Company: FRFXF
Filing Date: 2025-03-26
Form Type: 424B3
Source: 0001104659-25-028272
Chunk: 68

Company: FAIRFAX FINANCIAL HOLDINGS LTD/ CAN
Filing Date: 2025-03-26
Form: 424B3
Chunk 68
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 as “IRIS ratios”) and specifies “usual ranges” for each
ratio. An IRIS ratio that falls outside the usual range is not necessarily considered adverse. An insurance company may fall out of the
usual range for one or more ratios because of specific transactions that are in themselves immaterial or eliminated at the consolidated
level. Generally, an insurance company may become subject to increased regulatory scrutiny if it falls outside the usual ranges on multiple
ratios.

Investment Regulation

Our operating subsidiaries
are subject to state laws and regulations that require diversification of investment portfolios and that limit the amount of investments
in certain investment categories. Failure to comply with these laws and regulations may cause non-conforming investments to be treated
as non-admitted assets for purposes of measuring statutory surplus and, in some instances, would require divestiture. As of the date
of this prospectus, we believe our investments comply with such laws and regulations in all material respects.

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Credit for Reinsurance and Licensing

A primary insurer ordinarily
will enter into a reinsurance agreement only if it can obtain credit for the reinsurance ceded on its U.S. statutory financial statements.
In general, credit for reinsurance is allowed in the following circumstances: (1) if the reinsurer is licensed in the state in which
the primary insurer is domiciled; (2) if the reinsurer is an “accredited” or otherwise approved reinsurer in the state
in which the primary insurer is domiciled; (3) in some instances, if the reinsurer (a) is domiciled in a state that is deemed
to have substantially similar credit for reinsurance standards as the state in which the primary insurer is domiciled and (b) meets
certain financial requirements; or (4) if none of the above apply, to the extent that the reinsurance obligations of the reinsurer
are collateralized appropriately, typically through the posting of a letter of credit for the benefit of the primary insurer, the deposit
of assets into a trust fund established for the benefit of the primary insurer, or by the primary insurer retaining as collateral for
the reinsurer’s obligations, assets that would otherwise be transferred by the primary insurer to the reinsurer as consideration
for the reinsurance. With respect to reinsurance collateral requirements, states have adopted provisions of the NAIC Credit for Reinsurance
Model Law and Regulation that allow full credit to U.S. ceding insurers for reinsurance ceded to qualified