EMPLOYMENT AGREEMENT

EMPLOYMENT AGREEMENT

     This Employment Agreement (“Agreement”) is executed September 14, 2005 and effective as of June 30, 2005, by and between Odyssey Re Holdings Corp., a Delaware Corporation (“Employer”), and Andrew Barnard (“Executive”).

WITNESSETH

     WHEREAS, Executive is the Chief Executive Officer of the group of reinsurance and insurance companies constituted by Odyssey America Reinsurance Corporation and its subsidiaries; and

     WHEREAS, Executive is a party to an Employment Agreement dated July 19, 1996 by and between Fairfax Financial Holdings Limited and Executive as amended and restated on April 1, 2001 by and between Employer and Executive (the “Prior Agreement”); and

     WHEREAS, it is desirable that the Prior Agreement be terminated by mutual agreement of the parties as of June 30, 2005 and that this Agreement be entered into between the parties so as to contain the terms and conditions set forth below and to govern the employment of Executive in the capacity described in the first recital above;

     NOW THEREFORE, IT IS AGREED AS FOLLOWS:

ARTICLE I

EMPLOYMENT AND DUTIES; COMPENSATION

Section 1: Duties

     During the term of this Agreement, Executive shall be employed by and shall serve Employer in the capacity of President and Chief Executive Officer, and shall be employed by and/or shall serve such subsidiaries of Employer in such capacities as Employer shall from time to time designate and as are consistent with Executive’s position as President and Chief Executive Officer of Employer. Executive shall devote substantially all of his business time to the business and affairs of Employer and shall use his best efforts, skills, and energy to promote Employer’s interests.

Section 2: Term of Employment

     The term of employment of Executive by Employer shall commence as of June 30, 2005 (the “Commencement Date”) and shall continue until June 30, 2011 (the “Term”). At any time prior to the expiration of the Term, Employer and Executive may, by mutual written agreement, extend Executive’s employment under the terms of this Agreement for such additional periods as they may agree.

Section 3: Salary, Benefits and Additional Compensation

     As compensation and consideration for the performance by Executive of his duties and responsibilities pursuant to this Agreement, Employer agrees to pay, and/or to cause one or more of its subsidiaries to pay Executive, and Executive agrees to accept the following amounts and benefits (all Dollar amounts referred to herein are in United States Dollars):

(a)  Base Salary:

     An Annual Base Salary of One Million Dollars ($1,000,000), pro rated for any calendar year within the Term for which employment does not extend for the entire calendar year. The Annual Base Salary shall be paid to Executive in equal bi-weekly installments.

(b)  Bonus Pool:

     Executive shall participate to the extent of the percentage determined by the Board of Directors of Employer in the bonus pool (the “Bonus Pool”) created with respect to each accident underwriting year, consisting of that portion of the underwriting profit for such year designated by the Board of Directors of Employer.

(c)  Loan Forgiveness:

     Employer hereby waives, effective January 1, 2006, repayment by Executive of the then unpaid principal balance of the $1 million ($1,000,000.) promissory note dated June 19, 2001 payable by Executive to Employer. Employer shall mark the original promissory note as

cancelled and shall return said note to Executive no later than ten (10) business days after January 1, 2006. If necessary, Employer shall also deliver to Executive at such time unlegended shares of common stock of Employer pledged by Executive to Employer to secure repayment of the Promissory Note.

(d)  Restricted Stock Grant:

     (i) Executive shall receive as of the date hereof an award of that number of restricted shares (the “Restricted Shares”) of Employer, consisting of its Common Stock, par value $.01 per share, which when multiplied by the simple average of the closing prices of such common stock on the New York Stock Exchange on the twenty (20) business days next preceding the date of execution hereof, yields the aggregate sum of Five Million Dollars ($5,000,000.). Subject to subparagraph (ii) below, the foregoing grant shall be subject to the terms of Employer’s Restricted Share Plan. Employer shall become vested in the shares granted pursuant to the foregoing sentence, and all restrictions shall lapse, on June 30, 2006 with respect to twenty percent (20%) of the Restricted Shares and on each anniversary thereafter with respect to an additional twenty percent (20%) of the Restricted Shares such that on June 30, 2010 all restriction on the Restricted Shares shall lapse.

     (ii) The Award Document, a copy of which is attached hereto as Exhibit A, shall be substantially similar in form to the Award Document previously issued to Executive upon the award to him by Employer of Restricted Stock in 2004; provided, however, that the Award Document shall provide that (i) upon Employee’s Termination of Employment as a result of

death, disability, reaching retirement age, Change in Control (as defined in Article II, Section 6 below) or termination by Employer for reasons other than For Cause (as defined in Article II, Section 3 below) the restricted period applicable to any Restricted Shares granted to Executive shall terminate and Executive shall become fully vested in the Award; and (2) if the stock of Employer at any time during the restricted period ceases to be publicly traded, then Employee shall have the option to receive a cash payment, payable by Employer within ten (10) days following written notice from Executive no later than thirty (30) days following the delisting of Employer stock from the exchange, equal to the number of shares of Restricted Stock of Employer held by Executive as of the delisting of the stock times the greater of (a) the share price of Employer stock as of the close of business forty-five (45) trading days prior to its delisting and (b) the average share price of Employer stock (based on end of business day values) over the forty-five (45) trading day period prior to delisting. The foregoing subparagraph (2) shall not apply if the stock of Employer ceases to be publicly traded as a result of Employer having made a general assignment for the benefit of creditors, been adjudicated as bankrupt or insolvent, or having filed a voluntary petition in bankruptcy, a petition or answer seeking an arrangement with creditors or to take advantage of any insolvency law or having filed an answer admitting the material allegations of a petition filed against Employer in bankruptcy.

     (iii) Employer will take whatever action necessary, including, without limitation, amendment of the Odyssey Re Holdings Corp. Restricted Share Plan, to ensure that the issuance

of Restricted Shares by Company to Executive does not exceed the maximum number of shares available for such purpose.

(e)  Cash Payment:

     A cash payment of Six Million Dollars ($6,000,000.) payable to Executive contemporaneous with the signing hereof. The payment by Employer of the foregoing amount to Executive shall be a condition precedent to the effectiveness of this Agreement.

(f)  Previously Awarded Employer Restricted Stock:

     Employer previously awarded Executive 62,432 Restricted Shares of Employer stock pursuant to an Award Document dated March 8, 2002. Pursuant to the terms of said Award Document, Executive will become vested in all 62,432 Restricted Shares on September 1, 2006. Employer and Executive agree that the restricted period applicable to such shares shall be extended to June 30, 2010 at which time Executive shall become fully vested in the 62,432 Restricted Shares. The foregoing shall be evidenced by a new Award Document to be issued to the Executive by Employer, the terms and conditions of which shall be identical to the March 8, 2002 Award Document except for the change in the restricted period and except that the Award Document shall provide that (i) upon Employee’s Termination of Employment as a result of death, disability, reaching retirement age, Change in Control (as defined in Article II, Section 6 below) or termination by Employer for reasons other than For Cause (as defined as defined in Article II,

Section 3 below) the restricted period applicable to any Restricted Shares granted to Executive shall terminate and Executive shall become fully vested in the Award; and (ii) if the stock of Employer at any time during the restricted period ceases to be publicly traded, then Employee shall have the option to receive a cash payment, payable by Employer within ten (10) days following written notice from Executive no later than thirty (30) days following the delisting of Employer stock from the exchange, equal to the number of shares of Restricted Shares then held by Executive, i.e., 62,432, times the greater of (a) the share price of Employer stock as of the close of business forty-five (45) trading days prior to its delisting and (b) the average share price of Employer stock (based on end of business day values) over the forty-five (45) trading day period prior to delisting. The foregoing subparagraph (ii) shall not apply if the stock of Employer ceases to be publicly traded as a result of Employer having made a general assignment for the benefit of creditors, been adjudicated as bankrupt or insolvent, or having filed a voluntary petition in bankruptcy, a petition or answer seeking an arrangement with creditors or to take advantage of any insolvency law or having filed an answer admitting the material allegations of a petition filed against Employer in bankruptcy.

(g) Previously Awarded Fairfax Restricted Stock:

     Fairfax Financial Holdings Limited (“Fairfax”) previously awarded Executive 6,500 Restricted Shares of Fairfax pursuant to a stock bonus plan. Pursuant to the terms of said plan, Executive will become vested in all 6,500 Fairfax Restricted Shares on September 1, 2006. Fairfax and

Employer agree that the Restricted Period applicable to such shares shall be extended to June 30, 2010 at which time Executive shall become fully vested in the Restricted Shares. Fairfax and Employer agree that notwithstanding anything to the contrary contained in the stock bonus plan or any other document reflecting the grant of Fairfax Restricted Shares, (i) upon Employee’s Termination of Employment as a result of death, disability, reaching retirement age, Change in Control (as defined in Article II, Section 6 below) or for reasons other than For Cause (as defined as defined in Article II, Section 3 below) the restricted period applicable to the Fairfax Restricted Shares granted to Executive shall terminate and Executive shall become fully vested in the Fairfax Restricted Shares; and (ii) if the stock of Fairfax at any time during the restricted period ceases to be publicly traded, then Employee shall have the option to receive a cash payment, payable by Employer within ten (10) days following written notice from Executive no later than thirty (30) days following the delisting of Fairfax stock from the exchange, equal to the number of shares of Restricted Stock of Fairfax held by Executive as of the delisting of the stock, i.e., 6,500 times the greater of (a) the share price of Fairfax stock as of the close of business forty-five (45) trading days prior to its delisting and (b) the average share price of Fairfax stock (based on end of business day values) over the forty-five (45) trading day period prior to delisting. The foregoing subparagraph (ii) shall not apply if the stock of Employer ceases to be publicly traded as a result of Employer having made a general assignment for the benefit of creditors, been adjudicated as bankrupt or insolvent, or having filed a voluntary petition in bankruptcy, a petition or answer seeking an arrangement with creditors or to take advantage of any insolvency law or having filed an answer admitting the material allegations of a petition filed against Employer in bankruptcy.

(h)  Additional Benefits:

     During the term of this Agreement, Executive shall be entitled to the following fringe benefits:

     (i) Executive Benefits. Executive shall be eligible to participate in such benefits and perquisites as are now generally available or later made generally available to executive officers of Employer or its subsidiaries.

     (ii) Vacation. Executive shall be entitled to vacation time consistent with his position as President and Chief Executive Officer of Employer.

     (iii) Life Insurance. Executive shall be eligible to participate in any life insurance program available to executive officers of Employer or its subsidiaries on terms at least as favorable as those generally made available to such executive officers.

     (iv) Disability Insurance. Executive shall be eligible to participate in any disability insurance program available to executive officers of Employer or its subsidiaries on terms at least as favorable as those generally made available to such executive officers.

     (v) Automobile. Executive shall be provided with the exclusive use of an automobile appropriate to his position as President and Chief Executive Officer of Employer (with all operating costs, such as insurance, maintenance and fuel, paid for by Employer).

     (vi) Membership Fees. Employer shall pay Executive’s membership and usage fees of the St. Andrews Golf Club (or of a comparable country club of Executive’s choosing).

     (vii) Reimbursement for Expenses: Employer shall reimburse Executive for reasonable and properly documented out-of-pocket business and/or entertainment expenses incurred by Executive in connection with his duties under this Agreement.

     (viii) Reimbursement of Attorney’s Fees. Employer shall pay all reasonable attorney’s fees and disbursements incurred by Executive in drafting and negotiating this Agreement; payment shall be made either to Executive upon submission of paid invoices for such legal work or directly to the Attorney chosen by Executive.

     (ix) Tax Reimbursement. Employer shall reimburse Executive for all federal, state and local income taxes incurred by Executive as a result of the inclusion in income of any of the benefits provided by Employer to Executive pursuant to this paragraph (h)(v) and (h)(vi). The determination of such taxes shall be based upon all applicable state, local and federal taxes (computed at the highest marginal income tax rate) including any taxes payable pursuant to Section 4999 of the Internal Revenue Code of 1986, as amended. Employer shall remit to

Executive the amount of such taxes no later than April 15 ^th of the year following inclusion in income of any of the benefits for which tax reimbursement is provided herein.

ARTICLE II

TERMINATION OF EMPLOYMENT

Section 1: Termination Due to Death

     The employment of Executive under this Agreement shall terminate upon Executive’s death. In the event of Executive’s death during Executive’s employment hereunder, the estate or other legal representative of Executive shall be entitled to receive the following:

     (a) Base Salary. Employer shall pay to Executive’s estate or other legal representative of Executive, his Base Salary for the period ending three months following the month in which Executive dies. Such an amount and all other amounts payable under this Section 1 of Article II shall be paid by Employer in a lump sum within thirty (30) days of the date of death, provided however, that the amounts due with respect to the Bonus Pool shall be paid when such amounts would ordinarily be paid.

     (b) Payment from Bonus Pool. Employer shall pay to the estate or other legal representative of Executive, (i) all amounts accrued in the Bonus Pool by Executive with respect

to years preceding the year in which the death of Executive occurs and (ii) the pro-rated bonus payable with respect to the year in which the death of Executive occurs.

     (c) Restricted Stock. Upon the death of Executive, the restricted period with re