ODYSSEY RE HOLDINGS CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, 2004 2003 2002 (In thousands) OPERATING ACTIVITIES Net income $ 186,899 $ 249,225 $ 208,177 Less: cumulative effect of a change  in accounting principle — — (36,862) Income before cumulative effect of a  change in accounting principle 186,899 249,225 171,315 Adjustments to reconcile net income to net cash  provided by operating activities: Reinsurance balances and funds held, net (130,323) (109,151) (263,666) Unearned premiums 24,081 198,923 203,898 Unpaid losses and loss adjustment expenses 710,441 497,080 160,398 Federal and foreign income taxes (25,291) (13,216)  91,091 Other assets and liabilities, net (35,263) (6,851) 38,160 Deferred acquisition costs (3,690) (38,400) (48,764) Net realized investment gains (113,464) (202,742) (135,796) Bond discount accrual, net (10,210) (10,750) (2,425) Net cash provided by operating activities 603,180 564,118 214,211 INVESTING ACTIVITIES Maturities of fixed income securities 106,654 48,948  34,609 Sales of fixed income securities 1,437,226 4,683,504 2,422,938 Purchases of fixed income securities (2,304,052) (4,103,327) (2,264,108) Sales of equity securities 335,954 173,085 58,967 Purchases of equity securities (375,974) (355,679) (113,233) Purchases of other invested assets (46,400) (29,860) (88,781) Increase related to borrowed securities 39,042 — — Decrease related to borrowed securities (176,518) — — Increase in short-term investments (26,046) (18,028) (155,809) Acquisitions and dispositions, net of cash acquired (29,659) (39,581) 12,133 Net cash (used in) provided by investing activities (1,039,773) 359,062 (93,284) FINANCING ACTIVITIES Dividends (8,107) (6,908) (6,514) Additional borrowings, net of issuance costs — 222,480 107,494 Repayments of principal (100) (50,000) (110,000) Sale of interest rate contract — 8,667 — Purchase of treasury stock (10,091) (284) (2,305) Net cash (used in) provided by financing activities (18,298) 173,955 (11,325) Effect of exchange rate changes  on cash and cash equivalents 22,679 6,780 — (Decrease) increase in cash and cash equivalents (432,212) 1,103,915 109,602 Cash and cash equivalents, beginning of year 1,588,659 484,744 375,142 Cash and cash equivalents, end of year $ 1,156,447 $ 1,588,659 $ 484,744 Supplemental disclosures: Interest paid $ 25,067 $ 9,006 $ 8,664 Income taxes paid (recovered) $ 116,557 $ 142,202 $ (4,327) See accompanying notes. 47