Company: FRFXF
Filing Date: 2025-03-26
Form Type: 424B3
Source: 0001104659-25-028272
Chunk: 24

Company: FAIRFAX FINANCIAL HOLDINGS LTD/ CAN
Filing Date: 2025-03-26
Form: 424B3
Chunk 24
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 risks.

<div align='center'>- 15 -</div>

Our derivative instruments
may expose us to basis risk. Basis risk is the risk that the fair value or cash flows of derivative instruments applied as economic hedges
will not experience changes in exactly the opposite directions from those of the underlying hedged exposure. This imperfect correlation
may adversely impact the net effectiveness of the hedge and may diminish the financial viability of maintaining the hedging strategy and
therefore adversely impact our financial condition, profitability or cash flows.

We regularly monitor the
prospective and retrospective effectiveness of our economic hedging instruments and will adjust the amount and/or type of hedging instruments
as required to achieve our risk management goals.

We operate in a highly competitive environment which could make it more difficult for us to attract and retain business.

The property and casualty
insurance industry and the reinsurance industry are both highly competitive and will likely remain highly competitive in the foreseeable
future. Competition in these industries is based on many factors, including premiums charged and other terms and conditions offered, products
and services provided, commission structure, financial ratings assigned by independent rating agencies, speed of claims payment, reputation,
selling effort, perceived financial strength and the experience of the insurer or reinsurer in the line of insurance or reinsurance to
be written. We compete, and will continue to compete, with a large number of Canadian, U.S. and foreign insurers and reinsurers, as well
as certain underwriting syndicates, some of which have greater financial, marketing and management resources than we do. In addition,
some financial institutions, such as banks, are now able to offer services similar to those offered by our reinsurance subsidiaries while
in recent years, capital market participants have also created alternative products that are intended to compete with reinsurance products.

Consolidation within the
insurance industry could result in insurance and reinsurance market participants using their market power to implement price reductions.
If competitive pressures compel us to reduce our prices, our operating margins would decrease. As the insurance industry consolidates,
competition for customers could become more intense and the importance of acquiring and properly servicing each customer could become
greater, causing us to incur greater expenses relating to customer acquisition and retention and further reducing operating margins.

Emerging claim and coverage issues, or the failure of any of the loss limitation methods we employ, could adversely affect our business, financial condition or results of operations.

The liability for incurred
claims for insurance contracts is an estimate and may be found to be deficient, perhaps very significantly, in