Company: FRFXF
Filing Date: 2025-03-14
Form Type: F-4
Source: 0001104659-25-024010
Chunk: 84

Company: FAIRFAX FINANCIAL HOLDINGS LTD/ CAN
Filing Date: 2025-03-14
Form: F-4
Chunk 84
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 the firm and his or her financial soundness. The PRA and/or the FCA’s
assessment of fitness and propriety often includes an interview of the candidate to perform a SMF.

The managing agents must
carry out ongoing assessments of fitness and propriety in relation to all SMF holders. Individuals in SMFs are subject to a duty of responsibility
in accordance with FSMA and can be held accountable if they fail to take “reasonable steps” to prevent regulatory breaches.
Each SMF holder will have a statement of responsibilities showing what they are responsible for within the business. These responsibilities
will be set out alongside reporting lines in a “Responsibilities Map” which is available to the regulators.

Individuals who do not hold
SMFs but whose role means that they have the potential to cause harm to either the relevant managing agent or its customers must be certified
by the managing agent in question as fit and proper to perform their role. Such roles are “Certification Functions” and include
those functions that are considered to be Key Functions under the Solvency II Directive (as implemented into law in the United Kingdom).

All staff in each of the
managing agents, save for those who are in roles such as catering or security (where they cannot pose a risk to the business or its customers),
must comply with individual conduct rules. SMF holders must comply with additional conduct rules relating to regulatory objectives.

| - 49 - |

As noted above, we principally
operate in the United Kingdom through the Lloyd’s market. Lloyd’s capital structure, often referred to as the “chain
of security”, is intended to provide a high degree of security for policyholders. There are three parts to the “chain of
security”:

| (i) | Syndicate level assets: The insurance                                                       
 premiums that are collected by members and held in a premium trust fund for the benefit of  
 policyholders whose contracts are underwritten by the syndicate. These monies are the first 
 resource used for paying claims made by the members’ policyholders from that syndicate.     |

| (ii) | Funds at Lloyd’s: Each member                                                              
 must provide capital to support its underwriting at Lloyd’s. This capital is held in       
 trust as a buffer to back up each member’s underwriting liabilities in each syndicate      
 in which it is a member. The amount of capital to be provided by each member is determined 
 by reference to the rules on the Solvency Capital Requirement (“SCR”)                      
 contained in the Solv