BULLETIN NO.: MGR-98-001
     
     TO:       All Reinsured Companies
               All Risk Management Field Offices
               FSA Headquarters, Program Delivery and Field Operations
     
     FROM:     Kenneth D. Ackerman /s/   01/13/98
               Administrator
     
     SUBJECT:  1994 through 1997 Reinsurance Runs
     
     The 1998 Standard Reinsurance Agreement (SRA) states that underwriting gains held in the 
     reinsurance accounts for the reinsurance years prior to 1998 will be calculated and paid out
     in the same manner as the 1998 reinsurance year guidelines.  The changes for companies who 
     signed a 1998 SRA are as follows:
     
     1) The underwriting gain cap in 1997 and prior reinsurance
     years increases from 15 percent to 17.5 percent of retained net
     premium.
     
     2) Only 60 percent of the amount above 17.5 percent will be
     held by FCIC in a company reinsurance (reserve) account.
     
     3) Funds placed in the reserve account will be returned two (2)
     years after the first Annual Settlement for said reinsurance
     year, provided there are no pending matters between the Company
     and FCIC as referenced in 4.d. on page 15 of the SRA.
     
     
     In order to simplify the reinsurance runs for the 1994 through 1997 reinsurance years the 
     following will apply:
     
     1) The amount reflected as gross gain on the reinsurance runs
     for the 1994 and 1995 reinsurance years will be reflected as the
     company's underwriting gain on the 1994 and 1995 reinsurance year
     operations report processed in February 1998.  Previously the
     gain was after the deduction for reserves.
     
     2) Since there will no longer be any reserves on the 1994 and 1995
     reinsurance year operations reports the amount of underwriting
     gain paid for the 1996 and/or 1997 operations reports will be
     reduced accordingly, if applicable.  This should have a zero
     impact overall on your underwriting gain after the net changes
     for all affected years are combined.
     
     3) If your company has not signed an SRA since the 1994
     reinsurance year, funds in the reserve account were paid in
     February 1997.  If the 1995 reinsurance year is the last year
     that your company signed an SRA, funds in the reserve account for
     that year will be paid in February 1998.
     
     4) The amount reflected as underwriting gain or portion thereof
     being held in the reserve account for the 1996 and/or 1997
     reinsurance years will depend on whether or not your company has
     signed a 1998 SRA.  If your company has signed a 1998 SRA, the
     payment of any underwriting gain or reserve computations for the
     1996 and/or 1997 reinsurance years will be in accordance with the
     provisions of the 1998 SRA, otherwise, payout will be made in
     accordance with the applicable SRA for those  years.
     
     5) There are no reserves for the 1992 and 1993 reinsurance years.
     The reserves from the 1992 reinsurance year were applied to losses
     in the 1993 reinsurance year.
     
     If you have any questions regarding these changes, please contact Calvin Brewer at 
     (816)926-7030 or Steve Ginie at (816)926-7906.