Company: FRFXF
Filing Date: 2025-03-14
Form Type: F-4
Source: 0001104659-25-024010
Chunk: 71

Company: FAIRFAX FINANCIAL HOLDINGS LTD/ CAN
Filing Date: 2025-03-14
Form: F-4
Chunk 71
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 cannot be predicted with certainty, we believe that
future guaranty association assessments for known insurer insolvencies will not have a material adverse effect on our results of operations
or financial condition.

Shared Markets

As a condition of their
licenses to do business, some of our operating insurance subsidiaries are required to participate in mandatory property and casualty
shared market mechanisms, residual markets or pooling arrangements, which provide various types of insurance coverage to individuals
or other entities that are otherwise unable to purchase such coverage in the commercial insurance marketplace. Our U.S. operating insurance
subsidiaries’ participation in such shared markets or pooling mechanisms is generally proportionate to the amount of each of our
operating insurance subsidiaries’ direct premiums written for the type of coverage written by the specific pooling mechanism or
residual market mechanism in the applicable state.

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Many states have laws that
establish second-injury funds to provide compensation to injured employees for aggravation of a prior condition or injury. Generally,
insurers writing workers’ compensation in those states that have second-injury funds are subject to the laws creating the funds,
including the various funding mechanisms that those states have adopted to fund the second-injury funds, including premium surcharges
that effectively pass the cost of the fund on to policyholders.

Certain of our operating
insurance subsidiaries participate in the Florida Hurricane Catastrophe Fund, a state mandated catastrophe reinsurance fund. Business
insurance is also subject to pooled insurance on a small scale for commercial properties insured through the various Fair Access to Insurance
Requirements Plans that exist in most states.

The amount of future losses
or assessments from the shared and residual market mechanisms and pooling arrangements described above cannot be predicted with certainty.
The underwriting results of these pools traditionally have been unprofitable. Although it is possible that future losses or assessments
from such mechanisms and pooling arrangements could have a material adverse effect on our results of operations, we do not expect future
losses or assessments from the shared and residual market mechanisms and pooling arrangements to have a material adverse effect on our
liquidity or capital resources.

Insolvency of Insurers

Insolvency proceedings for
U.S. insurance companies, including reinsurers, are generally conducted pursuant to state insurance law. In the event one of our U.S.
operating insurance subsidiaries becomes insolvent or otherwise is found by its domiciliary regulator to be in a hazardous financial
condition as provided under applicable state insurance law, insolvency proceedings, up to and including rehabilitation, conservation
and liquidation, would be