Company: FRFXF
Filing Date: 2025-03-26
Form Type: 424B3
Source: 0001104659-25-028272
Chunk: 85

Company: FAIRFAX FINANCIAL HOLDINGS LTD/ CAN
Filing Date: 2025-03-26
Form: 424B3
Chunk 85
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Managing agents must calculate
capital resources at syndicate level under the rules in the Solvency II UK Firms section of the PRA Rulebook and, in particular,
must calculate an SCR for each syndicate (which captures the risks that will emerge over the next 12 months) and a uSCR (to capture potential
adverse developments which may arise until all liabilities have been paid). The SCR and uSCR take into account the risks, controls and
financial resources available to each syndicate, and are notified to Lloyd’s periodically.

Managing agents are also
subject to their own regulatory capital requirements, comprising both a minimum qualifying capital requirement and minimum net asset
requirement.

The FCA’s conduct
of business requirements for managing agents can be found in the Insurance: Conduct of Business Sourcebook of the FCA Handbook (“ICOBS”).
These rules regulate the day-to-day conduct of business standards to be observed by managing agents involved in insurance distribution
activities and/or the activity of managing the underwriting capacity of a Lloyd’s syndicate (these are supplemented by Lloyd’s
own rules, including certain principles in respect of customer outcomes). Although the scope and range of obligations imposed by the
ICOBS rules vary according to the scope of the firm’s business and the nature of its clients, generally the rules include
the need to provide clients with information about the firm, meet certain standards of product disclosure, ensure that promotional materials
are clear, fair and not misleading, assess suitability when advising on certain products, manage conflicts of interest, report appropriately
to clients and provide certain protections in relation to client assets. The rules in ICOBS were amended with effect from October 1,
2018 to implement Directive 2016/97/EU (the “Insurance Distribution Directive”). The key changes brought about by
the Insurance Distribution Directive included the introduction of: (i) an overarching requirement to act in a customer’s best
interest; (ii) additional requirements to ensure that individuals who sell insurance are fit and proper (including new continuing
professional development standards); (iii) a requirement for distributors to have in place product governance processes to ensure
that policies are designed for their target audience; and (iv) information disclosure requirements providing for the delivery of
simple, standardized policy summary documentation to retail customers. In addition, the Insurance Distribution Directive removed introducing
as a regulated activity.

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In July 2022, the FCA
published policy statement “PS 22/9: