Mr. John Varnell reports

FAIRFAX AND MITSUI SUMITOMO INSURANCE ENTER INTO STRATEGIC ALLIANCE AND SALE OF FIRST CAPITAL

Fairfax Financial Holdings Ltd. and Mitsui Sumitomo Insurance Co. Ltd., of Tokyo, Japan, a subsidiary of MS&AD Insurance Group Holdings Inc. (a Tokyo Stock Exchange-listed company), have entered into a binding agreement to pursue a global strategic alliance. Mitsui Sumitomo will acquire Fairfax's 97.7-per-cent interest in First Capital Insurance Ltd., of Singapore, with Fairfax retaining a meaningful quota share exposure to First Capital's insurance portfolio.

The cash purchase price for Fairfax's interest in First Capital is $1.6-billion (U.S.), which will result in a realized net investment gain of approximately $900-million (U.S.) after tax (an increase in book value per basic share of Fairfax of approximately $33 (U.S.) on a pro forma basis). Ramaswamy Athappan will continue as First Capital's chief executive officer, while continuing to retain his responsibilities as chairman of Fairfax Asia.

Highlights:

• Strategic alliance of Mitsui Sumitomo Insurance and Fairfax (more details on Mitsui Sumitomo Insurance can be found its website);
• Mitsui Sumitomo Insurance and Fairfax will enter into an agreement to explore a broad global partnership in various areas, including reinsurance relationships that would lead to successful growth and value creation for both parties;
• Cash purchase price for Fairfax's interest in First Capital is $1.6-billion (U.S.), which will result in a realized net investment gain of approximately $900-million (U.S.) after tax (an increase in book value per basic share of Fairfax of approximately $33 (U.S.) on a pro forma basis);
• Closing of First Capital transaction is expected late in 2017 or early 2018, subject to applicable regulatory approvals;
• Fairfax has scheduled a conference call on Thursday, Aug. 24, 2017, at 8:30 a.m. Eastern Time, to discuss this transaction. The conference call number is 1-800-857-9641 (Canada or the United States) or 1-517-308-9408 (international), and the passcode is Fairfax. More details on the transaction may be found in the investor presentation the Fairfax website.

"We are very excited to become partners with Mitsui Sumitomo," said Prem Watsa, chairman and chief executive officer of Fairfax. "Mitsui Sumitomo's scale in Asia will give First Capital, under the continued leadership of Mr. Athappan, the opportunity to grow significantly. Mr. Athappan championed this transaction, based on his strong belief that it was the best way for First Capital to continue to grow successfully while also creating a valuable long-term partnership for the Fairfax group."

"I am extremely happy to partner with Mitsui Sumitomo," said Mr. Athappan. "This wonderful new partnership creates a win-win-win by providing a runway for growth of the company I helped nurture and grow, while also significantly growing the business of both Fairfax Asia and the Fairfax group."

"Mitsui Sumitomo and Fairfax share the same long-term vision and values," said Masahiro Matsumoto, member of the board, senior executive officer of Mitsui Sumitomo. "We look forward to building our partnership with Fairfax to expand on our complementary global strengths and, in particular, with Mr. Athappan to continue building First Capital."

Closing of the First Capital transaction is subject to applicable regulatory approvals, including the approval of the Monetary Authority of Singapore and the Financial Services Agency of the government of Japan, and is expected to occur late in 2017 or early 2018.

Fairfax has scheduled a conference call on Thursday, Aug. 24, 2017, at 8:30 a.m. Eastern time, to discuss this transaction. The conference call number is 1-800-857-9641 (Canada or the U.S.) or 1-517-308-9408 (international), and the passcode is Fairfax. A replay of the call will be available from shortly after the termination of the call until 5 p.m. Eastern Time on Thursday, Sept. 7, 2017. The replay may be accessed at 1-888-446-2535 (Canada or the U.S.) or 1-203-369-3729 (international).

BofA Merrill Lynch acted as exclusive financial adviser to Fairfax.

Fairfax is a holding company which, through its subsidiaries, is engaged in property and casualty insurance and reinsurance and investment management.

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