Company: FRFXF
Filing Date: 2025-03-26
Form Type: 424B3
Source: 0001104659-25-028272
Chunk: 17

Company: FAIRFAX FINANCIAL HOLDINGS LTD/ CAN
Filing Date: 2025-03-26
Form: 424B3
Chunk 17
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 claims incurred and the associated claims adjustment expense. Establishing an appropriate
level of claims reserves is an inherently uncertain process. We utilize both proprietary and commercially available actuarial models,
as well as historical insurance industry loss development patterns, to assist in the establishment of appropriate claim reserves.

In contrast to casualty losses,
which frequently can be determined only through lengthy and unpredictable litigation, property losses tend to be reported promptly and
usually are settled within a shorter period of time. Nevertheless, for both casualty and property losses, actual claims and claim expenses
ultimately paid may deviate, perhaps substantially, from the reserve estimates reflected in our financial statements. Variables in the
reserve estimation process can be affected by both internal and external events, such as changes in claims handling procedures, economic
and social inflation, legal trends and legislative changes. Many of these items are not directly quantifiable, particularly on a prospective
basis.

If our claim reserves are
determined to be inadequate, we will be required to increase claim reserves with a corresponding reduction in our net earnings in the
period in which the deficiency is rectified. It is possible that claims in respect of events that have occurred could exceed our claim
reserves and have a material adverse effect on our results of operations in a particular period and/or our financial condition.

Even though most insurance
contracts have policy limits, the nature of property and casualty insurance and reinsurance is such that losses can exceed policy limits
for a variety of reasons and could significantly exceed the premiums received on the underlying policies. When this occurs, our financial
results are adversely affected.

Unpredictable catastrophic events could reduce our net earnings.

Our insurance and reinsurance
operations expose us to claims arising out of catastrophes. We have experienced, and will in the future experience, catastrophe losses
that may materially reduce our profitability or harm our financial condition. Catastrophes can be caused by various events, including
natural events such as hurricanes, windstorms, earthquakes, tornadoes, hailstorms, severe winter weather and fires, and unnatural events
such as terrorist attacks and riots. Weather-related losses have increased in recent years, in part due to climate change, which represents
a significant emerging risk that will continue to increase the inherent unpredictability of both the frequency and severity of weather-related
catastrophe losses.

The extent of losses from
a catastrophe is a function of both the total amount of insured exposure in the area affected by the event and the severity of the event.
Most catastrophes are restricted to small geographic