To qualify initially or thereafter for a Standard Reinsurance Agreement with FCIC, an insurer must:
(a) Be licensed or admitted in any state, territory, or possession of the United States;
(b) Be licensed or admitted, or use as a policy-issuing Company an insurer that is licensed or admitted, in each state from which the insurer will cede policies to FCIC for reinsurance;
(c) Have surplus, as reported in its most recent Annual or Quarterly Statutory Financial Statement, that is at least equal to the MPUL for the company's estimated retained premium proposed to be reinsured, multiplied by the appropriate Minimum Surplus Factor found in the Minimum Surplus Table. For the purposes of the Minimum Surplus Table, an insurer is considered to issue policies in a state if at least two and one-half percent (2.5%) of all its reinsured retained premium is written in that state;
Minimum Surplus Table------------------------------------------------------------------------
Minimum
surplus
Number of states in which a company issues FCIC-reinsured factor
policies (multiplied
by MPUL)------------------------------------------------------------------------1 through 10............................................... 2.511 or more................................................. 2.0------------------------------------------------------------------------
(d) Have and meet the ratio requirements of the Gross Premium to Surplus and Net Premium to Surplus required ratios and at least ten of the fourteen analytical ratios in this section based on the most recent Annual Statutory Financial Statement, or comply with Sec. 400.172: ------------------------------------------------------------------------
(1) Required:
(i) Gross Premium to Surplus.......... Less than 900%.
(ii) Net Premium to Surplus........... Less than 300%.(2) Analytical:
(i) Two-Year Overall Operating Ratio.. Less than 100%.
(ii) Agents' Balances to Surplus...... Less than 40%.
(iii) One-Year Change in Surplus...... Greater than -10% and less
than 50%.
(iv) Two-Year Change in Surplus....... Greater than -10%.
(v) Combined Ratio After Policyholder Less than 115%.
Dividends.
(vi) Change in Writing................ Greater than -33% and less
than 33%.
(vii) Surplus Aid to Surplus.......... Less than 15%.
(viii) Quick Liquidity................ Greater than 20%.
(ix) Liabilities to Liquid Asset...... Less than 105%.
(x) Return on Surplus................. Greater than -5%.
(xi) Investment Yield................. Greater than 4.5% and less
than 10%.
(xii) One-Year Reserve Development to Less than 20%.
Surplus.
(xiii) Two-Year Reserve Development to Less than 20%.
Surplus.
(xiv) Estimated Current Reserve Less than 25%.
Deficiency to Surplus.------------------------------------------------------------------------
(e) Submit to FCIC all of the following statements:
(1) Annual and Quarterly Statutory Financial Statements;
(2) Statutory Management Discussion & Analysis;
(3) Most recent State Insurance Department Examination Report;
(4) Actuarial Opinion of Reserves;
(5) Annual Audited Financial Report; and
(6) Any other appropriate financial information or explanation of IRIS ratio discrepancies as determined by the company or as requested by FCIC. [60 FR 57903, Nov. 24, 1995]