eLaws | eCases | United States Code | Federal Courts |
 Code of Federal Regulations (Last Updated: May 6, 2024)
 Title 7 - Agriculture
 Subtitle B - Regulations of the Department of Agriculture
 Chapter IV - Federal Crop Insurance Corporation, Department of Agriculture
 Part 400 - General Administrative Regulations
 Subpart L - Reinsurance Agreement - Standards for Approval; Regulations for the 1997 and Subsequent Reinsurance Years

  § 400.162 - Qualification ratios.  

Latest version.

  • § 400.162 Qualification ratios.

    (a) The

    sixteen

    eighteen qualification ratios include:

    (

    a

    1)

    Eleven

    Thirteen National Association of Insurance Commissioner's (NAIC

    's

    ) Insurance Regulatory Information System (IRIS) ratios found in

    §§ 400.170(dii

    12) and

    400.170d)(2) (i), (ii), (iii), (vi), (vii), (ix), (xi), (xii), (xiii), and (xiv) and

    17) of this section and referenced in “Using the NAIC Insurance Regulatory Information System” distributed by NAIC,

    120 West 12th

    1100 Walnut St., Suite 1500, Kansas City, MO

    64105

    64106-

    1925

    2197;

    (

    b

    2) Three ratios used by A.M. Best Company found in

    § 400.170(d2 (v)

    , (

    viii

    15), and (

    x

    16) of this section and referenced in Best's Key Rating Guide, A.M. Best, Ambest Road, Oldwick, N.J. 08858-0700;

    (

    c

    3) One ratio found in

    § 400.170(d1)(i) is

    14) of this section which is formulated by FCIC and is calculated the same as the

    Gross Premium

    One-Year Change to Surplus IRIS ratio

    , with Gross Premium adjusted to exclude the MPCI premium assumed by FCIC

    but for a two-year period; and

    (

    d

    [60 FR 57903, Nov. 24, 1995]

    4) One ratio found in

    § 400.170(d)(2)(iv) which is formulated by FCIC and is calculated the same as the One-Year Change to Surplus IRIS ratio but for a two-year period.

    paragraph (b)(18) of this section, which is reported on the annual statutory financial statement.

    (b) The Company shall provide an explanation for any ratio falling outside of the following requirements in paragraphs (b)(1) through (18):

    Ratio Ratio
    requirement
    (1) Gross Premium Written to Policyholders Surplus<900%
    (2) Net Premium Written to Policyholders Surplus<300%
    (3) Change in Net Premiums Writings−33% to 33%
    (4) Surplus Aid to Policyholders Surplus<15%
    (5) Two-Year Overall Operating Ratio<100%
    (6) Change in Policyholders Surplus−10% to 50%
    (7) Investment Yield3.0% to 6.5%
    (8) Liabilities to Liquid Assets<100%
    (9) Gross Agents Balances to Policyholders Surplus<40%
    (10) One Year Reserve Development to Policyholders Surplus<20%
    (11) Two Year Reserve Development to Policyholders Surplus<20%
    (12) Estimated Current Reserve Deficiency to Policyholders Surplus<25%
    (13) Combined Ratio after Policyholder Dividend<115%
    (14) Two Year Change in Surplus>−10%
    (15) Quick Liquidity>20%
    (16) Return on Surplus>−5%
    (17) Net Change in Adjusted Policyholder Surplus−10% to 25%
    (18) Risk Based Capital Ratio> 200%