Company: FRFXF
Filing Date: 2025-03-26
Form Type: 424B3
Source: 0001104659-25-028272
Chunk: 97

Company: FAIRFAX FINANCIAL HOLDINGS LTD/ CAN
Filing Date: 2025-03-26
Form: 424B3
Chunk 97
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our material Bermuda (re)insurer is prohibited from declaring or paying dividends if it is, or if the declaration or payment of such
dividend would cause it to be, in breach of its MSM, MLR or ECR. Moreover, where a Class 4 (re)insurer fails to meet its MSM or
MLR on the last day of any financial year, it will be prohibited from declaring or paying any dividends during the next financial year
without the approval of the BMA.

In addition, as a Class 4
(re)insurer, our material Bermuda (re)insurer is prohibited from declaring or paying in any financial year dividends of more than 25%
of its total statutory capital and surplus (as shown in its previous financial year’s statutory balance sheet) unless it files
(at least seven days before payment of such dividends) an affidavit with the BMA stating that it will continue to meet its MSM and MLR.

Additionally, under the
Companies Act 1981 of Bermuda (the “Bermuda Companies Act”), no Bermuda company may declare or pay a dividend, or
make a distribution out of contributed surplus, if there are reasonable grounds for believing that: (a) the company is, or would
after the payment, be, unable to pay its liabilities as they become due, or (b) the realizable value of its assets would thereby
be less than its liabilities.

Reduction of Capital

No Class 4 (re)insurer
may reduce its total statutory capital by 15% or more, as set out in its previous year’s financial statements, unless it has received
the prior approval of the BMA. Total statutory capital consists of the insurer’s paid-in share capital, its contributed surplus
(sometimes called additional paid-in capital) and any other fixed capital designated by the BMA as statutory capital (such as letters
of credit).

A Class 4 (re)insurer
seeking to reduce its statutory capital by 15% or more, as set out in its previous year’s financial statements, is also required
to submit an affidavit to the BMA stating that the proposed reduction will not cause the insurer to fail its relevant margins and such
other information as the BMA may require.

Insurance Code of Conduct

Our material Bermuda (re)insurer
must comply with the BMA’s Insurance Code of Conduct (the “Bermuda Insurance Code”), which prescribes the duties,
standards, procedures and sound business principles with