Company: FRFXF
Filing Date: 2025-03-14
Form Type: F-4
Source: 0001104659-25-024010
Chunk: 96

Company: FAIRFAX FINANCIAL HOLDINGS LTD/ CAN
Filing Date: 2025-03-14
Form: F-4
Chunk 96
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 entities. There are a number of remedial actions available to the BMA
in order to protect the public interest if the BMA determines that a Bermuda insurer or reinsurer may become insolvent or that a breach
of the Bermuda Insurance Act or of any of the conditions of registration on a Bermuda insurer or reinsurer has occurred or is about to occur.

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Our material Bermuda (re)insurer is registered as a Class 4 (re)insurer
under the Bermuda Insurance Act.

In addition to maintaining
a principal office in Bermuda and appointing specified officers, the summary below comprises the material aspects of the insurance regulatory
framework in Bermuda applicable to Class 4 (re)insurers under the Bermuda Insurance Act with which our material Bermuda (re)insurer
must comply.

Solvency and Capital Standards

The Bermuda Insurance Act
provides that the value of the statutory assets of a (re)insurer must exceed the value of its statutory liabilities by an amount greater
than its prescribed minimum solvency margin (“MSM”). The MSM that must be maintained by a Class 4 (re)insurer
is the greater of:

| (i) | $100,000,000; |

| (ii) | 50% of net premiums written (with a credit of reinsurance ceded not exceeding 25% of gross premiums); |

| (iii) | 15% of net losses and loss expense reserves; or |

| (iv) | 25% of the (re)insurer’s enhanced capital requirement. |

Class 4 (re)insurers
are also required to maintain available statutory economic capital and surplus equal to or in excess of their “enhanced capital
requirement” (“ECR”) as determined by the BMA under the Bermuda Solvency Capital Requirement model (the “BSCR model”). The BSCR model is a risk-based capital model that establishes an enhanced capital requirement and total capital level
by taking into account risk characteristics specific to an insurer’s or reinsurer’s business. The BMA also has established
a target capital level (“TCL”) equal to 120% of the (re)insurer’s ECR. The TCL serves as an early warning tool
for the BMA and failure to maintain statutory capital at least equal to the TCL will likely result in increased regulatory oversight.

Liquidity

The Bermuda Insurance Act
also prescribes a minimum liquidity ratio (“MLR”) for Class 4 (re)