Company: FRFXF
Filing Date: 2025-10-01
Form Type: F-10
Source: 0001104659-25-095645
Chunk: 80

Company: FAIRFAX FINANCIAL HOLDINGS LTD/ CAN
Filing Date: 2025-10-01
Form: F-10
Chunk 80
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 reliability that are domiciled in “qualified” or “reciprocal” jurisdictions. The NAIC reports that all 50 states have adopted the provisions of the NAIC Credit for Reinsurance Model Law and Regulation that provide for these reduced or eliminated reinsurance collateral requirements.

While the elimination or reduction of regulatory requirements for collateral for reinsurance ceded to Reciprocal Jurisdiction Reinsurers or certified reinsurers does not prevent our operating entities in the U.S. from continuing to request collateral, it is unclear how much collateral our U.S. operating entities will be able to obtain from these reinsurers going forward. In addition, it is unclear whether these changes will affect the competitive position of any of our U.S. and non-U.S. reinsurance subsidiaries.

#### Guaranty Funds
Virtually all U.S. states have separate insurance guaranty fund laws requiring property and casualty insurance companies licensed to do business in their respective jurisdictions to be members of their guaranty associations. These associations are organized to pay covered claims (as defined and limited by the various guaranty association statutes) under insurance policies issued by insolvent insurance companies. These associations generally levy assessments (up to prescribed limits) on all member insurers in a particular state on the basis of the proportionate share of the premiums written by member insurers in the covered lines of business in that state. Maximum assessments permitted by law in any one year generally vary between 1% and 2% of annual premiums written in the covered lines of business by a member insurer in that state. Some states permit or require member insurers to recover assessments paid through surcharges on policyholders or through full or partial premium tax offsets, while other states permit recovery of assessments through the rate filing process.

Our policy is to accrue for insolvencies when the loss is probable and the assessment amount can be reasonably estimated. In the case of most insurance insolvencies, our ability to reasonably estimate the insolvent insurer’s liabilities or develop a meaningful range of the insolvent insurer’s liabilities is significantly impaired by inadequate financial data with respect to the estate of the insolvent company as supplied by the guaranty funds. Although the amounts of any future assessments by guaranty funds 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