7 C.F.R. § 400.162

Current through November 30, 2024

Section 400.162 - Qualification ratios

(a) The eighteen qualification ratios include:

(1) Thirteen National Association of Insurance Commissioner's (NAIC) Insurance Regulatory Information System (IRIS) ratios found in paragraphs (b)(1) through (12) and (17) of this section and referenced in "Using the NAIC Insurance Regulatory Information System" distributed by NAIC, 1100 Walnut St., Suite 1500, Kansas City, MO 64106-2197;

(2) Three ratios used by A.M. Best Company found in paragraphs (b)(13), (15), and (16) of this section and referenced in Best's Key Rating Guide, A.M. Best, Ambest Road, Oldwick, N.J. 08858-0700;

(3) One ratio found in paragraph (b)(14) of this section 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; and

(4) One ratio found in 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	[LESS THAN]900%
(2) Net Premium Written to Policyholders Surplus	[LESS THAN]300%
(3) Change in Net Premiums Writings	-33% to 33%
(4) Surplus Aid to Policyholders Surplus	[LESS THAN]15%
(5) Two-Year Overall Operating Ratio	[LESS THAN]100%
(6) Change in Policyholders Surplus	-10% to 50%
(7) Investment Yield	3.0% to 6.5%
(8) Liabilities to Liquid Assets	[LESS THAN]100%
(9) Gross Agents Balances to Policyholders Surplus	[LESS THAN]40%
(10) One Year Reserve Development to Policyholders Surplus	[LESS THAN]20%
(11) Two Year Reserve Development to Policyholders Surplus	[LESS THAN]20%
(12) Estimated Current Reserve Deficiency to Policyholders Surplus	[LESS THAN]25%
(13) Combined Ratio after Policyholder Dividend	[LESS THAN]115%
(14) Two Year Change in Surplus	[GREATER THAN]-10%
(15) Quick Liquidity	[GREATER THAN]20%
(16) Return on Surplus	[GREATER THAN]-5%
(17) Net Change in Adjusted Policyholder Surplus	-10% to 25%
(18) Risk Based Capital Ratio	[GREATER THAN] 200%

7 C.F.R. §400.162

83 FR 51302 , 11/13/2018