Blue Ribbon Conference May, 2014 Note: All financial disclosure in this presentation is, unless otherwise noted, in US$

Guiding Principles Objectives  We expect to compound our 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 and shareholders – 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 2

Guiding Principles Structure  Our companies are decentralized and run by the presidents except for performance evaluation, succession planning, acquisitions and financing, which are done by or with Fairfax. 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 head office will always be a very small holding company and not an operating company 3

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! 4

Fairfax – 28 Years 5 Shareholders – Book Value per Share plus Dividends $ Year Compound Annual Growth Rate 22% 339

Real GDP Source: Hoisington Investment Management year average = 3.8% decade average growth 6

U.S. Private and Public Debt as % of GDP 7

8 Total Public and Private Debt as a % of GDP – Major Countries

9 Velocity of Money Equation of Exchange: GDP (nominal) = M*V

Source : Hoisington Investment Management Debt Induced Panic Years and Long-Term Government Bond Yields 1.Average low level of interest rates after panic2.0% 2.Average number of years after panic to lowest level of interest rates 13.7 years 3.Average level of interest rates 20 years after panic2.5% 4.Change from low level of interest rates to 20 th year0.5% Long-Term Government Bond Yields Historic Panic Years U.S U.S Japan

11 Long Term Treasury Rate

12 Shiller’s Price-Earnings Ratio

S&P 500 Index and Profit Margins 13

14 Deflation in Japan

7-10 Year US High Yield Debt (Yield To Maturity) 15

Recent Issuers of 10-year US$ Debt  Bolivia  Georgia  Honduras  Mongolia  Nigeria  Paraguay  Tanzania  Zambia 16

Source: Bloomberg 17 High Tech Speculation

Monstrous Real Estate & Construction Bubble in China  China built 50 Manhattans between 2008 and 2012  China built 20 million housing units in 2012 compared to 2 million in the United States at its peak  At the end of 2013 China had 60 million units under construction  In many Chinese cities, the existing housing stock has been replicated and is empty  Home ownership rates in China are estimated to be over 100% versus 65% in the United States  Since 2009 the Chinese banks have grown by the equivalent of the entire United States banking system  The shadow banking system in China is estimated by BoA to be $4.7 trillion or 51% of Chinese GDP  Prior to the credit crisis, the U.S. had $4.5 trillion in asset-backed securities (31% of U.S. GDP)  A combination of explosive growth and high interest rates has resulted in a massive carry trade where speculators borrow at low rates across the world and invest in China – when the capital flows reverse, watch out! 18

 U.S. Housing Market  Dot com Boom  Oil Boom in early 1980’s  The more things change… 19 Have We Experienced These Speculations Before?