The company blamed the loss on several factors, including low interest and dividends, reduced realized gains, and higher runoff costs.

But on a brighter note, Fairfax showed an improvement in financial results for the first nine months of 2003, recording $288.5 million in net profit, compared to $257.3 million in income posted last year. (Canadian dollars were converted to U.S. dollars using an exchange rate of C$1.32=U.S. $1.)

"In the third quarter, we had a small loss of C$20 million ($15.2 million). However, we had a record net income of C$381 million ($288.5 million) for the first nine months of 2003," noted Prem Watsa, chief executive officer at Fairfax, during a conference call today with analysts. "Overall, we are very pleased with our nine-month results?we continue to deliver on fundamentals and it shows in our financials," he said.

Commenting on runoff costs, Mr. Watsa noted that Dennis Gibbs?chairman of TRG Holding, Fairfax's jointly owned business with Xerox Corp., who is also in charge of overseeing the runoff business?"has done an outstanding job."

He continued that Mr. Gibbs' team has done even better than expected, but that there is a lag in the cost of running the operation. "As Dennis and his team continue to settle all the claims, we expect there to be a decreasing drag on our results from runoff, but it will likely last right through 2004," he said.

Mr. Watsa added, "Let me just say we are not happy about the loss."

In the past year, Fairfax has restructured its money-losing U.S. unit, TIG Specialty Insurance in Dallas, by placing most of its operations into a runoff division, boosting loss reserves by $200 million and purchasing a $300 million adverse loss development cover. Fairfax has since merged TIG with its TRG Holding's International Insurance Co. subsidiary.

Mr. Watsa emphasized that Fairfax's ongoing insurance and reinsurance operations continue to show solid results.

"Combined ratios for all our operations were below 100 percent?Northbridge, 92.7 percent; Crum & Forster, 98.1 percent; OdysseyRe, 96.4 percent," he said. "Total combined ratio for the third quarter was 97 percent. The combined ratio for the nine months was 97.8 percent."

Fairfax's realized gains on investments dropped sharply to $33.4 million, from $352.9 million one year ago. The insurer's revenue from interest and dividends also fell, to $84.3 million from $124.2 million posted during the year-ago period.

But Mr. Watsa said his company currently has nearly $6 billion in cash and T-bills, with 48 percent of its investment portfolio in cash.

He noted that if Fairfax were to invest its cash in longer-term treasuries, the company could immediately boost its investment income by more than $230 million annually, $56 million per quarter. He added: "We are tempted, but we don't believe the risk of principal loss justifies the added income. We are waiting for better opportunities patiently. With almost 50 percent in cash, we are well-positioned to take advantage of opportunities in the future."

Fairfax Financial Holdings, through its subsidiaries, offers various lines of insurance products, with a focus on property-casualty insurance. Its products include trucking, oil and gas insurance. The insurer also provides investment management, claims adjusting and risk management services.