Company: FRFXF
Filing Date: 2025-03-26
Form Type: 424B3
Source: 0001104659-25-028272
Chunk: 69

Company: FAIRFAX FINANCIAL HOLDINGS LTD/ CAN
Filing Date: 2025-03-26
Form: 424B3
Chunk 69
---
 reinsurers (called “certified
reinsurers” or “Reciprocal Jurisdiction Reinsurers”) that do not otherwise satisfy the state’s credit for reinsurance
requirements based upon less than 100% collateralization. Under those provisions, collateral requirements may be reduced or eliminated
for reinsurers meeting certain criteria as to financial strength and reliability that are domiciled in “qualified” or “reciprocal”
jurisdictions. The NAIC reports that all 50 states have adopted the provisions of the NAIC Credit for Reinsurance Model Law and Regulation
that provide for these reduced or eliminated reinsurance collateral requirements.

While the elimination or
reduction of regulatory requirements for collateral for reinsurance ceded to Reciprocal Jurisdiction Reinsurers or certified reinsurers
does not prevent our operating entities in the United States from continuing to request collateral, it is unclear how much collateral
our U.S. operating entities will be able to obtain from these reinsurers going forward. In addition, it is unclear whether these changes
will affect the competitive position of any of our U.S. and non-U.S. reinsurance subsidiaries.

Guaranty Funds

Virtually all U.S. states
have separate insurance guaranty fund laws requiring property and casualty insurance companies licensed to do business in their respective
jurisdictions to be members of their guaranty associations. These associations are organized to pay covered claims (as defined and limited
by the various guaranty association statutes) under insurance policies issued by insolvent insurance companies. These associations generally
levy assessments (up to prescribed limits) on all member insurers in a particular state on the basis of the proportionate share of the
premiums written by member insurers in the covered lines of business in that state. Maximum assessments permitted by law in any one year
generally vary between 1% and 2% of annual premiums written in the covered lines by a member in that state. Some states permit or require
member insurers to recover assessments paid through surcharges on policyholders or through full or partial premium tax offsets, while
other states permit recovery of assessments through the rate filing process.

Our policy is to accrue
for insolvencies when the loss is probable and the assessment amount can be reasonably estimated. In the case of most insurance insolvencies,
our ability to reasonably estimate the insolvent insurer’s liabilities or develop a meaningful range of the insolvent insurer’s
liabilities is significantly impaired by inadequate financial data with respect to the estate of the