Company: FRFXF
Filing Date: 2025-03-26
Form Type: 424B3
Source: 0001104659-25-028272
Chunk: 35

Company: FAIRFAX FINANCIAL HOLDINGS LTD/ CAN
Filing Date: 2025-03-26
Form: 424B3
Chunk 35
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 established underwriting guidelines.

Financial reporting risks associated with IFRS 17.

IFRS 17 Insurance Contracts
(“IFRS 17”) as issued by the IASB was retrospectively adopted by the Company on January 1, 2023 with restated
comparative periods presented in the financial statements. IFRS 17 replaced IFRS 4 Insurance Contracts and introduced considerable
change and additional complexity to the recognition, measurement, presentation and disclosure of insurance contracts within the Company’s
consolidated financial statements. The complex measurement requirements of IFRS 17 increased the potential volatility in the Company’s
consolidated statement of earnings and financial position, which affects financial reporting risk.

Financial reporting risks relating to deferred taxes associated with amendments to IAS 12.

On May 23, 2023, the
IASB issued amendments to IAS 12 Income Taxes (“IAS 12”) to provide temporary relief from accounting and
disclosure for deferred taxes arising from the implementation of Pillar Two model rules published by the Organisation for Economic
Co-operation and Development (“OECD”). The Pillar Two model rules provide a general framework for the implementation
of a 15% global minimum tax, which is to be applied on a jurisdiction-by-jurisdiction basis. We retrospectively adopted this amendment
during the second quarter of 2023 and have applied the exception to recognizing and disclosing information regarding Pillar Two deferred
income tax assets and liabilities.

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To the extent that the value of our goodwill, indefinite-lived intangible assets or investments in associates is impaired, we are required to write down the value of such assets.

The goodwill, indefinite-lived
intangible assets and investments in associates on our consolidated balance sheet originated from various acquisitions and investments
made by us or our operating subsidiaries. Continued profitability and achievement of financial plans by acquired businesses and associates
is a key consideration for there to be no impairment in the carrying value of goodwill, indefinite-lived intangible assets and investments
in associates. An intangible asset may be impaired if the economic benefit to be derived from its use is unexpectedly diminished. An investment
in an associate is considered to be impaired if its carrying value exceeds its recoverable amount (the higher of the associate’s
fair value and value-in-use).

Management regularly reviews
the current and expected profitability of operating companies and associates and their success in achieving financial plans when assessing
the carrying value of goodwill, indefinite-lived intangible assets and