Company: FRFXF
Filing Date: 2025-03-26
Form Type: 424B3
Source: 0001104659-25-028272
Chunk: 84

Company: FAIRFAX FINANCIAL HOLDINGS LTD/ CAN
Filing Date: 2025-03-26
Form: 424B3
Chunk 84
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 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 Solvency II UK Firms section of the PRA Rulebook, which apply to Lloyd’s  
 and to its managing agents. Lloyd’s requires managing agents to determine the SCR on       
 an ultimate basis (“uSCR”) for each syndicate they manage (described in                    
 greater detail below). Lloyd’s then applies an “Economic Capital Uplift”                   
 to each uSCR and the resulting figure is used to calculate each member’s capital resources 
 requirement in proportion to its share of each syndicate of which it is a member. Details  
 of how a member’s capital requirement is calculated are set out in the Lloyd’s             
 Membership & Underwriting Conditions and Requirements: Funds at Lloyd’s.                   |

| (iii) | Mutual assets (Central Fund and callable                                                     
 layer): Members make annual contributions to the Central Fund which can be used to pay       
 out in relation to the claims against any member who fails to meet its insurance liabilities 
 in full. In addition, this is supplemented by a “callable layer” of up to 5%                 
 of members’ overall premium limits which Lloyd’s can call upon to meet claims.               |

When calibrating the SCR,
Lloyd’s is required to include, in addition to the risks impacting its members, all quantifiable risks to which Lloyd’s itself
is exposed, including risks to its central assets and central liabilities. Lloyd’s and its managing agents must also comply with
requirements to conduct own risk and solvency assessments and to report, as set out in, respectively, the Conditions Governing Business
and the Reporting parts of the Solvency II UK Firms section of the PRA Rulebook.

As dual-regulated firms
in their own right, managing agents are under an obligation to manage the syndicate assets and the insurance business carried on by members
of the syndicate in accordance with the Solvency II UK Firms section of the PRA Rulebook. This requires managing agents to ensure that
the financial resources for each syndicate they manage and the capital resources at syndicate level are adequate, and that they establish
and maintain systems and controls for the management of prudential, credit, market, operational and insurance risks for each syndicate.