The insurance and investment firm said the loss amounted to 69 cents per share for the quarter ended March 31 compared with a loss of $12.42 per diluted share in the first quarter of 2011.
Revenue was 1.8 billion versus 1.81 billion year-over-year.
The average analyst estimate had been for a loss of $3.10 per share and revenue of $1.56 billion for the first three months of 2012, according to Thomon Reuters.
"We had a much improved underwriting result on increased premiums, but our defensive investment position through our hedging strategy resulted in a small unrealized investment loss as the markets moved higher in the first quarter," Fairfax chairman and chief executive Prem Watsa said in a statement.
"We continue to maintain our equity hedges as we remain very concerned about the economic outlook over the next few years."
During the quarter, Fairfax reported a $40.9 million loss in the quarter on its investments compared with a $101.5 million loss on investments a year ago.
Fairfax's efforts to hedge against volatile equity markets protect the company against market slumps, which can cause a huge hit to the bottom line. However, when markets improve, hedging can reduce gains from rising stocks.
The company recently doubled its stake in Research In Motion (TSX:RIM) after the BlackBerry maker announced a new chief executive and revamped board of directors. Watsa also took a seat on its board.
Fairfax, through its subsidiaries, is involved in property and casualty insurance and reinsurance and investment management.
Shares in the company, which reported its results after the close of markets, were down $1.49 at $403.50 on the Toronto Stock Exchange on Tuesday.