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Note: All financial disclosure in this presentation is, unless otherwise noted, in US$
Annual MeetingApril 11, 2019
Forward-Looking StatementsCertain statements contained herein may constitute forward-looking information (within the meaning of Canadian securities legislation) and forward-looking statements (within the meaning of the United States Private Securities Litigation Reform Act of 1995). These statements can be identified by expressions of belief, expectation or intention, as well as those statements that are not historical fact. Forward-looking statements are based upon assumptions, estimates, opinions and analysis made by management in light of its experience, current conditions and its expectations of future developments that management believe to be reasonable and relevant, and 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 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. We caution readers not to place undue reliance on these forward-looking statements, which speak only as of their dates. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, change in assumption or opinion or otherwise, except as may be required by applicable securities laws. Additional risks and uncertainties are described in our most recently issued 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. 2
Guiding Principles
Objectives
We expect to compound our mark-to-market book value per share over the long term by 15% annually by running Fairfax and its subsidiaries for the long term benefit of customers, employees, shareholders and the communities where we operate – at the expense of short term profits if necessary
Our focus is long term growth in book value per share and not quarterly earnings. We plan to grow through internal means as well as through friendly acquisitions
We always want to be soundly financed
We provide complete disclosure annually to our shareholders
3
Guiding Principles
Structure
Our companies are decentralized and run by the presidents except for performance evaluation, succession planning, acquisitions, financing and investments, which are done by or with Fairfax. Investing will always be conducted based on a long term value-oriented philosophy. Cooperation among companies is encouraged to the benefit of Fairfax in total
Complete and open communication between Fairfax and its subsidiaries is an essential requirement at Fairfax
Share ownership and large incentives are encouraged across the Group
Fairfax will always be a very small holding company and not an operating company
4
Guiding Principles
Values
Honesty and integrity are essential in all of our relationships and will never be compromised
We are results oriented — not political
We are team players — no "egos”. A confrontational style is not appropriate. We value loyalty — to Fairfax and our colleagues
We are hard working but not at the expense of our families
We always look at opportunities but emphasize downside protection and look for ways to minimize loss of capital
We are entrepreneurial. We encourage calculated risk taking. It is all right to fail but we should learn from our mistakes
We will never bet the company on any project or acquisition
We believe in having fun — at work! 5
Fairfax Value Creation – 33 Years
6
432
28
$0
$100
$200
$300
$400
$500
$600
1985 1989 1993 1997 2001 2005 2009 2013 2017
Book Value
Fairfax share price (USD)
S&P 500 index
Fairfax book value per share:Fairfax share price (USD):
S&P 500 Index:
Dividends Reinvested
19.5%18.3%10.3%
(1)
18.7%17.2%7.8%
33 Year Compound Annual Growth Rate
(1) Except for Fairfax book value per share which is the compound annual growth rate including cumulative dividends paid as of December 31, 2018
Historic Performance vs. Peer Group
7
Compound Growth in Book Value per Share (5 Years Ended December 31, 2018) (1)
(1) Except for S&P 500 and TSX which are compound index returns excluding dividends
11.3%
9.5%
6.7% 6.5% 6.3% 6.3%5.3% 5.2% 5.0% 4.9% 4.4%
3.4% 3.4%
1.0%
-1.1%-2.2% -2.5%
Historic Performance vs. Peer Group
8
Compound Growth in Stock Price (5 Years Ended December 31, 2018) (1)
7.2% in CAD
17.2%
12.3%11.5% 11.2%
8.7%7.3% 6.6% 6.3% 5.8%
4.5% 4.2%
2.0%1.0% 0.6%
-1.2%
-5.0%
-9.3%
Historic Performance vs. Peer Group
9
Compound Growth in Book Value per Share (33 Years: since Fairfax’s inception) (1)
(1) Except for S&P 500 and TSX which are compound index returns excluding dividends
18.7%
15.9% 15.6%
13.3%12.1%
11.7%
8.3% 7.8%
5.0%
Historic Performance vs. Peer Group
10
Compound Growth in Stock Price (33 Years: since Fairfax’s inception) (1)
17.2%15.8%
15.2%
11.5%10.6%
9.1%7.8% 7.8%
5.0%
Sources of Net Earnings in 2018
11(1) Includes: non-insurance operations, runoff operating results, interest expense and corporate overhead & other
($ millions)
Underwriting profit – (combined ratio of 97.3%) 318
Investment income – insurance and reinsurance 638
Operating income 956
Other (1) (347)
Realized investment gains 1,175
Pre-tax income including realized investment gains 1,784
Unrealized investment losses (922)
Pre-tax income 862
Net earnings 376
Underwriting Results in 2018
12
Combined Ratio
Combined Catastrophe Excluding
Ratio Losses Cat Losses
Northbridge 95.8% 1.7% 94.1%
Odyssey Group 93.4% 9.1% 84.3%
Crum & Forster 98.3% 1.4% 96.9%
Zenith 82.6% 0.1% 82.5%
Brit 105.2% 14.2% 91.0%
Allied World 98.1% 9.8% 88.3%
Fairfax Asia 99.8% - 99.8%
Other 104.6% 2.0% 102.6%
Consolidated 97.3% 6.5% 90.8%
Strategic growth in attractive markets
Bryte (South Africa)
Fairfax Latam
Fairfax Brasil
Colonnade (CEE)
Polish Re
Gulf Ins. (Kuwait)
Eurolife (Greece)
Group Re
$15.4 Billion in Gross Premiums Written in 2018
$1.3b $0.4b $1.7b
OtherInsurance & Reinsurance
Global multi-line reinsurer and specialty insurer
$4.2b IFRS equity
Major Cdn commercial P&C insurer
$1.5b IFRS equity
$3.3b
Manager of global runoff business
Significant presence in Asia
Falcon (Hong Kong)
Pacific (Malaysia)
AMAG (Indonesia)
Fairfirst (Sri Lanka)
Digit (India)
Alltrust (China)
Falcon Thailand
BIC (Vietnam)
Leading Lloyd’s market operation
$1.6b IFRS equity
$2.2b
13
Global specialty insurer and reinsurer
$3.6b IFRS equity
$3.4b$2.3b $0.8b
Leading workers comp insurer in U.S.
$0.9b IFRS equity
Major U.S. commercial P&C insurer
$1.6b IFRS equity
14
Fairfax’s Global Presence
Digit
Zenith
NorthbridgeOdyssey Group
Crum & Forster
Southbridge Colombia
Fairfax Brasil
Southbridge Chile Southbridge Uruguay
La Meridional
Bryte
Fairfirst
AMAG
Alltrust
Falcon HKBIC
Falcon Thailand
Pacific
Gulf
Brit
Allied World Eurolife
Polish Re
Colonnade
Importance of Float
15
Total Float Float per Share($ millions)
1985 13 $2 ½
1990 164 30
1995 653 74
2000 5,877 449
2005 8,757 492
2010 13,110 641
2015 17,072 769
2018 22,500 826
Benefit of float
Last 5 years 2.0%
Last 10 years 0.7%
$61 billion cumulative net premiums written
Average combined ratio of 98.0%
Average annual reserve redundancies of 3.6%
16
Outstanding Underwriting Performance– Last 8 Years
Major Cat Combined
Losses ($m) Ratio pts. Major Catastrophe Events
2011 735 13.8 Japan EQ and tsunami, Thailand floods, New Zealand EQ
2012 261 4.5 Sandy
2013 - -
2014 - -
2015 - -
2016 - -
2017 1,092 11.2 California wildfires, Harvey, Irma, Maria
2018 542 4.7 California wildfires, Michael, Florence, Typhoon Jebi
Total 2,630 4.3 avg.
Thomas Cook
17
2012 2013 2014 2015 2016 2017 2018
TC acquires Kuoni(HK and India)Purchase: $81
TC Ownership: 100%
Thomas Cook (TC)Purchase: $173
Share Price: ₹ 52
Today
Share Price: ₹ 257(1)TC acquires QuessPurchase: $47
TC Ownership: 74%
Quess IPO – July 2016Market Cap of $600TC Ownership: 62%
(1) As at March 31, 2019
- Thomas Cook sold 5.4% of Quess in November 2017 for $97
- Thomas Cook will spin its remaining holdings in Quess out to its shareholders
($ millions)
TC acquires Kuoni’sGlobal Destination
Management Network
TC acquires Sterling ResortsPurchase: $140
Fairfax invests $80 into TCTC Ownership: 100%
Fairfax MV(1):Cost:
Annual Return:
$921$25323%
Recipe Unlimited
18
(1) As at March 5, 2019
2012 2013 2014 2015 2016 2017 2018
Prime RestaurantsPurchase: $57
Ownership: 82%
Merger of Cara/PrimeInvestment: $100
Prime Contribution: $57Bill Gregson joined as CEO
Cara IPOFairfax MV: $458Ownership: 41%
Cara acquiresSt. Hubert
Purchase: $539
Cara acquiresOriginal Joe’s
Purchase: $113
Cara acquiresPickle Barrel
Purchase: $22
The KegPurchase: $85
Ownership: 51%
Cara acquiresThe Keg
Purchase: $200
1,370 restaurants – Cdn$3.5 billion system sales – 60,000 employees
Cara changes itsname to Recipe
Today
Ownership: 44%
(Cdn$ millions)
Fairfax MV(1):Cost:
Annual Return:
$732$34829%
PVC and caustic soda producer
30% FIH ownership
7-year debentures
Private
Fairfax India Holdings (FIH)
19
Private sector bank
51% FIH ownership –first $60m invested in Q4 2018
Private
Grain management
90% FIH ownership
Private
~$1.78 Billion Investments Completed (or Committed)
$174m
India’s 3rd largest airport
54% FIH ownership
Private
$653m$277m
Diversified financial services company
27% FIH ownership
9% FFH ownership
Public
$300m $72m
Ocean-going tankers
41% FIH ownership –purchased March 2019
Private
$30m
Container freight stations
51% FIH ownership
Private
$74m
Specialty chemical manufacturer
49% FIH ownership
Public
$170m
BIAL(& 5paisa)
Fairfax Financial holds a 33.7% equity interest and 93.8% voting interest in Fairfax India
Note: not pictured above is a $27 million investment in National Stock Exchange of India
SANMAR
Financing companies in food production and agriculture
35% FAH ownership
Private
Fairfax Africa Holdings (FAH)
20
Sub-Saharan financial institution
Banking, treasury and fintech
42% FAH ownership
Public
$469 Million Investments Completed (or Committed)
$194m
Food processing
Animal feeds
Branded foods
26% FAH ownership
Private
$23m$108m
Food, agriculture and financial services
Deep expertise in grain value chain
45% FAH ownership
Private
$12m $34m
For profit education platform in Kenya and South Africa
11%(1) FAH ownership
Private
$96m
Electrical infrastructure development
Heavy building materials
49% FAH ownership
Public
Fairfax Financial holds a 58.7% equity interest and 98.3% voting interest in Fairfax Africa
FAIRFAX AFRICA
(1) Assuming exercise of warrants
Investment Portfolio
21
Investment Portfolio Well Positioned$38.8 billion at December 31, 2018(1)
(1) Net of short sale and derivative obligations; investments in associates at carrying value
Not focused on short term results
Capital preservation a priority
Cash and short term U.S. treasury bonds to selectively take advantage of opportunities
Low duration portfolio given sizeable cash and low duration bond portfolio
We have not deviated from our long term value-oriented investment philosophy
Cash & 1-2 yearUST bonds
45%
2-3 yearIG Corp Bonds
8%
Other Gov'tBonds
7%
OtherCorp Bonds
11%
Other3%
Common Stocks26%
Total Return on Investment Portfolio
22
Average return – since inception: 8.0%
-10%
0%
10%
20%
1986 1990 1994 1998 2002 2006 2010 2014 2018199
Average return – last 5 years: 3.1%
Return on Investments
23(1) Simple average of the total return on average investments for each year
Interest &
Period Dividends Net gains ($ billions) % Return(1)
1986-1993 0.1 0.1 0.2 10.6
1994-1998 0.7 0.6 1.3 10.1
1999-2003 2.3 2.0 4.3 7.9
2004-2008 3.0 5.8 8.8 10.4
2009-2013 2.9 1.9 4.8 4.4
2014-2018 2.8 1.9 4.7 3.1
Cumulative from inception 11.8 12.3 24.1 8.0
Total return on
investments
($ billions)
Largest Equity Holdings
24
Per FFH
Share($ millions)
ICICI Lombard 497 $18
BDT Capital Partners (Oak Fund) 443 16
Commercial Intl Bk 351 13
BlackBerry Limited 326 12
Resolute Forest Products 300 11
APR Energy 298 11
Seaspan (invested add'l $250m Jan 2019) 277 10
KWF Real Estate LPs 247 9
Eurobank 243 9
Kennedy Wilson 242 9
Top 10 3,224 118
Carrying Value
Dec 31, 2018
Fluctuations in Equity Holdings
25(1) The % change in share price shown for Stelco and Seaspan in 2018 is from the cost per share of Fairfax’s investment in each company
Common Stocks 2018 Q1 2019
BlackBerry (36) 42
Eurobank (36) 31
Commercial Intl Bk (4) 14
Stelco(1) (27) 10
ICICI Lombard 11 20
Kennedy Wilson 5 18
Associates and Consolidated Equities
Fairfax India (12) 7
Fairfax Africa (43) 3
Thomas Cook (9) 10
Quess (43) 12
IIFL (24) (15)
Grivalia (9) 29
Seaspan(1) 20 11
Resolute (28) (0)
Recipe 1 (3)
% change in share price
Arbor Memorial
First purchased 42% of Arbor in 2001 at Cdn$8.81 per share
Took it private at Cdn$32 per share in 2012 with the Scanlan family
Sold our interest in 2018 to the Scanlan family at Cdn$152 per share
18% annual growth rate per share since first purchase
26
$0
$10
$20
$30
$40
$50
$60
$70
$0
$10
$20
$30
$40
$50
$60
$70
John Chen’s Performance at Sybase
Sybase share price had a CAGR of 24.4% under John Chen’s leadership – compared to just 2.0% for the Nasdaq over that period
27
$0
$10
$20
$30
$40
$50
$60
$70
$0
$10
$20
$30
$40
$50
$60
$70Sybase share price
John Chen becomes CEO
Nov 1998
Sybase acquires Mobile 365Nov 2006
$5
$25
SAP acquires Sybase
July 2010
$65
Value Stocks vs. Growth Stocks
28
Performance of U.S. value minus growth (%)
Source: Prof. Ken French, Tuck School of Business at Dartmouth
-500
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
-500
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
1926 1936 1946 1956 1966 1976 1986 1996 2006 2016
%%
Debt and Warrant Deals
29Note: current stock price as of March 5, 2019
Warrant Warrant Current Potential
Principal Coupon Maturity Strike Price Stock Price Ownership($ millions)
Seaspan - 1st tranche 250 5.5% 2025 $6.50 $8.74
Seaspan - 2nd
tranche 250 5.5% 2026 6.50 8.74
Seaspan - additional warrants 2025 8.05 8.74 43%
Chorus Aviation 146 6.0% 2024 8.25 7.34 15%
AGT Foods 139 5.4% 2024 33.25 17.79 20%
Mosaic Capital 110 5.7% 2024 8.81 4.49 62%
Altius Minerals 73 5.0% 2024 15.00 12.90 13%
Westaim 37 5.0% 2024 3.50 2.50 8%
1,005 5.5%
(local currency)
Financial Strength
30Note: excludes consolidated non-insurance companies
At December 31, 2018($ millions)
Holding company cash and investments 1,551
Borrowings - holding company 3,859
Borrowings - insurance and reinsurance companies 996 Total debt 4,855
Common shareholders' equity 11,779
Preferred stock 1,336
Non-controlling interests 1,437
Total capital 19,407
Total debt/total capital 25.0%
Net debt/net total capital 18.5%
Interest coverage 3.2x
RisksU.S. Private and Public Debt as % of GDP
31Source: Hoisington Investment Management
Through Q4 2018
366%
100%
140%
180%
220%
260%
300%
340%
380%
420%
100%
140%
180%
220%
260%
300%
340%
380%
420%
1870 1890 1910 1930 1950 1970 1990 2010
Panic Year 2008
Panic Year 1929
Panic Year 1873
1870-2018 avg.=194%
Current total debt = $76 trillionDebt/GDP of 194% would require total debt of $40 trillion
1.00
1.25
1.50
1.75
2.00
2.25
1.00
1.25
1.50
1.75
2.00
2.25
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010
1918 = 2.0
1946 = 1.2
1997 = 2.2
1.45
Avg. 1900 to present = 1.72
Avg. 1953 to 1983 = 1.75
RisksVelocity of Money 1900-2018
32Source: Hoisington Investment Management
Equation of Exchange: GDP (nominal) = M*V
Through Q4 2018
RisksLong Term Treasury Rate 1871-2018
33Source: Hoisington Investment Management
annual average
3.1%
0%
2%
4%
6%
8%
10%
12%
14%
0%
2%
4%
6%
8%
10%
12%
14%
1871 1891 1911 1931 1951 1971 1991 2011
avg. = 4.2%
Global market Restricted market Global market
Interest rate avg. = 2.9%Inflation rate avg. = 1.0%
Interest rate avg. = 6%Inflation rate avg. = 3.9%
Fall of Berlin Wall
Onset of Iron and Bamboo Curtains
RisksCyclically Adjusted P/E Ratio – S&P 500
34Source: Robert J. Shiller
0
5
10
15
20
25
30
35
40
45
50
0
5
10
15
20
25
30
35
40
45
50
1881 1894 1907 1921 1934 1947 1961 1974 1987 2001 2014
CAPE Ratio
Above March 2019
June 190125
Sept. 192933
Jan. 196624
Dec. 199944
Average at end of recessions = 13.1Range = 5.3 to 19.3
Average = 16.8
The CAPE Ratio is currently 30xSince 1881, it has been higher only twice. Both episodes ended badly:
June - Oct '29 when it peaked at 33xJan '97 - May '02 when it peaked at 44x
Mar 201930
2,076
$1,300
$1,450
$1,600
$1,750
$1,900
$2,050
$2,200
$1,300
$1,450
$1,600
$1,750
$1,900
$2,050
$2,200
'10 '11 '12 '13 '14 '15 '16 17 18 19
RisksU.S. Corporate After-Tax Profits
35Source: Hoisington Investment Management
Through Q4 2018
($ billions)
Pent-Up DemandU.S. Housing Starts
36Source: Bloomberg
U.S. Housing Starts (Seasonally Adjusted Annual Rate)
Sep '991.33M
June '071.73M
Dec '180.91M
0.0 M
0.5 M
1.0 M
1.5 M
2.0 M
2.5 M
0.0 M
0.5 M
1.0 M
1.5 M
2.0 M
2.5 M
'59 '62 '65 '68 '71 '74 '77 '80 '83 '86 '89 '92 '95 '98 '01 '04 '07 '10 '13 '16 '19
Housing Starts 10 Year Moving Avg.
Housing Starts Summary:1960s 1.39M p.a.1970s 1.78M1980s 1.48M1990s 1.37M2000s 1.52M2010s 0.96M'59-'18 1.43MCurrent 1.14M
Over the past decade, the U.S. built 7.9 million fewer houses than it did between 1997-2007
Jun '0518.0
Sep '099.4
Dec '1817.5
Sep '0716.7
Dec '1815.0
4 yr
6 yr
8 yr
10 yr
12 yr
5 M
10 M
15 M
20 M
25 M
'76 '78 '80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18
US Auto Sales 10 Year Moving Average Median Fleet Age (right axis)
US Auto Sales Summary:1970s 14.1M p.a.
1980s 13.7M
1990s 14.6M
2000s 15.7M
2010s 15.6M
'76-'18 14.8M
Current 17.5M
Pent-Up DemandU.S. Auto Sales and Median Fleet Age
37Source: Bloomberg
U.S. Auto Sales (Seasonally Adjusted Annual Rate)
Pent-Up DemandU.S. Gross Fixed Capital Formation to GDP
38Source: OECD Main Economic Indicators
Sep '7519.7%
Mar '8023.7%
Jun '9219.3%
Dec '0122.8%
Sep '0622.7%
Sep '1018.1%
Sep '1820.5%
63 year average= 21.3%
10%
15%
20%
25%
30%
10%
15%
20%
25%
30%
'55 '58 '61 '64 '67 '70 '73 '76 '79 '82 '85 '88 '91 '94 '97 '00 '03 '06 '09 '12 '15 '18
Gross Fixed Capital Formation / GDP 10 Year Moving Average
Shares Issued and Repurchased
39
(shares in millions)
December 31, 1985 5.0
1986 - Q3 2017 29.5 6.5 23.0
Q4 2017 - March 8, 2019 - 1.1 (1.1)
March 8, 2019 26.9
Shares Shares Shares
Issued Repurchased Outstanding
(1)
(1) Includes 621,000 shares repurchased for cancellation and 444,000 shares repurchased for use in various long term incentive plans across the company
Next Decade - Building on Fairfax’s Strengths
Our guiding principles have remained intact
Excellent long term performance
Demonstrated strengths
Strong operating subsidiaries focused on underwriting profitability and prudent reserving
Conservative investment management providing excellent long term returns
Well positioned for the future
Fair and friendly Fairfax culture
40
