Exhibit 10.(f)

FIREMEN'S INSURANCE COMPANY OF NEWARK, NEW JERSEY
CONTINENTAL REINSURANCE CORPORATION
CONTINENTAL REINSURANCE CORPORATION INTERNATIONAL LIMITED

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THE CONTINENTAL CORPORATION

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FAIRFAX FINANCIAL HOLDINGS LIMITED

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THE CONTINENTAL INSURANCE COMPANY OF CANADA
THE DOMINION INSURANCE CORPORATION

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PURCHASE AGREEMENT

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October 12, 1994

Tory Tory DesLauriers & Binnington

TABLE OF CONTENTS

ARTICLE 1
INTERPRETATION
1.1 Definitions . . . . . . . . . . . . . . . . . . . 3
1.2 Schedules . . . . . . . . . . . . . . . . . . . 14
1.3 Headings and Table of Contents . . . . . . . . 14
1.4 Gender and Number . . . . . . . . . . . . . . . 15
1.5 Currency . . . . . . . . . . . . . . . . . . . 15
1.6 Generally Accepted Accounting Principles . . . 15
1.7 Invalidity of Provisions . . . . . . . . . . . 15
1.8 Entire Agreement, Waiver . . . . . . . . . . . 15
1.9 Governing Law . . . . . . . . . . . . . . . . . 16
1.10 Reorganization . . . . . . . . . . . . . . . . 16
1.11 Disclosure Generally . . . . . . . . . . . . . 18

ARTICLE 2
PURCHASE AND SALE
2.1 Agreement to Purchase and Sell the Purchased
Shares . . . . . . . . . . . . . . . . . . . . 18
2.2 Calculation and Payment of the Purchase Price
for the Purchased Shares . . . . . . . . . . . 19
2.3 Transfer of Excluded Business and Canadian
Branch Business . . . . . . . . . . . . . . . . 20
2.4 Effective Date . . . . . . . . . . . . . . . . 20

ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 By the Vendors and Continental . . . . . . . . 21
3.1.1 Incorporation and Status of the Vendors,
Continental, Niagara and CIC. . . . . . 21
3.1.2 Corporate Power of the Vendors and
Continental and Due Authorization. . . 21
3.1.3 Incorporation and Status of the
Corporation and Subsidiaries. . . . . . 22
3.1.4 Power of the Corporation and the
Subsidiaries. . . . . . . . . . . . . . 22
3.1.5 Capital of the Corporation and
Subsidiaries. . . . . . . . . . . . . . 22
3.1.6 Subsidiaries. . . . . . . . . . . . . . 22
3.1.7 No Obligations to Issue Securities. . . 22
3.1.8 Title to and Right to Sell the Purchased
Shares and the Branch Businesses. . . . 22
3.1.9 No Dividends. . . . . . . . . . . . . . 23
3.1.10 Financial Statements and Pro Forma
Financial Statements. . . . . . . . . . 23
3.1.11 Tax Matters . . . . . . . . . . . . . . 23
3.1.12 Pension Plans . . . . . . . . . . . . . 24
3.1.13 Intellectual Property . . . . . . . . . 25
3.1.14 Reinsurance. . . . . . . . . . . . . . 25
3.1.15 Confidential Information Memorandum . . 26
3.1.16 Reinsurance Filings . . . . . . . . . . 26
3.2 By the Purchaser . . . . . . . . . . . . . . . 26

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3.2.1 Incorporation and Status of the
Purchaser . . . . . . . . . . . . . . . 26
3.2.2 Corporate Power of the Purchaser and Due
Authorization . . . . . . . . . . . . . 26
3.2.3 Fairfax Note . . . . . . . . . . . . . 27
3.3 No Finder's Fees . . . . . . . . . . . . . . . 27
3.4 Survival of Covenants, Representations and
Warranties . . . . . . . . . . . . . . . . . . 27

ARTICLE 4
CONDITIONS
4.1 Conditions for the Benefit of the Purchaser . . 28
4.1.1 Accuracy of Representations of Vendors
and Continental and Compliance With
Covenants . . . . . . . . . . . . . . . 29
4.1.2 Opinion of Vendors' Counsel . . . . . . 29
4.1.3 No Action to Restrain . . . . . . . . . 29
4.1.4 Non-Competition . . . . . . . . . . . . 30
4.1.5 Consents and Approvals . . . . . . . . 30
4.1.6 Termination of Non-Arm's Length
Management Arrangements . . . . . . . . 30
4.1.7 Security Agreements . . . . . . . . . . 31
4.1.8 Transfer of Excluded Business and
Canadian Branch Business . . . . . . . 31
4.1.9 No Material Adverse Change . . . . . . 31
4.1.10Financing . . . . . . . . . . . . 31
4.2 Conditions for the Benefit of the Vendors . . . 32
4.2.1 Accuracy of Representations of Purchaser
and Compliance With Covenants . . . . . 32
4.2.2 Opinion of Purchaser's Counsel . . . . 33
4.2.3 No Action to Restrain . . . . . . . . . 33
4.2.4 Transfer of Excluded Business and
Canadian Branch Business . . . . . . . 33
4.2.5 Consents and Approvals . . . . . . . . 33
4.2.6 Non-Competition . . . . . . . . . . . . 33

ARTICLE 5
ADDITIONAL AGREEMENTS OF THE PARTIES
5.1 Access to Information . . . . . . . . . . . . . 34
5.2 No Solicitation . . . . . . . . . . . . . . . . 34
5.3 Conduct of Business Until Time of Closing . . . 35
5.4 Negative Covenant . . . . . . . . . . . . . . . 36
5.5 Corporate Action and Resignations . . . . . . . 36
5.6 Obtaining of Consents and Approvals . . . . . . 37
5.7 Restructuring . . . . . . . . . . . . . . . . . 37
5.8 Reinsurance Arrangements . . . . . . . . . . . 38
5.9 Cooperation . . . . . . . . . . . . . . . . . . 40
5.10 Retention of Tax Records and Returns . . . . . 40
5.11 Continuance of Business Relationships . . . . . 41
5.12 Access to Insurance Products . . . . . . . . . 41
5.13 Protection of Existing Relationships . . . . . 42
5.14 Software Licences . . . . . . . . . . . . . . . 42

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5.15 Withholding Tax . . . . . . . . . . . . . . . . 43
5.16 Use of Continental Name and Registered Trade
Marks . . . . . . . . . . . . . . . . . . . . . 43
5.17 Financial Statements . . . . . . . . . . . . . 44
5.18 Chief Agent . . . . . . . . . . . . . . . . . . 44
5.19 NABT Reporting . . . . . . . . . . . . . . . . 44
5.20 Fairfax Note . . . . . . . . . . . . . . . . . 44
5.21 Pension Plan Assets . . . . . . . . . . . . . . 44
5.22 Reinsurance with Affiliates . . . . . . . . . . 45
5.23 Currency Protection on U.S. Claims . . . . . . 45
5.24 Settling U.S. and Canadian Claims . . . . . . . 46
5.25 Termination of Non-Arm's Length Arrangements . 46
5.26 Co-Operation in United States Tax Matters . . . 47

ARTICLE 6
INDEMNIFICATION AND
PAYMENT OF ADJUSTMENT AMOUNT
6.1 Indemnification and Adjustment Amount . . . . . 47
6.2 Notice of Claim for Indemnification . . . . . . 48
6.3 Procedure for Indemnification . . . . . . . . . 48
6.3.1 Purchaser's Claims . . . . . . . . . . 48
6.3.2 Third Party Claims . . . . . . . . . . 49
6.4 Additional Rules and Procedures for
Indemnification . . . . . . . . . . . . . . . . 49
6.5 Calculation of Adjustment Amount and Combined
Ratio Achieved . . . . . . . . . . . . . . . . 51
6.6 Payment of Indemnity and Adjustment Amount . . 52
6.7 Right of Inspection . . . . . . . . . . . . . . 52
6.8 Joint and Several Liability of the Vendors and
Continental . . . . . . . . . . . . . . . . . . 52
6.9 Indemnity by Purchaser . . . . . . . . . . . . 53

ARTICLE 7
CLOSING
7.1 Location and Time of the Closing . . . . . . . 53
7.2 Deliveries at and forthwith upon the Closing . 53

ARTICLE 8
GENERAL MATTERS
8.1 Confidentiality . . . . . . . . . . . . . . . . 54
8.2 Public Notices . . . . . . . . . . . . . . . . 54
8.3 Expenses . . . . . . . . . . . . . . . . . . . 55
8.4 Conveyance Taxes . . . . . . . . . . . . . . . 55
8.5 Specific Performance . . . . . . . . . . . . . 55
8.6 Assignment . . . . . . . . . . . . . . . . . . 55
8.7 Notices . . . . . . . . . . . . . . . . . . . . 56
8.8 Time of Essence . . . . . . . . . . . . . . . . 57
8.9 Further Assurances . . . . . . . . . . . . . . 57
8.10 Counterparts . . . . . . . . . . . . . . . . . 58

PURCHASE AGREEMENT
------------------

THIS AGREEMENT is made as of the 12th day of October,
1994,

B E T W E E N:

THE CONTINENTAL INSURANCE COMPANY OF
CANADA, a corporation incorporated under
the laws of Canada

(the "Corporation")

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THE DOMINION INSURANCE CORPORATION, a
corporation incorporated under the laws
of Canada

("Dominion")

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FIREMEN'S INSURANCE COMPANY OF NEWARK,
NEW JERSEY, a corporation incorporated
under the laws of the State of New
Jersey

("Firemens")

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CONTINENTAL REINSURANCE CORPORATION, a
corporation incorporated under the laws
of the State of California

("CRC")

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CONTINENTAL REINSURANCE CORPORATION
INTERNATIONAL LIMITED, a corporation
incorporated under the laws of Bermuda

("CRCIL")

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THE CONTINENTAL CORPORATION, a
corporation incorporated under the laws
of the State of New York

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("Continental")

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FAIRFAX FINANCIAL HOLDINGS LIMITED, a
corporation incorporated under the laws
of Canada

(the "Purchaser")

RECITALS:
A. The Corporation and Dominion are in the process of
completing a corporate reorganization which is described in
Schedule 1.10 (the "Reorganization");

B. Upon completion of the Reorganization, including receipt of
all necessary regulatory approvals, the Corporation and
Dominion wish to sell all of the issued and outstanding
shares in the capital of New Continental and the Purchaser
wishes to purchase such shares, on and subject to the terms
and conditions of this Agreement;

C. If the Reorganization cannot be completed because all
necessary regulatory consents and approvals have not been
received by April 30, 1995, then the parties have agreed
that on April 30, 1995 Firemens, CRC and CRCIL
(collectively, the "Vendors") will sell and the Purchaser
will purchase all of the issued and outstanding shares in
the capital of the Corporation, on and subject to the terms
and conditions of this Agreement;

D. In addition, certain assets, liabilities and business of
Niagara and CIC are to be transferred to and assumed by the
Corporation and Dominion and vice versa as part of a
rationalization of the Canadian operation;

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E. Continental owns directly or indirectly all of the issued
and outstanding shares of the Vendors, the Corporation,
Dominion, CIC and Niagara and Continental wishes to assist
in the completion of the transactions contemplated in this
Agreement;

Therefore in consideration of the mutual covenants and agreements
contained in this Agreement and other good and valuable
consideration (the receipt and sufficiency of which are hereby
acknowledged), the parties hereto agree as follows:

ARTICLE 1
---------

INTERPRETATION
--------------

1.1 Definitions
-----------
In this Agreement,

"AAU" means Associated Aviation Underwriters;

"Adjustment Amount" means the greater of (A) zero and (B) an
amount equal to the lesser of (X) $30 million or, if the
Purchaser exercises its election under section 5.8, $40
million, and (Y) the following:

(a) the amount, positive or negative, which results when
the amount of Reserves for Unpaid Losses and Loss
Adjustment Expenses of Continental Canada as at
December 31, 1993 (such amount being $314.7 million or,
if the Purchaser exercises its election under section
5.8, $467.0 million) is subtracted from the sum of:

(i) Reserves for Unpaid Losses and Loss Adjustment
Expenses at the Determination Date, and

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(ii) the aggregate amount of all losses and allocated
loss adjustment expenses paid by Continental
Canada from January 1, 1994 to the Determination
Date,

in each case with respect only to losses, arising out
of events occurring on or before December 31, 1993,
under contracts of insurance or reinsurance entered
into by Continental Canada which are in effect before
January 1, 1994;

plus

(b) the sum of:

(i) Reserves for Uncollectible Reinsurance at the
Determination Date; and

(ii) the aggregate amount of Uncollectible Reinsurance
on paid claims written off, net of any recoveries
by Continental Canada with respect thereto, from
January 1, 1994 to the Determination Date, to the
extent that it does not increase the Reserves for
Unpaid Losses and Loss Adjustment Expenses at the
Determination Date;

in each case in respect of reinsurance agreements in
effect before January 1, 1994 with respect to insurance
policies in effect before January 1, 1994 and under
which a claim arises out of events occurring prior to
January 1, 1994;

"affiliate": a company shall be deemed to be an affiliate of
another company if one of them is the subsidiary of the

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other or if both are subsidiaries of the same company or if
each of them is controlled by the same Person;
"Agreement" means this agreement and all schedules attached
to this agreement, in each case as they may be amended or
supplemented from time to time, and the expressions
"hereof", "herein", "hereto", "hereunder", "hereby" and
similar expressions refer to this agreement; and unless
otherwise indicated, references to Articles and sections are
to Articles and sections in this agreement;

"Alternative Documents" has the meaning in section 1.10;

"Applicable Laws" means all federal, provincial, state or
local laws, rules or regulations of any applicable
jurisdiction and all orders, rulings, judgments and decrees
of any court or tribunal in any such jurisdiction, and the
rules, regulations and administrative guidelines and
policies of any governmental or non-governmental regulatory
authority;

"Assumed Liabilities" means all of the debts, liabilities,
obligations, commitments, provisions and duties of CIC and
Niagara in connection with the business and insurance
policies covered by the Continental-Phoenix Pooling
Agreement and in connection with the business known as the
Continental Run-off business, the CIRI (Canadian Industrial
Risk Insurers) business and the Department E business
covered by the Dominion-Continental Pooling Agreement,
including losses, allocated loss adjustment expenses,
unearned premiums and amounts payable;

"Auditors" means KPMG Peat Marwick, chartered accountants,
or any predecessor thereof;

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"Bermuda Trust" means the trust established pursuant to the
trust agreement dated December 31, 1981 between Continental
Reinsurance Corporation (Bermuda) Limited (now CRCIL) and
Canada Permanent Trust Company;

"Business" means the carrying on of the property and
casualty insurance business or other business carried on by
Continental Canada at or prior to the date of this
Agreement;

"Business Day" means any day, other than Saturday, Sunday or
any statutory holiday in the Province of Ontario;

"CIC" means The Continental Insurance Company;

"CIC Investments" means cash or marketable securities held
in Canada by CIC as shall be mutually agreed by the parties
hereto acting reasonably, with a value determined in
accordance with Schedule 2.3;

"Canadian Branch Assets" means all of the assets (including
CIC Investments and Niagara Investments) used or held by
Niagara and CIC in connection with the Assumed Liabilities;

"Canadian Branch Business" means the Canadian Branch Assets
and the Assumed Liabilities;

"Charge" means any security interest, lien, charge, pledge,
encumbrance, mortgage, adverse claim or title retention
agreement of any nature or kind;

"Claim" has the meaning attributed to such term in section
6.2;

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"Closing" means the completion of the transactions
contemplated pursuant to this Agreement;

"Closing Date" means January 1, 1995, or such earlier or
later date as may be mutually agreed upon in writing by the
parties;

"Closing Documents" has the meaning in section 1.10;

"Combined Ratio Achieved" means the simple average of the
combined ratios (calculated in the same manner utilized by
Continental Canada for its management information systems
for calculating its combined ratio for the 1993 calendar
year and for several years immediately prior thereto (which
calculation is based on the calendar year)) of the
Corporation and its Subsidiaries for each of the five
calendar years ending on December 31 from 1995 to 1999,
provided that the calculation of the combined ratio in each
such year shall include a management fee of $3 million
payable to the Purchaser regardless of the amount actually
paid or accrued;

"Confidential Information Memorandum" means the confidential
information memorandum concerning Continental Canada dated
June 1994 stated to have been prepared by Barclays Bank plc
acting through its BZW Division;

"Continental Canada" means the Corporation and its
Subsidiaries including the Canadian Branch Business and,
only if the Purchaser exercises its election under section

5.8, the assets, liabilities and business which are the
subject matter of the Retrocession Agreement, but in any
event excluding the Excluded Business;

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"Continental-Phoenix Pooling Agreement" means the
Continental-Phoenix Canadian Intercompany Pooling Agreement
dated December 31, 1983 among Dominion, CIC, Niagara, the
Corporation, Phoenix Assurance Company of Canada and The
Century Insurance Company of Canada;

"control": a company or a corporation shall be deemed to be
controlled by another Person or by two or more other Persons

acting together if,

(a) voting securities of the company carrying more than
fifty percent of the votes for the election of
directors are held, otherwise than by way of security
only, by or for the benefit of the other Person or by
or for the benefit of the other Persons; and

(b) the votes carried by such securities are entitled, if
exercised, to elect a majority of the board of
directors of the company;

"Determination Date" means December 31, 1998;

"Dominion" means The Dominion Insurance Corporation;

"Dominion-Continental Pooling Agreement" means the
Intercompany Pooling Agreement dated August 22, 1985 among
Dominion, CIC, Niagara and the Corporation;

"Escrow Agreement" has the meaning in section 1.10;

"Excluded Assets" means all of the assets (including
Excluded Investments) used or held by the Corporation and
the Subsidiaries in connection with the Excluded
Liabilities;

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"Excluded Business" means the Excluded Assets and the
Excluded Liabilities;

"Excluded Investments" means cash or marketable securities
held by the Corporation or the Subsidiaries as shall be
mutually agreed by the parties hereto acting reasonably,
with a value determined in accordance with Schedule 2.3;

"Excluded Liabilities" means all of the debts, liabilities,
obligations, commitments, provisions and duties of the
Corporation and the Subsidiaries (i) in connection with the
business and insurance policies covered by the Dominion-
Continental Pooling Agreement except the business covered by
such Pooling Agreement known as the Continental Run-off
business, the CIRI (Canadian Industrial Risk Insurers)
business and the Department E business, and (ii) related to
the December 28, 1983 reinsurance agreement between the
Corporation and CRCIL, including in both cases losses,
allocated loss adjustment expenses, unearned premiums and
amounts payable;

"Fairfax Note" means a 7 3/4% note due December 15, 2003 issued
by the Purchaser in the principal amount of $25 million with
terms and conditions identical to the terms of the
Purchaser's outstanding U.S. $100 million of 7 3/4% Notes due
December 15, 2003 publicly issued under a prospectus dated
December 8, 1993, except that the note would be redeemable
at par plus accrued interest at any time coincident with a
public or private debt issue by the Purchaser;

"Financial Statements" means the unconsolidated financial
statements of the Corporation and its Subsidiaries as at
December 31, 1993 (including the notes thereto), together
with the report of the Auditors thereon, copies of which
have been delivered to the Purchaser;

- 10 -

"Investment Management Agreement" means the letter agreement
dated September 27, 1994 between the Purchaser and
Continental relating to the management of the investments of
Continental Canada by Hamblin Watsa Investment Counsel Ltd.;

"MOAC" means Marine Office of America Corporation;

"New Continental" has the meaning attributed thereto in
Schedule 1.10;

"New Dominion" has the meaning attributed thereto in
Schedule 1.10;

"Niagara" means Niagara Fire Insurance Company;

"Niagara Investments" means cash or marketable securities
held in Canada by Niagara as shall be mutually agreed by the
parties hereto acting reasonably, with a value determined in
accordance with Schedule 2.3;

"Non-Competition Agreement" means the non-competition
agreement between the Corporation, the Purchaser, the
Vendors and Continental in the form attached hereto as
Schedule 1.1;

"OSFI" means the Office of the Superintendent of Financial
Institutions Canada;

"Person" means any individual, partnership, limited
partnership, joint venture, syndicate, sole proprietorship,
company or corporation with or without share capital,
unincorporated association, trust, trustee, executor,
administrator or other legal personal representative,
regulatory body or agency, government or governmental

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agency, authority or entity however designated or
constituted;

"Policyholder" means a named insured under a policy to which
the Pooling Arrangements apply;

"Pooling Arrangements" means the pooling arrangements
effected pursuant to the Continental-Phoenix Pooling
Agreement and the Dominion-Continental Pooling Agreement;

"Portfolio" means (i) all bonds, debentures, treasury bills,
shares, evidences of indebtedness and other securities which
are ordinarily recorded as investments in the books and
records of the Corporation or a Subsidiary and which are
held by the Corporation or a Subsidiary and (ii) the Niagara
Investments and the CIC Investments;

"Pro Forma Financial Statements" means the pro forma balance
sheet of Continental Canada attached as Schedule 3.1.10;

"Purchase Price" has the meaning attributed to such term in
section 2.2;

"Purchased Shares" has the meaning attributed to such term
in section 2.1;

"Purchaser's Claim" has the meaning attributed to such term
in section 6.2;

"Purchaser's Counsel" means the firm of Tory Tory
DesLauriers & Binnington of Toronto, Ontario, or such other
counsel as the Purchaser may appoint with respect to this
Agreement and the matters contemplated hereby;

- 12 -

"Quota Share Treaty" means the reinsurance agreement
currently in force pursuant to which Continental Canada
cedes certain portions of its business to CRCIL;

"Redundancy Amount" means, if the amount calculated in
accordance with the following is positive, zero, and if the
amount calculated in accordance with the following is
negative, the positive amount resulting from deleting the
minus sign therefrom:

(i) Reserves for Unpaid Losses and Loss Adjustment
Expenses at the Determination Date, and

(ii) the aggregate amount of all losses and allocated
loss adjustment expenses paid by Continental
Canada from January 1, 1994 to the Determination
Date,

plus

(b) the sum of:

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(i) Reserves for Uncollectible Reinsurance at the
Determination Date; and

"Reorganization" has the meaning attributed thereto in
recital A;

"Reserves for Uncollectible Reinsurance" means an amount
equal to the provision, determined in accordance with
generally accepted accounting principles (applied on a basis
consistent with that used at December 31, 1993), in respect
of the consolidated financial position of Continental Canada
for Uncollectible Reinsurance;

"Reserves for Unpaid Losses and Loss Adjustment Expenses"
means an amount equal to the provision, determined in
accordance with generally accepted accounting principles
(applied on a basis consistent with that used at December
31, 1993), in respect of the consolidated financial position
of Continental Canada, for (a) case reserve estimates for
reported losses, plus (b) incurred but not reported claims
and allocated loss adjustment expenses, less (c) cash

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amounts that relate to salvage and subrogation recoveries,
net in all cases of applicable reinsurance recoverables;

"Retrocession Agreement" means the Retrocession Agreement
referred to in section 5.8;

"subsidiary": a company shall be deemed to be a subsidiary
of another company if

(a) it is controlled by,

(i) the other, or

(ii) that other and one or more companies, each of
which is controlled by that other, or

(iii) two or more companies, each of which is
controlled by that other; or

(b) it is a subsidiary of a company that is the other's
subsidiary;

"Subsidiaries Shares" means all of the issued and
outstanding shares in the capital of each of the
Subsidiaries, the details of which are set out in Schedule
3.1.5;

"Subsidiary" means each of Dominion and Continental
Insurance Management Ltd. and "Subsidiaries" means both such
corporations;

"Tax" or "Taxes" means any and all taxes, fees, levies,
duties, tariffs, imposts, and other charges of any kind
(together with any and all interest, penalties, additions to
tax and additional amounts imposed with respect thereto)

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imposed by any government or taxing authority, including,
without limitation, taxes or other charges on or with
respect to income, premiums, franchises, windfall or other
profits, gross receipts, property, sales, use, capital
stock, payroll, employment, social security, workers'
compensation, unemployment compensation, or net worth; taxes
or other charges in the nature of excise, withholding, ad
valorem, stamp, transfer, value added, or gains taxes;
license, registration and documentation fees; and customs
duties, tariffs, and similar charges;

"Third Party" has the meaning attributed to such term in
section 6.2;

"Third Party Claim" has the meaning attributed to such term
in section 6.2;

"Time of Closing" means 12:01 a.m., Toronto time, on the
Closing Date or such other time on the Closing Date as may
be agreed upon in writing by the parties;

"Uncollectible Reinsurance" means reinsurance recoverables
owed to Continental Canada by reinsurers (including without
limitation currently affiliated reinsurers) that have been
determined to be uncollectible (including any amount charged
as an expense in connection with commutation), in accordance
with generally accepted accounting principles (applied on a
basis consistent with that used at December 31, 1993);

"Vendors" has the meaning attributed thereto in recital C;

"Vendors' Counsel" means the firm of Blake, Cassels &
Graydon of Toronto, Ontario, or such other counsel as the
Vendors may appoint with respect to this Agreement and the
matters contemplated hereby.

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1.2 Schedules
---------
The following are the Schedules attached to this Agreement:

Schedule 1.1 - Non-Competition Agreement
Schedule 1.10 - Steps in the Reorganization
Schedule 2.3 - Terms of Transfer and Assumption
Agreements
Schedule 3.1.5 - Share Capital of the Corporation and
Subsidiaries
Schedule 3.1.10 - Pro Forma Balance Sheet
Schedule 3.1.13 - Intellectual Property
Schedule 5.11 - Business Relationships

1.3 Headings and Table of Contents
------------------------------

The inclusion of headings and a table of contents in this
Agreement is for convenience of reference only and shall not
affect the construction or interpretation hereof.

1.4 Gender and Number
-----------------
In this Agreement, unless the context otherwise requires,
words importing the singular include the plural and vice versa
and words importing gender include all genders.

1.5 Currency
--------

Except where otherwise expressly provided, all amounts in
this Agreement are stated and shall be paid in Canadian currency.

1.6 Generally Accepted Accounting Principles
----------------------------------------

In this Agreement, except to the extent otherwise expressly
provided, references to "generally accepted accounting
principles" mean, for all principles stated in the Handbook of
the Canadian Institute of Chartered Accountants, such principles
so stated, consistently applied.

1.7 Invalidity of Provisions
------------------------
Each of the provisions contained in this Agreement is
distinct and severable and a declaration of invalidity or
unenforceability of any such provision or part thereof by a court

- 17 -

of competent jurisdiction shall not affect the validity or
enforceability of any other provision hereof.

1.8 Entire Agreement, Waiver
------------------------

This Agreement, the Investment Management Agreement and the
agreements to be delivered pursuant hereto constitute the entire
agreement between the parties pertaining to the subject matter of
this Agreement. There are no warranties, representations or
other agreements between the parties in connection with such
subject matter except as specifically set forth or referred to
therein. Except as expressly provided in this Agreement, no
amendment, waiver or termination of this Agreement shall be
binding unless executed in writing by the party to be bound
thereby. No waiver of any provision of this Agreement shall
constitute a waiver of any other provision nor shall any waiver
of any provision of this Agreement constitute a continuing waiver
unless otherwise expressly provided.

1.9 Governing Law
-------------
This Agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario and the laws
of Canada applicable therein.

1.10 Reorganization
--------------

The Purchaser acknowledges that the Corporation and Dominion
are in the process of completing the Reorganization, subject to
receiving all required approvals and consents. The Purchaser
acknowledges that it is satisfied with and consents to the
Reorganization. The parties hereto agree promptly after the date
hereof to execute and deliver, and to cause any relevant
subsidiary to execute and deliver, an amending agreement which
amends this Agreement so that this Agreement as so amended
provides for the transaction provided for hereunder in the
circumstances of the completed Reorganization and so that the
Purchaser and Continental will each have rights and obligations

- 18 -

under the Agreement as so amended which are essentially
identical, based on the circumstances after the Reorganization is
completed, to the rights and obligations which they each have
under this Agreement. The additional costs incurred by the
Purchaser and Continental Canada in connection with or as a
result of the Reorganization (including without limitation the
costs of determining whether the Reorganization is neutral or
advantageous to the Purchaser and Continental Canada from a tax
point of view) shall be for the account of Continental. If the
Reorganization takes place, Continental, the Vendors, the
Corporation and Dominion shall jointly and severally indemnify
the Purchaser and save the Purchaser harmless for and from any
loss, damage, liability, expense or deficiency suffered by the
Purchaser, New Continental or New Dominion for Tax payable by any
of them in excess of the Tax that would have been payable by the
Purchaser, the Corporation and Dominion, respectively, if the
Reorganization had not taken place and the Purchaser had acquired
the shares of the Corporation instead of the shares of New
Continental.

If all approvals and consents required to effect the
Reorganization have not been received by the Closing Date, the
parties hereto agree to, at the Time of Closing, execute and
deliver in escrow pursuant to an escrow agreement described below
(the "Escrow Agreement") the portion of the Purchase Price
referred to in section 2.2.2.1, all other Closing deliveries and
documentation which would be required if the Reorganization
occurs by April 30, 1995 (such other Closing deliveries and
documentation being the "Closing Documents") and all other
Closing deliveries and documentation which would be required if
the Reorganization does not occur by April 30, 1995 (such other
deliveries and documentation being the "Alternative Documents").

- 19 -

The Escrow Agreement shall contain the following material
provisions, and shall otherwise be satisfactory to the Purchaser
and Continental, each acting reasonably:

(i) the escrow agent shall hold all documents delivered as
provided in this section 1.10 until the earlier of
April 30, 1995 and the date on which it receives a
certificate of Continental and the Purchaser to the
effect that all regulatory approvals necessary to
permit the Reorganization to be completed have been
granted, each of the Purchaser and Continental agreeing
to provide such certificate upon the receipt of all
such regulatory approvals;

(ii) the escrow agent shall invest the Purchase Price in
accordance with the terms of the Escrow Agreement, the
Purchaser having no approval rights in respect thereof;

(iii) if the escrow agent receives the certificate
referred to in paragraph (i) above prior to the close
of business on April 30, 1995, the escrow agent shall
deliver the portion of the Purchase Price placed in
escrow ( and all income earned thereon during the
escrow period) to the order of the Corporation and
Dominion, shall deliver each of the Closing Documents
to the party who is to receive it and shall destroy
the Alternative Documents;

(iv) if the escrow agent does not receive the certificate
referred to in paragraph (i) above prior to the close
of business on April 30, 1995, the escrow agent shall
deliver the portion of the Purchase Price placed in
escrow (and all income earned thereon during the escrow
period) to the order of the Vendors, shall deliver each

- 20 -

of the Alternative Documents to the party who is to
receive it and shall destroy the Closing Documents; and

(v) Continental and the Purchaser shall provide the escrow
agent with the customary indemnities, but as between
them Continental shall indemnify the Purchaser with
respect thereto, and Continental shall pay any fees and
expenses of the escrow agent.

The Purchaser covenants and agrees to cooperate and to use
all reasonable efforts to take all steps reasonably requested of
it by Continental to be taken to achieve completion of the
Reorganization.

1.11 Disclosure Generally
--------------------
If, and to the extent, any information required to be
furnished in any Schedule is contained herein or in any Schedule
or part of a Schedule, such information shall be deemed to be
included in all sections hereof and in all Schedules and parts of
Schedules in which it is required to be included. The inclusion
of any information in the Schedules shall not be deemed to be an
admission or acknowledgement by the Vendors and Continental that
such information is material to or outside the ordinary course of
the Business of the Corporation and the Subsidiaries.

ARTICLE 2
---------

PURCHASE AND SALE
-----------------

2.1 Agreement to Purchase and Sell the Purchased Shares
---------------------------------------------------
Subject to the terms of this Agreement and in accordance
with section 1.10, as of the Time of Closing, Continental shall
cause one of the following to occur: (i) if the Reorganization
is completed by April 30, 1995, the Corporation and Dominion

- 21 -

shall sell and the Purchaser shall purchase all of the issued and
outstanding shares in the capital of New Continental; or (ii) if
the Reorganization is not completed by April 30, 1995, the
Vendors shall sell and the Purchaser shall purchase all of the
issued and outstanding shares in the capital of the Corporation,
in either case for the Purchase Price paid in accordance with
section 2.2. The shares so purchased shall be herein referred to
as the "Purchased Shares".

2.2 Calculation and Payment of the Purchase Price for the
------------------------------------------------------------

Purchased Shares
----------------
2.2.1 The Purchaser shall purchase the Purchased Shares
for a total purchase price as follows:

2.2.1.1 $155 million; and
2.2.1.2 $10 million; and
2.2.1.3 50% of the Redundancy Amount

(hereinafter referred to as the "Purchase Price") in the manner
described in section 2.2.2 and upon and subject to the terms and
conditions hereof.

2.2.2 The Purchase Price shall be paid by the Purchaser
as specified in section 1.10 as follows:
2.2.2.1 as to the amount specified in section 2.2.1.1
above, at the Time of Closing by payment of $130
million by certified cheque or bank draft or wire
transfer at the option of the payee and the issuance of
the Fairfax Note; and

2.2.2.2 as to the amount specified in section 2.2.1.2
above, by certified cheque, bank draft or wire transfer
at the option of the payee on March 15, 2000 if and

- 22 -

only if the Combined Ratio Achieved is 100.4 or less;
and

2.2.2.3 as to the amount specified in section 2.2.1.3
above, by certified cheque, bank draft or wire transfer
at the option of the payee on the date two weeks
following the date on which the Adjustment Amount has
been finally determined in accordance with section 6.5
hereof.

2.3 Transfer of Excluded Business and Canadian Branch Business
----------------------------------------------------------

Upon receiving all approvals and consents required under
Applicable Laws, Continental shall cause the Corporation,
Dominion, CIC, Niagara and any other relevant subsidiaries, prior
to the Time of Closing, to execute and deliver agreements, which
are in form and substance acceptable to the Purchaser and
Continental, acting reasonably, which provide for the following:

(i) the transfer of the Excluded Business from the
Corporation and Dominion to Niagara and CIC, as
applicable, effective the close of business on
September 30, 1994; and

(ii) the transfer of the Canadian Branch Business from
Niagara and CIC to the Corporation and Dominion, as
applicable, effective the Closing Date.

The above-mentioned transfer and assumption agreements shall
include the terms and conditions set out in Schedule 2.3, as
applicable, and shall be effected using the same form and
methodology as used in the Pro Forma Financial Statements.

2.4 Effective Date
--------------

- 23 -

Although the purchase of the Purchased Shares takes effect
as of the Closing Date, the parties hereto acknowledge that the
Purchase Price was determined based on the state of affairs of
Continental Canada as at June 30, 1994 shown in the Pro Forma
Financial Statements and that the economic and accounting effect
of this transaction is that the results of the operations of
Continental Canada after June 30, 1994 are for the account of the
Purchaser in accordance with this Agreement.

ARTICLE 3
---------

REPRESENTATIONS AND WARRANTIES
------------------------------

3.1 By the Vendors and Continental
------------------------------
The Vendors and Continental jointly and severally represent
and warrant to the Purchaser as follows and acknowledge that the
Purchaser is relying upon the following representations and
warranties in connection with the transactions contemplated under
this Agreement:

3.1.1 Incorporation and Status of the Vendors,
--------------------------------------------------
Continental, Niagara and CIC. Each of the Vendors,
--------------------------------
Continental, Niagara and CIC are duly incorporated and
validly existing under the laws of their jurisdiction of
incorporation. Each of the Vendors, Niagara and CIC is,
directly or indirectly, a wholly-owned subsidiary of
Continental.

3.1.2 Corporate Power of the Vendors and Continental and
--------------------------------------------------
Due Authorization. This Agreement, and each of the
-------------------
agreements, contracts and instruments required by this
Agreement to be delivered by the Vendors, Continental,
Niagara and CIC, respectively, will at the Time of Closing
have been duly authorized by such respective party or
parties. Upon receipt of such authorizations, the Vendors,
Continental, Niagara and CIC will have the corporate power

- 24 -

and capacity to enter into, and to perform their obligations
under, this Agreement. This Agreement has been duly
executed and delivered by the Vendors and Continental and
subject to receipt of appropriate corporate authorizations
as described above is a valid and binding obligation of the
Vendors and Continental, enforceable in accordance with its
terms, subject to the usual exceptions as to bankruptcy and
the availability of equitable remedies. At the Time of
Closing all agreements, contracts and instruments required
by this Agreement to be delivered by the Vendors,
Continental, Niagara and CIC at such time will be duly
executed and delivered by the Vendors, Continental, Niagara
and CIC, as the case may be, and will be valid and binding
obligations of the Vendors, Continental, Niagara and CIC, as
the case may be, enforceable in accordance with their
respective terms, subject to the usual exceptions as to
bankruptcy and the availability of equitable remedies.

3.1.3 Incorporation and Status of the Corporation and
--------------------------------------------------
Subsidiaries. Each of the Corporation and the Subsidiaries
------------
is duly incorporated and organized, and is subsisting under
the laws of its jurisdiction of incorporation. Each of the
Corporation and the Subsidiaries is duly registered,
licensed or qualified to carry on its Business under the
laws of each province or territory in which it carries on
Business.

3.1.4 Power of the Corporation and the Subsidiaries.
-------------------------------------------------
Each of the Corporation and the Subsidiaries has all the
necessary powers, licences, permits and rights which it
requires to own or lease its assets and to carry on its
Business as the same is presently conducted. None of the
Vendors and Continental is aware of any revocation,
termination or material adverse amendment of any power,
licence, permit or right referred to above which is proposed

- 25 -

or threatened by any governmental body or regulatory
authority.

3.1.5 Capital of the Corporation and Subsidiaries.
-------------------------------------------------
Schedule 3.1.5 sets out particulars of the authorized and
issued shares of the Corporation and each Subsidiary. All
the shares indicated on such Schedule as being issued and
outstanding have been validly issued and are outstanding as
fully paid and non-assessable shares. There are no
shareholders agreements, voting trusts or other agreements
or understandings with respect to the voting of the shares,
or any of them, of the Corporation or any Subsidiary.

3.1.6 Subsidiaries. The Subsidiaries are the only
------------
subsidiaries of the Corporation.

3.1.7 No Obligations to Issue Securities. There are no
-----------------------------------
agreements, options, warrants, rights of conversion or other
rights pursuant to which the Corporation or any Subsidiary
is, or may become, obligated to issue any shares or any
securities convertible or exchangeable, directly or
indirectly, into any shares of the Corporation or any
Subsidiary.

3.1.8 Title to and Right to Sell the Purchased Shares
--------------------------------------------------
and the Branch Businesses. The Vendors are the sole
----------------------------
registered and beneficial owners of the Purchased Shares
with good, valid and freely transferable title thereto, free
of all Charges. Niagara and CIC are the absolute beneficial
owners of the Canadian Branch Assets each with good, valid
and freely transferable title thereto, free of all charges.
There are no agreements or (except for requisite regulatory
approvals) restrictions which in any way limit or restrict
the transfer to the Purchaser of any of the Purchased Shares
or to the Corporation of the Canadian Branch Business and

- 26 -

there are no shareholders agreements, voting trusts or other
agreements or understandings with respect to the voting of
the Purchased Shares or any of them.

3.1.9 No Dividends. No dividends have been declared or
------------
paid on or in respect of the Purchased Shares and no other
distribution on any of the Corporation's or a Subsidiary's
securities or shares has been made since December 31, 1993.

3.1.10 Financial Statements and Pro Forma Financial
--------------------------------------------------
Statements.
----------

3.1.10.1 Financial Statements. The Financial
-----------------------
Statements have been prepared in accordance with
generally accepted accounting principles consistently
applied throughout the periods indicated and fairly
present the financial position of the Corporation and
the Subsidiaries and the results of their operations as
of the dates and throughout the periods indicated.

3.1.10.2 Pro Forma Financial Statements. The
-------------------------------------
unaudited Pro Forma Financial Statements fairly present
the financial position of Continental Canada as of June
30, 1994 and there has been no material adverse change
in the financial position of Continental Canada from
the position reflected in the Pro Forma Financial
Statements.

3.1.11 Tax Matters. The Corporation and the Subsidiaries
-----------
have accurately prepared and filed all tax returns required
to be filed by them in all applicable jurisdictions, and
have paid all Taxes payable by them, for all periods to and
including December 31, 1993. Adequate provision has been
made in the Financial Statements for all Taxes payable in
respect of the Business or assets of the Corporation and the

- 27 -

Subsidiaries or otherwise for all periods up to the date of
any balance sheet comprising part of the Financial
Statements. Any amounts of Taxes owing pursuant to any
assessments for Taxes which have been issued to the
Corporation and the Subsidiaries have been paid or are being
contested in good faith. There are no actions, suits or
other proceedings or investigations (other than tax audits
in the ordinary course) or claims in progress, pending or
threatened against the Corporation or any Subsidiary in
respect of any Taxes and, in particular, there are no
currently outstanding reassessments or written enquiries
which have been issued or raised by any governmental
authority relating to any such Taxes. The Corporation and
the Subsidiaries have withheld or collected and remitted all
amounts required to be withheld or collected and remitted by
them in respect of any Taxes. Correct and complete copies
of all federal and provincial income tax returns, including
schedules thereto, filed by the Corporation and its
Subsidiaries since 1990 and all written communications
relating thereto have been provided to the Purchaser.

3.1.12 Pension Plans. All pension plans (the "plans")
--------------
provided by the Corporation or any Subsidiary (except for
the arrangement providing for the payment of the difference
between Revenue Canada limits and that pension that would
otherwise be payable under the provisions of the employee
pension plan) are registered under, and are in compliance
with, the Income Tax Act (Canada), the Pension Benefits Act
(Ontario) and all other applicable federal and provincial
legislation and all reports, returns and filings required to
be made thereunder have been made. The plans have been at
all times administered in accordance with their terms and
the provisions of applicable law.

- 28 -

There are no unfunded liabilities under the plans
and, without limiting the generality of the foregoing, there
is no going concern unfunded actuarial liability, past
service unfunded actuarial liability or solvency deficiency.
No changes have occurred since the date of the actuarial
report provided to the Purchaser as contemplated in section
3.1.19 which makes such report misleading in any material
respect and, without limiting the generality of the
foregoing, none of the Corporation and the Subsidiaries has
made or granted, or committed to make or grant, any benefit
improvements to which members of any of the plans are or may
become entitled which are not reflected in such actuarial
report.

None of the Corporation and the Subsidiaries has
received, or applied for, any payment of surplus from any of
the pension plans of the Corporation or the Subsidiaries.

3.1.13 Intellectual Property. Schedule 3.1.13 is a list
---------------------
of all registered trade marks and trade mark applications,
trade names and certification marks used by the Corporation
or any Subsidiary in its Business. Each of the Corporation
and each Subsidiary is duly licensed to use or otherwise has
the right to use all of the intellectual property listed in
Schedule 3.1.13 used by it in carrying on its Business in
those jurisdictions in which the Business is carried on. To
the best of the knowledge of the Vendor and Continental, the
conduct of the Business does not infringe the intellectual
property rights of any Person.

3.1.14 Reinsurance. All treaties with reinsurers
-----------
contemplated or reflected in the reinsurance schedules
forming part of the 1993 P & C-1 filings by the Corporation
and its Subsidiaries, as the same have been renewed,
amended, terminated or replaced in the ordinary course of

- 29 -

Business, are in full force and effect and none of the
Vendors, Continental or Continental Canada has received
notice from any reinsurer that such party intends to
terminate or does not intend to renew such agreement.
Neither Continental Canada nor, to the knowledge of the
Vendors and Continental, any other party thereto, is in
default as to any material provision of any reinsurance
treaty. All reinsurance placed or ceded by Continental
Canada: (i) was or, as applicable, is, fully placed; (ii)
covered or covers losses occurring during the term of the
reinsurance except in the case of reinsurance placed to
protect claims made against insurance or reinsurance
policies; and (iii) was or is placed on terms and conditions
which are concurrent with the terms and conditions of the
underlying insurance or reinsurance policies which are the
subject matter of such reinsurance. No reinsurance placed
or ceded by Continental Canada has been cancelled or
terminated without provision having been made to provide
reinsurance protection for the run-off of in-force insurance
or reinsurance policies which were the subject matter of
such reinsurance.

To the best knowledge of Continental, the Vendors, the
Corporation and its Subsidiaries, with respect to each
reinsurance agreement referred to above, there exists no
dispute between Continental Canada and the other party or
parties thereto.

3.1.15 Confidential Information Memorandum. To the best
-----------------------------------
of the knowledge of Continental, the Vendors, the
Corporation and its Subsidiaries, the Confidential
Information Memorandum did not as of its date make any
material untrue statement of fact concerning Continental
Canada or contain any material omission of a fact necessary

- 30 -

to make a statement contained therein not misleading in the
light of the circumstances in which it was made.

3.1.16 Reinsurance Filings. The reinsurance schedules
--------------------
forming part of the P & C-1 filings by the Corporation and
its Subsidiaries are accurate in all material respects.

3.2 By the Purchaser
----------------

The Purchaser represents and warrants to the Vendors and
Continental as follows with respect to itself and any related
person to whom it assigns its rights under section 8.6, and
acknowledges that the Vendors and Continental are relying upon
the following representations and warranties in connection with
the transactions contemplated by this Agreement:

3.2.1 Incorporation and Status of the Purchaser. The
-------------------------------------------

Purchaser is duly incorporated and validly existing under
the laws of its jurisdiction of incorporation.

3.2.2 Corporate Power of the Purchaser and Due
--------------------------------------------------
Authorization. The Purchaser has the corporate power and
-------------
capacity to enter into, and to perform its obligations
under, this Agreement. This Agreement and the agreements,
contracts and instruments required by this Agreement to be
delivered by the Purchaser at Closing or forthwith
thereafter have been, or will at the Time of Closing or the
time of delivery as contemplated by this Agreement have
been, duly authorized by the Purchaser. This Agreement has
been duly executed and delivered by the Purchaser and is a
valid and binding obligation of the Purchaser, enforceable
in accordance with its terms, subject to the usual
exceptions as to bankruptcy and the availability of
equitable remedies. At the Time of Closing, all other
agreements, contracts and instruments required by this
Agreement to be delivered by the Purchaser at such time will

- 31 -

be duly executed and delivered by the Purchaser and will be
valid and binding obligations of the Purchaser, enforceable
in accordance with their respective terms, subject to the
usual exceptions as to bankruptcy and the availability of
equitable remedies.

3.2.3 Fairfax Note. At the Time of Closing the
--------------
Purchaser will have taken all necessary corporate action to
authorize the execution, delivery and issue by the Purchaser
of the Fairfax Note and the Fairfax Note will constitute a
binding obligation of the Purchaser, enforceable in
accordance with its terms, subject to the usual exceptions
as to bankruptcy and the availability of equitable remedies.

3.3 No Finder's Fees
----------------

Each of the parties represents and warrants to the other
that such party has not taken, and agrees that it will not take,
any action that would cause the other party to become liable to
any claim or demand for a brokerage commission, finder's fee or
other similar payment. Any fees payable to Barclays Bank plc
acting through its BZW Division are the responsibility of
Continental.

3.4 Survival of Covenants, Representations and Warranties
-----------------------------------------------------
To the extent that they have not been fully performed at or
prior to the Time of Closing, the covenants contained in this
Agreement shall survive the Closing unless they are by their
terms to be performed at or prior to the Time of Closing. The
representations and warranties contained in this Agreement and in
all certificates and documents delivered pursuant to or
contemplated by this Agreement (which for the purposes of
sections 3.4.1 and 3.4.2 shall be deemed to be set out in the
appropriate corresponding section of this Agreement) shall
survive the Closing provided, however, that:

- 32 -

3.4.1 such representations and warranties, except those
set out in sections 3.1.1 to 3.1.8 inclusive, 3.1.11,
3.1.16, 3.2.1 and 3.2.2 shall terminate on June 30, 1996;

3.4.2 the representations and warranties set out in
section 3.1.11 shall, subject to section 3.4.3, terminate on
the date six years from the Closing Date;

3.4.3 there shall be no termination of the
representations and warranties set out in section 3.1.11 to
the extent that any misrepresentation has been made or fraud
has been committed in filing a return or in supplying
information for the purposes of any legislation imposing Tax
on the Corporation or any Subsidiary; and

3.4.4 no claim for breach of representation or warranty
shall be valid unless the party against whom such claim is
made has been given notice thereof before the date on which
the applicable representation or warranty shall have
terminated in accordance with the foregoing.

ARTICLE 4
---------

CONDITIONS
----------

4.1 Conditions for the Benefit of the Purchaser
-------------------------------------------
The obligation of the Purchaser to complete the purchase of
the Purchased Shares pursuant to this Agreement is subject to the
satisfaction of, or compliance with, at or prior to the Time of
Closing, each of the following conditions (each of which is
acknowledged to be for the exclusive benefit of the Purchaser):

4.1.1 Accuracy of Representations of Vendors and
--------------------------------------------------
Continental and Compliance With Covenants. The
---------------------------------------------------
representations and warranties of the Vendors and
Continental made in or pursuant to this Agreement shall be

- 33 -

true and correct at the Time of Closing with the same force
and effect as if made at and as of the Time of Closing,
except as otherwise contemplated by this Agreement; the
covenants contained in this Agreement to be performed by the
Vendors and Continental at or prior to the Time of Closing
shall have been performed; the Vendors and Continental shall
not be in breach of any material agreement on its part
contained in this Agreement; and the Purchaser shall have
received certificates confirming the foregoing, signed for
and on behalf of the Vendors by senior officers or directors
of the Vendors, and signed for and on behalf of Continental
by senior officers or directors of Continental, or other
persons acceptable to the Purchaser, in form and substance
satisfactory to the Purchaser and the Purchaser's Counsel,
acting reasonably.

4.1.2 Opinion of Vendors' Counsel. The Purchaser shall
---------------------------
have received an opinion of Vendors' Counsel as to such
matters as the Purchaser and the Purchaser's Counsel may
reasonably request (including matters with respect to
Continental, Niagara and CIC), which opinion shall be in
form and substance satisfactory to the Purchaser's Counsel,
acting reasonably.

4.1.3 No Action to Restrain. No action or proceeding
----------------------
shall be pending by any Person to restrain or prohibit:

4.1.3.1 the performance of this Agreement, including
the purchase and sale of the Purchased Shares hereunder
and the delivery of the consideration in connection
therewith in accordance with terms and conditions of
this Agreement; or

- 34 -

4.1.3.2 the Corporation or any Subsidiary from
materially carrying on its Business as the Business is
being carried on at the date hereof.

4.1.4 Non-Competition. The Vendors and Continental
---------------
shall have executed and delivered to the Purchaser and
Continental Canada the Non-Competition Agreement.

4.1.5 Consents and Approvals. The following consents
-----------------------
and approvals, which shall be unconditional or on conditions
acceptable to the Purchaser at its sole option, shall have
been delivered to the Purchaser, in form and substance
satisfactory to the Purchaser and the Purchaser's Counsel,
acting reasonably:

4.1.5.1 the consent and approval of OSFI and the
insurance regulatory authorities in each jurisdiction
in which the Corporation or a Subsidiary is domiciled
or commercially domiciled, and such other regulatory
consents or approvals to the transactions contemplated
by this Agreement as are required by applicable
legislation;

4.1.5.2 receipt of an Advance Ruling Certificate
under the Competition Act (Canada); and

4.1.5.3 all other advice, consents, approvals,
waivers and orders notified by the Purchaser to
Continental within 30 days of Continental providing the
Purchaser with reasonably complete details (including
tax information) regarding the Reorganization, which
are required to be obtained by the Vendors in
connection with the completion of the transactions
contemplated by this Agreement, or which are required
in order for the Corporation and each Subsidiary to

- 35 -

carry on Business after the Closing in accordance with
past practice.

4.1.6 Termination of Non-Arm's Length Management
--------------------------------------------------
Arrangements. All management arrangements between the
------------
Corporation or the Subsidiaries on the one part, and
Continental, any affiliate (excluding the Corporation and
the Subsidiaries), and any officer, director, employee or
shareholder of Continental or any such affiliate, on the
other part, will be terminated without any continuing
liability to the Corporation or a Subsidiary.

4.1.7 Security Agreements. The Vendors will deliver or
-------------------
cause to be delivered to the Purchaser, and duly registered
as necessary, the security agreements referred to below, in
form and on terms reasonably acceptable to the Purchaser.
The security agreements shall provide for a security
interest in marketable securities (the income on which shall
belong to the depositor) with a market value (determined by
mutual agreement of the parties, acting reasonably), as at
the Closing Date and on a continuing basis so long as the
security agreements remain in effect, of not less than $30
million (or, if the Purchaser has exercised its election
under section 5.8, $40 million), which may, if the Vendors
so choose, include the Fairfax Note (valued at $25 million)
whether or not the same is marketable. The security
agreements shall be agreements in favour of the Purchaser
collateralizing the indemnification and Adjustment Amount
payment obligations in section 6.1. Notwithstanding the
foregoing, the Purchaser may require that the above-
mentioned security arrangements be established by way of an
effective trust in favour of the Purchaser. All such
security or trust arrangements shall terminate upon
determination and payment, if any, of the Adjustment Amount.

- 36 -

4.1.8 Transfer of Excluded Business and Canadian Branch
--------------------------------------------------
Business. The transfers referred to in section 2.3, all in
--------
form and substance satisfactory to the Purchaser acting
reasonably, shall have occurred.

4.1.9 No Material Adverse Change. There shall have been
--------------------------

no material adverse change to the financial condition of the
Corporation and the Subsidiaries taken as a whole since June
30, 1994 and neither the Corporation nor any Subsidiary
shall have any liability to pay any compensation as
described in section 5.4.6.

4.1.10 Financing. The Purchaser shall have arranged the
---------
necessary financing for the purchase provided for by this
Agreement by October 17, 1994. The Purchaser shall, on or
before October 17, 1994, notify Continental whether or not
this condition has been fulfilled, and if such notification
is not given this condition shall be deemed to be waived by

the Purchaser.

If any of the conditions contained in this section 4.1 shall
not be fulfilled or performed at or prior to the Time of Closing
to the satisfaction of the Purchaser, acting reasonably, the
Purchaser may, by notice to the Vendors and Continental,
terminate this Agreement and the obligations of the Vendors,
Continental and the Purchaser under this Agreement other than the
obligations contained in sections 3.3, 8.1 and 8.2. The
Purchaser may also bring an action against the Vendors and
Continental for damages suffered by the Purchaser where the non-
performance or non-fulfilment of a condition is as a result of a
wilful breach of covenant, representation or warranty by the
Vendors or Continental. Any condition may be waived in whole or
in part by the Purchaser without prejudice to any claims it may
have for wilful breaches of covenant, representation or warranty.

- 37 -

4.2 Conditions for the Benefit of the Vendors
-----------------------------------------
The obligation of the Vendors to complete the sale of the
Purchased Shares hereunder is subject to the satisfaction of, or
compliance with, at or prior to the Time of Closing, each of the
following conditions (each of which is acknowledged to be for the
exclusive benefit of the Vendors):

4.2.1 Accuracy of Representations of Purchaser and
--------------------------------------------------
Compliance With Covenants. The representations and
----------------------------
warranties of the Purchaser made in or pursuant to this
Agreement shall be true and correct at the Time of Closing
with the same force and effect as if made at and as of the
Time of Closing except as otherwise contemplated by this
Agreement; the covenants contained in this Agreement to be
performed by the Purchaser at or prior to the Time of
Closing shall have been performed; the Purchaser shall not
be in breach of any material agreement on its part contained
in this Agreement; and the Vendors and Continental shall
have received a certificate confirming the foregoing signed
for and on behalf of the Purchaser by senior officers or
directors of the Purchaser or other persons acceptable to
the Vendors, in form and substance satisfactory to the
Vendors and the Vendors' Counsel, acting reasonably.

4.2.2 Opinion of Purchaser's Counsel. The Vendors shall
------------------------------
have received an opinion of the Purchaser's Counsel as to
such matters as the Vendors and the Vendors' Counsel may
reasonably request, which opinion shall be in form and
substance satisfactory to the Vendors' Counsel, acting
reasonably.

4.2.3 No Action to Restrain. No action or proceeding
----------------------
shall be pending or threatened by any Person to restrain or
prohibit the performance of this Agreement, including the
purchase and sale of the Purchased Shares hereunder and the

- 38 -

delivery of the consideration in connection therewith in
accordance with terms and conditions of this Agreement.

4.2.4 Transfer of Excluded Business and Canadian Branch
--------------------------------------------------

Business. The transfers referred to in section 2.3, in form
--------
and substance satisfactory to the Vendors and Continental
acting reasonably, shall have occurred.

4.2.5 Consents and Approvals. The consents and
-------------------------
approvals referred to in section 4.1.5, which shall be
unconditional or on conditions acceptable to Continental and
the Vendors acting reasonably, shall have been delivered to
Continental and the Vendors, in form and substance
satisfactory to Continental and the Vendors, acting
reasonably.

4.2.6 Non-Competition. The Corporation and the
---------------
Purchaser shall have executed and delivered the Non-
Competition Agreement.

If any of the conditions contained in this section 4.2
shall not be fulfilled or performed at the Time of Closing to the
satisfaction of the Vendors and Continental, acting reasonably,
the Vendors and Continental may, by notice to the Purchaser,
terminate this Agreement and the obligations of the Vendors,
Continental and the Purchaser under this Agreement other than the
obligations contained in sections 3.3, 8.1 and 8.2. The Vendors
and Continental may also bring an action against the Purchaser
for damages suffered by the Vendors or Continental where the non-
performance or non-fulfilment of a condition is as a result of a
wilful breach of covenant, representation or warranty by the
Purchaser. Any condition may be waived in whole or in part by
the Vendors without prejudice to any claims it may have for
wilful breaches of covenant, representation or warranty.

- 39 -

ARTICLE 5
---------
ADDITIONAL AGREEMENTS OF THE PARTIES
------------------------------------

5.1 Access to Information
---------------------

The Vendors and Continental shall to the extent reasonable
in connection with the transactions provided for herein give, and
shall cause the Corporation, the Subsidiaries, Niagara and CIC to
give, until the Time of Closing, to the Purchaser and its
accountants, legal advisers and representatives full access to
their premises, all their assets, books, accounts, tax returns,
contracts, commitments and records and to their personnel and to
furnish them with all such information relating to the Business
of the Corporation and each Subsidiary and the Canadian Branch
Business and their affairs and assets as the Purchaser may
reasonably request.

5.2 No Solicitation
---------------
Unless and until this Agreement is terminated in accordance
with its terms, the Vendors and Continental will not authorize or
permit any Person (including any related companies and trusts;
management, shareholders or trustees of Continental Canada or any
related companies and trusts; and financial advisers, investment
dealers or others acting as agent or otherwise for Continental or
the Vendors; or any of the foregoing), except in dealing with the
Purchaser, to provide access for review, enter into any
agreement, have any discussions or correspondence or take any
other action related to or with a view to soliciting, encouraging
or assisting in any offer or proposal for, or which would have an
effect comparable to, purchasing, financing or financing the
purchase of Continental Canada (in whole or in part) or all or
any material portion of Continental Canada's assets or Business.

- 40 -

5.3 Conduct of Business Until Time of Closing
-----------------------------------------
Except as expressly provided in this Agreement (including
without limitation, the Reorganization) or except with the prior
written consent of the Purchaser, from the date hereof to the
Time of Closing the Vendors and Continental shall direct each of
the Corporation and the Subsidiaries, and Niagara and CIC with
respect to the Canadian Branch Business, to:

5.3.1 operate its Business only in the ordinary course,
consistent with past practice and, to the extent consistent
with such operation, use best efforts to preserve its
business organization, including the services of its
officers and employees, and its business relationships with
significant Policyholders, customers, suppliers, reinsurers
and others having business dealings with it;

5.3.2 maintain all its assets, whether owned or leased,
in good condition and repair, and maintain insurance upon
all its assets comparable in amount, scope and coverage to
that in effect on the date of this Agreement;

5.3.3 maintain its books, records and accounts in the
ordinary course on a basis consistent with past practice;

5.3.4 do or refrain from doing all acts and things in
order to ensure that the representations and warranties in
section 3.1 remain true and correct at the Time of Closing
as if such representations and warranties were made at and
as of such date and to satisfy or cause to be satisfied the
conditions in section 4.1 which are within its control.

- 41 -

5.4 Negative Covenant
-----------------
Except as expressly provided in this Agreement (including
without limitation, the Reorganization) or except with the prior
written consent of the Purchaser, from the date hereof to the
Time of Closing the Vendors and Continental shall exercise
reasonable efforts to ensure that neither the Corporation nor any
Subsidiary:

5.4.1 amends its certificate of incorporation, by-laws
or other organizational documents;

5.4.2 amalgamates, merges or consolidates with, or
acquires all or substantially all the shares or assets of,
any Person;

5.4.3 declares or pays any dividends on, or makes other
distributions in respect of, or purchases or redeems, any of
its shares;

5.4.4 authorizes or proposes the issuance of, or
purchases or proposes the purchase of, any of its shares or
securities convertible into, or rights, warrants or options
to acquire, any of its shares;

5.4.5 changes its outstanding shares into a different
number of shares or a different class by reason of any
reclassification, recapitalization, split, consolidation,
combination, exchange of shares or readjustment, nor shall
it declare a stock dividend thereon; or

5.4.6 grants or pays to any officer or employee any
compensation with respect to or arising out of any
transaction contemplated by this Agreement.

5.5 Corporate Action and Resignations
---------------------------------

- 42 -

At or prior to the Time of Closing, the Vendors and
Continental shall cause all necessary corporate action on their
part to be taken for the purpose of approving the transfer of the
Purchased Shares to the Purchaser. At or prior to such time, the
Vendors and Continental shall use reasonable efforts to obtain
the resignations of those directors, and those officers who are
not full-time employees, of the Corporation and the Subsidiaries
designated in writing by the Purchaser not less than 24 hours
prior to the Time of Closing. Continental shall indemnify the
Purchaser against any claims by such resigning individuals in
their capacity as directors and officers against the Corporation
or any of the Subsidiaries (other than in respect of
indemnification). If requested by the Purchaser, the Vendors and
Continental shall cause nominees of the Purchaser to be elected
or appointed directors of the Corporation and the Subsidiaries to
fill any vacancies effective as of the Time of Closing.

5.6 Obtaining of Consents and Approvals
-----------------------------------

The Vendors, Continental and the Purchaser shall use their
reasonable efforts to deliver, at or prior to the Time of
Closing, the consents and approvals referred to in section 4.1.5,
although they shall not be required to pay any monies or give any
other consideration in order to obtain any consent or approval,
other than payments in respect of required regulatory filing
fees, reasonable legal fees incurred by third parties in
connection with a request for a consent or approval and the
expenses of that party (including the reasonable fees and
disbursements of their counsel) in obtaining such consents and
approvals and such monies or other consideration as may be
necessary in connection with the receipt of any required consents
of reinsurers. If the Purchaser completes the transaction
contemplated hereby on the Closing Date notwithstanding that any
of the consents or approvals referred to in section 4.1.5 have
not been obtained, the Vendors, Continental and the Purchaser
shall continue after the Closing to use reasonable efforts as

- 43 -

requested by the Purchaser from time to time in order to attempt
to obtain any such consent or approval.

5.7 Restructuring
-------------

Each of the Vendors, Continental and the Purchaser agree
that, in addition to the matter contemplated in section 1.10,
they will consent to any reasonable proposal to restructure the
transaction or any part thereof contemplated by this Agreement in
a way advantageous to the party making such proposal if such
proposal has no negative economic or commercial impact on the
party whose consent is sought.

5.8 Reinsurance Arrangements
------------------------
Except as otherwise expressly provided for in this
Agreement, all reinsurance arrangements between Continental
Canada and the Vendors, Continental and their affiliates shall
remain in place unamended until December 31, 1994. At the
Purchaser's option, Continental shall request the relevant
reinsurers to give reasonable consideration to continuing each
such arrangement for up to three additional one-year periods.
Nothing in this Agreement shall relieve any reinsurer under any
such reinsurance arrangements of any obligation incurred or
provided for under those arrangements.

At the Purchaser's election, which must be exercised by
notice given to Continental on or prior to December 15, 1994,
CRCIL shall, and Continental shall cause CRCIL to, enter into the
retrocession agreement provided for below (the "Retrocession
Agreement") and the Purchaser shall cause its affiliate to enter
into such agreement, which shall be signed either at the Time of
Closing or by March 31, 1995, as appropriate. If the
Retrocession Agreement is to take effect at the Time of Closing,
CRCIL shall, and Continental shall cause CRCIL to, and the
Purchaser shall cause its affiliate to, by the Time of Closing or
as soon thereafter as is reasonably practicable, take the steps

- 44 -

necessary so that there shall have occurred all actions which
that agreement provides or contemplates will occur in conjunction
with that agreement taking effect. The Retrocession Agreement
shall include or be subject to the following terms:

(i) CRCIL will retrocede to an insurance company subsidiary
of the Purchaser (the "retrocessionnaire") all of the
liabilities of CRCIL under the Quota Share Treaty
related to the business of Continental Canada as of the
date provided for below, against payment by CRCIL of
good quality, marketable securities within the Bermuda
Trust (which securities shall remain within the Bermuda
Trust after such payment) equal in value (at fair
market value determined by the Purchaser and
Continental, acting reasonably) to the sum of 162/180
of the amount of liabilities for outstanding losses
assumed and 100% of the liabilities for unearned
premiums (net of deferred acquisition costs) assumed,
as determined in paragraph (iii) below;

(ii) the retrocessionnaire will receive 50% of the
investment income on the assets transferred pursuant to
paragraph (i) above from June 30, 1994 until the
earlier of Closing and December 31, 1994, and all of
such investment income thereafter. Except as provided
in the preceding sentence, CRCIL will receive all of
the investment income on its assets within the Bermuda
Trust;

(iii) the liabilities assumed shall initially be estimated
and, when audited 1994 financial statements are
available, those estimates shall be finalized and
necessary adjustments made, all pursuant to procedures
comparable to the scheme in Schedule 2.3;

(iv) the Purchaser may at its option specify either (a) that
the Retrocession Agreement will take effect at the
earlier of the Time of Closing and December 31, 1994,
in which event any further liabilities of CRCIL of the
type assumed which accrue after Closing until December
31, 1994 shall also be assumed as of December 31, 1994;
or (b) that the Retrocession Agreement will take effect
as of January 1, 1995, with the Purchaser having until
March 31, 1995 to arrange for this to occur;

(v) the Bermuda Trust will be amended as necessary to
ensure that the assets within the Bermuda Trust are
vested in trust for the benefit of the reinsured under

- 45 -

the Quota Share Treaty and to permit payments of claims
under the Quota Share Treaty to be made out of the
assets of the retrocessionnaire within the Bermuda
Trust;

(vi) CRCIL will, in a manner satisfactory to Continental and
the Purchaser, acting reasonably, be relieved of direct
liability for the liabilities ceded under the
Retrocession Agreement, and the Purchaser shall ensure
the return to CRCIL of its assets within the Bermuda
Trust, not later than December 31, 1997. Until that
time, the assets of CRCIL within the Bermuda Trust will
remain within that trust and will be managed by CRCIL
and such assets as are transferred to the Purchaser
under the Retrocession Agreement will be managed by the
Purchaser or an affiliate, in both cases within OSFI
requirements or guidelines; and

(vii) in the event there is a requirement under
Applicable Laws that assets be contributed to the
Bermuda Trust,

(A) the Purchaser shall, or shall cause the
retrocessionnaire, to deposit within that trust
assets (which shall remain the contributor's
assets) with a fair market value (determined by
the Purchaser and Continental, acting reasonably)
such that the value of the Purchaser's and the
retrocessionnaire's assets within the Bermuda
Trust, when added to the amount of claims paid out
of such assets in respect of the liabilities
retroceded under the Retrocession Agreement, is at
least equal to the sum of the value of the assets
transferred to the retrocessionnaire in accordance
with paragraph (i) above at the time of such
transfer plus any increase in assets required
under Applicable Laws at any time after December
31, 1994 either as a result of adverse reserves
developments in respect of the retroceded
liabilities or any change in Applicable Laws; and

(B) Continental shall, or shall cause CRCIL, to
deposit within the Bermuda Trust assets (which
shall remain the contributor's assets) which are
sufficient, after any contribution of assets
referred to in the preceding clause (vii)(A), to
satisfy the requirements of Applicable Laws.

- 46 -

5.9 Cooperation
-----------
The parties shall cooperate fully in good faith with each
other and their respective legal advisers, accountants and other
representatives in connection with any steps required to be taken
as part of their respective obligations under this Agreement.

5.10 Retention of Tax Records and Returns
------------------------------------
The Vendors, Continental, the Corporation and its
Subsidiaries shall retain (or cause to be retained) all returns,
schedules and work papers, records and other documents in their
possession relating to Tax matters of the Corporation and the
Subsidiaries for each taxable period ending after the Closing
Date and for all prior taxable periods, until the later of (i)
the expiration of the statute of limitations of the taxable
periods to which such returns and other documents relate, without
regard to extensions except to the extent notified by the
Purchaser in writing of such extensions for the respective
taxable periods, or (ii) six years following the due date
(without extension) for such returns; provided, however, that
-------- -------
returns, schedules, work papers, records and other documents
relating to the determination of the basis of any asset shall be
retained for six years following the disposition of such asset;
and provided further that none of Continental, the Vendors and
-------- -------
any subsidiary thereof shall dispose of any such documents
without first notifying the Corporation and providing the
Corporation a reasonable period of time in which to assume
possession of such documents. Any information obtained under
this section 5.10 shall be kept confidential except as may be
otherwise necessary in connection with the filing of returns or
claims for refund or in conducting an audit or other proceeding.

5.11 Continuance of Business Relationships
-------------------------------------

Each of the Purchaser, Continental and the Vendors covenant
and agree, and covenant and agree to cause their respective
affiliates, to continue the existing business relationships and

- 47 -

arrangements referred to below in this section 5.11. In the
event that prior to Closing the Purchaser determines that it
wishes to continue an existing business relationship or
arrangement between Continental Canada and Continental and its
affiliates which is not referred to below, the Purchaser shall
provide Continental and the Vendors with a notice which includes
a description of the business relationship or arrangement to be
continued and, if Continental is, in its sole discretion,
interested in continuing such relationship or arrangement, the
parties shall negotiate reasonably regarding the continuation of
that business relationship consistent with the provisions below.

The North American Business Team arrangements described in
Schedule 5.11 will continue indefinitely, subject to mutual
agreement otherwise, and the arrangements under which loss
control or claims services, or administration services for MOAC
(as described in Schedule 5.11), are provided, and specialty
lines are insured in Canada and the United States respectively
and services and information with respect to those lines is
provided, will continue on mutually agreeable terms, negotiated
reasonably, so long as desired by the Person to whom the services
are provided.

5.12 Access to Insurance Products
----------------------------

For a period of five years after Closing, the Vendors and
Continental shall, and shall cause their affiliates to, provide
to Continental Canada, at Continental Canada's request,
information concerning new insurance products or revised existing
insurance products, other than insurance products relating to the
lines of business currently managed by MOAC or AAU described in
Schedule A to the Non-Competition Agreement and specialty lines
which are currently mutually written by Continental Canada and
affiliates of Continental but which cease to be mutually written
by such parties subsequent to Closing, including reasonable
access to copies of such products, all relevant documentation and

- 48 -

knowledgeable personnel, so that Continental Canada will be in a
position to sell such insurance products. Continental Canada
will have the indefinite right to sell insurance products
developed based on the information and access provided by this
section 5.12 in Canada and any other jurisdiction where
Continental and its affiliates do not sell and have not announced
their intention to sell such insurance products prior to
Continental Canada starting to sell such products in those
jurisdictions. Nothing in this section 5.12 permits the use of
such insurance products otherwise than by Continental Canada or
use by Continental Canada in the United States otherwise than
through the North American Business Team arrangements described
in Schedule 5.11.

5.13 Protection of Existing Relationships
------------------------------------
Continental covenants and agrees, and covenants and agrees
to cause its affiliates, to refrain from taking any action which
may reasonably be expected to adversely affect a contractual or
business relationship existing between Continental Canada and any
other Person at the date hereof, including Continental Canada's
role as chief agent for Tokio Marine and Fire.

5.14 Software Licences
-----------------
Continental shall permit Continental Canada to continue to
use all computer software currently used by Continental Canada in
which Continental or its affiliates have any rights (including,
without limitation, software related to catastrophe management or
to underwriting or loss control services) and Continental shall
use reasonable efforts to provide, and use reasonable efforts to
cause its affiliates to provide, Continental Canada with any
license agreements which are required or beneficial to continue
to use such software, in all cases to the extent that Continental
or its affiliates have the right to permit such use. Such
license agreements shall be for an indefinite period and at no
cost to Continental Canada.

- 49 -

If MOAC, CIC or Niagara wishes to use any computer software
for their business in Canada which is currently used by
Continental Canada, Continental Canada shall allow MOAC, CIC or
Niagara to use such software at no cost for an indefinite period
to the extent that Continental Canada has the right to permit
such use, and shall use reasonable efforts to provide MOAC, CIC
and Niagara with any licence agreements which are required or
beneficial in this regard.

5.15 Withholding Tax
---------------

If the Vendors fail to deliver to the Purchaser, at least 2
Business Days before the tax hereinafter referred to is required
to be remitted, a certificate issued pursuant to section 116 of
the Income Tax Act (Canada) in respect of the sale of the
Purchased Shares containing a certificate limit at least equal to
$155 million, the amount of the certified cheque or bank draft or
wire transfer of the Purchaser referred to in section 2.2.2.1 may
be reduced by the amount of tax for which the Purchaser may be
liable (as determined solely by the Purchaser's Counsel) under
section 116 of such Act. The Purchaser shall not remit such tax
to Revenue Canada until two Business Days prior to the last date
on which it is required to be remitted.

5.16 Use of Continental Name and Registered Trade Marks
--------------------------------------------------
Continental and the Vendors consent to the use by
Continental Canada of the names Continental Insurance Limited,
The Continental Insurance Company of Canada and Continental
Insurance Management Ltd. for a period of two years from Closing
and agree during that period, and for any longer period
contemplated below during which the Continental name may be used,
to provide Continental Canada with any consent or other document
which is required or beneficial for the use of such name in
Canada or any other jurisdiction in which Continental does not
carry on business in accordance with Applicable Laws. The
Purchaser agrees to change the name of the Corporation and its

- 50 -

Subsidiaries so that their names do not include the name
"Continental" prior to the end of such two year period, unless
the name "Continental" is used by Continental Canada in
conjunction with another name or term so that the combined name
is not confusing with the name "Continental" and unless
Continental consents in its sole discretion to the use of the
combined name.

Continental shall, and shall cause its affiliates, to grant
or continue to grant to Continental Canada a licence, registered
user or comparable agreement to use in Canada the registered
trade marks listed on Schedule 3.1.13 which are marked for
identification with an "A" or a "B" and all other registered user
agreements shall be deemed to be terminated at Closing. The
period of the agreement for those marked with an "A" shall be the
period for which Continental Canada is allowed to use the
"Continental" name and for those marked with a "B" shall be
indefinite.

5.17 Financial Statements
--------------------

At the request of the Purchaser, Continental shall arrange
for the appropriate auditors to provide any financial statements
or pro forma financial statements relating to Continental Canada
that are required in connection with securities offerings by the
Purchaser to finance the purchase of Continental Canada
hereunder.

5.18 Chief Agent
-----------

Continental shall continue to appoint the chief executive
officer of the Corporation as chief agent in Canada for
Continental and any affiliate of Continental carrying on an
insurance business in Canada for a period of three years from the
Closing Date. Notwithstanding the preceding sentence, the
appointment shall be reviewable by Continental at the end of each
one year period and may be cancelled by Continental at each such

- 51 -

time in its sole discretion or at any time for material non-
performance. The Purchaser shall indemnify and save Continental
harmless for any loss, damage, liability, expense or deficiency
suffered by Continental or an affiliate as a result of any
material non-performance of the chief agent as so appointed.

5.19 NABT Reporting
--------------
Robert Rich, or another person acceptable to the Purchaser,
shall be the individual designated by Continental as the contact
person for Continental Canada in relation to the activities of
the North American Business Team.

5.20 Fairfax Note
------------
At the request of Continental, the Purchaser will use all
reasonable efforts to cause the Fairfax Note to be freely
tradeable in the United States at any time after the Purchaser
has received its audited financial statements for the year ended
December 31, 1994.

5.21 Pension Plan Assets
-------------------

The assets including any surplus and related liabilities of
the current Continental Canada employee pension plan applicable
to MOAC and CAFO, Inc. employees shall be removed from such
pension plan in accordance with MOAC's instructions and at MOAC's
expense, as soon as all required regulatory consents and
approvals have been received. Towers Perrin or such other
actuary as is agreed to by the parties hereto shall make all
necessary actuarial determinations in this connection.

5.22 Reinsurance with Affiliates
---------------------------

Continental covenants and agrees that, except for currently
established fixed periodic premiums payable in 1994 which are
currently unpaid, Continental Canada shall not be liable, in
respect of 1994 or any prior period, for any additional or
adjusting premiums or payments (including without limitation any

- 52 -

payback, swing rate, reinstatement or reinsurance surcharge
premium or any payment of a deductible) upon any existing
reinsurance or retrocession contract or arrangement made with any
affiliate of Continental as reinsurer or retrocessionnaire. The
Purchaser shall cause the Corporation and its Subsidiaries to
consent to the release to the settlor of any surplus assets held
in any trust relating to any existing reinsurance contracts
provided that OSFI has consented to such release of surplus
assets.

5.23 Currency Protection on U.S. Claims
----------------------------------
Continental covenants and agrees, with respect to all United
States losses of Continental Canada occurring prior to and
including December 31, 1994 (other than those relating to the
Thomson Corporation business), (the claims giving rise to such
losses being those listed in a schedule which has been prepared
by the Corporation and its Subsidiaries and provided to
Continental) to continue the existing practice whereby affiliates
of Continental (other than the Corporation and its Subsidiaries)
reimburse and indemnify the Corporation and its Subsidiaries for
the excess of any amounts paid by them in United States dollars
on or in connection with such claims over the amount which would
have been paid had the amount paid been the same numerical dollar
amount but denominated in Canadian dollars, such reimbursement
and indemnity obligation being limited to the respective loss
reserve for each claim as shown on the above-mentioned schedule.

5.24 Settling U.S. and Canadian Claims
---------------------------------

5.24.1 Continental covenants and agrees, subsequent to
the Time of Closing, to cause any affiliate which has the
authority or responsibility to settle in the United States
any claim on behalf of Continental Canada to keep
Continental Canada informed on developments and not to
settle such claim unless Continental Canada has approved
such settlement prior to the time it is made. In acting on

- 53 -

behalf of Continental Canada in connection with claims
settlement activities, any such affiliate shall conduct
itself in a manner consistent with responsible industry
practice, including with a view to preserving Continental
Canada's client relationships. Nothing in this section 5.24
restricts Continental Canada's right to terminate the above-
mentioned authority or responsibility at any time.

5.24.2 The Purchaser covenants and agrees, subsequent to
the Time of Closing, to cause the Corporation or any
affiliate which has the authority or responsibility to
settle in Canada any claim on behalf of Continental or an
affiliate to keep Continental informed on developments and
not to settle such claim unless Continental has approved
such settlement prior to the time it is made. In acting on
behalf of Continental in connection with claims settlement
activities, the Corporation or any of its affiliates shall
conduct itself in a manner consistent with responsible
industry practice, including with a view to preserving
Continental's client relationships. Nothing in this section

5.24 restricts Continental's right to terminate the above-
mentioned authority or responsibility at any time.

5.25 Termination of Non-Arm's Length Arrangements. Except as
----------------------------------------------
expressly provided by this Agreement (including, without
limitation, in sections 5.11, 5.12, 5.13 and 5.14 hereof), all
arrangements between the Corporation or the Subsidiaries on the
one part, and Continental, any affiliate (excluding the
Corporation and the Subsidiaries), and any officer, director,
employee or shareholder of Continental or any such affiliate, on
the other part, and any arm's length investment management
agreement or arrangement to which Continental Canada is a party,
will be terminated as of the Time of Closing unless stipulated
otherwise by the Purchaser, without any continuing liability to
the Corporation or a Subsidiary and all accrued liabilities under

- 54 -

such arrangements shall be satisfied without cost to the
Corporation and its Subsidiaries in full on a net basis at the
Time of Closing with respect to such of those amounts as are
determinable at such time and, with respect to such of those
amounts as are not determinable at that time, as soon thereafter
as such amounts are determinable.

5.26 Co-Operation in United States Tax Matters
-----------------------------------------

The Purchaser agrees that it shall co-operate with the
Vendors and Continental, and cause the Corporation and its
Subsidiaries to co-operate with the Vendors and Continental, by
sharing all financial and accounting information reasonably
requested by the Vendors and Continental in connection with the
preparation or audit of Continental's United States federal
income tax return or Canadian tax returns of the Corporation and
its Subsidiaries for any taxation year during any part of which
the Corporation and its Subsidiaries was owned, directly or
indirectly, by Continental. Such assistance shall include, but
not be limited to, providing information necessary to (i)
determine the subpart F income of the Corporation and its
Subsidiaries or (ii) substantiate foreign tax credits claimed
with respect to taxes paid or accrued by the Corporation and its
Subsidiaries.

ARTICLE 6
---------
INDEMNIFICATION AND
-------------------

PAYMENT OF ADJUSTMENT AMOUNT
----------------------------

6.1 Indemnification and Adjustment Amount
-------------------------------------

6.1.1 The Vendors and Continental shall jointly and
severally indemnify the Purchaser and save the Purchaser
harmless for and from any loss, damage, liability, expense
or deficiency suffered by the Purchaser as a result of any
breach of representation, warranty or covenant on the part

- 55 -

of the Vendors or Continental or any of their affiliates
contained in this Agreement or in any agreement, certificate
or document delivered pursuant to or contemplated by this
Agreement, and all claims, demands, costs and expenses,
including reasonable legal fees, in respect of the
foregoing. The amount of such indemnity shall be on an
after-tax basis and shall be deemed to be an adjustment to
the Purchase Price.

6.1.2 The Vendors and Continental shall pay the
Adjustment Amount to the Purchaser in accordance with
sections 6.5 and 6.6.

6.1.3 Amounts payable under sections 6.1.1 and 6.1.2
shall be paid without duplication.

6.2 Notice of Claim for Indemnification
-----------------------------------
The Purchaser shall promptly give notice to the Vendors and
Continental of any claim for indemnification pursuant to section
6.1 (a "Claim", which term shall include more than one Claim).
Such notice shall specify whether the Claim arises as a result of
a claim by a Person (a "Third Party") against the Purchaser (a
"Third Party Claim") or whether the Claim does not so arise (a
"Purchaser's Claim"), and shall also specify with reasonable
particularity (to the extent that the information is available):

6.2.1 the factual basis for the Claim; and

6.2.2 the amount of the Claim or, if an amount is not
then determinable, an approximate and reasonable estimate of
the likely amount of the Claim.

If the Vendors and Continental do not receive such prompt notice,
the Vendors and Continental shall not be obligated to indemnify

- 56 -

the Purchaser for any damages or costs that could have been
avoided but for such lack of timely notice.

6.3 Procedure for Indemnification
-----------------------------

6.3.1 Purchaser's Claims. Following receipt of notice
------------------
from the Purchaser of a Claim, the Vendors and Continental
shall have 30 days to make such investigation of the Claim
as the Vendors or Continental consider necessary or
desirable. For the purpose of such investigation, the
Purchaser shall make available to the Vendors and
Continental and their authorized representatives the
information relied upon by the Purchaser to substantiate the
Claim and all other available relevant information. If the
Purchaser and the Vendors or Continental agree at or prior
to the expiration of such 30 day period (or any mutually
agreed upon extension thereof) to the validity and amount of
such Claim, the Vendors or Continental, as the case may be,
shall immediately pay to the Purchaser the full agreed upon
amount of the Claim.

If the Purchaser and the Vendors or Continental do not
agree within such period (or any mutually agreed upon
extension thereof), the Purchaser, the Vendors and
Continental agree that any of them may take the dispute to a
court of competent jurisdiction.

6.3.2 Third Party Claims. With respect to any Third
-------------------
Party Claim against the Purchaser, the Vendors or
Continental shall have the right, at their own expense, to
participate in or assume control of the negotiation,
settlement or defence of such Third Party Claim and, in such
event, the Vendors or Continental shall reimburse the
Purchaser for all the Purchaser's out-of-pocket expenses as
a result of such participation or assumption. If the

- 57 -

Vendors or Continental elect to assume such control, the
Purchaser shall cooperate with the Vendors or Continental,
and shall have the right to participate in the negotiation,
settlement or defence of such Third Party Claim at its own
expense. If the Vendors or Continental, having elected to
assume such control, thereafter fail to defend any such
Third Party Claim within a reasonable time, the Purchaser
shall be entitled to assume such control and the Vendors and

Continental shall be bound by the results obtained by the
Purchaser with respect to such Third Party Claim.

6.4 Additional Rules and Procedures for Indemnification
---------------------------------------------------

The obligation of the Vendors or Continental to indemnify
the Purchaser in respect of Claims shall also be subject to the
following:

6.4.1 The obligation of Continental and the Vendors to
indemnify the Purchaser and the Corporation shall not apply
until the aggregate amount of Claims is at least $1,000,000
and shall not apply to the first $1,000,000 in aggregate
amount of Claims. However, this section 6.4.1 shall not
apply to Claims pursuant to breaches of the indemnity
obligations in sections 1.10 and 5.5 and breaches of the
covenants contained in sections 5.22 and 5.23, with the
result that any proper Claims under those sections shall be
paid in full, and there shall be no minimum amount of
aggregate Claims under those sections.

6.4.2 The obligation of Continental and the Vendors to
indemnify the Purchaser and the Corporation in respect of
Claims shall be limited to the aggregate amount of
$50,000,000.

6.4.3 Whether or not the Vendors or Continental assume
control of the negotiation, settlement or defence of any

- 58 -

Third Party Claim against the Purchaser, the Purchaser shall
not negotiate, settle, compromise or pay any such Third
Party Claim except with the prior written consent of the
Vendors and Continental (which consent shall not be
unreasonably withheld).

6.4.4 The Purchaser shall not permit any right of appeal
in respect of any Third Party Claim against it to terminate
without giving the Vendors and Continental notice thereof
and an opportunity to contest such Third Party Claim.

6.4.5 The Purchaser, the Vendors and Continental shall
cooperate fully with each other with respect to Third Party
Claims, shall keep each other fully advised with respect
thereto (including supplying copies of all relevant
documentation promptly as it becomes available) and shall
each designate a senior officer who will keep himself
informed about and be prepared to discuss the Third Party
Claim with his counterpart and with counsel at all
reasonable times.

6.4.6 Notwithstanding section 6.3.2, the Vendors and
Continental shall not settle any Third Party Claim or
conduct any related legal or administrative proceeding in a
manner which would, in the opinion of the Purchaser, acting
reasonably, have an adverse impact on the Purchaser.

6.5 Calculation of Adjustment Amount and Combined Ratio Achieved
------------------------------------------------------------

The Adjustment Amount will be calculated by the Purchaser
and its or the Corporation's independent actuary within 120 days
of the Determination Date. If the Vendors and Continental do not
agree with the amount calculated by the Purchaser and such
actuary, the Vendors and Continental will within 60 days of being
advised of the Purchaser's calculation advise the Purchaser of
the Adjustment Amount as calculated by the Vendors and

- 59 -

Continental and their independent actuary (failing which the
Vendors and Continental will be deemed to have agreed with the
Purchaser's calculation), and if the Purchaser and the Vendors
and Continental cannot agree on the Adjustment Amount within 30
days thereafter, then such amount shall be forthwith determined
by a mutually agreed upon third party actuary whose
determination, including with respect to costs, shall be final
and binding on the parties hereto. Unless otherwise agreed, such
dispute shall be submitted to arbitration pursuant to the
Arbitration Act, 1991 (Ontario). Sections 6.3 and 6.4 shall not
apply to a claim for indemnification or payment of the Adjustment
Amount. After 1994, within 60 days of the end of each calendar
quarter, other than the fourth quarter, and within 120 days of
the end of each fourth quarter, the Purchaser shall provide
Continental with an estimate of the Adjustment Amount calculated
as at the end of such quarter and reasonable explanatory
commentary and such additional relevant information as
Continental shall at any time request.

The Combined Ratio Achieved will be calculated by the
Purchaser and the Corporation's auditors by February 28, 2000.
The second and third sentences of the preceding paragraph shall
apply mutatis mutandis to the calculation of the Combined Ratio
Achieved. Within 60 days of the end of each calendar year after
1994, the Purchaser shall provide Continental with a calculation
of the combined ratio of the Corporation and its Subsidiaries for
such calendar year and reasonable explanatory commentary relating
to such calculation and such additional relevant information as
Continental shall at any time request.

6.6 Payment of Indemnity and Adjustment Amount
------------------------------------------
All amounts payable by the Vendors and Continental to the
Purchaser as contemplated by this Article 6 will be paid
forthwith upon agreement of the indemnification or payment amount
calculated in accordance herewith.

- 60 -

6.7 Right of Inspection
-------------------
The Vendors and Continental shall be entitled, through their
employees, representatives, accountants, actuaries and lawyers,
to inspect and examine such books, records, tax records and
financial statements of the Purchaser, the Corporation and the
Subsidiaries as may be relevant to a determination of the
indemnification or payment of the Adjustment Amount required by
this Article 6 or of the Combined Ratio Achieved. Any such
inspection and examination shall be conducted at reasonable times
and under reasonable circumstances in such a manner as to avoid
any unreasonable disruption of the businesses of such
corporations, and the Purchaser shall cause the Corporation and
the Subsidiaries and their representatives to cooperate fully
with such inspection and examination. The Vendors and
Continental shall, and shall cause any other person to whom the
Vendors and Continental have given access to information
disclosed pursuant to this section 6.7 to, keep confidential any
information or documents obtained pursuant to this section 6.7
unless such information or documents are readily ascertainable
from public or published information, are otherwise available to
the Vendors or Continental or are needed to be used in legal
proceedings related to the determination of indemnification or
payment obligations under this Article 6 or of the Combined Ratio
Achieved.

6.8 Joint and Several Liability of the Vendors and Continental
----------------------------------------------------------

For greater certainty, the Vendors and Continental are
jointly and severally liable to the Purchaser pursuant to the
indemnities contemplated by this Article 6.

6.9 Indemnity by Purchaser
----------------------
The Purchaser shall indemnify the Vendors and Continental
and save them harmless for and from:

- 61 -

6.9.1 any loss, damage, liability, expense or deficiency
suffered by the Vendors or Continental as a result of any
breach of representation, warranty or covenant on the part
of the Purchaser contained in this Agreement or in any
agreement, certificate or document delivered pursuant to or
contemplated by this Agreement; and

6.9.2 all claims, demands, costs and expenses, including
reasonable legal fees, in respect of the foregoing.

The provisions of sections 6.2, 6.3 and 6.4 respecting the
indemnity given by the Vendors and Continental in section 6.1
shall apply mutatis mutandis to this indemnity by the Purchaser.

ARTICLE 7
---------
CLOSING
-------

7.1 Location and Time of the Closing
--------------------------------

The Closing shall take place at the Time of Closing on the
Closing Date at the offices of the Vendors' Counsel.

7.2 Deliveries at and forthwith upon the Closing
--------------------------------------------

At the Closing, the Vendors shall deliver the share
certificates representing the Purchased Shares and such other
documents as are required or contemplated to be delivered by the
Vendors or the Vendors' Counsel pursuant to this Agreement, and
the Purchaser shall pay the Purchase Price in the manner
contemplated by Article 2 and shall deliver such documents as are
required or contemplated to be delivered by the Purchaser or the
Purchaser's Counsel pursuant to this Agreement.

- 62 -

ARTICLE 8
---------
GENERAL MATTERS
---------------

8.1 Confidentiality
---------------

If the transaction contemplated by this Agreement is not
completed, the Purchaser shall hold in confidence and shall not,
except as contemplated below, directly or indirectly use for its
own purposes or communicate to any other Person any confidential
information or data relating to the Vendors, Continental, the
Corporation, any Subsidiary or their respective Businesses
(including, without limitation, Intellectual Property) which
become known to the Purchaser, its accountants, legal advisers or
representatives as a result of the Vendors, Continental or their
advisers making the same available in connection with the
transactions contemplated hereby, and the Purchaser shall return
or cause to be returned to the Vendors, Continental and the
Corporation or the applicable Subsidiary all copies (and extracts
therefrom) of documents received from them in connection with the
transaction contemplated by this Agreement, except, in the case
of any dispute related to this Agreement, as retention of such
material is necessary or useful in conducting such dispute. The
foregoing shall not prevent the Purchaser from disclosing or
making available to its accountants, professional advisers and
bankers and other lenders, whether current or prospective, any
such information or data provided that such Persons agree to hold
the same in confidence.

8.2 Public Notices
--------------

No press release or other announcement concerning the
transaction contemplated by this Agreement shall be made by the
Vendors, Continental or the Purchaser without the prior consent
of the others (such consent not to be unreasonably withheld)
provided, however, that any party may, without such consent, make
such disclosure if the same is required by any stock exchange on
which any of the securities of such party or any of its

- 63 -

affiliates are listed or by any law or any securities commission
or other similar regulatory authority having jurisdiction over
such party or any of its affiliates, and if such disclosure is
required, the party making the disclosure shall use reasonable
efforts to give the others prior written notice and the
opportunity to review the form of disclosure and if such prior
notice is not possible, to give such notice immediately following
the making of such disclosure.

8.3 Expenses
--------

Except as otherwise provided herein, each of the Vendors,
Continental and the Purchaser shall be responsible for their own
respective expenses (including fees and expenses of legal
advisers, accountants and other professional advisers) incurred
in connection with the negotiation and settlement of this
Agreement and the completion of the transactions contemplated
hereby.

8.4 Conveyance Taxes
----------------
Any real property transfer or gains, sales, use, transfer,
value added, stock transfer, stamp, recording, registration, and
any similar Tax or fee that becomes payable in connection with
the transactions contemplated by this Agreement shall be paid by
the transferee, and the transferee shall file such applications
and documents as shall permit any such Tax to be assessed and
paid on or prior to the Closing Date in accordance with any
available pre-sale filing procedure. Each party hereto shall
execute and deliver all instruments and certificates necessary to
enable the other to comply with the foregoing.

8.5 Specific Performance
--------------------
The parties hereto agree that irreparable damage will occur
in the event that any provision of this Agreement is not
performed in accordance with its terms and that the parties
hereto agree that each other party shall be entitled to specific

- 64 -

performance of its terms or injunctive relief, as applicable, in
addition to any other remedy at law or equity.

8.6 Assignment
----------

No party may assign its rights, benefits or obligations
under this Agreement without the written consent of the others
except that the Purchaser may assign its rights, benefits and
obligations under this Agreement to an affiliate without such
consent as long as the Purchaser continues to remain liable for
all of its obligations under this Agreement.

8.7 Notices
-------

Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be given by
facsimile or other means of electronic communication or by hand-
delivery as hereinafter provided. Any such notice or other
communication, if sent by facsimile or other means of electronic
communication, shall be deemed to have been received on the date
of sending if sent during normal business hours on a Business
Day, and otherwise on the first Business Day following the date
of sending, or if delivered by hand shall be deemed to have been
received at the time it is delivered to the applicable address
noted below either to the individual designated below or to an
individual at such address having apparent authority to accept
deliveries on behalf of the addressee. Notice of change of
address or telecopier number shall also be governed by this
section. Notices and other communications shall be addressed as
follows:

(a) if to the Vendors and/or Continental, to:

180 Maiden Lane
New York, New York 10038
U.S.A.

Attention: William F. Gleason, Jr., Esq.
Telecopier No.: (212) 440-7982

- 65 -

with a copy to:

Blake, Cassels & Graydon
Box 25, 28th Floor
Commerce Court West
Toronto, Ontario, Canada
M5L 1A9

Attention: Shirley A. Brown, Esq.
Telecopier No.: (416) 863-2174

(b) if to the Purchaser, to:

Fairfax Financial Holdings Limited
95 Wellington Street West
P.O. Box 8, Suite 800
Toronto, Ontario, Canada
M5J 2N7

Attention: Eric P. Salsberg
Telecopier Number: (416) 367-4946

with a copy to:

Tory Tory DesLauriers & Binnington
Suite 3000, Aetna Tower, P.O. Box 270
Toronto-Dominion Centre
Toronto, Ontario, Canada
M5K 1N2

Attention: Bradley P. Martin, Esq.
Telecopier Number: (416) 865-7380

The failure to send or deliver a copy of a notice to the

Purchaser's Counsel, the Vendors' Counsel or Continental's
counsel, as the case may be, shall not invalidate any notice
given under this section.

8.8 Time of Essence
---------------
Time is of the essence of this Agreement.

8.9 Further Assurances
------------------

Each of the parties shall promptly do, make, execute,
deliver, or cause to be done, made, executed or delivered, all
such further acts, documents and things as any other party hereto

- 66 -

may reasonably require from time to time for the purpose of
giving effect to this Agreement and shall use reasonable efforts
and take all such steps as may be reasonably within its power to
implement to their full extent the provisions of this Agreement.

8.10 Counterparts
------------

This Agreement may be signed in counterparts and each such
counterpart shall constitute an original document and such
counterparts, taken together, shall constitute one and the same
instrument.

IN WITNESS WHEREOF the parties hereto have executed this

Agreement.

FIREMEN'S INSURANCE COMPANY OF
NEWARK, NEW JERSEY

By: /s/ J. HEATH FITZSIMMONS
-----------------------------------

J. HEATH FITZSIMMONS
-----------------------------------
Senior Vice President and Chief
Financial Officer

CONTINENTAL REINSURANCE CORPORATION

By: /s/ J. HEATH FITZSIMMONS
-----------------------------------

J. HEATH FITZSIMMONS
-----------------------------------
Senior Vice President and Chief
Financial Officer

CONTINENTAL REINSURANCE CORPORATION
INTERNATIONAL LIMITED

By: /s/ J. HEATH FITZSIMMONS
-----------------------------------

J. HEATH FITZSIMMONS
-----------------------------------
Senior Vice President and Chief
Financial Officer

- 67 -

THE CONTINENTAL CORPORATION

By: /s/ J. HEATH FITZSIMMONS
-----------------------------------

J. HEATH FITZSIMMONS
-----------------------------------
Senior Vice President and Chief
Financial Officer

FAIRFAX FINANCIAL HOLDINGS LIMITED

By: /s/ V. Prem Watsa
-----------------------------------
Chairman

- 68 -

THE CONTINENTAL INSURANCE COMPANY
OF CANADA

By: /s/ Byron G. Messier
-----------------------------------

-----------------------------------

THE DOMINION INSURANCE CORPORATION

By: /s/ Byron G. Messier
-----------------------------------

-----------------------------------

SCHEDULE 1.1
NON-COMPETITION AGREEMENT
THIS AGREEMENT is made as of the day of , 1994

BY: FIREMEN'S INSURANCE COMPANY
OF NEWARK, NEW JERSEY,
a corporation incorporated
under the laws of the State of New
Jersey

("Firemen's")

- and -

CONTINENTAL REINSURANCE CORPORATION,
a corporation incorporated under
the laws of
the State of California

("CRC")

- and -

CONTINENTAL REINSURANCE CORPORATION
INTERNATIONAL LIMITED,
a corporation incorporated under
the laws of Bermuda

("CRCIL")

- and -

THE CONTINENTAL CORPORATION, a
corporation incorporated under
the laws of the State of
New York, on behalf of itself and
its Subsidiaries (as hereinafter
defined), including without
limitation The Continental
Insurance Company ("CIC") and
Niagara Fire Insurance Company
("Niagara")

("Continental")

(collectively the "The Continental
Group")

- 2 -

- and -

FAIRFAX FINANCIAL HOLDINGS LIMITED,

(the "Purchaser")

- and -

THE CONTINENTAL INSURANCE COMPANY
OF CANADA, a corporation
incorporated under the laws of
Canada, and its Subsidiaries (as
hereinafter defined)

RECITALS:
Pursuant to an agreement (the "Purchase Agreement")
dated as of October 12, 1994 between the Purchaser and The
Continental Group, the Purchaser agreed to purchase and certain
members of The Continental Group agreed to sell all the issued
and outstanding shares of the Corporation;

The obligations of the Purchaser and The Continental
Group under the Purchase Agreement are subject to the condition
that the Purchaser, the Corporation and The Continental Group
execute and deliver this non-competition agreement;

The Continental Group acknowledge that this agreement
is necessary in order that the Purchaser receives the full
benefit of the goodwill of the Corporation's business and in
order to permit the Corporation to preserve that goodwill and,
accordingly, The Continental Group is willing to enter into this
agreement in order to ensure that the goodwill of the
Corporation's business is not impaired by action of The
Continental Group;

The Continental Group and the Purchaser acknowledge
that this agreement is an integral part of the transaction
contemplated by the Purchase Agreement under which The
Continental Group and the Purchaser are receiving significant
benefit and each such party is relying on the agreements and
acknowledgements given herein;

NOW THEREFORE in consideration of the foregoing and
other good and valuable consideration (the receipt and
sufficiency of which are hereby acknowledged), The Continental
Group, the Purchaser and the Corporation mutually agree:

1. Definitions
-----------
In this agreement,
"Corporation" means The Continental Insurance Company of
Canada and its Subsidiaries unless the context otherwise

requires;

- 3 -

"Person" means any individual, partnership, limited
partnership, joint venture, syndicate, sole proprietorship,

company or corporation with or without share capital,
unincorporated association, trust, trustee, executor,

administrator or other legal personal representative,
regulatory body or agency, government or governmental

agency, authority or entity however designated or
constituted;

"Subsidiaries" means subsidiaries within the meaning of the

Canada Business Corporations Act as the same may be amended
from time to time and any successor legislation thereto.

2. Non-Competition
---------------
The Continental Group shall not, and shall
not permit their Subsidiaries or any other Person not at arm's length
to them respectively over whom they have the necessary control
(collectively, their "Affiliates"), to, for a period of five (5)
years from the date hereof, directly or indirectly, in any manner
whatsoever including, without limitation, either individually, in
partnership, jointly or in conjunction with any other Person, or
as employee, principal, agent, director or shareholder:

(i) be engaged in any undertaking;

(ii) have any financial or other interest in or in
respect of the business of any Person which
carries on a business; or

(iii) advise, lend money to, guarantee the
debts or obligations of or permit the
use of The Continental Group's names or
any parts thereof by any Person which
carries on a business;

in Canada which is the same as or substantially similar to or
which competes with or would compete with the business of the
writing of property and casualty insurance currently carried on
by the Corporation.

The Corporation shall not, and shall not permit its
Subsidiaries or any other Person not at arm's length to them
respectively over whom they have the necessary control
(collectively, their "Affiliates"), and the Purchaser shall not
permit the Corporation, to, for a period of five (5) years from

- 4 -

the date hereof, directly or indirectly, in any manner whatsoever
including, without limitation, either individually, in
partnership, jointly or in conjunction with any other Person, or
as employee, principal, agent, director or shareholder:

(i) be engaged in any undertaking;

(ii) have any financial or other interest in or in
respect of the business of any Person which
carries on a business; or

(iii) advise, lend money to, guarantee the
debts or obligations of any Person which
carries on a business;

in Canada which is the same as or substantially similar to or
which competes with or would compete with the business of the
writing of hull insurance, protection and indemnity insurance,
ocean cargo insurance, primary and excess marine liabilities
insurance and aviation insurance currently managed by Marine
Office of America Corporation and Associated Aviation
Underwriters.

3. Exceptions
----------
Notwithstanding section 2, nothing herein shall
prevent:

(i) The Continental Group or their Affiliates from
carrying on or managing, or competing with the
Corporation in respect of, the types of insurance
business currently managed by Marine Office of
America Corporation and Associated Aviation
Underwriters, which types of insurance business
are more specifically described in Schedule A
attached hereto;

(ii) The Continental Group or their Affiliates from
competing with the Corporation in respect of
specialty lines for which the current arrangement
whereby such specialty lines are done mutually by
the Corporation in Canada and by affiliates of
Continental in the United States has been
terminated by the Corporation or by affiliates of
Continental;

(iii) The Continental Group or their Affiliates
from owning, in aggregate as to The
Continental Group and their Affiliates, not
more than 10% of the issued shares of any
corporation, the shares of which are listed
on a recognized stock exchange or quoted on a

- 5 -

recognized securities market or quotation
system;

(iv) the Corporation or its Affiliates from owning, in
aggregate as to the Corporation and its
Affiliates, not more than 10% of the issued shares
of any corporation, the shares of which are listed
on a recognized stock exchange or quoted on a
recognized securities market or quotation system.

4. Employees
---------
The Continental Group shall not, and shall not permit
their Affiliates to, for a period of two (2) years from the date
hereof, directly or indirectly, hire any individual who is at
such time an employee of the Corporation or induce or attempt to
induce any individual who is at such time an employee of the
Corporation to leave such individual's employment.

5. No Impairment
-------------
For a period of five (5) years from the date hereof,
The Continental Group and the Corporation shall not do or cause
or permit to be done any acts which would reasonably be expected
to impair in a material fashion the relationship between each of
them respectively and any of their respective suppliers,
customers, employees or other Persons.

6. Continental Group's Acknowledgements and Agreements
----------------------------------------------------

The Continental Group acknowledges and agrees:

(i) that the covenants contained herein are
intended to ensure that the Purchaser
receives the full benefit of the goodwill of
the Corporation's business; and

(ii) that the breach by it of any section of this
agreement will cause serious harm to the
Purchaser, the Corporation and the
Corporation's business.

The Continental Group agrees that the Purchaser is
relying on the acknowledgements and agreements contained herein
in connection with its purchase of the Corporation.

CIC and Niagara, each of which carry on a branch
business in Canada, acknowledge and agree (for good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged) that they are each bound by all of the agreements
of The Continental Group under this agreement.

- 6 -

7. Invalidity of Provisions
------------------------
Each of the provisions contained in this agreement is
distinct and severable and a declaration of invalidity or
unenforceability of any such provision or part thereof by a court
of competent jurisdiction shall not affect the validity or
enforceability of any other provision hereof.

8. Remedies
--------
The Continental Group, the Purchaser and the
Corporation acknowledge that a breach or threatened breach by any
party hereto of any provision of this agreement will result in
the aggrieved party suffering irreparable harm which cannot be
calculated or fully or adequately compensated by recovery of
damages alone. Accordingly, The Continental Group, the Purchaser
and the Corporation agree that, in addition to any other relief
to which the aggrieved party may become entitled, the aggrieved
party shall be entitled to interim and permanent injunctive
relief, specific performance and other equitable remedies.

9. Amendment
---------
No modification, amendment or waiver of any of the
provisions of this agreement shall be effective unless made with
the prior written consent of the Purchaser and The Continental
Group.

10. Enurement
---------
This agreement shall enure to the benefit of the
Purchaser and the Corporation and The Continental Group and their
successors and assigns, respectively.

11. Governing Law
-------------
This agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario and the laws
of Canada applicable therein.

IN WITNESS WHEREOF each party herein has affixed its
corporate seal attested to by its proper officers.

FIREMEN'S INSURANCE COMPANY OF
NEWARK, NEW JERSEY