1,028.7		327.6		790.6		9,701.3		20.1		—		—			—			9,721.4
Underwriting expenses(2)		(1,010.7	)		(2,273.4	)		(1,849.6	)	(694.4	)	(1,738.8	)	(1,615.3	)	(289.4	)	(871.2	)	(10,342.8	)	(227.5	)	—		—			—			(10,570.3	)
Underwriting profit (loss)		9.0			60.0			3.2		117.2		(201.9	)	(586.6	)	38.2		(80.6	)	(641.5	)	(207.4	)	—		—			—			(848.9	)
Interest income		56.1			131.0			53.4		26.8		41.9		76.8		31.3		38.7		456.0		37.2		29.7		(8.3	)		—			514.6
Dividends		9.5			15.6			3.4		3.8		3.7		2.2		3.2		11.8		53.2		4.6		9.1		6.3			—			73.2
Investment expenses		(11.5	)		(21.7	)		(23.0	)	(7.2	)	(13.0	)	(13.1	)	(5.4	)	(12.0	)	(106.9	)	(12.9	)	(143.7	)	(2.1	)		236.8			(28.8	)
Interest and dividends		54.1			124.9			33.8		23.4		32.6		65.9		29.1		38.5		402.3		28.9		(104.9	)	(4.1	)		236.8			559.0
Share of profit (loss) of associates		3.2			7.2			(1.1	)	(9.8	)	9.2		(17.6	)	29.4		3.0		23.5		(6.1	)	55.4		127.7			—			200.5
Other
Revenue		—			—			—		—		—		—		—		—		—		—		3,257.6		—			—			3,257.6
Expenses		—			—			—		—		—		—		—		—		—		—		(2,996.0	)	—			—			(2,996.0	)
		—			—			—		—		—		—		—		—		—		—		261.6		—			—			261.6
Operating income (loss)		66.3			192.1			35.9		130.8		(160.1	)	(538.3	)	96.7		(39.1	)	(215.7	)	(184.6	)	212.1		123.6			236.8			172.2
Net gains (losses) on investments		44.8			253.1			27.9		26.6		79.0		(26.5	)	1,083.9		69.5		1,558.3		73.3		7.2		(171.3	)		—			1,467.5
Gain on sale of subsidiary		—		—	—		—	—		—		—		—		1,018.6		—		1,018.6		—		—		—			—			1,018.6
Loss on repurchase of long term debt (note 15)		—			—			—		—		—		—		—		—		—		—		—		(28.6	)		—			(28.6	)
Interest expense		—			(3.3	)		(1.8	)	(3.3	)	(12.5	)	(15.6	)	—		(4.8	)	(41.3	)	—		(65.8	)	(224.1	)		—			(331.2	)
Corporate overhead		(8.7	)		(27.4	)		(25.4	)	(8.2	)	(9.2	)	(27.9	)	(2.6	)	(22.2	)	(131.6	)	—		—		93.1			(236.8	)		(275.3	)
Pre-tax income (loss)		102.4			414.5			36.6		145.9		(102.8	)	(608.3	)	2,196.6		3.4		2,188.3		(111.3	)	153.5		(207.3	)		—			2,023.2
Income taxes																																(408.3	)
Net earnings																																1,614.9
Attributable to:
Shareholders of Fairfax																																1,740.6
Non-controlling interests																																(125.7	)
																																1,614.9

(1) Allied World is included in the company's financial reporting with effect from July 6, 2017.

(2) Total underwriting expenses for the year ended December 31, 2017 are comprised as shown below. Accident year total underwriting expenses exclude the impact of favourable or unfavourable prior year claims reserve development.

	Insurance and Reinsurance
	Northbridge		OdysseyRe		Crum & Forster		Zenith National		Brit		Allied World	FairfaxAsia		Other		Operating companies
Loss & LAE - accident year	760.1		1,827.7		1,209.8		477.9		1,117.8		1,293.1	263.1		563.8		7,513.3
Commissions	164.5		492.5		292.4		83.5		424.8		32.6	4.7		148.4		1,643.4
Premium acquisition costs and other underwriting expenses	179.6		241.3		357.6		209.4		205.7		217.7	73.9		192.6		1,677.8
Total underwriting expenses - accident year	1,104.2		2,561.5		1,859.8		770.8		1,748.3		1,543.4	341.7		904.8		10,834.5
Unfavourable (favourable) claims reserve development	(93.5	)	(288.1	)	(10.2	)	(76.4	)	(9.5	)	71.9	(52.3	)	(33.6	)	(491.7	)
Total underwriting expenses - calendar year	1,010.7		2,273.4		1,849.6		694.4		1,738.8		1,615.3	289.4		871.2		10,342.8

2016

	Insurance and Reinsurance
	Northbridge			OdysseyRe			Crum & Forster		Zenith National		Brit		FairfaxAsia		Other		Operating companies		Run-off		Other		Corporate and Other		Eliminations and adjustments			Consolidated
Gross premiums written
External		1,052.3			2,355.8		2,011.8		831.7		1,904.3		636.1		558.4		9,350.4		183.9		—		—			—			9,534.3
Intercompany		2.8			24.9		43.2		—		7.9		12.6		84.9		176.3		—		—		—			(176.3	)		—
		1,055.1			2,380.7		2,055.0		831.7		1,912.2		648.7		643.3		9,526.7		183.9		—		—			(176.3	)		9,534.3
Net premiums written		942.6			2,100.2		1,801.1		819.4		1,480.2		303.1		458.4		7,905.0		183.4		—		—			—			8,088.4
Net premiums earned
External		915.8			2,083.9		1,738.6		809.3		1,396.5		348.5		406.1		7,698.7		163.5		—		—			—			7,862.2
Intercompany		(7.0	)		(9.8	)	30.9		(2.0	)	2.8		(46.0	)	31.1		—		—		—		—			—			—
		908.8			2,074.1		1,769.5		807.3		1,399.3		302.5		437.2		7,698.7		163.5		—		—			—			7,862.2
Underwriting expenses(1)		(862.5	)		(1,838.9	)	(1,737.1	)	(643.2	)	(1,370.2	)	(261.4	)	(409.5	)	(7,122.8	)	(348.6	)	—		—			—			(7,471.4	)
Underwriting profit (loss)		46.3			235.2		32.4		164.1		29.1		41.1		27.7		575.9		(185.1	)	—		—			—			390.8
Interest income		56.6			158.5		72.8		33.0		66.5		26.6		32.2		446.2		58.6		21.3		(11.7	)		—			514.4
Dividends		8.4			23.9		5.8		4.3		2.6		3.4		2.7		51.1		5.9		8.2		1.6			—			66.8
Investment expenses		(12.8	)		(28.7	)	(12.8	)	(7.7	)	(13.7	)	(3.3	)	(8.3	)	(87.3	)	(13.3	)	(12.8	)	(1.4	)		88.8			(26.0	)
Interest and dividends		52.2			153.7		65.8		29.6		55.4		26.7		26.6		410.0		51.2		16.7		(11.5	)		88.8			555.2
Share of profit (loss) of associates		5.2			17.3		(22.6	)	1.2		3.4		48.1		0.7		53.3		(15.5	)	13.6		(27.2	)		—			24.2
Other
Revenue		—			—		—		—		—		—		—		—		—		2,061.6		—			—			2,061.6
Expenses		—			—		—		—		—		—		—		—		—		(1,958.4	)	—			—			(1,958.4	)
		—			—		—		—		—		—		—		—		—		103.2		—			—			103.2
Operating income (loss)		103.7			406.2		75.6		194.9		87.9		115.9		55.0		1,039.2		(149.4	)	133.5		(38.7	)		88.8			1,073.4
Net gains (losses) on investments(3)		(161.3	)		(318.7	)	(184.7	)	(168.2	)	87.3		(1.7	)	(90.0	)	(837.3	)	(225.2	)	30.1		(171.2	)		—			(1,203.6	)
Interest expense		—			(2.8	)	(1.6	)	(3.3	)	(14.2	)	—		(4.2	)	(26.1	)	—		(28.3	)	(188.4	)		—			(242.8	)
Corporate overhead		(6.6	)		(30.2	)	(20.4	)	(8.4	)	(9.2	)	(0.1	)	—		(74.9	)	—		—		(17.6	)		(88.8	)		(181.3	)
Pre-tax income (loss)		(64.2	)		54.5		(131.1	)	15.0		151.8		114.1		(39.2	)	100.9		(374.6	)	135.3		(415.9	)		—			(554.3	)
Income taxes																													159.6
Net loss																													(394.7	)
Attributable to:
Shareholders of Fairfax																													(512.5	)
Non-controlling interests																													117.8
																													(394.7	)

(1) Total underwriting expenses for the year ended December 31, 2016 are comprised as shown below. Accident year total underwriting expenses exclude the impact of favourable or unfavourable prior year claims reserve development.

	Insurance and Reinsurance
	Northbridge		OdysseyRe		Crum & Forster		Zenith National		Brit(1)		Fairfax Asia		Other		Operating companies
Loss & LAE - accident year	651.1		1,438.4		1,136.1		459.3		909.7		252.5		290.1		5,137.2
Commissions	150.6		431.4		283.2		81.9		292.3		(6.5	)	101.8		1,334.7
Premium acquisition costs and other underwriting expenses	173.6		235.6		326.1		203.0		221.7		67.5		78.0		1,305.5
Total underwriting expenses - accident year	975.3		2,105.4		1,745.4		744.2		1,423.7		313.5		469.9		7,777.4
Favourable claims reserve development	(112.8	)	(266.5	)	(8.3	)	(101.0	)	(53.5	)	(52.1	)	(60.4	)	(654.6	)
Total underwriting expenses - calendar year	862.5		1,838.9		1,737.1		643.2		1,370.2		261.4		409.5		7,122.8

Investments in Associates, Additions to Goodwill, Segment Assets and Segment Liabilities

Investments in associates, additions to goodwill, segment assets and segment liabilities by reporting segment as at and for the years ended December 31 were as follows:

	Investments in associates		Additions to goodwill			Segment assets				Segment liabilities
	2017	2016	2017		2016	2017		2016		2017	2016
Insurance and Reinsurance
Northbridge	218.6	206.9	1.1		—	4,527.2		4,149.9		2,804.6	2,630.2
OdysseyRe	355.7	373.5	—		—	11,316.1		10,334.8		7,248.4	6,370.5
Crum & Forster	263.2	153.5	—		7.8	6,290.6		6,294.1		4,651.1	4,625.7
Zenith National	162.9	146.9	—		—	2,586.8		2,590.7		1,653.8	1,633.1
Brit	231.4	217.8	—		—	7,480.1		6,579.5		5,930.1	4,915.7
Allied World(1)	210.5	—	937.9		—	14,584.4		—		10,937.2	—
Fairfax Asia	100.9	487.3	(24.2	)	69.5	1,930.7		2,684.7		674.5	1,457.7
Other	92.0	127.4	19.6		11.5	4,321.3		2,656.2		3,223.5	1,850.1
Operating companies	1,635.2	1,713.3	934.4		88.8	53,037.2		35,289.9		37,123.2	23,483.0
Run-off	252.0	308.2	—		—	5,207.2		5,709.5		3,456.5	3,970.4
Other	1,250.8	255.3	277.9		127.2	8,684.0		4,740.2		3,245.8	2,029.8
Corporate and Other and eliminations and adjustments	518.3	356.7	—		—	(2,838.3	)	(2,355.2	)	1,852.6	2,081.1
Consolidated	3,656.3	2,633.5	1,212.3		216.0	64,090.1		43,384.4		45,678.1	31,564.3

(1) Allied World is included in the company's financial reporting with effect from July 6, 2017.

Product Line

Net premiums earned by product line for the years ended December 31 was as follows:

	Property				Casualty				Specialty				Total
	2017		2016		2017		2016		2017		2016		2017	2016
Net premiums earned - Insurance and Reinsurance
Northbridge	449.1		395.6		474.4		423.8		96.2		89.4		1,019.7	908.8
OdysseyRe	1,206.0		1,159.9		901.5		714.5		225.9		199.7		2,333.4	2,074.1
Crum & Forster	238.9		237.0		1,518.0		1,426.6		95.9		105.9		1,852.8	1,769.5
Zenith National	32.1		29.3		779.5		778.0		—		—		811.6	807.3
Brit	427.1		402.7		755.7		664.3		354.1		332.3		1,536.9	1,399.3
Allied World(1)	360.9		—		607.4		—		60.4		—		1,028.7	—
Fairfax Asia	65.6		57.4		219.2		191.2		42.8		53.9		327.6	302.5
Other	405.9		191.9		221.9		146.1		162.8		99.2		790.6	437.2
Operating companies	3,185.6		2,473.8		5,477.6		4,344.5		1,038.1		880.4		9,701.3	7,698.7
Run-off	—		0.4		22.9		162.6		(2.8	)	0.5		20.1	163.5
Consolidated net premiums earned	3,185.6		2,474.2		5,500.5		4,507.1		1,035.3		880.9		9,721.4	7,862.2
Interest and dividends													559.0	555.2
Share of profit of associates													200.5	24.2
Net gains (losses) on investments													1,467.5	(1,203.6	)
Gain on sale of subsidiary													1,018.6	—
Other													3,257.6	2,061.6
Consolidated revenue													16,224.6	9,299.6
Allocation of net premiums earned	32.8	%	31.5	%	56.6	%	57.3	%	10.6	%	11.2	%

(1) Allied World is included in the company's financial reporting with effect from July 6, 2017.

Geographic Region

Net premiums earned by geographic region for the years ended December 31 was as follows:

	Canada				United States				Asia(1)				International(2)				Total
	2017		2016		2017		2016		2017		2016		2017		2016		2017	2016
Net premiums earned - Insurance and Reinsurance
Northbridge	1,007.2		899.5		12.5		9.3		—		—		—		—		1,019.7	908.8
OdysseyRe	76.8		72.5		1,539.2		1,319.3		247.2		231.4		470.2		450.9		2,333.4	2,074.1
Crum & Forster	—		—		1,852.6		1,769.3		—		—		0.2		0.2		1,852.8	1,769.5
Zenith National	—		—		811.6		807.3		—		—		—		—		811.6	807.3
Brit	83.1		77.1		1,036.5		942.1		60.3		54.0		357.0		326.1		1,536.9	1,399.3
Allied World(3)	20.5		—		773.7		—		88.2		—		146.3		—		1,028.7	—
Fairfax Asia	0.1		0.1		—		0.3		319.0		293.2		8.5		8.9		327.6	302.5
Other	9.1		3.9		98.9		142.6		108.0		105.7		574.6		185.0		790.6	437.2
Operating companies	1,196.8		1,053.1		6,125.0		4,990.2		822.7		684.3		1,556.8		971.1		9,701.3	7,698.7
Run-off	—		—		23.7		162.6		—		—		(3.6	)	0.9		20.1	163.5
Consolidated net premiums earned	1,196.8		1,053.1		6,148.7		5,152.8		822.7		684.3		1,553.2		972.0		9,721.4	7,862.2
Interest and dividends																	559.0	555.2
Share of profit of associates																	200.5	24.2
Net gains (losses) on investments																	1,467.5	(1,203.6	)
Gain on sale of subsidiary																	1,018.6	—
Other																	3,257.6	2,061.6
Consolidated revenue																	16,224.6	9,299.6
Allocation of net premiums earned	12.3	%	13.4	%	63.2	%	65.5	%	8.5	%	8.7	%	16.0	%	12.4	%

(1) The Asia geographic segment comprises countries located throughout Asia, including China, India, Sri Lanka, Malaysia, Singapore, Indonesia and Thailand, and the Middle East.

(2) The International geographic segment comprises Australia and countries located in Africa, Europe and South America.

(3) Allied World is included in the company's financial reporting with effect from July 6, 2017.

XML

Expenses

12 Months Ended

Dec. 31, 2017

Analysis of income and expense [abstract]

Expenses

Expenses

Losses on claims, net, operating expenses and other expenses for the years ended December 31 were comprised as follows:

	2017			2016
	Insurance and reinsurance companies(1)	Non-insurance companies(2)	Total	Insurance and reinsurance companies(1)	Non-insurance companies(2)	Total
Losses and loss adjustment expenses	6,880.0	—	6,880.0	4,478.3	—	4,478.3
Other reporting segment cost of sales	—	1,821.4	1,821.4	—	1,095.2	1,095.2
Wages and salaries	1,072.0	495.2	1,567.2	876.6	351.8	1,228.4
Employee benefits	242.1	76.9	319.0	213.1	63.8	276.9
Depreciation, amortization and impairment charges	136.5	144.0	280.5	98.4	93.3	191.7
Operating lease costs	79.3	136.9	216.2	60.6	95.1	155.7
Audit, legal and tax professional fees	155.7	27.2	182.9	116.2	17.4	133.6
Premium taxes	152.7	—	152.7	101.4	—	101.4
Information technology costs	122.2	16.2	138.4	99.8	6.7	106.5
Other reporting segment marketing costs	—	65.4	65.4	—	43.9	43.9
Share-based payments to directors and employees	58.4	5.4	63.8	48.1	5.5	53.6
Restructuring costs	30.6	3.1	33.7	2.9	0.3	3.2
Loss on repurchase of long term debt (note 15)(2)	—	28.6	28.6	—	—	—
Administrative expense and other	266.9	204.3	471.2	220.9	185.4	406.3
	9,196.4	3,024.6	12,221.0	6,316.3	1,958.4	8,274.7

(1) Total expense of the insurance and reinsurance companies is comprised of losses on claims, net and operating expenses as presented in the consolidated statement of earnings.

(2) Other expenses as presented in the consolidated statement of earnings is comprised of cost of sales and operating expenses of the non-insurance companies, and loss on repurchase of long term debt of the holding company.

XML

Supplementary Cash Flow Information

12 Months Ended

Dec. 31, 2017

Cash Flow Statement [Abstract]

Supplementary Cash Flow Information

Supplementary Cash Flow Information

Cash and cash equivalents as presented in the consolidated balance sheets and the consolidated statements of cash flows were comprised as follows:

	December 31, 2017		December 31, 2016
Holding company cash and investments:
Cash and balances with banks		129.1		131.9
Treasury bills and other eligible bills		866.3		401.3
		995.4		533.2
Subsidiary cash and short term investments:
Cash and balances with banks		2,355.5		1,668.2
Treasury bills and other eligible bills		5,028.6		2,275.2
		7,384.1		3,943.4
Subsidiary assets pledged for short sale and derivative obligations:
Treasury bills and other eligible bills		16.8		—
Fairfax India:
Cash and balances with banks		44.0		44.5
Treasury bills and other eligible bills		—		128.7
		44.0		173.2
Fairfax Africa:
Cash and balances with banks		329.7		—
Cash and cash equivalents as presented in the consolidated balance sheet		8,770.0		4,649.8
Less: Cash and cash equivalents - restricted(1)
Holding company cash and cash equivalents - restricted:
Cash and balances with banks		1.7		2.8
Subsidiary cash and cash equivalents - restricted:
Cash and balances with banks		546.8		180.8
Treasury bills and other eligible bills		286.5		247.1
		835.0		430.7
Cash and cash equivalents as presented in the consolidated statement of cash flows		7,935.0		4,219.1

(1) Cash, cash equivalents and bank overdrafts as presented in the consolidated statements of cash flows excludes balances that are restricted. Restricted cash and cash equivalents are comprised primarily of amounts required to be maintained on deposit with various regulatory authorities to support the operations of the insurance and reinsurance subsidiaries.

Details of certain cash flows included in the consolidated statements of cash flows for the years ended December 31 were as follows:  

	2017		2016
(a) Net sales of securities classified as FVTPL
Short term investments	(2,816.5	)	(2,688.0	)
Bonds	5,677.1		4,514.5
Preferred stocks	(249.6	)	(42.4	)
Common stocks	778.3		170.4
Derivatives, short sales and other invested assets	(710.9	)	(835.2	)
	2,678.4		1,119.3
(b) Changes in operating assets and liabilities
Net increase in restricted cash and cash equivalents	(245.4	)	(55.1	)
Provision for losses and loss adjustment expenses	1,842.1		(355.7	)
Provision for unearned premiums	395.2		326.2
Insurance contract receivables	(428.4	)	(296.6	)
Recoverable from reinsurers	(1,168.5	)	(34.6	)
Other receivables	(32.4	)	(36.5	)
Funds withheld payable to reinsurers	182.0		87.9
Accounts payable and accrued liabilities	174.0		110.6
Income taxes payable	46.5		(54.1	)
Other	(209.7	)	(300.0	)
	555.4		(607.9	)
(c) Net interest and dividends received
Interest and dividends received	531.9		782.4
Interest paid	(277.9	)	(216.2	)
	254.0		566.2
(d) Net income taxes paid	(33.4	)	(267.1	)

XML

Related Party Transactions

12 Months Ended

Dec. 31, 2017

Related Party [Abstract]

Related Party Transactions

Related Party Transactions

Compensation for the company's key management team for the years ended December 31 determined in accordance with the company's IFRS accounting policies was as follows:

	2017	2016
Salaries and other short-term employee benefits	9.7	8.2
Share-based payments	3.1	2.5
	12.8	10.7

Compensation for the company's Board of Directors for the years ended December 31 was as follows:

	2017	2016
Retainers and fees	0.8	0.8
Share-based payments	0.3	0.1
	1.1	0.9

During 2017 the company entered into an investment management contract on normal commercial terms pursuant to which effectively Benjamin Watsa, a member of the company’s board of directors and the son of Prem Watsa, the company’s Chairman and CEO and effectively controlling shareholder, would manage up to $50.0 for operating companies within the Fairfax group.

Subsequent to December 31, 2017

Pursuant to the company's investment advisory agreement with Fairfax India, a performance fee of $114.4 in the form of newly issued Fairfax India subordinate voting shares was received on March 9, 2018. See note 23.

XML

Subsidiaries

12 Months Ended

Dec. 31, 2017

Interests In Other Entities [Abstract]

Subsidiaries

The company has wholly-owned subsidiaries not presented in the tables below that are intermediate holding companies of investments in subsidiaries and intercompany balances, all of which are eliminated on consolidation.

December 31, 2017	Domicile	Fairfax's ownership (100% other than as shown below)
Insurance and Reinsurance
Northbridge Financial Corporation (Northbridge)	Canada
Odyssey Re Holdings Corp. (OdysseyRe)	United States
Hudson Insurance Company (Hudson Insurance)	United States
Crum & Forster Holdings Corp. (Crum & Forster)	United States
Zenith National Insurance Corp. (Zenith National)	United States
Brit Limited (Brit)	United Kingdom	72.5%
Allied World Assurance Company Holdings, GmbH (Allied World)	Switzerland	67.4%
Advent Capital (Holdings) Ltd. (Advent)	United Kingdom
Fairfax Central and Eastern Europe, which consists of:
Polskie Towarzystwo Reasekuracji Spólka Akcyjna (Polish Re)	Poland
Colonnade Insurance S.A. (Colonnade Insurance)	Luxembourg
Fairfax Latin America, which consists of:
Fairfax Brasil Seguros Corporativos S.A. (Fairfax Brasil)	Brazil
SBS Seguros Colombia S.A. (SouthBridge Colombia)	Colombia
Southbridge Compañía de Seguros Generales S.A. (SouthBridge Chile)	Chile
La Meridional Compañía Argentina de Seguros S.A. (La Meridional Argentina)	Argentina
Bryte Insurance Company Limited (Bryte Insurance)	South Africa
Group Re, which underwrites business in:
CRC Reinsurance Limited (CRC Re)	Barbados
Wentworth Insurance Company Ltd. (Wentworth)	Barbados
Fairfax Asia, which consists of:
Falcon Insurance Company (Hong Kong) Limited (Falcon)	Hong Kong
The Pacific Insurance Berhad (Pacific Insurance)	Malaysia	85.0%
PT Asuransi Multi Artha Guna TBK (AMAG)	Indonesia	80.0%
Fairfirst Insurance Limited (Fairfirst Insurance)	Sri Lanka	78.0%
Run-off
TIG Insurance Company (TIG Insurance)	United States
RiverStone Insurance (UK) Limited (RiverStone (UK))	United Kingdom
RiverStone Insurance Limited (RiverStone Insurance)	United Kingdom
RiverStone Managing Agency Limited	United Kingdom

December 31, 2017		Domicile	Fairfax's ownership			Primary business
Other reporting segment
Hamblin Watsa Investment Counsel Ltd. (Hamblin Watsa)		Canada	100.0	%		Investment management
Fairfax Africa Holdings Corporation (Fairfax Africa)		Canada	64.2	%	(1)	Invests in public and private African businesses
Grivalia Properties Real Estate Investment Company S.A. (Grivalia Properties)		Greece	52.7	%		Real Estate investment company
Mosaic Capital Corporation(Mosaic Capital)		Canada	—		(2)	Invests in private Canadian businesses
Pethealth Inc. (Pethealth)		Canada	100.0	%		Pet medical insurance and database services
Boat Rocker Media Inc. (Boat Rocker)		Canada	58.2	%		Development, production, marketing and distribution of television programs
Restaurants and Retail
Cara Operations Limited (Cara) which owns:		Canada	40.2	%	(1)	Franchisor, owner and operator of restaurants
100.0% of	Groupe St-Hubert Inc. (St-Hubert)	Canada	40.2	%		Full-service restaurant operator and a fully integrated food manufacturer
89.2% of	Original Joe's Franchise Group Inc. (Original Joe's)	Canada	35.9	%		Multi-brand restaurant owner and operator
100.0% of	Pickle Barrel Restaurants Inc. (Pickle Barrel)	Canada	40.2	%		Owner and operator of restaurants and catering business
Keg Restaurants Ltd. (The Keg)		Canada	51.0	%		Owner and operator of premium dining restaurants
Praktiker Hellas Commercial Societe Anonyme (Praktiker)		Greece	100.0	%		Retailer of home improvement goods
Sporting Life Inc. (Sporting Life)		Canada	75.0	%		Retailer of sporting goods and sports apparel
William Ashley China Corporation (William Ashley)		Canada	100.0	%		Retailer of tableware and gifts
Golf Town Limited (Golf Town)		Canada	60.0	%	(3)	Retailer of golf equipment, consumables, athletic apparel and accessories
India focused
Fairfax India Holdings Limited (Fairfax India) which owns:		Canada	30.2	%	(1)	Invests in public and private Indian businesses
89.5% of	National Collateral Management Services Limited (NCML)	India	27.0	%		Provider of agricultural commodities storage
48.7% of	Fairchem Specialty Limited (Fairchem)	India	14.7	%		Manufacturer, supplier and exporter of aroma chemicals
51.0% of	Saurashtra Freight Private Limited (Saurashtra Freight)	India	15.4	%		Container freight station operator
Thomas Cook (India) Limited (Thomas Cook India) which owns:		India	67.6	%		Provider of integrated travel and travel-related financial services
49.0% of	Quess Corp Limited (Quess)	India	33.1	%		Provider of staffing and facilities management services
100.0% of	Sterling Holiday Resorts Limited (Sterling Resorts)	India	67.6	%		Owner and operator of holiday resorts

(1) The company holds multiple voting shares that give it voting rights of 56.7% in Cara, 98.8% in Fairfax Africa and 93.6% in Fairfax India.

(2) The company holds Mosaic Capital warrants representing a potential voting interest of approximately 62%.

(3) The company holds 100% of the voting rights in Golf Town.

XML

Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2017

Corporate Information And Statement Of IFRS Compliance [Abstract]

Basis of Presentation

Basis of Presentation

The company's consolidated financial statements for the year ended December 31, 2017 are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) effective as at December 31, 2017, except IFRS 9 (2010) Financial Instruments which was adopted early. The consolidated financial statements have been prepared on a historical cost basis, except for derivative financial instruments and fair value through profit and loss (“FVTPL”) financial assets and liabilities that have been measured at fair value.

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

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

These consolidated financial statements were approved for issue by the company’s Board of Directors on March 9, 2018.

Consolidation

Consolidation

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

The consolidated financial statements were prepared as of December 31, 2017 and 2016 based on individual holding companies' and subsidiary companies' financial statements at those dates. Accounting policies of subsidiaries have been aligned with those of the company where necessary. The company's significant subsidiaries are identified in note 29.

Non-controlling interests - A non-controlling interest is initially recognized as the proportionate share of the identifiable net assets of a subsidiary on its acquisition date and is subsequently adjusted for the non-controlling interest's share of changes in the acquired subsidiary's earnings and capital. Effects of transactions with non-controlling interests are recorded in equity if there is no change in control.

Business combinations

Business combinations

Business combinations are accounted for using the acquisition method of accounting whereby the consideration transferred is measured at fair value at the date of acquisition. This consideration may include cash paid and the fair value at the date of exchange of assets given, liabilities incurred and equity instruments issued by the company or its subsidiaries. The consideration transferred also includes any contingent consideration arrangements, recorded at fair value. Directly attributable acquisition-related costs are expensed in the current period and reported within operating expenses. At the date of acquisition, the company recognizes the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquired business. The identifiable assets acquired and liabilities assumed are initially recognized at fair value. If the consideration transferred is less than the fair value of identifiable net assets acquired, the excess is recognized in the consolidated statement of earnings.

A pre-existing equity interest is re-measured to fair value at the date of a business combination with any gain or loss recognized in net gains (losses) on investments in the consolidated statement of earnings.

Goodwill and intangible assets

Goodwill and intangible assets

Goodwill - Goodwill is recorded as the excess of consideration transferred over the fair value of the identifiable net assets acquired in a business combination, less accumulated impairment charges, and is allocated to the cash-generating units expected to benefit from the acquisition for the purpose of impairment testing. On an annual basis or more frequently if there are potential indicators of impairment, the carrying value of a cash-generating unit inclusive of its allocated goodwill is compared to its recoverable amount, with any goodwill impairment measured as the excess of the carrying amount over the recoverable amount. Goodwill is derecognized on disposal of a cash-generating unit to which goodwill was previously allocated.

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

Intangible assets are initially recognized at cost (fair value when acquired through a business combination) and subsequently measured at cost less accumulated amortization and impairment, where amortization is calculated using the straight-line method based on the estimated useful life of those intangible assets with a finite life. The carrying value of intangible assets with a finite life are re-evaluated by the company when there are potential indicators of impairment. Indefinite-lived intangible assets are not subject to amortization but are assessed for impairment annually or more frequently if there are potential indicators of impairment.

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

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

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

Investment in associates

Investments in associates

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

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

Upon loss of significant influence, any retained interest classified as a financial asset is re-measured to fair value and all amounts previously recognized in other comprehensive income in relation to that investee are reclassified to the consolidated statement of earnings. Gains and losses on loss of significant influence or disposition of an associate are recognized in net gains (losses) on investments in the consolidated statement of earnings.

Foreign currency translation

Foreign currency translation

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

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

Translation of foreign subsidiaries - The functional currencies of some of the company's subsidiaries (principally in Canada, the United Kingdom and Asia) differ from the consolidated group U.S. dollar presentation currency. As a result, the assets and liabilities of these foreign subsidiaries (including goodwill and fair value adjustments arising on their acquisition, where applicable) are translated on consolidation at the rates of exchange prevailing at the balance sheet date. Revenue and expenses are translated at the average rate of exchange for the period. The net unrealized gain or loss resulting from this translation is recognized in accumulated other comprehensive income, and only recycled to the consolidated statement of earnings upon reduction of an investment in a foreign subsidiary.

Net investment hedge - The company has designated a portion of the principal amount of its Canadian dollar denominated borrowings as a hedge of its net investment in its Canadian subsidiaries. The cumulative unrealized gain or loss relating to the effective portion of the hedge is recognized in accumulated other comprehensive income, and only recycled to the consolidated statement of earnings upon reduction of an investment in a hedged foreign subsidiary. Gains and losses relating to any ineffective portion of the hedge are recorded in net gains (losses) on investments in the consolidated statement of earnings.

Comprehensive income (loss)

Comprehensive income (loss)

Comprehensive income (loss) consists of net earnings (loss) and other comprehensive income (loss) and includes all changes in total equity during a period, except for those resulting from investments by owners or distributions to owners. Unrealized foreign currency translation amounts arising from foreign subsidiaries and associates that do not have U.S. dollar functional currencies and the effective portion of changes in the fair value of hedging instruments on hedges of net investments in foreign subsidiaries are recognized in other comprehensive income (loss) and included in accumulated other comprehensive income (loss) until recycled to the consolidated statement of earnings on reduction of an investment in a foreign subsidiary or associate. Actuarial gains and losses and changes in asset limitation amounts on defined benefit pension and post retirement plans are recorded in other comprehensive income (loss) and included in accumulated other comprehensive income (loss) without recycling. Upon settlement of the defined benefit plan or disposal of the related associate or subsidiary, those amounts are reclassified directly to retained earnings. Accumulated other comprehensive income (loss), net of income taxes, is included on the consolidated balance sheet as a component of common shareholders' equity.

Consolidated statement of cash flows

Consolidated statement of cash flows

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

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

Investments

Investments

Investments include cash and cash equivalents, short term investments, equity instruments, debt instruments, securities sold short, derivatives, investment property and investments in associates. Management determines the appropriate classifications of investments at their acquisition date. The company has not designated any financial assets or liabilities (including derivatives) as accounting hedges except for the hedge of its net investment in Canadian subsidiaries as described in note 7.

Classification - Short term investments, equity instruments, bonds, securities sold short and derivatives are classified as FVTPL.

An investment in a debt instrument is measured at amortized cost if (i) the objective of the company's business model is to hold the instrument in order to collect contractual cash flows and (ii) the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The company's business model currently does not permit any of its short term investments or bonds to be measured at amortized cost.

Recognition and measurement - The company recognizes purchases and sales of investments on the trade date, which is the date on which the company commits to purchase or sell the asset. Transactions pending settlement are reflected on the consolidated balance sheet in other assets or in accounts payable and accrued liabilities.

Investments classified as FVTPL are carried at fair value on the consolidated balance sheet, with transaction costs expensed as incurred and changes in fair value reported in the consolidated statement of earnings as interest and dividends and net gains (losses) on investments. Interest and dividends comprises dividends received on holdings of common stocks and preferred stocks, and interest income on short term investments and bonds calculated using the effective interest method, net of investment expenses. All other changes in fair value of investments classified as FVTPL are reported in net gains (losses) on investments in the consolidated statement of earnings, such that the sum of interest income and net gains (losses) on short term investments and bonds is equal to their total change in fair value for the reporting period.

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

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

Short term investments - Debt instruments with maturity dates between three months and twelve months when purchased are presented as short term investments.

Bonds - Debt instruments with maturity dates greater than twelve months when purchased are presented as bonds.

Securities sold short - Securities sold short ("short sales") represent obligations to deliver securities which were not owned at the time of the sale.

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

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

The fair value of derivatives in a gain position is presented on the consolidated balance sheet in derivatives and other invested assets in portfolio investments and in cash and investments of the holding company. The fair value of derivatives in a loss position and obligations to purchase securities sold short, if any, are presented on the consolidated balance sheet in short sale and derivative obligations. The initial premium paid for a derivative contract, if any, would be recorded as a derivative asset and subsequently adjusted for changes in the fair value of the contract at each balance sheet date. Changes in the fair value of a derivative are recorded as net gains (losses) on investments in the consolidated statement of earnings at each balance sheet date, with a corresponding adjustment to the carrying value of the derivative asset or liability.

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

Cash and securities delivered to counterparties as collateral for derivative contracts continue to be reflected as assets on the consolidated balance sheet within holding company cash and investments or within portfolio investments as assets pledged for short sale and derivative obligations.

Equity contracts - The company's long equity total return swaps allow the company to receive the total return on a notional amount of an equity index or individual equity (including dividends and capital gains or losses) in exchange for the payment of a floating rate of interest on the notional amount. Conversely, short equity total return swaps allow the company to pay the total return on a notional amount of an equity index or individual equity in exchange for the receipt of a floating rate of interest on the notional amount. The company classifies dividends and interest paid or received related to its long and short equity and equity index total return swaps on a net basis as interest and dividends in the consolidated statement of earnings. The company's equity and equity index total return swaps contain contractual reset provisions requiring counterparties to cash-settle monthly or quarterly any fair value movements arising subsequent to the prior settlement. Any cash amounts paid to settle unfavourable fair value changes and, conversely, any cash amounts received in settlement of favourable fair value changes, are recorded as net gains (losses) on investments in the consolidated statement of earnings. To the extent that a contractual reset date of a contract does not correspond to the balance sheet date, the company records net gains (losses) on investments in the consolidated statement of 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. Final cash settlements of total return swaps are recognized as net gains (losses) on investments net of any previously recorded unrealized fair value changes since the last quarterly reset date. Total return swaps require no initial net investment and have a fair value of nil at inception.

CPI-linked derivative contracts - The company's derivative contracts referenced to consumer price indexes (“CPI”) in the geographic regions in which it operates serve as an economic hedge against the potential adverse financial impact on the company of decreasing price levels. These contracts may be structured to provide a payout at maturity if there is cumulative deflation over the life of the contract or if cumulative average inflation is below a specified floor rate over the life of the contract. As the average remaining life of a CPI-linked derivative declines, the fair value of the contract (excluding the impact of changes in the underlying CPI) will generally decline.

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

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

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

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

Level 3 - Inputs include unobservable inputs used in the measurement of financial instruments. Management is required to use its own assumptions regarding unobservable inputs as there is little, if any, market activity in these instruments or related observable inputs that can be corroborated at the measurement date. CPI-linked derivatives are classified as Level 3 and valued using broker-dealer quotes which management has determined utilize market observable inputs except for the inflation volatility input which is not market observable.

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

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

Fair values of CPI-linked derivative contracts received from third party broker-dealers are assessed by comparing the fair values to recent market transactions where available and values determined using third party pricing software based on the Black-Scholes option pricing model for European-style options that incorporates market observable and unobservable inputs such as the current value of the relevant CPI underlying the derivative, the inflation swap rate, nominal swap rate and inflation volatility. The fair values of CPI-linked derivative contracts are sensitive to assumptions such as market expectations of future rates of inflation and related inflation volatilities.

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

Accounts receivable and accounts payable

Accounts receivable and accounts payable

Accounts receivable and accounts payable are recognized initially at fair value. Due to their short-term nature, carrying value is considered to approximate fair value.

Insurance contracts

Insurance contracts

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

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

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

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

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

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

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

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

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

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

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

Reinsurance

Reinsurance

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

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

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

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

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

Income taxes

Income taxes

The provision for income taxes for the period comprises current and deferred income tax. Income taxes are recognized in the consolidated statement of earnings, except when related to items recognized in other comprehensive income or directly in equity. In those cases, the income taxes are also recognized in other comprehensive income or directly in equity, respectively.

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

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

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

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

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

On December 22, 2017 the United States enacted the Tax Cuts and Jobs Act ("U.S. tax reform") that, among other changes, introduced a new minimum base erosion and anti-abuse tax (“BEAT”) on certain payments to foreign affiliates and a U.S. tax on foreign earnings for certain global intangible low-taxed income ("GILTI"), applicable to U.S. corporate income tax for tax years beginning after December 31, 2017. The company will recognize charges related to BEAT and GILTI, if any, in the periods in which they are incurred, and does not include their impacts in measuring its net deferred income tax asset.

Investment property

Investment property

Real estate held by the company for investment purposes, such as capital appreciation or long-term rental yield, is initially recorded at cost (including transaction costs) and subsequently carried at historical cost less accumulated amortization and any accumulated impairment losses. On the consolidated balance sheet investment property held is included in portfolio investments by the insurance and reinsurance companies and in other assets by the non-insurance companies. Investment property rental income and gains or losses on disposal are recorded in the consolidated statement of earnings as interest and dividends and net gains (losses) on investments respectively by the insurance and reinsurance companies, and as other revenue by the non-insurance companies.

Other assets

Other assets

Other assets consist of inventories, receivables and investment properties of non-insurance companies included in the Other reporting segment, premises and equipment, accrued interest and dividends, income taxes refundable, receivables for securities sold, pension assets, deferred compensation assets, prepaid expenses and other miscellaneous receivables.

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

Other revenue and expenses

Other revenue and expenses

Revenue from the sale of hospitality, travel and other non-insurance products and services are recognized when the price is fixed or determinable, collection is reasonably assured and the product or service has been delivered to the customer. The revenue and related cost of inventories sold or services provided are recorded in other revenue and other expenses respectively in the consolidated statement of earnings.

Borrowings

Borrowings

Borrowings are initially recognized at fair value, net of transaction costs incurred, and subsequently carried at amortized cost. Interest expense on borrowings is recognized in the consolidated statement of earnings using the effective interest rate method.

Equity

Equity

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

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

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

Share-based payments

Share-based payments

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

Net earnings per share attribute to shareholders of Fairfax

Net earnings per share attributable to shareholders of Fairfax

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

Net earnings (loss) per diluted share - Diluted earnings (loss) per share is calculated by adjusting the weighted average number of subordinate and multiple voting shares outstanding during the period for the dilutive effect, if any, of share-based payments.

Pensions and post retirement benefits

Pensions and post retirement benefits

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

Defined contribution plan - A defined contribution plan is a pension plan under which the company pays fixed contributions. Contributions to defined contribution pension plans are charged to operating expenses in the period in which the employment services qualifying for the benefit are provided. The company has no further payment obligations once the contributions have been paid.

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

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

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

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

Operating leases

Operating leases

The company and its subsidiaries are lessees under various operating leases relating to premises, automobiles and equipment. Payments made under an operating lease, net of any incentives received from the lessor, are recorded in operating expenses on a straight-line basis over the term of the lease.

New accounting pronouncements

New accounting pronouncements adopted in 2017

The company adopted the following amendments, effective January 1, 2017. These changes were adopted in accordance with the applicable transitional provisions of each amendment, and did not have a significant impact on the consolidated financial statements.

IFRS Annual Improvements 2014-2016

In December 2016 the IASB issued an amendment to clarify the scope of the disclosure requirements in IFRS 12 Disclosure of Interests in Other Entities.

Recognition of Deferred Tax Assets for Unrealised Losses (Amendments to IAS 12)

In January 2016 the IASB issued amendments to IAS 12 Income Taxes to clarify the requirements on recognition of deferred income tax assets for unrealized losses.

Disclosure Initiative (Amendments to IAS 7)

In January 2016 the IASB issued amendments to IAS 7 Statement of Cash Flows that require additional disclosures for cash and non-cash changes in liabilities arising from financing activities.

New accounting pronouncements issued but not yet effective

The following new standards have been issued by the IASB and were not yet effective for the fiscal year beginning January 1, 2017. The company is currently evaluating their impact on its consolidated financial statements and does not expect to adopt any of them in advance of their respective effective dates.

Foreign Currency Transactions and Advance Consideration ("IFRIC 22")

In December 2016 the IASB issued an interpretation by the IFRS Interpretations Committee to clarify the accounting for transactions that include the receipt or payment of advance consideration in a foreign currency. IFRIC 22 is effective for annual periods beginning on or after January 1, 2018, with a choice of prospective or retrospective application. Adoption of IFRIC 22 is not expected to have a significant impact on the company's consolidated financial statements.

Classification and Measurement of Share-based Payment Transactions (Amendments to IFRS 2)

In June 2016 the IASB issued narrow-scope amendments to clarify the classification and measurement requirements of IFRS 2 Share-based Payment. The amendments are effective for annual periods beginning on or after January 1, 2018, with prospective application in accordance with certain transitional provisions. Adoption of the amendments is not expected to have a significant impact on the company's consolidated financial statements.

IFRS 9 Financial Instruments ("IFRS 9")

In July 2014 the IASB issued the complete version of IFRS 9 which will supersede the 2010 version of IFRS 9 currently applied by the company ("IFRS 9 (2010)"). IFRS 9 is effective for annual periods beginning on or after January 1, 2018, with retrospective application, and includes requirements for the classification and measurement of financial assets and liabilities, an expected credit loss model that replaces the existing incurred loss impairment model, and new hedge accounting guidance. The company is nearing completion of its analysis of IFRS 9's accounting requirements and has determined that its current classifications of equity investments, derivatives, financial liabilities and hedge of net investment under IFRS 9 (2010) will remain substantially unchanged. The company continues to monitor and consider evolving guidance and interpretations related to IFRS 9 as it works through the classification analysis for its investments in debt instruments.

IFRS 15 Revenue from Contracts with Customers ("IFRS 15")

In May 2014 the IASB issued IFRS 15 which introduces a single model for recognizing revenue from contracts with customers. IFRS 15 excludes insurance contracts and financial instruments from its scope and is applicable primarily to the company’s non-insurance companies. In April 2016 the IASB issued amendments to clarify certain aspects of IFRS 15 and to provide additional practical expedients upon transition. The standard is effective for annual periods beginning on or after January 1, 2018, with retrospective application. The company has substantially completed its analysis of the accounting requirements under IFRS 15 and does not expect the adoption of IFRS 15 to have a significant impact on the company's consolidated financial statements or to require any significant transition adjustments.

IFRS 16 Leases ("IFRS 16")

In January 2016 the IASB issued IFRS 16 which largely eliminates the distinction between finance and operating leases for lessees. With limited exceptions, a lessee will be required to recognize a right-of-use asset and a liability for its obligation to make lease payments. The standard is effective for annual periods beginning on or after January 1, 2019, with a choice of modified retrospective or full retrospective application. The company has commenced impact assessments and reviews of lease data at its operating companies in preparation for the adoption of IFRS 16.

IFRIC Interpretation 23 Uncertainty over Income Tax Treatments ("IFRIC 23")

In June 2017 the IASB issued IFRIC 23 to clarify how the requirements of IAS 12 Income Taxes should be applied when there is uncertainty over income tax treatments. The interpretation is effective for annual periods beginning on or after January 1, 2019, with modified retrospective or retrospective application. Adoption of IFRIC 23 is not expected to have a significant impact on the company's consolidated financial statements.

IFRS Annual Improvements 2015-2017

In December 2017 the IASB issued amendments to clarify the requirements of four IFRS standards. The amendments are effective for annual periods beginning on or after January 1, 2019, primarily with prospective application. Adoption of the amendments is not expected to have a significant impact on the company's consolidated financial statements.

IFRS 17 Insurance Contracts ("IFRS 17")

In May 2017 the IASB issued IFRS 17, a comprehensive standard that establishes principles for the recognition, measurement, presentation and disclosure of insurance contracts. The measurement approach is based on the following: (i) a current, unbiased probability-weighted estimate of future cash flows expected to arise as the insurer fulfills the contract; (ii) the effect of the time value of money; (iii) a risk adjustment that measures the effects of uncertainty about the amount and timing of future cash flows; and (iv) a contractual service margin which represents the unearned profit in a contract (that is recognized in net earnings as the insurer fulfills its performance obligations under the contract). Estimates are required to be re-measured each reporting period. In addition, a simplified measurement approach is permitted for short-duration contracts in which the coverage period is approximately one year or less. The standard is effective for annual periods beginning on or after January 1, 2021, with retrospective application and some practical expedients available on adoption. The company has commenced implementation planning, education workshops and impact assessments at its largest insurance and reinsurance companies in preparation for the adoption of IFRS 17.

Critical accounting estimates and judgments

In the preparation of the company's consolidated financial statements, management has made a number of critical accounting estimates and judgments which are discussed below, with the exception of the determination of fair value for financial instruments (notes 3 and 5), carrying value of associates (notes 3 and 6), charges related to U.S. tax reform (note 18) and contingencies (note 20). Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Provision for losses and loss adjustment expenses

Provisions for losses and loss adjustment expenses are estimated based on Canadian accepted actuarial practices, which are designed to ensure the company establishes an appropriate reserve on the consolidated balance sheet to cover insured losses with respect to reported and unreported claims incurred as of the end of each accounting period and related claims expenses. The assumptions underlying the estimation of provisions for losses and loss adjustment expenses are reviewed and updated by the company on an ongoing basis to reflect recent and emerging trends in experience and changes in the risk profile of the business. The estimation techniques employed by the company in determining provisions for losses and loss adjustment expenses and the inherent uncertainties associated with insurance contracts are described in the “Underwriting Risk” section of note 24 while the historic development of the company's insurance liabilities are presented in note 8.

Recoverability of deferred income tax assets

In determining the recoverability of deferred income tax assets, management exercises judgment in assessing recent and expected profitability of applicable operating companies and their ability to utilize any recorded income tax assets. The company reviews its deferred income tax assets quarterly, taking into consideration the availability of sufficient current and projected taxable profits, reversals of taxable temporary differences and tax planning strategies. Details of deferred income tax assets are presented in note 18.

Business combinations

Judgment may be required to determine whether a transaction qualifies as a business combination when it involves elements such as contractual arrangements between shareholders or potential voting rights. Accounting for business combinations requires fair values to be estimated for the consideration transferred, assets acquired and liabilities assumed. The company uses all available information, including external valuations and appraisals where appropriate, to determine these fair values. Changes in estimates of fair value due to additional information related to facts and circumstances that existed at the acquisition date would impact the amount of goodwill (or gain on bargain purchase) recognized. If necessary, the company has up to one year from the acquisition date to finalize the determination of fair values for a business combination. Details of business combinations are presented in note 23.

Assessment of goodwill for potential impairment

Goodwill is assessed annually for impairment or more frequently if there are potential indicators of impairment. Management estimates the recoverable amount of each of the company's cash-generating units using one or more generally accepted valuation techniques, which requires the making of a number of assumptions, including assumptions about future revenue, net earnings, corporate overhead costs, capital expenditures, cost of capital, and growth rate. The recoverable amount of each cash-generating unit to which goodwill has been assigned is compared to its carrying value (inclusive of assigned goodwill). If the recoverable amount of a cash-generating unit is determined to be less than its carrying value, the excess is recognized as a goodwill impairment loss in the consolidated statement of earnings. Given the variability of future-oriented financial information, goodwill impairment tests are subjected to sensitivity analysis. The critical estimates pertain to those cash-generating units where there is little difference between the recoverable amount and the related carrying amount. Details of goodwill are presented in note 12.

XML

Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2017

Corporate Information And Statement Of IFRS Compliance [Abstract]

Schedule of estimated useful lives of intangible assets

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

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

XML

Cash and Investments (Tables)

12 Months Ended

Dec. 31, 2017

Investments and Cash1 [Abstract]

Schedule of cash and short term investments

Holding company cash and investments, portfolio investments and short sale and derivative obligations are classified as FVTPL, except for investments in associates and other invested assets which are classified as other, and are shown in the table below:

	December 31, 2017			December 31, 2016
Holding company
Cash and cash equivalents (note 27)		995.4			533.2
Short term investments		115.4			285.4
Bonds		380.9			264.8
Preferred stocks		2.8			1.0
Common stocks(1)		784.9			153.2
Derivatives (note 7)		11.2			39.6
		2,290.6			1,277.2
Assets pledged for short sale and derivative obligations:
Short term investments		77.8			82.6
Bonds		—			11.8
		77.8			94.4
		2,368.4			1,371.6
Short sale and derivative obligations (note 7)		(11.5	)		(42.2	)
		2,356.9			1,329.4
Portfolio investments
Cash and cash equivalents (note 27)		7,384.1			3,943.4
Short term investments		9,998.4			5,994.6
Bonds		9,164.1			9,323.2
Preferred stocks		296.8			69.6
Common stocks(1)		4,838.7			4,158.8
Investments in associates (note 6)		2,487.0			2,393.0
Derivatives (note 7)		192.6			163.7
Other invested assets		62.8			16.0
		34,424.5			26,062.3
Assets pledged for short sale and derivative obligations:
Cash and cash equivalents (note 27)		16.8			—
Short term investments		145.7			189.6
Bonds		32.2			38.9
		194.7			228.5
Fairfax India cash, portfolio investments and associates		1,762.5			1,002.6
Fairfax Africa cash, portfolio investments and associates		631.5			—
		2,394.0			1,002.6
		37,013.2			27,293.4
Short sale and derivative obligations (note 7)		(114.7	)		(192.1	)
		36,898.5			27,101.3
Total investments		39,255.4			28,430.7

(1) Common stocks include investments in limited partnerships and other funds with carrying values of $1,903.7 and $90.9 respectively at December 31, 2017 (December 31, 2016 - $1,171.6 and $157.1).

Fairfax India and Fairfax Africa cash, portfolio investments and associates were comprised as follows:

	Fairfax India		Fairfax Africa
	December 31, 2017	December 31, 2016	December 31, 2017	December 31, 2016
Cash and cash equivalents (note 27)	44.0	173.2	329.7	—
Short term investments	34.3	33.6	57.2	—
Bonds	694.2	528.8	19.4	—
Common stocks	40.5	26.5	4.9	—
Investments in associates (note 6)	949.5	240.5	219.8	—
Derivatives and other invested assets	—	—	0.5	—
	1,762.5	1,002.6	631.5	—

Schedule of pledge assets, by nature of pledge requirement

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

	December 31, 2017	December 31, 2016
Regulatory deposits	4,256.8	4,748.2
Security for reinsurance and other	1,449.2	732.8
	5,706.0	5,481.0

Disclosure of financial assets

The table below does not reflect the impact of $1,693.8 (December 31, 2016 - $3,013.4) notional amount of U.S. treasury bond forward contracts (described in note 7) that reduce the company's exposure to interest rate risk.

	December 31, 2017			December 31, 2016
	Amortizedcost	Fairvalue		Amortized cost	Fair value
Due in 1 year or less	3,383.9	3,537.6		1,649.4	1,779.0
Due after 1 year through 5 years	3,540.7	3,720.2		3,245.9	3,447.6
Due after 5 years through 10 years	1,017.6	1,054.3		1,046.7	1,031.3
Due after 10 years	1,872.1	1,978.7		3,575.1	3,909.6
	9,814.3	10,290.8		9,517.1	10,167.5
Effective interest rate		4.0	%		4.7	%

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

	December 31, 2017					December 31, 2016
	Cost	Notionalamount	Fair value			Cost	Notional amount	Fair value
			Assets	Liabilities				Assets	Liabilities
Equity derivatives:
Equity index total return swaps – short positions	—	52.6	0.4		—	—	43.3	0.6		—
Equity total return swaps – short positions	—	892.5	11.8		12.1	—	1,623.0	10.4		78.1
Equity total return swaps – long positions	—	697.8	17.8		15.6	—	213.1	9.4		5.1
Equity and equity index call options	0.4	8.2	3.9		—	16.2	1,104.4	12.8		—
Warrants	64.8	607.1	73.7		—	6.5	32.2	6.5		—
CPI-linked derivative contracts	678.4	117,254.6	39.6		—	670.0	110,365.5	83.4		—
U.S. treasury bond forwards	—	1,693.8	—		28.8	—	3,013.4	—		49.7
Foreign exchange forward contracts	—	—	57.1		69.7	—	—	80.2		101.4
Total			204.3		126.2			203.3		234.3

Disclosure of fair value measurement of assets

A summary of changes in Level 3 financial assets measured at fair value on a recurring basis for the years ended December 31 follows:

	2017
	Private placement debt securities		Private company preferred shares			Limited partnerships and other			Private equity funds		Private company common shares			Derivatives and other invested assets			Total
Balance - January 1	1,053.1			44.0			981.4		167.8			155.4			97.8		2,499.5
Net realized and unrealized gains (losses) included in the consolidated statement of earnings	190.2			1.3			243.4		(5.5	)		22.6			(9.9	)	442.1
Purchases	430.2			268.4			221.2		—			11.1			72.3		1,003.2
Sales and distributions	(209.7	)		(34.1	)		(443.4	)	—			(19.4	)		—		(706.6	)
Acquisitions of subsidiaries (note 23)	22.4			—			583.8		—			29.9			9.7		645.8
Transfer into category	384.0			—			—		—			—			7.1		391.1
Unrealized foreign currency translation gains on foreign operations included in other comprehensive income	70.9			3.6			12.3		8.2			2.6			0.6		98.2
Balance - December 31	1,941.1			283.2			1,598.7		170.5			202.2			177.6		4,373.3

	2016
	Private placement debt securities		Private company preferred shares			Limited partnerships and other			Private equity funds		Private company common shares			Derivatives and other invested assets			Total
Balance - January 1	696.4			7.7			960.9		171.0			138.0			285.4		2,259.4
Net realized and unrealized gains (losses) included in the consolidated statement of earnings	(52.9	)		2.5			102.7		(12.5	)		(21.6	)		(204.4	)	(186.2	)
Purchases	955.6			115.7			124.4		16.4			38.8			21.1		1,272.0
Sales and distributions	(548.2	)		(82.5	)		(202.9	)	(10.2	)		—			(4.9	)	(848.7	)
Transfer into category	9.4			0.4			—		—			—			—		9.8
Unrealized foreign currency translation gains (losses) on foreign operations included in other comprehensive income	(7.2	)		0.2			(3.7	)	3.1			0.2			0.6		(6.8	)
Balance - December 31	1,053.1			44.0			981.4		167.8			155.4			97.8		2,499.5

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

	December 31, 2017									December 31, 2016
	Total fairvalue asset(liability)		Quotedprices(Level 1)		Significantotherobservableinputs(Level 2)		Significantunobservableinputs(Level 3)			Total fair value asset (liability)		Quoted prices (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Cash and cash equivalents	8,770.0		8,770.0		—			—		4,649.8		4,649.8		—			—
Short term investments:
Canadian government	7.1		7.1		—			—		8.2		8.2		—			—
Canadian provincials	281.9		281.9		—			—		261.7		261.7		—			—
U.S. treasury	9,225.5		9,225.5		—			—		5,930.3		5,930.3		—			—
Other government	403.0		307.0		96.0			—		212.2		212.2		—			—
Corporate and other	511.3		—		466.3			45.0		173.4		—		173.4			—
	10,428.8		9,821.5		562.3			45.0		6,585.8		6,412.4		173.4			—
Bonds:
Canadian government	84.4		—		84.4			—		311.4		—		311.4			—
Canadian provincials	93.8		—		93.8			—		196.9		—		196.9			—
U.S. treasury	1,779.3		—		1,779.3			—		1,117.3		—		1,117.3			—
U.S. states and municipalities	2,452.1		—		2,452.1			—		4,732.2		—		4,732.2			—
Other government	1,799.4		—		1,799.4			—		1,176.2		—		1,176.2			—
Corporate and other	4,081.8		—		2,185.7			1,896.1		2,633.5		—		1,580.4			1,053.1
	10,290.8		—		8,394.7			1,896.1		10,167.5		—		9,114.4			1,053.1
Preferred stocks:
Canadian	240.7		—		11.3			229.4		22.2		—		10.9			11.3
U.S.	5.0		—		—			5.0		0.3		—		—			0.3
Other	53.9		1.5		3.6			48.8		48.1		0.6		15.1			32.4
	299.6		1.5		14.9			283.2		70.6		0.6		26.0			44.0
Common stocks:
Canadian	958.7		825.9		110.3			22.5		665.3		545.0		98.6			21.7
U.S.	1,583.3		474.8		66.9			1,041.6		1,172.6		629.6		33.9			509.1
Other funds	90.9		—		90.9			—		157.1		—		157.1			—
Other	3,036.1		1,713.7		415.1			907.3		2,343.5		1,037.2		532.5			773.8
	5,669.0		3,014.4		683.2			1,971.4		4,338.5		2,211.8		822.1			1,304.6
Derivatives and other invested assets	267.1		—		89.5			177.6		219.3		—		121.5			97.8
Short sale and derivative obligations	(126.2	)	—		(126.2	)		—		(234.3	)	—		(234.3	)		—
Holding company cash and investments and portfolio investments measured at fair value	35,599.1		21,607.4		9,618.4			4,373.3		25,797.2		13,274.6		10,023.1			2,499.5
	100.0	%	60.7	%	27.0	%		12.3	%	100.0	%	51.5	%	38.9	%		9.6	%
Investments in associates (note 6)(1)	4,629.3		2,004.3		45.3			2,579.7		3,267.3		1,100.1		40.9			2,126.3

(1) The carrying value of investments in associates is determined using the equity method of accounting so fair value is presented separately in the table above.

Disclosure of fair value measurement of liabilities

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

	December 31, 2017									December 31, 2016
	Total fairvalue asset(liability)		Quotedprices(Level 1)		Significantotherobservableinputs(Level 2)		Significantunobservableinputs(Level 3)			Total fair value asset (liability)		Quoted prices (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Cash and cash equivalents	8,770.0		8,770.0		—			—		4,649.8		4,649.8		—			—
Short term investments:
Canadian government	7.1		7.1		—			—		8.2		8.2		—			—
Canadian provincials	281.9		281.9		—			—		261.7		261.7		—			—
U.S. treasury	9,225.5		9,225.5		—			—		5,930.3		5,930.3		—			—
Other government	403.0		307.0		96.0			—		212.2		212.2		—			—
Corporate and other	511.3		—		466.3			45.0		173.4		—		173.4			—
	10,428.8		9,821.5		562.3			45.0		6,585.8		6,412.4		173.4			—
Bonds:
Canadian government	84.4		—		84.4			—		311.4		—		311.4			—
Canadian provincials	93.8		—		93.8			—		196.9		—		196.9			—
U.S. treasury	1,779.3		—		1,779.3			—		1,117.3		—		1,117.3			—
U.S. states and municipalities	2,452.1		—		2,452.1			—		4,732.2		—		4,732.2			—
Other government	1,799.4		—		1,799.4			—		1,176.2		—		1,176.2			—
Corporate and other	4,081.8		—		2,185.7			1,896.1		2,633.5		—		1,580.4			1,053.1
	10,290.8		—		8,394.7			1,896.1		10,167.5		—		9,114.4			1,053.1
Preferred stocks:
Canadian	240.7		—		11.3			229.4		22.2		—		10.9			11.3
U.S.	5.0		—		—			5.0		0.3		—		—			0.3
Other	53.9		1.5		3.6			48.8		48.1		0.6		15.1			32.4
	299.6		1.5		14.9			283.2		70.6		0.6		26.0			44.0
Common stocks:
Canadian	958.7		825.9		110.3			22.5		665.3		545.0		98.6			21.7
U.S.	1,583.3		474.8		66.9			1,041.6		1,172.6		629.6		33.9			509.1
Other funds	90.9		—		90.9			—		157.1		—		157.1			—
Other	3,036.1		1,713.7		415.1			907.3		2,343.5		1,037.2		532.5			773.8
	5,669.0		3,014.4		683.2			1,971.4		4,338.5		2,211.8		822.1			1,304.6
Derivatives and other invested assets	267.1		—		89.5			177.6		219.3		—		121.5			97.8
Short sale and derivative obligations	(126.2	)	—		(126.2	)		—		(234.3	)	—		(234.3	)		—
Holding company cash and investments and portfolio investments measured at fair value	35,599.1		21,607.4		9,618.4			4,373.3		25,797.2		13,274.6		10,023.1			2,499.5
	100.0	%	60.7	%	27.0	%		12.3	%	100.0	%	51.5	%	38.9	%		9.6	%
Investments in associates (note 6)(1)	4,629.3		2,004.3		45.3			2,579.7		3,267.3		1,100.1		40.9			2,126.3

(1) The carrying value of investments in associates is determined using the equity method of accounting so fair value is presented separately in the table above.

Disclosure of significant unobservable inputs used in fair value measurement of assets

The table below presents the valuation techniques, range of values applied for significant unobservable inputs and the typical relationship between significant unobservable inputs and estimated fair values for the company's significant Level 3 financial assets:

Asset class	Carrying value at December 31, 2017	Valuation technique	Significant unobservable input	Input range used				Effect on estimated fair value if input value is increased(a)
				Low		High
Private placement debt securities(b)(1)	1,340.4	Discounted cash flow	Credit spread	1.6	%	18.9	%	Decrease
Private placement debt securities(b)(2)	402.0	Net asset valuation of secured loans	Recoverability of assets	60.0	%	100.0	%	Increase
Limited partnerships and other(c)(3)	1,598.7	Net asset value	Net asset value / Price	N/A		N/A		Increase
Private company preferred shares(d)(4)	207.3	Discounted cash flow	Credit spread	3.5	%	3.6	%	Decrease
Private equity funds(c)(3)	100.9	Net asset value	Net asset value / Price	N/A		N/A		Increase
Private equity funds(c)(5)	69.6	Market comparable	Price/Earnings multiple	10.0		10.0		Increase
Private company common shares(c)(5)	81.2	Market comparable	Book value multiple	1.3		1.3		Increase
Private company common shares(c)(5)	40.5	Market comparable	Price/Earnings multiple	26.2		26.2		Increase
Warrants(e)(6)	73.1	Option pricing model	Equity volatility	24.6	%	39.3	%	Increase
CPI-linked derivatives(e)(7)	39.6	Option pricing model	Inflation volatility	0.0	%	3.7	%	Increase

(a) Decreasing the input value would have the opposite effect on the estimated fair value.

(b) Classified within holding company cash and investments or bonds on the consolidated balance sheet.

(c) Classified within holding company cash and investments or common stocks on the consolidated balance sheet.

(d) Classified within preferred stocks on the consolidated balance sheet.

(e) Classified within holding company cash and investments or derivatives and other invested assets on the consolidated balance sheet.

(1) Valued using industry accepted discounted cash flow models that incorporate credit spreads of the issuers, which are not market observable. At December 31, 2017 this asset class consisted of 7 investments, the largest being $663.6. By increasing (decreasing) the credit spreads within a reasonably possible range, the fair value of these private placement debt securities would decrease by $41.6 (increase by $44.3).

(2) At December 31, 2017 this asset class consisted of 2 investments, the larger being $253.0.

(3) Valued primarily based on net asset value statements provided by the respective third party fund managers and general partners. The fair values in those statements are determined using quoted prices of the underlying assets, and to a lesser extent, observable inputs where available and unobservable inputs, in conjunction with industry accepted valuation models, where required. In some instances, such investments are classified as Level 3 because they may require at least three months' notice to liquidate. The company has not applied reasonably possible alternative assumptions to the estimated fair value of these investments due to their diverse nature and resulting dispersion of prices. At December 31, 2017 limited partnerships and other consisted of 47 investments, the largest being $355.3.

(4) Valued using industry accepted discounted cash flow models that incorporate market unobservable credit spreads of the preferred shares.

(5) Fair values are determined by reference to various valuation measures for comparable companies and transactions, including relevant valuation multiples. In some instances, such investments are classified as Level 3 because the valuation multiples applied by the company are adjusted for differences in attributes between the investment and the underlying companies or transactions from which the valuation multiples were derived.

(6) Valued using industry accepted option pricing models that incorporate market unobservable long-dated equity volatilities. A higher equity volatility generally results in a higher fair value due to the higher probability of obtaining a greater return from the warrant.

(7) Valued based on broker-dealer quotes which management has determined utilize market observable inputs except for inflation volatility which is an unobservable input.

Disclosure of interest income

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

Interest and dividends and share of profit of associates

	2017		2016
Interest income:
Cash and short term investments	117.5		33.4
Bonds	441.9		622.4
Derivatives and other	(44.8	)	(141.4	)
	514.6		514.4
Dividends:
Preferred stocks	2.1		11.2
Common stocks	71.1		55.6
	73.2		66.8
Investment expenses	(28.8	)	(26.0	)
Interest and dividends	559.0		555.2
Share of profit of associates (note 6)	200.5		24.2

Disclosure of net gains (losses) on investments

Net gains (losses) on investments

		2017									2016
	Net realized gains (losses)				Net change in unrealized gains (losses)			Net gains (losses) on investments			Net realized gains (losses)				Net change in unrealized gains (losses)				Net gains (losses) on investments
Bonds		445.7				(167.7	)		278.0			683.7				(400.4	)			283.3
Preferred stocks		0.2				(0.5	)		(0.3	)		(68.0	)	(4)(5)		61.6		(4)(5)		(6.4	)
Common stocks		126.5				585.7			712.2			(162.2	)	(4)(6)		91.2		(4)(6)		(71.0	)
		572.4				417.5			989.9			453.5				(247.6	)			205.9
Derivatives:
Common stock and equity index short positions		(485.6	)	(1)		67.7			(417.9	)		(915.8	)	(1)		(264.0	)			(1,179.8	)
Common stock and equity index long positions		21.6		(1)		(2.0	)		19.6			10.4		(1)		12.9				23.3
Equity index put options		—				—			—			(20.3	)			7.2				(13.1	)
Equity warrants and call options		22.9				15.4			38.3			—				(4.0	)			(4.0	)
CPI-linked derivatives		—				(71.0	)		(71.0	)		—				(196.2	)			(196.2	)
U.S. treasury bond forwards		(174.5	)			21.3			(153.2	)		96.7				(49.7	)			47.0
Other		(8.4	)			8.1			(0.3	)		(70.6	)			63.2				(7.4	)
		(624.0	)			39.5			(584.5	)		(899.6	)			(430.6	)			(1,330.2	)
Foreign currency net gains (losses) on:
Investing activities		0.8				88.0			88.8			54.4				(191.3	)			(136.9	)
Underwriting activities		(74.9	)			—			(74.9	)		19.7				—				19.7
Foreign currency contracts		(21.0	)			9.9			(11.1	)		6.5				(18.8	)			(12.3	)
		(95.1	)			97.9			2.8			80.6				(210.1	)			(129.5	)
Gain on disposition of associates		999.9		(2)(3)		—			999.9			—				—				—
Other		2.1				57.3			59.4			3.2				47.0				50.2
Net gains (losses) on investments		855.3				612.2			1,467.5			(362.3	)			(841.3	)			(1,203.6	)

(1) Amounts recorded in net realized gains (losses) include net gains (losses) on total return swaps where the counterparties are required to cash-settle on a quarterly or monthly basis the market value movement since the previous reset date notwithstanding that the total return swap positions remain open subsequent to the cash settlement. The company discontinued its economic equity hedging strategy during the fourth quarter of 2016 and closed out $6,350.6 notional amount of short positions effected through equity index total return swaps (comprised of Russell 2000, S&P 500 and S&P/TSX 60 short equity index total return swaps) (see notes 7 and 24).

(2) During 2017 the company sold a 24.3% equity interest in ICICI Lombard for net proceeds of $908.5 and recorded a net realized gain of $595.6. The company's remaining 9.9% equity interest in ICICI Lombard was reclassified to common stock measured at FVTPL and re-measured to fair value for a net realized gain of $334.5 (see note 6).

(3) During 2017 the company acquired control of Grivalia Properties by increasing its equity interest to 52.7% and commenced consolidating Grivalia Properties in the Other reporting segment. As a result, the company re-measured its equity accounted carrying value of Grivalia Properties to fair value and recorded a net realized gain of $51.3 (see note 6).

(4) During 2016 the company recognized net realized losses of $220.3 and $103.7 on common and preferred stock investments pursuant to the issuer's plan of restructuring and subsequent emergence from bankruptcy protection. Prior period unrealized losses on the common and preferred stock investments of $209.5 and $99.6 were reclassified to net realized losses with a net impact of nil on the consolidated statement of earnings.

(5) During 2016 the company was required to convert a preferred stock investment into common shares of the issuer, resulting in a net realized gain on investment of $35.1 (the difference between the share price of the underlying common stock at the date of conversion and the exercise price of the preferred stock). Prior period unrealized gains on the preferred stock investment of $41.7 were reclassified to net realized gains with a net impact of nil on the consolidated statement of earnings.

(6) During 2016 the company increased its ownership interest in APR Energy to 49.0% and commenced applying the equity method of accounting, resulting in the reclassification of an unrealized loss of $68.1 on APR Energy to realized losses with a net impact of nil on the consolidated statement of earnings.

XML

Investments in Associates (Tables)

12 Months Ended

Dec. 31, 2017

Interests In Other Entities [Abstract]

Schedule of investments in associates

Changes in the investments in associates balances for the years ended December 31 were as follows:

	2017
	Associates		Joint arrangements		Fairfax India associates		Fairfax Africa associates		Total
Balance - January 1	1,769.6		623.4		240.5		—		2,633.5
Share of pre-tax comprehensive income (loss) of associates and joint arrangements:
Share of profit of associates and joint arrangements	25.6		128.2		45.5		1.2		200.5
Share of other comprehensive income (loss), excluding gains (losses) on defined benefit plans	22.9		46.4		(0.1	)	(1.3	)	67.9
Share of gains (losses) on defined benefit plans	12.4		—		(0.1	)	—		12.3
	60.9		174.6		45.3		(0.1	)	280.7
Dividends and distributions received	(50.5	)	(57.0	)	(26.8	)	—		(134.3	)
Purchases and acquisitions	367.4		301.6		682.9		219.9		1,571.8
Divestitures and other net changes in capitalization	(290.5	)	(2.4	)	(0.7	)	—		(293.6	)
Reclassifications(1)	(440.4	)	—		(20.4	)	—		(460.8	)
Foreign exchange effect	20.5		9.8		28.7		—		59.0
Balance - December 31	1,437.0		1,050.0		949.5		219.8		3,656.3

(1) Comprised of the consolidation of Grivalia Properties, the reduction of the company's investment in ICICI Lombard and the consolidation of Fairchem subsequent to its merger with Privi Organics.

	2016
	Associates		Joint arrangements		Fairfax India associates		Fairfax Africa associates	Total
Balance - January 1	1,538.7		191.5		202.7		—	1,932.9
Share of pre-tax comprehensive income (loss) of associates and joint arrangements:
Share of profit (loss) of associates and joint arrangements	32.1		(21.5	)	13.6		—	24.2
Share of other comprehensive loss, excluding losses on defined benefit plans	(24.9	)	(14.4	)	—		—	(39.3	)
Share of losses on defined benefit plans	(43.5	)	—		—		—	(43.5	)
	(36.3	)	(35.9	)	13.6		—	(58.6	)
Dividends and distributions received	(45.6	)	(47.8	)	(4.6	)	—	(98.0	)
Purchases and acquisitions	306.2		528.4		20.5		—	855.1
Divestitures and other net changes in capitalization	5.6		(11.6	)	13.7		—	7.7
Foreign exchange effect	1.0		(1.2	)	(5.4	)	—	(5.6	)
Balance - December 31	1,769.6		623.4		240.5		—	2,633.5

The following summarizes the company's investments in associates:

	December 31, 2017									Year ended December 31, 2017
				Carrying value
	Ownership percentage		Fair value(a)		Associates and joint arrangements		Fairfax India and Fairfax Africa associates		Total	Share of profit (loss)(8)
Insurance and reinsurance:
Eurolife ERB Insurance Group Holdings S.A. ("Eurolife")	43.3	%	303.0		298.0	(b)	—		298.0	117.6
Gulf Insurance Company ("Gulf Insurance")	41.4	%	233.1		185.4		—		185.4	7.7
Thai Re Public Company Limited ("Thai Re")(1)	34.9	%	80.5		80.3		—		80.3	(21.3	)
Bank for Investment and Development of Vietnam Insurance Joint Stock Corporation (“BIC Insurance”)	35.0	%	66.7		48.6		—		48.6	1.6
Singapore Reinsurance Corporation Limited ("Singapore Re")	27.8	%	39.6		38.5		—		38.5	3.2
Ambridge Partners LLC ("Ambridge Partners")	50.0	%	34.9		34.9		—		34.9	4.4
Go Digit Infoworks Services Private Limited ("Digit")(2)	45.3	%	10.6		10.6		—		10.6	—
Falcon Insurance PLC ("Falcon Thailand")	41.2	%	9.2		9.2		—		9.2	—
Camargue Underwriting Managers Group Ltd. ("Camargue")	50.0	%	5.5		5.5		—		5.5	0.7
ICICI Lombard General Insurance Company Limited ("ICICI Lombard")(3)	—		—		—		—		—	24.0
			783.1		711.0		—		711.0	137.9
Non-insurance:
Agriculture
Astarta Holding N.V. ("Astarta")(4)	28.1	%	101.2		140.6		—		140.6	15.8
Farmers Edge Inc. ("Farmers Edge")(5)	46.1	%	95.0		88.1		—		88.1	(10.5	)
			196.2		228.7		—		228.7	5.3
Real estate
KWF Real Estate Ventures Limited Partnerships ("KWF LPs")(6)	—		213.4		213.4	(b)	—		213.4	12.2
Grivalia Properties REIC ("Grivalia Properties")(7)	—		—		—		—		—	12.8
Other	—		88.7		88.6	(b)	—		88.6	9.0
			302.1		302.0		—		302.0	34.0
India
Bangalore International Airport Limited ("Bangalore Airport")(12)	48.0	%	608.3		—		611.1	(c)	611.1	15.8
IIFL Holdings Limited (“IIFL Holdings”)(13)	35.5	%	1,185.1		102.7		317.2	(c)	419.9	36.5
5paisa Capital Limited ("5paisa")(13)	35.5	%	26.6		6.6		20.2	(c)	26.8	—
Fairchem Limited ("Fairchem")(14)	—		—		—		—		—	0.2
Other	—		0.6		—		1.0	(c)	1.0	—
			1,820.6		109.3		949.5		1,058.8	52.5
Africa
Atlas Mara Limited ("Atlas Mara")(15)	43.3	%	168.7		—		170.3	(d)	170.3	1.6
AFGRI Holdings Proprietary Limited ("AFGRI")(16)	60.0	%	119.0		—		49.5	(d)	49.5	(0.4	)
			287.7		—		219.8		219.8	1.2
Other
Resolute Forest Products Inc. ("Resolute")(8)	33.8	%	334.0		320.6		—		320.6	0.3
APR Energy plc ("APR Energy")(9)	67.8	%	336.4		309.4	(b)	—		309.4	(3.1	)
Peak Achievement Athletics ("Peak Achievement")(10)	42.6	%	153.5		144.8	(b)	—		144.8	(6.2	)
Arbor Memorial Services Inc. ("Arbor Memorial")	43.4	%	111.8		61.4		—		61.4	10.6
Partnerships, trusts and other(11)	—		303.9		299.8		—		299.8	(32.0	)
			1,239.6		1,136.0		—		1,136.0	(30.4	)
			3,846.2		1,776.0		1,169.3		2,945.3	62.6
Investments in associates			4,629.3		2,487.0		1,169.3		3,656.3	200.5
As presented on the consolidated balance sheet:
Investments in associates			2,824.3						2,487.0
Fairfax India cash and portfolio investments(12)(13)			1,517.3						949.5
Fairfax Africa cash and portfolio investments(15)(16)			287.7						219.8
			4,629.3						3,656.3

(a) See note 5 for fair value hierarchy information.

(b) These investments are considered joint arrangements.

(c) Fairfax India associate.

(d) Fairfax Africa associate.

	December 31, 2016									Year ended December 31, 2016
				Carrying value
	Ownership percentage		Fair value(a)		Associates and joint arrangements		Fairfax India associates		Total	Share of profit (loss)(8)
Insurance and reinsurance:
Eurolife ERB Insurance Group Holdings S.A. ("Eurolife")	40.0	%	171.4		150.6	(b)	—		150.6	(6.4	)
Gulf Insurance Company ("Gulf Insurance")	41.4	%	235.8		195.7		—		195.7	14.0
Thai Re Public Company Limited ("Thai Re")	32.4	%	80.2		94.7		—		94.7	(1.8	)
Bank for Investment and Development of Vietnam Insurance Joint Stock Corporation (“BIC Insurance”)	35.0	%	68.5		48.4		—		48.4	1.8
Singapore Reinsurance Corporation Limited ("Singapore Re")	27.8	%	35.5		34.6		—		34.6	2.0
Ambridge Partners LLC ("Ambridge Partners")	50.0	%	31.4		31.4		—		31.4	3.4
Falcon Insurance PLC ("Falcon Thailand")	41.2	%	8.8		8.8		—		8.8	0.7
Camargue Underwriting Managers Group Ltd. ("Camargue")	50.0	%	5.2		5.2		—		5.2	0.2
ICICI Lombard General Insurance Company Limited ("ICICI Lombard")	34.6	%	878.0		371.1		—		371.1	44.1
			1,514.8		940.5		—		940.5	58.0
Non-insurance:
Real estate
KWF Real Estate Ventures Limited Partnerships ("KWF LPs")(6)	—		202.8		202.8	(b)	—		202.8	13.9
Grivalia Properties REIC ("Grivalia Properties")	40.6	%	332.4		295.9		—		295.9	16.1
			535.2		498.7		—		498.7	30.0
India
IIFL Holdings Limited (“IIFL Holdings”)	30.5	%	373.9		96.3		220.1	(c)	316.4	18.5
Fairchem Limited ("Fairchem")	44.9	%	45.5		—		19.4	(c)	19.4	0.3
Other	—		0.4		—		1.0	(c)	1.0	—
			419.8		96.3		240.5		336.8	18.8
Other
Resolute Forest Products Inc. ("Resolute")(8)	33.9	%	162.5		304.5		—		304.5	(73.6	)
APR Energy plc (‘‘APR Energy’’)	45.0	%	234.0		187.3	(b)	—		187.3	(29.0	)
Peak Achievement Athletics ("Peak Achievement")	38.2	%	83.0		82.7	(b)	—		82.7	—
Arbor Memorial Services Inc. ("Arbor Memorial")	43.4	%	93.6		56.0		—		56.0	9.0
Partnerships, trusts and other	—		224.4		227.0		—		227.0	11.0
			797.5		857.5		—		857.5	(82.6	)
			1,752.5		1,452.5		240.5		1,693.0	(33.8	)
Investments in associates			3,267.3		2,393.0		240.5		2,633.5	24.2
As presented on the consolidated balance sheet:
Investments in associates			2,955.4						2,393.0
Fairfax India cash and portfolio investments			311.9						240.5
			3,267.3						2,633.5

(a) See note 5 for fair value hierarchy information.

(b) These investments are considered joint arrangements.

(c) Fairfax India associate.

Insurance and reinsurance associates

(1) At December 31, 2017 Thai Re Public Company Limited's ("Thai Re") recoverable amount of $80.3 was determined to be lower than its carrying value, resulting in a non-cash impairment charge of $17.7 recognized in share of profit (loss) of associates in the consolidated statement of earnings.

(2) Through various transactions during 2017 the company acquired a45.3% equity interest in Go Digit Infoworks Private Limited ("Digit”) for cash consideration of $10.6 (694.4 million Indian rupees) and invested in convertible preferred shares of Digit for $48.9 (3.2 billion Indian rupees). Digit is a newly formed Indian company that has established and is operating an insurance company in India named Go Digit General Insurance Limited.

(3) On July 6, 2017 the company sold a 12.2% equity interest in ICICI Lombard General Insurance Company Limited ("ICICI Lombard") to private equity investors for net proceeds of $376.3 and a net realized investment gain of $223.3. On September 19, 2017 the company sold an additional 12.1% equity interest through participation in ICICI Lombard's initial public offering for net proceeds of $532.2 and a net realized investment gain of $372.3. The company's remaining 9.9% equity interest in ICICI Lombard was reclassified from the equity method of accounting to common stock at FVTPL, resulting in a $334.5 re-measurement gain.

Non-insurance associates

(4) Through various transactions between January 3, 2017 and May 10, 2017, the company acquired an aggregate equity interest in Astarta Holding N.V. (“Astarta”) of 28.0% with an initial carrying value of $120.1 under the equity method of accounting, comprised of cash consideration of $104.4 (420.1 million Polish zlotys) and re-measurements to fair value of $15.7. Astarta specializes in sugar production, crop growing, soybean processing and cattle farming, primarily in Ukraine.

(5) On March 1, 2017 the company acquired a 46.1% equity interest in Farmers Edge Inc. ("Farmers Edge") for purchase consideration of $95.0. Farmers Edge specializes in data science, precision agronomy (farming), geographic information systems, hardware engineering, software development, soil science and sustainability.

(6) The KWF LPs are partnerships formed between the company and Kennedy-Wilson Holdings, Inc. and its affiliates ("Kennedy Wilson") to invest in U.S. and international real estate properties. The company participates as a limited partner in the KWF LPs, with limited partnership interests ranging from 50% to 90%. Kennedy Wilson is the general partner and holds the remaining limited partnership interest in each of the KWF LPs.

(7) On July 4, 2017 the company acquired control of Grivalia Properties REIC ("Grivalia Properties") by increasing its equity interest to 52.6% through the purchase of an additional 10.3% equity interest from Eurobank Ergasias S.A. for cash consideration of $100.0 (€88.0). Accordingly, the company re-measured its equity accounted carrying value of Grivalia Properties to fair value, recorded a net realized gain of$51.3and commenced consolidating Grivalia Properties (and its equity accounted investments with a fair value of $39.5) in the Other reporting segment.Pursuant to Greek securities law, the company then made a tender offer for all remaining outstanding shares of Grivalia Properties which expired on September 6, 2017, resulting in the company increasing its equity interest by 0.1% to 52.7% for cash consideration of $0.6 (€0.5).Grivalia Properties is a real estate investment company listed on the Athens Stock Exchange.

(8) At December 31, 2016 the carrying value of the company's investment in Resolute Forest Products Inc. ("Resolute") exceeded its fair value as determined by the market price of Resolute shares. The company performed a value-in-use analysis to establish the recoverable amount of its investment in Resolute and recognized a non-cash impairment charge of $100.4 in share of profit of associates in the 2016 consolidated statement of earnings.

(9) On July 20, 2017 the company increased its indirect equity interest in APR Energy plc ("APR Energy") to 67.9% through the acquisition of an additional 22.9% equity interest for purchase consideration of $109.0. APR Energy continues to be reported under the equity method of accounting due to certain contractual arrangements between Fairfax and the second-largest shareholder which preclude either party from exercising unilateral control over APR Energy's most relevant decisions governing its operations, including the appointment of executive management and the approval of the detailed annual business plan. On October 13, 2017 APR Energy obtained further capital financing through the issuance of common shares to existing shareholders for which the company participated by investing an additional $13.2. The net impact of the common share issuance reduced the company's indirect equity interest to 67.8%.

(10) On March 1, 2017 the restructuring of Performance Sports Group Ltd. ("PSG") was substantially completed after all of the assets and certain related operating liabilities of PSG were sold to an intermediate holding company ("Performance Sports") co-owned by Fairfax and Sagard Holdings Inc. The company's $153.5 equity investment in Performance Sports represents a voting interest of 50.0% and an equity interest of 42.6%. On April 3, 2017 Performance Sports was renamed Peak Achievement Athletics Inc. ("Peak Achievement").

(11) On August 2, 2017 the company acquired an 81.2% non-voting equity interest in Sigma Companies International Corp. ("Sigma") for cash consideration of $41.4. Sigma, through its subsidiary, is engaged in global water and wastewater infrastructure projects.

Fairfax India

(12) On March 24, 2017 Fairfax India acquired a 38.0% equity interest in Bangalore International Airport Limited (“Bangalore Airport”) for cash consideration of $385.5 (25.2 billion Indian rupees). On July 13, 2017 Fairfax India increased its equity interest in Bangalore Airport to 48.0% through the acquisition of an additional 10.0% equity interest from a wholly-owned subsidiary of GVK Power and Infrastructure Limited ("GVK") for purchase consideration of $200.1 (12.9 billion Indian rupees). A put option previously issued to GVK during the company's initial investment in Bangalore Airport was terminated by this transaction. Bangalore Airport, under a concession agreement with the Government of India, operates and manages the Kempegowda International Airport in Bengaluru, India through a public-private partnership.

(13) On October 20, 2017 IIFL Holdings Limited ("IIFL Holdings") completed a spin-off of a wholly owned subsidiary resulting in the entity 5paisa Capital Limited ("5paisa"). IIFL Holdings investors received 5paisa shares pro rata based on existing ownership in IIFL Holdings. The transaction was recorded as a non-cash distribution that reduced the carrying value of the company's investment in IIFL Holdings. Subsequent to the spin-off transaction, the company holds a 35.5% equity interest in 5paisa recorded at an initial carrying value of$26.4. 5paisa is a provider of a web-based, mobile technology platform that facilitates trading of securities on the BSE and NSE of India.

(14) On March 14, 2017 Fairchem Speciality Limited ("Fairchem") and Privi Organics Limited ("Privi Organics") completed their previously announced merger, with the merged entity continuing under the Fairchem name and being consolidated by Fairfax India (see note 23).

Fairfax Africa

(15) On August 31, 2017 Fairfax Africa, through a series of transactions, acquired a 42.4% equity interest in Atlas Mara Limited ("Atlas Mara") for cash consideration of $155.8. On December 22, 2017 Fairfax Africa acquired an additional 0.9% equity interest in Atlas Mara for cash consideration of $2.4. Atlas Mara is a financial services institution listed on the London Stock Exchange that operates in seven sub-Saharan countries.

(16) On February 17, 2017 the company contributed its indirect equity ownership interest in AFGRI Holdings Proprietary Limited ("AFGRI") to Fairfax Africa (fair value of $72.8 and carrying value of $40.5) in exchange for 7,284,606 multiple voting shares of Fairfax Africa valued at $10.00 per multiple voting share (see note 23). Despite the company's significant equity interest, AFGRI is reported under the equity method of accounting due to contractual arrangements between Fairfax Africa and certain other shareholders of AFGRI which preclude any shareholders from exercising unilateral control over AFGRI's most relevant decisions governing its operations, including approval of significant transactions and the five-year business plan.

XML

Short Sales and Derivatives (Tables)

12 Months Ended

Dec. 31, 2017

Disclosure of notes and other explanatory information [Abstract]

Disclosure of financial assets

The table below does not reflect the impact of $1,693.8 (December 31, 2016 - $3,013.4) notional amount of U.S. treasury bond forward contracts (described in note 7) that reduce the company's exposure to interest rate risk.

	December 31, 2017			December 31, 2016
	Amortizedcost	Fairvalue		Amortized cost	Fair value
Due in 1 year or less	3,383.9	3,537.6		1,649.4	1,779.0
Due after 1 year through 5 years	3,540.7	3,720.2		3,245.9	3,447.6
Due after 5 years through 10 years	1,017.6	1,054.3		1,046.7	1,031.3
Due after 10 years	1,872.1	1,978.7		3,575.1	3,909.6
	9,814.3	10,290.8		9,517.1	10,167.5
Effective interest rate		4.0	%		4.7	%

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

	December 31, 2017					December 31, 2016
	Cost	Notionalamount	Fair value			Cost	Notional amount	Fair value
			Assets	Liabilities				Assets	Liabilities
Equity derivatives:
Equity index total return swaps – short positions	—	52.6	0.4		—	—	43.3	0.6		—
Equity total return swaps – short positions	—	892.5	11.8		12.1	—	1,623.0	10.4		78.1
Equity total return swaps – long positions	—	697.8	17.8		15.6	—	213.1	9.4		5.1
Equity and equity index call options	0.4	8.2	3.9		—	16.2	1,104.4	12.8		—
Warrants	64.8	607.1	73.7		—	6.5	32.2	6.5		—
CPI-linked derivative contracts	678.4	117,254.6	39.6		—	670.0	110,365.5	83.4		—
U.S. treasury bond forwards	—	1,693.8	—		28.8	—	3,013.4	—		49.7
Foreign exchange forward contracts	—	—	57.1		69.7	—	—	80.2		101.4
Total			204.3		126.2			203.3		234.3

Disclosure of financial liabilities

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

	December 31, 2017					December 31, 2016
	Cost	Notionalamount	Fair value			Cost	Notional amount	Fair value
			Assets	Liabilities				Assets	Liabilities
Equity derivatives:
Equity index total return swaps – short positions	—	52.6	0.4		—	—	43.3	0.6		—
Equity total return swaps – short positions	—	892.5	11.8		12.1	—	1,623.0	10.4		78.1
Equity total return swaps – long positions	—	697.8	17.8		15.6	—	213.1	9.4		5.1
Equity and equity index call options	0.4	8.2	3.9		—	16.2	1,104.4	12.8		—
Warrants	64.8	607.1	73.7		—	6.5	32.2	6.5		—
CPI-linked derivative contracts	678.4	117,254.6	39.6		—	670.0	110,365.5	83.4		—
U.S. treasury bond forwards	—	1,693.8	—		28.8	—	3,013.4	—		49.7
Foreign exchange forward contracts	—	—	57.1		69.7	—	—	80.2		101.4
Total			204.3		126.2			203.3		234.3

Disclosure of detailed information about financial instruments

The CPI-linked derivative contracts are summarized as follows:

	December 31, 2017
	Floor rate(1)		Average life (in years)	Notional amount		Weighted average strike price	Index value at period end	Cost	Cost in bps(2)	Market value	Market value in bps(2)	Unrealized gain (loss)
Underlying CPI index				Original currency	U.S. dollars
United States	0.0	%	4.7	46,725.0	46,725.0	231.39	246.52	287.5	61.5	20.6	4.4	(266.9	)
United States	0.5	%	6.8	12,600.0	12,600.0	238.30	246.52	39.9	31.7	17.2	13.7	(22.7	)
European Union	0.0	%	4.0	41,375.0	49,683.0	96.09	102.57	307.1	61.8	1.4	0.3	(305.7	)
United Kingdom	0.0	%	4.9	3,300.0	4,464.1	243.82	278.10	23.2	52.0	0.3	0.7	(22.9	)
France	0.0	%	5.1	3,150.0	3,782.5	99.27	101.76	20.7	54.7	0.1	0.3	(20.6	)
			4.6		117,254.6			678.4		39.6		(638.8	)

	December 31, 2016
	Floor rate(1)		Average life (in years)	Notional amount		Weighted average strike price	Index value at period end	Cost	Cost in bps(2)	Market value	Market value in bps(2)	Unrealized gain (loss)
Underlying CPI index				Original currency	U.S. dollars
United States	0.0	%	5.7	46,725.0	46,725.0	231.39	241.43	286.9	61.4	35.2	7.5	(251.7	)
United States	0.5	%	7.8	12,600.0	12,600.0	238.30	241.43	39.5	31.3	34.3	27.2	(5.2	)
European Union	0.0	%	5.0	41,375.0	43,640.4	96.09	101.26	300.3	68.8	12.5	2.9	(287.8	)
United Kingdom	0.0	%	5.9	3,300.0	4,077.6	243.82	267.10	22.6	55.4	0.5	1.2	(22.1	)
France	0.0	%	6.1	3,150.0	3,322.5	99.27	100.66	20.7	62.3	0.9	2.7	(19.8	)
			5.6		110,365.5			670.0		83.4		(586.6	)

(1) Contracts with a floor rate of 0.0% provide a payout at maturity if there is cumulative deflation over the life of the contract. Contracts with a floor rate of 0.5% provide a payout at maturity based on an equivalent weighted average strike price of 250.49 if cumulative inflation averages less than 0.5% per year over the life of the contract.At December 31, 2017 the equivalent weighted average strike price for the United States 0.5% CPI-linked derivative contracts was 242.20 (December 31, 2016 - 241.00).

(2) Expressed as a percentage of the notional amount.

XML

Insurance Contract Liabilities (Tables)

12 Months Ended

Dec. 31, 2017

Insurance Contracts [Abstract]

Disclosure of amounts arising from insurance contracts

The loss development table which follows shows the provision for losses and loss adjustment expenses at the end of each calendar year, the cumulative payments made in respect of those reserves in subsequent years and the re-estimated amount of each calendar year's provision for losses and loss adjustment expenses as at December 31, 2017.

	Calendar year
	2008		2009		2010	2011	2012	2013	2014	2015		2016		2017
Provision for losses and loss adjustment expenses	14,467.2		14,504.8		16,049.3	17,232.2	19,648.8	19,212.8	17,749.1	19,816.4		19,481.8		28,610.8
Less: CTR Life(1)	34.9		27.6		25.3	24.2	20.6	17.9	15.2	14.2		12.8		8.7
	14,432.3		14,477.2		16,024.0	17,208.0	19,628.2	19,194.9	17,733.9	19,802.2		19,469.0		28,602.1
Cumulative payments as of:
One year later	3,136.0		3,126.6		3,355.9	3,627.6	4,323.5	4,081.1	3,801.6	4,441.4		4,608.0
Two years later	5,336.4		5,307.6		5,441.4	6,076.7	7,153.1	6,787.6	6,364.5	7,283.6
Three years later	7,070.7		6,846.3		7,063.1	7,920.3	9,148.0	8,775.5	8,172.7
Four years later	8,318.7		7,932.7		8,333.3	9,333.4	10,702.8	10,212.4
Five years later	9,189.1		8,936.9		9,327.0	10,458.7	11,783.3
Six years later	10,039.4		9,721.1		10,202.6	11,263.6
Seven years later	10,705.5		10,456.1		10,823.4
Eight years later	11,379.9		10,975.6
Nine years later	11,857.8
Reserves re-estimated as of:
One year later	14,746.0		14,616.0		15,893.8	17,316.4	19,021.2	18,375.6	16,696.4	19,169.3		19,343.1
Two years later	14,844.4		14,726.6		15,959.7	17,013.6	18,529.4	17,475.0	16,269.2	18,973.6
Three years later	14,912.4		14,921.6		15,705.6	16,721.0	17,820.5	17,307.9	16,114.0
Four years later	15,127.5		14,828.9		15,430.4	16,233.9	17,735.5	17,287.2
Five years later	15,091.0		14,663.1		15,036.2	16,269.6	17,830.5
Six years later	15,011.7		14,433.0		15,099.0	16,331.8
Seven years later	14,873.6		14,551.5		15,252.1
Eight years later	15,028.8		14,744.2
Nine years later	15,231.4
Favourable (unfavourable) development	(799.1	)	(267.0	)	771.9	876.2	1,797.7	1,907.7	1,619.9	828.6		125.9
Comprised of favourable (unfavourable):
Effect of foreign currency translation	(317.7	)	82.0		264.2	265.1	575.6	476.0	248.5	(252.3	)	(205.7	)
Loss reserve development	(481.4	)	(349.0	)	507.7	611.1	1,222.1	1,431.7	1,371.4	1,080.9		331.6
	(799.1	)	(267.0	)	771.9	876.2	1,797.7	1,907.7	1,619.9	828.6		125.9

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

Changes in the provision for unearned premiums for the years ended December 31 were as follows:

	2017		2016
Provision for unearned premiums – January 1	3,740.4		3,284.8
Gross premiums written	12,207.5		9,534.3
Less: gross premiums earned	(11,822.0	)	(9,209.7	)
Acquisitions of subsidiaries (note 23)	1,906.2		111.1
Divestiture of subsidiary (note 23)	(157.9	)	—
Foreign exchange effect and other	77.5		19.9
Provision for unearned premiums - December 31	5,951.7		3,740.4

The estimated fair value of insurance and reinsurance contracts is as follows:

	December 31, 2017		December 31, 2016
	Fair value	Carrying value	Fair value	Carrying value
Insurance contracts	33,807.2	34,562.5	22,598.3	23,222.2
Ceded reinsurance contracts	6,948.7	7,358.7	3,501.3	3,719.4

Changes in the provision for losses and loss adjustment expenses for the years ended December 31 were as follows:

	2017		2016
Provision for losses and loss adjustment expenses – January 1	19,481.8		19,816.4
Decrease in estimated losses and expenses for claims occurring in the prior years	(218.8	)	(559.8	)
Losses and expenses for claims occurring in the current year	9,736.5		6,247.8
Paid on claims occurring during:
the current year	(2,263.9	)	(1,595.6	)
the prior years	(5,526.0	)	(4,441.8	)
Acquisitions of subsidiaries (note 23)	7,377.6		143.1
Divestiture of subsidiary (note 23)	(546.6	)	—
Foreign exchange effect and other	570.2		(128.3	)
Provision for losses and loss adjustment expenses – December 31	28,610.8		19,481.8

	December 31, 2017			December 31, 2016
	Gross	Ceded	Net	Gross	Ceded	Net
Provision for unearned premiums	5,951.7	1,169.0	4,782.7	3,740.4	539.8	3,200.6
Provision for losses and loss adjustment expenses	28,610.8	6,189.7	22,421.1	19,481.8	3,179.6	16,302.2
Total insurance contract liabilities	34,562.5	7,358.7	27,203.8	23,222.2	3,719.4	19,502.8
Current	13,405.0	2,975.9	10,429.1	9,013.9	1,586.8	7,427.1
Non-current	21,157.5	4,382.8	16,774.7	14,208.3	2,132.6	12,075.7
	34,562.5	7,358.7	27,203.8	23,222.2	3,719.4	19,502.8

The following is an analysis of the changes which have occurred in the company's provision for losses and loss adjustment expenses related to asbestos exposure on a gross and net basis for the years ended December 31:

	2017				2016
	Gross		Net		Gross		Net
Provision for asbestos claims and loss adjustment expenses - January 1	1,347.7		1,065.5		1,381.0		1,043.8
Losses and loss adjustment expenses incurred	153.0		141.8		219.9		218.7
Losses and loss adjustment expenses paid	(208.6	)	(174.0	)	(253.2	)	(197.0	)
Provision for asbestos claims and loss adjustment expenses - December 31	1,292.1		1,033.3		1,347.7		1,065.5

Disclosure of sensitivity to insurance risk

The table that follows illustrates the potential impact of interest rate fluctuations on the fair value of the company's insurance and reinsurance contracts:

	December 31, 2017		December 31, 2016
Change in interest rates	Fair value of insurance contracts	Fair value of reinsurance contracts	Fair value of insurance contracts	Fair value of reinsurance contracts
100 basis point increase	32,820.7	6,764.1	21,973.4	3,425.7
100 basis point decrease	34,877.5	7,147.6	23,274.9	3,582.4

XML

Reinsurance (Tables)

12 Months Ended

Dec. 31, 2017

Insurance Contracts [Abstract]

Disclosure of reinsurers' share of amounts arising from insurance contracts

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

	December 31, 2017				December 31, 2016
	Gross recoverable from reinsurers	Provision for uncollectible reinsurance(1)		Recoverable from reinsurers	Gross recoverable from reinsurers	Provision for uncollectible reinsurance(1)		Recoverable from reinsurers
Provision for losses and loss adjustment expenses	6,216.2	(26.5	)	6,189.7	3,210.0	(30.4	)	3,179.6
Reinsurers’ share of paid losses	593.7	(139.9	)	453.8	432.2	(141.3	)	290.9
Provision for unearned premiums	1,169.0	—		1,169.0	539.8	—		539.8
	7,978.9	(166.4	)	7,812.5	4,182.0	(171.7	)	4,010.3
Current				3,418.6				1,846.6
Non-current				4,393.9				2,163.7
				7,812.5				4,010.3

(1) The company's management of credit risk associated with its reinsurance recoverables is discussed in note 24.

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

	2017
	Paidlosses		Unpaidlosses		Unearned premiums			Provision for uncollectible reinsurance		Recoverable from reinsurers
Balance – January 1, 2017	432.2		3,210.0			539.8		(171.7	)		4,010.3
Reinsurers’ share of losses paid to insureds	1,330.7		(1,330.7	)		—		—			—
Reinsurance recoveries received	(1,314.0	)	—			—		—			(1,314.0	)
Reinsurers’ share of unpaid losses and premiums earned	—		2,367.1			(2,100.6	)	—			266.5
Premiums ceded to reinsurers	—		—			2,224.0		—			2,224.0
Change in provision, recovery or write-off of impaired balances	(0.2	)	0.7			—		7.2			7.7
Acquisitions of subsidiaries (note 23)	162.7		2,115.2			586.0		—			2,863.9
Divestiture of subsidiary (note 23)	(29.0	)	(237.8	)		(86.8	)	0.1			(353.5	)
Foreign exchange effect and other	11.3		91.7			6.6		(2.0	)		107.6
Balance – December 31, 2017	593.7		6,216.2			1,169.0		(166.4	)		7,812.5

	2016
	Paidlosses		Unpaidlosses		Unearned premiums			Provision for uncollectible reinsurance		Recoverable from reinsurers
Balance – January 1, 2016	419.4		3,259.8			398.7		(187.0	)		3,890.9
Reinsurers’ share of losses paid to insureds	1,018.3		(1,018.3	)		—		—			—
Reinsurance recoveries received	(1,017.4	)	—			—		—			(1,017.4	)
Reinsurers’ share of unpaid losses and premiums earned	—		952.1			(1,347.5	)	—			(395.4	)
Premiums ceded to reinsurers	—		—			1,445.9		—			1,445.9
Change in provision, recovery or write-off of impaired balances	0.7		(11.3	)		—		15.5			4.9
Acquisitions of subsidiaries (note 23)	11.5		65.0			32.3		—			108.8
Foreign exchange effect and other	(0.3	)	(37.3	)		10.4		(0.2	)		(27.4	)
Balance – December 31, 2016	432.2		3,210.0			539.8		(171.7	)		4,010.3

XML

Insurance Contract Receivables (Tables)

12 Months Ended

Dec. 31, 2017

Insurance Contracts [Abstract]

Disclosure of insurance contract receivables and changes in premiums

Insurance contract receivables were comprised as follows:

	December 31, 2017			December 31, 2016
Insurance premiums receivable		2,752.3			1,906.2
Reinsurance premiums receivable		1,086.4			788.8
Funds withheld receivable		659.8			181.8
Other		218.7			68.3
Provision for uncollectible balances		(30.3	)		(27.6	)
		4,686.9			2,917.5

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

	Insurance premiums receivable				Reinsurance premiums receivable
	2017		2016		2017		2016
Balance – January 1	1,906.2		1,677.1		788.8		659.5
Gross premiums written	9,329.9		6,930.2		2,877.6		2,604.1
Premiums collected	(8,075.2	)	(6,050.5	)	(2,323.3	)	(1,876.5	)
Recovery (impairments)	0.5		(1.6	)	(0.7	)	(1.2	)
Amounts due to brokers and agents	(932.3	)	(707.8	)	(686.4	)	(581.2	)
Acquisitions of subsidiaries (note 23)	604.1		54.7		445.2		0.8
Divestiture of subsidiary (note 23)	(64.7	)	—		(48.5	)	—
Foreign exchange effect and other	(16.2	)	4.1		33.7		(16.7	)
Balance – December 31	2,752.3		1,906.2		1,086.4		788.8

XML

Deferred Premium Acquisition Costs (Tables)

12 Months Ended

Dec. 31, 2016

Insurance Contracts [Abstract]

Schedule of deferred premium acquisition costs

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

	2017		2016
Balance – January 1	693.1		532.7
Premium acquisition costs deferred	2,380.2		1,851.1
Amortization	(2,140.7	)	(1,696.2	)
Divestiture of subsidiary (note 23)	(15.8	)	—
Foreign exchange effect and other	10.7		5.5
Balance – December 31	927.5		693.1

XML

Goodwill and Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2017

Disclosure of reconciliation of changes in intangible assets and goodwill [abstract]

Disclosure of reconciliation of changes in intangible assets and goodwill

Goodwill and intangible assets were comprised as follows:

	Goodwill			Intangible assets						Total
			Lloyd's participation rights(1)		Customer and broker relationships		Brand  names(1)	Computer software and other
Balance - January 1, 2017	1,633.7			420.5	431.8		1,014.4	347.1		3,847.5
Additions	1,212.3			87.4	672.8		87.5	172.9		2,232.9
Disposals	(1.7	)		—	—		—	(0.2	)	(1.9	)
Amortization and impairment	(0.1	)		—	(67.9	)	—	(91.5	)	(159.5	)
Foreign exchange effect and other	60.5			—	11.1		69.5	12.4		153.5
Balance - December 31, 2017	2,904.7			507.9	1,047.8		1,171.4	440.7		6,072.5
Gross carrying amount	2,911.8			507.9	1,266.7		1,171.4	767.7		6,625.5
Accumulated amortization	—			—	(218.9	)	—	(311.5	)	(530.4	)
Accumulated impairment	(7.1	)		—	—		—	(15.5	)	(22.6	)
	2,904.7			507.9	1,047.8		1,171.4	440.7		6,072.5

	Goodwill			Intangible assets						Total
			Lloyd's participation rights(1)		Customer and broker relationships		Brand  names(1)	Computer software and other
Balance - January 1, 2016	1,428.2			420.5	385.6		723.3	257.3		3,214.9
Additions	216.0			—	73.8		280.9	163.4		734.1
Disposals	—			—	—		—	(0.1	)	(0.1	)
Amortization and impairment	(7.0	)		—	(35.3	)	—	(68.9	)	(111.2	)
Foreign exchange effect and other	(3.5	)		—	7.7		10.2	(4.6	)	9.8
Balance - December 31, 2016	1,633.7			420.5	431.8		1,014.4	347.1		3,847.5
Gross carrying amount	1,640.7			420.5	578.6		1,014.4	599.5		4,253.7
Accumulated amortization	—			—	(146.8	)	—	(237.7	)	(384.5	)
Accumulated impairment	(7.0	)		—	—		—	(14.7	)	(21.7	)
	1,633.7			420.5	431.8		1,014.4	347.1		3,847.5

(1) Not subject to amortization.

Schedule goodwill and intangible asset allocation to CGUs

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

	December 31, 2017			December 31, 2016
	Goodwill	Intangible assets	Total	Goodwill	Intangible assets	Total
Allied World	938.9	763.7	1,702.6	—	—	—
Cara	222.3	1,073.6	1,295.9	211.5	990.3	1,201.8
Brit	154.3	571.3	725.6	154.3	576.6	730.9
Zenith National	317.6	115.5	433.1	317.6	121.4	439.0
Crum & Forster	188.8	129.4	318.2	186.5	145.1	331.6
Quess	229.0	21.8	250.8	23.7	18.5	42.2
Thomas Cook India	150.0	54.2	204.2	115.3	50.1	165.4
Northbridge	95.7	77.1	172.8	88.3	64.5	152.8
OdysseyRe	119.7	51.6	171.3	119.7	55.2	174.9
AMAG	44.7	110.2	154.9	72.6	63.0	135.6
All other(1)	443.7	199.4	643.1	344.2	129.1	473.3
	2,904.7	3,167.8	6,072.5	1,633.7	2,213.8	3,847.5

(1) Comprised primarily of balances related to NCML, Fairchem, Mosaic Capital, Boat Rocker, The Keg, U.S. Run-off and Pethealth.

XML

Other Assets (Tables)

12 Months Ended

Dec. 31, 2017

Subclassifications of assets, liabilities and equities [abstract]

Disclosure of information for other assets

Other assets were comprised as follows:  

	December 31, 2017			December 31, 2016
	Insurance and reinsurance companies	Non-insurance companies	Total	Insurance and reinsurance companies	Non-insurance companies	Total
Premises and equipment	403.0	847.3	1,250.3	251.9	639.6	891.5
Other reporting segment investment properties (note 23)	—	1,168.4	1,168.4	—	—	—
Other reporting segment sales receivables	—	470.0	470.0	—	295.2	295.2
Other reporting segment inventories	—	320.7	320.7	—	235.5	235.5
Receivables for securities sold but not yet settled	207.3	—	207.3	15.6	26.5	42.1
Prepaid expenses	83.7	102.5	186.2	59.7	64.4	124.1
Income taxes refundable	83.1	63.9	147.0	174.7	28.0	202.7
Accrued interest and dividends	105.2	16.2	121.4	97.3	9.5	106.8
Deferred compensation plans	67.1	—	67.1	63.4	—	63.4
Pension surplus (note 21)	49.1	—	49.1	50.8	—	50.8
Other	565.5	275.3	840.8	307.3	199.0	506.3
	1,564.0	3,264.3	4,828.3	1,020.7	1,497.7	2,518.4
Current	788.5	1,069.0	1,857.5	487.5	792.9	1,280.4
Non-current	775.5	2,195.3	2,970.8	533.2	704.8	1,238.0
	1,564.0	3,264.3	4,828.3	1,020.7	1,497.7	2,518.4

XML

Accounts Payable and Accrued Liabilities (Tables)

12 Months Ended

Dec. 31, 2017

Subclassifications of assets, liabilities and equities [abstract]

Schedule of accounts payable and accrued liabilities

Accounts payable and accrued liabilities were comprised as follows:

	December 31, 2017			December 31, 2016
	Insurance and reinsurance companies	Non-insurance companies	Total	Insurance and reinsurance companies	Non-insurance companies	Total
Other reporting segment payables related to cost of sales	—	530.8	530.8	—	416.7	416.7
Payable to reinsurers	428.2	—	428.2	498.3	—	498.3
Salaries and employee benefit liabilities	296.8	77.3	374.1	218.3	31.2	249.5
Deferred gift card, hospitality and other revenue	27.3	294.7	322.0	20.9	263.4	284.3
Pension and post retirement liabilities (note 21)	227.1	23.7	250.8	196.2	20.7	216.9
Amounts withheld and accrued taxes	205.2	43.4	248.6	169.7	48.5	218.2
Ceded deferred premium acquisition costs	161.4	—	161.4	84.7	—	84.7
Accrued rent, storage and facilities costs	33.1	59.7	92.8	17.1	47.7	64.8
Amounts payable to agents and brokers	90.4	0.1	90.5	30.5	0.1	30.6
Accrued commissions	79.8	0.4	80.2	85.4	—	85.4
Accrued premium taxes	66.6	—	66.6	55.2	—	55.2
Accrued interest expense	48.0	3.4	51.4	41.4	2.1	43.5
Accrued legal and professional fees	37.7	10.7	48.4	29.6	8.5	38.1
Amounts payable for securities purchased but not yet settled	18.2	—	18.2	14.4	—	14.4
Administrative and other	621.7	243.8	865.5	453.3	134.7	588.0
	2,341.5	1,288.0	3,629.5	1,915.0	973.6	2,888.6
Current	1,429.7	1,019.7	2,449.4	1,174.7	770.8	1,945.5
Non-current	911.8	268.3	1,180.1	740.3	202.8	943.1
	2,341.5	1,288.0	3,629.5	1,915.0	973.6	2,888.6

XML

Borrowings (Tables)

12 Months Ended

Dec. 31, 2017

Borrowings [abstract]

Disclosure of the schedule of debt

	December 31, 2017			December 31, 2016
	Principal	Carrying value(a)	Fair value(b)	Principal	Carrying value(a)	Fair value(b)
Borrowings - holding company
Fairfax unsecured notes:
7.375% due April 15, 2018(e)	144.2	144.2	146.4	144.2	144.2	153.8
7.50% due August 19, 2019 (Cdn$400.0)(d)(1)(7)	—	—	—	298.3	297.0	334.4
7.25% due June 22, 2020 (Cdn$275.0)(d)(7)	213.3	212.7	235.6	205.1	204.2	233.6
5.80% due May 15, 2021(d)	500.0	498.0	534.1	500.0	497.4	538.9
6.40% due May 25, 2021 (Cdn$400.0)(d)(7)	315.7	314.4	349.4	298.3	296.5	337.3
5.84% due October 14, 2022 (Cdn$450.0)(d)	359.2	362.5	397.2	335.6	339.6	373.9
4.50% due March 22, 2023 (Cdn$400.0)	319.2	316.8	333.5	298.3	295.4	310.6
4.875% due August 13, 2024(d)	300.0	296.2	313.4	300.0	295.6	297.8
4.95% due March 3, 2025 (Cdn$350.0)(d)	279.3	275.5	297.1	261.0	256.6	272.6
8.30% due April 15, 2026(e)	91.8	91.6	116.3	91.8	91.6	109.9
4.70% due December 16, 2026 (Cdn$450.0)	359.2	356.6	371.7	335.6	332.7	338.9
4.25% due December 6, 2027 (Cdn$650.0)(3)	518.8	516.2	514.7	—	—	—
7.75% due July 15, 2037(e)	91.3	90.4	114.1	91.3	90.4	104.2
Revolving credit facility	—	—	—	200.0	200.0	200.0
Purchase consideration payable due 2017 and other(2)	—	—	—	131.3	131.3	131.3
	3,492.0	3,475.1	3,723.5	3,490.8	3,472.5	3,737.2
Borrowings - insurance and reinsurance companies
Allied World senior notes:
5.50% due November 1, 2020	300.0	320.4	320.0	—	—	—
4.35% due October 29, 2025	500.0	508.4	507.3	—	—	—
Allied World revolving credit facility and other borrowings	45.0	49.2	49.2	—	—	—
OdysseyRe floating rate unsecured senior notes due 2021	90.0	89.8	93.0	90.0	89.8	94.1
Brit 6.625% subordinated notes due December 9, 2030 (£135.0)	182.6	188.5	199.0	166.8	175.9	169.0
Brit floating rate revolving credit facility(4)	45.0	45.0	45.0	—	—	—
First Mercury trust preferred securities due 2036 and 2037	41.4	41.4	41.4	41.4	41.4	41.4
Zenith National 8.55% debentures due August 1, 2028(d)	38.4	38.2	38.2	38.4	38.2	38.2
Advent floating rate subordinated notes due June 3, 2035(d)	48.4	47.1	47.8	46.7	45.4	41.5
Advent floating rate unsecured senior notes due 2026(d)	46.0	45.0	46.0	46.0	44.8	46.0
	1,336.8	1,373.0	1,386.9	429.3	435.5	430.2
Borrowings - non-insurance companies(c)
Fairfax India floating rate term loan due July 11, 2018(6)	400.0	400.0	400.0	225.0	223.8	223.8
Fairfax India subsidiary borrowings	186.1	186.1	186.1	80.8	80.8	80.8
Fairfax Africa floating rate term loan due January 31, 2018(5)	150.0	150.0	150.0	—	—	—
Grivalia Properties term loans and revolving facility	160.4	160.4	160.4	—	—	—
Cara floating rate term loan due September 2, 2019 (Cdn$150.0)	119.7	119.3	119.3	111.9	111.4	111.4
Cara floating rate credit facility expiring September 2, 2021	182.8	181.7	181.7	180.5	179.1	179.1
The Keg 7.5% note due May 31, 2042 (Cdn$57.0)	45.5	45.5	45.5	42.5	42.5	42.5
The Keg floating rate revolving facility and term loan due July 2, 2020	31.9	31.7	31.7	20.9	20.7	20.7
Loans and revolving credit facilities primarily at floating rates	291.7	291.3	291.4	201.8	201.3	200.7
	1,568.1	1,566.0	1,566.1	863.4	859.6	859.0
Total debt	6,396.9	6,414.1	6,676.5	4,783.5	4,767.6	5,026.4

(a) Principal net of unamortized issue costs and discounts (premiums).

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

(c) These borrowings are non-recourse to the holding company.

(d) Redeemable at the issuer's option at any time at certain prices specified in the instrument's offering document.

(e) This debt has no provision for redemption prior to the contractual maturity date.

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

	2017					2016
	Holding company		Insurance and reinsurance companies	Non-insurance companies	Total	Holding company	Insurance and reinsurance companies		Non-insurance companies	Total
Balance – January 1	3,472.5		435.5	859.6	4,767.6	2,599.0	468.5		284.0	3,351.5
Net cash inflows (outflows) from issuances and repayments	(174.2	)	67.5	425.6	318.9	832.3	—		515.2	1,347.5
Non-cash changes:
Acquisitions (note 23)	—		860.5	221.5	1,082.0	—	—		60.4	60.4
Loss on redemption	28.6		—	—	28.6	—	—		—	—
Foreign exchange effect and other	148.2		9.5	59.3	217.0	41.2	(33.0	)	—	8.2
Balance – December 31	3,475.1		1,373.0	1,566.0	6,414.1	3,472.5	435.5		859.6	4,767.6

Disclosure of borrowing repayments

Principal repayments on borrowings are due as follows:

	2018	2019	2020	2021	2022	Thereafter	Total
Holding company	144.2	—	213.3	815.7	359.2	1,959.6	3,492.0
Insurance and reinsurance companies	5.0	—	345.0	90.0	—	896.8	1,336.8
Non-insurance companies	855.9	187.8	131.4	242.5	49.4	101.1	1,568.1
Total	1,005.1	187.8	689.7	1,148.2	408.6	2,957.5	6,396.9

XML

Total Equity (Tables)

12 Months Ended

Dec. 31, 2017

Share Capital, Reserves And Other Equity Interest [Abstract]

Disclosure of classes of share capital

The number of shares outstanding was as follows:

	2017		2016
Subordinate voting shares – January 1	22,344,796		21,465,089
Issuances during the year	5,084,961		1,000,000
Repurchases for cancellation	(184,367	)	(30,732	)
Treasury shares acquired	(277,364	)	(130,075	)
Treasury shares reissued	34,277		40,514
Subordinate voting shares – December 31	27,002,303		22,344,796
Multiple voting shares – beginning and end of year	1,548,000		1,548,000
Interest in multiple and subordinate voting shares held through ownership interest in shareholder – beginning and end of year	(799,230	)	(799,230	)
Common stock effectively outstanding – December 31	27,751,073		23,093,566

The number of preferred shares outstanding was as follows:

	Series C	Series D	Series E	Series F	Series G	Series H	Series I	Series J	Series K	Series M	Total
January 1, 2016	6,016,384	3,983,616	3,967,134	3,572,044	7,432,952	2,567,048	10,465,553	1,534,447	9,500,000	9,200,000	58,239,178
2016 activity:	—	—	—	—	—	—	—	—	—	—	—
December 31, 2016	6,016,384	3,983,616	3,967,134	3,572,044	7,432,952	2,567,048	10,465,553	1,534,447	9,500,000	9,200,000	58,239,178
2017 activity:	—	—	—	—	—	—	—	—	—	—	—
December 31, 2017	6,016,384	3,983,616	3,967,134	3,572,044	7,432,952	2,567,048	10,465,553	1,534,447	9,500,000	9,200,000	58,239,178

The carrying value of preferred shares outstanding was as follows:

	Series C	Series D	Series E	Series F	Series G	Series H	Series I	Series J	Series K	Series M	Total
January 1, 2016	136.7	90.5	90.8	81.8	175.3	60.6	251.6	36.9	231.7	179.0	1,334.9
2016 activity:
Other	—	—	—	—	—	—	—	—	—	0.6	0.6
December 31, 2016	136.7	90.5	90.8	81.8	175.3	60.6	251.6	36.9	231.7	179.6	1,335.5
2017 activity:	—	—	—	—	—	—	—	—	—	—	—
December 31, 2017	136.7	90.5	90.8	81.8	175.3	60.6	251.6	36.9	231.7	179.6	1,335.5

Dividends paid

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

Date of declaration	Date of record	Date of payment	Dividend per share	Total cash payment
January 3, 2018	January 18, 2018	January 25, 2018	$10.00	$283.2
January 4, 2017	January 19, 2017	January 26, 2017	$10.00	$237.4
January 5, 2016	January 20, 2016	January 27, 2016	$10.00	$227.8

Schedule of preferred shares

The terms of the company's cumulative five-year rate reset preferred shares at December 31, 2017 were as follows:

	Next possible redemption and conversion date(1)(2)	Number of shares outstanding	Stated capital			Liquidation preference per share	Fixed dividend rate per annum		Floating dividend rate per annum(3)
Series C	December 31, 2019	6,016,384	Cdn	$	150.4	Cdn $25.00	4.58	%	—
Series D	December 31, 2019	3,983,616	Cdn	$	99.6	Cdn $25.00	—		4.02	%
Series E	March 31, 2020	3,967,134	Cdn	$	99.2	Cdn $25.00	2.91	%	—
Series F	March 31, 2020	3,572,044	Cdn	$	89.3	Cdn $25.00	—		3.03	%
Series G	September 30, 2020	7,432,952	Cdn	$	185.8	Cdn $25.00	3.32	%	—
Series H	September 30, 2020	2,567,048	Cdn	$	64.2	Cdn $25.00	—		3.43	%
Series I	December 31, 2020	10,465,553	Cdn	$	261.6	Cdn $25.00	3.71	%	—
Series J	December 31, 2020	1,534,447	Cdn	$	38.4	Cdn $25.00	—		3.72	%
Series K	March 31, 2022	9,500,000	Cdn	$	237.5	Cdn $25.00	4.67	%	—
Series M	March 31, 2020	9,200,000	Cdn	$	230.0	Cdn $25.00	4.75	%	—

(1) Fixed and floating rate cumulative preferred shares are redeemable at the company's option at each stated redemption date and on each subsequent five-year anniversary date at Cdn$25.00 per share.

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

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

Schedule of AOCI

The amounts related to each component of accumulated other comprehensive income (loss) attributable to shareholders of Fairfax were as follows:

	December 31, 2017						December 31, 2016
	Pre-tax amount		Income tax (expense) recovery		After-tax amount		Pre-tax amount		Income tax (expense) recovery			After-tax amount
Items that may be subsequently reclassified to net earnings
Currency translation account	(166.6	)		2.8	(163.8	)	(356.6	)		(7.6	)	(364.2	)
Share of accumulated other comprehensive loss of associates, excluding share of net losses on defined benefit plans of associates	(22.0	)		0.5	(21.5	)	(157.1	)		26.3		(130.8	)
	(188.6	)		3.3	(185.3	)	(513.7	)		18.7		(495.0	)
Items that will not be subsequently reclassified to net earnings
Share of net losses on defined benefit plans of associates	(30.3	)		3.5	(26.8	)	(42.6	)		10.8		(31.8	)
Net losses on defined benefit plans	(60.9	)		8.9	(52.0	)	(28.0	)		6.9		(21.1	)
	(91.2	)		12.4	(78.8	)	(70.6	)		17.7		(52.9	)
Accumulated other comprehensive loss attributable to shareholders of Fairfax	(279.8	)		15.7	(264.1	)	(584.3	)		36.4		(547.9	)

Disclosure of non-controlling interests

Non-controlling interests for the years ended December 31 were as follows:

								Net earnings (loss) attributable to non-controlling interests
		2017			2016			Year ended December 31,
Subsidiary	Domicile	Minority voting percentage		Carrying value	Minority voting percentage		Carrying value	2017		2016
Allied World(1)	Switzerland	32.6	%	1,229.4	—		—	(182.3	)	—
Fairfax India(2)	Canada	6.4	%	1,110.7	4.7	%	743.7	(59.9	)	24.4
Cara(3)	Canada	43.3	%	578.0	43.4	%	523.9	55.7		30.8
Grivalia Properties(4)	Greece	47.3	%	517.6	—		—	20.0		—
Brit(5)	U.K.	27.5	%	435.3	27.5	%	463.4	(19.1	)	50.4
Thomas Cook India(6)	India	32.4	%	391.2	32.3	%	139.6	28.2		2.4
Fairfax Africa(7)	Canada	1.2	%	191.6	—		—	4.3		—
All other	—			147.1			129.4	27.4		9.8
				4,600.9			2,000.0	(125.7	)	117.8

Pursuant to the transactions described in note 23:

(1) During the third quarter of 2017 the company acquired an indirect 67.4% equity interest in Allied World.

(2) The increase in carrying value of Fairfax India's non-controlling interests at December 31, 2017 compared to December 31, 2016 was primarily due to common shares issued as a result of Fairfax India's public offering and private placement on January 13, 2017, the acquisition of a 51.0% interest in Saurashtra Freight, the merger of Fairchem and Privi Organics, and the impact of foreign currency translation (principally the strengthening of the Indian rupee relative to the U.S. dollar), partially offset by non-controlling interests' share of net loss.

(3) The increase in carrying value of Cara's non-controlling interests at December 31, 2017 compared to December 31, 2016 was primarily due to net earnings and the impact of foreign currency translation (strengthening of the Canadian dollar relative to the U.S. dollar), partially offset by repurchase of shares by Cara and dividends paid.

(4) On July 4, 2017 the company increased its equity interest in Grivalia Properties to 52.6% and commenced consolidating Grivalia Properties in the Other reporting segment.

(5) On March 3, 2017 Brit paid a dividend of $45.8 to its minority shareholder (OMERS).

(6) The increase in carrying value of Thomas Cook India's non-controlling interests at December 31, 2017 compared to December 31, 2016 was primarily due to a reduction in the company's indirect ownership of Quess from 42.1% to 33.1%.

(7) On February 17, 2017 the company acquired a 64.2% equity interest in Fairfax Africa.

XML

Earnings per Share (Tables)

12 Months Ended

Dec. 31, 2017

Earnings per share [abstract]

Schedule of earnings per share

Net earnings (loss) per share is calculated based upon the weighted average common shares outstanding as follows:

	2017			2016
Net earnings (loss) attributable to shareholders of Fairfax	1,740.6			(512.5		)
Preferred share dividends	(44.6		)	(44.0		)
Net earnings (loss) attributable to common shareholders – basic and diluted	1,696.0			(556.5		)
Weighted average common shares outstanding – basic	25,411,246			23,017,184
Share-based payment awards	689,571			—
Weighted average common shares outstanding – diluted	26,100,817			23,017,184
Net earnings (loss) per common share – basic		$66.74			($24.18	)
Net earnings (loss) per common share – diluted		$64.98			($24.18	)

XML

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Income Taxes [Abstract]

The company's provision for (recovery of) income taxes

The company’s provision (recovery) for income taxes for the years ended December 31 were as follows:

	2017		2016
Current income tax
Current year expense	200.6		95.1
Adjustments to prior years’ income taxes	(22.6	)	19.1
	178.0		114.2
Deferred income tax
Origination and reversal of temporary differences	(22.5	)	(265.6	)
Adjustments to prior years' deferred income taxes	24.3		2.9
Change in tax rate related to U.S. tax reform	222.4		—
Other	6.1		(11.1	)
	230.3		(273.8	)
Provision (recovery) for income taxes	408.3		(159.6	)

Earnings before income taxes by jurisdiction

The company’s earnings (loss) before income taxes by jurisdiction and the associated provision (recovery) for income taxes for the years ended December 31 are summarized in the following table:

	2017								2016
	Canada(1)		U.S.(2)	U.K.(3)		Other(4)		Total	Canada(1)		U.S.(2)		U.K.(3)		Other(4)	Total
Earnings (loss) before income taxes	(141.3	)	543.5	(72.1	)	1,693.1		2,023.2	(258.5	)	(428.4	)	42.2		90.4	(554.3	)
Provision (recovery) for income taxes	52.9		420.5	(24.6	)	(40.5	)	408.3	69.6		(234.6	)	(23.7	)	29.1	(159.6	)
Net earnings (loss)	(194.2	)	123.0	(47.5	)	1,733.6		1,614.9	(328.1	)	(193.8	)	65.9		61.3	(394.7	)

(1) Includes Fairfax India and Fairfax Africa.

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

(3) Principally comprised of Brit, Riverstone UK, Advent and other associated holding company results.

(4) Includes India, Asia, non-U.K. European companies and Allied World (acquired on July 6, 2017; notwithstanding that certain operations of Allied World conduct business in the U.S. and the U.K., the majority of Allied World's net earnings (loss) is sourced from its Bermuda operations).

Reconciliations of the provision for (recovery of) income taxes

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

	2017		2016
Canadian statutory income tax rate	26.5	%	26.5	%
Provision (recovery) for income taxes at the Canadian statutory income tax rate	536.1		(146.9	)
Tax rate differential on income and losses incurred outside Canada	(445.3	)	(65.3	)
Non-taxable investment income	(116.2	)	(74.7	)
Change in unrecorded tax benefit of losses and temporary differences	210.2		117.5
Change in tax rate for deferred income taxes related to U.S. tax reform	222.4		—
Change in tax rate for deferred income taxes (excluding U.S. tax reform)	2.2		(15.1	)
Other including permanent differences	(15.6	)	11.3
Foreign exchange effect	12.8		(8.4	)
Provision relating to prior years	1.7		22.0
Provision (recovery) for income taxes	408.3		(159.6	)

Income taxes refundable and payable

Income taxes refundable and payable were as follows:

	December 31, 2017			December 31, 2016
Income taxes refundable		147.0			202.7
Income taxes payable		(95.6	)		(35.4	)
Net income taxes refundable		51.4			167.3

Changes net income taxes (payable) refundable

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

	2017		2016
Balance - January 1	167.3		12.1
Amounts recorded in the consolidated statements of earnings	(178.0	)	(114.2	)
Payments made during the year	33.4		267.1
Acquisitions of subsidiaries (note 23)	18.8		3.9
Foreign exchange effect and other	9.9		(1.6	)
Balance - December 31	51.4		167.3

Changes in net deferred income tax asset

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

	2017
	Operating and capital losses		Provision for losses and loss adjustment expenses		Provision for unearned premiums		Deferred premium acquisition costs		Intangible assets		Investments		Tax credits		Other		Total
Balance - January 1, 2017	188.8		182.3		126.6		(120.0	)	(347.6	)	331.9		224.3		146.3		732.6
Amounts recorded in the consolidated statement of earnings	(41.2	)	(72.3	)	(15.0	)	(0.6	)	111.0		(140.1	)	(106.0	)	33.9		(230.3	)
Amounts recorded in total equity	—		—		—		—		—		(15.5	)	(0.1	)	(5.1	)	(20.7	)
Acquisitions of subsidiaries (note 23)	33.1		20.5		(19.8	)	53.6		(195.2	)	0.9		—		5.4		(101.5	)
Foreign exchange effect and other	7.0		0.8		0.1		0.3		(11.7	)	0.3		(0.1	)	4.0		0.7
Balance - December 31, 2017	187.7		131.3		91.9		(66.7	)	(443.5	)	177.5		118.1		184.5		380.8
	2016
	Operating and capital losses		Provision for losses and loss adjustment expenses		Provision for unearned premiums		Deferred premium acquisition costs		Intangible assets		Investments		Tax credits		Other		Total
Balance - January 1, 2016	235.4		204.2		92.8		(96.9	)	(325.4	)	49.0		174.9		129.9		463.9
Amounts recorded in the consolidated statement of earnings	(57.8	)	(22.7	)	31.8		(24.1	)	27.9		266.9		49.4		2.4		273.8
Amounts recorded in total equity	—		—		—		—		—		17.7		—		19.6		37.3
Acquisitions of subsidiaries (note 23)	9.7		—		(0.3	)	0.7		(47.7	)	(1.1	)	—		(14.5	)	(53.2	)
Foreign exchange effect and other	1.5		0.8		2.3		0.3		(2.4	)	(0.6	)	—		8.9		10.8
Balance - December 31, 2016	188.8		182.3		126.6		(120.0	)	(347.6	)	331.9		224.3		146.3		732.6

XML

Statutory Requirements (Tables)

12 Months Ended

Dec. 31, 2017

Statutory Requirements [Abstract]

Schedule of dividend capacity available

Based on the surplus and net earnings (loss) of the primary insurance and reinsurance subsidiaries as at and for the year ended December 31, 2017, the maximum dividend capacity available in 2018 at each of those subsidiaries, payable to all shareholders (including non-controlling interests) is as follows:

	December 31, 2017
Allied World		688.0
OdysseyRe		324.9
Northbridge(1)		149.1
Crum & Forster		130.2
Zenith National		86.0
Brit		195.1
		1,573.3

(1) Subject to prior regulatory approval.

XML

Pensions and Post Retirement Benefits (Tables)

12 Months Ended

Dec. 31, 2017

Pension And Post Retirement Benefits [Abstract]

Disclosure of defined benefit plans

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

	Defined benefit pension plans December 31				Post retirement benefit plans December 31
	2017		2016		2017		2016
Benefit obligation	(918.3	)	(803.7	)	(118.5	)	(109.3	)
Fair value of plan assets	836.1		747.9		—		—
Funded status of plans - deficit	(82.2	)	(55.8	)	(118.5	)	(109.3	)
Impact of asset ceiling	(1.0	)	(1.0	)	—		—
Net accrued liability (notes 13 and 14)(1)	(83.2	)	(56.8	)	(118.5	)	(109.3	)

Weighted average assumptions used to determine benefit obligations:
Discount rate	3.2	%	3.6	%	4.1	%	4.2	%
Rate of compensation increase	2.8	%	3.6	%	3.3	%	3.5	%
Health care cost trend	—		—		5.0	%	5.7	%

(1) The defined benefit pension plan net accrued liability at December 31, 2017 of $83.2 (December 31, 2016 - $56.8) was comprised of pension surpluses of $49.1 and pension deficits of $132.3 (December 31, 2016 - $50.8 and $107.6).

Pension and post retirement expenses recognized

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

	2017	2016
Defined benefit pension plan expense	17.3	27.7
Defined contribution pension plan expense	45.6	32.2
Defined benefit post retirement expense	10.3	8.0
	73.2	67.9

Pre-tax actuarial net gains (losses) recognized in the consolidated statements

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

	2017		2016
Defined benefit pension plans
Actuarial net gains on plan assets and change in asset ceiling	18.6		54.5
Actuarial net losses on benefit obligations	(53.0	)	(76.4	)
	(34.4	)	(21.9	)
Post retirement benefit plans - actuarial net gains (losses) on benefit obligations	0.3		(1.4	)
	(34.1	)	(23.3	)

XML

Operating Leases (Tables)

12 Months Ended

Dec. 31, 2017

Leases1 [Abstract]

Aggregate future minimum operating lease commitments

Aggregate future minimum operating lease commitments at December 31, 2017 relating to premises, automobiles and equipment for various terms up to ten years were as follows:

2018	188.5
2019	173.2
2020	153.4
2021	139.5
2022	113.0
Thereafter	458.2

XML

Acquisitions and Divestitures (Tables)

12 Months Ended

Dec. 31, 2017

Business Combinations1 [Abstract]

Disclosure of detailed information about business combinations

The fair value of assets acquired and liabilities assumed in connection with the 2016 acquisitions described above are summarized in the table that follows:

	Bryte Insurance			AMAG			St-Hubert			Other(1)
Acquisition date	December 7, 2016			October 10, 2016			September 2, 2016			Throughout 2016
Percentage of common shares acquired	100.0	%		80.0	%		100.0	%	(2)
Assets:
Insurance contract receivables	45.0			8.9			—			41.3
Portfolio investments(3)	220.4			99.9			—			22.1
Recoverable from reinsurers	85.8			26.4			—			1.1
Deferred income taxes	11.4			—			—			8.5
Goodwill and intangible assets	16.8		(4)	161.2		(5)	319.4		(6)	146.1
Other assets	10.8			25.9			180.0			205.3
	390.2			322.3			499.4			424.4
Liabilities:
Accounts payable and accrued liabilities	88.4			16.6			30.7			48.3
Deferred income taxes	—			11.1			54.9			12.2
Funds withheld payable to reinsurers	1.4			5.4			—			0.4
Insurance contract liabilities	172.4			76.3			—			59.7
Borrowings	—			—			—			48.1
	262.2			109.4			85.6			168.7
Non-controlling interests	—			34.0			—			57.3
Purchase consideration	128.0			178.9			413.8			191.6
Excess of fair value of net assets acquired over purchase consideration	—			—			—			6.8
	390.2			322.3			499.4			424.4

(1) Includes the acquisitions of Fairfirst Insurance, Privi Organics, the QBE insurance operations and Golf Town, and Cara's acquisition of Original Joe's.

(2) The company's economic interest in St-Hubert was 38.9% as a result of acquiring St-Hubert through 38.9%-owned Cara.

(3) Included subsidiary cash and cash equivalents of Bryte Insurance ($48.4) and AMAG ($6.2).

(4) Comprised of goodwill of $11.5 and intangible assets of $5.3.

(5) Comprised of goodwill of $43.0 and intangible assets of $118.2.

(6) Comprised of goodwill of $85.2 and intangible assets of $234.2 (primarily brand names of $183.1).

The determination of the fair value of assets acquired and liabilities assumed in connection with the acquisitions described above is currently underway and will be finalized within twelve months of the respective acquisition dates. Provisionally recorded amounts primarily include intangible assets, deferred income taxes, goodwill and the excess of fair value of net assets acquired over purchase consideration. The company has substantially completed its valuation of Allied World's intangible assets.

	Allied World			Grivalia Properties		Fairfax Latam		Other(1)
Acquisition date	July 6, 2017			July 4, 2017		Throughout 2017		Throughout 2017
Percentage of common shares acquired	94.6	%		52.6	%	100.0	%
Assets:
Insurance contract receivables	1,212.5			—		235.8		0.4
Portfolio investments(2)	8,568.7			139.1		250.4		76.0
Recoverable from reinsurers	2,363.6			—		597.7		0.7
Deferred income taxes	—			0.3		48.3		5.0
Goodwill and intangible assets	1,726.9		(3)	—		23.3		385.5
Other assets	223.5			1,020.4		51.1		288.7
	14,095.2			1,159.8		1,206.6		756.3
Liabilities:
Accounts payable and accrued liabilities	300.7			25.3		172.3		167.4
Income taxes payable	3.4			4.2		9.0		1.1
Deferred income taxes	118.0			—		21.5		4.3
Funds withheld payable to reinsurers	193.5			—		9.8		0.1
Insurance contract liabilities	8,467.7			—		826.1		3.0
Borrowings	860.5			137.6		—		83.9
	9,943.8			167.1		1,038.7		259.8
Non-controlling interests	173.5			470.5		—		8.1
Purchase consideration	3,977.9			519.7		167.9		488.4
Excess of fair value of net assets acquired over purchase consideration	—			2.5		—		—
	14,095.2			1,159.8		1,206.6		756.3

(1) Primarily comprised of the acquisitions of Mosaic Capital and certain AIG branches in Central and Eastern Europe, the acquisition of Pickle Barrel by Cara, the acquisition of Saurashtra Freight and consolidation of Fairchem by Fairfax India, and various acquisitions by Quess, Thomas Cook India, Mosaic Capital and Boat Rocker.

(2) Included subsidiary cash and cash equivalents of Allied World ($1,195.4, of which $4.8 was restricted), Grivalia Properties ($26.3) and Fairfax Latam ($67.2).

(3) Comprised of goodwill of $937.9 and intangible assets of $789.0 (primarily broker relationships of $574.0, Lloyd's participation rights of $87.0 and brand names of $71.0).

XML

Financial Risk Management (Tables)

12 Months Ended

Dec. 31, 2017

Disclosure of nature and extent of risks arising from financial instruments [abstract]

Concentration of risk by region and line of business based on gross premiums written

The table below shows the company's concentration of risk by region and line of business based on gross premiums written prior to giving effect to ceded reinsurance premiums. The company's exposure to general insurance risk varies by geographic region and may change over time. Premiums ceded to reinsurers (including retrocessions) in 2017 by line of business amounted to $992.3 for property (2016 - $463.5), $916.3 for casualty (2016 - $699.9) and $315.4 for specialty (2016 - $282.5).

	Canada		United States		Asia(1)		International(2)		Total
For the years ended December 31	2017	2016	2017	2016	2017	2016	2017	2016	2017	2016
Property	646.8	582.7	1,878.6	1,466.0	586.5	464.8	995.7	502.7	4,107.6	3,016.2
Casualty	602.6	528.5	4,899.4	4,002.9	400.8	352.3	805.0	465.1	6,707.8	5,348.8
Specialty	143.4	126.4	548.8	485.6	275.1	231.9	424.8	325.4	1,392.1	1,169.3
Total	1,392.8	1,237.6	7,326.8	5,954.5	1,262.4	1,049.0	2,225.5	1,293.2	12,207.5	9,534.3
Insurance	1,295.3	1,134.6	5,855.4	4,607.0	684.9	516.3	1,494.3	672.3	9,329.9	6,930.2
Reinsurance	97.5	103.0	1,471.4	1,347.5	577.5	532.7	731.2	620.9	2,877.6	2,604.1
	1,392.8	1,237.6	7,326.8	5,954.5	1,262.4	1,049.0	2,225.5	1,293.2	12,207.5	9,534.3

(1) The Asia geographic segment comprises countries located throughout Asia, including China, India, Sri Lanka, Malaysia, Singapore, Indonesia and Thailand, and the Middle East.

(2) The International geographic segment comprises Australia and countries located in Africa, Europe and South America.

Schedule of aggregate gross credit risk exposure

The company's gross credit risk exposure at December 31, 2017 (without taking into account amounts held by the company as collateral) was comprised as follows:

	December 31, 2017		December 31, 2016
Cash and short term investments		19,198.8		11,235.6
Investments in debt instruments:
U.S. sovereign government		1,779.3		1,117.3
Other sovereign government rated AA/Aa or higher(1)		615.4		596.1
All other sovereign government(2)		1,268.4		891.5
Canadian provincials		93.8		196.9
U.S. states and municipalities		2,452.1		4,732.2
Corporate and other		4,081.8		2,633.5
Receivable from counterparties to derivative contracts		126.7		196.4
Insurance contract receivables		4,686.9		2,917.5
Recoverable from reinsurers		7,812.5		4,010.3
Other assets		1,723.0		1,065.4
Total gross credit risk exposure		43,838.7		29,592.7

(1) Primarily comprised of bonds issued by the governments of Germany, Australia, the U.K, and Canada with fair values of $105.3, $97.9, $90.9 and $84.4 (December 31, 2016 - $201.7, $31.7, $23.4 and $311.4).

(2) Primarily comprised of bonds issued by the governments of India, Poland and Brazil with fair values of $734.7, $125.1 and $101.7 (December 31, 2016 - $602.2, $117.2 and $80.3).

Schedule of fixed income portfolio according to credit rating

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

	December 31, 2017			December 31, 2016
Issuer Credit Rating	Amortized cost	Fair value	%	Amortized cost	Fair value	%
AAA/Aaa	2,476.3	2,432.0	23.7	2,042.0	1,915.8	18.8
AA/Aa	2,149.5	2,408.8	23.4	3,669.1	4,383.3	43.1
A/A	823.1	819.8	8.0	649.3	728.5	7.2
BBB/Baa	1,617.1	1,764.8	17.1	910.4	1,024.0	10.1
BB/Ba	151.1	154.0	1.5	98.5	117.6	1.2
B/B	448.7	447.6	4.3	339.0	261.6	2.5
Lower than B/B(1)	554.1	432.7	4.2	392.1	320.5	3.2
Unrated(2)	1,594.4	1,831.1	17.8	1,416.7	1,416.2	13.9
Total	9,814.3	10,290.8	100.0	9,517.1	10,167.5	100.0

(1) Lower than B/B is primarily comprised of the fair value of the company's investments in EXCO Resources, Inc. of $402.0 (December 31, 2016 - $292.4).

(2) Unrated is primarily comprised of the fair value of the company's investments in Blackberry Limited of $663.6 (December 31, 2016 - $461.2), Sanmar Chemicals Group of $333.2 (December 31, 2016 - $299.1), Chorus Aviation Inc. $155.2 (December 31, 2016 - nil) and FBD Insurance plc. of $112.0 (December 31, 2016 - $76.8).

Schedule of credit risk related to derivative contract counterparties

The following table sets out the company's credit risk related to derivative contract counterparties, assuming all such counterparties are simultaneously in default:

	December 31, 2017			December 31, 2016
Total derivative assets(1)		126.7			196.4
Impact of net settlement arrangements		(38.6	)		(53.8	)
Fair value of collateral deposited for the benefit of the company(2)		(39.1	)		(54.0	)
Excess collateral pledged by the company in favour of counterparties		9.0			12.2
Initial margin not held in segregated third party custodian accounts		8.2			5.0
Net derivative counterparty exposure after net settlement and collateral arrangements		66.2			105.8

(1) Excludes equity warrants and equity call options which are not subject to counterparty risk.

(2) Excludes $0.4 (December 31, 2016 - $8.7) of excess collateral pledged by counterparties.

Schedule of gross reinsurance recoverable by reinsurer financial strength rating

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

	December 31, 2017								December 31, 2016
A.M. Best Rating (or S&P equivalent)	Gross recoverable from reinsurers			Outstanding balances for which security  is held		Net unsecured recoverable from reinsurers			Gross recoverable from reinsurers			Outstanding balances for which security  is held		Net unsecured recoverable from reinsurers
A++		429.6			31.9		397.7			390.0			27.2		362.8
A+		3,878.4			267.2		3,611.2			1,551.0			152.0		1,399.0
A		2,311.9			95.4		2,216.5			1,130.8			67.3		1,063.5
A-		245.5			15.1		230.4			299.7			19.9		279.8
B++		22.2			1.2		21.0			22.0			1.4		20.6
B+		3.1			0.8		2.3			2.0			1.2		0.8
B or lower		5.4			3.0		2.4			11.9			8.9		3.0
Not rated		948.2			493.8		454.4			703.3			218.5		484.8
Pools and associations		134.6			4.5		130.1			71.3			5.6		65.7
		7,978.9			912.9		7,066.0			4,182.0			502.0		3,680.0
Provision for uncollectible reinsurance		(166.4	)				(166.4	)		(171.7	)				(171.7	)
Recoverable from reinsurers		7,812.5					6,899.6			4,010.3					3,508.3

Disclosure of maturity analysis for non-derivative financial liabilities

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

	December 31, 2017
	Less than 3 months	3 months to 1 year	1 - 3 years	3 - 5 years	More than 5 years	Total
Accounts payable and accrued liabilities(1)	1,564.5	578.8	485.3	216.8	93.5	2,938.9
Funds withheld payable to reinsurers	186.6	553.2	41.9	1.4	67.1	850.2
Provision for losses and loss adjustment expenses	2,108.8	5,344.5	8,272.0	4,557.3	8,328.2	28,610.8
Borrowings - principal	47.1	958.0	877.5	1,556.8	2,957.5	6,396.9
Borrowings - interest	45.6	270.1	542.9	381.5	745.6	1,985.7
	3,952.6	7,704.6	10,219.6	6,713.8	12,191.9	40,782.5

	December 31, 2016
	Less than 3 months	3 months to 1 year	1 - 3 years	3 - 5 years	More than 5 years	Total
Accounts payable and accrued liabilities(1)	1,257.4	433.9	347.4	113.3	131.8	2,283.8
Funds withheld payable to reinsurers	125.1	252.0	25.8	1.5	11.8	416.2
Provision for losses and loss adjustment expenses	1,383.5	3,890.0	5,664.4	3,428.0	5,115.9	19,481.8
Borrowings - principal	478.1	237.6	650.8	1,299.6	2,117.4	4,783.5
Borrowings - interest	51.5	197.6	443.1	334.5	610.0	1,636.7
	3,295.6	5,011.1	7,131.5	5,176.9	7,986.9	28,602.0

(1) Excludes pension and post retirement liabilities, ceded deferred premium acquisition costs and accrued interest. Operating lease commitments are described in note 22.

Disclosure of maturity analysis for derivative financial liabilities

The following table provides a maturity profile of the company's short sale and derivative obligations based on the expected undiscounted cash flows from the end of the year to the contractual maturity date or the settlement date:

	December 31, 2017			December 31, 2016
	Less than 3 months	3 months to 1 year	Total	Less than 3 months	3 months to 1 year	Total
Equity total return swaps - short positions	12.1	—	12.1	78.1	—	78.1
Equity total return swaps - long positions	15.6	—	15.6	5.1	—	5.1
Foreign exchange forward contracts	58.1	11.6	69.7	89.0	12.4	101.4
U.S. treasury bond forwards	28.8	—	28.8	49.7	—	49.7
	114.6	11.6	126.2	221.9	12.4	234.3

Schedule of potential impact of changes in interest rates on fixed asset portfolio

The table below displays the potential impact of changes in interest rates on the company's fixed income portfolio based on parallel 200 basis point shifts up and down, in 100 basis point increments. This analysis was performed on each individual security to determine the hypothetical effect on net earnings.

		December 31, 2017								December 31, 2016
	Fair value offixed incomeportfolio		Hypothetical$ change effect on net earnings(1)			Hypothetical% changein fair value(1)			Fair value of fixed income portfolio		Hypothetical$ change effect on net earnings(1)			Hypothetical% changein fair value(1)
Change in interest rates
200 basis point increase		9,897.4		(306.2	)		(3.8	)		9,758.6		(295.1	)		(4.0	)
100 basis point increase		10,090.1		(155.6	)		(2.0	)		9,962.2		(148.2	)		(2.0	)
No change		10,290.8		—			—			10,167.5		—			—
100 basis point decrease		10,498.6		161.3			2.0			10,338.3		124.6			1.7
200 basis point decrease		10,720.5		332.0			4.2			10,480.2		228.6			3.1

(1) Includes the impact of forward contracts to sell long dated U.S. treasury bonds with a notional amount of $1,693.8 (December 31, 2016 - $3,013.4).

Schedule of impact of equity and equity related holdings on the financial position

The following table summarizes the net effect of the company's equity and equity-related holdings (long exposures net of short exposures) on the company's financial position as at December 31, 2017 and 2016 and results of operations for the years then ended. The company considers the fair value of $3,846.2 (December 31, 2016 – $1,752.5) of its non-insurance investments in associates (see note 6) as a component of its equity and equity-related holdings when assessing its net equity exposures.

	December 31, 2017				December 31, 2016				Year ended December 31, 2017			Year ended December 31, 2016
	Exposure/Notional amount		Carrying value		Exposure/Notional amount		Carrying value		Pre-tax earnings (loss)			Pre-tax earnings (loss)
Long equity exposures:
Common stocks(1)	5,578.1		5,578.1		4,181.4		4,181.4			707.8			(78.0	)
Preferred stocks – convertible	68.1		68.1		9.1		9.1			(1.6	)		(6.6	)
Bonds – convertible	833.8		833.8		638.2		638.2			233.1			(39.4	)
Investments in associates(2)	3,846.2		2,945.3		1,752.5		1,693.0			69.8			—
Derivatives and other invested assets:
Equity total return swaps – long positions	697.8		2.2		213.1		4.3			19.6			23.3
Equity warrants and call options(4)	77.6		77.6		19.3		19.3			38.3			(4.0	)
Total equity and equity related holdings	11,101.6		9,505.1		6,813.6		6,545.3			1,067.0			(104.7	)
Short equity exposures and equity hedges(3):
Derivatives and other invested assets:
Equity total return swaps – short positions	(892.5	)	(0.3	)	(1,623.0	)	(67.7	)		(408.7	)		(208.0	)
Equity index total return swaps – short positions	(52.6	)	0.4		(43.3	)	0.6			(9.2	)		(971.8	)
Equity index put options(4)	—		—		—		—			—			(13.1	)
	(945.1	)	0.1		(1,666.3	)	(67.1	)		(417.9	)		(1,192.9	)
Net equity exposures and financial effects	10,156.5				5,147.3					649.1			(1,297.6	)

(1) The company excludes other funds that are invested principally in fixed income securities with a carrying value of $90.9 at December 31, 2017 (December 31, 2016 - $157.1) when measuring its equity and equity-related exposure.

(2) Excludes the company’s insurance and reinsurance investments in associates which are considered long term strategic holdings. See note 6 for details.

(3) Prior to the fourth quarter of 2016 the short equity exposures were considered economic hedges of certain market risks associated with the company's equity and equity-related holdings.

(4) The company does not consider the notional amounts of the S&P 500 call options and put options in its assessment of its net equity exposures if they are out-of-the-money.

Schedule of potential impact of changes in the fair value of equity and equity related holdings

The table that follows illustrates the potential impact on net earnings of changes in the fair value of the company's equity and equity-related holdings (long exposures net of short exposures) as a result of changes in global equity markets at December 31, 2017 and 2016. The analysis assumes variations of 5% and 10% which the company believes to be reasonably possible based on analysis of the return on various equity indexes and management's knowledge of global equity markets.

		December 31, 2017								December 31, 2016
	Fair value of equity and equity-related holdings		Hypothetical$ change effecton net earnings			Hypothetical% changein fair value			Fair value of equity and equity-related holdings		Hypothetical $ change effect on net earnings			Hypothetical % change in fair value
Change in global equity markets
10% increase		6,887.9		479.9			9.2			3,755.3		248.6			10.6
5% increase		6,597.9		239.0			4.6			3,569.7		119.6			5.2
No change		6,310.3		—			—			3,394.7		—			—
5% decrease		6,023.0		(238.5	)		(4.6	)		3,233.5		(106.7	)		(4.7	)
10% decrease		5,738.1		(475.0	)		(9.1	)		3,082.9		(204.5	)		(9.2	)

Schedule of pre-tax foreign currency effect

The pre-tax foreign exchange effect on certain line items in the company's consolidated financial statements for the years ended December 31 follows:

	2017		2016
Net gains (losses) on investments
Investing activities	88.8		(136.9	)
Underwriting activities	(74.9	)	19.7
Foreign currency forward contracts	(11.1	)	(12.3	)
Foreign currency net gains (losses) included in pre-tax earnings (loss)	2.8		(129.5	)

Schedule of effect of currency appreciation

The table below shows the approximate effect of a 5% appreciation of the U.S. dollar against each of the Canadian dollar, euro, British pound sterling, Indian rupee and all other currencies, respectively, on pre-tax earnings (loss), net earnings (loss), pre-tax other comprehensive income (loss) and other comprehensive income (loss). Certain shortcomings are inherent in the method of analysis presented, including the assumption that the 5% appreciation of the U.S. dollar occurred at December 31, 2017 with all other variables held constant.

	Canadian dollar				Euro				British pound sterling				Indian rupee				All other currencies				Total
	2017		2016		2017		2016		2017		2016		2017		2016		2017		2016		2017		2016
Pre-tax earnings (loss)	32.5		40.6		6.2		9.5		5.7		15.6		(64.8	)	(31.2	)	(55.7	)	24.0		(76.1	)	58.5
Net earnings (loss)	24.3		28.0		5.0		7.8		5.4		11.7		(57.3	)	(21.9	)	(45.4	)	13.8		(68.0	)	39.4
Pre-tax other comprehensive income (loss)	(75.3	)	(66.1	)	(60.8	)	(1.7	)	(33.6	)	(29.9	)	(128.5	)	(99.3	)	(54.3	)	(60.0	)	(352.5	)	(257.0	)
Other comprehensive income (loss)	(73.8	)	(66.0	)	(54.7	)	4.3		(33.4	)	(28.5	)	(126.8	)	(94.0	)	(50.9	)	(60.0	)	(339.6	)	(244.2	)

Schedule of capital management, financial measurements

The company manages its capital based on the following financial measurements and ratios to provide an indication of the company's ability to issue and service debt without impacting the operating companies or their portfolio investments:

	December 31, 2017			December 31, 2016
Holding company cash and investments (net of short sale and derivative obligations)		2,356.9			1,329.4
Borrowings – holding company		3,475.1			3,472.5
Borrowings – insurance and reinsurance companies		1,373.0			435.5
Borrowings – non-insurance companies		1,566.0			859.6
Total debt		6,414.1			4,767.6
Net debt(1)		4,057.2			3,438.2
Common shareholders’ equity		12,475.6			8,484.6
Preferred stock		1,335.5			1,335.5
Non-controlling interests		4,600.9			2,000.0
Total equity		18,412.0			11,820.1
Net debt/total equity		22.0	%		29.1	%
Net debt/net total capital(2)		18.1	%		22.5	%
Total debt/total capital(3)		25.8	%		28.7	%
Interest coverage(4)		7.1x			n/a
Interest and preferred share dividend distribution coverage(5)		6.0x			n/a

(1) Net debt is is calculated by the company as total debt less holding company cash and investments (net of short sale and derivative obligations).

(2) Net total capital is calculated by the company as the sum of total equity and net debt.

(3) Total capital is calculated by the company as the sum of total equity and total debt.

(4) Interest coverage is calculated by the company as the sum of earnings (loss) before income taxes and interest expense divided by interest expense.

(5) Interest and preferred share dividend distribution coverage is calculated by the company as the sum of earnings (loss) before income taxes and interest expense divided by interest expense and preferred share dividend distributions adjusted to a pre-tax equivalent at the company’s Canadian statutory income tax rate.

XML

Segmented Information (Tables)

12 Months Ended

Dec. 31, 2017

Operating Segments [Abstract]

Disclosure of operating segments

Investments in associates, additions to goodwill, segment assets and segment liabilities by reporting segment as at and for the years ended December 31 were as follows:

	Investments in associates		Additions to goodwill			Segment assets				Segment liabilities
	2017	2016	2017		2016	2017		2016		2017	2016
Insurance and Reinsurance
Northbridge	218.6	206.9	1.1		—	4,527.2		4,149.9		2,804.6	2,630.2
OdysseyRe	355.7	373.5	—		—	11,316.1		10,334.8		7,248.4	6,370.5
Crum & Forster	263.2	153.5	—		7.8	6,290.6		6,294.1		4,651.1	4,625.7
Zenith National	162.9	146.9	—		—	2,586.8		2,590.7		1,653.8	1,633.1
Brit	231.4	217.8	—		—	7,480.1		6,579.5		5,930.1	4,915.7
Allied World(1)	210.5	—	937.9		—	14,584.4		—		10,937.2	—
Fairfax Asia	100.9	487.3	(24.2	)	69.5	1,930.7		2,684.7		674.5	1,457.7
Other	92.0	127.4	19.6		11.5	4,321.3		2,656.2		3,223.5	1,850.1
Operating companies	1,635.2	1,713.3	934.4		88.8	53,037.2		35,289.9		37,123.2	23,483.0
Run-off	252.0	308.2	—		—	5,207.2		5,709.5		3,456.5	3,970.4
Other	1,250.8	255.3	277.9		127.2	8,684.0		4,740.2		3,245.8	2,029.8
Corporate and Other and eliminations and adjustments	518.3	356.7	—		—	(2,838.3	)	(2,355.2	)	1,852.6	2,081.1
Consolidated	3,656.3	2,633.5	1,212.3		216.0	64,090.1		43,384.4		45,678.1	31,564.3

(1) Allied World is included in the company's financial reporting with effect from July 6, 2017

Sources of earnings by reporting segment for the years ended December 31 were as follows:

2017

	Insurance and Reinsurance
	Northbridge			OdysseyRe				Crum & Forster		Zenith National		Brit		Allied World(1)		FairfaxAsia		Other		Operating companies		Run-off		Other		Corporate and Other		Eliminations and adjustments			Consolidated
Gross premiums written
External		1,180.4			2,725.7			2,120.0		849.0		2,048.1		1,447.6		667.9		1,160.4		12,199.1		8.4		—		—			—			12,207.5
Intercompany		6.6			57.4			54.5		—		8.9		—		2.5		83.9		213.8		—		—		—			(213.8	)		—
		1,187.0			2,783.1			2,174.5		849.0		2,057.0		1,447.6		670.4		1,244.3		12,412.9		8.4		—		—			(213.8	)		12,207.5
Net premiums written		1,064.9			2,495.9			1,863.4		837.4		1,530.9		991.9		327.5		863.3		9,975.2		8.3		—		—			—			9,983.5
Net premiums earned
External		1,023.7			2,318.3			1,822.1		814.1		1,537.3		1,041.3		369.3		775.2		9,701.3		20.1		—		—			—			9,721.4
Intercompany		(4.0	)		15.1			30.7		(2.5	)	(0.4	)	(12.6	)	(41.7	)	15.4		—		—		—		—			—			—
		1,019.7			2,333.4			1,852.8		811.6		1,536.9		1,028.7		327.6		790.6		9,701.3		20.1		—		—			—			9,721.4
Underwriting expenses(2)		(1,010.7	)		(2,273.4	)		(1,849.6	)	(694.4	)	(1,738.8	)	(1,615.3	)	(289.4	)	(871.2	)	(10,342.8	)	(227.5	)	—		—			—			(10,570.3	)
Underwriting profit (loss)		9.0			60.0			3.2		117.2		(201.9	)	(586.6	)	38.2		(80.6	)	(641.5	)	(207.4	)	—		—			—			(848.9	)
Interest income		56.1			131.0			53.4		26.8		41.9		76.8		31.3		38.7		456.0		37.2		29.7		(8.3	)		—			514.6
Dividends		9.5			15.6			3.4		3.8		3.7		2.2		3.2		11.8		53.2		4.6		9.1		6.3			—			73.2
Investment expenses		(11.5	)		(21.7	)		(23.0	)	(7.2	)	(13.0	)	(13.1	)	(5.4	)	(12.0	)	(106.9	)	(12.9	)	(143.7	)	(2.1	)		236.8			(28.8	)
Interest and dividends		54.1			124.9			33.8		23.4		32.6		65.9		29.1		38.5		402.3		28.9		(104.9	)	(4.1	)		236.8			559.0
Share of profit (loss) of associates		3.2			7.2			(1.1	)	(9.8	)	9.2		(17.6	)	29.4		3.0		23.5		(6.1	)	55.4		127.7			—			200.5
Other
Revenue		—			—			—		—		—		—		—		—		—		—		3,257.6		—			—			3,257.6
Expenses		—			—			—		—		—		—		—		—		—		—		(2,996.0	)	—			—			(2,996.0	)
		—			—			—		—		—		—		—		—		—		—		261.6		—			—			261.6
Operating income (loss)		66.3			192.1			35.9		130.8		(160.1	)	(538.3	)	96.7		(39.1	)	(215.7	)	(184.6	)	212.1		123.6			236.8			172.2
Net gains (losses) on investments		44.8			253.1			27.9		26.6		79.0		(26.5	)	1,083.9		69.5		1,558.3		73.3		7.2		(171.3	)		—			1,467.5
Gain on sale of subsidiary		—		—	—		—	—		—		—		—		1,018.6		—		1,018.6		—		—		—			—			1,018.6
Loss on repurchase of long term debt (note 15)		—			—			—		—		—		—		—		—		—		—		—		(28.6	)		—			(28.6	)
Interest expense		—			(3.3	)		(1.8	)	(3.3	)	(12.5	)	(15.6	)	—		(4.8	)	(41.3	)	—		(65.8	)	(224.1	)		—			(331.2	)
Corporate overhead		(8.7	)		(27.4	)		(25.4	)	(8.2	)	(9.2	)	(27.9	)	(2.6	)	(22.2	)	(131.6	)	—		—		93.1			(236.8	)		(275.3	)
Pre-tax income (loss)		102.4			414.5			36.6		145.9		(102.8	)	(608.3	)	2,196.6		3.4		2,188.3		(111.3	)	153.5		(207.3	)		—			2,023.2
Income taxes																																(408.3	)
Net earnings																																1,614.9
Attributable to:
Shareholders of Fairfax																																1,740.6
Non-controlling interests																																(125.7	)
																																1,614.9

(1) Allied World is included in the company's financial reporting with effect from July 6, 2017.

(2) Total underwriting expenses for the year ended December 31, 2017 are comprised as shown below. Accident year total underwriting expenses exclude the impact of favourable or unfavourable prior year claims reserve development.

	Insurance and Reinsurance
	Northbridge		OdysseyRe		Crum & Forster		Zenith National		Brit		Allied World	FairfaxAsia		Other		Operating companies
Loss & LAE - accident year	760.1		1,827.7		1,209.8		477.9		1,117.8		1,293.1	263.1		563.8		7,513.3
Commissions	164.5		492.5		292.4		83.5		424.8		32.6	4.7		148.4		1,643.4
Premium acquisition costs and other underwriting expenses	179.6		241.3		357.6		209.4		205.7		217.7	73.9		192.6		1,677.8
Total underwriting expenses - accident year	1,104.2		2,561.5		1,859.8		770.8		1,748.3		1,543.4	341.7		904.8		10,834.5
Unfavourable (favourable) claims reserve development	(93.5	)	(288.1	)	(10.2	)	(76.4	)	(9.5	)	71.9	(52.3	)	(33.6	)	(491.7	)
Total underwriting expenses - calendar year	1,010.7		2,273.4		1,849.6		694.4		1,738.8		1,615.3	289.4		871.2		10,342.8

2016

	Insurance and Reinsurance
	Northbridge			OdysseyRe			Crum & Forster		Zenith National		Brit		FairfaxAsia		Other		Operating companies		Run-off		Other		Corporate and Other		Eliminations and adjustments			Consolidated
Gross premiums written
External		1,052.3			2,355.8		2,011.8		831.7		1,904.3		636.1		558.4		9,350.4		183.9		—		—			—			9,534.3
Intercompany		2.8			24.9		43.2		—		7.9		12.6		84.9		176.3		—		—		—			(176.3	)		—
		1,055.1			2,380.7		2,055.0		831.7		1,912.2		648.7		643.3		9,526.7		183.9		—		—			(176.3	)		9,534.3
Net premiums written		942.6			2,100.2		1,801.1		819.4		1,480.2		303.1		458.4		7,905.0		183.4		—		—			—			8,088.4
Net premiums earned
External		915.8			2,083.9		1,738.6		809.3		1,396.5		348.5		406.1		7,698.7		163.5		—		—			—			7,862.2
Intercompany		(7.0	)		(9.8	)	30.9		(2.0	)	2.8		(46.0	)	31.1		—		—		—		—			—			—
		908.8			2,074.1		1,769.5		807.3		1,399.3		302.5		437.2		7,698.7		163.5		—		—			—			7,862.2
Underwriting expenses(1)		(862.5	)		(1,838.9	)	(1,737.1	)	(643.2	)	(1,370.2	)	(261.4	)	(409.5	)	(7,122.8	)	(348.6	)	—		—			—			(7,471.4	)
Underwriting profit (loss)		46.3			235.2		32.4		164.1		29.1		41.1		27.7		575.9		(185.1	)	—		—			—			390.8
Interest income		56.6			158.5		72.8		33.0		66.5		26.6		32.2		446.2		58.6		21.3		(11.7	)		—			514.4
Dividends		8.4			23.9		5.8		4.3		2.6		3.4		2.7		51.1		5.9		8.2		1.6			—			66.8
Investment expenses		(12.8	)		(28.7	)	(12.8	)	(7.7	)	(13.7	)	(3.3	)	(8.3	)	(87.3	)	(13.3	)	(12.8	)	(1.4	)		88.8			(26.0	)
Interest and dividends		52.2			153.7		65.8		29.6		55.4		26.7		26.6		410.0		51.2		16.7		(11.5	)		88.8			555.2
Share of profit (loss) of associates		5.2			17.3		(22.6	)	1.2		3.4		48.1		0.7		53.3		(15.5	)	13.6		(27.2	)		—			24.2
Other
Revenue		—			—		—		—		—		—		—		—		—		2,061.6		—			—			2,061.6
Expenses		—			—		—		—		—		—		—		—		—		(1,958.4	)	—			—			(1,958.4	)
		—			—		—		—		—		—		—		—		—		103.2		—			—			103.2
Operating income (loss)		103.7			406.2		75.6		194.9		87.9		115.9		55.0		1,039.2		(149.4	)	133.5		(38.7	)		88.8			1,073.4
Net gains (losses) on investments(3)		(161.3	)		(318.7	)	(184.7	)	(168.2	)	87.3		(1.7	)	(90.0	)	(837.3	)	(225.2	)	30.1		(171.2	)		—			(1,203.6	)
Interest expense		—			(2.8	)	(1.6	)	(3.3	)	(14.2	)	—		(4.2	)	(26.1	)	—		(28.3	)	(188.4	)		—			(242.8	)
Corporate overhead		(6.6	)		(30.2	)	(20.4	)	(8.4	)	(9.2	)	(0.1	)	—		(74.9	)	—		—		(17.6	)		(88.8	)		(181.3	)
Pre-tax income (loss)		(64.2	)		54.5		(131.1	)	15.0		151.8		114.1		(39.2	)	100.9		(374.6	)	135.3		(415.9	)		—			(554.3	)
Income taxes																													159.6
Net loss																													(394.7	)
Attributable to:
Shareholders of Fairfax																													(512.5	)
Non-controlling interests																													117.8
																													(394.7	)

(1) Total underwriting expenses for the year ended December 31, 2016 are comprised as shown below. Accident year total underwriting expenses exclude the impact of favourable or unfavourable prior year claims reserve development.

	Insurance and Reinsurance
	Northbridge		OdysseyRe		Crum & Forster		Zenith National		Brit(1)		Fairfax Asia		Other		Operating companies
Loss & LAE - accident year	651.1		1,438.4		1,136.1		459.3		909.7		252.5		290.1		5,137.2
Commissions	150.6		431.4		283.2		81.9		292.3		(6.5	)	101.8		1,334.7
Premium acquisition costs and other underwriting expenses	173.6		235.6		326.1		203.0		221.7		67.5		78.0		1,305.5
Total underwriting expenses - accident year	975.3		2,105.4		1,745.4		744.2		1,423.7		313.5		469.9		7,777.4
Favourable claims reserve development	(112.8	)	(266.5	)	(8.3	)	(101.0	)	(53.5	)	(52.1	)	(60.4	)	(654.6	)
Total underwriting expenses - calendar year	862.5		1,838.9		1,737.1		643.2		1,370.2		261.4		409.5		7,122.8

Schedule of net premiums earned by product line

Net premiums earned by product line for the years ended December 31 was as follows:

	Property				Casualty				Specialty				Total
	2017		2016		2017		2016		2017		2016		2017	2016
Net premiums earned - Insurance and Reinsurance
Northbridge	449.1		395.6		474.4		423.8		96.2		89.4		1,019.7	908.8
OdysseyRe	1,206.0		1,159.9		901.5		714.5		225.9		199.7		2,333.4	2,074.1
Crum & Forster	238.9		237.0		1,518.0		1,426.6		95.9		105.9		1,852.8	1,769.5
Zenith National	32.1		29.3		779.5		778.0		—		—		811.6	807.3
Brit	427.1		402.7		755.7		664.3		354.1		332.3		1,536.9	1,399.3
Allied World(1)	360.9		—		607.4		—		60.4		—		1,028.7	—
Fairfax Asia	65.6		57.4		219.2		191.2		42.8		53.9		327.6	302.5
Other	405.9		191.9		221.9		146.1		162.8		99.2		790.6	437.2
Operating companies	3,185.6		2,473.8		5,477.6		4,344.5		1,038.1		880.4		9,701.3	7,698.7
Run-off	—		0.4		22.9		162.6		(2.8	)	0.5		20.1	163.5
Consolidated net premiums earned	3,185.6		2,474.2		5,500.5		4,507.1		1,035.3		880.9		9,721.4	7,862.2
Interest and dividends													559.0	555.2
Share of profit of associates													200.5	24.2
Net gains (losses) on investments													1,467.5	(1,203.6	)
Gain on sale of subsidiary													1,018.6	—
Other													3,257.6	2,061.6
Consolidated revenue													16,224.6	9,299.6
Allocation of net premiums earned	32.8	%	31.5	%	56.6	%	57.3	%	10.6	%	11.2	%

(1) Allied World is included in the company's financial reporting with effect from July 6, 2017

Disclosure of geographical regions

Net premiums earned by geographic region for the years ended December 31 was as follows:

	Canada				United States				Asia(1)				International(2)				Total
	2017		2016		2017		2016		2017		2016		2017		2016		2017	2016
Net premiums earned - Insurance and Reinsurance
Northbridge	1,007.2		899.5		12.5		9.3		—		—		—		—		1,019.7	908.8
OdysseyRe	76.8		72.5		1,539.2		1,319.3		247.2		231.4		470.2		450.9		2,333.4	2,074.1
Crum & Forster	—		—		1,852.6		1,769.3		—		—		0.2		0.2		1,852.8	1,769.5
Zenith National	—		—		811.6		807.3		—		—		—		—		811.6	807.3
Brit	83.1		77.1		1,036.5		942.1		60.3		54.0		357.0		326.1		1,536.9	1,399.3
Allied World(3)	20.5		—		773.7		—		88.2		—		146.3		—		1,028.7	—
Fairfax Asia	0.1		0.1		—		0.3		319.0		293.2		8.5		8.9		327.6	302.5
Other	9.1		3.9		98.9		142.6		108.0		105.7		574.6		185.0		790.6	437.2
Operating companies	1,196.8		1,053.1		6,125.0		4,990.2		822.7		684.3		1,556.8		971.1		9,701.3	7,698.7
Run-off	—		—		23.7		162.6		—		—		(3.6	)	0.9		20.1	163.5
Consolidated net premiums earned	1,196.8		1,053.1		6,148.7		5,152.8		822.7		684.3		1,553.2		972.0		9,721.4	7,862.2
Interest and dividends																	559.0	555.2
Share of profit of associates																	200.5	24.2
Net gains (losses) on investments																	1,467.5	(1,203.6	)
Gain on sale of subsidiary																	1,018.6	—
Other																	3,257.6	2,061.6
Consolidated revenue																	16,224.6	9,299.6
Allocation of net premiums earned	12.3	%	13.4	%	63.2	%	65.5	%	8.5	%	8.7	%	16.0	%	12.4	%

(1) The Asia geographic segment comprises countries located throughout Asia, including China, India, Sri Lanka, Malaysia, Singapore, Indonesia and Thailand, and the Middle East.

(2) The International geographic segment comprises Australia and countries located in Africa, Europe and South America.

(3) Allied World is included in the company's financial reporting with effect from July 6, 2017

XML

Expenses (Tables)

12 Months Ended

Dec. 31, 2017

Analysis of income and expense [abstract]

Schedule of losses on claims, net, operating expenses and other expenses

Losses on claims, net, operating expenses and other expenses for the years ended December 31 were comprised as follows:

	2017			2016
	Insurance and reinsurance companies(1)	Non-insurance companies(2)	Total	Insurance and reinsurance companies(1)	Non-insurance companies(2)	Total
Losses and loss adjustment expenses	6,880.0	—	6,880.0	4,478.3	—	4,478.3
Other reporting segment cost of sales	—	1,821.4	1,821.4	—	1,095.2	1,095.2
Wages and salaries	1,072.0	495.2	1,567.2	876.6	351.8	1,228.4
Employee benefits	242.1	76.9	319.0	213.1	63.8	276.9
Depreciation, amortization and impairment charges	136.5	144.0	280.5	98.4	93.3	191.7
Operating lease costs	79.3	136.9	216.2	60.6	95.1	155.7
Audit, legal and tax professional fees	155.7	27.2	182.9	116.2	17.4	133.6
Premium taxes	152.7	—	152.7	101.4	—	101.4
Information technology costs	122.2	16.2	138.4	99.8	6.7	106.5
Other reporting segment marketing costs	—	65.4	65.4	—	43.9	43.9
Share-based payments to directors and employees	58.4	5.4	63.8	48.1	5.5	53.6
Restructuring costs	30.6	3.1	33.7	2.9	0.3	3.2
Loss on repurchase of long term debt (note 15)(2)	—	28.6	28.6	—	—	—
Administrative expense and other	266.9	204.3	471.2	220.9	185.4	406.3
	9,196.4	3,024.6	12,221.0	6,316.3	1,958.4	8,274.7

(1) Total expense of the insurance and reinsurance companies is comprised of losses on claims, net and operating expenses as presented in the consolidated statement of earnings.

(2) Other expenses as presented in the consolidated statement of earnings is comprised of cost of sales and operating expenses of the non-insurance companies, and loss on repurchase of long term debt of the holding company.

XML

Supplementary Cash Flow Information (Tables)

12 Months Ended

Dec. 31, 2017

Cash Flow Statement [Abstract]

Schedule of supplemental balance sheet disclosures

Cash and cash equivalents as presented in the consolidated balance sheets and the consolidated statements of cash flows were comprised as follows:

	December 31, 2017		December 31, 2016
Holding company cash and investments:
Cash and balances with banks		129.1		131.9
Treasury bills and other eligible bills		866.3		401.3
		995.4		533.2
Subsidiary cash and short term investments:
Cash and balances with banks		2,355.5		1,668.2
Treasury bills and other eligible bills		5,028.6		2,275.2
		7,384.1		3,943.4
Subsidiary assets pledged for short sale and derivative obligations:
Treasury bills and other eligible bills		16.8		—
Fairfax India:
Cash and balances with banks		44.0		44.5
Treasury bills and other eligible bills		—		128.7
		44.0		173.2
Fairfax Africa:
Cash and balances with banks		329.7		—
Cash and cash equivalents as presented in the consolidated balance sheet		8,770.0		4,649.8
Less: Cash and cash equivalents - restricted(1)
Holding company cash and cash equivalents - restricted:
Cash and balances with banks		1.7		2.8
Subsidiary cash and cash equivalents - restricted:
Cash and balances with banks		546.8		180.8
Treasury bills and other eligible bills		286.5		247.1
		835.0		430.7
Cash and cash equivalents as presented in the consolidated statement of cash flows		7,935.0		4,219.1

(1) Cash, cash equivalents and bank overdrafts as presented in the consolidated statements of cash flows excludes balances that are restricted. Restricted cash and cash equivalents are comprised primarily of amounts required to be maintained on deposit with various regulatory authorities to support the operations of the insurance and reinsurance subsidiaries.

Schedule of cash flow, supplemental disclosures

Details of certain cash flows included in the consolidated statements of cash flows for the years ended December 31 were as follows:  

	2017		2016
(a) Net sales of securities classified as FVTPL
Short term investments	(2,816.5	)	(2,688.0	)
Bonds	5,677.1		4,514.5
Preferred stocks	(249.6	)	(42.4	)
Common stocks	778.3		170.4
Derivatives, short sales and other invested assets	(710.9	)	(835.2	)
	2,678.4		1,119.3
(b) Changes in operating assets and liabilities
Net increase in restricted cash and cash equivalents	(245.4	)	(55.1	)
Provision for losses and loss adjustment expenses	1,842.1		(355.7	)
Provision for unearned premiums	395.2		326.2
Insurance contract receivables	(428.4	)	(296.6	)
Recoverable from reinsurers	(1,168.5	)	(34.6	)
Other receivables	(32.4	)	(36.5	)
Funds withheld payable to reinsurers	182.0		87.9
Accounts payable and accrued liabilities	174.0		110.6
Income taxes payable	46.5		(54.1	)
Other	(209.7	)	(300.0	)
	555.4		(607.9	)
(c) Net interest and dividends received
Interest and dividends received	531.9		782.4
Interest paid	(277.9	)	(216.2	)
	254.0		566.2
(d) Net income taxes paid	(33.4	)	(267.1	)

XML

Related Party Transactions (Tables)

12 Months Ended

Dec. 31, 2017

Related Party [Abstract]

Schedule of related parties

Compensation for the company's key management team for the years ended December 31 determined in accordance with the company's IFRS accounting policies was as follows:

	2017	2016
Salaries and other short-term employee benefits	9.7	8.2
Share-based payments	3.1	2.5
	12.8	10.7

Compensation for the company's Board of Directors for the years ended December 31 was as follows:

	2017	2016
Retainers and fees	0.8	0.8
Share-based payments	0.3	0.1
	1.1	0.9

XML

Subsidiaries (Tables)

12 Months Ended

Dec. 31, 2017

Interests In Other Entities [Abstract]

Disclosure of interests in subsidiaries

Subsidiaries

During 2017 the company acquired controlling interests in Allied World, Grivalia Properties, Mosaic Capital, Saurashtra Freight and Fairchem (through Fairfax India), and sold First Capital. The foregoing transactions are described in note 23. The company has wholly-owned subsidiaries not presented in the tables below that are intermediate holding companies of investments in subsidiaries and intercompany balances, all of which are eliminated on consolidation.

December 31, 2017	Domicile	Fairfax's ownership (100% other than as shown below)
Insurance and Reinsurance
Northbridge Financial Corporation (Northbridge)	Canada
Odyssey Re Holdings Corp. (OdysseyRe)	United States
Hudson Insurance Company (Hudson Insurance)	United States
Crum & Forster Holdings Corp. (Crum & Forster)	United States
Zenith National Insurance Corp. (Zenith National)	United States
Brit Limited (Brit)	United Kingdom	72.5%
Allied World Assurance Company Holdings, GmbH (Allied World)	Switzerland	67.4%
Advent Capital (Holdings) Ltd. (Advent)	United Kingdom
Fairfax Central and Eastern Europe, which consists of:
Polskie Towarzystwo Reasekuracji Spólka Akcyjna (Polish Re)	Poland
Colonnade Insurance S.A. (Colonnade Insurance)	Luxembourg
Fairfax Latin America, which consists of:
Fairfax Brasil Seguros Corporativos S.A. (Fairfax Brasil)	Brazil
SBS Seguros Colombia S.A. (SouthBridge Colombia)	Colombia
Southbridge Compañía de Seguros Generales S.A. (SouthBridge Chile)	Chile
La Meridional Compañía Argentina de Seguros S.A. (La Meridional Argentina)	Argentina
Bryte Insurance Company Limited (Bryte Insurance)	South Africa
Group Re, which underwrites business in:
CRC Reinsurance Limited (CRC Re)	Barbados
Wentworth Insurance Company Ltd. (Wentworth)	Barbados
Fairfax Asia, which consists of:
Falcon Insurance Company (Hong Kong) Limited (Falcon)	Hong Kong
The Pacific Insurance Berhad (Pacific Insurance)	Malaysia	85.0%
PT Asuransi Multi Artha Guna TBK (AMAG)	Indonesia	80.0%
Fairfirst Insurance Limited (Fairfirst Insurance)	Sri Lanka	78.0%
Run-off
TIG Insurance Company (TIG Insurance)	United States
RiverStone Insurance (UK) Limited (RiverStone (UK))	United Kingdom
RiverStone Insurance Limited (RiverStone Insurance)	United Kingdom
RiverStone Managing Agency Limited	United Kingdom

December 31, 2017		Domicile	Fairfax's ownership			Primary business
Other reporting segment
Hamblin Watsa Investment Counsel Ltd. (Hamblin Watsa)		Canada	100.0	%		Investment management
Fairfax Africa Holdings Corporation (Fairfax Africa)		Canada	64.2	%	(1)	Invests in public and private African businesses
Grivalia Properties Real Estate Investment Company S.A. (Grivalia Properties)		Greece	52.7	%		Real Estate investment company
Mosaic Capital Corporation(Mosaic Capital)		Canada	—		(2)	Invests in private Canadian businesses
Pethealth Inc. (Pethealth)		Canada	100.0	%		Pet medical insurance and database services
Boat Rocker Media Inc. (Boat Rocker)		Canada	58.2	%		Development, production, marketing and distribution of television programs
Restaurants and Retail
Cara Operations Limited (Cara) which owns:		Canada	40.2	%	(1)	Franchisor, owner and operator of restaurants
100.0% of	Groupe St-Hubert Inc. (St-Hubert)	Canada	40.2	%		Full-service restaurant operator and a fully integrated food manufacturer
89.2% of	Original Joe's Franchise Group Inc. (Original Joe's)	Canada	35.9	%		Multi-brand restaurant owner and operator
100.0% of	Pickle Barrel Restaurants Inc. (Pickle Barrel)	Canada	40.2	%		Owner and operator of restaurants and catering business
Keg Restaurants Ltd. (The Keg)		Canada	51.0	%		Owner and operator of premium dining restaurants
Praktiker Hellas Commercial Societe Anonyme (Praktiker)		Greece	100.0	%		Retailer of home improvement goods
Sporting Life Inc. (Sporting Life)		Canada	75.0	%		Retailer of sporting goods and sports apparel
William Ashley China Corporation (William Ashley)		Canada	100.0	%		Retailer of tableware and gifts
Golf Town Limited (Golf Town)		Canada	60.0	%	(3)	Retailer of golf equipment, consumables, athletic apparel and accessories
India focused
Fairfax India Holdings Limited (Fairfax India) which owns:		Canada	30.2	%	(1)	Invests in public and private Indian businesses
89.5% of	National Collateral Management Services Limited (NCML)	India	27.0	%		Provider of agricultural commodities storage
48.7% of	Fairchem Specialty Limited (Fairchem)	India	14.7	%		Manufacturer, supplier and exporter of aroma chemicals
51.0% of	Saurashtra Freight Private Limited (Saurashtra Freight)	India	15.4	%		Container freight station operator
Thomas Cook (India) Limited (Thomas Cook India) which owns:		India	67.6	%		Provider of integrated travel and travel-related financial services
49.0% of	Quess Corp Limited (Quess)	India	33.1	%		Provider of staffing and facilities management services
100.0% of	Sterling Holiday Resorts Limited (Sterling Resorts)	India	67.6	%		Owner and operator of holiday resorts

(1) The company holds multiple voting shares that give it voting rights of 56.7% in Cara, 98.8% in Fairfax Africa and 93.6% in Fairfax India.

(2) The company holds Mosaic Capital warrants representing a potential voting interest of approximately 62%.

(3) The company holds 100% of the voting rights in Golf Town.

XML

Summary of Significant Accounting Policies (Details)	12 Months Ended
	Dec. 31, 2017
Customer and broker relationships | Bottom of range
Disclosure of detailed information about intangible assets [line items]
Intangible asset useful lives	8 years
Customer and broker relationships | Top of range
Disclosure of detailed information about intangible assets [line items]
Intangible asset useful lives	20 years
Computer software | Bottom of range
Disclosure of detailed information about intangible assets [line items]
Intangible asset useful lives	3 years
Computer software | Top of range
Disclosure of detailed information about intangible assets [line items]
Intangible asset useful lives	15 years
Restricted Share Units
Disclosure of detailed information about intangible assets [line items]
Restricted share vesting period	10 years

XML

Cash and Investments - Schedule of Cash, Cash Equivalents and Investments (Details) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments, net	$ 36,900.0	$ 27,100.0
Total investments	39,255.4	28,430.7
Holding Company
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments	2,368.4	1,371.6
Assets pledged for short sale and derivative obligations	77.8	94.4
Short sale and derivative obligations (note 7)	(11.5)	(42.2)
Cash and investments, net	2,356.9	1,329.4
Portfolio Investments
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments	37,013.2	27,293.4
Assets pledged for short sale and derivative obligations	194.7	228.5
Short sale and derivative obligations (note 7)	(114.7)	(192.1)
Cash and investments, net	36,898.5	27,101.3
Cash and cash equivalents (note 27) | Holding Company
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments	995.4	533.2
Cash and cash equivalents (note 27) | Portfolio Investments
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments	7,384.1	3,943.4
Assets pledged for short sale and derivative obligations	16.8	0.0
Short term investments | Holding Company
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments	115.4	285.4
Short term investments | Portfolio Investments
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments	9,998.4	5,994.6
Assets pledged for short sale and derivative obligations	145.7	189.6
Short term investments pledged for short sale and derivative obligations | Holding Company
Schedule Of Cash And Cash Equivalents1 [Line Items]
Assets pledged for short sale and derivative obligations	77.8	82.6
Bonds | Holding Company
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments	380.9	264.8
Bonds | Portfolio Investments
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments	9,164.1	9,323.2
Assets pledged for short sale and derivative obligations	32.2	38.9
Bonds pledged for short sale and derivative obligations | Holding Company
Schedule Of Cash And Cash Equivalents1 [Line Items]
Assets pledged for short sale and derivative obligations	0.0	11.8
Preferred stocks | Holding Company
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments	2.8	1.0
Preferred stocks | Portfolio Investments
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments	296.8	69.6
Common stocks | Holding Company
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments	784.9	153.2
Common stocks | Portfolio Investments
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments	4,838.7	4,158.8
Investments in associates | Portfolio Investments
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments	2,487.0	2,393.0
Derivatives (note 7) | Holding Company
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments	11.2	39.6
Derivatives (note 7) | Portfolio Investments
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments	192.6	163.7
Other invested assets | Portfolio Investments
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments	62.8	16.0
Portfolio investments, net | Holding Company
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments	2,290.6	1,277.2
Portfolio investments, net | Portfolio Investments
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments	34,424.5	26,062.3
Common Stock, Limited Partnerships
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments	1,903.7	1,171.6
Common Stock, Other Funds
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments	90.9	157.1
Fairfax India | Portfolio Investments
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments	1,762.5	1,002.6
Total investments	1,054.7	326.6
Fairfax India | Cash and cash equivalents (note 27) | Portfolio Investments
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments	44.0	173.2
Fairfax India | Short term investments | Portfolio Investments
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments	34.3	33.6
Fairfax India | Bonds | Portfolio Investments
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments	694.2	528.8
Fairfax India | Common stocks | Portfolio Investments
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments	40.5	26.5
Fairfax India | Investments in associates | Portfolio Investments
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments	949.5	240.5
Fairfax India | Derivatives and other invested assets | Portfolio Investments
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments	0.0	0.0
Fairfax Africa | Portfolio Investments
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments	631.5	0.0
Fairfax Africa | Cash and cash equivalents (note 27) | Portfolio Investments
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments	329.7	0.0
Fairfax Africa | Short term investments | Portfolio Investments
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments	57.2	0.0
Fairfax Africa | Bonds | Portfolio Investments
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments	19.4	0.0
Fairfax Africa | Common stocks | Portfolio Investments
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments	4.9	0.0
Fairfax Africa | Investments in associates | Portfolio Investments
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments	219.8	0.0
Fairfax Africa | Derivatives and other invested assets | Portfolio Investments
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments	0.5	0.0
Fairfax India and Fairfax Africa | Portfolio Investments
Schedule Of Cash And Cash Equivalents1 [Line Items]
Cash and investments	$ 2,394.0	$ 1,002.6

XML

Cash and Investments - Additional Information (Details) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Investments and Cash1 [Abstract]
Restricted cash and cash equivalents	$ 835.0	$ 430.7

XML

Cash and Investments - Schedule of Pledged Assets (Details) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Investment [Line Items]
Financial assets pledged as liabilities	$ 5,706.0	$ 5,481.0
Regulatory deposits
Investment [Line Items]
Financial assets pledged as liabilities	4,256.8	4,748.2
Security for reinsurance and other
Investment [Line Items]
Financial assets pledged as liabilities	$ 1,449.2	$ 732.8

XML

Cash and Investments - Fixed Income Maturity Profile (Details) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of financial assets [line items]
Bonds with call features	$ 3,390.3	$ 4,498.0
Bonds with put features	93.3	196.2
Notional amount	$ 6,396.9	$ 4,783.5
Debt securities
Disclosure of financial assets [line items]
Effective interest rate	4.00%	4.70%
U.S. treasury bond forward contracts
Disclosure of financial assets [line items]
Notional amount	$ 1,693.8	$ 3,013.4
Bonds, U.S. states and municipalities
Disclosure of financial assets [line items]
Favourable tax treatment expected	$ 2,300.0	$ 3,300.0

XML

Cash and Investments - Schedule of Fixed Income Maturity (Details) - Debt securities - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Investment [Line Items]
Amortized cost	$ 9,814.3	$ 9,517.1
Fair value	$ 10,290.8	$ 10,167.5
Effective interest rate	4.00%	4.70%
Due in 1 year or less
Investment [Line Items]
Amortized cost	$ 3,383.9	$ 1,649.4
Fair value	3,537.6	1,779.0
Due after 1 year through 5 years
Investment [Line Items]
Amortized cost	3,540.7	3,245.9
Fair value	3,720.2	3,447.6
Due after 5 years through 10 years
Investment [Line Items]
Amortized cost	1,017.6	1,046.7
Fair value	1,054.3	1,031.3
Due after 10 years
Investment [Line Items]
Amortized cost	1,872.1	3,575.1
Fair value	$ 1,978.7	$ 3,909.6

XML

Cash and Investments - Schedule of Fair Value Measurement (Details) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	$ 64,090.1	$ 43,384.4
Financial liabilities	(45,678.1)	(31,564.3)
Recurring fair value measurement
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	$ 35,599.1	$ 25,797.2
Percentage of assets classified as level 1, 2, and 3	100.00%	100.00%
Fair value of investments in associates	$ 4,629.3	$ 3,267.3
Recurring fair value measurement | Short sale and derivative obligations
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Financial liabilities	(126.2)	(234.3)
Recurring fair value measurement | Cash and cash equivalents
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	8,770.0	4,649.8
Recurring fair value measurement | Short term investments
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	10,428.8	6,585.8
Recurring fair value measurement | Short term investments, Canadian government
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	7.1	8.2
Recurring fair value measurement | Short term investments, Canadian provincials
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	281.9	261.7
Recurring fair value measurement | Short term investments, U.S. treasury
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	9,225.5	5,930.3
Recurring fair value measurement | Short term investments, Other government
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	403.0	212.2
Recurring fair value measurement | Short term investments, Corporate and other
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	511.3	173.4
Recurring fair value measurement | Bonds
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	10,290.8	10,167.5
Recurring fair value measurement | Bonds, Canadian government
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	84.4	311.4
Recurring fair value measurement | Bonds, Canadian provincials
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	93.8	196.9
Recurring fair value measurement | Bonds, U.S. treasury
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	1,779.3	1,117.3
Recurring fair value measurement | Bonds, U.S. states and municipalities
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	2,452.1	4,732.2
Recurring fair value measurement | Bonds, Other government
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	1,799.4	1,176.2
Recurring fair value measurement | Bonds, Corporate and other
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	4,081.8	2,633.5
Recurring fair value measurement | Preferred stocks
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	299.6	70.6
Recurring fair value measurement | Preferred stocks, Canadian
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	240.7	22.2
Recurring fair value measurement | Preferred stocks, U.S.
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	5.0	0.3
Recurring fair value measurement | Preferred stocks, Other
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	53.9	48.1
Recurring fair value measurement | Common stocks
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	5,669.0	4,338.5
Recurring fair value measurement | Common stocks, Canadian
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	958.7	665.3
Recurring fair value measurement | Common stocks, U.S.
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	1,583.3	1,172.6
Recurring fair value measurement | Common stocks, Other funds
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	90.9	157.1
Recurring fair value measurement | Common stocks, Other
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	3,036.1	2,343.5
Recurring fair value measurement | Derivatives and other invested assets
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	267.1	219.3
Recurring fair value measurement | Quoted prices (Level 1)
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	$ 21,607.4	$ 13,274.6
Percentage of assets classified as level 1, 2, and 3	60.70%	51.50%
Fair value of investments in associates	$ 2,004.3	$ 1,100.1
Recurring fair value measurement | Quoted prices (Level 1) | Short sale and derivative obligations
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Financial liabilities	0.0	0.0
Recurring fair value measurement | Quoted prices (Level 1) | Cash and cash equivalents
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	8,770.0	4,649.8
Recurring fair value measurement | Quoted prices (Level 1) | Short term investments
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	9,821.5	6,412.4
Recurring fair value measurement | Quoted prices (Level 1) | Short term investments, Canadian government
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	7.1	8.2
Recurring fair value measurement | Quoted prices (Level 1) | Short term investments, Canadian provincials
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	281.9	261.7
Recurring fair value measurement | Quoted prices (Level 1) | Short term investments, U.S. treasury
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	9,225.5	5,930.3
Recurring fair value measurement | Quoted prices (Level 1) | Short term investments, Other government
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	307.0	212.2
Recurring fair value measurement | Quoted prices (Level 1) | Short term investments, Corporate and other
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	0.0	0.0
Recurring fair value measurement | Quoted prices (Level 1) | Bonds
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	0.0	0.0
Recurring fair value measurement | Quoted prices (Level 1) | Bonds, Canadian government
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	0.0	0.0
Recurring fair value measurement | Quoted prices (Level 1) | Bonds, Canadian provincials
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	0.0	0.0
Recurring fair value measurement | Quoted prices (Level 1) | Bonds, U.S. treasury
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	0.0	0.0
Recurring fair value measurement | Quoted prices (Level 1) | Bonds, U.S. states and municipalities
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	0.0	0.0
Recurring fair value measurement | Quoted prices (Level 1) | Bonds, Other government
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	0.0	0.0
Recurring fair value measurement | Quoted prices (Level 1) | Bonds, Corporate and other
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	0.0	0.0
Recurring fair value measurement | Quoted prices (Level 1) | Preferred stocks
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	1.5	0.6
Recurring fair value measurement | Quoted prices (Level 1) | Preferred stocks, Canadian
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	0.0	0.0
Recurring fair value measurement | Quoted prices (Level 1) | Preferred stocks, U.S.
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	0.0	0.0
Recurring fair value measurement | Quoted prices (Level 1) | Preferred stocks, Other
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	1.5	0.6
Recurring fair value measurement | Quoted prices (Level 1) | Common stocks
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	3,014.4	2,211.8
Recurring fair value measurement | Quoted prices (Level 1) | Common stocks, Canadian
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	825.9	545.0
Recurring fair value measurement | Quoted prices (Level 1) | Common stocks, U.S.
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	474.8	629.6
Recurring fair value measurement | Quoted prices (Level 1) | Common stocks, Other funds
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	0.0	0.0
Recurring fair value measurement | Quoted prices (Level 1) | Common stocks, Other
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	1,713.7	1,037.2
Recurring fair value measurement | Quoted prices (Level 1) | Derivatives and other invested assets
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	0.0	0.0
Recurring fair value measurement | Significant other observable inputs (Level 2)
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	$ 9,618.4	$ 10,023.1
Percentage of assets classified as level 1, 2, and 3	27.00%	38.90%
Fair value of investments in associates	$ 45.3	$ 40.9
Recurring fair value measurement | Significant other observable inputs (Level 2) | Short sale and derivative obligations
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Financial liabilities	(126.2)	(234.3)
Recurring fair value measurement | Significant other observable inputs (Level 2) | Cash and cash equivalents
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	0.0	0.0
Recurring fair value measurement | Significant other observable inputs (Level 2) | Short term investments
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	562.3	173.4
Recurring fair value measurement | Significant other observable inputs (Level 2) | Short term investments, Canadian government
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	0.0	0.0
Recurring fair value measurement | Significant other observable inputs (Level 2) | Short term investments, Canadian provincials
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	0.0	0.0
Recurring fair value measurement | Significant other observable inputs (Level 2) | Short term investments, U.S. treasury
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	0.0	0.0
Recurring fair value measurement | Significant other observable inputs (Level 2) | Short term investments, Other government
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	96.0	0.0
Recurring fair value measurement | Significant other observable inputs (Level 2) | Short term investments, Corporate and other
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	466.3	173.4
Recurring fair value measurement | Significant other observable inputs (Level 2) | Bonds
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	8,394.7	9,114.4
Recurring fair value measurement | Significant other observable inputs (Level 2) | Bonds, Canadian government
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	84.4	311.4
Recurring fair value measurement | Significant other observable inputs (Level 2) | Bonds, Canadian provincials
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	93.8	196.9
Recurring fair value measurement | Significant other observable inputs (Level 2) | Bonds, U.S. treasury
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	1,779.3	1,117.3
Recurring fair value measurement | Significant other observable inputs (Level 2) | Bonds, U.S. states and municipalities
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	2,452.1	4,732.2
Recurring fair value measurement | Significant other observable inputs (Level 2) | Bonds, Other government
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	1,799.4	1,176.2
Recurring fair value measurement | Significant other observable inputs (Level 2) | Bonds, Corporate and other
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	2,185.7	1,580.4
Recurring fair value measurement | Significant other observable inputs (Level 2) | Preferred stocks
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	14.9	26.0
Recurring fair value measurement | Significant other observable inputs (Level 2) | Preferred stocks, Canadian
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	11.3	10.9
Recurring fair value measurement | Significant other observable inputs (Level 2) | Preferred stocks, U.S.
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	0.0	0.0
Recurring fair value measurement | Significant other observable inputs (Level 2) | Preferred stocks, Other
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	3.6	15.1
Recurring fair value measurement | Significant other observable inputs (Level 2) | Common stocks
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	683.2	822.1
Recurring fair value measurement | Significant other observable inputs (Level 2) | Common stocks, Canadian
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	110.3	98.6
Recurring fair value measurement | Significant other observable inputs (Level 2) | Common stocks, U.S.
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	66.9	33.9
Recurring fair value measurement | Significant other observable inputs (Level 2) | Common stocks, Other funds
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	90.9	157.1
Recurring fair value measurement | Significant other observable inputs (Level 2) | Common stocks, Other
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	415.1	532.5
Recurring fair value measurement | Significant other observable inputs (Level 2) | Derivatives and other invested assets
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	89.5	121.5
Recurring fair value measurement | Significant unobservable inputs (Level 3)
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	$ 4,373.3	$ 2,499.5
Percentage of assets classified as level 1, 2, and 3	12.30%	9.60%
Fair value of investments in associates	$ 2,579.7	$ 2,126.3
Recurring fair value measurement | Significant unobservable inputs (Level 3) | Short sale and derivative obligations
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Financial liabilities	0.0	0.0
Recurring fair value measurement | Significant unobservable inputs (Level 3) | Cash and cash equivalents
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	0.0	0.0
Recurring fair value measurement | Significant unobservable inputs (Level 3) | Short term investments
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	45.0	0.0
Recurring fair value measurement | Significant unobservable inputs (Level 3) | Short term investments, Canadian government
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	0.0	0.0
Recurring fair value measurement | Significant unobservable inputs (Level 3) | Short term investments, Canadian provincials
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	0.0	0.0
Recurring fair value measurement | Significant unobservable inputs (Level 3) | Short term investments, U.S. treasury
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	0.0	0.0
Recurring fair value measurement | Significant unobservable inputs (Level 3) | Short term investments, Other government
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	0.0	0.0
Recurring fair value measurement | Significant unobservable inputs (Level 3) | Short term investments, Corporate and other
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	45.0	0.0
Recurring fair value measurement | Significant unobservable inputs (Level 3) | Bonds
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	1,896.1	1,053.1
Recurring fair value measurement | Significant unobservable inputs (Level 3) | Bonds, Canadian government
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	0.0	0.0
Recurring fair value measurement | Significant unobservable inputs (Level 3) | Bonds, Canadian provincials
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	0.0	0.0
Recurring fair value measurement | Significant unobservable inputs (Level 3) | Bonds, U.S. treasury
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	0.0	0.0
Recurring fair value measurement | Significant unobservable inputs (Level 3) | Bonds, U.S. states and municipalities
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	0.0	0.0
Recurring fair value measurement | Significant unobservable inputs (Level 3) | Bonds, Other government
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	0.0	0.0
Recurring fair value measurement | Significant unobservable inputs (Level 3) | Bonds, Corporate and other
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	1,896.1	1,053.1
Recurring fair value measurement | Significant unobservable inputs (Level 3) | Preferred stocks
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	283.2	44.0
Recurring fair value measurement | Significant unobservable inputs (Level 3) | Preferred stocks, Canadian
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	229.4	11.3
Recurring fair value measurement | Significant unobservable inputs (Level 3) | Preferred stocks, U.S.
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	5.0	0.3
Recurring fair value measurement | Significant unobservable inputs (Level 3) | Preferred stocks, Other
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	48.8	32.4
Recurring fair value measurement | Significant unobservable inputs (Level 3) | Common stocks
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	1,971.4	1,304.6
Recurring fair value measurement | Significant unobservable inputs (Level 3) | Common stocks, Canadian
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	22.5	21.7
Recurring fair value measurement | Significant unobservable inputs (Level 3) | Common stocks, U.S.
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	1,041.6	509.1
Recurring fair value measurement | Significant unobservable inputs (Level 3) | Common stocks, Other funds
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	0.0	0.0
Recurring fair value measurement | Significant unobservable inputs (Level 3) | Common stocks, Other
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	907.3	773.8
Recurring fair value measurement | Significant unobservable inputs (Level 3) | Derivatives and other invested assets
Disclosure Of Fair Value Measurement Of Assets And Liabilities [Line Items]
Assets	$ 177.6	$ 97.8

XML

Cash and Investments - Changes in Level 3 Financial Assets (Details) - Significant unobservable inputs (Level 3) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Changes in fair value measurement, assets [abstract]
Balance - January 1	$ 2,499.5	$ 2,259.4
Net realized and unrealized gains (losses) included in the consolidated statement of earnings	442.1	(186.2)
Purchases	1,003.2	1,272.0
Sales and distributions	(706.6)	(848.7)
Acquisitions of subsidiaries (note 23)	645.8
Transfer into category	391.1	9.8
Unrealized foreign currency translation gains on foreign operations included in other comprehensive income	98.2	(6.8)
Balance - December 31	4,373.3	2,499.5
Private placement debt securities(b)(2)
Changes in fair value measurement, assets [abstract]
Balance - January 1	1,053.1	696.4
Net realized and unrealized gains (losses) included in the consolidated statement of earnings	190.2	(52.9)
Purchases	430.2	955.6
Sales and distributions	(209.7)	(548.2)
Acquisitions of subsidiaries (note 23)	22.4
Transfer into category	384.0	9.4
Unrealized foreign currency translation gains on foreign operations included in other comprehensive income	70.9	(7.2)
Balance - December 31	1,941.1	1,053.1
Private company preferred shares
Changes in fair value measurement, assets [abstract]
Balance - January 1	44.0	7.7
Net realized and unrealized gains (losses) included in the consolidated statement of earnings	1.3	2.5
Purchases	268.4	115.7
Sales and distributions	(34.1)	(82.5)
Acquisitions of subsidiaries (note 23)	0.0
Transfer into category	0.0	0.4
Unrealized foreign currency translation gains on foreign operations included in other comprehensive income	3.6	0.2
Balance - December 31	283.2	44.0
Limited partnerships and other
Changes in fair value measurement, assets [abstract]
Balance - January 1	981.4	960.9
Net realized and unrealized gains (losses) included in the consolidated statement of earnings	243.4	102.7
Purchases	221.2	124.4
Sales and distributions	(443.4)	(202.9)
Acquisitions of subsidiaries (note 23)	583.8
Transfer into category	0.0	0.0
Unrealized foreign currency translation gains on foreign operations included in other comprehensive income	12.3	(3.7)
Balance - December 31	1,598.7	981.4
Private equity funds
Changes in fair value measurement, assets [abstract]
Balance - January 1	167.8	171.0
Net realized and unrealized gains (losses) included in the consolidated statement of earnings	(5.5)	(12.5)
Purchases	0.0	16.4
Sales and distributions	0.0	(10.2)
Acquisitions of subsidiaries (note 23)	0.0
Transfer into category	0.0	0.0
Unrealized foreign currency translation gains on foreign operations included in other comprehensive income	8.2	3.1
Balance - December 31	170.5	167.8
Private company common shares
Changes in fair value measurement, assets [abstract]
Balance - January 1	155.4	138.0
Net realized and unrealized gains (losses) included in the consolidated statement of earnings	22.6	(21.6)
Purchases	11.1	38.8
Sales and distributions	(19.4)	0.0
Acquisitions of subsidiaries (note 23)	29.9
Transfer into category	0.0	0.0
Unrealized foreign currency translation gains on foreign operations included in other comprehensive income	2.6	0.2
Balance - December 31	202.2	155.4
Derivatives and other invested assets
Changes in fair value measurement, assets [abstract]
Balance - January 1	97.8	285.4
Net realized and unrealized gains (losses) included in the consolidated statement of earnings	(9.9)	(204.4)
Purchases	72.3	21.1
Sales and distributions	0.0	(4.9)
Acquisitions of subsidiaries (note 23)	9.7
Transfer into category	7.1	0.0
Unrealized foreign currency translation gains on foreign operations included in other comprehensive income	0.6	0.6
Balance - December 31	$ 177.6	$ 97.8

XML

Cash and Investments - Fair Value Assets Measurement Techniques (Details) $ in Millions	12 Months Ended
	Dec. 31, 2017 USD ($) investment	Dec. 31, 2016 USD ($)
Disclosure of significant unobservable inputs used in fair value measurement of assets [line items]
Assets	$ 64,090.1	$ 43,384.4
Private placement debt securities(b)(2) | Discounted cash flow
Disclosure of significant unobservable inputs used in fair value measurement of assets [line items]
Assets	$ 1,340.4
Number of investments | investment	7
Private placement debt securities(b)(2) | Net asset value
Disclosure of significant unobservable inputs used in fair value measurement of assets [line items]
Assets	$ 402.0
Private placement debt securities - largest investment | Discounted cash flow
Disclosure of significant unobservable inputs used in fair value measurement of assets [line items]
Assets	663.6
Decrease in fair value measurement due to change in one or more unobservable inputs to reflect reasonably possible alternative assumptions, assets	41.6
Increase in fair value measurement due to change in one or more unobservable inputs to reflect reasonably possible alternative assumptions, assets	44.3
Private placement debt securities - largest investment | Net asset value
Disclosure of significant unobservable inputs used in fair value measurement of assets [line items]
Assets	$ 253.0
Number of investments | investment	2
Limited partnerships and other | Net asset value
Disclosure of significant unobservable inputs used in fair value measurement of assets [line items]
Assets	$ 1,598.7
Number of investments | investment	47
Limited partnerships and other - largest investment | Net asset value
Disclosure of significant unobservable inputs used in fair value measurement of assets [line items]
Assets	$ 355.3
Private company preferred shares | Discounted cash flow
Disclosure of significant unobservable inputs used in fair value measurement of assets [line items]
Assets	207.3
Private equity funds | Net asset value
Disclosure of significant unobservable inputs used in fair value measurement of assets [line items]
Assets	100.9
Private equity funds | Market comparable
Disclosure of significant unobservable inputs used in fair value measurement of assets [line items]
Assets	69.6
Private company common shares, book value multiple | Market comparable
Disclosure of significant unobservable inputs used in fair value measurement of assets [line items]
Assets	81.2
Private company common shares | Market comparable
Disclosure of significant unobservable inputs used in fair value measurement of assets [line items]
Assets	40.5
Warrants | Option pricing model
Disclosure of significant unobservable inputs used in fair value measurement of assets [line items]
Assets	73.1
CPI-linked derivatives | Option pricing model
Disclosure of significant unobservable inputs used in fair value measurement of assets [line items]
Assets	39.6
Recurring fair value measurement
Disclosure of significant unobservable inputs used in fair value measurement of assets [line items]
Assets	$ 35,599.1	$ 25,797.2
Recurring fair value measurement | Option pricing model | Bottom of range
Disclosure of significant unobservable inputs used in fair value measurement of assets [line items]
Equity volatility	24.60%
Recurring fair value measurement | Option pricing model | Top of range
Disclosure of significant unobservable inputs used in fair value measurement of assets [line items]
Equity volatility	39.30%
Recurring fair value measurement | Private placement debt securities(b)(2) | Discounted cash flow | Bottom of range
Disclosure of significant unobservable inputs used in fair value measurement of assets [line items]
Credit spread	1.60%
Recurring fair value measurement | Private placement debt securities(b)(2) | Discounted cash flow | Top of range
Disclosure of significant unobservable inputs used in fair value measurement of assets [line items]
Credit spread	18.90%
Recurring fair value measurement | Private placement debt securities(b)(2) | Net asset value | Bottom of range
Disclosure of significant unobservable inputs used in fair value measurement of assets [line items]
Recoverability of assets	60.00%
Recurring fair value measurement | Private placement debt securities(b)(2) | Net asset value | Top of range
Disclosure of significant unobservable inputs used in fair value measurement of assets [line items]
Recoverability of assets	100.00%
Recurring fair value measurement | Private company preferred shares | Discounted cash flow | Bottom of range
Disclosure of significant unobservable inputs used in fair value measurement of assets [line items]
Credit spread	3.50%
Recurring fair value measurement | Private company preferred shares | Discounted cash flow | Top of range
Disclosure of significant unobservable inputs used in fair value measurement of assets [line items]
Credit spread	3.60%
Recurring fair value measurement | Private equity funds | Market comparable | Bottom of range
Disclosure of significant unobservable inputs used in fair value measurement of assets [line items]
Price/Earnings multiple	10.0
Recurring fair value measurement | Private equity funds | Market comparable | Top of range
Disclosure of significant unobservable inputs used in fair value measurement of assets [line items]
Price/Earnings multiple	10.0
Recurring fair value measurement | Private company common shares, book value multiple | Market comparable | Bottom of range
Disclosure of significant unobservable inputs used in fair value measurement of assets [line items]
Book value multiple	1.3
Recurring fair value measurement | Private company common shares, book value multiple | Market comparable | Top of range
Disclosure of significant unobservable inputs used in fair value measurement of assets [line items]
Book value multiple	1.3
Recurring fair value measurement | Private company common shares | Market comparable | Bottom of range
Disclosure of significant unobservable inputs used in fair value measurement of assets [line items]
Price/Earnings multiple	26.2
Recurring fair value measurement | Private company common shares | Market comparable | Top of range
Disclosure of significant unobservable inputs used in fair value measurement of assets [line items]
Price/Earnings multiple	26.2
Recurring fair value measurement | CPI-linked derivatives | Option pricing model | Bottom of range
Disclosure of significant unobservable inputs used in fair value measurement of assets [line items]
Inflation volatility	0.00%
Recurring fair value measurement | CPI-linked derivatives | Option pricing model | Top of range
Disclosure of significant unobservable inputs used in fair value measurement of assets [line items]
Inflation volatility	3.70%

XML

Cash and Investments - Fair Value Disclosures (Narrative) (Details) - Significant unobservable inputs (Level 3) $ in Millions	12 Months Ended
	Dec. 31, 2017 USD ($)
Disclosure of fair value measurement of assets [line items]
Acquisitions of subsidiaries (note 23)	$ 645.8
Limited partnerships and other
Disclosure of fair value measurement of assets [line items]
Acquisitions of subsidiaries (note 23)	583.8
Private placement debt securities(b)(2)
Disclosure of fair value measurement of assets [line items]
Acquisitions of subsidiaries (note 23)	$ 22.4

XML

Cash and Investments - Schedule of Interest Income and Dividends (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Interest income:
Cash and short term investments	$ 117.5	$ 33.4
Bonds	441.9	622.4
Derivatives and other	(44.8)	(141.4)
Interest income	514.6	514.4
Dividends:
Dividend income	73.2	66.8
Investment expenses	(28.8)	(26.0)
Interest and dividends	559.0	555.2
Share of profit of associates	200.5	24.2
Preferred stocks
Dividends:
Dividend income	2.1	11.2
Common stocks
Dividends:
Dividend income	$ 71.1	$ 55.6

XML

Cash and Investments - Net Gains (Losses) on Investments (Details) - USD ($) $ in Millions						12 Months Ended
	Sep. 19, 2017	Sep. 06, 2017	Jul. 20, 2017	Jul. 06, 2017	Jul. 04, 2017	Dec. 31, 2017	Dec. 31, 2016
Investment [Line Items]
Net realized gains (losses)						$ 855.3	$ (362.3)
Net change in unrealized gains (losses)						612.2	(841.3)
Net gains (losses) on investments						1,467.5	(1,203.6)
Proceeds from sales of interests in associates						1,014.9	45.8
Share of profit (loss) of associates						$ 200.5	$ 24.2
ICICI Lombard General Insurance Company Limited
Investment [Line Items]
Ownership percentage in equity method investment	9.90%					0.00%	34.60%
Share of profit (loss) of associates						$ 24.0	$ 44.1
Grivalia
Investment [Line Items]
Ownership percentage in equity method investment		52.70%			52.60%	0.00%	40.60%
Share of profit (loss) of associates						$ 12.8	$ 16.1
APR Energy PLC
Investment [Line Items]
Ownership percentage in equity method investment			67.90%			67.80%	45.00%
Share of profit (loss) of associates						$ (3.1)	$ (29.0)
Subsidiary and associates
Investment [Line Items]
Net realized gains (losses)						999.9	0.0
Net change in unrealized gains (losses)						0.0	0.0
Net gains (losses) on investments						999.9	0.0
Other
Investment [Line Items]
Net realized gains (losses)						2.1	3.2
Net change in unrealized gains (losses)						57.3	47.0
Net gains (losses) on investments						$ 59.4	50.2
Common stocks
Investment [Line Items]
Unrealized loss on securities reclassified to realized loss							$ 209.5
Common stocks | Investments accounted for using equity method | Grivalia
Investment [Line Items]
Ownership percentage in equity method investment						52.70%
Share of profit (loss) of associates						$ (51.3)
Common stocks | Investments accounted for using equity method | APR Energy PLC
Investment [Line Items]
Ownership percentage in equity method investment							49.00%
Share of profit (loss) of associates							$ (68.1)
Preferred stocks
Investment [Line Items]
Unrealized loss on securities reclassified to realized loss							99.6
Gain on conversion of preferred stock to common stock							35.1
Unrealized gain on securities, reclassified to realized gain							41.7
Bonds
Investment [Line Items]
Net realized gains (losses)						445.7	683.7
Net change in unrealized gains (losses)						(167.7)	(400.4)
Net gains (losses) on investments						278.0	283.3
Preferred stocks
Investment [Line Items]
Net realized gains (losses)						0.2	(68.0)
Net change in unrealized gains (losses)						(0.5)	61.6
Net gains (losses) on investments						(0.3)	(6.4)
Common stocks
Investment [Line Items]
Net realized gains (losses)						126.5	(162.2)
Net change in unrealized gains (losses)						585.7	91.2
Net gains (losses) on investments						712.2	(71.0)
Debt and equity securities
Investment [Line Items]
Net realized gains (losses)						572.4	453.5
Net change in unrealized gains (losses)						417.5	(247.6)
Net gains (losses) on investments						989.9	205.9
Derivatives:
Investment [Line Items]
Net realized gains (losses)						(624.0)	(899.6)
Net change in unrealized gains (losses)						39.5	(430.6)
Net gains (losses) on investments						(584.5)	(1,330.2)
Common stock and equity index short positions
Investment [Line Items]
Net realized gains (losses)						(485.6)	(915.8)
Net change in unrealized gains (losses)						67.7	(264.0)
Net gains (losses) on investments						(417.9)	(1,179.8)
Common stock and equity index long positions
Investment [Line Items]
Net realized gains (losses)						21.6	10.4
Net change in unrealized gains (losses)						(2.0)	12.9
Net gains (losses) on investments						19.6	23.3
Equity index put options
Investment [Line Items]
Net realized gains (losses)						0.0	(20.3)
Net change in unrealized gains (losses)						0.0	7.2
Net gains (losses) on investments						0.0	(13.1)
Equity warrants and call options
Investment [Line Items]
Net realized gains (losses)						22.9	0.0
Net change in unrealized gains (losses)						15.4	(4.0)
Net gains (losses) on investments						38.3	(4.0)
CPI-linked derivative contracts
Investment [Line Items]
Net realized gains (losses)						0.0	0.0
Net change in unrealized gains (losses)						(71.0)	(196.2)
Net gains (losses) on investments						(71.0)	(196.2)
U.S. government bond forwards
Investment [Line Items]
Net realized gains (losses)						(174.5)	96.7
Net change in unrealized gains (losses)						21.3	(49.7)
Net gains (losses) on investments						(153.2)	47.0
Other
Investment [Line Items]
Net realized gains (losses)						(8.4)	(70.6)
Net change in unrealized gains (losses)						8.1	63.2
Net gains (losses) on investments						(0.3)	(7.4)
Foreign currency net gains (losses)
Investment [Line Items]
Net realized gains (losses)						(95.1)	80.6
Net change in unrealized gains (losses)						97.9	(210.1)
Net gains (losses) on investments						2.8	(129.5)
Investing activities
Investment [Line Items]
Net realized gains (losses)						0.8	54.4
Net change in unrealized gains (losses)						88.0	(191.3)
Net gains (losses) on investments						88.8	(136.9)
Underwriting activities
Investment [Line Items]
Net realized gains (losses)						(74.9)	19.7
Net change in unrealized gains (losses)						0.0	0.0
Net gains (losses) on investments						(74.9)	19.7
Foreign currency contracts
Investment [Line Items]
Net realized gains (losses)						(21.0)	6.5
Net change in unrealized gains (losses)						9.9	(18.8)
Net gains (losses) on investments						(11.1)	(12.3)
Equity Contract | Designated as hedging instrument | Short position
Investment [Line Items]
Notional amount of short positions							6,350.6
Restructuring provision | Common stocks
Investment [Line Items]
Net realized gains (losses)							(220.3)
Restructuring provision | Preferred stocks
Investment [Line Items]
Net realized gains (losses)							$ (103.7)
ICICI Lombard General Insurance Company Limited
Investment [Line Items]
Net realized gains (losses)	$ 372.3			$ 223.3		$ 595.6
Ownership percentage in equity method investment	12.10%			12.20%		24.30%
Proceeds from sales of interests in associates	$ 532.2			$ 376.3		$ 908.5
Unrealized gain on securities, reclassified to realized gain						$ 334.5

XML

Investments in Associates - Investments in Associates (Details) - USD ($) $ in Millions					12 Months Ended
	Sep. 19, 2017	Sep. 06, 2017	Jul. 20, 2017	Jul. 04, 2017	Dec. 31, 2017	Dec. 31, 2016	Oct. 20, 2017	May 10, 2017	Feb. 17, 2017	Dec. 31, 2015
Disclosure of associates [line items]
Carrying value					$ 3,656.3	$ 2,633.5
Share of profit (loss) of associates					$ 200.5	$ 24.2
Eurolife ERB Insurance Group Holdings S.A.
Disclosure of associates [line items]
Ownership percentage					43.30%	40.00%
Fair value of investments in associates					$ 303.0	$ 171.4
Carrying value					298.0	150.6
Total carrying value					298.0	150.6
Share of profit (loss) of associates					$ 117.6	$ (6.4)
Gulf Insurance Company
Disclosure of associates [line items]
Ownership percentage					41.40%	41.40%
Fair value of investments in associates					$ 233.1	$ 235.8
Carrying value					185.4	195.7
Total carrying value					185.4	195.7
Share of profit (loss) of associates					$ 7.7	$ 14.0
Thai Re Public Company Limited
Disclosure of associates [line items]
Ownership percentage					34.90%	32.40%
Fair value of investments in associates					$ 80.5	$ 80.2
Carrying value					80.3	94.7
Total carrying value					80.3	94.7
Share of profit (loss) of associates					$ (21.3)	$ (1.8)
Bank for Investment and Development of Vietnam Insurance Joint Stock Corporation
Disclosure of associates [line items]
Ownership percentage					35.00%	35.00%
Fair value of investments in associates					$ 66.7	$ 68.5
Carrying value					48.6	48.4
Total carrying value					48.6	48.4
Share of profit (loss) of associates					$ 1.6	$ 1.8
Singapore Reinsurance Corporation Limited
Disclosure of associates [line items]
Ownership percentage					27.80%	27.80%
Fair value of investments in associates					$ 39.6	$ 35.5
Carrying value					38.5	34.6
Total carrying value					38.5	34.6
Share of profit (loss) of associates					$ 3.2	$ 2.0
Ambridge Partners LLC
Disclosure of associates [line items]
Ownership percentage					50.00%	50.00%
Fair value of investments in associates					$ 34.9	$ 31.4
Carrying value					34.9	31.4
Total carrying value					34.9	31.4
Share of profit (loss) of associates					$ 4.4	$ 3.4
Go Digit Infoworks Services Private Limited
Disclosure of associates [line items]
Ownership percentage					45.30%
Fair value of investments in associates					$ 10.6
Carrying value					10.6
Total carrying value					10.6
Share of profit (loss) of associates					$ 0.0
Falcon Insurance PLC
Disclosure of associates [line items]
Ownership percentage					41.20%	41.20%
Fair value of investments in associates					$ 9.2	$ 8.8
Carrying value					9.2	8.8
Total carrying value					9.2	8.8
Share of profit (loss) of associates					$ 0.0	$ 0.7
Camargue Underwriting Managers Group Ltd.
Disclosure of associates [line items]
Ownership percentage					50.00%	50.00%
Fair value of investments in associates					$ 5.5	$ 5.2
Carrying value					5.5	5.2
Total carrying value					5.5	5.2
Share of profit (loss) of associates					$ 0.7	$ 0.2
ICICI Lombard General Insurance Company Limited
Disclosure of associates [line items]
Ownership percentage	9.90%				0.00%	34.60%
Fair value of investments in associates					$ 0.0	$ 878.0
Carrying value					0.0	371.1
Total carrying value					0.0	371.1
Share of profit (loss) of associates					24.0	44.1
Insurance and reinsurance associates
Disclosure of associates [line items]
Fair value of investments in associates					783.1	1,514.8
Carrying value					711.0	940.5
Total carrying value					711.0	940.5
Share of profit (loss) of associates					$ 137.9	$ 58.0
Astarta Holding N.V.
Disclosure of associates [line items]
Ownership percentage					28.10%
Fair value of investments in associates					$ 101.2			$ 15.7
Carrying value					140.6			$ 120.1
Total carrying value					140.6
Share of profit (loss) of associates					$ 15.8
Farmers Edge Inc
Disclosure of associates [line items]
Ownership percentage					46.10%
Fair value of investments in associates					$ 95.0
Carrying value					88.1
Total carrying value					88.1
Share of profit (loss) of associates					(10.5)
Non-insurance associates, Agriculture
Disclosure of associates [line items]
Fair value of investments in associates					196.2
Carrying value					228.7
Total carrying value					228.7
Share of profit (loss) of associates					$ 5.3
KWF Real Estate Ventures Limited Partnerships
Disclosure of associates [line items]
Ownership percentage					0.00%	0.00%
Fair value of investments in associates					$ 213.4	$ 202.8
Carrying value					213.4	202.8
Total carrying value					213.4	202.8
Share of profit (loss) of associates					$ 12.2	$ 13.9
Grivalia Properties REIC
Disclosure of associates [line items]
Ownership percentage		52.70%		52.60%	0.00%	40.60%
Fair value of investments in associates				$ 39.5	$ 0.0	$ 332.4
Carrying value					0.0	295.9
Total carrying value					0.0	295.9
Share of profit (loss) of associates					$ 12.8	16.1
Other, Real estate
Disclosure of associates [line items]
Ownership percentage					0.00%
Fair value of investments in associates					$ 88.7
Carrying value					88.6
Total carrying value					88.6
Share of profit (loss) of associates					9.0
Non-insurance associates, Real estate
Disclosure of associates [line items]
Fair value of investments in associates					302.1	535.2
Carrying value					302.0	498.7
Total carrying value					302.0	498.7
Share of profit (loss) of associates					$ 34.0	$ 30.0
Bangalore International Airport Limited
Disclosure of associates [line items]
Ownership percentage					48.00%
Fair value of investments in associates					$ 608.3
Carrying value					0.0
Total carrying value					611.1
Share of profit (loss) of associates					$ 15.8
IIFL Holdings Limited
Disclosure of associates [line items]
Ownership percentage					35.50%	30.50%
Fair value of investments in associates					$ 1,185.1	$ 373.9
Carrying value					102.7	96.3
Total carrying value					419.9	316.4
Share of profit (loss) of associates					$ 36.5	$ 18.5
5paisa Capital Limited
Disclosure of associates [line items]
Ownership percentage					35.50%
Fair value of investments in associates					$ 26.6
Carrying value					6.6		$ 26.4
Total carrying value					26.8
Share of profit (loss) of associates					$ 0.0
Fairchem Limited
Disclosure of associates [line items]
Ownership percentage					0.00%	44.90%
Fair value of investments in associates					$ 0.0	$ 45.5
Carrying value					0.0	0.0
Total carrying value					0.0	19.4
Share of profit (loss) of associates					$ 0.2	$ 0.3
Other, India
Disclosure of associates [line items]
Ownership percentage					0.00%	0.00%
Fair value of investments in associates					$ 0.6	$ 0.4
Carrying value					0.0	0.0
Total carrying value					1.0	1.0
Share of profit (loss) of associates					0.0	0.0
Non-insurance associates, India
Disclosure of associates [line items]
Fair value of investments in associates					1,820.6	419.8
Carrying value					109.3	96.3
Total carrying value					1,058.8	336.8
Share of profit (loss) of associates					$ 52.5	$ 18.8
Atlas Mara Limited
Disclosure of associates [line items]
Ownership percentage					43.30%
Fair value of investments in associates					$ 168.7
Carrying value					0.0
Total carrying value					170.3
Share of profit (loss) of associates					$ 1.6
AFGRI Proprietary Limited
Disclosure of associates [line items]
Ownership percentage					60.00%
Fair value of investments in associates					$ 119.0				$ 72.8
Carrying value					0.0				$ 40.5
Total carrying value					49.5
Share of profit (loss) of associates					(0.4)
Non-insurance associates, Africa
Disclosure of associates [line items]
Fair value of investments in associates					287.7
Carrying value					0.0
Total carrying value					219.8
Share of profit (loss) of associates					$ 1.2
Resolute Forest Products Inc.
Disclosure of associates [line items]
Ownership percentage					33.80%	33.90%
Fair value of investments in associates					$ 334.0	$ 162.5
Carrying value					320.6	304.5
Total carrying value					320.6	304.5
Share of profit (loss) of associates					$ 0.3	$ (73.6)
APR Energy PLC
Disclosure of associates [line items]
Ownership percentage			67.90%		67.80%	45.00%
Fair value of investments in associates					$ 336.4	$ 234.0
Carrying value					309.4	187.3
Total carrying value					309.4	187.3
Share of profit (loss) of associates					$ (3.1)	$ (29.0)
Peak Achievement Athletics
Disclosure of associates [line items]
Ownership percentage					42.60%	38.20%
Fair value of investments in associates					$ 153.5	$ 83.0
Carrying value					144.8	82.7
Total carrying value					144.8	82.7
Share of profit (loss) of associates					$ (6.2)	$ 0.0
Arbor Memorial Services Inc.
Disclosure of associates [line items]
Ownership percentage					43.40%	43.40%
Fair value of investments in associates					$ 111.8	$ 93.6
Carrying value					61.4	56.0
Total carrying value					61.4	56.0
Share of profit (loss) of associates					$ 10.6	$ 9.0
Partnerships, trusts and other
Disclosure of associates [line items]
Ownership percentage					0.00%	0.00%
Fair value of investments in associates					$ 303.9	$ 224.4
Carrying value					299.8	227.0
Total carrying value					299.8	227.0
Share of profit (loss) of associates					(32.0)	11.0
Non-insurance associates, Other
Disclosure of associates [line items]
Fair value of investments in associates					1,239.6	797.5
Carrying value					1,136.0	857.5
Total carrying value					1,136.0	857.5
Share of profit (loss) of associates					(30.4)	(82.6)
Non-insurance associates
Disclosure of associates [line items]
Fair value of investments in associates					3,846.2	1,752.5
Carrying value					1,776.0	1,452.5
Total carrying value					2,945.3	1,693.0
Share of profit (loss) of associates					62.6	(33.8)
Investments in associates
Disclosure of associates [line items]
Fair value of investments in associates					4,629.3	3,267.3
Carrying value					2,487.0	2,393.0
Total carrying value					3,656.3	2,633.5				$ 1,932.9
Share of profit (loss) of associates					200.5	24.2
Investments in associates
Disclosure of associates [line items]
Fair value of investments in associates					2,824.3	2,955.4
Total carrying value					2,487.0	2,393.0
Fairfax India cash and portfolio investments
Disclosure of associates [line items]
Fair value of investments in associates					1,517.3	311.9
Total carrying value					949.5	240.5
Fairfax Africa cash and portfolio investments
Disclosure of associates [line items]
Fair value of investments in associates					287.7
Total carrying value					219.8
Fairfax India and Fairfax Africa | Bangalore International Airport Limited
Disclosure of associates [line items]
Carrying value					611.1
Fairfax India and Fairfax Africa | IIFL Holdings Limited
Disclosure of associates [line items]
Carrying value					317.2	220.1
Fairfax India and Fairfax Africa | 5paisa Capital Limited
Disclosure of associates [line items]
Carrying value					20.2
Fairfax India and Fairfax Africa | Fairchem Limited
Disclosure of associates [line items]
Carrying value					0.0	19.4
Fairfax India and Fairfax Africa | Other, India
Disclosure of associates [line items]
Carrying value					1.0	1.0
Fairfax India and Fairfax Africa | Non-insurance associates, India
Disclosure of associates [line items]
Carrying value					949.5	240.5
Fairfax India and Fairfax Africa | Atlas Mara Limited
Disclosure of associates [line items]
Carrying value					170.3
Fairfax India and Fairfax Africa | AFGRI Proprietary Limited
Disclosure of associates [line items]
Carrying value					49.5
Fairfax India and Fairfax Africa | Non-insurance associates, Africa
Disclosure of associates [line items]
Carrying value					219.8
Fairfax India and Fairfax Africa | Non-insurance associates
Disclosure of associates [line items]
Carrying value					1,169.3	240.5
Fairfax India and Fairfax Africa | Investments in associates
Disclosure of associates [line items]
Carrying value					$ 1,169.3	$ 240.5

XML

Investments in Associates - Additional Information (Details) $ / shares in Units, € in Millions, ₨ in Millions, PLN in Millions, $ in Millions																		4 Months Ended		12 Months Ended
	Dec. 22, 2017 USD ($)	Oct. 13, 2017 USD ($)	Sep. 19, 2017 USD ($)	Sep. 06, 2017 USD ($)	Sep. 06, 2017 EUR (€)	Aug. 31, 2017 USD ($)	Aug. 02, 2017 USD ($)	Jul. 20, 2017 USD ($)	Jul. 13, 2017 USD ($)	Jul. 13, 2017 INR (₨)	Jul. 06, 2017 USD ($)	Jul. 04, 2017 USD ($)	Jul. 04, 2017 EUR (€)	Mar. 24, 2017 USD ($)	Mar. 24, 2017 INR (₨)	Mar. 01, 2017 USD ($)	Feb. 17, 2017 USD ($) $ / shares shares	May 10, 2017 USD ($)	May 10, 2017 PLN	Dec. 31, 2017 USD ($)	Dec. 31, 2017 INR (₨)	Dec. 31, 2016 USD ($)	Dec. 31, 2017 INR (₨)	Oct. 20, 2017 USD ($)	Feb. 08, 2016
Disclosure of associates [line items]
Gross premiums written																				$ 12,207.5		$ 9,534.3
Investments in associates																				$ 3,656.3		2,633.5
Long term growth rate																				3.00%			3.00%
Proceeds from sales of interests in associates																				$ 1,014.9		45.8
Net realized gains (losses)																				855.3		(362.3)
Grivalia
Disclosure of associates [line items]
Total carrying value																				$ 0.0		$ 295.9
Ownership percentage				52.70%	52.70%							52.60%	52.60%							0.00%	0.00%	40.60%
Gain (loss) on fair value adjustment												$ 51.3
Percentage of common shares acquired				0.10%	0.10%							10.30%
Consideration paid				$ 0.6	€ 0.5							$ 100.0	€ 88.0
Fair value of associates												$ 39.5								$ 0.0		$ 332.4
Investments in associates																				0.0		295.9
ICICI Lombard General Insurance Company Limited
Disclosure of associates [line items]
Total carrying value																				$ 0.0		$ 371.1
Ownership percentage			9.90%																	0.00%	0.00%	34.60%
Fair value of associates																				$ 0.0		$ 878.0
Investments in associates																				0.0		371.1
Thai Re Public Company Limited
Disclosure of associates [line items]
Total carrying value																				$ 80.3		$ 94.7
Ownership percentage																				34.90%	34.90%	32.40%
Fair value of associates																				$ 80.5		$ 80.2
Investments in associates																				80.3		94.7
Go Digit Infoworks Services Private Limited
Disclosure of associates [line items]
Total carrying value																				$ 10.6
Ownership percentage																				45.30%	45.30%
Consideration paid																				$ 10.6	₨ 694.4
Fair value of associates																				10.6
Investments in associates																				10.6
Preferred equity instrument																				48.9			₨ 3,200.0
Farmers Edge Inc
Disclosure of associates [line items]
Total carrying value																				$ 88.1
Ownership percentage																				46.10%	46.10%
Consideration paid																$ 95.0
Fair value of associates																				$ 95.0
Investments in associates																				88.1
Astarta Holding N.V.
Disclosure of associates [line items]
Total carrying value																				$ 140.6
Ownership percentage																				28.10%	28.10%
Percentage of common shares acquired																		28.00%
Consideration paid																		$ 104.4	PLN 420.1
Fair value of associates																		15.7		$ 101.2
Investments in associates																		$ 120.1		140.6
Eurolife ERB Insurance Group Holdings S.A.
Disclosure of associates [line items]
Total carrying value																				$ 298.0		$ 150.6
Ownership percentage																				43.30%	43.30%	40.00%
Fair value of associates																				$ 303.0		$ 171.4
Investments in associates																				298.0		150.6
KWF Real Estate Ventures Limited Partnerships
Disclosure of associates [line items]
Total carrying value																				$ 213.4		$ 202.8
Ownership percentage																				0.00%	0.00%	0.00%
Fair value of associates																				$ 213.4		$ 202.8
Investments in associates																				213.4		202.8
APR Energy PLC
Disclosure of associates [line items]
Total carrying value																				$ 309.4		$ 187.3
Ownership percentage								67.90%												67.80%	67.80%	45.00%
Percentage of common shares acquired								22.90%
Consideration paid		$ 13.2						$ 109.0
Fair value of associates																				$ 336.4		$ 234.0
Investments in associates																				309.4		187.3
Resolute Forest Products Inc.
Disclosure of associates [line items]
Total carrying value																				$ 320.6		$ 304.5
Ownership percentage																				33.80%	33.80%	33.90%
Fair value of associates																				$ 334.0		$ 162.5
Investments in associates																				320.6		304.5
Performance Sports
Disclosure of associates [line items]
Ownership percentage																42.60%
Investments in associates																$ 153.5
Voting interest percentage																50.00%
Non-insurance associates
Disclosure of associates [line items]
Total carrying value																				2,945.3		1,693.0
Fair value of associates																				3,846.2		1,752.5
Investments in associates																				$ 1,776.0		1,452.5
Alltrust Insurance Company of China Ltd.
Disclosure of associates [line items]
Ownership percentage																				15.00%	15.00%
Investments in associates																				$ 81.2		76.1
Sigma Companies International Corp.
Disclosure of associates [line items]
Percentage of common shares acquired							81.20%
Consideration paid							$ 41.4
Bangalore International Airport Limited
Disclosure of associates [line items]
Total carrying value																				$ 611.1
Ownership percentage																				48.00%	48.00%
Fair value of associates																				$ 608.3
Investments in associates																				0.0
5paisa Capital Limited
Disclosure of associates [line items]
Total carrying value																				$ 26.8
Ownership percentage																				35.50%	35.50%
Fair value of associates																				$ 26.6
Investments in associates																				6.6				$ 26.4
Atlas Mara Limited
Disclosure of associates [line items]
Total carrying value																				$ 170.3
Ownership percentage																				43.30%	43.30%
Fair value of associates																				$ 168.7
Investments in associates																				0.0
AFGRI Proprietary Limited
Disclosure of associates [line items]
Total carrying value																				$ 49.5
Ownership percentage																				60.00%	60.00%
Fair value of associates																	$ 72.8			$ 119.0
Investments in associates																	$ 40.5			$ 0.0
Fairfax India | Bangalore International Airport Limited
Disclosure of associates [line items]
Ownership percentage									48.00%	48.00%
Percentage of common shares acquired									10.00%	10.00%				38.00%	38.00%
Consideration paid									$ 200.1	₨ 12,900.0				$ 385.5	₨ 25,200.0
Fairfax India | Fairchem Limited
Disclosure of associates [line items]
Percentage of common shares acquired																									44.70%
Fairfax Africa | Atlas Mara Limited
Disclosure of associates [line items]
Percentage of common shares acquired	0.90%					42.40%
Consideration paid	$ 2.4					$ 155.8
Minimum | KWF Real Estate Ventures Limited Partnerships
Disclosure of associates [line items]
Ownership percentage																				50.00%	50.00%
Maximum | KWF Real Estate Ventures Limited Partnerships
Disclosure of associates [line items]
Ownership percentage																				90.00%	90.00%
ICICI Lombard General Insurance Company Limited
Disclosure of associates [line items]
Ownership percentage			12.10%								12.20%									24.30%	24.30%
Proceeds from sales of interests in associates			$ 532.2								$ 376.3									$ 908.5
Net realized gains (losses)			$ 372.3								$ 223.3									595.6
Unrealized gain on securities, reclassified to realized gain																				334.5
Multiple voting shares | AFGRI Proprietary Limited
Disclosure of associates [line items]
Share acquired through exchange of indirect interest (in shares) | shares																	7,284,606
Share acquired through exchange of indirect interest (in dollars per share) | $ / shares																	$ 10.00
Investments accounted for using equity method | Thai Re Public Company Limited
Disclosure of associates [line items]
Non-cash impairment charge																				$ 17.7
Investments accounted for using equity method | Resolute Forest Products Inc.
Disclosure of associates [line items]
Non-cash impairment charge																						$ 100.4

XML

Investments in Associates - Associates Rollforward (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Schedule Of Associates [Roll Forward]
Share of profit of associates and joint arrangements	$ 200.5	$ 24.2
Purchases and acquisitions	1,026.5	735.3
Divestitures and other net changes in capitalization	1,014.9	45.8
Investments in associates
Schedule Of Associates [Roll Forward]
Balance - January 1	1,769.6	1,538.7
Share of profit of associates and joint arrangements	25.6	32.1
Share of other comprehensive income (loss), excluding gains (losses) on defined benefit plans	22.9	(24.9)
Share of gains (losses) on defined benefit plans	12.4	(43.5)
Share of pre-tax comprehensive income (loss) of associates and joint arrangements:	60.9	(36.3)
Distributions and dividends received from associates	(50.5)	(45.6)
Purchases and acquisitions	367.4	306.2
Divestitures and other net changes in capitalization	(290.5)	5.6
Reclassifications	(440.4)
Foreign exchange effect	20.5	1.0
Balance - December 31	1,437.0	1,769.6
Joint arrangements
Schedule Of Associates [Roll Forward]
Balance - January 1	623.4	191.5
Share of profit of associates and joint arrangements	128.2	(21.5)
Share of other comprehensive income (loss), excluding gains (losses) on defined benefit plans	46.4	(14.4)
Share of gains (losses) on defined benefit plans	0.0	0.0
Share of pre-tax comprehensive income (loss) of associates and joint arrangements:	174.6	(35.9)
Distributions and dividends received from associates	(57.0)	(47.8)
Purchases and acquisitions	301.6	528.4
Divestitures and other net changes in capitalization	(2.4)	(11.6)
Reclassifications	0.0
Foreign exchange effect	9.8	(1.2)
Balance - December 31	1,050.0	623.4
Fairfax Africa
Schedule Of Associates [Roll Forward]
Balance - January 1	0.0	0.0
Share of profit of associates and joint arrangements	1.2	0.0
Share of other comprehensive income (loss), excluding gains (losses) on defined benefit plans	(1.3)	0.0
Share of gains (losses) on defined benefit plans	0.0	0.0
Share of pre-tax comprehensive income (loss) of associates and joint arrangements:	(0.1)	0.0
Distributions and dividends received from associates	0.0	0.0
Purchases and acquisitions	219.9	0.0
Divestitures and other net changes in capitalization	0.0	0.0
Reclassifications	0.0
Foreign exchange effect	0.0	0.0
Balance - December 31	219.8	0.0
Fairfax India
Schedule Of Associates [Roll Forward]
Balance - January 1	240.5	202.7
Share of profit of associates and joint arrangements	45.5	13.6
Share of other comprehensive income (loss), excluding gains (losses) on defined benefit plans	(0.1)	0.0
Share of gains (losses) on defined benefit plans	(0.1)	0.0
Share of pre-tax comprehensive income (loss) of associates and joint arrangements:	45.3	13.6
Distributions and dividends received from associates	(26.8)	(4.6)
Purchases and acquisitions	682.9	20.5
Divestitures and other net changes in capitalization	(0.7)	13.7
Reclassifications	(20.4)
Foreign exchange effect	28.7	(5.4)
Balance - December 31	949.5	240.5
Associates
Schedule Of Associates [Roll Forward]
Balance - January 1	2,633.5	1,932.9
Share of profit of associates and joint arrangements	200.5	24.2
Share of other comprehensive income (loss), excluding gains (losses) on defined benefit plans	67.9	(39.3)
Share of gains (losses) on defined benefit plans	12.3	(43.5)
Share of pre-tax comprehensive income (loss) of associates and joint arrangements:	280.7	(58.6)
Distributions and dividends received from associates	(134.3)	(98.0)
Purchases and acquisitions	1,571.8	855.1
Divestitures and other net changes in capitalization	(293.6)	7.7
Reclassifications	(460.8)
Foreign exchange effect	59.0	(5.6)
Balance - December 31	$ 3,656.3	$ 2,633.5

XML

Short Sales and Derivatives - Financial Instruments (Details) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of financial assets [line items]
Notional amount	$ 6,396.9	$ 4,783.5
Market value	204.3	203.3
Short sale and derivative obligations, holding company	126.2	234.3
Equity index total return swaps – short positions
Disclosure of financial assets [line items]
Cost	0.0	0.0
Notional amount	52.6	43.3
Market value	0.4	0.6
Short sale and derivative obligations, holding company	0.0	0.0
Equity total return swaps – short positions
Disclosure of financial assets [line items]
Cost	0.0	0.0
Notional amount	892.5	1,623.0
Market value	11.8	10.4
Short sale and derivative obligations, holding company	12.1	78.1
Equity total return swaps – long positions
Disclosure of financial assets [line items]
Cost	0.0	0.0
Notional amount	697.8	213.1
Market value	17.8	9.4
Short sale and derivative obligations, holding company	15.6	5.1
Equity and equity index call options
Disclosure of financial assets [line items]
Cost	0.4	16.2
Notional amount	8.2	1,104.4
Market value	3.9	12.8
Short sale and derivative obligations, holding company	0.0	0.0
Warrants
Disclosure of financial assets [line items]
Cost	64.8	6.5
Notional amount	607.1	32.2
Market value	73.7	6.5
Short sale and derivative obligations, holding company	0.0	0.0
CPI-linked derivative contracts
Disclosure of financial assets [line items]
Cost	678.4	670.0
Notional amount	117,254.6	110,365.5
Market value	39.6	83.4
Short sale and derivative obligations, holding company	0.0	0.0
U.S. treasury bond forward contracts
Disclosure of financial assets [line items]
Cost	0.0	0.0
Notional amount	1,693.8	3,013.4
Market value	0.0	0.0
Short sale and derivative obligations, holding company	28.8	49.7
Foreign exchange forward contracts
Disclosure of financial assets [line items]
Cost	0.0	0.0
Notional amount	0.0	0.0
Market value	57.1	80.2
Short sale and derivative obligations, holding company	$ 69.7	$ 101.4

XML

Short Sales and Derivatives - Additional Information (Details) CAD in Millions, $ in Millions	2 Months Ended	3 Months Ended	12 Months Ended
	Mar. 09, 2018 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2017 CAD	Dec. 31, 2016 CAD
Disclosure of financial assets [line items]
Gains (losses) recognised in profit or loss attributable to change in unrealised gains or losses for assets held at end of period, fair value measurement			$ 612.2	$ (841.3)
Net gains (losses) on investments			1,467.5	(1,203.6)
Notional amount		$ 4,783.5	6,396.9	4,783.5
Assets pledged for short sale and derivative obligations, at cost		322.9	272.5	322.9
Financial Assets Pledged As Collateral For Liabilities Or Contingent Liabilities, Fair Value Changes		86.4	36.0	86.4
Financial Assets Pledged As Collateral For Liabilities Or Contingent Liabilities, Entering Derivative Contracts		236.5	236.5	236.5
Net realized gains (losses)			855.3	(362.3)
Financial assets pledged as liabilities		5,481.0	5,706.0	5,481.0
Losses on hedge of net investment in Canadian subsidiaries			106.3	37.5
Equity total return swaps – short positions
Disclosure of financial assets [line items]
Net cash paid (received) for derivative closures and reset provisions			485.6	915.8
Notional amount of derivatives settled		6,350.6	1,202.9	6,350.6
Net gains (losses) on investments			(237.9)	(955.2)
Realized loss on derivatives		2,665.4	553.1	2,665.4
Notional amount		1,623.0	892.5	1,623.0
Unrealized gain (loss)	$ (190.9)		(315.2)	(1,710.2)
S&P 500 - call options
Disclosure of financial assets [line items]
Notional amount of derivatives settled			1,100.0
Net gains (losses) on investments			10.1
Equity total return swaps – long positions, individual equities
Disclosure of financial assets [line items]
Notional amount		283.9	706.3	283.9
Equity total return swaps – long positions
Disclosure of financial assets [line items]
Net cash paid (received) for derivative closures and reset provisions			(21.6)	(10.4)
Notional amount		213.1	697.8	213.1
U.S. treasury bond forward contracts
Disclosure of financial assets [line items]
Notional amount		3,013.4	1,693.8	3,013.4
CPI-linked derivative contracts
Disclosure of financial assets [line items]
Notional amount		110,365.5	117,254.6	110,365.5
Unrealized gain (loss)			$ (638.8)	$ (586.6)
Average life (in years)			4 years 7 months 6 days	5 years 7 months 6 days
Hedges of net investment in foreign operations | Unsecured senior notes
Disclosure of financial assets [line items]
Borrowings | CAD					CAD 2,212.9	CAD 1,975.0
Borrowings at fair value		1,618.1	$ 1,868.6	$ 1,618.1
Other price risk | CPI-linked derivative contracts
Disclosure of financial assets [line items]
Gains (losses) recognised in profit or loss attributable to change in unrealised gains or losses for assets held at end of period, fair value measurement			$ (71.0)	$ (196.2)
Average life (in years)			4 years 7 months 6 days	5 years 7 months 6 days
Credit risk | Cash
Disclosure of financial assets [line items]
Financial assets pledged as liabilities		8.3	$ 3.6	$ 8.3
Credit risk | Government securities
Disclosure of financial assets [line items]
Financial assets pledged as liabilities		$ 54.4	$ 35.9	$ 54.4
Subsequent event | Equity total return swaps – short positions
Disclosure of financial assets [line items]
Notional amount of derivatives settled	481.3
Net gains (losses) on investments	(8.1)
Realized loss on derivatives	199.0
Notional amount	509.0
Unrealized gain (loss)	$ (190.9)

XML

Short Sales and Derivatives - Underlying CPI Index (Details) € in Millions, £ in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2017 USD ($) $ / derivative_unit	Dec. 31, 2016 USD ($) $ / derivative_unit	Dec. 31, 2017 GBP (£) $ / derivative_unit	Dec. 31, 2017 EUR (€) $ / derivative_unit	Dec. 31, 2016 GBP (£) $ / derivative_unit	Dec. 31, 2016 EUR (€) $ / derivative_unit
Disclosure of financial assets [line items]
Notional amount	$ 6,396.9	$ 4,783.5
Market value	$ 204.3	$ 203.3
CPI-linked derivative contracts
Disclosure of financial assets [line items]
Average life (in years)	4 years 7 months 6 days	5 years 7 months 6 days
Notional amount	$ 117,254.6	$ 110,365.5
Cost	678.4	670.0
Market value	39.6	83.4
Unrealized gain (loss)	$ (638.8)	$ (586.6)
United States | CPI-linked derivative contracts
Disclosure of financial assets [line items]
Floor rate	0.50%		0.50%	0.50%
Weighted average index value or strike price (usd per unit) | $ / derivative_unit	242.20	241.00	242.20	242.20	241.00	241.00
United States, 1 | CPI-linked derivative contracts
Disclosure of financial assets [line items]
Floor rate	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%
Average life (in years)	4 years 8 months 12 days	5 years 8 months 12 days
Notional amount	$ 46,725.0	$ 46,725.0
Weighted average index value or strike price (usd per unit) | $ / derivative_unit	231.39	231.39	231.39	231.39	231.39	231.39
Index value at period end (usd per unit) | $ / derivative_unit	246.52	241.43	246.52	246.52	241.43	241.43
Cost	$ 287.5	$ 286.9
Cost (in bps)	0.615%	0.614%	0.615%	0.615%	0.614%	0.614%
Market value	$ 20.6	$ 35.2
Market value (in bps)	0.044%	0.075%	0.044%	0.044%	0.075%	0.075%
Unrealized gain (loss)	$ (266.9)	$ (251.7)
United States, 2 | CPI-linked derivative contracts
Disclosure of financial assets [line items]
Floor rate	0.50%	0.50%	0.50%	0.50%	0.50%	0.50%
Average life (in years)	6 years 9 months 18 days	7 years 9 months 18 days
Notional amount	$ 12,600.0	$ 12,600.0
Weighted average index value or strike price (usd per unit) | $ / derivative_unit	238.30	238.30	238.30	238.30	238.30	238.30
Index value at period end (usd per unit) | $ / derivative_unit	246.52	241.43	246.52	246.52	241.43	241.43
Cost	$ 39.9	$ 39.5
Cost (in bps)	0.317%	0.313%	0.317%	0.317%	0.313%	0.313%
Market value	$ 17.2	$ 34.3
Market value (in bps)	0.137%	0.272%	0.137%	0.137%	0.272%	0.272%
Unrealized gain (loss)	$ (22.7)	$ (5.2)
European Union | CPI-linked derivative contracts
Disclosure of financial assets [line items]
Floor rate	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%
Average life (in years)	4 years	5 years
Notional amount	$ 49,683.0	$ 43,640.4		€ 41,375.0		€ 41,375.0
Weighted average index value or strike price (usd per unit) | $ / derivative_unit	96.09	96.09	96.09	96.09	96.09	96.09
Index value at period end (usd per unit) | $ / derivative_unit	102.57	101.26	102.57	102.57	101.26	101.26
Cost	$ 307.1	$ 300.3
Cost (in bps)	0.618%	0.688%	0.618%	0.618%	0.688%	0.688%
Market value	$ 1.4	$ 12.5
Market value (in bps)	0.003%	0.029%	0.003%	0.003%	0.029%	0.029%
Unrealized gain (loss)	$ (305.7)	$ (287.8)
United Kingdom | CPI-linked derivative contracts
Disclosure of financial assets [line items]
Floor rate	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%
Average life (in years)	4 years 10 months 24 days	5 years 10 months 24 days
Notional amount	$ 4,464.1	$ 4,077.6	£ 3,300.0		£ 3,300.0
Weighted average index value or strike price (usd per unit) | $ / derivative_unit	243.82	243.82	243.82	243.82	243.82	243.82
Index value at period end (usd per unit) | $ / derivative_unit	278.10	267.10	278.10	278.10	267.10	267.10
Cost	$ 23.2	$ 22.6
Cost (in bps)	0.52%	0.554%	0.52%	0.52%	0.554%	0.554%
Market value	$ 0.3	$ 0.5
Market value (in bps)	0.007%	0.012%	0.007%	0.007%	0.012%	0.012%
Unrealized gain (loss)	$ (22.9)	$ (22.1)
France | CPI-linked derivative contracts
Disclosure of financial assets [line items]
Floor rate	0.00%	0.00%	0.00%	0.00%	0.00%	0.00%
Average life (in years)	5 years 1 month 6 days	6 years 1 month 6 days
Notional amount	$ 3,782.5	$ 3,322.5		€ 3,150.0		€ 3,150.0
Weighted average index value or strike price (usd per unit) | $ / derivative_unit	99.27	99.27	99.27	99.27	99.27	99.27
Index value at period end (usd per unit) | $ / derivative_unit	101.76	100.66	101.76	101.76	100.66	100.66
Cost	$ 20.7	$ 20.7
Cost (in bps)	0.547%	0.623%	0.547%	0.547%	0.623%	0.623%
Market value	$ 0.1	$ 0.9
Market value (in bps)	0.003%	0.027%	0.003%	0.003%	0.027%	0.027%
Unrealized gain (loss)	$ (20.6)	$ (19.8)
Payout At Maturity Scenario 1
Disclosure of financial assets [line items]
Floor rate	0.00%		0.00%	0.00%
Payout At Maturity Scenario 2
Disclosure of financial assets [line items]
Floor rate	0.50%		0.50%	0.50%
Weighted average index value or strike price (usd per unit) | $ / derivative_unit	250.49		250.49	250.49

XML

Insurance Contract Liabilities (Details) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009	Dec. 31, 2008
Disclosure of net, gross and reinsurer's share for amounts arising from insurance contracts [line items]
Provision for unearned premiums	$ 5,951.7	$ 3,740.4	$ 3,284.8
Provision for losses and loss adjustment expenses	28,610.8	19,481.8	$ 19,816.4	$ 17,749.1	$ 19,212.8	$ 19,648.8	$ 17,232.2	$ 16,049.3	$ 14,504.8	$ 14,467.2
Total insurance contract liabilities	34,562.5	23,222.2
Total insurance contract liabilities, Current	13,405.0	9,013.9
Total ceded insurance contract liabilities, Current	2,975.9	1,586.8
Total insurance contract liabilities, net, Current	10,429.1	7,427.1
Total insurance contract liabilities, Non-current	21,157.5	14,208.3
Total ceded insurance contract liabilities, Non-current	4,382.8	2,132.6
Total insurance contract liabilities, net, Non-current	16,774.7	12,075.7
Total insurance contract liabilities, Ceded	7,358.7	3,719.4
Total insurance contract liabilities, Net	27,203.8	19,502.8
Gross
Disclosure of net, gross and reinsurer's share for amounts arising from insurance contracts [line items]
Provision for unearned premiums	5,951.7	3,740.4
Provision for losses and loss adjustment expenses	28,610.8	19,481.8
Total insurance contract liabilities	34,562.5	23,222.2
Ceded
Disclosure of net, gross and reinsurer's share for amounts arising from insurance contracts [line items]
Provision for unearned premiums	1,169.0	539.8
Provision for losses and loss adjustment expenses	6,189.7	3,179.6
Total insurance contract liabilities	7,358.7	3,719.4
Net
Disclosure of net, gross and reinsurer's share for amounts arising from insurance contracts [line items]
Provision for unearned premiums	4,782.7	3,200.6
Provision for losses and loss adjustment expenses	22,421.1	16,302.2
Total insurance contract liabilities	$ 27,203.8	$ 19,502.8

XML

Insurance Contract Liabilities - Additional Information (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009	Dec. 31, 2008	Dec. 31, 2017
Disclosure of net, gross and reinsurer's share for amounts arising from insurance contracts [line items]
Provision for losses and loss adjustment expenses	$ 19,481.8	$ 19,816.4	$ 17,749.1	$ 19,212.8	$ 19,648.8	$ 17,232.2	$ 16,049.3	$ 14,504.8	$ 14,467.2	$ 28,610.8
Net loss reserves, case reserves	7,537.2									9,731.5
Net loss reserves, IBNR	8,765.0									12,689.6
Loss reserve development	331.6	$ 1,080.9	$ 1,371.4	$ 1,431.7	$ 1,222.1	$ 611.1	$ 507.7	$ (349.0)	$ (481.4)
Net
Disclosure of net, gross and reinsurer's share for amounts arising from insurance contracts [line items]
Provision for losses and loss adjustment expenses	$ 16,302.2									$ 22,421.1

XML

Insurance Contract Liabilities - Provision For Unearned Premiums (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Change In Unearned Premiums [Roll Forward]
Provision for unearned premiums – January 1	$ 3,740.4	$ 3,284.8
Gross premiums written	12,207.5	9,534.3
Less: gross premiums earned	(11,822.0)	(9,209.7)
Acquisitions of subsidiaries (note 23)	1,906.2	111.1
Divestiture of subsidiary (note 23)	(157.9)	0.0
Foreign exchange effect and other	77.5	19.9
Provision for unearned premiums - December 31	$ 5,951.7	$ 3,740.4

XML

Insurance Contract Liabilities - Provision For Loss And Loss Adjustment Expenses (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Provision For Loss On Insurance Contracts [Roll Forward]
Provision for losses and loss adjustment expenses – January 1	$ 19,481.8	$ 19,816.4
Decrease in estimated losses and expenses for claims occurring in the prior years	(218.8)	(559.8)
Losses and expenses for claims occurring in the current year	9,736.5	6,247.8
Paid on claims occurring during:
the current year	(2,263.9)	(1,595.6)
the prior years	(5,526.0)	(4,441.8)
Acquisitions of subsidiaries (note 23)	7,377.6	143.1
Divestiture of subsidiary (note 23)	(546.6)	0.0
Foreign exchange effect and other	570.2	(128.3)
Provision for losses and loss adjustment expenses – December 31	$ 28,610.8	$ 19,481.8

XML

Insurance Contract Liabilities - Development Of Insurance Losses (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009	Dec. 31, 2008	Dec. 31, 2017
Disclosure of types of insurance contracts [line items]
Provision for losses and loss adjustment expenses	$ 19,481.8	$ 19,816.4	$ 17,749.1	$ 19,212.8	$ 19,648.8	$ 17,232.2	$ 16,049.3	$ 14,504.8	$ 14,467.2	$ 28,610.8
Less: CTR Life	12.8	14.2	15.2	17.9	20.6	24.2	25.3	27.6	34.9	8.7
Provision for losses and loss adjustment expenses, net of CTR Life	19,469.0	19,802.2	17,733.9	19,194.9	19,628.2	17,208.0	16,024.0	14,477.2	14,432.3	$ 28,602.1
Effect of foreign currency translation	(205.7)	(252.3)	248.5	476.0	575.6	265.1	264.2	82.0	(317.7)
Loss reserve development	331.6	1,080.9	1,371.4	1,431.7	1,222.1	611.1	507.7	(349.0)	(481.4)
Favourable (unfavourable) development	125.9	828.6	1,619.9	1,907.7	1,797.7	876.2	771.9	(267.0)	(799.1)
One year later
Disclosure of types of insurance contracts [line items]
Cumulative payments	4,608.0	4,441.4	3,801.6	0.0	0.0	3,627.6	3,355.9	3,126.6	3,136.0
Reserves re-estimated	$ 19,343.1	19,169.3	16,696.4	18,375.6	19,021.2	17,316.4	15,893.8	14,616.0	14,746.0
Two years later
Disclosure of types of insurance contracts [line items]
Cumulative payments		7,283.6	6,364.5	6,787.6	7,153.1	0.0	5,441.4	5,307.6	5,336.4
Reserves re-estimated		$ 18,973.6	16,269.2	17,475.0	18,529.4	17,013.6	15,959.7	14,726.6	14,844.4
Three years later
Disclosure of types of insurance contracts [line items]
Cumulative payments			8,172.7	8,775.5	9,148.0	7,920.3	0.0	6,846.3	7,070.7
Reserves re-estimated			$ 16,114.0	17,307.9	17,820.5	16,721.0	15,705.6	14,921.6	14,912.4
Four years later
Disclosure of types of insurance contracts [line items]
Cumulative payments				10,212.4	10,702.8	9,333.4	8,333.3	0.0	8,318.7
Reserves re-estimated				$ 17,287.2	17,735.5	16,233.9	15,430.4	14,828.9	15,127.5
Five years later
Disclosure of types of insurance contracts [line items]
Cumulative payments					11,783.3	10,458.7	9,327.0	8,936.9	0.0
Reserves re-estimated					$ 17,830.5	16,269.6	15,036.2	14,663.1	15,091.0
Six years later
Disclosure of types of insurance contracts [line items]
Cumulative payments						11,263.6	10,202.6	9,721.1	10,039.4
Reserves re-estimated						$ 16,331.8	15,099.0	14,433.0	15,011.7
Seven years later
Disclosure of types of insurance contracts [line items]
Cumulative payments							10,823.4	10,456.1	10,705.5
Reserves re-estimated							$ 15,252.1	14,551.5	14,873.6
Eight years later
Disclosure of types of insurance contracts [line items]
Cumulative payments								10,975.6	11,379.9
Reserves re-estimated								$ 14,744.2	15,028.8
Nine years later
Disclosure of types of insurance contracts [line items]
Cumulative payments									11,857.8
Reserves re-estimated									$ 15,231.4

XML

Insurance Contract Liabilities - Provision For Loss And Loss Adjustment Expenses - Asbestos (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Gross
Provision for asbestos claims and loss adjustment expenses - January 1	$ 1,347.7	$ 1,381.0
Losses and loss adjustment expenses incurred	153.0	219.9
Losses and loss adjustment expenses paid	(208.6)	(253.2)
Provision for asbestos claims and loss adjustment expenses - December 31	1,292.1	1,347.7
Net
Provision for asbestos claims and loss adjustment expenses - January 1	1,065.5	1,043.8
Losses and loss adjustment expenses incurred	141.8	218.7
Losses and loss adjustment expenses paid	(174.0)	(197.0)
Provision for asbestos claims and loss adjustment expenses - December 31	$ 1,033.3	$ 1,065.5

XML

Insurance Contract Liabilities - Fair Value/Change In Interest Rates (Details) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of types of insurance contracts [line items]
Carrying value	$ 34,562.5	$ 23,222.2
Insurance contracts
Disclosure of types of insurance contracts [line items]
Fair value	33,807.2	22,598.3
Carrying value	34,562.5	23,222.2
Ceded reinsurance contracts
Disclosure of types of insurance contracts [line items]
Fair value	6,948.7	3,501.3
Carrying value	7,358.7	3,719.4
100 basis point increase | Insurance contracts
Disclosure of types of insurance contracts [line items]
Fair value	32,820.7	21,973.4
100 basis point increase | Ceded reinsurance contracts
Disclosure of types of insurance contracts [line items]
Fair value	6,764.1	3,425.7
100 basis point decrease | Insurance contracts
Disclosure of types of insurance contracts [line items]
Fair value	34,877.5	23,274.9
100 basis point decrease | Ceded reinsurance contracts
Disclosure of types of insurance contracts [line items]
Fair value	$ 7,147.6	$ 3,582.4

XML

Reinsurance - Reinsurers' Share of Insurance Contract Liabilities (Details) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of net, gross and reinsurer's share for amounts arising from insurance contracts [line items]
Assets under reinsurance ceded	$ 7,812.5
Ceded reinsurance contracts
Disclosure of net, gross and reinsurer's share for amounts arising from insurance contracts [line items]
Provision for losses and loss adjustment expenses	6,189.7	$ 3,179.6
Reinsurers’ share of paid losses	453.8	290.9
Provision for unearned premiums	1,169.0	539.8
Assets under reinsurance ceded	7,812.5	4,010.3	$ 3,890.9
Recoverable from reinsurers, current	3,418.6	1,846.6
Recoverable from reinsurers, non-current	4,393.9	2,163.7
Gross recoverable from reinsurers | Ceded reinsurance contracts
Disclosure of net, gross and reinsurer's share for amounts arising from insurance contracts [line items]
Provision for losses and loss adjustment expenses	6,216.2	3,210.0
Reinsurers’ share of paid losses	593.7	432.2
Provision for unearned premiums	1,169.0	539.8
Assets under reinsurance ceded	7,978.9	4,182.0
Provision for uncollectible reinsurance | Ceded reinsurance contracts
Disclosure of net, gross and reinsurer's share for amounts arising from insurance contracts [line items]
Provision for losses and loss adjustment expenses	(26.5)	(30.4)
Reinsurers’ share of paid losses	(139.9)	(141.3)
Provision for unearned premiums	0.0	0.0
Assets under reinsurance ceded	$ (166.4)	$ (171.7)	$ (187.0)

XML

Reinsurance - Reinsurers' Share of Paid Losses, Unpaid Losses, Unearned Premiums and the Provision (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Changes In Reinsurance Recoverables [Roll Forward]
Reinsurance recoverables, ending balance	$ 7,812.5
Ceded reinsurance contracts
Changes In Reinsurance Recoverables [Roll Forward]
Reinsurance recoverables, beginning balance	4,010.3	$ 3,890.9
Reinsurers’ share of losses paid to insureds	0.0	0.0
Reinsurance recoveries received	(1,314.0)	(1,017.4)
Reinsurers’ share of unpaid losses and premiums earned	266.5	(395.4)
Premiums ceded to reinsurers	2,224.0	1,445.9
Change in provision, recovery or write-off of impaired balances	7.7	4.9
Acquisitions of subsidiaries (note 23)	2,863.9	108.8
Divestiture of subsidiary (note 23)	(353.5)
Foreign exchange effect and other	107.6	(27.4)
Reinsurance recoverables, ending balance	7,812.5	4,010.3
Commission income on premiums ceded	347.1	267.4
Ceded reinsurance contracts | Paid losses
Changes In Reinsurance Recoverables [Roll Forward]
Reinsurance recoverables, beginning balance	432.2	419.4
Reinsurers’ share of losses paid to insureds	1,330.7	1,018.3
Reinsurance recoveries received	(1,314.0)	(1,017.4)
Reinsurers’ share of unpaid losses and premiums earned	0.0	0.0
Premiums ceded to reinsurers	0.0	0.0
Change in provision, recovery or write-off of impaired balances	(0.2)	0.7
Acquisitions of subsidiaries (note 23)	162.7	11.5
Divestiture of subsidiary (note 23)	(29.0)
Foreign exchange effect and other	11.3	(0.3)
Reinsurance recoverables, ending balance	593.7	432.2
Ceded reinsurance contracts | Unpaid losses
Changes In Reinsurance Recoverables [Roll Forward]
Reinsurance recoverables, beginning balance	3,210.0	3,259.8
Reinsurers’ share of losses paid to insureds	(1,330.7)	(1,018.3)
Reinsurance recoveries received	0.0	0.0
Reinsurers’ share of unpaid losses and premiums earned	2,367.1	952.1
Premiums ceded to reinsurers	0.0	0.0
Change in provision, recovery or write-off of impaired balances	0.7	(11.3)
Acquisitions of subsidiaries (note 23)	2,115.2	65.0
Divestiture of subsidiary (note 23)	(237.8)
Foreign exchange effect and other	91.7	(37.3)
Reinsurance recoverables, ending balance	6,216.2	3,210.0
Ceded reinsurance contracts | Unearned premiums
Changes In Reinsurance Recoverables [Roll Forward]
Reinsurance recoverables, beginning balance	539.8	398.7
Reinsurers’ share of losses paid to insureds	0.0	0.0
Reinsurance recoveries received	0.0	0.0
Reinsurers’ share of unpaid losses and premiums earned	(2,100.6)	(1,347.5)
Premiums ceded to reinsurers	2,224.0	1,445.9
Change in provision, recovery or write-off of impaired balances	0.0	0.0
Acquisitions of subsidiaries (note 23)	586.0	32.3
Divestiture of subsidiary (note 23)	(86.8)
Foreign exchange effect and other	6.6	10.4
Reinsurance recoverables, ending balance	1,169.0	539.8
Ceded reinsurance contracts | Provision for uncollectible reinsurance
Changes In Reinsurance Recoverables [Roll Forward]
Reinsurance recoverables, beginning balance	(171.7)	(187.0)
Reinsurers’ share of losses paid to insureds	0.0	0.0
Reinsurance recoveries received	0.0	0.0
Reinsurers’ share of unpaid losses and premiums earned	0.0	0.0
Premiums ceded to reinsurers	0.0	0.0
Change in provision, recovery or write-off of impaired balances	7.2	15.5
Acquisitions of subsidiaries (note 23)	0.0	0.0
Divestiture of subsidiary (note 23)	0.1
Foreign exchange effect and other	(2.0)	(0.2)
Reinsurance recoverables, ending balance	$ (166.4)	$ (171.7)

XML

Insurance Contract Receivables - Insurance Contract Receivables (Details) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Insurance Contracts [Abstract]
Insurance premiums receivable	$ 2,752.3	$ 1,906.2	$ 1,677.1
Reinsurance premiums receivable	1,086.4	788.8	$ 659.5
Funds withheld receivable	659.8	181.8
Other	218.7	68.3
Provision for uncollectible balances	(30.3)	(27.6)
Insurance contract receivables	$ 4,686.9	$ 2,917.5

XML

Insurance Contract Receivables - Changes in Insurance Contract Receivables (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Insurance premiums receivable
Insurance premiums receivable, beginning balance	$ 1,906.2	$ 1,677.1
Gross premiums written	9,329.9	6,930.2
Premiums collected	(8,075.2)	(6,050.5)
Recovery (impairments)	0.5	(1.6)
Amounts due to brokers and agents	(932.3)	(707.8)
Acquisitions of subsidiaries (note 23)	604.1	54.7
Divestiture of subsidiary (note 23)	(64.7)	0.0
Foreign exchange effect and other	(16.2)	4.1
Insurance premiums receivable, ending balance	2,752.3	1,906.2
Reinsurance premiums receivable
Reinsurance premiums receivable, beginning balance	788.8	659.5
Gross premiums written	2,877.6	2,604.1
Premiums collected	(2,323.3)	(1,876.5)
Recovery (impairments)	(0.7)	(1.2)
Amounts due to brokers and agents	(686.4)	(581.2)
Acquisitions of subsidiaries (note 23)	445.2	0.8
Divestiture of subsidiary (note 23)	(48.5)	0.0
Foreign exchange effect and other	33.7	(16.7)
Reinsurance premiums receivable, ending balance	$ 1,086.4	$ 788.8

XML

Deferred Premium Acquisition Costs (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Reconciliation of changes in deferred acquisition costs arising from insurance contracts [abstract]
Deferred premium acquisition costs, beginning balance	$ 693.1	$ 532.7
Premium acquisition costs deferred	2,380.2	1,851.1
Amortization	(2,140.7)	(1,696.2)
Divestiture of subsidiary (note 23)	(15.8)	0.0
Foreign exchange effect and other	10.7	5.5
Deferred premium acquisition costs, ending balance	$ 927.5	$ 693.1

XML

Goodwill and Intangible Assets - Schedule of Changes in Goodwill and Intangible Assets (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	$ 3,847.5	$ 3,214.9
Additions	2,232.9	734.1
Disposals	(1.9)	(0.1)
Amortization and impairment	(159.5)	(111.2)
Foreign exchange effect and other	153.5	9.8
Intangible assets and goodwill, ending balance	6,072.5	3,847.5
Gross carrying amount
Disclosure of reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	4,253.7
Intangible assets and goodwill, ending balance	6,625.5	4,253.7
Accumulated amortization
Disclosure of reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	(384.5)
Intangible assets and goodwill, ending balance	(530.4)	(384.5)
Accumulated impairment
Disclosure of reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	(21.7)
Intangible assets and goodwill, ending balance	(22.6)	(21.7)
Goodwill
Disclosure of reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	1,633.7	1,428.2
Additions	1,212.3	216.0
Disposals	(1.7)	0.0
Impairment	(0.1)	(7.0)
Foreign exchange effect and other	60.5	(3.5)
Intangible assets and goodwill, ending balance	2,904.7	1,633.7
Goodwill | Gross carrying amount
Disclosure of reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	1,640.7
Intangible assets and goodwill, ending balance	2,911.8	1,640.7
Goodwill | Accumulated amortization
Disclosure of reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	0.0
Intangible assets and goodwill, ending balance	0.0	0.0
Goodwill | Accumulated impairment
Disclosure of reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	(7.0)
Intangible assets and goodwill, ending balance	(7.1)	(7.0)
Lloyd's participation rights
Disclosure of reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	420.5	420.5
Additions	87.4	0.0
Disposals	0.0	0.0
Impairment	0.0	0.0
Foreign exchange effect and other	0.0	0.0
Intangible assets and goodwill, ending balance	507.9	420.5
Lloyd's participation rights | Gross carrying amount
Disclosure of reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	420.5
Intangible assets and goodwill, ending balance	507.9	420.5
Lloyd's participation rights | Accumulated amortization
Disclosure of reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	0.0
Intangible assets and goodwill, ending balance	0.0	0.0
Lloyd's participation rights | Accumulated impairment
Disclosure of reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	0.0
Intangible assets and goodwill, ending balance	0.0	0.0
Customer and broker relationships
Disclosure of reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	431.8	385.6
Additions	672.8	73.8
Disposals	0.0	0.0
Amortization	(67.9)	(35.3)
Foreign exchange effect and other	11.1	7.7
Intangible assets and goodwill, ending balance	1,047.8	431.8
Customer and broker relationships | Gross carrying amount
Disclosure of reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	578.6
Intangible assets and goodwill, ending balance	1,266.7	578.6
Customer and broker relationships | Accumulated amortization
Disclosure of reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	(146.8)
Intangible assets and goodwill, ending balance	(218.9)	(146.8)
Customer and broker relationships | Accumulated impairment
Disclosure of reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	0.0
Intangible assets and goodwill, ending balance	0.0	0.0
Brand names
Disclosure of reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	1,014.4	723.3
Additions	87.5	280.9
Disposals	0.0	0.0
Impairment	0.0	0.0
Foreign exchange effect and other	69.5	10.2
Intangible assets and goodwill, ending balance	1,171.4	1,014.4
Brand names | Gross carrying amount
Disclosure of reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	1,014.4
Intangible assets and goodwill, ending balance	1,171.4	1,014.4
Brand names | Accumulated amortization
Disclosure of reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	0.0
Intangible assets and goodwill, ending balance	0.0	0.0
Brand names | Accumulated impairment
Disclosure of reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	0.0
Intangible assets and goodwill, ending balance	0.0	0.0
Computer software and other
Disclosure of reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	347.1	257.3
Additions	172.9	163.4
Disposals	(0.2)	(0.1)
Amortization	(91.5)	(68.9)
Foreign exchange effect and other	12.4	(4.6)
Intangible assets and goodwill, ending balance	440.7	347.1
Computer software and other | Gross carrying amount
Disclosure of reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	599.5
Intangible assets and goodwill, ending balance	767.7	599.5
Computer software and other | Accumulated amortization
Disclosure of reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	(237.7)
Intangible assets and goodwill, ending balance	(311.5)	(237.7)
Computer software and other | Accumulated impairment
Disclosure of reconciliation of changes in intangible assets and goodwill [abstract]
Intangible assets and goodwill, beginning balance	(14.7)
Intangible assets and goodwill, ending balance	$ (15.5)	$ (14.7)

XML

Other Assets (Details) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of operating segments [line items]
Premises and equipment	$ 1,250.3	$ 891.5
Other reporting segment investment properties (note 23)	1,168.4	0.0
Other reporting segment sales receivables	470.0	295.2
Other reporting segment inventories	320.7	235.5
Receivables for securities sold but not yet settled	207.3	42.1
Prepaid expenses	186.2	124.1
Income taxes refundable	147.0	202.7
Accrued interest and dividends	121.4	106.8
Deferred compensation plans	67.1	63.4
Pension surplus (note 21)	49.1	50.8
Other	840.8	506.3
Current	1,857.5	1,280.4
Non-current	2,970.8	1,238.0
Other assets	4,828.3	2,518.4
Insurance and reinsurance companies
Disclosure of operating segments [line items]
Premises and equipment	403.0	251.9
Other reporting segment investment properties (note 23)	0.0	0.0
Other reporting segment sales receivables	0.0	0.0
Other reporting segment inventories	0.0	0.0
Receivables for securities sold but not yet settled	207.3	15.6
Prepaid expenses	83.7	59.7
Income taxes refundable	83.1	174.7
Accrued interest and dividends	105.2	97.3
Deferred compensation plans	67.1	63.4
Pension surplus (note 21)	49.1	50.8
Other	565.5	307.3
Current	788.5	487.5
Non-current	775.5	533.2
Other assets	1,564.0	1,020.7
Non-insurance companies
Disclosure of operating segments [line items]
Premises and equipment	847.3	639.6
Other reporting segment investment properties (note 23)	1,168.4	0.0
Other reporting segment sales receivables	470.0	295.2
Other reporting segment inventories	320.7	235.5
Receivables for securities sold but not yet settled	0.0	26.5
Prepaid expenses	102.5	64.4
Income taxes refundable	63.9	28.0
Accrued interest and dividends	16.2	9.5
Deferred compensation plans	0.0	0.0
Pension surplus (note 21)	0.0	0.0
Other	275.3	199.0
Current	1,069.0	792.9
Non-current	2,195.3	704.8
Other assets	$ 3,264.3	$ 1,497.7

XML

Goodwill and Intangible Assets - Allocation of Goodwill and Intangible Assets (Details) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of information for cash-generating units [line items]
Goodwill	$ 2,904.7	$ 1,633.7
Intangible assets	3,167.8	2,213.8
Total	6,072.5	3,847.5	$ 3,214.9
Allied World
Disclosure of information for cash-generating units [line items]
Goodwill	938.9	0.0
Intangible assets	763.7	0.0
Total	1,702.6	0.0
Cara
Disclosure of information for cash-generating units [line items]
Goodwill	222.3	211.5
Intangible assets	1,073.6	990.3
Total	1,295.9	1,201.8
Brit
Disclosure of information for cash-generating units [line items]
Goodwill	154.3	154.3
Intangible assets	571.3	576.6
Total	725.6	730.9
Zenith National
Disclosure of information for cash-generating units [line items]
Goodwill	317.6	317.6
Intangible assets	115.5	121.4
Total	433.1	439.0
Crum & Forster
Disclosure of information for cash-generating units [line items]
Goodwill	188.8	186.5
Intangible assets	129.4	145.1
Total	318.2	331.6
Quess
Disclosure of information for cash-generating units [line items]
Goodwill	229.0	23.7
Intangible assets	21.8	18.5
Total	250.8	42.2
Thomas Cook India
Disclosure of information for cash-generating units [line items]
Goodwill	150.0	115.3
Intangible assets	54.2	50.1
Total	204.2	165.4
Northbridge
Disclosure of information for cash-generating units [line items]
Goodwill	95.7	88.3
Intangible assets	77.1	64.5
Total	172.8	152.8
OdysseyRe
Disclosure of information for cash-generating units [line items]
Goodwill	119.7	119.7
Intangible assets	51.6	55.2
Total	171.3	174.9
AMAG
Disclosure of information for cash-generating units [line items]
Goodwill	44.7	72.6
Intangible assets	110.2	63.0
Total	154.9	135.6
All other
Disclosure of information for cash-generating units [line items]
Goodwill	443.7	344.2
Intangible assets	199.4	129.1
Total	$ 643.1	$ 473.3

XML

Goodwill and Intangible Assets - Additional Information (Details)	12 Months Ended
	Dec. 31, 2017 USD ($)
Disclosure of information for cash-generating units [line items]
Impairment loss recognized in earnings, intangible assets	$ 0
Investment return rate	5.00%
Growth rate used to extrapolate cash flow projections	3.00%
Insurance business | Bottom of range
Disclosure of information for cash-generating units [line items]
Discount rate applied to cash flow projections	7.80%
Insurance business | Top of range
Disclosure of information for cash-generating units [line items]
Discount rate applied to cash flow projections	15.40%
Non-insurance business | Bottom of range
Disclosure of information for cash-generating units [line items]
Discount rate applied to cash flow projections	9.20%
Non-insurance business | Top of range
Disclosure of information for cash-generating units [line items]
Discount rate applied to cash flow projections	21.30%

XML

Accounts Payable and Accrued Liabilities (Details) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Accounts Payable And Accrued Liabilities [Line Items]
Other reporting segment payables related to cost of sales	$ 530.8	$ 416.7
Payable to reinsurers	428.2	498.3
Salaries and employee benefit liabilities	374.1	249.5
Deferred gift card, hospitality and other revenue	322.0	284.3
Pension and post retirement liabilities (note 21)	250.8	216.9
Amounts withheld and accrued taxes	248.6	218.2
Ceded deferred premium acquisition costs	161.4	84.7
Accrued rent, storage and facilities costs	92.8	64.8
Amounts payable to agents and brokers	90.5	30.6
Accrued commissions	80.2	85.4
Accrued premium taxes	66.6	55.2
Accrued interest expense	51.4	43.5
Accrued legal and professional fees	48.4	38.1
Amounts payable for securities purchased but not yet settled	18.2	14.4
Administrative and other	865.5	588.0
Accounts payable and accrued liabilities	3,629.5	2,888.6
Current	2,449.4	1,945.5
Non-current	1,180.1	943.1
Insurance and reinsurance companies
Accounts Payable And Accrued Liabilities [Line Items]
Other reporting segment payables related to cost of sales	0.0	0.0
Payable to reinsurers	428.2	498.3
Salaries and employee benefit liabilities	296.8	218.3
Deferred gift card, hospitality and other revenue	27.3	20.9
Pension and post retirement liabilities (note 21)	227.1	196.2
Amounts withheld and accrued taxes	205.2	169.7
Ceded deferred premium acquisition costs	161.4	84.7
Accrued rent, storage and facilities costs	33.1	17.1
Amounts payable to agents and brokers	90.4	30.5
Accrued commissions	79.8	85.4
Accrued premium taxes	66.6	55.2
Accrued interest expense	48.0	41.4
Accrued legal and professional fees	37.7	29.6
Amounts payable for securities purchased but not yet settled	18.2	14.4
Administrative and other	621.7	453.3
Accounts payable and accrued liabilities	2,341.5	1,915.0
Current	1,429.7	1,174.7
Non-current	911.8	740.3
Non-insurance companies
Accounts Payable And Accrued Liabilities [Line Items]
Other reporting segment payables related to cost of sales	530.8	416.7
Payable to reinsurers	0.0	0.0
Salaries and employee benefit liabilities	77.3	31.2
Deferred gift card, hospitality and other revenue	294.7	263.4
Pension and post retirement liabilities (note 21)	23.7	20.7
Amounts withheld and accrued taxes	43.4	48.5
Ceded deferred premium acquisition costs	0.0	0.0
Accrued rent, storage and facilities costs	59.7	47.7
Amounts payable to agents and brokers	0.1	0.1
Accrued commissions	0.4	0.0
Accrued premium taxes	0.0	0.0
Accrued interest expense	3.4	2.1
Accrued legal and professional fees	10.7	8.5
Amounts payable for securities purchased but not yet settled	0.0	0.0
Administrative and other	243.8	134.7
Accounts payable and accrued liabilities	1,288.0	973.6
Current	1,019.7	770.8
Non-current	$ 268.3	$ 202.8

XML

Borrowings - Schedule of Borrowings (Details) $ in Millions	Dec. 31, 2017 USD ($)	Dec. 31, 2017 GBP (£)	Dec. 31, 2017 CAD	Dec. 29, 2017 CAD	Dec. 04, 2017 CAD	Aug. 31, 2017 USD ($)	Jul. 11, 2017 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)
Disclosure of detailed information about borrowings [line items]
Principal	$ 6,396.9							$ 4,783.5
Carrying amount	6,414.1							4,767.6
Fair value	$ 6,676.5							5,026.4
4.25% due December 6, 2027 (Cdn$650.0)
Disclosure of detailed information about borrowings [line items]
Principal | CAD			CAD 650,000,000.0
Interest rate	4.25%	4.25%	4.25%
Holding Company
Disclosure of detailed information about borrowings [line items]
Principal	$ 3,492.0							3,490.8
Carrying amount	3,475.1
Fair value	3,723.5							3,737.2
Holding Company | 7.375% due April 15, 2018
Disclosure of detailed information about borrowings [line items]
Principal	144.2							144.2
Fair value	$ 146.4							153.8
Interest rate	7.375%	7.375%	7.375%
Holding Company | 7.50% due August 19, 2019 (Cdn$400.0)
Disclosure of detailed information about borrowings [line items]
Principal	$ 0.0		CAD 400,000,000.0	CAD 388,400,000				298.3
Fair value	$ 0.0							334.4
Interest rate	7.50%	7.50%	7.50%	7.50%
Holding Company | 7.25% due June 22, 2020 (Cdn$275.0)
Disclosure of detailed information about borrowings [line items]
Principal	$ 213.3		CAD 275,000,000.0					205.1
Fair value	$ 235.6							233.6
Interest rate	7.25%	7.25%	7.25%
Holding Company | 5.80% due May 15, 2021
Disclosure of detailed information about borrowings [line items]
Principal	$ 500.0							500.0
Fair value	$ 534.1							538.9
Interest rate	5.80%	5.80%	5.80%
Holding Company | 6.40% due May 25, 2021 (Cdn$400.0)
Disclosure of detailed information about borrowings [line items]
Principal	$ 315.7		CAD 400,000,000.0					298.3
Fair value	$ 349.4							337.3
Interest rate	6.40%	6.40%	6.40%
Holding Company | 5.84% due October 14, 2022 (Cdn$450.0)
Disclosure of detailed information about borrowings [line items]
Principal	$ 359.2		CAD 450,000,000.0					335.6
Fair value	$ 397.2							373.9
Interest rate	5.84%	5.84%	5.84%
Holding Company | 4.50% due March 22, 2023 (Cdn$400.0)
Disclosure of detailed information about borrowings [line items]
Principal	$ 319.2		CAD 400,000,000.0					298.3
Fair value	$ 333.5							310.6
Interest rate	4.50%	4.50%	4.50%
Holding Company | 4.875% due August 13, 2024
Disclosure of detailed information about borrowings [line items]
Principal	$ 300.0							300.0
Fair value	$ 313.4							297.8
Interest rate	4.875%	4.875%	4.875%
Holding Company | 4.95% due March 3, 2025 (Cdn$350.0)
Disclosure of detailed information about borrowings [line items]
Principal	$ 279.3		CAD 350,000,000.0					261.0
Fair value	$ 297.1							272.6
Interest rate	4.95%	4.95%	4.95%
Holding Company | 8.30% due April 15, 2026
Disclosure of detailed information about borrowings [line items]
Principal	$ 91.8							91.8
Fair value	$ 116.3							109.9
Interest rate	8.30%	8.30%	8.30%
Holding Company | 4.70% due December 16, 2026 (Cdn$450.0)
Disclosure of detailed information about borrowings [line items]
Principal	$ 359.2		CAD 450,000,000.0					335.6
Fair value	$ 371.7							338.9
Interest rate	4.70%	4.70%	4.70%
Holding Company | 4.25% due December 6, 2027 (Cdn$650.0)
Disclosure of detailed information about borrowings [line items]
Principal	$ 518.8		CAD 650,000,000.0		CAD 650,000,000			0.0
Fair value	$ 514.7							0.0
Interest rate	4.25%	4.25%	4.25%		4.25%
Holding Company | 7.75% due July 15, 2037
Disclosure of detailed information about borrowings [line items]
Principal	$ 91.3							91.3
Fair value	$ 114.1							104.2
Interest rate	7.75%	7.75%	7.75%
Holding Company | Revolving credit facility
Disclosure of detailed information about borrowings [line items]
Principal	$ 0.0							200.0
Fair value	0.0							200.0
Holding Company | Purchase consideration payable due 2017
Disclosure of detailed information about borrowings [line items]
Principal	0.0							131.3
Fair value	0.0							131.3
Insurance and reinsurance companies
Disclosure of detailed information about borrowings [line items]
Principal	1,336.8							429.3
Carrying amount	1,373.0
Fair value	1,386.9							430.2
Insurance and reinsurance companies | Allied World senior notes, 5.50% due November 1, 2020
Disclosure of detailed information about borrowings [line items]
Principal	300.0							0.0
Fair value	$ 320.0							0.0
Interest rate	5.50%	5.50%	5.50%
Insurance and reinsurance companies | Allied World senior notes, 4.35% due October 29, 2025
Disclosure of detailed information about borrowings [line items]
Principal	$ 500.0							0.0
Fair value	$ 507.3							0.0
Interest rate	4.35%	4.35%	4.35%
Insurance and reinsurance companies | Allied World revolving credit facility and other borrowings
Disclosure of detailed information about borrowings [line items]
Principal	$ 45.0							0.0
Fair value	49.2							0.0
Insurance and reinsurance companies | OdysseyRe floating rate unsecured senior notes due 2021
Disclosure of detailed information about borrowings [line items]
Principal	90.0							90.0
Fair value	93.0							94.1
Insurance and reinsurance companies | Brit 6.625% subordinated notes due December 9, 2030 (£135.0)
Disclosure of detailed information about borrowings [line items]
Principal	182.6	£ 135,000,000.0						166.8
Fair value	$ 199.0							169.0
Interest rate	6.625%	6.625%	6.625%
Insurance and reinsurance companies | Brit floating rate revolving credit facility
Disclosure of detailed information about borrowings [line items]
Principal	$ 45.0							0.0
Fair value	45.0							0.0
Insurance and reinsurance companies | First Mercury floating rate trust preferred securities due 2036 and 2037
Disclosure of detailed information about borrowings [line items]
Principal	41.4							41.4
Fair value	41.4							41.4
Insurance and reinsurance companies | Zenith National 8.55% debentures due August 1, 2028
Disclosure of detailed information about borrowings [line items]
Principal	38.4							38.4
Fair value	$ 38.2							38.2
Interest rate	8.55%	8.55%	8.55%
Insurance and reinsurance companies | Advent floating rate subordinated notes due June 3, 2035
Disclosure of detailed information about borrowings [line items]
Principal	$ 48.4							46.7
Fair value	47.8							41.5
Insurance and reinsurance companies | Advent floating rate unsecured senior notes due 2026
Disclosure of detailed information about borrowings [line items]
Principal	46.0							46.0
Fair value	46.0							46.0
Non-insurance companies
Disclosure of detailed information about borrowings [line items]
Principal	1,568.1							863.4
Carrying amount	1,566.0
Fair value	1,566.1							859.0
Non-insurance companies | Fairfax India floating rate term loan due July 11, 2018
Disclosure of detailed information about borrowings [line items]
Principal	400.0						$ 400.0	225.0
Fair value	400.0							223.8
Non-insurance companies | Fairfax India subsidiary borrowings
Disclosure of detailed information about borrowings [line items]
Principal	186.1							80.8
Fair value	186.1							80.8
Non-insurance companies | Fairfax Africa floating rate term loan due January 31, 2018
Disclosure of detailed information about borrowings [line items]
Principal	150.0					$ 150.0		0.0
Fair value	150.0							0.0
Non-insurance companies | Grivalia Properties term loans and revolving facility
Disclosure of detailed information about borrowings [line items]
Principal	160.4							0.0
Fair value	160.4							0.0
Non-insurance companies | Cara floating rate term loan due September 2, 2019 (Cdn$150.0)
Disclosure of detailed information about borrowings [line items]
Principal	119.7		CAD 150,000,000.0					111.9
Fair value	119.3							111.4
Non-insurance companies | Cara floating rate credit facility expiring September 2, 2021
Disclosure of detailed information about borrowings [line items]
Principal	182.8							180.5
Fair value	181.7							179.1
Non-insurance companies | The Keg 7.5% note due May 31, 2042 (Cdn$57.0)
Disclosure of detailed information about borrowings [line items]
Principal	45.5		CAD 57,000,000.0					42.5
Fair value	$ 45.5							42.5
Interest rate	7.50%	7.50%	7.50%
Non-insurance companies | The Keg floating rate revolving facility and term loan due July 2, 2018
Disclosure of detailed information about borrowings [line items]
Principal	$ 31.9							20.9
Fair value	31.7							20.7
Non-insurance companies | Loans and revolving credit facilities primarily at floating rates
Disclosure of detailed information about borrowings [line items]
Principal	291.7							201.8
Fair value	291.4							200.7
Gross carrying amount
Disclosure of detailed information about borrowings [line items]
Carrying amount	6,414.1							4,767.6	$ 3,351.5
Gross carrying amount | Holding Company
Disclosure of detailed information about borrowings [line items]
Carrying amount	3,475.1							3,472.5	2,599.0
Gross carrying amount | Holding Company | 7.375% due April 15, 2018
Disclosure of detailed information about borrowings [line items]
Carrying amount	144.2							144.2
Gross carrying amount | Holding Company | 7.50% due August 19, 2019 (Cdn$400.0)
Disclosure of detailed information about borrowings [line items]
Carrying amount	0.0							297.0
Gross carrying amount | Holding Company | 7.25% due June 22, 2020 (Cdn$275.0)
Disclosure of detailed information about borrowings [line items]
Carrying amount	212.7							204.2
Gross carrying amount | Holding Company | 5.80% due May 15, 2021
Disclosure of detailed information about borrowings [line items]
Carrying amount	498.0							497.4
Gross carrying amount | Holding Company | 6.40% due May 25, 2021 (Cdn$400.0)
Disclosure of detailed information about borrowings [line items]
Carrying amount	314.4							296.5
Gross carrying amount | Holding Company | 5.84% due October 14, 2022 (Cdn$450.0)
Disclosure of detailed information about borrowings [line items]
Carrying amount	362.5							339.6
Gross carrying amount | Holding Company | 4.50% due March 22, 2023 (Cdn$400.0)
Disclosure of detailed information about borrowings [line items]
Carrying amount	316.8							295.4
Gross carrying amount | Holding Company | 4.875% due August 13, 2024
Disclosure of detailed information about borrowings [line items]
Carrying amount	296.2							295.6
Gross carrying amount | Holding Company | 4.95% due March 3, 2025 (Cdn$350.0)
Disclosure of detailed information about borrowings [line items]
Carrying amount	275.5							256.6
Gross carrying amount | Holding Company | 8.30% due April 15, 2026
Disclosure of detailed information about borrowings [line items]
Carrying amount	91.6							91.6
Gross carrying amount | Holding Company | 4.70% due December 16, 2026 (Cdn$450.0)
Disclosure of detailed information about borrowings [line items]
Carrying amount	356.6							332.7
Gross carrying amount | Holding Company | 4.25% due December 6, 2027 (Cdn$650.0)
Disclosure of detailed information about borrowings [line items]
Carrying amount	516.2							0.0
Gross carrying amount | Holding Company | 7.75% due July 15, 2037
Disclosure of detailed information about borrowings [line items]
Carrying amount	90.4							90.4
Gross carrying amount | Holding Company | Revolving credit facility
Disclosure of detailed information about borrowings [line items]
Carrying amount	0.0							200.0
Gross carrying amount | Holding Company | Purchase consideration payable due 2017
Disclosure of detailed information about borrowings [line items]
Carrying amount	0.0							131.3
Gross carrying amount | Insurance and reinsurance companies
Disclosure of detailed information about borrowings [line items]
Carrying amount	1,373.0							435.5	468.5
Gross carrying amount | Insurance and reinsurance companies | Allied World senior notes, 5.50% due November 1, 2020
Disclosure of detailed information about borrowings [line items]
Carrying amount	320.4							0.0
Gross carrying amount | Insurance and reinsurance companies | Allied World senior notes, 4.35% due October 29, 2025
Disclosure of detailed information about borrowings [line items]
Carrying amount	508.4							0.0
Gross carrying amount | Insurance and reinsurance companies | Allied World revolving credit facility and other borrowings
Disclosure of detailed information about borrowings [line items]
Carrying amount	49.2							0.0
Gross carrying amount | Insurance and reinsurance companies | OdysseyRe floating rate unsecured senior notes due 2021
Disclosure of detailed information about borrowings [line items]
Carrying amount	89.8							89.8
Gross carrying amount | Insurance and reinsurance companies | Brit 6.625% subordinated notes due December 9, 2030 (£135.0)
Disclosure of detailed information about borrowings [line items]
Carrying amount	188.5							175.9
Gross carrying amount | Insurance and reinsurance companies | Brit floating rate revolving credit facility
Disclosure of detailed information about borrowings [line items]
Carrying amount	45.0							0.0
Gross carrying amount | Insurance and reinsurance companies | First Mercury floating rate trust preferred securities due 2036 and 2037
Disclosure of detailed information about borrowings [line items]
Carrying amount	41.4							41.4
Gross carrying amount | Insurance and reinsurance companies | Zenith National 8.55% debentures due August 1, 2028
Disclosure of detailed information about borrowings [line items]
Carrying amount	38.2							38.2
Gross carrying amount | Insurance and reinsurance companies | Advent floating rate subordinated notes due June 3, 2035
Disclosure of detailed information about borrowings [line items]
Carrying amount	47.1							45.4
Gross carrying amount | Insurance and reinsurance companies | Advent floating rate unsecured senior notes due 2026
Disclosure of detailed information about borrowings [line items]
Carrying amount	45.0							44.8
Gross carrying amount | Non-insurance companies
Disclosure of detailed information about borrowings [line items]
Carrying amount	1,566.0							859.6	$ 284.0
Gross carrying amount | Non-insurance companies | Fairfax India floating rate term loan due July 11, 2018
Disclosure of detailed information about borrowings [line items]
Carrying amount	400.0							223.8
Gross carrying amount | Non-insurance companies | Fairfax India subsidiary borrowings
Disclosure of detailed information about borrowings [line items]
Carrying amount	186.1							80.8
Gross carrying amount | Non-insurance companies | Fairfax Africa floating rate term loan due January 31, 2018
Disclosure of detailed information about borrowings [line items]
Carrying amount	150.0							0.0
Gross carrying amount | Non-insurance companies | Grivalia Properties term loans and revolving facility
Disclosure of detailed information about borrowings [line items]
Carrying amount	160.4							0.0
Gross carrying amount | Non-insurance companies | Cara floating rate term loan due September 2, 2019 (Cdn$150.0)
Disclosure of detailed information about borrowings [line items]
Carrying amount	119.3							111.4
Gross carrying amount | Non-insurance companies | Cara floating rate credit facility expiring September 2, 2021
Disclosure of detailed information about borrowings [line items]
Carrying amount	181.7							179.1
Gross carrying amount | Non-insurance companies | The Keg 7.5% note due May 31, 2042 (Cdn$57.0)
Disclosure of detailed information about borrowings [line items]
Carrying amount	45.5							42.5
Gross carrying amount | Non-insurance companies | The Keg floating rate revolving facility and term loan due July 2, 2018
Disclosure of detailed information about borrowings [line items]
Carrying amount	31.7							20.7
Gross carrying amount | Non-insurance companies | Loans and revolving credit facilities primarily at floating rates
Disclosure of detailed information about borrowings [line items]
Carrying amount	$ 291.3							$ 201.3

XML

Borrowings - Additional Information (Details) ZAR in Billions									12 Months Ended
	Dec. 29, 2017 USD ($)	Dec. 29, 2017 CAD	Dec. 13, 2017 USD ($)	Dec. 04, 2017 USD ($)	Dec. 04, 2017 CAD	Nov. 29, 2017 USD ($)	Mar. 31, 2017 USD ($)	Mar. 15, 2017 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2017 CAD	Dec. 21, 2017 USD ($)	Dec. 04, 2017 CAD	Aug. 31, 2017 USD ($)	Aug. 31, 2017 ZAR	Jul. 11, 2017 USD ($)
Disclosure of detailed information about borrowings [line items]
Principal									$ 6,396,900,000	$ 4,783,500,000
Loss on repurchase of borrowings									$ (28,600,000)	0
Maximum ratio of consolidated debt to consolidated capitalization									0.35
Required minimum of shareholders' equity balance									$ 9,500,000,000.0
Debt to consolidated capitalization ratio, actual									0.24		0.24
Shareholders’ equity attributable to shareholders of Fairfax									$ 13,811,100,000	9,820,100,000
Holding Company
Disclosure of detailed information about borrowings [line items]
Principal									3,492,000,000	3,490,800,000
Non-insurance companies
Disclosure of detailed information about borrowings [line items]
Principal									1,568,100,000	863,400,000
Loss on repurchase of borrowings									(28,600,000)	0
7.50% due August 19, 2019 | Holding Company
Disclosure of detailed information about borrowings [line items]
Principal		CAD 388,400,000							$ 0	298,300,000	CAD 400,000,000.0
Interest rate		7.50%							7.50%		7.50%
Payments for redemption of debt	$ 340,600,000	CAD 430,600,000						$ 9,700,000
Loss on repurchase of borrowings	$ 26,000,000	CAD 32,800,000
Repayment of debt								8,700,000
Purchase consideration payable due 2017 | Holding Company
Disclosure of detailed information about borrowings [line items]
Principal									$ 0	131,300,000
Extinguishment of debt amount			$ 124,900,000
4.25% Due 2027
Disclosure of detailed information about borrowings [line items]
Principal | CAD											CAD 650,000,000.0
Interest rate									4.25%		4.25%
4.25% Due 2027 | Holding Company
Disclosure of detailed information about borrowings [line items]
Principal									$ 518,800,000	0	CAD 650,000,000.0		CAD 650,000,000
Interest rate				4.25%					4.25%		4.25%		4.25%
Issuance price				$ 99.992
Net proceeds from borrowings				509,500,000	CAD 646,800,000
Borrowing costs capitalised				$ 2,400,000	CAD 3,100,000
The credit facility | Holding Company
Disclosure of detailed information about borrowings [line items]
Principal									$ 0	200,000,000
Net proceeds from borrowings						$ 45,000,000
Revolving credit facility available										1,000,000,000		$ 2,000,000,000
Short term draw									0
Fairfax Africa floating rate term loan due January 31, 2018 | Non-insurance companies
Disclosure of detailed information about borrowings [line items]
Principal									150,000,000	0				$ 150,000,000
Cash collateral														150,000,000
Fairfax India floating rate term loan due September 16, 2018 | Non-insurance companies
Disclosure of detailed information about borrowings [line items]
Extinguishment of debt amount							$ 225,000,000
Fairfax India floating rate term loan due July 11, 2018 | Non-insurance companies
Disclosure of detailed information about borrowings [line items]
Principal									400,000,000	225,000,000						$ 400,000,000
Fairfax Africa Credit Facility | Non-insurance companies
Disclosure of detailed information about borrowings [line items]
Principal														153,900,000	ZAR 2
Cash collateral														$ 162,000,000
7.50%, 7.25%, and 6.40% unsecured senior notes | Holding Company
Disclosure of detailed information about borrowings [line items]
Repayment of debt								250,000,000
7.25% Due June 22, 2020 | Holding Company
Disclosure of detailed information about borrowings [line items]
Principal									$ 213,300,000	205,100,000	CAD 275,000,000.0
Interest rate									7.25%		7.25%
Payments for redemption of debt								6,600,000
Repayment of debt								5,800,000
6.40% Due May 25, 2021 | Holding Company
Disclosure of detailed information about borrowings [line items]
Principal									$ 315,700,000	$ 298,300,000	CAD 400,000,000.0
Interest rate									6.40%		6.40%
Payments for redemption of debt								3,700,000
Repayment of debt								$ 3,300,000

XML

Borrowings - Carrying Amount Rollforward (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Carrying Value Of Borrowings [Roll Forward]
Balance – January 1	$ 4,767.6
Balance – December 31	6,414.1	$ 4,767.6
Holding Company
Carrying Value Of Borrowings [Roll Forward]
Balance – December 31	3,475.1
Insurance and reinsurance companies
Carrying Value Of Borrowings [Roll Forward]
Balance – December 31	1,373.0
Non-insurance companies
Carrying Value Of Borrowings [Roll Forward]
Balance – December 31	1,566.0
Gross carrying amount
Carrying Value Of Borrowings [Roll Forward]
Balance – January 1	4,767.6	3,351.5
Net cash inflows (outflows) from issuances and repayments	318.9	1,347.5
Acquisitions (note 23)	1,082.0	60.4
Loss on redemption	28.6	0.0
Foreign exchange effect and other	217.0	8.2
Balance – December 31	6,414.1	4,767.6
Gross carrying amount | Holding Company
Carrying Value Of Borrowings [Roll Forward]
Balance – January 1	3,472.5	2,599.0
Net cash inflows (outflows) from issuances and repayments	(174.2)	832.3
Acquisitions (note 23)	0.0	0.0
Loss on redemption	28.6	0.0
Foreign exchange effect and other	148.2	41.2
Balance – December 31	3,475.1	3,472.5
Gross carrying amount | Insurance and reinsurance companies
Carrying Value Of Borrowings [Roll Forward]
Balance – January 1	435.5	468.5
Net cash inflows (outflows) from issuances and repayments	67.5	0.0
Acquisitions (note 23)	860.5	0.0
Loss on redemption	0.0	0.0
Foreign exchange effect and other	9.5	(33.0)
Balance – December 31	1,373.0	435.5
Gross carrying amount | Non-insurance companies
Carrying Value Of Borrowings [Roll Forward]
Balance – January 1	859.6	284.0
Net cash inflows (outflows) from issuances and repayments	425.6	515.2
Acquisitions (note 23)	221.5	60.4
Loss on redemption	0.0	0.0
Foreign exchange effect and other	59.3	0.0
Balance – December 31	$ 1,566.0	$ 859.6

XML

Borrowings - Schedule of Borrowings Principal Payments (Details) $ in Millions	Dec. 31, 2017 USD ($)
Disclosure of detailed information about borrowings [line items]
2018	$ 1,005.1
2019	187.8
2020	689.7
2021	1,148.2
2022	408.6
Thereafter	2,957.5
Principal	6,396.9
Holding company
Disclosure of detailed information about borrowings [line items]
2018	144.2
2019	0.0
2020	213.3
2021	815.7
2022	359.2
Thereafter	1,959.6
Principal	3,492.0
Insurance and reinsurance companies
Disclosure of detailed information about borrowings [line items]
2018	5.0
2019	0.0
2020	345.0
2021	90.0
2022	0.0
Thereafter	896.8
Principal	1,336.8
Non-insurance companies
Disclosure of detailed information about borrowings [line items]
2018	855.9
2019	187.8
2020	131.4
2021	242.5
2022	49.4
Thereafter	101.1
Principal	$ 1,568.1

XML

Total Equity (Details) - USD ($) $ in Millions	2 Months Ended	12 Months Ended
	Mar. 09, 2018	Dec. 31, 2017	Dec. 31, 2016	Aug. 17, 2017	Jul. 06, 2017
Disclosure of classes of share capital [line items]
Cost of cancellation		$ 96.2	$ 14.1
Excess of book value over consideration of common shares purchased for cancellation		(50.6)	(8.0)
Purchases and amortization		$ 130.5	$ 30.5
Multiple voting shares
Disclosure of classes of share capital [line items]
Voting percentage of multiple voting shares		41.80%
Number of shares issued (in shares)		1,548,000	1,548,000
Subordinate voting shares
Disclosure of classes of share capital [line items]
Number of shares issued (in shares)		27,904,801	23,004,207
Number of shares reserved for share-based payments		902,498	659,411
Issuances during the year		5,084,961	1,000,000
Purchases for cancellation		184,367	30,732
Treasury shares acquired		277,364	130,075
Retained earnings
Disclosure of classes of share capital [line items]
Excess of book value over consideration of common shares purchased for cancellation		$ (50.6)	$ (8.0)
Treasury shares (at cost)
Disclosure of classes of share capital [line items]
Purchases and amortization		$ 140.5	$ 64.2
Subsequent event
Disclosure of classes of share capital [line items]
Cost of cancellation	$ 9.9
Subsequent event | Subordinate voting shares
Disclosure of classes of share capital [line items]
Purchases for cancellation	20,000
Treasury shares acquired	47,372
Subsequent event | Treasury shares (at cost)
Disclosure of classes of share capital [line items]
Purchases and amortization	$ 24.3
Allied World | Subordinate voting shares
Disclosure of classes of share capital [line items]
Number of shares issued (in shares)				276,397	4,799,497
Number of shares issued in combination		5,075,894
Equity interests of acquirer		$ 2,191.6		$ 119.3	$ 2,072.3

XML

Total Equity - Shares Outstanding Rollforward (Details) - shares	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Multiple voting shares
Reconciliation of number of shares outstanding [abstract]
Beginning balance, shares outstanding	1,548,000
Ending balance, shares outstanding	1,548,000	1,548,000
Subordinate voting shares
Reconciliation of number of shares outstanding [abstract]
Beginning balance, shares outstanding	22,344,796	21,465,089
Interest in subordinate voting shares held through ownership interest in shareholder, beginning balance	(799,230)
Issuances during the year	5,084,961	1,000,000
Purchases for cancellation	(184,367)	(30,732)
Treasury shares acquired	(277,364)	(130,075)
Treasury shares reissued	34,277	40,514
Interest in subordinate voting shares held through ownership interest in shareholder, ending balance	(799,230)	(799,230)
Ending balance, shares outstanding	27,002,303	22,344,796
Common shares
Reconciliation of number of shares outstanding [abstract]
Beginning balance, shares outstanding	23,093,566
Ending balance, shares outstanding	27,751,073	23,093,566

XML

Total Equity - Dividends Paid (Details) - USD ($) $ / shares in Units, $ in Millions				1 Months Ended	12 Months Ended
	Jan. 25, 2018	Jan. 26, 2017	Jan. 27, 2016	Jan. 31, 2017	Dec. 31, 2017	Dec. 31, 2016
Dividends Declared [Line Items]
Dividend per share (in dollars per share)		$ 10	$ 10	$ 10.00	$ 10	$ 10
Total cash payment		$ 237.4	$ 227.8	$ 283.2	$ 304.9	$ 269.0
Subsequent event
Dividends Declared [Line Items]
Dividend per share (in dollars per share)	$ 10
Total cash payment	$ 283.2

XML

Total Equity - Preferred Shares Outstanding (Details) - shares	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Series C
Reconciliation of number of shares outstanding [abstract]
Beginning balance, shares outstanding	6,016,384	6,016,384
Activity	0	0
Ending balance, shares outstanding	6,016,384	6,016,384
Series D
Reconciliation of number of shares outstanding [abstract]
Beginning balance, shares outstanding	3,983,616	3,983,616
Activity	0	0
Ending balance, shares outstanding	3,983,616	3,983,616
Series E
Reconciliation of number of shares outstanding [abstract]
Beginning balance, shares outstanding	3,967,134	3,967,134
Activity	0	0
Ending balance, shares outstanding	3,967,134	3,967,134
Series F
Reconciliation of number of shares outstanding [abstract]
Beginning balance, shares outstanding	3,572,044	3,572,044
Activity	0	0
Ending balance, shares outstanding	3,572,044	3,572,044
Series G
Reconciliation of number of shares outstanding [abstract]
Beginning balance, shares outstanding	7,432,952	7,432,952
Activity	0	0
Ending balance, shares outstanding	7,432,952	7,432,952
Series H
Reconciliation of number of shares outstanding [abstract]
Beginning balance, shares outstanding	2,567,048	2,567,048
Activity	0	0
Ending balance, shares outstanding	2,567,048	2,567,048
Series I
Reconciliation of number of shares outstanding [abstract]
Beginning balance, shares outstanding	10,465,553	10,465,553
Activity	0	0
Ending balance, shares outstanding	10,465,553	10,465,553
Series J
Reconciliation of number of shares outstanding [abstract]
Beginning balance, shares outstanding	1,534,447	1,534,447
Activity	0	0
Ending balance, shares outstanding	1,534,447	1,534,447
Series K
Reconciliation of number of shares outstanding [abstract]
Beginning balance, shares outstanding	9,500,000	9,500,000
Activity	0	0
Ending balance, shares outstanding	9,500,000	9,500,000
Series M
Reconciliation of number of shares outstanding [abstract]
Beginning balance, shares outstanding	9,200,000	9,200,000
Activity	0	0
Ending balance, shares outstanding	9,200,000	9,200,000
Preferred shares
Reconciliation of number of shares outstanding [abstract]
Beginning balance, shares outstanding	58,239,178	58,239,178
Activity	0	0
Ending balance, shares outstanding	58,239,178	58,239,178

XML

Total Equity - Carrying Value Of Preferred Shares Outstanding (Details) CAD in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2017 USD ($)	Dec. 31, 2017 CAD	Dec. 31, 2016 USD ($)
Disclosure of classes of share capital [line items]
Other	$ 420.6		$ 144.4
Issuances	2,196.9		521.0
Series C
Disclosure of classes of share capital [line items]
Beginning balance	136.7		136.7
Other			0.0
Issuances	0.0
Ending balance	136.7	CAD 150.4	136.7
Series D
Disclosure of classes of share capital [line items]
Beginning balance	90.5		90.5
Other			0.0
Issuances	0.0
Ending balance	90.5	99.6	90.5
Series E
Disclosure of classes of share capital [line items]
Beginning balance	90.8		90.8
Other			0.0
Issuances	0.0
Ending balance	90.8	99.2	90.8
Series F
Disclosure of classes of share capital [line items]
Beginning balance	81.8		81.8
Other			0.0
Issuances	0.0
Ending balance	81.8	89.3	81.8
Series G
Disclosure of classes of share capital [line items]
Beginning balance	175.3		175.3
Other			0.0
Issuances	0.0
Ending balance	175.3	185.8	175.3
Series H
Disclosure of classes of share capital [line items]
Beginning balance	60.6		60.6
Other			0.0
Issuances	0.0
Ending balance	60.6	64.2	60.6
Series I
Disclosure of classes of share capital [line items]
Beginning balance	251.6		251.6
Other			0.0
Issuances	0.0
Ending balance	251.6	261.6	251.6
Series J
Disclosure of classes of share capital [line items]
Beginning balance	36.9		36.9
Other			0.0
Issuances	0.0
Ending balance	36.9	38.4	36.9
Series K
Disclosure of classes of share capital [line items]
Beginning balance	231.7		231.7
Other			0.0
Issuances	0.0
Ending balance	231.7	237.5	231.7
Series M
Disclosure of classes of share capital [line items]
Beginning balance	179.6		179.0
Other			0.6
Issuances	0.0
Ending balance	179.6	CAD 230.0	179.6
Preferred shares
Disclosure of classes of share capital [line items]
Beginning balance	1,335.5		1,334.9
Other			0.6
Issuances	0.0
Ending balance	$ 1,335.5		$ 1,335.5

XML

Total Equity - Preferred Shares (Details) CAD / shares in Units, CAD in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2017 USD ($) shares	Dec. 31, 2017 CAD CAD / shares shares	Dec. 31, 2016 USD ($) shares	Dec. 31, 2015 USD ($) shares
Disclosure of classes of share capital [line items]
Liquidation preference per share (in dollars per share)		CAD 25.00
Series C
Disclosure of classes of share capital [line items]
Number of shares outstanding | shares	6,016,384	6,016,384	6,016,384	6,016,384
Stated capital	$ 136.7	CAD 150.4	$ 136.7	$ 136.7
Liquidation preference per share (in dollars per share)		CAD 25
Fixed dividend rate per annum	4.58%
Series D
Disclosure of classes of share capital [line items]
Number of shares outstanding | shares	3,983,616	3,983,616	3,983,616	3,983,616
Stated capital	$ 90.5	CAD 99.6	$ 90.5	$ 90.5
Liquidation preference per share (in dollars per share)		CAD 25
Floating dividend rate per annum	4.02%
Series E
Disclosure of classes of share capital [line items]
Number of shares outstanding | shares	3,967,134	3,967,134	3,967,134	3,967,134
Stated capital	$ 90.8	CAD 99.2	$ 90.8	$ 90.8
Liquidation preference per share (in dollars per share)		CAD 25
Fixed dividend rate per annum	2.91%
Series F
Disclosure of classes of share capital [line items]
Number of shares outstanding | shares	3,572,044	3,572,044	3,572,044	3,572,044
Stated capital	$ 81.8	CAD 89.3	$ 81.8	$ 81.8
Liquidation preference per share (in dollars per share)		CAD 25
Floating dividend rate per annum	3.03%
Series G
Disclosure of classes of share capital [line items]
Number of shares outstanding | shares	7,432,952	7,432,952	7,432,952	7,432,952
Stated capital	$ 175.3	CAD 185.8	$ 175.3	$ 175.3
Liquidation preference per share (in dollars per share)		CAD 25
Fixed dividend rate per annum	3.32%
Series H
Disclosure of classes of share capital [line items]
Number of shares outstanding | shares	2,567,048	2,567,048	2,567,048	2,567,048
Stated capital	$ 60.6	CAD 64.2	$ 60.6	$ 60.6
Liquidation preference per share (in dollars per share)		CAD 25
Floating dividend rate per annum	3.43%
Series I
Disclosure of classes of share capital [line items]
Number of shares outstanding | shares	10,465,553	10,465,553	10,465,553	10,465,553
Stated capital	$ 251.6	CAD 261.6	$ 251.6	$ 251.6
Liquidation preference per share (in dollars per share)		CAD 25
Fixed dividend rate per annum	3.71%
Series J
Disclosure of classes of share capital [line items]
Number of shares outstanding | shares	1,534,447	1,534,447	1,534,447	1,534,447
Stated capital	$ 36.9	CAD 38.4	$ 36.9	$ 36.9
Liquidation preference per share (in dollars per share)		CAD 25
Floating dividend rate per annum	3.72%
Series K
Disclosure of classes of share capital [line items]
Number of shares outstanding | shares	9,500,000	9,500,000	9,500,000	9,500,000
Stated capital	$ 231.7	CAD 237.5	$ 231.7	$ 231.7
Liquidation preference per share (in dollars per share)		CAD 25
Fixed dividend rate per annum	4.671%
Series M
Disclosure of classes of share capital [line items]
Number of shares outstanding | shares	9,200,000	9,200,000	9,200,000	9,200,000
Stated capital	$ 179.6	CAD 230.0	$ 179.6	$ 179.0
Liquidation preference per share (in dollars per share)		CAD 25
Fixed dividend rate per annum	4.75%
Government of Canada Treasury Bill | Series D
Disclosure of classes of share capital [line items]
Variable rate basis spread	3.15%
Government of Canada Treasury Bill | Series F
Disclosure of classes of share capital [line items]
Variable rate basis spread	2.16%
Government of Canada Treasury Bill | Series H
Disclosure of classes of share capital [line items]
Variable rate basis spread	2.56%
Government of Canada Treasury Bill | Series J
Disclosure of classes of share capital [line items]
Variable rate basis spread	2.85%
Government of Canada Treasury Bill | Series L
Disclosure of classes of share capital [line items]
Variable rate basis spread	3.51%
Government of Canada Treasury Bill | Series N
Disclosure of classes of share capital [line items]
Variable rate basis spread	3.98%

XML

Total Equity - Accumulated Other Comprehensive Income (Loss) (Details) - Equity attributable to shareholders of Fairfax - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Pre-tax amount
Currency translation account	$ (166.6)	$ (356.6)
Share of accumulated other comprehensive loss of associates, excluding net gains (losses) on defined benefit plans	(22.0)	(157.1)
Items that may be subsequently reclassified to net earnings	(188.6)	(513.7)
Share of net gains (losses) on defined benefit plans of associates	(30.3)	(42.6)
Net losses on defined benefit plans	(60.9)	(28.0)
Items that will not be subsequently reclassified to net earnings	(91.2)	(70.6)
Accumulated other comprehensive loss attributable to shareholders of Fairfax	(279.8)	(584.3)
Income tax (expense) recovery
Currency translation account	2.8	(7.6)
Share of accumulated other comprehensive loss of associates, excluding net gains (losses) on defined benefit plans	0.5	26.3
Items that may be subsequently reclassified to net earnings	3.3	18.7
Share of net gains (losses) on defined benefit plans of associates	3.5	10.8
Net losses on defined benefit plans	8.9	6.9
Items that will not be subsequently reclassified to net earnings	12.4	17.7
Accumulated other comprehensive loss attributable to shareholders of Fairfax	15.7	36.4
After-tax amount
Currency translation account	(163.8)	(364.2)
Share of accumulated other comprehensive loss of associates, excluding net gains (losses) on defined benefit plans	(21.5)	(130.8)
Items that may be subsequently reclassified to net earnings	(185.3)	(495.0)
Net losses on defined benefit plans	(26.8)	(31.8)
Net losses on defined benefit plans	(52.0)	(21.1)
Items that will not be subsequently reclassified to net earnings	(78.8)	(52.9)
Accumulated other comprehensive loss attributable to shareholders of Fairfax	$ (264.1)	$ (547.9)

XML

Total Equity - Non-Controlling Interests (Details) - USD ($) $ in Millions				12 Months Ended
	Jul. 04, 2017	Mar. 03, 2017	Jan. 13, 2017	Dec. 31, 2017	Dec. 31, 2016	Sep. 30, 2017	Feb. 17, 2017
Disclosure of subsidiaries [line items]
Carrying value				$ 4,600.9	$ 2,000.0
Net earnings attributable to non-controlling interests				(125.7)	117.8
Dividends paid, other shares				44.6	44.0
Other net changes in capitalization (note 16)				$ 420.6	$ 144.4
Allied World
Disclosure of subsidiaries [line items]
Minority voting percentage				32.60%	0.00%
Proportion of ownership interest in subsidiary				67.40%
Carrying value				$ 1,229.4	$ 0.0
Net earnings attributable to non-controlling interests				$ (182.3)	$ 0.0
Percentage of common shares acquired						67.40%
Fairfax India
Disclosure of subsidiaries [line items]
Minority voting percentage				6.40%	4.70%
Proportion of ownership interest in subsidiary				30.20%	33.60%
Carrying value				$ 1,110.7	$ 743.7
Net earnings attributable to non-controlling interests				$ (59.9)	$ 24.4
Economic ownership percentage				69.80%
Other net changes in capitalization (note 16)			$ 3.3
Cara
Disclosure of subsidiaries [line items]
Minority voting percentage				43.30%	43.40%
Proportion of ownership interest in subsidiary				40.20%
Carrying value				$ 578.0	$ 523.9
Net earnings attributable to non-controlling interests				$ 55.7	$ 30.8
Economic ownership percentage				59.80%
Grivalia Properties REIC
Disclosure of subsidiaries [line items]
Minority voting percentage	52.60%			47.30%	0.00%
Carrying value				$ 517.6	$ 0.0
Net earnings attributable to non-controlling interests				$ 20.0	$ 0.0
Brit
Disclosure of subsidiaries [line items]
Minority voting percentage				27.50%	27.50%
Proportion of ownership interest in subsidiary				72.50%
Carrying value				$ 435.3	$ 463.4
Net earnings attributable to non-controlling interests				$ (19.1)	$ 50.4
Thomas Cook India
Disclosure of subsidiaries [line items]
Minority voting percentage				32.40%	32.30%
Proportion of ownership interest in subsidiary				67.60%
Carrying value				$ 391.2	$ 139.6
Net earnings attributable to non-controlling interests				$ 28.2	$ 2.4
Fairfax Africa
Disclosure of subsidiaries [line items]
Minority voting percentage				1.20%	0.00%
Proportion of ownership interest in subsidiary				64.20%
Carrying value				$ 191.6	$ 0.0
Net earnings attributable to non-controlling interests				$ 4.3	0.0
Percentage of common shares acquired							64.20%
Economic ownership percentage				35.80%
All other
Disclosure of subsidiaries [line items]
Carrying value				$ 147.1	129.4
Net earnings attributable to non-controlling interests				$ 27.4	$ 9.8
Saurashtra Freight Private Limited
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary				15.40%
Quess
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary				33.10%	42.10%
Fairfax India | Saurashtra Freight Private Limited
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary				51.00%
Percentage of common shares acquired			51.00%
OMERS | Brit
Disclosure of subsidiaries [line items]
Dividends paid, other shares		$ 45.8
Equity issued | Common shares
Disclosure of subsidiaries [line items]
Dividends paid, other shares				$ 44.6	$ 44.0
Other net changes in capitalization (note 16)				236.6	17.0
Non- controlling interests
Disclosure of subsidiaries [line items]
Other net changes in capitalization (note 16)				$ 184.0	$ 126.8

XML

Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Earnings per share [line items]
Net earnings (loss) attributable to shareholders of Fairfax	$ 1,740.6	$ (512.5)
Preferred share dividends	(44.6)	(44.0)
Net earnings (loss) attributable to common shareholders – basic and diluted	$ 1,696.0	$ (556.5)
Weighted average common shares outstanding – basic (in shares)	25,411,246	23,017,184
Share-based payment awards (in shares)	689,571	0
Weighted average common shares outstanding – diluted (in shares)	26,100,817	23,017,184
Net earnings (loss) per common share – basic (in dollars per share)	$ 66.74	$ (24.18)
Net earnings (loss) per common share – diluted (in dollars per share)	$ 64.98	$ (24.18)
Share-based payments
Earnings per share [line items]
Antidilutive securities		567,450

XML

Income Taxes - Provision for (Recovery of) Income Taxes (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Current income tax
Current year expense	$ 200.6	$ 95.1
Adjustments to prior years’ income taxes	(22.6)	19.1
Current income tax	178.0	114.2
Deferred income tax
Origination and reversal of temporary differences	(22.5)	(265.6)
Adjustments to prior years' deferred income taxes	24.3	2.9
Change in tax rate related to U.S. tax reform	222.4	0.0
Other	6.1	(11.1)
Deferred income tax	230.3	(273.8)
Provision (recovery) for income taxes	$ 408.3	$ (159.6)

XML

Income Taxes - Earnings Before Income Taxes by Jurisdiction (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of geographical areas [line items]
Earnings (loss) before income taxes	$ 2,023.2	$ (554.3)
Provision (recovery) for income taxes	408.3	(159.6)
Net earnings (loss)	1,614.9	(394.7)
Canada
Disclosure of geographical areas [line items]
Earnings (loss) before income taxes	(141.3)	(258.5)
Provision (recovery) for income taxes	52.9	69.6
Net earnings (loss)	(194.2)	(328.1)
United States
Disclosure of geographical areas [line items]
Earnings (loss) before income taxes	543.5	(428.4)
Provision (recovery) for income taxes	420.5	(234.6)
Net earnings (loss)	123.0	(193.8)
UK
Disclosure of geographical areas [line items]
Earnings (loss) before income taxes	(72.1)	42.2
Provision (recovery) for income taxes	(24.6)	(23.7)
Net earnings (loss)	(47.5)	65.9
Other
Disclosure of geographical areas [line items]
Earnings (loss) before income taxes	1,693.1	90.4
Provision (recovery) for income taxes	(40.5)	29.1
Net earnings (loss)	$ 1,733.6	$ 61.3

XML

Income Taxes - Additional Information (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Deferred tax assets	$ 380,800,000	$ 732,600,000
Tax rate differential on income and losses incurred outside Canada		65,300,000
Unremitted earnings of subsidiaries	3,100,000,000	3,100,000,000
Canada
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Non-taxable investment income	116,200,000	74,700,000
Change in unrecorded tax benefit of losses and temporary differences	210,200,000	117,500,000
Change in tax rate for deferred income taxes related to U.S. tax reform	222,400,000	0
Tax benefit from transition tax	7,400,000
Deferred tax assets	70,800,000	117,900,000
Provision (recovery) relating to prior years	1,700,000	22,000,000
Tax rate differential on income and losses incurred outside Canada	(445,300,000)	(65,300,000)
Unused tax losses	1,516,400,000	1,064,700,000
Mauritius
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Tax rate differential on income and losses incurred outside Canada	246,500,000
Barbados
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Tax rate differential on income and losses incurred outside Canada	269,900,000
Europe
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Unused tax losses	635,700,000	585,700,000
United States
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Change in tax rate for deferred income taxes related to U.S. tax reform	229,200,000
Change in tax rate related to U.S. tax reform, income statement	222,400,000
Change in tax rate related to U.S. tax reform, other comprehensive income	6,800,000
Provision (recovery) relating to prior years	89,700,000	0
Unused tax losses	44,600,000	44,600,000
Unused foreign tax credits	159,000,000	59,000,000
Undistributed foreign earnings	79,100,000
Operating And Capital Losses, And U.S. Foreign Tax Credits
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Deferred tax assets	878,300,000	$ 590,000,000
Foreign tax credit carryforwards | United States
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Decrease in net deferred income tax asset	100,000,000
Reduction of deferred tax liability	27,100,000
Deferred earnings on foreign subsidiary | United States
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Reduction of deferred tax liability	$ 34,500,000

XML

Income Taxes - Income Tax Reconciliation (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Tax rate differential on income and losses incurred outside Canada		$ 65,300,000
Provision (recovery) for income taxes	$ 408,300,000	$ (159,600,000)
Canada
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Canadian statutory income tax rate	26.50%	26.50%
Provision (recovery) for income taxes at the Canadian statutory income tax rate	$ 536,100,000	$ (146,900,000)
Tax rate differential on income and losses incurred outside Canada	(445,300,000)	(65,300,000)
Non-taxable investment income	(116,200,000)	(74,700,000)
Change in unrecorded tax benefit of losses and temporary differences	210,200,000	117,500,000
Change in tax rate for deferred income taxes related to U.S. tax reform	222,400,000	0
Change in tax rate for deferred income taxes (excluding U.S. tax reform)	2,200,000	(15,100,000)
Other including permanent differences	(15,600,000)	11,300,000
Foreign exchange effect	12,800,000	(8,400,000)
Provision relating to prior years	1,700,000	22,000,000
Provision (recovery) for income taxes	$ 408,300,000	$ (159,600,000)

XML

Income Taxes - Income Taxes Refundable and Payable (Details) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Income Taxes [Abstract]
Income taxes refundable	$ 147.0	$ 202.7
Income taxes payable	(95.6)	(35.4)
Net income taxes refundable	$ 51.4	$ 167.3	$ 12.1

XML

Income Taxes - Changes in Net Income Taxes (Payable) Refundable (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Income Tax Receivable (Payable) [Roll Forward]
Balance - January 1	$ 167.3	$ 12.1
Amounts recorded in the consolidated statements of earnings	(178.0)	(114.2)
Payments made during the year	33.4	267.1
Acquisitions of subsidiaries (note 23)	18.8	3.9
Foreign exchange effect and other	9.9	(1.6)
Balance - December 31	$ 51.4	$ 167.3

XML

Income Taxes - Changes in Deferred Net Income Tax Asset (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Reconciliation of changes in deferred tax liability (asset) [abstract]
Deferred tax asset, beginning balance	$ 732.6	$ 463.9
Amounts recorded in the consolidated statement of earnings	(230.3)	273.8
Amounts recorded in total equity	(20.7)	37.3
Acquisitions of subsidiaries (note 23)	(101.5)	(53.2)
Foreign exchange effect and other	0.7	10.8
Deferred tax asset, ending balance	380.8	732.6
Operating and capital losses
Reconciliation of changes in deferred tax liability (asset) [abstract]
Deferred tax asset, beginning balance	188.8	235.4
Amounts recorded in the consolidated statement of earnings	(41.2)	(57.8)
Amounts recorded in total equity	0.0	0.0
Acquisitions of subsidiaries (note 23)	33.1	9.7
Foreign exchange effect and other	7.0	1.5
Deferred tax asset, ending balance	187.7	188.8
Provision for losses and loss adjustment expenses
Reconciliation of changes in deferred tax liability (asset) [abstract]
Deferred tax asset, beginning balance	182.3	204.2
Amounts recorded in the consolidated statement of earnings	(72.3)	(22.7)
Amounts recorded in total equity	0.0	0.0
Acquisitions of subsidiaries (note 23)	20.5	0.0
Foreign exchange effect and other	0.8	0.8
Deferred tax asset, ending balance	131.3	182.3
Provision for unearned premiums
Reconciliation of changes in deferred tax liability (asset) [abstract]
Deferred tax asset, beginning balance	126.6	92.8
Amounts recorded in the consolidated statement of earnings	(15.0)	31.8
Amounts recorded in total equity	0.0	0.0
Acquisitions of subsidiaries (note 23)	(19.8)	(0.3)
Foreign exchange effect and other	0.1	2.3
Deferred tax asset, ending balance	91.9	126.6
Deferred premium acquisition costs
Reconciliation of changes in deferred tax liability (asset) [abstract]
Deferred tax asset, beginning balance	(120.0)	(96.9)
Amounts recorded in the consolidated statement of earnings	(0.6)	(24.1)
Amounts recorded in total equity	0.0	0.0
Acquisitions of subsidiaries (note 23)	53.6	0.7
Foreign exchange effect and other	0.3	0.3
Deferred tax asset, ending balance	(66.7)	(120.0)
Intangibles
Reconciliation of changes in deferred tax liability (asset) [abstract]
Deferred tax asset, beginning balance	(347.6)	(325.4)
Amounts recorded in the consolidated statement of earnings	111.0	27.9
Amounts recorded in total equity	0.0	0.0
Acquisitions of subsidiaries (note 23)	(195.2)	(47.7)
Foreign exchange effect and other	(11.7)	(2.4)
Deferred tax asset, ending balance	(443.5)	(347.6)
Investments
Reconciliation of changes in deferred tax liability (asset) [abstract]
Deferred tax asset, beginning balance	331.9	49.0
Amounts recorded in the consolidated statement of earnings	(140.1)	266.9
Amounts recorded in total equity	(15.5)	17.7
Acquisitions of subsidiaries (note 23)	0.9	(1.1)
Foreign exchange effect and other	0.3	(0.6)
Deferred tax asset, ending balance	177.5	331.9
Tax credits
Reconciliation of changes in deferred tax liability (asset) [abstract]
Deferred tax asset, beginning balance	224.3	174.9
Amounts recorded in the consolidated statement of earnings	(106.0)	49.4
Amounts recorded in total equity	(0.1)	0.0
Acquisitions of subsidiaries (note 23)	0.0	0.0
Foreign exchange effect and other	(0.1)	0.0
Deferred tax asset, ending balance	118.1	224.3
Other
Reconciliation of changes in deferred tax liability (asset) [abstract]
Deferred tax asset, beginning balance	146.3	129.9
Amounts recorded in the consolidated statement of earnings	33.9	2.4
Amounts recorded in total equity	(5.1)	19.6
Acquisitions of subsidiaries (note 23)	5.4	(14.5)
Foreign exchange effect and other	4.0	8.9
Deferred tax asset, ending balance	$ 184.5	$ 146.3

XML

Statutory Requirements (Details) - USD ($) $ in Millions			1 Months Ended	12 Months Ended
	Jan. 26, 2017	Jan. 27, 2016	Jan. 31, 2017	Dec. 31, 2017	Dec. 31, 2016
Statutory Requirements [Line Items]
Common share dividends	$ 237.4	$ 227.8	$ 283.2	$ 304.9	$ 269.0
Dividend capacity available				1,573.3
Allied World
Statutory Requirements [Line Items]
Dividend capacity available				688.0
OdysseyRe
Statutory Requirements [Line Items]
Dividend capacity available				324.9
Northbridge
Statutory Requirements [Line Items]
Dividend capacity available				149.1
Crum & Forster
Statutory Requirements [Line Items]
Dividend capacity available				130.2
Zenith National
Statutory Requirements [Line Items]
Dividend capacity available				86.0
Brit
Statutory Requirements [Line Items]
Dividend capacity available				195.1
Insurance and reinsurance companies
Statutory Requirements [Line Items]
Common share dividends				$ 418.1	$ 445.8

XML

Contingencies and Commitments (Details) CAD in Millions, $ in Millions		12 Months Ended
	Jul. 26, 2006 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Dec. 15, 2011 CAD
Disclosure of contingent liabilities [line items]
Financial assets pledged as liabilities		$ 5,706.0	$ 5,481.0
Capital commitments		966.3
Investments
Disclosure of contingent liabilities [line items]
Capital commitments		367.0
Financial assets at fair value | Cash | Insurance underwriting | Lloyd's participants
Disclosure of contingent liabilities [line items]
Financial assets pledged as liabilities		361.9
Financial assets at fair value | Securities | Insurance underwriting | Lloyd's participants
Disclosure of contingent liabilities [line items]
Financial assets pledged as liabilities		$ 1,566.1
Fibrek
Disclosure of contingent liabilities [line items]
Voting interest percentage		26.00%
Value of investment in associate | CAD				CAD 32
Portion of 1% of total investments, less than				0.20%
Various Defendants
Disclosure of contingent liabilities [line items]
Damages sought in legal suit	$ 6,000.0

XML

Pensions and Post Retirement Benefits - Funded Status of Defined Benefit Pension and Post Retirement Plans (Details) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of defined benefit plans [line items]
Pension surpluses	$ 49.1	$ 50.8
Pension deficits	250.8	216.9
Defined benefit pension plans
Disclosure of defined benefit plans [line items]
Benefit obligation	(918.3)	(803.7)
Fair value of plan assets	836.1	747.9
Funded status of plans - deficit	(82.2)	(55.8)
Impact of asset ceiling	(1.0)	(1.0)
Net accrued liability (notes 13 and 14)	$ (83.2)	$ (56.8)
Discount rate	3.20%	3.60%
Rate of compensation increase	2.80%	3.60%
Pension surpluses	$ 49.1	$ 50.8
Pension deficits	132.3	107.6
Post retirement benefit plans
Disclosure of defined benefit plans [line items]
Benefit obligation	(118.5)	(109.3)
Fair value of plan assets	0.0	0.0
Funded status of plans - deficit	(118.5)	(109.3)
Net accrued liability (notes 13 and 14)	$ (118.5)	$ (109.3)
Discount rate	4.10%	4.20%
Rate of compensation increase	3.30%	3.50%
Health care cost trend	5.00%	5.70%

XML

Pensions and Post Retirement Benefits - Pension and Post Retirement Expenses Recognized (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of defined benefit plans [line items]
Employee benefits	$ 319.0	$ 276.9
Defined benefit pension plans
Disclosure of defined benefit plans [line items]
Defined benefit plan expense	17.3	27.7
Defined contribution pension plan expense	45.6	32.2
Employee benefits	73.2	67.9
Post retirement benefit plans
Disclosure of defined benefit plans [line items]
Defined benefit plan expense	$ 10.3	$ 8.0

XML

Pensions and Post Retirement Benefits - Pre-tax Actuarial Gains and (Losses) Recognized (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of net defined benefit liability (asset) [line items]
Gain (loss) on defined benefit pension plans	$ (34.1)	$ (23.3)
Defined benefit pension plans
Disclosure of net defined benefit liability (asset) [line items]
Actuarial net gains on plan assets and change in asset ceiling	18.6	54.5
Actuarial net gains (losses) on benefit obligations	(53.0)	(76.4)
Gain (loss) on defined benefit pension plans	(34.4)	(21.9)
Post retirement benefit plans
Disclosure of net defined benefit liability (asset) [line items]
Actuarial net gains (losses) on benefit obligations	$ 0.3	$ (1.4)

XML

Pensions and Post Retirement Benefits - Additional Information (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Pension And Post Retirement Benefits [Abstract]
Employer contributions	$ 30.7	$ 21.8
Expected employer contributions	$ 28.2

XML

Operating Leases (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Leases1 [Abstract]
Operating lease costs	$ 216.2	$ 155.7
Term of lease, maximum	10 years
2018
Disclosure of finance lease and operating lease by lessee [line items]
Minimum operating lease commitments	$ 188.5
2019
Disclosure of finance lease and operating lease by lessee [line items]
Minimum operating lease commitments	173.2
2020
Disclosure of finance lease and operating lease by lessee [line items]
Minimum operating lease commitments	153.4
2021
Disclosure of finance lease and operating lease by lessee [line items]
Minimum operating lease commitments	139.5
2022
Disclosure of finance lease and operating lease by lessee [line items]
Minimum operating lease commitments	113.0
Thereafter
Disclosure of finance lease and operating lease by lessee [line items]
Minimum operating lease commitments	$ 458.2

XML

Acquisitions and Divestitures - Subsequent to 2017 (Details) CAD in Millions, $ in Millions, ₨ in Billions				12 Months Ended
	Mar. 09, 2018 USD ($)	Feb. 22, 2018 USD ($) shares	Jan. 13, 2017	Dec. 31, 2017 shares	Dec. 31, 2016 shares	Feb. 22, 2018 CAD shares	Feb. 20, 2018 USD ($)	Feb. 20, 2018 INR (₨)	Sep. 02, 2016 shares
Fairfax India | Subsequent event
Disclosure of detailed information about business combination [line items]
Performance fee revenue | $	$ 114.4
The Keg
Disclosure of detailed information about business combination [line items]
Proportion of ownership interest in subsidiary				51.00%
The Keg | Subsequent event
Disclosure of detailed information about business combination [line items]
Percentage of interest sold		51.00%
Fairfax India
Disclosure of detailed information about business combination [line items]
Number of subordinated voting equity interests acquired				7,663,685
Proportion of ownership interest in subsidiary				30.20%	33.60%
Ownership percentage			30.20%
Cara | Subsequent event | The Keg
Disclosure of detailed information about business combination [line items]
Purchase consideration		$ 74.6				CAD 94.7
Cash transferred		$ 7.9				CAD 10.0
Other shareholders | The Keg | Subsequent event
Disclosure of detailed information about business combination [line items]
Percentage of interest sold		49.00%
Fairfax India | Subsequent event | The Catholic Syrian Bank Ltd.
Disclosure of detailed information about business combination [line items]
Purchase consideration							$ 186.0	₨ 12.1
Percentage of interests acquired							51.00%	51.00%
Cara
Disclosure of detailed information about business combination [line items]
Ownership percentage				40.20%	43.20%
Subordinate voting shares
Disclosure of detailed information about business combination [line items]
Number of shares issued (in shares)				27,904,801	23,004,207
Subordinate voting shares | Cara
Disclosure of detailed information about business combination [line items]
Number of shares issued (in shares)									7,863,280
Subordinate voting shares | Cara | Subsequent event | The Keg
Disclosure of detailed information about business combination [line items]
Number of shares issued (in shares)		3,400,000				3,400,000
Other shareholders | Cara | Subsequent event | The Keg
Disclosure of detailed information about business combination [line items]
Purchase consideration		$ 82.7				CAD 105.0
Cash transferred		74.8				95.0
Contingent consideration		$ 24.0				CAD 30.0
Other shareholders | Subordinate voting shares | Cara | Subsequent event | The Keg
Disclosure of detailed information about business combination [line items]
Number of shares issued (in shares)		401,123				401,123

XML

Acquisitions and Divestitures - 2017 Acquisitions (Details) CAD / shares in Units, $ / shares in Units, € in Millions, $ in Millions, ₨ in Billions												1 Months Ended		12 Months Ended
	Dec. 28, 2017 USD ($)	Sep. 06, 2017 USD ($)	Sep. 06, 2017 EUR (€)	Aug. 17, 2017 USD ($) shares	Aug. 17, 2017 INR (₨)	Jul. 06, 2017 USD ($) $ / shares shares	Jul. 04, 2017 USD ($)	Jul. 04, 2017 EUR (€)	Feb. 17, 2017 USD ($) $ / shares shares	Jan. 26, 2017 USD ($) CAD / shares shares	Jan. 13, 2017 USD ($) $ / shares shares	Nov. 30, 2017 USD ($)	Nov. 30, 2017 INR (₨)	Dec. 31, 2017 USD ($) shares	Dec. 31, 2016 USD ($) shares	Dec. 22, 2017 USD ($)	Dec. 22, 2017 INR (₨)	Feb. 14, 2017 USD ($)	Feb. 14, 2017 INR (₨)	Jan. 26, 2017 CAD	Aug. 26, 2016 USD ($)	Aug. 26, 2016 INR (₨)	Feb. 08, 2016
Disclosure of detailed information about business combination [line items]
Sale of subsidiary														$ 640.4	$ 0.0
Investments in associates														3,656.3	2,633.5
Acquisitions of subsidiaries														2,451.2	86.8
Other net changes in capitalization (note 16)														420.6	144.4
Notional amount														$ 6,396.9	$ 4,783.5
Allied World
Disclosure of detailed information about business combination [line items]
Percentage of interests acquired				5.40%		94.60%
Purchase consideration				$ 229.0		$ 3,977.9
Cash transferred				109.7		$ 1,905.6
Equity interests issued, pre-closing dividends paid per share (in dollars per share) | $ / shares						$ 5.00
Equity interests issued, pre-closing dividends paid						$ 438.0
Privi Organics
Disclosure of detailed information about business combination [line items]
Percentage of interests acquired																					50.80%	50.80%
Purchase consideration																					$ 55.0	₨ 3.7
Fairfax Africa
Disclosure of detailed information about business combination [line items]
Cash transferred									$ 252.2
Number of multiple voting equity interests acquired | shares									22,715,394
Number of subordinated voting equity interests acquired | shares									2,500,000
Saurashtra Freight Private Limited
Disclosure of detailed information about business combination [line items]
Percentage of interests acquired																		51.00%	51.00%
Purchase consideration																		$ 30.0	₨ 2.0
First Capital Insurance Limited
Disclosure of detailed information about business combination [line items]
Percentage of interest sold	97.70%
Sale of subsidiary	$ 1,683.3
Realized gain of sale of subsidiary	$ 1,018.6
Fairfax India
Disclosure of detailed information about business combination [line items]
Ownership percentage											30.20%
Voting interest percentage											93.60%
Number of subordinated voting equity interests acquired | shares														7,663,685
Acquisitions of subsidiaries											$ 336.3
Other net changes in capitalization (note 16)											3.3
Co-Investors | Allied World
Disclosure of detailed information about business combination [line items]
Purchase consideration						1,580.0
Quess | Manipal
Disclosure of detailed information about business combination [line items]
Purchase consideration																$ 152.5	₨ 9.8
Thomas Cook India | Quess
Disclosure of detailed information about business combination [line items]
Percentage of interest sold												5.40%	5.40%
Sale of subsidiary												$ 96.8	₨ 6.3
Fairfax India
Disclosure of detailed information about business combination [line items]
Proceeds from issuing shares											493.5
Fairfax India | Fairchem Limited
Disclosure of detailed information about business combination [line items]
Percentage of interests acquired																							44.70%
Fairfax India | Privi Organics
Disclosure of detailed information about business combination [line items]
Percentage of interests acquired																					50.80%	50.80%
Fairfax Africa
Disclosure of detailed information about business combination [line items]
Proceeds from issuing shares									$ 493.3
Subordinate voting shares
Disclosure of detailed information about business combination [line items]
Number of shares issued (in shares) | shares														27,904,801	23,004,207
Subordinate voting shares | Allied World
Disclosure of detailed information about business combination [line items]
Equity interests issued in combination				$ 119.3		$ 2,072.3								$ 2,191.6
Number of shares issued (in shares) | shares				276,397		4,799,497
Common shares | Quess
Disclosure of detailed information about business combination [line items]
Proceeds from issuing shares				$ 132.2	₨ 8.5
Common shares | Quess | Manipal
Disclosure of detailed information about business combination [line items]
Equity interests issued in combination																117.7	7.5
Preferred shares
Disclosure of detailed information about business combination [line items]
Other net changes in capitalization (note 16)															$ 0.6
Preferred shares | Quess | Manipal
Disclosure of detailed information about business combination [line items]
Equity interests issued in combination																$ 34.3	₨ 2.2
Multiple voting shares
Disclosure of detailed information about business combination [line items]
Number of shares issued (in shares) | shares														1,548,000	1,548,000
Multiple voting shares | Fairfax Africa
Disclosure of detailed information about business combination [line items]
Share acquired through exchange of indirect interest (in shares) | shares									7,284,606
Allied World | Co-Investors
Disclosure of detailed information about business combination [line items]
Ownership percentage														32.60%
Quess
Disclosure of detailed information about business combination [line items]
Ownership percentage														33.10%	42.10%
Acquisitions of subsidiaries														$ 210.0
Other net changes in capitalization (note 16)															$ 135.6
Grivalia
Disclosure of detailed information about business combination [line items]
Percentage of interests acquired		0.10%	0.10%				10.30%	10.30%
Ownership percentage		52.70%	52.70%				52.60%	52.60%						0.00%	40.60%
Consideration paid		$ 0.6	€ 0.5				$ 100.0	€ 88.0
Investments in associates														$ 0.0	$ 295.9
Gain (loss) on fair value adjustment							$ 51.3
AFGRI Proprietary Limited
Disclosure of detailed information about business combination [line items]
Equity interests issued in combination									$ 72.8
Ownership percentage														60.00%
Investments in associates									$ 40.5					$ 0.0
AFGRI Proprietary Limited | Multiple voting shares
Disclosure of detailed information about business combination [line items]
Share acquired through exchange of indirect interest (in shares) | shares									7,284,606
Fairfax Africa
Disclosure of detailed information about business combination [line items]
Ownership percentage									64.20%
Voting interest percentage									98.80%
Investments in associates									$ 325.0
Investment in associates (in dollars per share) | $ / shares									$ 10.00
Fairchem Limited
Disclosure of detailed information about business combination [line items]
Ownership percentage														0.00%	44.90%
Investments in associates														$ 0.0	$ 0.0
Fairchem Limited | Fairfax India
Disclosure of detailed information about business combination [line items]
Ownership percentage														48.70%
Mosaic Capital
Disclosure of detailed information about business combination [line items]
Voting interest percentage										62.00%
Investments in associates										$ 114.5										CAD 150,000,000
Mosaic Capital | Common shares
Disclosure of detailed information about business combination [line items]
Warrants to acquire common shares (in shares) | shares										17,026,106
Warrants to acquire common shares (in dollars per share) | CAD / shares										$ 8.81
Fairfax Financial Holdings | Subordinate voting shares | Fairfax India
Disclosure of detailed information about business combination [line items]
Purchase consideration											$ 145.0
Consideration transferred (in dollars per share) | $ / shares											$ 11.75
Number of subordinated voting equity interests acquired | shares											12,340,500
6.00% Senior Preferred Securities | Mosaic Capital
Disclosure of detailed information about business combination [line items]
Notional amount | CAD																				CAD 100,000,000.0
Interest rate										6.00%										6.00%
5.00% Senior Secured Debentures | Mosaic Capital
Disclosure of detailed information about business combination [line items]
Notional amount | CAD																				CAD 50,000,000.0
Interest rate										5.00%										5.00%

XML

Acquisitions and Divestitures - 2016 Acquisitions (Details) CAD / shares in Units, $ / shares in Units, LKR in Millions, CAD in Millions, $ in Millions, ₨ in Billions, ZAR in Billions, IDR in Billions	Jul. 06, 2017 USD ($) $ / shares shares	Jan. 13, 2017 USD ($)	Sep. 02, 2016 USD ($) shares	Sep. 02, 2016 CAD shares	Dec. 31, 2017 USD ($) shares	Aug. 17, 2017 USD ($) shares	Dec. 31, 2016 USD ($) shares	Dec. 07, 2016 USD ($)	Dec. 07, 2016 ZAR	Nov. 28, 2016 USD ($)	Nov. 28, 2016 CAD	Oct. 31, 2016 USD ($)	Oct. 31, 2016 CAD	Oct. 18, 2016 USD ($)	Oct. 10, 2016 USD ($)	Oct. 10, 2016 IDR	Oct. 03, 2016 USD ($)	Oct. 03, 2016 LKR	Sep. 02, 2016 CAD CAD / shares shares	Aug. 26, 2016 USD ($)	Aug. 26, 2016 INR (₨)	Feb. 08, 2016
Disclosure of detailed information about business combination [line items]
Carrying value of investment					$ 39,255.4		$ 28,430.7
Cara
Disclosure of detailed information about business combination [line items]
Number of subordinated voting equity interests acquired | shares			3,128,804	3,128,804
Allied World
Disclosure of detailed information about business combination [line items]
Purchase consideration	$ 3,977.9					$ 229.0
Equity interests issued, pre-closing dividends paid per share (in dollars per share) | $ / shares	$ 5.00
Percentage of interests acquired	94.60%					5.40%
Cash transferred	$ 1,905.6					$ 109.7
Certain American International Group, Inc. Operations in Latin America and Central and Eastern Europe
Disclosure of detailed information about business combination [line items]
Purchase consideration														$ 240.0
Zurich Insurance Company South Africa Limited
Disclosure of detailed information about business combination [line items]
Purchase consideration								$ 128.0	ZAR 1.8
Percentage of interests acquired								100.00%	100.00%
Original Joe's
Disclosure of detailed information about business combination [line items]
Purchase consideration										$ 83.8	CAD 112.5
Percentage of interests acquired										89.20%	89.20%
Cash transferred										$ 69.3	CAD 93.0
Contingent consideration										$ 14.5	CAD 19.5
Golf Town Limited
Disclosure of detailed information about business combination [line items]
Purchase consideration												$ 31.4	CAD 42.0
Percentage of interests acquired												60.00%	60.00%
AMAG
Disclosure of detailed information about business combination [line items]
Purchase consideration															$ 178.9	IDR 2,322
Percentage of interests acquired															80.00%	80.00%
Asian Alliance General Insurance Limited
Disclosure of detailed information about business combination [line items]
Purchase consideration																	$ 10.2	LKR 1,488.9
Percentage of interests acquired																	100.00%	100.00%
St-Hubert
Disclosure of detailed information about business combination [line items]
Purchase consideration			$ 413.8																CAD 538.7
Percentage of interests acquired			100.00%																100.00%
Cash transferred			$ 372.4																CAD 484.8
Privi Organics
Disclosure of detailed information about business combination [line items]
Purchase consideration																				$ 55.0	₨ 3.7
Percentage of interests acquired																				50.80%	50.80%
Fairfax India
Disclosure of detailed information about business combination [line items]
Proceeds from issuing shares		$ 493.5
Fairfax India | Privi Organics
Disclosure of detailed information about business combination [line items]
Percentage of interests acquired																				50.80%	50.80%
Fairfax India | Fairchem Speciality Limited
Disclosure of detailed information about business combination [line items]
Percentage of interests acquired																						44.70%
Co-Investors | Allied World
Disclosure of detailed information about business combination [line items]
Purchase consideration	1,580.0
Subordinate voting shares
Disclosure of detailed information about business combination [line items]
Number of shares issued (in shares) | shares					27,904,801		23,004,207
Subordinate voting shares | Allied World
Disclosure of detailed information about business combination [line items]
Equity interests issued in combination	$ 2,072.3				$ 2,191.6	$ 119.3
Number of shares issued (in shares) | shares	4,799,497					276,397
Subordinate voting shares | St-Hubert
Disclosure of detailed information about business combination [line items]
Equity interests issued in combination			$ 41.4																CAD 53.9
Subordinate voting shares | Cara
Disclosure of detailed information about business combination [line items]
Number of shares issued (in shares) | shares			7,863,280																7,863,280
Sale of shares (in dollars per share) | CAD / shares																			CAD 29.25
Proceeds from issuing shares			$ 179.2	CAD 230.0

XML

Acquisitions and Divestitures - Assets Acquired and Liabilities Assumed (Details) CAD in Millions, $ in Millions, IDR in Billions					12 Months Ended
	Jul. 06, 2017 USD ($)	Jul. 04, 2017 USD ($)	Dec. 07, 2016 USD ($)	Oct. 10, 2016 USD ($)	Dec. 31, 2017 USD ($)	Aug. 17, 2017 USD ($)	Dec. 31, 2016 USD ($)	Oct. 10, 2016 IDR	Sep. 02, 2016 USD ($)	Sep. 02, 2016 CAD
Liabilities:
Goodwill					$ 2,904.7		$ 1,633.7
Allied World
Disclosure of detailed information about business combination [line items]
Percentage of common shares acquired	94.60%					5.40%
Assets:
Insurance contract receivables	$ 1,212.5
Portfolio investments	8,568.7
Recoverable from reinsurers	2,363.6
Deferred income taxes	0.0
Goodwill and intangible assets	1,726.9
Other assets	223.5
Assets	14,095.2
Liabilities:
Accounts payable and accrued liabilities	300.7
Income taxes payable	3.4
Deferred income taxes	118.0
Funds withheld payable to reinsurers	193.5
Insurance contract liabilities	8,467.7
Borrowings	860.5
Liabilities	9,943.8
Non-controlling interests	173.5
Purchase consideration	3,977.9					$ 229.0
Excess of fair value of net assets acquired over purchase consideration	0.0
Assets acquired (liabilities assumed)	14,095.2
Subsidiary cash and cash equivalents	1,195.4
Restricted cash and cash equivalents	4.8
Goodwill	937.9
Identifiable intangible assets recognised as of acquisition date	789.0
Grivalia Properties
Disclosure of detailed information about business combination [line items]
Percentage of common shares acquired		52.60%
Assets:
Insurance contract receivables		$ 0.0
Portfolio investments		139.1
Recoverable from reinsurers		0.0
Deferred income taxes		0.3
Goodwill and intangible assets		0.0
Other assets		1,020.4
Assets		1,159.8
Liabilities:
Accounts payable and accrued liabilities		25.3
Income taxes payable		4.2
Deferred income taxes		0.0
Funds withheld payable to reinsurers		0.0
Insurance contract liabilities		0.0
Borrowings		137.6
Liabilities		167.1
Non-controlling interests		470.5
Purchase consideration		519.7
Excess of fair value of net assets acquired over purchase consideration		2.5
Assets acquired (liabilities assumed)		1,159.8
Subsidiary cash and cash equivalents		$ 26.3
Fairfax Latam
Disclosure of detailed information about business combination [line items]
Percentage of common shares acquired					100.00%
Assets:
Insurance contract receivables					$ 235.8
Portfolio investments					250.4
Recoverable from reinsurers					597.7
Deferred income taxes					48.3
Goodwill and intangible assets					23.3
Other assets					51.1
Assets					1,206.6
Liabilities:
Accounts payable and accrued liabilities					172.3
Income taxes payable					9.0
Deferred income taxes					21.5
Funds withheld payable to reinsurers					9.8
Insurance contract liabilities					826.1
Borrowings					0.0
Liabilities					1,038.7
Non-controlling interests					0.0
Purchase consideration					167.9
Excess of fair value of net assets acquired over purchase consideration					0.0
Assets acquired (liabilities assumed)					1,206.6
Subsidiary cash and cash equivalents					67.2
Other
Assets:
Insurance contract receivables					0.4		41.3
Portfolio investments					76.0		22.1
Recoverable from reinsurers					0.7		1.1
Deferred income taxes					5.0		8.5
Goodwill and intangible assets					385.5		146.1
Other assets					288.7		205.3
Assets					756.3		424.4
Liabilities:
Accounts payable and accrued liabilities					167.4		48.3
Income taxes payable					1.1
Deferred income taxes					4.3		12.2
Funds withheld payable to reinsurers					0.1		0.4
Insurance contract liabilities					3.0		59.7
Borrowings					83.9		48.1
Liabilities					259.8		168.7
Non-controlling interests					8.1		57.3
Purchase consideration					488.4		191.6
Excess of fair value of net assets acquired over purchase consideration					0.0		6.8
Assets acquired (liabilities assumed)					$ 756.3		$ 424.4
Bryte Insurance
Disclosure of detailed information about business combination [line items]
Percentage of common shares acquired			100.00%
Assets:
Insurance contract receivables			$ 45.0
Portfolio investments			220.4
Recoverable from reinsurers			85.8
Deferred income taxes			11.4
Goodwill and intangible assets			16.8
Other assets			10.8
Assets			390.2
Liabilities:
Accounts payable and accrued liabilities			88.4
Deferred income taxes			0.0
Funds withheld payable to reinsurers			1.4
Insurance contract liabilities			172.4
Borrowings			0.0
Liabilities			262.2
Non-controlling interests			0.0
Purchase consideration			128.0
Excess of fair value of net assets acquired over purchase consideration			0.0
Assets acquired (liabilities assumed)			390.2
Subsidiary cash and cash equivalents			48.4
Goodwill			11.5
Identifiable intangible assets recognised as of acquisition date			$ 5.3
AMAG
Disclosure of detailed information about business combination [line items]
Percentage of common shares acquired				80.00%				80.00%
Assets:
Insurance contract receivables				$ 8.9
Portfolio investments				99.9
Recoverable from reinsurers				26.4
Deferred income taxes				0.0
Goodwill and intangible assets				161.2
Other assets				25.9
Assets				322.3
Liabilities:
Accounts payable and accrued liabilities				16.6
Deferred income taxes				11.1
Funds withheld payable to reinsurers				5.4
Insurance contract liabilities				76.3
Borrowings				0.0
Liabilities				109.4
Non-controlling interests				34.0
Purchase consideration				178.9				IDR 2,322
Excess of fair value of net assets acquired over purchase consideration				0.0
Assets acquired (liabilities assumed)				322.3
Subsidiary cash and cash equivalents				6.2
Goodwill				43.0
Identifiable intangible assets recognised as of acquisition date				$ 118.2
St-Hubert
Disclosure of detailed information about business combination [line items]
Percentage of common shares acquired									100.00%	100.00%
Assets:
Insurance contract receivables									$ 0.0
Portfolio investments									0.0
Recoverable from reinsurers									0.0
Deferred income taxes									0.0
Goodwill and intangible assets									319.4
Other assets									180.0
Assets									499.4
Liabilities:
Accounts payable and accrued liabilities									30.7
Deferred income taxes									54.9
Funds withheld payable to reinsurers									0.0
Insurance contract liabilities									0.0
Borrowings									0.0
Liabilities									85.6
Non-controlling interests									0.0
Purchase consideration									413.8	CAD 538.7
Excess of fair value of net assets acquired over purchase consideration									0.0
Assets acquired (liabilities assumed)									$ 499.4
Percentage of economic interests									38.90%	38.90%
Goodwill									$ 85.2
Identifiable intangible assets recognised as of acquisition date									234.2
Customer and broker relationships | Allied World
Liabilities:
Identifiable intangible assets recognised as of acquisition date	574.0
Lloyd's participation rights | Allied World
Liabilities:
Identifiable intangible assets recognised as of acquisition date	87.0
Brand names | Allied World
Liabilities:
Identifiable intangible assets recognised as of acquisition date	$ 71.0
Brand names | St-Hubert
Liabilities:
Identifiable intangible assets recognised as of acquisition date									$ 183.1

XML

Acquisitions and Divestitures - Additional Information (Details) - Allied World $ in Millions	12 Months Ended
	Dec. 31, 2017 USD ($)
Disclosure of detailed information about business combination [line items]
Contributed revenue from acquiree	$ 1,050.5
Net loss from acquiree	555.4
Pro forma revenue	17,514.6
Pro forma net earnings	$ 1,766.4

XML

Financial Risk Management - Underwriting Risk - Gross Premiums Written (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of nature and extent of risks arising from financial instruments [line items]
Recoverable from reinsurers	$ 7,812.5
Gross premiums written	$ 12,207.5	$ 9,534.3
Normalized net earnings, percent return on common shareholders' equity adjusted to pre-tax basis	15.00%
Canada
Disclosure of nature and extent of risks arising from financial instruments [line items]
Gross premiums written	$ 1,392.8	1,237.6
United States
Disclosure of nature and extent of risks arising from financial instruments [line items]
Gross premiums written	7,326.8	5,954.5
Asia
Disclosure of nature and extent of risks arising from financial instruments [line items]
Gross premiums written	1,262.4	1,049.0
International
Disclosure of nature and extent of risks arising from financial instruments [line items]
Gross premiums written	2,225.5	1,293.2
Reinsurance
Disclosure of nature and extent of risks arising from financial instruments [line items]
Gross premiums written	2,877.6	2,604.1
Reinsurance | Canada
Disclosure of nature and extent of risks arising from financial instruments [line items]
Gross premiums written	97.5	103.0
Reinsurance | United States
Disclosure of nature and extent of risks arising from financial instruments [line items]
Gross premiums written	1,471.4	1,347.5
Reinsurance | Asia
Disclosure of nature and extent of risks arising from financial instruments [line items]
Gross premiums written	577.5	532.7
Reinsurance | International
Disclosure of nature and extent of risks arising from financial instruments [line items]
Gross premiums written	731.2	620.9
Insurance
Disclosure of nature and extent of risks arising from financial instruments [line items]
Gross premiums written	9,329.9	6,930.2
Insurance | Canada
Disclosure of nature and extent of risks arising from financial instruments [line items]
Gross premiums written	1,295.3	1,134.6
Insurance | United States
Disclosure of nature and extent of risks arising from financial instruments [line items]
Gross premiums written	5,855.4	4,607.0
Insurance | Asia
Disclosure of nature and extent of risks arising from financial instruments [line items]
Gross premiums written	684.9	516.3
Insurance | International
Disclosure of nature and extent of risks arising from financial instruments [line items]
Gross premiums written	1,494.3	672.3
Specialty
Disclosure of nature and extent of risks arising from financial instruments [line items]
Gross premiums written	1,392.1	1,169.3
Specialty | Canada
Disclosure of nature and extent of risks arising from financial instruments [line items]
Gross premiums written	143.4	126.4
Specialty | United States
Disclosure of nature and extent of risks arising from financial instruments [line items]
Gross premiums written	548.8	485.6
Specialty | Asia
Disclosure of nature and extent of risks arising from financial instruments [line items]
Gross premiums written	275.1	231.9
Specialty | International
Disclosure of nature and extent of risks arising from financial instruments [line items]
Gross premiums written	424.8	325.4
Casualty
Disclosure of nature and extent of risks arising from financial instruments [line items]
Gross premiums written	6,707.8	5,348.8
Casualty | Canada
Disclosure of nature and extent of risks arising from financial instruments [line items]
Gross premiums written	602.6	528.5
Casualty | United States
Disclosure of nature and extent of risks arising from financial instruments [line items]
Gross premiums written	4,899.4	4,002.9
Casualty | Asia
Disclosure of nature and extent of risks arising from financial instruments [line items]
Gross premiums written	400.8	352.3
Casualty | International
Disclosure of nature and extent of risks arising from financial instruments [line items]
Gross premiums written	805.0	465.1
Property
Disclosure of nature and extent of risks arising from financial instruments [line items]
Gross premiums written	4,107.6	3,016.2
Property | Canada
Disclosure of nature and extent of risks arising from financial instruments [line items]
Gross premiums written	646.8	582.7
Property | United States
Disclosure of nature and extent of risks arising from financial instruments [line items]
Gross premiums written	1,878.6	1,466.0
Property | Asia
Disclosure of nature and extent of risks arising from financial instruments [line items]
Gross premiums written	586.5	464.8
Property | International
Disclosure of nature and extent of risks arising from financial instruments [line items]
Gross premiums written	995.7	502.7
Ceded reinsurance contracts
Disclosure of nature and extent of risks arising from financial instruments [line items]
Recoverable from reinsurers	7,812.5	4,010.3	$ 3,890.9
Ceded reinsurance contracts | Specialty
Disclosure of nature and extent of risks arising from financial instruments [line items]
Recoverable from reinsurers	315.4	282.5
Ceded reinsurance contracts | Casualty
Disclosure of nature and extent of risks arising from financial instruments [line items]
Recoverable from reinsurers	916.3	699.9
Ceded reinsurance contracts | Property
Disclosure of nature and extent of risks arising from financial instruments [line items]
Recoverable from reinsurers	$ 992.3	$ 463.5

XML

Financial Risk Management - Credit Risk - Aggregate Gross Credit Risk Exposure (Details) - Credit risk - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	$ 43,838.7	$ 29,592.7
Cash and short term investments
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	19,198.8	11,235.6
U.S. sovereign government
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	1,779.3	1,117.3
Other sovereign government rated AA/Aa or higher
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	615.4	596.1
All other sovereign government
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	1,268.4	891.5
Canadian provincials
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	93.8	196.9
U.S. states and municipalities
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	2,452.1	4,732.2
Corporate and other
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	4,081.8	2,633.5
Receivable from counterparties to derivative contracts
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	126.7	196.4
Insurance contract receivables
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	4,686.9	2,917.5
Recoverable from reinsurers
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	7,812.5	4,010.3
Other assets
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	$ 1,723.0	$ 1,065.4

XML

Financial Risk Management - Credit Risk - Narrative (Details) - USD ($)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of credit risk exposure [line items]
Income taxes refundable	$ 147,000,000	$ 202,700,000
Proceeds from issue of bonds, notes and debentures	5,677,100,000	4,514,500,000
Excess collateral pledged by counterparties	400,000	8,700,000
Financial assets pledged as liabilities	5,706,000,000	5,481,000,000
Credit risk
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	43,838,700,000	$ 29,592,700,000
Capital and surplus requirement	$ 500,000,000
Investment grade or better | Credit risk
Disclosure of credit risk exposure [line items]
Risk exposure percentage	72.20%	79.20%
AA or better | Credit risk
Disclosure of credit risk exposure [line items]
Risk exposure percentage	47.10%	61.90%
Cash and short term investments | Credit risk
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	$ 19,198,800,000	$ 11,235,600,000
Financial assets pledged as liabilities	3,600,000	8,300,000
All other sovereign government | Credit risk
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	1,268,400,000	891,500,000
Bonds, U.S. states and municipalities
Disclosure of credit risk exposure [line items]
Financial assets	2,500,000,000	4,700,000,000
Proceeds from issue of bonds, notes and debentures	2,346,500,000
Favourable tax treatment expected	2,300,000,000	3,300,000,000
Taxable portion of investment	200,000,000
Bonds, U.S. states and municipalities | Credit risk
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	2,452,100,000	4,732,200,000
Bonds, U.S. states and municipalities | AA or better
Disclosure of credit risk exposure [line items]
Financial assets	$ 1,500,000,000	$ 2,100,000,000
Other than U.S., U.K., German, and Canadian sovereign government | Credit risk
Disclosure of credit risk exposure [line items]
Risk exposure percentage	8.70%	14.70%
Maximum exposure to credit risk	$ 3,398,700,000	$ 4,178,600,000
Largest single issuer of corporate bonds | Credit risk
Disclosure of credit risk exposure [line items]
Risk exposure percentage	1.70%	1.60%
Maximum exposure to credit risk	$ 663,600,000	$ 461,200,000
Government securities | Credit risk
Disclosure of credit risk exposure [line items]
Financial assets pledged as liabilities	35,900,000	54,400,000
Recoverable from reinsurers | Credit risk
Disclosure of credit risk exposure [line items]
Maximum exposure to credit risk	$ 7,812,500,000	$ 4,010,300,000
Recoverable from reinsurers | A Plus | Credit risk
Disclosure of credit risk exposure [line items]
Risk exposure percentage	6.50%	3.60%
Germany | Bonds
Disclosure of credit risk exposure [line items]
Bonds issued by government	$ 105,300,000	$ 201,700,000
Australia | Bonds
Disclosure of credit risk exposure [line items]
Bonds issued by government	97,900,000	31,700,000
UK | Bonds
Disclosure of credit risk exposure [line items]
Bonds issued by government	90,900,000	23,400,000
Canada | Bonds
Disclosure of credit risk exposure [line items]
Bonds issued by government	84,400,000	311,400,000
India | Bonds
Disclosure of credit risk exposure [line items]
Bonds issued by government	734,700,000	602,200,000
Poland | Bonds
Disclosure of credit risk exposure [line items]
Bonds issued by government	125,100,000	117,200,000
Brazil | Bonds
Disclosure of credit risk exposure [line items]
Bonds issued by government	$ 101,700,000	$ 80,300,000
Canada and United States | Cash and short term investments | Credit risk
Disclosure of credit risk exposure [line items]
Risk exposure percentage	87.40%	85.10%
Europe | Cash and short term investments | Credit risk
Disclosure of credit risk exposure [line items]
Risk exposure percentage	9.10%	8.10%
Other foreign countries | Cash and short term investments | Credit risk
Disclosure of credit risk exposure [line items]
Risk exposure percentage	3.50%	6.80%
Low Risk Level | All other sovereign government | Credit risk
Disclosure of credit risk exposure [line items]
Financial assets	$ 2,394,700,000	$ 1,713,400,000
Low Risk Level | Bonds | Credit risk
Disclosure of credit risk exposure [line items]
Risk exposure percentage	6.10%	6.00%
High And Moderate Risk Levels | Bonds | Credit risk
Disclosure of credit risk exposure [line items]
Risk exposure percentage	20.10%	29.70%
Financial assets	$ 7,896,100,000	$ 8,454,100,000
EXCO Resources, Inc | Bonds
Disclosure of credit risk exposure [line items]
Financial assets	402,000,000	292,400,000
Blackberry Limited | Bonds
Disclosure of credit risk exposure [line items]
Financial assets	663,600,000	461,200,000
Sanmar Chemicals Group | Bonds
Disclosure of credit risk exposure [line items]
Financial assets	333,200,000	299,100,000
Chorus Aviation | Bonds
Disclosure of credit risk exposure [line items]
Financial assets	155,200,000	0
FBD Insurance PLC | Bonds
Disclosure of credit risk exposure [line items]
Financial assets	$ 112,000,000	$ 76,800,000

XML

Financial Risk Management - Credit Risk - Schedule of Issuer Credit Rating (Details) - Credit risk - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
AAA/Aaa
Disclosure of external credit grades [line items]
Percent	23.70%	18.80%
AA/Aa
Disclosure of external credit grades [line items]
Percent	23.40%	43.10%
A/A
Disclosure of external credit grades [line items]
Percent	8.00%	7.20%
BBB/Baa
Disclosure of external credit grades [line items]
Percent	17.10%	10.10%
BB/Ba
Disclosure of external credit grades [line items]
Percent	1.50%	1.20%
B/B
Disclosure of external credit grades [line items]
Percent	4.30%	2.50%
Lower than B/B
Disclosure of external credit grades [line items]
Percent	4.20%	3.20%
Unrated
Disclosure of external credit grades [line items]
Percent	17.80%	13.90%
Total
Disclosure of external credit grades [line items]
Percent	100.00%	100.00%
At cost | AAA/Aaa
Disclosure of external credit grades [line items]
Financial assets	$ 2,476.3	$ 2,042.0
At cost | AA/Aa
Disclosure of external credit grades [line items]
Financial assets	2,149.5	3,669.1
At cost | A/A
Disclosure of external credit grades [line items]
Financial assets	823.1	649.3
At cost | BBB/Baa
Disclosure of external credit grades [line items]
Financial assets	1,617.1	910.4
At cost | BB/Ba
Disclosure of external credit grades [line items]
Financial assets	151.1	98.5
At cost | B/B
Disclosure of external credit grades [line items]
Financial assets	448.7	339.0
At cost | Lower than B/B
Disclosure of external credit grades [line items]
Financial assets	554.1	392.1
At cost | Unrated
Disclosure of external credit grades [line items]
Financial assets	1,594.4	1,416.7
At cost | Total
Disclosure of external credit grades [line items]
Financial assets	9,814.3	9,517.1
At fair value | AAA/Aaa
Disclosure of external credit grades [line items]
Financial assets	2,432.0	1,915.8
At fair value | AA/Aa
Disclosure of external credit grades [line items]
Financial assets	2,408.8	4,383.3
At fair value | A/A
Disclosure of external credit grades [line items]
Financial assets	819.8	728.5
At fair value | BBB/Baa
Disclosure of external credit grades [line items]
Financial assets	1,764.8	1,024.0
At fair value | BB/Ba
Disclosure of external credit grades [line items]
Financial assets	154.0	117.6
At fair value | B/B
Disclosure of external credit grades [line items]
Financial assets	447.6	261.6
At fair value | Lower than B/B
Disclosure of external credit grades [line items]
Financial assets	432.7	320.5
At fair value | Unrated
Disclosure of external credit grades [line items]
Financial assets	1,831.1	1,416.2
At fair value | Total
Disclosure of external credit grades [line items]
Financial assets	$ 10,290.8	$ 10,167.5

XML

Financial Risk Management - Credit Risk - Related Derivative Contract Counterparties (Details) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of nature and extent of risks arising from financial instruments [abstract]
Total derivative assets	$ 126.7	$ 196.4
Impact of net settlement arrangements	(38.6)	(53.8)
Fair value of collateral deposited for the benefit of the company	(39.1)	(54.0)
Excess collateral pledged by the company in favour of counterparties	9.0	12.2
Initial margin not held in segregated third party custodian accounts	8.2	5.0
Net derivative counterparty exposure after net settlement and collateral arrangements	$ 66.2	$ 105.8

XML

Financial Risk Management - Credit Risk - Gross Recoverable From Reinsurers Classified by Financial Strength (Details) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of credit risk exposure [line items]
Recoverable from reinsurers	$ 7,812.5
Ceded reinsurance contracts
Disclosure of credit risk exposure [line items]
Recoverable from reinsurers	7,812.5	$ 4,010.3	$ 3,890.9
Provision for uncollectible reinsurance	6,189.7	3,179.6
Gross recoverable from reinsurers | Ceded reinsurance contracts
Disclosure of credit risk exposure [line items]
Recoverable from reinsurers	7,978.9	4,182.0
Provision for uncollectible reinsurance	6,216.2	3,210.0
Provision for uncollectible reinsurance | Ceded reinsurance contracts
Disclosure of credit risk exposure [line items]
Recoverable from reinsurers	(166.4)	(171.7)	$ (187.0)
Provision for uncollectible reinsurance	(26.5)	(30.4)
Credit risk | Ceded reinsurance contracts
Disclosure of credit risk exposure [line items]
Recoverable from reinsurers	7,812.5	4,010.3
Outstanding balances for which security is held	912.9	502.0
Net unsecured recoverable from reinsurers	7,066.0	3,680.0
Provision for uncollectible reinsurance	(166.4)	(171.7)
Recoverable from reinsurers	6,899.6	3,508.3
Credit risk | Gross recoverable from reinsurers | Ceded reinsurance contracts
Disclosure of credit risk exposure [line items]
Recoverable from reinsurers	7,978.9	4,182.0
Credit risk | Provision for uncollectible reinsurance | Ceded reinsurance contracts
Disclosure of credit risk exposure [line items]
Recoverable from reinsurers	(166.4)	(171.7)
Credit risk | A Plus Plus | Ceded reinsurance contracts
Disclosure of credit risk exposure [line items]
Outstanding balances for which security is held	31.9	27.2
Net unsecured recoverable from reinsurers	397.7	362.8
Credit risk | A Plus Plus | Gross recoverable from reinsurers | Ceded reinsurance contracts
Disclosure of credit risk exposure [line items]
Recoverable from reinsurers	429.6	390.0
Credit risk | A Plus | Ceded reinsurance contracts
Disclosure of credit risk exposure [line items]
Outstanding balances for which security is held	267.2	152.0
Net unsecured recoverable from reinsurers	3,611.2	1,399.0
Credit risk | A Plus | Gross recoverable from reinsurers | Ceded reinsurance contracts
Disclosure of credit risk exposure [line items]
Recoverable from reinsurers	3,878.4	1,551.0
Credit risk | A | Ceded reinsurance contracts
Disclosure of credit risk exposure [line items]
Outstanding balances for which security is held	95.4	67.3
Net unsecured recoverable from reinsurers	2,216.5	1,063.5
Credit risk | A | Gross recoverable from reinsurers | Ceded reinsurance contracts
Disclosure of credit risk exposure [line items]
Recoverable from reinsurers	2,311.9	1,130.8
Credit risk | A Minus | Ceded reinsurance contracts
Disclosure of credit risk exposure [line items]
Outstanding balances for which security is held	15.1	19.9
Net unsecured recoverable from reinsurers	230.4	279.8
Credit risk | A Minus | Gross recoverable from reinsurers | Ceded reinsurance contracts
Disclosure of credit risk exposure [line items]
Recoverable from reinsurers	245.5	299.7
Credit risk | B Plus Plus | Ceded reinsurance contracts
Disclosure of credit risk exposure [line items]
Outstanding balances for which security is held	1.2	1.4
Net unsecured recoverable from reinsurers	21.0	20.6
Credit risk | B Plus Plus | Gross recoverable from reinsurers | Ceded reinsurance contracts
Disclosure of credit risk exposure [line items]
Recoverable from reinsurers	22.2	22.0
Credit risk | B Plus | Ceded reinsurance contracts
Disclosure of credit risk exposure [line items]
Outstanding balances for which security is held	0.8	1.2
Net unsecured recoverable from reinsurers	2.3	0.8
Credit risk | B Plus | Gross recoverable from reinsurers | Ceded reinsurance contracts
Disclosure of credit risk exposure [line items]
Recoverable from reinsurers	3.1	2.0
Credit risk | B or lower | Ceded reinsurance contracts
Disclosure of credit risk exposure [line items]
Outstanding balances for which security is held	3.0	8.9
Net unsecured recoverable from reinsurers	2.4	3.0
Credit risk | B or lower | Gross recoverable from reinsurers | Ceded reinsurance contracts
Disclosure of credit risk exposure [line items]
Recoverable from reinsurers	5.4	11.9
Credit risk | Not rated | Ceded reinsurance contracts
Disclosure of credit risk exposure [line items]
Outstanding balances for which security is held	493.8	218.5
Net unsecured recoverable from reinsurers	454.4	484.8
Credit risk | Not rated | Gross recoverable from reinsurers | Ceded reinsurance contracts
Disclosure of credit risk exposure [line items]
Recoverable from reinsurers	948.2	703.3
Credit risk | Pools and associations | Ceded reinsurance contracts
Disclosure of credit risk exposure [line items]
Outstanding balances for which security is held	4.5	5.6
Net unsecured recoverable from reinsurers	130.1	65.7
Credit risk | Pools and associations | Gross recoverable from reinsurers | Ceded reinsurance contracts
Disclosure of credit risk exposure [line items]
Recoverable from reinsurers	$ 134.6	$ 71.3

XML

Financial Risk Management - Liquidity Risk - Narrative (Details) - USD ($) $ / shares in Units, $ in Millions				1 Months Ended	12 Months Ended
	Jan. 25, 2018	Jan. 26, 2017	Jan. 27, 2016	Jan. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016	Dec. 21, 2017
Disclosure of nature and extent of risks arising from financial instruments [line items]
Common share dividends		$ 237.4	$ 227.8	$ 283.2		$ 304.9	$ 269.0
Dividend per share (in dollars per share)		$ 10	$ 10	$ 10.00		$ 10	$ 10
Cash and investments, net						$ 36,900.0	$ 27,100.0
Investments						39,255.4	28,430.7
Net (purchases) sales of securities classified as FVTPL						1,467.5	(1,203.6)
Income taxes payable						95.6	35.4
Subsequent event
Disclosure of nature and extent of risks arising from financial instruments [line items]
Common share dividends	$ 283.2
Dividend per share (in dollars per share)	$ 10
Insurance and reinsurance companies
Disclosure of nature and extent of risks arising from financial instruments [line items]
Common share dividends						418.1	445.8
Net (purchases) sales of securities classified as FVTPL						(285.0)	(814.4)
Holding Company
Disclosure of nature and extent of risks arising from financial instruments [line items]
Cash and investments, net						2,356.9	1,329.4
Subsidiary investments
Disclosure of nature and extent of risks arising from financial instruments [line items]
Cash and investments, net						$ 36,898.5	27,101.3
4.70% due December 16, 2026 | Holding Company
Disclosure of nature and extent of risks arising from financial instruments [line items]
Interest rate						4.70%
Revolving credit facility | Holding Company
Disclosure of nature and extent of risks arising from financial instruments [line items]
Revolving credit facility available							1,000.0	$ 2,000.0
Fairfax India | Subsidiary investments
Disclosure of nature and extent of risks arising from financial instruments [line items]
Investments						$ 1,054.7	$ 326.6
Liquidity risk | Insurance and reinsurance companies
Disclosure of nature and extent of risks arising from financial instruments [line items]
Risk exposure percentage						12.30%	9.60%
Forecast | Fairfax India and Fairfax Africa Term Loans | Non-insurance companies
Disclosure of nature and extent of risks arising from financial instruments [line items]
Repayment of borrowings					$ 855.9

XML

Financial Risk Management - Liquidity Risk - Financial Liabilities Maturity (Details) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009	Dec. 31, 2008
Disclosure of maturity analysis for non-derivative financial liabilities [line items]
Funds withheld payable to reinsurers	$ 850.2	$ 416.2
Provision for losses and loss adjustment expenses	28,610.8	19,481.8	$ 19,816.4	$ 17,749.1	$ 19,212.8	$ 19,648.8	$ 17,232.2	$ 16,049.3	$ 14,504.8	$ 14,467.2
Liquidity risk
Disclosure of maturity analysis for non-derivative financial liabilities [line items]
Accounts payable and accrued liabilities	2,938.9	2,283.8
Funds withheld payable to reinsurers	850.2	416.2
Provision for losses and loss adjustment expenses	28,610.8	19,481.8
Borrowings - principal	6,396.9	4,783.5
Borrowings - interest	1,985.7	1,636.7
Total financial liabilities	40,782.5	28,602.0
Liquidity risk | Less than 3 months
Disclosure of maturity analysis for non-derivative financial liabilities [line items]
Accounts payable and accrued liabilities	1,564.5	1,257.4
Funds withheld payable to reinsurers	186.6	125.1
Provision for losses and loss adjustment expenses	2,108.8	1,383.5
Borrowings - principal	47.1	478.1
Borrowings - interest	45.6	51.5
Total financial liabilities	3,952.6	3,295.6
Liquidity risk | 3 months to 1 year
Disclosure of maturity analysis for non-derivative financial liabilities [line items]
Accounts payable and accrued liabilities	578.8	433.9
Funds withheld payable to reinsurers	553.2	252.0
Provision for losses and loss adjustment expenses	5,344.5	3,890.0
Borrowings - principal	958.0	237.6
Borrowings - interest	270.1	197.6
Total financial liabilities	7,704.6	5,011.1
Liquidity risk | 1 - 3 years
Disclosure of maturity analysis for non-derivative financial liabilities [line items]
Accounts payable and accrued liabilities	485.3	347.4
Funds withheld payable to reinsurers	41.9	25.8
Provision for losses and loss adjustment expenses	8,272.0	5,664.4
Borrowings - principal	877.5	650.8
Borrowings - interest	542.9	443.1
Total financial liabilities	10,219.6	7,131.5
Liquidity risk | 3 - 5 years
Disclosure of maturity analysis for non-derivative financial liabilities [line items]
Accounts payable and accrued liabilities	216.8	113.3
Funds withheld payable to reinsurers	1.4	1.5
Provision for losses and loss adjustment expenses	4,557.3	3,428.0
Borrowings - principal	1,556.8	1,299.6
Borrowings - interest	381.5	334.5
Total financial liabilities	6,713.8	5,176.9
Liquidity risk | More than 5 years
Disclosure of maturity analysis for non-derivative financial liabilities [line items]
Accounts payable and accrued liabilities	93.5	131.8
Funds withheld payable to reinsurers	67.1	11.8
Provision for losses and loss adjustment expenses	8,328.2	5,115.9
Borrowings - principal	2,957.5	2,117.4
Borrowings - interest	745.6	610.0
Total financial liabilities	$ 12,191.9	$ 7,986.9

XML

Financial Risk Management - Liquidity Risk - Derivative Financial Liabilities (Details) - Liquidity risk - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure of maturity analysis for derivative financial liabilities [line items]
Derivative financial liabilities	$ 126.2	$ 234.3
Less than 3 months
Disclosure of maturity analysis for derivative financial liabilities [line items]
Derivative financial liabilities	114.6	221.9
3 months to 1 year
Disclosure of maturity analysis for derivative financial liabilities [line items]
Derivative financial liabilities	11.6	12.4
Equity total return swaps – short positions
Disclosure of maturity analysis for derivative financial liabilities [line items]
Derivative financial liabilities	12.1	78.1
Equity total return swaps – short positions | Less than 3 months
Disclosure of maturity analysis for derivative financial liabilities [line items]
Derivative financial liabilities	12.1	78.1
Equity total return swaps – short positions | 3 months to 1 year
Disclosure of maturity analysis for derivative financial liabilities [line items]
Derivative financial liabilities	0.0	0.0
Equity total return swaps – long positions
Disclosure of maturity analysis for derivative financial liabilities [line items]
Derivative financial liabilities	15.6	5.1
Equity total return swaps – long positions | Less than 3 months
Disclosure of maturity analysis for derivative financial liabilities [line items]
Derivative financial liabilities	15.6	5.1
Equity total return swaps – long positions | 3 months to 1 year
Disclosure of maturity analysis for derivative financial liabilities [line items]
Derivative financial liabilities	0.0	0.0
Foreign exchange forward contracts
Disclosure of maturity analysis for derivative financial liabilities [line items]
Derivative financial liabilities	69.7	101.4
Foreign exchange forward contracts | Less than 3 months
Disclosure of maturity analysis for derivative financial liabilities [line items]
Derivative financial liabilities	58.1	89.0
Foreign exchange forward contracts | 3 months to 1 year
Disclosure of maturity analysis for derivative financial liabilities [line items]
Derivative financial liabilities	11.6	12.4
U.S. treasury bond forward contracts
Disclosure of maturity analysis for derivative financial liabilities [line items]
Derivative financial liabilities	28.8	49.7
U.S. treasury bond forward contracts | Less than 3 months
Disclosure of maturity analysis for derivative financial liabilities [line items]
Derivative financial liabilities	28.8	49.7
U.S. treasury bond forward contracts | 3 months to 1 year
Disclosure of maturity analysis for derivative financial liabilities [line items]
Derivative financial liabilities	$ 0.0	$ 0.0

XML

Financial Risk Management - Market Risk - Narrative (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Jul. 06, 2017
Disclosure of nature and extent of risks arising from financial instruments [line items]
Proceeds from issue of bonds, notes and debentures	$ 5,677.1	$ 4,514.5
Notional amount	6,396.9	4,783.5
Bonds
Disclosure of nature and extent of risks arising from financial instruments [line items]
Fair value	$ 10,290.8	10,167.5
Interest rate risk
Disclosure of nature and extent of risks arising from financial instruments [line items]
Change in interest rate on investments	2.00%
Increment change in interest rate on investments	1.00%
Interest rate risk | Bonds
Disclosure of nature and extent of risks arising from financial instruments [line items]
Fair value	$ 10,290.8	10,167.5
Bonds, U.S. states and municipalities
Disclosure of nature and extent of risks arising from financial instruments [line items]
Proceeds from issue of bonds, notes and debentures	2,346.5
U.S. treasury bond forward contracts
Disclosure of nature and extent of risks arising from financial instruments [line items]
Notional amount	$ 1,693.8	$ 3,013.4
Allied World | Bonds
Disclosure of nature and extent of risks arising from financial instruments [line items]
Portfolio investments			$ 5,337.2

XML

Financial Risk Management - Market Risk - Potential Impact of Changes in Interest Rates on Fixed Asset Portfolio (Details) - Debt securities - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of nature and extent of risks arising from financial instruments [line items]
Fair value of fixed income portfolio, no change	$ 10,290.8	$ 10,167.5
Interest rate risk
Disclosure of nature and extent of risks arising from financial instruments [line items]
Fair value of fixed income portfolio, 200 basis point increase	9,897.4	9,758.6
Hypothetical $ change effect on net earnings, 200 basis point increase	$ (306.2)	$ (295.1)
Hypothetical % change in fair value, 200 basis point increase	(3.80%)	(4.00%)
Fair value of fixed income portfolio, 100 basis point increase	$ 10,090.1	$ 9,962.2
Hypothetical $ change effect on net earnings, 100 basis point increase	$ (155.6)	$ (148.2)
Hypothetical % change in fair value, 100 basis point increase	(2.00%)	(2.00%)
Fair value of fixed income portfolio, no change	$ 10,290.8	$ 10,167.5
Fair value of fixed income portfolio, 100 basis point decrease	10,498.6	10,338.3
Hypothetical $ change effect on net earnings, 100 basis point decrease	$ 161.3	$ 124.6
Hypothetical % change in fair value, 100 basis point decrease	2.00%	1.70%
Fair value of fixed income portfolio, 200 basis point decrease	$ 10,720.5	$ 10,480.2
Hypothetical $ change effect on net earnings, 200 basis point decrease	$ 332.0	$ 228.6
Hypothetical % change in fair value, 200 basis point decrease	4.20%	3.10%

XML

Financial Risk Management - Market Price Fluctuations - Narrative (Details) CAD in Millions, $ in Millions		2 Months Ended	3 Months Ended	12 Months Ended
	Sep. 19, 2017	Mar. 09, 2018 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2017 CAD	Dec. 31, 2016 CAD
Disclosure of detailed information about financial instruments [line items]
Net gains (losses) on investments				$ 1,467.5	$ (1,203.6)
Notional amount			$ 4,783.5	6,396.9	4,783.5
Market value			203.3	204.3	203.3
Net change in unrealized gains (losses)				612.2	(841.3)
Gains (losses) on hedge of net investment in Canadian subsidiaries				(106.3)	(37.5)
Equity total return swaps – short positions
Disclosure of detailed information about financial instruments [line items]
Notional amount of derivatives settled			6,350.6	1,202.9	6,350.6
Net gains (losses) on investments				(237.9)	(955.2)
Realized loss on derivatives			2,665.4	553.1	2,665.4
Unrealized loss on derivatives		$ 190.9		315.2	1,710.2
Notional amount			1,623.0	892.5	1,623.0
Market value			10.4	11.8	10.4
CPI-linked derivative contracts
Disclosure of detailed information about financial instruments [line items]
Unrealized loss on derivatives				$ 638.8	$ 586.6
Average life (in years)				4 years 7 months 6 days	5 years 7 months 6 days
Notional amount			110,365.5	$ 117,254.6	$ 110,365.5
Market value			83.4	39.6	83.4
Subsequent event | Equity total return swaps – short positions
Disclosure of detailed information about financial instruments [line items]
Notional amount of derivatives settled		481.3
Net gains (losses) on investments		(8.1)
Realized loss on derivatives		199.0
Unrealized loss on derivatives		190.9
Notional amount		$ 509.0
Equity price risk
Disclosure of detailed information about financial instruments [line items]
Net gains (losses) on investments				233.1	(39.4)
Notional amount			638.2	833.8	638.2
Market value			638.2	833.8	638.2
Equity price risk | Equity total return swaps – short positions
Disclosure of detailed information about financial instruments [line items]
Net gains (losses) on investments				(408.7)	(208.0)
Notional amount			(1,623.0)	(892.5)	(1,623.0)
Market value			(67.7)	(0.3)	(67.7)
Equity price risk | Investment Portfolio With Ten Largest Issuers
Disclosure of detailed information about financial instruments [line items]
Common equity instrument			$ 2,113.8	$ 3,138.1	$ 2,113.8
Risk exposure percentage			7.40%	8.00%	7.40%	8.00%	7.40%
Equity price risk | Investment Portfolio With Single Largest Issuer
Disclosure of detailed information about financial instruments [line items]
Common equity instrument			$ 391.7	$ 549.0	$ 391.7
Risk exposure percentage			1.40%	1.40%	1.40%	1.40%	1.40%
Equity price risk | Investments in associates and subsidiary
Disclosure of detailed information about financial instruments [line items]
Net gains (losses) on investments				$ 69.8	$ 0.0
Notional amount			$ 1,752.5	$ 3,846.2	$ 1,752.5
Other price risk | CPI-linked derivative contracts
Disclosure of detailed information about financial instruments [line items]
Average life (in years)				4 years 7 months 6 days	5 years 7 months 6 days
Net change in unrealized gains (losses)				$ (71.0)	$ (196.2)
Currency risk
Disclosure of detailed information about financial instruments [line items]
Change in interest rate on investments				5.00%
Common Stock, Other Funds
Disclosure of detailed information about financial instruments [line items]
Portfolio investments			157.1	$ 90.9	157.1
Bottom of range | Equity price risk
Disclosure of detailed information about financial instruments [line items]
Change in interest rate on investments				5.00%
Top of range | Equity price risk
Disclosure of detailed information about financial instruments [line items]
Change in interest rate on investments				10.00%
Unsecured senior notes | Hedges of net investment in foreign operations
Disclosure of detailed information about financial instruments [line items]
Borrowings | CAD						CAD 2,212.9	CAD 1,975.0
Borrowings at fair value			$ 1,618.1	$ 1,868.6	$ 1,618.1
ICICI Lombard General Insurance Company Limited
Disclosure of detailed information about financial instruments [line items]
Ownership percentage	9.90%			0.00%	34.60%

XML

Financial Risk Management - Market Price Fluctuations - Equity and Equity Related Holdings (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of financial assets [line items]
Notional amount	$ 6,396.9	$ 4,783.5
Market value	204.3	203.3
Net gains (losses) on investments	1,467.5	(1,203.6)
Equity total return swaps – long positions
Disclosure of financial assets [line items]
Notional amount	697.8	213.1
Market value	17.8	9.4
Equity total return swaps – short positions
Disclosure of financial assets [line items]
Notional amount	892.5	1,623.0
Market value	11.8	10.4
Net gains (losses) on investments	(237.9)	(955.2)
Equity index total return swaps – short positions
Disclosure of financial assets [line items]
Notional amount	52.6	43.3
Market value	0.4	0.6
Equity price risk
Disclosure of financial assets [line items]
Notional amount	833.8	638.2
Market value	833.8	638.2
Net gains (losses) on investments	233.1	(39.4)
Net equity exposures and financial effects, exposure/notional amount	10,156.5	5,147.3
Net equity exposures and financial effects, pre-tax earnings (loss)	649.1	(1,297.6)
Equity price risk | Investments in associates and subsidiary
Disclosure of financial assets [line items]
Notional amount	3,846.2	1,752.5
Investments in subsidiaries, joint ventures and associates	2,945.3	1,693.0
Net gains (losses) on investments	69.8	0.0
Equity price risk | Common stocks
Disclosure of financial assets [line items]
Notional amount	5,578.1	4,181.4
Common equity instrument, carrying value	5,578.1	4,181.4
Net gains (losses) on investments	707.8	(78.0)
Equity price risk | Preferred stocks – convertible
Disclosure of financial assets [line items]
Notional amount	68.1	9.1
Preferred equity instrument, carrying value	68.1	9.1
Net gains (losses) on investments	(1.6)	(6.6)
Equity price risk | Equity hedges and long equity exposures
Disclosure of financial assets [line items]
Notional amount	11,101.6	6,813.6
Total equity and equity related holdings	9,505.1	6,545.3
Net gains (losses) on investments	1,067.0	(104.7)
Equity price risk | Equity total return swaps – long positions
Disclosure of financial assets [line items]
Notional amount	697.8	213.1
Market value	2.2	4.3
Net gains (losses) on investments	19.6	23.3
Equity price risk | Equity warrants and call options
Disclosure of financial assets [line items]
Notional amount	77.6	19.3
Market value	77.6	19.3
Net gains (losses) on investments	38.3	(4.0)
Equity price risk | Equity hedges and short equity exposures
Disclosure of financial assets [line items]
Notional amount	(945.1)	(1,666.3)
Total equity and equity related holdings	0.1	(67.1)
Net gains (losses) on investments	(417.9)	(1,192.9)
Equity price risk | Equity total return swaps – short positions
Disclosure of financial assets [line items]
Notional amount	(892.5)	(1,623.0)
Market value	(0.3)	(67.7)
Net gains (losses) on investments	(408.7)	(208.0)
Equity price risk | Equity index total return swaps – short positions
Disclosure of financial assets [line items]
Notional amount	(52.6)	(43.3)
Market value	0.4	0.6
Net gains (losses) on investments	(9.2)	(971.8)
Equity price risk | Equity index put options
Disclosure of financial assets [line items]
Notional amount	0.0	0.0
Market value	0.0	0.0
Net gains (losses) on investments	$ 0.0	$ (13.1)

XML

Financial Risk Management - Market Price Fluctuations - Impact on Net Earnings (Details) - Equity price risk - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of nature and extent of risks arising from financial instruments [line items]
Fair value of equity and equity-related holdings, 10% increase	$ 6,887.9	$ 3,755.3
Hypothetical $ change effect on net earnings, 10% increase	$ 479.9	$ 248.6
Hypothetical % change in fair value, 10% increase	9.20%	10.60%
Fair value of equity and equity-related holdings, 5% increase	$ 6,597.9	$ 3,569.7
Hypothetical $ change effect on net earnings, 5% increase	$ 239.0	$ 119.6
Hypothetical % change in fair value, 5% increase	4.60%	5.20%
Fair value of equity and equity-related holdings, no change	$ 6,310.3	$ 3,394.7
Hypothetical $ change effect on net earnings, no change	$ 0.0	$ 0.0
Hypothetical % change in fair value, no change	0.00%	0.00%
Fair value of equity and equity-related holdings, 5% decrease	$ 6,023.0	$ 3,233.5
Hypothetical $ change effect on net earnings, 5% decrease	$ (238.5)	$ (106.7)
Hypothetical % change in fair value, 5% decrease	(4.60%)	(4.70%)
Fair value of equity and equity-related holdings, 10% decrease	$ 5,738.1	$ 3,082.9
Hypothetical $ change effect on net earnings, 10% decrease	$ (475.0)	$ (204.5)
Hypothetical % change in fair value, 10% decrease	(9.10%)	(9.20%)

XML

Financial Risk Management - Market Price Fluctuations - Pre Tax Foreign Exchange (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of nature and extent of risks arising from financial instruments [abstract]
Investing activities	$ 88.8	$ (136.9)
Underwriting activities	(74.9)	19.7
Foreign currency forward contracts	(11.1)	(12.3)
Foreign currency net gains (losses) included in pre-tax earnings (loss)	$ 2.8	$ (129.5)

XML

Financial Risk Management - Market Price Fluctuations - Currency Appreciation (Details) - Currency risk - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Effect Of Currency Appreciation [Line Items]
Pre-tax earnings (loss)	$ (76.1)	$ 58.5
Net earnings (loss)	(68.0)	39.4
Pre-tax other comprehensive income (loss)	(352.5)	(257.0)
Other comprehensive income (loss)	(339.6)	(244.2)
Canadian dollar
Effect Of Currency Appreciation [Line Items]
Pre-tax earnings (loss)	32.5	40.6
Net earnings (loss)	24.3	28.0
Pre-tax other comprehensive income (loss)	(75.3)	(66.1)
Other comprehensive income (loss)	(73.8)	(66.0)
Euro
Effect Of Currency Appreciation [Line Items]
Pre-tax earnings (loss)	6.2	9.5
Net earnings (loss)	5.0	7.8
Pre-tax other comprehensive income (loss)	(60.8)	(1.7)
Other comprehensive income (loss)	(54.7)	4.3
British pound sterling
Effect Of Currency Appreciation [Line Items]
Pre-tax earnings (loss)	5.7	15.6
Net earnings (loss)	5.4	11.7
Pre-tax other comprehensive income (loss)	(33.6)	(29.9)
Other comprehensive income (loss)	(33.4)	(28.5)
Indian rupee
Effect Of Currency Appreciation [Line Items]
Pre-tax earnings (loss)	(64.8)	(31.2)
Net earnings (loss)	(57.3)	(21.9)
Pre-tax other comprehensive income (loss)	(128.5)	(99.3)
Other comprehensive income (loss)	(126.8)	(94.0)
All other currencies
Effect Of Currency Appreciation [Line Items]
Pre-tax earnings (loss)	(55.7)	24.0
Net earnings (loss)	(45.4)	13.8
Pre-tax other comprehensive income (loss)	(54.3)	(60.0)
Other comprehensive income (loss)	$ (50.9)	$ (60.0)

XML

Financial Risk Management - Capital Management - Narrative (Details) $ in Millions							12 Months Ended
	Dec. 29, 2017 USD ($)	Dec. 29, 2017 CAD	Dec. 13, 2017 USD ($)	Dec. 04, 2017 USD ($)	Dec. 04, 2017 CAD	Mar. 15, 2017 USD ($)	Dec. 31, 2017 USD ($) shares	Dec. 31, 2017 CAD shares	Aug. 17, 2017 USD ($)	Jul. 06, 2017 USD ($)	Dec. 31, 2016 USD ($)
Disclosure of detailed information about financial instruments [line items]
Capitalization							$ 24,826.1				$ 16,587.7
Notional amount							$ 6,396.9				4,783.5
Minimum supervisory target							150.00%
Holding Company
Disclosure of detailed information about financial instruments [line items]
Notional amount							$ 3,492.0				3,490.8
4.25% Due 2027
Disclosure of detailed information about financial instruments [line items]
Notional amount | CAD								CAD 650,000,000.0
Interest rate							4.25%	4.25%
4.25% Due 2027 | Holding Company
Disclosure of detailed information about financial instruments [line items]
Notional amount					CAD 650,000,000		$ 518.8	CAD 650,000,000.0			0.0
Net proceeds from borrowings				$ 509.5	CAD 646,800,000
Interest rate					4.25%		4.25%	4.25%
7.50% due August 19, 2019 | Holding Company
Disclosure of detailed information about financial instruments [line items]
Notional amount		CAD 388,400,000					$ 0.0	CAD 400,000,000.0			298.3
Interest rate		7.50%					7.50%	7.50%
Payments for redemption of debt	$ 340.6	CAD 430,600,000				$ 9.7
Purchase consideration payable due 2017 | Holding Company
Disclosure of detailed information about financial instruments [line items]
Notional amount							$ 0.0				$ 131.3
Extinguishment of debt amount			$ 124.9
Allied World | Subordinate voting shares
Disclosure of detailed information about financial instruments [line items]
Number of shares issued in combination | shares							5,075,894	5,075,894
Equity interests issued in combination							$ 2,191.6		$ 119.3	$ 2,072.3

XML

Financial Risk Management - Capital Management - Schedule of Capital (Details) $ in Millions	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2015 USD ($)
Disclosure of financial liabilities [line items]
Holding company cash and investments (net of short sale and derivative obligations)	$ 36,900.0	$ 27,100.0
Borrowings	6,414.1	4,767.6
Net debt	4,057.2	3,438.2
Non-controlling interests	4,600.9	2,000.0
Total equity	$ 18,412.0	$ 11,820.1	$ 12,018.9
Net debt/total equity	22.00%	29.10%
Net debt/net total capital	18.10%	22.50%
Total debt/total capital	25.80%	28.70%
Interest coverage	7.1
Interest and preferred share dividend distribution coverage	6
Common shareholders’ equity
Disclosure of financial liabilities [line items]
Equity in stock	$ 12,475.6	$ 8,484.6
Preferred shares
Disclosure of financial liabilities [line items]
Equity in stock	1,335.5	1,335.5	$ 1,334.9
Holding company
Disclosure of financial liabilities [line items]
Holding company cash and investments (net of short sale and derivative obligations)	2,356.9	$ 1,329.4
Borrowings	3,475.1
Insurance and reinsurance companies
Disclosure of financial liabilities [line items]
Borrowings	1,373.0
Non-insurance companies
Disclosure of financial liabilities [line items]
Borrowings	$ 1,566.0

XML

Segmented Information - Narrative (Details)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Bank for Investment and Development of Vietnam Insurance Joint Stock Corporation
Disclosure of operating segments [line items]
Ownership percentage	35.00%	35.00%
Falcon Insurance PLC
Disclosure of operating segments [line items]
Ownership percentage	41.20%	41.20%

XML

Segmented Information - Operating Segments (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of operating segments [line items]
Gross premiums written	$ 12,207.5	$ 9,534.3
Net premiums written	9,983.5	8,088.4
Net earned premium	9,721.4	7,862.2
Underwriting expenses	(10,570.3)	(7,471.4)
Underwriting profit (loss)	(848.9)	390.8
Interest income	514.6	514.4
Dividends	73.2	66.8
Investment expenses	(28.8)	(26.0)
Interest and dividends	559.0	555.2
Share of profit (loss) of associates	200.5	24.2
Other revenue	3,257.6	2,061.6
Other expenses	(2,996.0)	(1,958.4)
Other revenue (expenses)	261.6	103.2
Operating income (loss)	172.2	1,073.4
Net gains (losses) on investments	1,467.5	(1,203.6)
Gain on sale of subsidiary	1,018.6	0.0
Loss on repurchase of borrowings	(28.6)	0.0
Interest expense	(331.2)	(242.8)
Corporate overhead	(275.3)	(181.3)
Earnings (loss) before income taxes	2,023.2	(554.3)
Income taxes	(408.3)	159.6
Net earnings (loss)	1,614.9	(394.7)
Shareholders of Fairfax	1,740.6	(512.5)
Non-controlling interests	(125.7)	117.8
Operating companies
Disclosure of operating segments [line items]
Gross premiums written	12,412.9	9,526.7
Net premiums written	9,975.2	7,905.0
Net earned premium	9,701.3	7,698.7
Underwriting expenses	(10,342.8)	(7,122.8)
Underwriting profit (loss)	(641.5)	575.9
Interest income	456.0	446.2
Dividends	53.2	51.1
Investment expenses	(106.9)	(87.3)
Interest and dividends	402.3	410.0
Share of profit (loss) of associates	23.5	53.3
Other revenue	0.0	0.0
Other expenses	0.0	0.0
Other revenue (expenses)	0.0	0.0
Operating income (loss)	(215.7)	1,039.2
Net gains (losses) on investments	1,558.3	(837.3)
Gain on sale of subsidiary	1,018.6
Loss on repurchase of borrowings	0.0
Interest expense	(41.3)	(26.1)
Corporate overhead	(131.6)	(74.9)
Earnings (loss) before income taxes	2,188.3	100.9
Reportable segments | Runoff
Disclosure of operating segments [line items]
Gross premiums written	8.4	183.9
Net premiums written	8.3	183.4
Net earned premium	20.1	163.5
Underwriting expenses	(227.5)	(348.6)
Underwriting profit (loss)	(207.4)	(185.1)
Interest income	37.2	58.6
Dividends	4.6	5.9
Investment expenses	(12.9)	(13.3)
Interest and dividends	28.9	51.2
Share of profit (loss) of associates	(6.1)	(15.5)
Other revenue	0.0	0.0
Other expenses	0.0	0.0
Other revenue (expenses)	0.0	0.0
Operating income (loss)	(184.6)	(149.4)
Net gains (losses) on investments	73.3	(225.2)
Gain on sale of subsidiary	0.0
Loss on repurchase of borrowings	0.0
Interest expense	0.0	0.0
Corporate overhead	0.0	0.0
Earnings (loss) before income taxes	(111.3)	(374.6)
Reportable segments | Other
Disclosure of operating segments [line items]
Gross premiums written	0.0	0.0
Net premiums written	0.0	0.0
Net earned premium	0.0	0.0
Underwriting expenses	0.0	0.0
Underwriting profit (loss)	0.0	0.0
Interest income	29.7	21.3
Dividends	9.1	8.2
Investment expenses	(143.7)	(12.8)
Interest and dividends	(104.9)	16.7
Share of profit (loss) of associates	55.4	13.6
Other revenue	3,257.6	2,061.6
Other expenses	(2,996.0)	(1,958.4)
Other revenue (expenses)	261.6	103.2
Operating income (loss)	212.1	133.5
Net gains (losses) on investments	7.2	30.1
Gain on sale of subsidiary	0.0
Loss on repurchase of borrowings	0.0
Interest expense	(65.8)	(28.3)
Corporate overhead	0.0	0.0
Earnings (loss) before income taxes	153.5	135.3
Corporate and Other
Disclosure of operating segments [line items]
Gross premiums written	0.0	0.0
Net premiums written	0.0	0.0
Net earned premium	0.0	0.0
Underwriting expenses	0.0	0.0
Underwriting profit (loss)	0.0	0.0
Interest income	(8.3)	(11.7)
Dividends	6.3	1.6
Investment expenses	(2.1)	(1.4)
Interest and dividends	(4.1)	(11.5)
Share of profit (loss) of associates	127.7	(27.2)
Other revenue	0.0	0.0
Other expenses	0.0	0.0
Other revenue (expenses)	0.0	0.0
Operating income (loss)	123.6	(38.7)
Net gains (losses) on investments	(171.3)	(171.2)
Gain on sale of subsidiary	0.0
Loss on repurchase of borrowings	(28.6)
Interest expense	(224.1)	(188.4)
Corporate overhead	93.1	(17.6)
Earnings (loss) before income taxes	(207.3)	(415.9)
Eliminations and adjustments
Disclosure of operating segments [line items]
Gross premiums written	(213.8)	(176.3)
Net premiums written	0.0	0.0
Net earned premium	0.0	0.0
Underwriting expenses	0.0	0.0
Underwriting profit (loss)	0.0	0.0
Interest income	0.0	0.0
Dividends	0.0	0.0
Investment expenses	236.8	88.8
Interest and dividends	236.8	88.8
Share of profit (loss) of associates	0.0	0.0
Other revenue	0.0	0.0
Other expenses	0.0	0.0
Other revenue (expenses)	0.0	0.0
Operating income (loss)	236.8	88.8
Net gains (losses) on investments	0.0	0.0
Gain on sale of subsidiary	0.0
Loss on repurchase of borrowings	0.0
Interest expense	0.0	0.0
Corporate overhead	(236.8)	(88.8)
Earnings (loss) before income taxes	0.0	0.0
External
Disclosure of operating segments [line items]
Gross premiums written	12,207.5	9,534.3
Net earned premium	9,721.4	7,862.2
External | Operating companies
Disclosure of operating segments [line items]
Gross premiums written	12,199.1	9,350.4
Net earned premium	9,701.3	7,698.7
External | Reportable segments | Runoff
Disclosure of operating segments [line items]
Gross premiums written	8.4	183.9
Net earned premium	20.1	163.5
External | Reportable segments | Other
Disclosure of operating segments [line items]
Gross premiums written	0.0	0.0
Net earned premium	0.0	0.0
External | Corporate and Other
Disclosure of operating segments [line items]
Gross premiums written	0.0	0.0
Net earned premium	0.0	0.0
External | Eliminations and adjustments
Disclosure of operating segments [line items]
Gross premiums written	0.0	0.0
Net earned premium	0.0	0.0
Intercompany
Disclosure of operating segments [line items]
Gross premiums written	0.0	0.0
Net earned premium	0.0	0.0
Intercompany | Operating companies
Disclosure of operating segments [line items]
Gross premiums written	213.8	176.3
Net earned premium	0.0	0.0
Intercompany | Reportable segments | Runoff
Disclosure of operating segments [line items]
Gross premiums written	0.0	0.0
Net earned premium	0.0	0.0
Intercompany | Reportable segments | Other
Disclosure of operating segments [line items]
Gross premiums written	0.0	0.0
Net earned premium	0.0	0.0
Intercompany | Corporate and Other
Disclosure of operating segments [line items]
Gross premiums written	0.0	0.0
Net earned premium	0.0	0.0
Intercompany | Eliminations and adjustments
Disclosure of operating segments [line items]
Gross premiums written	(213.8)	(176.3)
Net earned premium	0.0	0.0
Northbridge | Operating companies | Insurance and Reinsurance
Disclosure of operating segments [line items]
Gross premiums written	1,187.0	1,055.1
Net premiums written	1,064.9	942.6
Net earned premium	1,019.7	908.8
Underwriting expenses	(1,010.7)	(862.5)
Underwriting profit (loss)	9.0	46.3
Interest income	56.1	56.6
Dividends	9.5	8.4
Investment expenses	(11.5)	(12.8)
Interest and dividends	54.1	52.2
Share of profit (loss) of associates	3.2	5.2
Other revenue	0.0	0.0
Other expenses	0.0	0.0
Other revenue (expenses)	0.0	0.0
Operating income (loss)	66.3	103.7
Net gains (losses) on investments	44.8	(161.3)
Gain on sale of subsidiary	0.0
Loss on repurchase of borrowings	0.0
Interest expense	0.0	0.0
Corporate overhead	(8.7)	(6.6)
Earnings (loss) before income taxes	102.4	(64.2)
Northbridge | External | Operating companies | Insurance and Reinsurance
Disclosure of operating segments [line items]
Gross premiums written	1,180.4	1,052.3
Net earned premium	1,023.7	915.8
Northbridge | Intercompany | Operating companies | Insurance and Reinsurance
Disclosure of operating segments [line items]
Gross premiums written	6.6	2.8
Net earned premium	(4.0)	(7.0)
OdysseyRe | Operating companies | Insurance and Reinsurance
Disclosure of operating segments [line items]
Gross premiums written	2,783.1	2,380.7
Net premiums written	2,495.9	2,100.2
Net earned premium	2,333.4	2,074.1
Underwriting expenses	(2,273.4)	(1,838.9)
Underwriting profit (loss)	60.0	235.2
Interest income	131.0	158.5
Dividends	15.6	23.9
Investment expenses	(21.7)	(28.7)
Interest and dividends	124.9	153.7
Share of profit (loss) of associates	7.2	17.3
Other revenue	0.0	0.0
Other expenses	0.0	0.0
Other revenue (expenses)	0.0	0.0
Operating income (loss)	192.1	406.2
Net gains (losses) on investments	253.1	(318.7)
Gain on sale of subsidiary	0.0
Loss on repurchase of borrowings	0.0
Interest expense	(3.3)	(2.8)
Corporate overhead	(27.4)	(30.2)
Earnings (loss) before income taxes	414.5	54.5
OdysseyRe | External | Operating companies | Insurance and Reinsurance
Disclosure of operating segments [line items]
Gross premiums written	2,725.7	2,355.8
Net earned premium	2,318.3	2,083.9
OdysseyRe | Intercompany | Operating companies | Insurance and Reinsurance
Disclosure of operating segments [line items]
Gross premiums written	57.4	24.9
Net earned premium	15.1	(9.8)
Crum & Forster | Operating companies | Insurance and Reinsurance
Disclosure of operating segments [line items]
Gross premiums written	2,174.5	2,055.0
Net premiums written	1,863.4	1,801.1
Net earned premium	1,852.8	1,769.5
Underwriting expenses	(1,849.6)	(1,737.1)
Underwriting profit (loss)	3.2	32.4
Interest income	53.4	72.8
Dividends	3.4	5.8
Investment expenses	(23.0)	(12.8)
Interest and dividends	33.8	65.8
Share of profit (loss) of associates	(1.1)	(22.6)
Other revenue	0.0	0.0
Other expenses	0.0	0.0
Other revenue (expenses)	0.0	0.0
Operating income (loss)	35.9	75.6
Net gains (losses) on investments	27.9	(184.7)
Gain on sale of subsidiary	0.0
Loss on repurchase of borrowings	0.0
Interest expense	(1.8)	(1.6)
Corporate overhead	(25.4)	(20.4)
Earnings (loss) before income taxes	36.6	(131.1)
Crum & Forster | External | Operating companies | Insurance and Reinsurance
Disclosure of operating segments [line items]
Gross premiums written	2,120.0	2,011.8
Net earned premium	1,822.1	1,738.6
Crum & Forster | Intercompany | Operating companies | Insurance and Reinsurance
Disclosure of operating segments [line items]
Gross premiums written	54.5	43.2
Net earned premium	30.7	30.9
Zenith National | Operating companies | Insurance and Reinsurance
Disclosure of operating segments [line items]
Gross premiums written	849.0	831.7
Net premiums written	837.4	819.4
Net earned premium	811.6	807.3
Underwriting expenses	(694.4)	(643.2)
Underwriting profit (loss)	117.2	164.1
Interest income	26.8	33.0
Dividends	3.8	4.3
Investment expenses	(7.2)	(7.7)
Interest and dividends	23.4	29.6
Share of profit (loss) of associates	(9.8)	1.2
Other revenue	0.0	0.0
Other expenses	0.0	0.0
Other revenue (expenses)	0.0	0.0
Operating income (loss)	130.8	194.9
Net gains (losses) on investments	26.6	(168.2)
Gain on sale of subsidiary	0.0
Loss on repurchase of borrowings	0.0
Interest expense	(3.3)	(3.3)
Corporate overhead	(8.2)	(8.4)
Earnings (loss) before income taxes	145.9	15.0
Zenith National | External | Operating companies | Insurance and Reinsurance
Disclosure of operating segments [line items]
Gross premiums written	849.0	831.7
Net earned premium	814.1	809.3
Zenith National | Intercompany | Operating companies | Insurance and Reinsurance
Disclosure of operating segments [line items]
Gross premiums written	0.0	0.0
Net earned premium	(2.5)	(2.0)
Brit | Operating companies | Insurance and Reinsurance
Disclosure of operating segments [line items]
Gross premiums written	2,057.0	1,912.2
Net premiums written	1,530.9	1,480.2
Net earned premium	1,536.9	1,399.3
Underwriting expenses	(1,738.8)	(1,370.2)
Underwriting profit (loss)	(201.9)	29.1
Interest income	41.9	66.5
Dividends	3.7	2.6
Investment expenses	(13.0)	(13.7)
Interest and dividends	32.6	55.4
Share of profit (loss) of associates	9.2	3.4
Other revenue	0.0	0.0
Other expenses	0.0	0.0
Other revenue (expenses)	0.0	0.0
Operating income (loss)	(160.1)	87.9
Net gains (losses) on investments	79.0	87.3
Gain on sale of subsidiary	0.0
Loss on repurchase of borrowings	0.0
Interest expense	(12.5)	(14.2)
Corporate overhead	(9.2)	(9.2)
Earnings (loss) before income taxes	(102.8)	151.8
Brit | External | Operating companies | Insurance and Reinsurance
Disclosure of operating segments [line items]
Gross premiums written	2,048.1	1,904.3
Net earned premium	1,537.3	1,396.5
Brit | Intercompany | Operating companies | Insurance and Reinsurance
Disclosure of operating segments [line items]
Gross premiums written	8.9	7.9
Net earned premium	(0.4)	2.8
Allied World | Operating companies | Insurance and Reinsurance
Disclosure of operating segments [line items]
Gross premiums written	1,447.6
Net premiums written	991.9
Net earned premium	1,028.7	0.0
Underwriting expenses	(1,615.3)
Underwriting profit (loss)	(586.6)
Interest income	76.8
Dividends	2.2
Investment expenses	(13.1)
Interest and dividends	65.9
Share of profit (loss) of associates	(17.6)
Other revenue	0.0
Other expenses	0.0
Other revenue (expenses)	0.0
Operating income (loss)	(538.3)
Net gains (losses) on investments	(26.5)
Gain on sale of subsidiary	0.0
Loss on repurchase of borrowings	0.0
Interest expense	(15.6)
Corporate overhead	(27.9)
Earnings (loss) before income taxes	(608.3)
Allied World | External | Operating companies | Insurance and Reinsurance
Disclosure of operating segments [line items]
Gross premiums written	1,447.6
Net earned premium	1,041.3
Allied World | Intercompany | Operating companies | Insurance and Reinsurance
Disclosure of operating segments [line items]
Gross premiums written	0.0
Net earned premium	(12.6)
Fairfax Asia | Operating companies | Insurance and Reinsurance
Disclosure of operating segments [line items]
Gross premiums written	670.4	648.7
Net premiums written	327.5	303.1
Net earned premium	327.6	302.5
Underwriting expenses	(289.4)	(261.4)
Underwriting profit (loss)	38.2	41.1
Interest income	31.3	26.6
Dividends	3.2	3.4
Investment expenses	(5.4)	(3.3)
Interest and dividends	29.1	26.7
Share of profit (loss) of associates	29.4	48.1
Other revenue	0.0	0.0
Other expenses	0.0	0.0
Other revenue (expenses)	0.0	0.0
Operating income (loss)	96.7	115.9
Net gains (losses) on investments	1,083.9	(1.7)
Gain on sale of subsidiary	1,018.6
Loss on repurchase of borrowings	0.0
Interest expense	0.0	0.0
Corporate overhead	(2.6)	(0.1)
Earnings (loss) before income taxes	2,196.6	114.1
Fairfax Asia | External | Operating companies | Insurance and Reinsurance
Disclosure of operating segments [line items]
Gross premiums written	667.9	636.1
Net earned premium	369.3	348.5
Fairfax Asia | Intercompany | Operating companies | Insurance and Reinsurance
Disclosure of operating segments [line items]
Gross premiums written	2.5	12.6
Net earned premium	(41.7)	(46.0)
Other | Operating companies | Insurance and Reinsurance
Disclosure of operating segments [line items]
Gross premiums written	1,244.3	643.3
Net premiums written	863.3	458.4
Net earned premium	790.6	437.2
Underwriting expenses	(871.2)	(409.5)
Underwriting profit (loss)	(80.6)	27.7
Interest income	38.7	32.2
Dividends	11.8	2.7
Investment expenses	(12.0)	(8.3)
Interest and dividends	38.5	26.6
Share of profit (loss) of associates	3.0	0.7
Other revenue	0.0	0.0
Other expenses	0.0	0.0
Other revenue (expenses)	0.0	0.0
Operating income (loss)	(39.1)	55.0
Net gains (losses) on investments	69.5	(90.0)
Gain on sale of subsidiary	0.0
Loss on repurchase of borrowings	0.0
Interest expense	(4.8)	(4.2)
Corporate overhead	(22.2)	0.0
Earnings (loss) before income taxes	3.4	(39.2)
Other | External | Operating companies | Insurance and Reinsurance
Disclosure of operating segments [line items]
Gross premiums written	1,160.4	558.4
Net earned premium	775.2	406.1
Other | Intercompany | Operating companies | Insurance and Reinsurance
Disclosure of operating segments [line items]
Gross premiums written	83.9	84.9
Net earned premium	$ 15.4	$ 31.1

XML

Segmented Information - Underwriting Expenses (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of operating segments [line items]
Loss & LAE - accident year	$ 9,736.5	$ 6,247.8
Total underwriting expenses - calendar year	10,570.3	7,471.4
Operating companies
Disclosure of operating segments [line items]
Loss & LAE - accident year	7,513.3	5,137.2
Commissions	1,643.4	1,334.7
Premium acquisition costs and other underwriting expenses	1,677.8	1,305.5
Total underwriting expenses - accident year	10,834.5	7,777.4
Favourable claims reserve development	(491.7)	(654.6)
Total underwriting expenses - calendar year	10,342.8	7,122.8
Northbridge | Operating companies | Insurance and Reinsurance
Disclosure of operating segments [line items]
Loss & LAE - accident year	760.1	651.1
Commissions	164.5	150.6
Premium acquisition costs and other underwriting expenses	179.6	173.6
Total underwriting expenses - accident year	1,104.2	975.3
Favourable claims reserve development	(93.5)	(112.8)
Total underwriting expenses - calendar year	1,010.7	862.5
OdysseyRe | Operating companies | Insurance and Reinsurance
Disclosure of operating segments [line items]
Loss & LAE - accident year	1,827.7	1,438.4
Commissions	492.5	431.4
Premium acquisition costs and other underwriting expenses	241.3	235.6
Total underwriting expenses - accident year	2,561.5	2,105.4
Favourable claims reserve development	(288.1)	(266.5)
Total underwriting expenses - calendar year	2,273.4	1,838.9
Crum & Forster | Operating companies | Insurance and Reinsurance
Disclosure of operating segments [line items]
Loss & LAE - accident year	1,209.8	1,136.1
Commissions	292.4	283.2
Premium acquisition costs and other underwriting expenses	357.6	326.1
Total underwriting expenses - accident year	1,859.8	1,745.4
Favourable claims reserve development	(10.2)	(8.3)
Total underwriting expenses - calendar year	1,849.6	1,737.1
Zenith National | Operating companies | Insurance and Reinsurance
Disclosure of operating segments [line items]
Loss & LAE - accident year	477.9	459.3
Commissions	83.5	81.9
Premium acquisition costs and other underwriting expenses	209.4	203.0
Total underwriting expenses - accident year	770.8	744.2
Favourable claims reserve development	(76.4)	(101.0)
Total underwriting expenses - calendar year	694.4	643.2
Brit | Operating companies | Insurance and Reinsurance
Disclosure of operating segments [line items]
Loss & LAE - accident year	1,117.8	909.7
Commissions	424.8	292.3
Premium acquisition costs and other underwriting expenses	205.7	221.7
Total underwriting expenses - accident year	1,748.3	1,423.7
Favourable claims reserve development	(9.5)	(53.5)
Total underwriting expenses - calendar year	1,738.8	1,370.2
Allied World | Operating companies | Insurance and Reinsurance
Disclosure of operating segments [line items]
Loss & LAE - accident year	1,293.1
Commissions	32.6
Premium acquisition costs and other underwriting expenses	217.7
Total underwriting expenses - accident year	1,543.4
Favourable claims reserve development	71.9
Total underwriting expenses - calendar year	1,615.3
Fairfax Asia | Operating companies | Insurance and Reinsurance
Disclosure of operating segments [line items]
Loss & LAE - accident year	263.1	252.5
Commissions	4.7	(6.5)
Premium acquisition costs and other underwriting expenses	73.9	67.5
Total underwriting expenses - accident year	341.7	313.5
Favourable claims reserve development	(52.3)	(52.1)
Total underwriting expenses - calendar year	289.4	261.4
Other | Operating companies | Insurance and Reinsurance
Disclosure of operating segments [line items]
Loss & LAE - accident year	563.8	290.1
Commissions	148.4	101.8
Premium acquisition costs and other underwriting expenses	192.6	78.0
Total underwriting expenses - accident year	904.8	469.9
Favourable claims reserve development	(33.6)	(60.4)
Total underwriting expenses - calendar year	$ 871.2	$ 409.5

XML

Segmented Information - Investments In Associates (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of operating segments [line items]
Investments in associates	$ 3,656.3	$ 2,633.5
Additions to goodwill	1,212.3	216.0
Segment assets	64,090.1	43,384.4
Segment liabilities	45,678.1	31,564.3
Operating companies | Insurance and Reinsurance
Disclosure of operating segments [line items]
Investments in associates	1,635.2	1,713.3
Additions to goodwill	934.4	88.8
Segment assets	53,037.2	35,289.9
Segment liabilities	37,123.2	23,483.0
Operating companies | Northbridge | Insurance and Reinsurance
Disclosure of operating segments [line items]
Investments in associates	218.6	206.9
Additions to goodwill	1.1	0.0
Segment assets	4,527.2	4,149.9
Segment liabilities	2,804.6	2,630.2
Operating companies | OdysseyRe | Insurance and Reinsurance
Disclosure of operating segments [line items]
Investments in associates	355.7	373.5
Additions to goodwill	0.0	0.0
Segment assets	11,316.1	10,334.8
Segment liabilities	7,248.4	6,370.5
Operating companies | Crum & Forster | Insurance and Reinsurance
Disclosure of operating segments [line items]
Investments in associates	263.2	153.5
Additions to goodwill	0.0	7.8
Segment assets	6,290.6	6,294.1
Segment liabilities	4,651.1	4,625.7
Operating companies | Zenith National | Insurance and Reinsurance
Disclosure of operating segments [line items]
Investments in associates	162.9	146.9
Additions to goodwill	0.0	0.0
Segment assets	2,586.8	2,590.7
Segment liabilities	1,653.8	1,633.1
Operating companies | Brit | Insurance and Reinsurance
Disclosure of operating segments [line items]
Investments in associates	231.4	217.8
Additions to goodwill	0.0	0.0
Segment assets	7,480.1	6,579.5
Segment liabilities	5,930.1	4,915.7
Operating companies | Allied World | Insurance and Reinsurance
Disclosure of operating segments [line items]
Investments in associates	210.5	0.0
Additions to goodwill	937.9	0.0
Segment assets	14,584.4	0.0
Segment liabilities	10,937.2	0.0
Operating companies | Fairfax Asia | Insurance and Reinsurance
Disclosure of operating segments [line items]
Investments in associates	100.9	487.3
Additions to goodwill	(24.2)	69.5
Segment assets	1,930.7	2,684.7
Segment liabilities	674.5	1,457.7
Operating companies | Other | Insurance and Reinsurance
Disclosure of operating segments [line items]
Investments in associates	92.0	127.4
Additions to goodwill	19.6	11.5
Segment assets	4,321.3	2,656.2
Segment liabilities	3,223.5	1,850.1
Reportable segments | Runoff
Disclosure of operating segments [line items]
Investments in associates	252.0	308.2
Additions to goodwill	0.0	0.0
Segment assets	5,207.2	5,709.5
Segment liabilities	3,456.5	3,970.4
Reportable segments | Other
Disclosure of operating segments [line items]
Investments in associates	1,250.8	255.3
Additions to goodwill	277.9	127.2
Segment assets	8,684.0	4,740.2
Segment liabilities	3,245.8	2,029.8
Corporate and Other and eliminations and adjustments
Disclosure of operating segments [line items]
Investments in associates	518.3	356.7
Additions to goodwill	0.0	0.0
Segment assets	(2,838.3)	(2,355.2)
Segment liabilities	$ 1,852.6	$ 2,081.1

XML

Segmented Information - Product Line (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of products and services [line items]
Net earned premium	$ 9,721.4	$ 7,862.2
Interest and dividends	559.0	555.2
Share of profit of associates	200.5	24.2
Net gains (losses) on investments	1,467.5	(1,203.6)
Gain on sale of subsidiary	1,018.6	0.0
Other revenue	3,257.6	2,061.6
Revenue	16,224.6	9,299.6
Property
Disclosure of products and services [line items]
Net earned premium	3,185.6	2,474.2
Casualty
Disclosure of products and services [line items]
Net earned premium	5,500.5	4,507.1
Specialty
Disclosure of products and services [line items]
Net earned premium	1,035.3	880.9
Operating companies
Disclosure of products and services [line items]
Net earned premium	9,701.3	7,698.7
Interest and dividends	402.3	410.0
Share of profit of associates	23.5	53.3
Net gains (losses) on investments	1,558.3	(837.3)
Gain on sale of subsidiary	1,018.6
Other revenue	0.0	0.0
Operating companies | Property
Disclosure of products and services [line items]
Net earned premium	3,185.6	2,473.8
Operating companies | Casualty
Disclosure of products and services [line items]
Net earned premium	5,477.6	4,344.5
Operating companies | Specialty
Disclosure of products and services [line items]
Net earned premium	1,038.1	880.4
Reportable segments | Runoff
Disclosure of products and services [line items]
Net earned premium	20.1	163.5
Interest and dividends	28.9	51.2
Share of profit of associates	(6.1)	(15.5)
Net gains (losses) on investments	73.3	(225.2)
Gain on sale of subsidiary	0.0
Other revenue	0.0	0.0
Reportable segments | Property | Runoff
Disclosure of products and services [line items]
Net earned premium	0.0	0.4
Reportable segments | Casualty | Runoff
Disclosure of products and services [line items]
Net earned premium	22.9	162.6
Reportable segments | Specialty | Runoff
Disclosure of products and services [line items]
Net earned premium	$ (2.8)	$ 0.5
Product Concentration | Net Premiums Earned | Property
Disclosure of products and services [line items]
Allocation of net premiums earned	32.80%	31.50%
Product Concentration | Net Premiums Earned | Casualty
Disclosure of products and services [line items]
Allocation of net premiums earned	56.60%	57.30%
Product Concentration | Net Premiums Earned | Specialty
Disclosure of products and services [line items]
Allocation of net premiums earned	10.60%	11.20%
Northbridge | Operating companies | Insurance and Reinsurance
Disclosure of products and services [line items]
Net earned premium	$ 1,019.7	$ 908.8
Interest and dividends	54.1	52.2
Share of profit of associates	3.2	5.2
Net gains (losses) on investments	44.8	(161.3)
Gain on sale of subsidiary	0.0
Other revenue	0.0	0.0
Northbridge | Operating companies | Property | Insurance and Reinsurance
Disclosure of products and services [line items]
Net earned premium	449.1	395.6
Northbridge | Operating companies | Casualty | Insurance and Reinsurance
Disclosure of products and services [line items]
Net earned premium	474.4	423.8
Northbridge | Operating companies | Specialty | Insurance and Reinsurance
Disclosure of products and services [line items]
Net earned premium	96.2	89.4
OdysseyRe | Operating companies | Insurance and Reinsurance
Disclosure of products and services [line items]
Net earned premium	2,333.4	2,074.1
Interest and dividends	124.9	153.7
Share of profit of associates	7.2	17.3
Net gains (losses) on investments	253.1	(318.7)
Gain on sale of subsidiary	0.0
Other revenue	0.0	0.0
OdysseyRe | Operating companies | Property | Insurance and Reinsurance
Disclosure of products and services [line items]
Net earned premium	1,206.0	1,159.9
OdysseyRe | Operating companies | Casualty | Insurance and Reinsurance
Disclosure of products and services [line items]
Net earned premium	901.5	714.5
OdysseyRe | Operating companies | Specialty | Insurance and Reinsurance
Disclosure of products and services [line items]
Net earned premium	225.9	199.7
Crum & Forster | Operating companies | Insurance and Reinsurance
Disclosure of products and services [line items]
Net earned premium	1,852.8	1,769.5
Interest and dividends	33.8	65.8
Share of profit of associates	(1.1)	(22.6)
Net gains (losses) on investments	27.9	(184.7)
Gain on sale of subsidiary	0.0
Other revenue	0.0	0.0
Crum & Forster | Operating companies | Property | Insurance and Reinsurance
Disclosure of products and services [line items]
Net earned premium	238.9	237.0
Crum & Forster | Operating companies | Casualty | Insurance and Reinsurance
Disclosure of products and services [line items]
Net earned premium	1,518.0	1,426.6
Crum & Forster | Operating companies | Specialty | Insurance and Reinsurance
Disclosure of products and services [line items]
Net earned premium	95.9	105.9
Zenith National | Operating companies | Insurance and Reinsurance
Disclosure of products and services [line items]
Net earned premium	811.6	807.3
Interest and dividends	23.4	29.6
Share of profit of associates	(9.8)	1.2
Net gains (losses) on investments	26.6	(168.2)
Gain on sale of subsidiary	0.0
Other revenue	0.0	0.0
Zenith National | Operating companies | Property | Insurance and Reinsurance
Disclosure of products and services [line items]
Net earned premium	32.1	29.3
Zenith National | Operating companies | Casualty | Insurance and Reinsurance
Disclosure of products and services [line items]
Net earned premium	779.5	778.0
Zenith National | Operating companies | Specialty | Insurance and Reinsurance
Disclosure of products and services [line items]
Net earned premium	0.0	0.0
Brit | Operating companies | Insurance and Reinsurance
Disclosure of products and services [line items]
Net earned premium	1,536.9	1,399.3
Interest and dividends	32.6	55.4
Share of profit of associates	9.2	3.4
Net gains (losses) on investments	79.0	87.3
Gain on sale of subsidiary	0.0
Other revenue	0.0	0.0
Brit | Operating companies | Property | Insurance and Reinsurance
Disclosure of products and services [line items]
Net earned premium	427.1	402.7
Brit | Operating companies | Casualty | Insurance and Reinsurance
Disclosure of products and services [line items]
Net earned premium	755.7	664.3
Brit | Operating companies | Specialty | Insurance and Reinsurance
Disclosure of products and services [line items]
Net earned premium	354.1	332.3
Allied World | Operating companies | Insurance and Reinsurance
Disclosure of products and services [line items]
Net earned premium	1,028.7	0.0
Interest and dividends	65.9
Share of profit of associates	(17.6)
Net gains (losses) on investments	(26.5)
Gain on sale of subsidiary	0.0
Other revenue	0.0
Allied World | Operating companies | Property | Insurance and Reinsurance
Disclosure of products and services [line items]
Net earned premium	360.9	0.0
Allied World | Operating companies | Casualty | Insurance and Reinsurance
Disclosure of products and services [line items]
Net earned premium	607.4	0.0
Allied World | Operating companies | Specialty | Insurance and Reinsurance
Disclosure of products and services [line items]
Net earned premium	60.4	0.0
Fairfax Asia | Operating companies | Insurance and Reinsurance
Disclosure of products and services [line items]
Net earned premium	327.6	302.5
Fairfax Asia | Operating companies | Property | Insurance and Reinsurance
Disclosure of products and services [line items]
Net earned premium	65.6	57.4
Fairfax Asia | Operating companies | Casualty | Insurance and Reinsurance
Disclosure of products and services [line items]
Net earned premium	219.2	191.2
Fairfax Asia | Operating companies | Specialty | Insurance and Reinsurance
Disclosure of products and services [line items]
Net earned premium	42.8	53.9
Other | Operating companies | Insurance and Reinsurance
Disclosure of products and services [line items]
Net earned premium	790.6	437.2
Interest and dividends	38.5	26.6
Share of profit of associates	3.0	0.7
Net gains (losses) on investments	69.5	(90.0)
Gain on sale of subsidiary	0.0
Other revenue	0.0	0.0
Other | Operating companies | Property | Insurance and Reinsurance
Disclosure of products and services [line items]
Net earned premium	405.9	191.9
Other | Operating companies | Casualty | Insurance and Reinsurance
Disclosure of products and services [line items]
Net earned premium	221.9	146.1
Other | Operating companies | Specialty | Insurance and Reinsurance
Disclosure of products and services [line items]
Net earned premium	$ 162.8	$ 99.2

XML

Segmented Information - Geographic Region (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of geographical areas [line items]
Net earned premium	$ 9,721.4	$ 7,862.2
Interest and dividends	559.0	555.2
Share of profit of associates	200.5	24.2
Net gains (losses) on investments	1,467.5	(1,203.6)
Gain on sale of subsidiary	1,018.6	0.0
Other revenue	3,257.6	2,061.6
Revenue	16,224.6	9,299.6
Canada
Disclosure of geographical areas [line items]
Net earned premium	1,196.8	1,053.1
United States
Disclosure of geographical areas [line items]
Net earned premium	6,148.7	5,152.8
Asia
Disclosure of geographical areas [line items]
Net earned premium	822.7	684.3
International
Disclosure of geographical areas [line items]
Net earned premium	1,553.2	972.0
Operating companies
Disclosure of geographical areas [line items]
Net earned premium	9,701.3	7,698.7
Interest and dividends	402.3	410.0
Share of profit of associates	23.5	53.3
Net gains (losses) on investments	1,558.3	(837.3)
Gain on sale of subsidiary	1,018.6
Other revenue	0.0	0.0
Operating companies | Canada
Disclosure of geographical areas [line items]
Net earned premium	1,196.8	1,053.1
Operating companies | United States
Disclosure of geographical areas [line items]
Net earned premium	6,125.0	4,990.2
Operating companies | Asia
Disclosure of geographical areas [line items]
Net earned premium	822.7	684.3
Operating companies | International
Disclosure of geographical areas [line items]
Net earned premium	1,556.8	971.1
Insurance and Reinsurance | Operating companies | Northbridge
Disclosure of geographical areas [line items]
Net earned premium	1,019.7	908.8
Interest and dividends	54.1	52.2
Share of profit of associates	3.2	5.2
Net gains (losses) on investments	44.8	(161.3)
Gain on sale of subsidiary	0.0
Other revenue	0.0	0.0
Insurance and Reinsurance | Operating companies | OdysseyRe
Disclosure of geographical areas [line items]
Net earned premium	2,333.4	2,074.1
Interest and dividends	124.9	153.7
Share of profit of associates	7.2	17.3
Net gains (losses) on investments	253.1	(318.7)
Gain on sale of subsidiary	0.0
Other revenue	0.0	0.0
Insurance and Reinsurance | Operating companies | Crum & Forster
Disclosure of geographical areas [line items]
Net earned premium	1,852.8	1,769.5
Interest and dividends	33.8	65.8
Share of profit of associates	(1.1)	(22.6)
Net gains (losses) on investments	27.9	(184.7)
Gain on sale of subsidiary	0.0
Other revenue	0.0	0.0
Insurance and Reinsurance | Operating companies | Zenith National
Disclosure of geographical areas [line items]
Net earned premium	811.6	807.3
Interest and dividends	23.4	29.6
Share of profit of associates	(9.8)	1.2
Net gains (losses) on investments	26.6	(168.2)
Gain on sale of subsidiary	0.0
Other revenue	0.0	0.0
Insurance and Reinsurance | Operating companies | Brit
Disclosure of geographical areas [line items]
Net earned premium	1,536.9	1,399.3
Interest and dividends	32.6	55.4
Share of profit of associates	9.2	3.4
Net gains (losses) on investments	79.0	87.3
Gain on sale of subsidiary	0.0
Other revenue	0.0	0.0
Insurance and Reinsurance | Operating companies | Allied World
Disclosure of geographical areas [line items]
Net earned premium	1,028.7	0.0
Interest and dividends	65.9
Share of profit of associates	(17.6)
Net gains (losses) on investments	(26.5)
Gain on sale of subsidiary	0.0
Other revenue	0.0
Insurance and Reinsurance | Operating companies | Fairfax Asia
Disclosure of geographical areas [line items]
Net earned premium	327.6	302.5
Insurance and Reinsurance | Operating companies | Other
Disclosure of geographical areas [line items]
Net earned premium	790.6	437.2
Insurance and Reinsurance | Operating companies | Canada | Northbridge
Disclosure of geographical areas [line items]
Net earned premium	1,007.2	899.5
Insurance and Reinsurance | Operating companies | Canada | OdysseyRe
Disclosure of geographical areas [line items]
Net earned premium	76.8	72.5
Insurance and Reinsurance | Operating companies | Canada | Crum & Forster
Disclosure of geographical areas [line items]
Net earned premium	0.0	0.0
Insurance and Reinsurance | Operating companies | Canada | Zenith National
Disclosure of geographical areas [line items]
Net earned premium	0.0	0.0
Insurance and Reinsurance | Operating companies | Canada | Brit
Disclosure of geographical areas [line items]
Net earned premium	83.1	77.1
Insurance and Reinsurance | Operating companies | Canada | Allied World
Disclosure of geographical areas [line items]
Net earned premium	20.5	0.0
Insurance and Reinsurance | Operating companies | Canada | Fairfax Asia
Disclosure of geographical areas [line items]
Net earned premium	0.1	0.1
Insurance and Reinsurance | Operating companies | Canada | Other
Disclosure of geographical areas [line items]
Net earned premium	9.1	3.9
Insurance and Reinsurance | Operating companies | United States | Northbridge
Disclosure of geographical areas [line items]
Net earned premium	12.5	9.3
Insurance and Reinsurance | Operating companies | United States | OdysseyRe
Disclosure of geographical areas [line items]
Net earned premium	1,539.2	1,319.3
Insurance and Reinsurance | Operating companies | United States | Crum & Forster
Disclosure of geographical areas [line items]
Net earned premium	1,852.6	1,769.3
Insurance and Reinsurance | Operating companies | United States | Zenith National
Disclosure of geographical areas [line items]
Net earned premium	811.6	807.3
Insurance and Reinsurance | Operating companies | United States | Brit
Disclosure of geographical areas [line items]
Net earned premium	1,036.5	942.1
Insurance and Reinsurance | Operating companies | United States | Allied World
Disclosure of geographical areas [line items]
Net earned premium	773.7	0.0
Insurance and Reinsurance | Operating companies | United States | Fairfax Asia
Disclosure of geographical areas [line items]
Net earned premium	0.0	0.3
Insurance and Reinsurance | Operating companies | United States | Other
Disclosure of geographical areas [line items]
Net earned premium	98.9	142.6
Insurance and Reinsurance | Operating companies | Asia | Northbridge
Disclosure of geographical areas [line items]
Net earned premium	0.0	0.0
Insurance and Reinsurance | Operating companies | Asia | OdysseyRe
Disclosure of geographical areas [line items]
Net earned premium	247.2	231.4
Insurance and Reinsurance | Operating companies | Asia | Crum & Forster
Disclosure of geographical areas [line items]
Net earned premium	0.0	0.0
Insurance and Reinsurance | Operating companies | Asia | Zenith National
Disclosure of geographical areas [line items]
Net earned premium	0.0	0.0
Insurance and Reinsurance | Operating companies | Asia | Brit
Disclosure of geographical areas [line items]
Net earned premium	60.3	54.0
Insurance and Reinsurance | Operating companies | Asia | Allied World
Disclosure of geographical areas [line items]
Net earned premium	88.2	0.0
Insurance and Reinsurance | Operating companies | Asia | Fairfax Asia
Disclosure of geographical areas [line items]
Net earned premium	319.0	293.2
Insurance and Reinsurance | Operating companies | Asia | Other
Disclosure of geographical areas [line items]
Net earned premium	108.0	105.7
Insurance and Reinsurance | Operating companies | International | Northbridge
Disclosure of geographical areas [line items]
Net earned premium	0.0	0.0
Insurance and Reinsurance | Operating companies | International | OdysseyRe
Disclosure of geographical areas [line items]
Net earned premium	470.2	450.9
Insurance and Reinsurance | Operating companies | International | Crum & Forster
Disclosure of geographical areas [line items]
Net earned premium	0.2	0.2
Insurance and Reinsurance | Operating companies | International | Zenith National
Disclosure of geographical areas [line items]
Net earned premium	0.0	0.0
Insurance and Reinsurance | Operating companies | International | Brit
Disclosure of geographical areas [line items]
Net earned premium	357.0	326.1
Insurance and Reinsurance | Operating companies | International | Allied World
Disclosure of geographical areas [line items]
Net earned premium	146.3	0.0
Insurance and Reinsurance | Operating companies | International | Fairfax Asia
Disclosure of geographical areas [line items]
Net earned premium	8.5	8.9
Insurance and Reinsurance | Operating companies | International | Other
Disclosure of geographical areas [line items]
Net earned premium	574.6	185.0
Runoff | Reportable segments
Disclosure of geographical areas [line items]
Net earned premium	20.1	163.5
Interest and dividends	28.9	51.2
Share of profit of associates	(6.1)	(15.5)
Net gains (losses) on investments	73.3	(225.2)
Gain on sale of subsidiary	0.0
Other revenue	0.0	0.0
Runoff | Reportable segments | Canada
Disclosure of geographical areas [line items]
Net earned premium	0.0	0.0
Runoff | Reportable segments | United States
Disclosure of geographical areas [line items]
Net earned premium	23.7	162.6
Runoff | Reportable segments | Asia
Disclosure of geographical areas [line items]
Net earned premium	0.0	0.0
Runoff | Reportable segments | International
Disclosure of geographical areas [line items]
Net earned premium	$ (3.6)	$ 0.9
Geographic | Net Premiums Earned | Canada
Disclosure of geographical areas [line items]
Allocation of net premiums earned	12.30%	13.40%
Geographic | Net Premiums Earned | United States
Disclosure of geographical areas [line items]
Allocation of net premiums earned	63.20%	65.50%
Geographic | Net Premiums Earned | Asia
Disclosure of geographical areas [line items]
Allocation of net premiums earned	8.50%	8.70%
Geographic | Net Premiums Earned | International
Disclosure of geographical areas [line items]
Allocation of net premiums earned	16.00%	12.40%

XML

Expenses (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Expenses [Line Items]
Losses and loss adjustment expenses	$ 6,880.0	$ 4,478.3
Other reporting segment cost of sales	1,821.4	1,095.2
Wages and salaries	1,567.2	1,228.4
Employee benefits	319.0	276.9
Depreciation, amortization and impairment charges	280.5	191.7
Operating lease costs	216.2	155.7
Audit, legal and tax professional fees	182.9	133.6
Premium taxes	152.7	101.4
Information technology costs	138.4	106.5
Other reporting segment marketing costs	65.4	43.9
Share-based payments to directors and employees	63.8	53.6
Restructuring costs	33.7	3.2
Loss on repurchase of borrowings	28.6	0.0
Administrative expense and other	471.2	406.3
Total expenses	12,221.0	8,274.7
Insurance and reinsurance companies
Expenses [Line Items]
Losses and loss adjustment expenses	6,880.0	4,478.3
Other reporting segment cost of sales	0.0	0.0
Wages and salaries	1,072.0	876.6
Employee benefits	242.1	213.1
Depreciation, amortization and impairment charges	136.5	98.4
Operating lease costs	79.3	60.6
Audit, legal and tax professional fees	155.7	116.2
Premium taxes	152.7	101.4
Information technology costs	122.2	99.8
Other reporting segment marketing costs	0.0	0.0
Share-based payments to directors and employees	58.4	48.1
Restructuring costs	30.6	2.9
Loss on repurchase of borrowings	0.0	0.0
Administrative expense and other	266.9	220.9
Total expenses	9,196.4	6,316.3
Non-insurance companies
Expenses [Line Items]
Losses and loss adjustment expenses	0.0	0.0
Other reporting segment cost of sales	1,821.4	1,095.2
Wages and salaries	495.2	351.8
Employee benefits	76.9	63.8
Depreciation, amortization and impairment charges	144.0	93.3
Operating lease costs	136.9	95.1
Audit, legal and tax professional fees	27.2	17.4
Premium taxes	0.0	0.0
Information technology costs	16.2	6.7
Other reporting segment marketing costs	65.4	43.9
Share-based payments to directors and employees	5.4	5.5
Restructuring costs	3.1	0.3
Loss on repurchase of borrowings	28.6	0.0
Administrative expense and other	204.3	185.4
Total expenses	$ 3,024.6	$ 1,958.4

XML

Supplementary Cash Flow Information - Supplemental Balance Sheet Information (Details) - USD ($) $ in Millions	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Entity Information [Line Items]
Cash and cash equivalents	$ 8,770.0	$ 4,649.8
Subsidiary assets pledged for short sale and derivative obligations, treasury bills and other eligible bills	16.8	0.0
Restricted cash and cash equivalents	835.0	430.7
Cash and cash equivalents as presented on the consolidated statements of cash flows	7,935.0	4,219.1	$ 3,125.6
Holding Company
Entity Information [Line Items]
Cash and balances with banks	129.1	131.9
Treasury bills and other eligible bills	866.3	401.3
Cash and cash equivalents	995.4	533.2
Cash and investments	2,368.4	1,371.6
Cash and balances with banks, restricted	1.7	2.8
Subsidiary investments
Entity Information [Line Items]
Cash and balances with banks	2,355.5	1,668.2
Treasury bills and other eligible bills	5,028.6	2,275.2
Cash and cash equivalents	17,382.5	9,938.0
Cash and investments	37,013.2	27,293.4
Cash and balances with banks, restricted	546.8	180.8
Treasury bills and other eligible bills, restricted	286.5	247.1
Fairfax India
Entity Information [Line Items]
Cash and balances with banks	44.0	44.5
Treasury bills and other eligible bills	0.0	128.7
Cash and cash equivalents	44.0	173.2
Fairfax Africa
Entity Information [Line Items]
Cash and balances with banks	329.7	0.0
Cash and cash equivalents | Holding Company
Entity Information [Line Items]
Cash and investments	995.4	533.2
Cash and cash equivalents | Subsidiary investments
Entity Information [Line Items]
Cash and investments	$ 7,384.1	$ 3,943.4

XML

Supplementary Cash Flow Information - Supplemental Cash Flow Information (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Net (purchases) sales of securities classified as FVTPL
Short term investments	$ (2,816.5)	$ (2,688.0)
Bonds	5,677.1	4,514.5
Preferred stocks	(249.6)	(42.4)
Common stocks	778.3	170.4
Derivatives, short sales and other invested assets	(710.9)	(835.2)
Net (purchases) sales of securities classified as FVTPL	2,678.4	1,119.3
Changes in operating assets and liabilities
Net increase in restricted cash and cash equivalents	(245.4)	(55.1)
Provision for losses and loss adjustment expenses	1,842.1	(355.7)
Provision for unearned premiums	395.2	326.2
Insurance contract receivables	(428.4)	(296.6)
Recoverable from reinsurers	(1,168.5)	(34.6)
Other receivables	(32.4)	(36.5)
Funds withheld payable to reinsurers	182.0	87.9
Accounts payable and accrued liabilities	174.0	110.6
Income taxes payable	46.5	(54.1)
Other	(209.7)	(300.0)
Changes in operating assets and liabilities	555.4	(607.9)
Net interest and dividends received
Interest and dividends received	531.9	782.4
Interest paid	(277.9)	(216.2)
Net interest and dividends received	254.0	566.2
Net income taxes paid	$ (33.4)	$ (267.1)

XML

Related Party Transactions (Details) - USD ($) $ in Millions		12 Months Ended
	Mar. 09, 2018	Dec. 31, 2017	Dec. 31, 2016
Key management team
Disclosure of transactions between related parties [line items]
Salaries and other short-term employee benefits		$ 9.7	$ 8.2
Share-based payments		3.1	2.5
Related party compensation		12.8	10.7
Board of Directors
Disclosure of transactions between related parties [line items]
Retainers and fees		0.8	0.8
Share-based payments		0.3	0.1
Related party compensation		1.1	$ 0.9
Lissom
Disclosure of transactions between related parties [line items]
Amount of operating companies managed		$ 50.0
Subsequent event | Fairfax India
Disclosure of transactions between related parties [line items]
Performance fee revenue	$ 114.4

XML

Subsidiaries (Details)			12 Months Ended
	Sep. 19, 2017	Jan. 13, 2017	Dec. 31, 2017	Dec. 31, 2016
ICICI Lombard General Insurance Company Limited
Disclosure of subsidiaries [line items]
Ownership percentage	9.90%		0.00%	34.60%
Fairfax Africa Holdings Corporation
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			64.20%
Proportion of voting rights held in associate			98.80%
Grivalia Properties Real Estate Investment Company S.A.
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			52.70%
Brit
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			72.50%
Allied World
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			67.40%
The Pacific Insurance Berhad
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			85.00%
PT Asuransi Multi Artha Guna TBK (AMAG)
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			80.00%
Fairfirst Insurance Limited
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			78.00%
Hamblin Watsa Investment Counsel Ltd.
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			100.00%
Pethealth Inc.
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			100.00%
Boat Rocker Media Inc.
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			58.20%
Cara
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			40.20%
Proportion of voting rights held in associate			56.70%
Group St-Hubert Inc.
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			40.20%
Original Joe's
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			35.90%
Pickle Barrel Restaurants Inc.
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			40.20%
The Keg
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			51.00%
Praktiker Hellas Commercial Societe Anonyme
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			100.00%
Sporting Life Inc.
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			75.00%
William Ashley China Corporation
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			100.00%
Golf Town Limited
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			60.00%
Proportion of voting rights held in associate			100.00%
Fairfax India
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			30.20%	33.60%
Proportion of voting rights held in associate			93.60%
Ownership percentage		30.20%
National Collateral Management Services Limited
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			27.00%
Fairchem Speciality Limited
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			14.70%
Thomas Cook India
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			67.60%
Quess Corp Limited
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			33.10%	42.10%
Sterling Holiday Resorts (India) Limited
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			67.60%
Northbridge
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			100.00%
OdysseyRe
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			100.00%
Hudson Insurance
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			100.00%
Crum & Forster
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			100.00%
Zenith National
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			100.00%
Advent
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			100.00%
Polish Re
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			100.00%
Colonnade
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			100.00%
Fairfax Brasil
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			100.00%
SBS Seguros Colombia S.A.
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			100.00%
Southbridge Compañía de Seguros Generales S.A.
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			100.00%
La Meridional Compañía Argentina de Seguros S.A.
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			100.00%
Bryte Insurance
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			100.00%
CRC Re
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			100.00%
Wentworth
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			100.00%
Falcon
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			100.00%
TIG Insurance
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			100.00%
RiverStone UK
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			100.00%
RiverStone Insurance
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			100.00%
RiverStone Managing Agency Limited
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			100.00%
Saurashtra Freight Private Limited
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			15.40%
Mosaic Capital
Disclosure of subsidiaries [line items]
Proportion of voting rights held in associate			62.00%
Cara | Group St-Hubert Inc.
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			100.00%
Cara | Original Joe's
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			89.20%
Cara | Pickle Barrel Restaurants Inc.
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			100.00%
Fairfax India | National Collateral Management Services Limited
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			89.50%
Fairfax India | Fairchem Speciality Limited
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			48.70%
Fairfax India | Saurashtra Freight Private Limited
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			51.00%
Thomas Cook India | Quess Corp Limited
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			49.00%
Thomas Cook India | Sterling Holiday Resorts (India) Limited
Disclosure of subsidiaries [line items]
Proportion of ownership interest in subsidiary			100.00%