BULLETIN NO.: MGR-98-033 TO: All Reinsured Companies All Risk Management Field Offices All Other Interested Parties FROM: Kenneth D. Ackerman /s/ Ken Ackerman 11-17-98 Administrator SUBJECT: Amendment No.2 to the 1998 SRA BACKGROUND: On September 15, 1998, the Federal Crop Insurance Corporation (FCIC) Board of Directors (Board) approved the Adjusted Gross Revenue (AGR) pilot program beginning the 1999 crop year. The Board approved reinsurance under the terms provided for revenue insurance plans, and administrative and operating expense subsidy of 24.5 percent of net book premium. Amendment No. 2 is an optional amendment and needs only to be executed by companies who intend to market AGR policies. The AGR policy language, forms and rates will be available through the Reporting Organization Server. The counties where AGR coverage will be available are: Florida Alachua, Gilchrist, Levy, Marion, Sumter, Suwannee Maine Androscoggin, Cumberland, Kennebec, York Massachusetts Barnstable, Berkshire, Bristol, Dukes, Essex, Franklin, Hampden, Hampshire, Middlesex, Nantucket, Norfolk, Plymouth, Suffolk, Worcester Michigan Allegan, Berrien, Kent, Ottawa, Van Buren New Hampshire Belknap, Cheshire, Hillsborough, Merrimack, Rockingham, Strafford, Sullivan ACTION: To reinsure AGR policies, the 1998 SRA is amended as follows: 1) Section I. is revised to incorporate the AGR policy into definitions used in the SRA. 2) Section III.A.2. is revised to include a new subparagraph specifying the percent of net book premium paid by FCIC as administrative and operating expense subsidy. Attached are two copies of Amendment No. 2 to the 1998 SRA which must be executed for FCIC to provide reinsurance and subsidy on AGR policies in the 1999 and subsequent reinsurance years. Each copy must be signed as an original and returned to FCIC at the address shown below via overnight mail by December 10, 1998. The Amendment should be signed by the person authorized by the Company's Board of Directors to enter into the SRA. OVERNIGHT MAIL: USDA/Risk Management Agency Reinsurance Services Division E. Heyward Baker, Director 1400 Independence Avenue, SW Stop Code: 0804 Room 6727-South Building Washington, DC 20250 Phone: (202) 720-4232 Questions regarding this bulletin may be addressed to E. Heyward Baker, Director, Reinsurance Services Division, at (202) 720-4232. Attachments: 1998 Standard Reinsurance Agreement (Rev. 11/16/98) AMENDMENT NO. 2 TO THE 1998 STANDARD REINSURANCE AGREEMENT (THIS AMENDMENT IS OPTIONAL) The Standard Reinsurance Agreement, between the Federal Crop Insurance Corporation and the undersigned Company is hereby amended for the 1999 and subsequent reinsurance years for the purpose of permitting Adjusted Gross Revenue insurance policies to be reinsured. The portions amended are, as follows: (I) Section I. is amended as follows: "Crop insurance contract" means an agreement (with the terms in effect as of the contract change date) to insure the insurable interest of an eligible producer in a single crop in a single county, or the farm revenue attributed to the production or sale of agricultural commodities of an eligible producer, as provided by the application, the General, or Common Crop Insurance Policy, the Adjusted Gross Revenue Insurance Policy, the Crop Endorsements, the Basic Provisions, the Crop Provisions, the Special Provisions, the Catastrophic Risk Protection Endorsement, as applicable, the Actuarial Table, and any other instrument or endorsement as approved by FCIC. "Eligible crop insurance contract" means a crop insurance contract that is sold and serviced consistent with the Act, 7 C.F.R. chapter IV, FCIC approved regulations and procedure, at applicable rates, terms, and special conditions; having a sales closing date within the reinsurance year; to an eligible producer, covering a crop in an area approved by FCIC or covering farm revenue attributed to the production or sale of agricultural commodities, and on forms approved in writing by FCIC. "Eligible producer" means a person who meets all the conditions specified in 7 C.F.R. Chapter IV and the crop insurance contract. "Insurable interest" means the portion of an insured crop or farm revenue attributed to the production or sale of agricultural commodities a person has at risk in the event of an insurable loss. "Insurance Plan" means the type of insurance coverage provided on a crop or the farm revenue attributed to the production or sale of agricultural commodities. For example, a crop may be insured under the GRP plan, a revenue insurance plan, or a guaranteed-yield plan. Differences in levels of coverage do not create different plans. "Sales closing date" means the date established by FCIC as the last date on which a producer may apply for an eligible crop insurance contract on a crop in a specific county or farm revenue attributed to the production or sale of agricultural commodities. (II) Section III.A.2.is amended by designating subparagraph (e) as subparagraph (f), and adding a new subparagraph (e) to read as follows: e. For any eligible Adjusted Gross Revenue insurance contract, 24.5 percent of the net book premium attributed to such eligible crop insurance contracts. The undersigned Company representative acknowledges that the Company's Board of Directors has authorized the Company to enter into this Amendment of the 1998 Standard Reinsurance Agreement. APPROVED AND ACCEPTED for Federal Crop Insurance Corporation The Company Signature Signature Name Name Title Title Date Date