Fairfax Financial Holdings Ltd. has realized cash proceeds of $574.5 million during the third quarter as of Sept. 19, through the sale of $3.22 billion notional amount of credit-default swaps, the company announced on Monday.

The cash proceeds are part of $2.1-billion worth of realized and unrealized gains from the sales of credit default swaps, which are derivatives that transfer the risk that a third party will fail to repay debt.

“Beginning in 2003, we took significant steps, including the purchase of credit default swaps, in an attempt to protect our balance sheet from investment risks,” said Prem Watsa, chairman and CEO, in a statement.

“Given the unprecedented events of the past week, we felt it was prudent to update shareholders on the progress of our credit-default swap sales prior to the date that we would customarily report our third quarter results, particularly since we have an active share buy-back program.”

Altogether Fairfax has sold $8.87 billion notional amount of credit-default swaps, which it acquired for $197 million. It has realized a cumulative gain of $1.65 billion on these sales.

As of Sept. 19, the company still owns $12.87 billion notional amount of credit default swaps, representing an unrealized gain of $446.8 million.

But Fairfax noted that the highly volatile credit-default swaps are subject to dramatic swings in market value and liquidity; and, therefore, their ultimate value is only known upon their disposition.