Andrew Barnard
 
                              EMPLOYMENT AGREEMENT
 
     This amended and restated employment agreement ("Agreement") is made and
entered into as of this date by and between Odyssey Re Holdings Corp., a
Delaware Corporation ("Employer"), and Andrew Barnard, an individual residing at
296 Winding Road South, Ardsley, New York 10502 ("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 (the "Prior
Agreement"); and
 
     WHEREAS, it is desirable that the Prior Agreement be amended, updated and
restated 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 on the date
hereof (the "Commencement Date") and shall continue until August 31, 2006 (the
"Initial Term"). At any time prior to the expiration of the Initial 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 BONUS 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 Initial Term for which employment does not extend
for the entire calendar year. The Annual Base Salary shall be paid to Executive
in equal monthly installments.
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(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)  Supplemental Bonus Plan:
 
     On August 31, 2006, if Executive then remains an employee of Employer,
Executive shall receive a Supplemental Cash Bonus Payment equal to Six Million
Dollars ($6,000,000).
 
(d)  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 fees of
the St. Andrews Golf Club (or of a comparable country club of Executive's
choosing).
 
     (vii) Pension Plan Service.  Executive may, to the extent permitted by law,
direct that any payments hereunder be redirected into payments for pension
service reinstatement.
 
     (viii) 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.
 
     (ix)  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 directly to the Attorney
chosen by Executive.
 
                                   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:
 
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<PAGE>   3
 
     (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
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)   Supplemental Bonus Plan.  Employer shall pay to the estate or other
legal representative of Executive a pro-rata portion of the Supplemental Cash
Bonus Payment described in Subsection 3(c) of Article I. The pro-rata portion
shall be a fraction, the numerator of which is the aggregate number of whole or
partial months Executive was employed under the Prior Agreement and this
Agreement and the denominator of which is 120.
 
SECTION 2:  TERMINATION BY REASON OF DISABILITY
 
     If, during the term of this Agreement, Executive, in the judgment of the
Board of Directors of Employer, has failed to perform his duties under this
Agreement on account of illness or physical or mental incapacity, and such
illness or incapacity continues for a period of more than five (5) consecutive
months, Employer shall have the right to commence process to terminate
Executive's employment under this Agreement on account of disability. Employer
shall send written notice to Executive of (i) its intention to commence such
process, (ii) a medical doctor chosen by Employer to make the determination
referred to in the next sentence, and (iii) Executive's right within ten (10)
days of receipt of the notice to choose a second medical doctor to make such
determination. The purpose of the process shall be to determine whether
Executive is unable on account of illness or physical or mental incapacity to
perform his duties under this Agreement. Executive shall fully cooperate in this
process, including by making himself available for and consenting to all
examinations and tests required by any doctor making the aforesaid
determination. The aforesaid determination shall be made by the medical doctor
chosen by Executive, if he exercises his foregoing right to choose a doctor, and
the medical doctor chosen by Employer. If the determination is being made by two
medical doctors and they cannot agree within fifteen (15) days of their both
being chosen, they shall as soon as reasonably possible select a third medical
doctor to make the determination, who shall make the determination within
fifteen (15) days of being chosen. The determination made by the foregoing
process shall be conclusive. In the event that Executive's employment is
terminated on account of disability, Executive's rights to compensation and
benefits shall be as follows:
 
     (a)   Base Salary.  Executive shall be paid his Base Salary, less any
benefits paid to him under disability insurance policies maintained by Employer,
until his termination on account of disability.
 
     (b)   Payment from Bonus Pool.  Employer shall pay to Executive, when the
same would ordinarily be paid, (i) all amounts accrued in the Bonus Pool by
Executive with respect to years preceding the year in which termination due to
disability of Executive occurs and (ii) the pro-rated bonus payable with respect
to the year in which termination due to the disability of Executive occurs.
 
     (c)   Supplemental Bonus Plan.  Employer shall pay to Executive, within
thirty (30) days of his termination on account of disability, a pro-rata portion
of the Supplemental Cash Bonus Payment described in Subsection 3(c) of Article
I. The pro-rata portion shall be a fraction, the numerator of which is the
aggregate number of whole or partial months Executive was employed under the
Prior Agreement and this Agreement and the denominator of which is 120.
 
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SECTION 3:  TERMINATION FOR CAUSE
 
     "Termination for Cause" shall mean termination by Employer of Executive's
employment by Employer by reason of:
 
     (i) a willful failure by Executive in bad faith to substantially perform
his duties with Employer resulting in material harm to Employer; or
 
     (ii) Executive's conviction of a felony involving moral turpitude.
 
     Executive must be given written notice that Employer intends to terminate
his employment for Cause. Such written notice shall specify the particular act
or failure to act constituting the basis of the intention to so terminate
employment. In the case of a termination for Cause under clause (i) above,
Executive shall be given the opportunity, within twenty (20) days of the receipt
of such notice, to meet with the Board of Directors of Employer (the "Board of
Directors") to refute or explain such act or failure to act. If such act or
failure to act is found in violation of Clause (i), Executive shall be given ten
(10) days after such meeting to correct such act or failure to act, and upon
failure of Executive within such ten (10) day period to correct such act or
failure to act, Executive's employment by Employer shall be terminated. In the
case of Termination for Cause under (ii) above, Executive's employment shall be
terminated as of the date such notice is given.
 
     In the event the Board of Directors shall terminate Executive's employment
for Cause, Executive shall be entitled only to the following:
 
     (a)   Base Salary.  Within thirty (30) days of the date of Executive's
Termination for Cause, he shall be paid his Base Salary through the date of
termination of employment.
 
     (b)   Payment from Bonus Pool.  Executive shall forfeit all rights to
payments from the Bonus Pool.
 
     (c)   Supplemental Bonus Plan.  Executive shall forfeit all rights to
payments from the Supplemental Bonus Plan.
 
SECTION 4:  CONSTRUCTIVE TERMINATION AND TERMINATION BY EMPLOYER OTHER THAN FOR
CAUSE
 
     Notwithstanding anything in this Agreement to the contrary, Executive's
employment hereunder may be terminated by Employer without Cause and Executive
may terminate his employment hereunder in the case of a Constructive Termination
as defined in this section, provided however, that in the event that Executive's
employment is so terminated, Executive shall be entitled to receive:
 
     (a)   Base Salary.  Within thirty (30) days of his termination of
employment, Employer shall pay to Executive a lump sum payment equal to:
 
          (i) his Base Salary for the month in which termination occurs, and
 
          (ii) Forty Three Thousand Seven Hundred and Fifty Dollars ($43,750)
     times the number of months from the month immediately following the month
     in which termination occurs to the end of the Initial Term, or any
     extension thereto, inclusive.
 
     (b)   Payment from Bonus Pool. Employer shall pay to Executive, when the
same would ordinarily be paid, (i) all amounts accrued in the Bonus Pool by
Executive with respect to years preceding the year in which termination of
employment of Executive occurs and (ii) the pro-rated bonus payable with respect
to the year in which termination of employment of Executive occurs.
 
     (c)   Supplemental Bonus Plan. Employer shall pay to Executive, within
thirty (30) days of such termination, a pro-rata portion of the Supplemental
Cash Bonus Payment described in Subsection 3(c) of Article I. The pro-rata
portion shall be a fraction, the numerator of which is the aggregate number of
whole or partial months Executive was employed under the Prior Agreement and
this Agreement and the denominator of which is 120.
 
     For purposes of this Agreement "Constructive Termination" shall mean the
termination of employment by Executive following written notice to Employer for
any of the following reasons:
 
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<PAGE>   5
 
     (i) without Executive's express written consent, the loss of Executive's
position described in Article I, Section 1 or a material alteration in
Executive's position and responsibility as so described;
 
     (ii) without Executive's express written consent, a breach by Employer of
any of its material obligations set forth in this Agreement which remains
uncured after ten (10) days following written notice to Employer of such breach;
 
     (iii) any failure by a successor to Employer to assume Employer's
obligations under this Agreement, either expressly or by operation of law, or,
if Employer sells all or substantially all of its assets, any failure by the
purchaser to assume Employer's obligations under this Agreement; or
 
     (iv) without Executive's express written consent, relocation of Executive's
work situs to a location that is not in the New York Metropolitan area.
 
     Executive must give written notice to Employer if he intends to terminate
his employment because of the occurrence of one of the circumstances
constituting Constructive Termination under this Section 4. Such written notice
shall specify the particular act or failure to act constituting the basis of
Executive's claim that Constructive Termination has occurred. Employer shall be
given the opportunity, within twenty (20) days of the receipt of such notice, to
fully cure any such act or failure to act.
 
SECTION 5:  VOLUNTARY TERMINATION
 
     Executive may terminate his employment under this Agreement voluntarily by
giving two (2) years written notice to Employer of his intention to voluntarily
terminate his employment with Employer. "Voluntary Termination" shall mean
termination by Executive of Executive's employment by Employer other than (i)
Constructive Termination as described in Section 4, (ii) "Termination Upon a
Change in Control," as described in Section 6, or (iii) termination by reason of
Executive's death or disability as described in Sections 1 and 2.
 
     In the event that Executive's employment is voluntarily terminated by
Executive, Executive's rights to compensation and benefits shall be identical to
those to which he would be entitled had he been Terminated for Cause, except
that Employer shall pay to Executive, when the same would ordinarily be paid,
all amounts accrued in the Bonus Pool by Executive with respect to years
preceding the year in which the Voluntary Termination of Executive occurs.
 
SECTION 6:  TERMINATION UPON A CHANGE OF CONTROL
 
     "Termination Upon a Change in Control" shall mean (i) a termination by
Executive, by written notice given to Employer, of Executive's employment with
Employer following a "Change in Control", or (ii) the termination of Executive's
employment by Employer or the successor company, in either case within one year
following a Change in Control.
 
     In the event that Executive's employment is Terminated Upon a Change in
Control, Executive's rights to compensation and benefits shall be identical to
those to which he would be entitled had he been terminated by Employer other
than for Cause pursuant to Section 4.
 
     "Change in Control" shall mean (i) the time that Employer or its ultimate
parent, Fairfax Financial Holdings Limited ("Fairfax"), first determines that
any person and all other persons who constitute a group (within the meaning of
Section 13(d) (3) of the Securities Exchange Act of 1934 ("Exchange Act")) have,
at a time when no other person or group directly or indirectly beneficially owns
securities carrying more than 50% of the votes attached to all outstanding
securities of Employer or Fairfax, acquired direct or indirect beneficial
ownership (within the meaning of Rule 13d-3 under the Exchange Act) of
outstanding securities of Employer or Fairfax carrying more than twenty percent
(20%) of the votes attached to all outstanding securities of Employer or
Fairfax, unless a majority of the "Continuing Directors" approves the
acquisition not later than ten (10) business days after Employer or Fairfax
makes that determination, or (ii) the first day on which a majority of the
members of Employer's or Fairfax's Board of Directors are not "Continuing
Directors", or (iii) the time that the Controlling Shareholder of either
Employer or Fairfax no longer is the
 
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<PAGE>   6
 
controlling shareholder, or (iv) the arm's length sale of a majority interest in
Employer by Fairfax. For purposes of (iii) in the preceding sentence, the
"Controlling Shareholder" of Employer is Fairfax and/or its subsidiaries, and
the "Controlling Shareholder" of Fairfax is one or more of V. Prem Watsa, his
family, corporations controlled by, or trusts whose beneficiaries are, V. Prem
Watsa or his family, the estate of V. Prem Watsa (including the executors and
administrators), and any persons to whom shares are distributed or sold upon the
death or by the estate of V. Prem Watsa or his family.
 
     "Continuing Directors" shall mean, as of any date of determination, any
member of the Board of Directors of Employer or Fairfax who (i) was a member of
that Board of Directors on the date of this Agreement, (ii) has been a member of
that Board of Directors for the two years immediately preceding such date of
determination, or (iii) was nominated for election or elected to the Board of
Directors by the Controlling Shareholder or with the affirmative vote of all, or
one less that all, the Continuing Directors who were members of the Board at the
time of such nomination or election.
 
                                  ARTICLE III
 
                            MISCELLANEOUS PROVISIONS
 
SECTION 1:  PAYMENT OBLIGATIONS
 
     The obligation of Employer to pay Executive the compensation and to make
the arrangements provided herein shall be unconditional, and Executive shall
have no obligation whatsoever to mitigate damages hereunder. If litigation after
a Change in Control shall be brought to enforce or interpret any provision
contained herein, Employer, to the extent permitted by applicable law and
Employer's Articles of Incorporation and Bylaws, hereby indemnifies Executive
for Executive's reasonable attorney's fees and disbursements incurred in such
litigation.
 
SECTION 2:  CONFIDENTIALITY
 
     Executive agrees that all confidential and proprietary information relating
to the business of Employer shall be kept and treated as confidential both
during and after the term of this Agreement, except as may be permitted in
writing by Employer's Board of Directors or as such information is within the
public domain or comes within the public domain without any breach of this
Agreement.
 
SECTION 3:  WITHHOLDINGS
 
     All compensation and benefits to Executive hereunder shall be reduced by
all federal, state, local and other withholdings and similar taxes and payments
required by applicable law.
 
SECTION 4:  INDEMNIFICATION
 
     In addition to any rights to indemnification to which Executive is entitled
under Employer's Articles of Incorporation and Bylaws, Employer shall indemnify
Executive at all times during and after the term of this Agreement to the
maximum extent permitted under the Delaware General Corporation Law and any
successor provision thereof and any other applicable corporate law, and shall
pay Executive's expenses in defending any civil or criminal action, suit or
proceeding in advance of the final disposition of such action, suit or
proceeding, to the maximum extent permitted under such applicable corporate
laws.
 
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SECTION 5:  NOTICES
 
     Any notices permitted or required under this Agreement shall be deemed
given upon the date of personal delivery, addressed to Employer at:
 
Odyssey Re Holdings Corp.
140 Broadway, 39th Floor
New York, New York 10005
addressed to Executive at:
Mr. Andrew Barnard
296 Winding Road South
Ardsley, New York 10502
 
or at any other address as either party may, from time to time, designate by
notice given in compliance with this Section.
 
SECTION 6:  LAW GOVERNING
 
     This Agreement shall be governed by and construed in accordance with the
substantive laws of the State of New York.
 
SECTION 7:  TITLES AND CAPTIONS
 
     All section titles or captions contained in this Agreement are for
convenience only and shall not be deemed part of the context nor affect the
interpretation of this Agreement.
 
SECTION 8:  ENTIRE AGREEMENT
 
     This Agreement contains the entire understanding between the parties, and
supersedes any prior understandings and agreements between Executive and
Employer and/or any affiliate of Employer, including the Prior Agreement,
respecting the subject matter of this Agreement.
 
SECTION 9:  AGREEMENT BINDING
 
     This Agreement shall be binding upon the heirs, executors, administrators,
successors and assigns of the parties hereto.
 
SECTION 10:  ATTORNEY FEES
 
     In the event an arbitration, suit or action is brought by Executive under
this Agreement to enforce any of its terms, or in any appeal therefrom, it is
agreed that Executive shall be entitled to reasonable attorneys fees to be fixed
by the arbitrator, trial court and/or appellate court.
 
SECTION 11:  COMPUTATION OF TIME
 
     In computing any period of time pursuant to this Agreement, the day of the
act, event or default from which the designated period of time begins to run
shall be included, unless it is a Saturday, Sunday or a legal holiday, in which
event the period shall begin to run on the next day which is not a Saturday,
Sunday or legal holiday, and if the period ends on a Saturday, Sunday or legal
holiday, the period shall run until the end of the next day thereafter which is
not a Saturday, Sunday or legal holiday.
 
SECTION 12:  PRONOUNS AND PLURALS
 
     All pronouns and any variations thereof shall be deemed to refer to the
masculine, feminine, neuter, singular or plural as the identity of the person or
persons may require.
 
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SECTION 13:  ARBITRATION
 
     If at any time during the term of this Agreement any dispute, difference,
or disagreement shall arise upon or in respect of this Agreement, and the
meaning and construction hereof, every such dispute, difference, and
disagreement shall be referred to a single arbiter agreed upon by the parties,
or if no single arbiter can be agreed upon, an arbiter or arbiters shall be
selected in accordance with the rules of the American Arbitration Association
and such dispute, difference, or disagreement shall be settled by arbitration in
accordance with the then prevailing commercial rules of the American Arbitration
Association, which settlement shall be final and conclusive, and judgment upon
the award rendered by the arbiter may be entered in any court having
jurisdiction thereof.
 
SECTION 14:  PRESUMPTION
 
     This Agreement or any section thereof shall not be construed against any
party due to the fact that said Agreement or any section thereof was drafted by
said party.
 
SECTION 15:  FURTHER ACTION
 
     The parties hereto shall execute and deliver all documents, provide all
information and take or forbear from all such action as may be necessary or
appropriate to achieve the purposes of this Agreement.
 
SECTION 16:  PARTIES IN INTEREST
 
     Nothing herein shall be construed to be to the benefit of any third party,
nor is it intended that any provision shall be for the benefit of any third
party.
 
SECTION 17:  SAVINGS CLAUSE
 
     If any provision of this Agreement, or the application of such provision to
any person or circumstance, shall be held invalid, the remainder of this
Agreement, or the application of such provision to persons or circumstances
other than those as to which it is held invalid, shall not be affected thereby.
 
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SECTION 18:  FAILURE TO ENFORCE AND WAIVER
 
     The failure to insist upon strict compliance with any of the terms,
covenants or conditions of this Agreement shall not be deemed a waiver of such
terms, covenants or conditions, and the waiver or relinquishment or any right or
power under this Agreement at any one or more times shall not be deemed a waiver
or relinquishment of such right or power at any other time or times.
 
Dated as of April 1, 2001.
 
ODYSSEY RE HOLDINGS CORP.
 
By: /s/ V. Prem Watsa
 
    ----------------------------------------
    V. Prem Watsa, Chairman
 
/s/ Andrew Barnard
    ----------------------------------------
    Andrew Barnard