Company: FRFXF
Filing Date: 2025-03-14
Form Type: F-4
Source: 0001104659-25-024010
Chunk: 26

Company: FAIRFAX FINANCIAL HOLDINGS LTD/ CAN
Filing Date: 2025-03-14
Form: F-4
Chunk 26
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. Unanticipated developments in the law as well as changes in social and environmental
conditions could result in unexpected claims for coverage under insurance and reinsurance contracts. With respect to casualty lines of
business, these legal, social and environmental changes may not become apparent until some time after their occurrence.

The full effects of these
and other unforeseen emerging claim and coverage issues are extremely hard to predict and could harm our business. As a result, the full
extent of our liability under our coverages, and in particular our casualty insurance policies and reinsurance contracts, may not be known
until many years after a policy or contract is issued. Our exposure to this uncertainty is greatest in our “long-tail” casualty
lines of business where claims can typically be made for many years, rendering them more susceptible to these trends than in the property
insurance lines of business, which are more typically “short-tail”. In addition, we could be adversely affected by the growing
trend of plaintiffs targeting participants in the property-liability insurance industry in purported class action litigation relating
to claims handling and other practices.

Although loss exposure is
limited by geographic diversification and we seek to limit our loss exposure by employing a variety of policy limits and other terms and
conditions and through prudent underwriting of each program written, there can be no assurance that such measures will be successful in
limiting our loss exposure.

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Fairfax and Allied World are holding companies and may not have access to the cash that is needed to meet their payment obligations under the Notes.

Fairfax and Allied World
are both holding companies that conduct substantially all of their business through their subsidiaries and receive substantially all of
their earnings from such subsidiaries. We control the operating insurance and reinsurance companies, each of which must comply with applicable
insurance regulations of the jurisdictions in which it operates. Each insurance and reinsurance operating company must maintain reserves
for losses and loss adjustment expenses to cover the risks it has underwritten. The reserves of one of our insurance or reinsurance companies
are not available to be applied against the risks underwritten by other of such companies. The financial condition and results of operations
of each of the insurance and reinsurance companies we control are included in our consolidated financial statements and, generally, losses
incurred by any of our companies directly impact our consolidated results. Although a severe loss incurred by one insurance or reinsurance
company should not have any adverse effect on any of our other insurance or reinsurance companies,