05 Guidance Exhibit 10

Guidance on Selected Appendix II Exhibits
Purpose
The purpose of this document is to provide guidance regarding RMA’s information
requirements and expectations as it pertains to selected Plan of Operations (Appendix II)
exhibits.
Exhibit 10m. – Commission Template
This template reflects the commissions paid to agents by state (policy location) and by
Revenue, All Other, and Catastrophic Risk Protection (CAT) insurance. These amounts
are separated between commissions paid as a percent of premium plus salaries paid, and
all other compensation (e.g. transfer, loss experience, and collection bonuses, profit
sharing, etc.).
RMA requires the actual amounts for the previous reinsurance year (ending June 30 of
last year), the actual plus estimated amounts for the current reinsurance year, and the
estimated amounts for the reinsurance year for which the Company is seeking approval.
Exhibit 10n. – Loss Adjustment Expense Template
This template reflects the loss adjustment expenses paid by state (claim location), with
the exception of column H amounts which are to be recorded based on the state in which
the loss adjuster resides. Include a narrative describing the allocation methodologies
used to develop the expense amounts.
RMA requires the actual amounts for the previous reinsurance year (ending June 30 of
last year), the actual plus estimated amounts for the current reinsurance year, and the
estimated amounts for the reinsurance year for which the Company is seeking approval.
Description of table column amounts:
B – Number of loss adjusters the Company has contracted, whether on a daily rate or
other rate basis.
C – Number of loss adjusters the Company compensates on a salary basis.
E – Total rate payments made to the contracted loss adjusters enumerated in column B.
F – Total salary payments, including performance based compensation, to the salaried
loss adjusters enumerated in column C.

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G – Total travel expenses incurred by all loss adjusters, excluding travel for training.
Loss adjustment travel expenses include hotel, mileage, meals, phone charges, and
other related expenses.
H – Total miscellaneous expenses related to loss adjustment. Miscellaneous expenses
include training (travel, materials, fees), loss adjustment (handbooks, forms,
equipment), and allocated expenses (data processing, management, overhead, support
staff, etc.).
J – Number of claims worked. A claim worked is defined as a claim assigned to a loss
adjuster to make a loss determination, regardless of whether an indemnity is
ultimately paid. RMA is not requesting the total number of notices of loss, but rather
the number of claims that best account for the expenses incurred.
Exhibit 10o. – Estimated Expenses Template
The Estimated Expenses Template reflects crop related expenses and revenues budgeted
for the reinsurance year, based on premium volume. Expenses are to be prepared
according to the National Association of Insurance Commissioners (NAIC) Annual
Statement Instructions.
RMA requires the actual amounts for the previous reinsurance year (ending June 30 of
last year), the actual plus estimated amounts for the current reinsurance year, and the
estimated amounts for the reinsurance year for which the Company is seeking approval.
Exhibit 10r. – Material Risk Assessment
Identify material threats or risks to the Company’s ability to meet its financial and
operational obligations under this Agreement, including the possible financial or
operational ramification, and the Company plan and resources to mitigate or minimize
risks.
A. Provide a copy of the Company’s latest maximum probable loss risk assessment,
whether conducted by the Company, a reinsurer, a reinsurance broker, or other party on
behalf of the Company. The assessment must detail the magnitude and frequency of loss
occurrence and include a description of the methodology used,
B. For each of the risks listed below: (a) state the probability of the risk occurring; (b)
describe the Company’s rationale for this assessment; and (c) identify controls, mitigating
actions, or plans the Company has established to manage the adverse effects of that risk.
1. MPCI operating expenses will exceed the Administrative and Operating
expense (A&O) subsidy provided by FCIC.
2. MPCI underwriting gains are insufficient to offset an expense deficit, defined
as actual MPCI operating expenses exceeding A&O subsidy.

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3. Policyholder surplus decreases more than ten percent in any calendar year.
4. Various threats cause a significant interruption in computer operations and
data transfer (e.g. viruses, loss of hardware or communications over an extended
period, etc).
5. A rating agency determines the Company’s ability to meet its current
obligations is marginal and that its financial condition is vulnerable.
6. Lines of credit or other financial arrangements are inadequate to facilitate cash
flow needs.
7. Commercial reinsurance availability is decreased or the cost increased (e.g.
reduced ceding commissions, increased premium rates, increased Company
retention).
8. Other potential threats to the Company’s finances or operations that are not
included above or in Exhibit 20.
RMA requires assurance that the Company management team and Board of Directors are
fully aware of the risks that could negatively impact the Company’s ability to meet the
terms of the Agreement and, through proper management controls, the Company is
actively engaged in mitigating or minimizing those risks.
Exhibit 20. – Contingency Plan
Describe how the Company will service the policies reinsured under the Agreement in
the event: the managing general agent or service provider listed in Exhibit 8 is no longer
able to meet the requirements of their agreement with the Company; the Company is no
longer able to meet the requirements of section II.A.8. and 9. of the Agreement, or is not
eligible to participate in the Federal crop insurance program.
The Company’s ability to meet the terms of the Agreement is dependent upon obtaining
the financial and operational resources needed to deliver and service the Federal crop
insurance program. Whether a Company is directly providing the resource or contracts
with a service provider, it must be prepared to manage a delivery system failure by
having assured access to alternative resources.
For each of the three resources listed below: (a) identify the entity or entities responsible
for providing the resource required to meet the terms of the Agreement; (b) alternative
means of obtaining the resource in the event the entity or entities listed in a) experience
failure; and (c) the estimated time and other resources needed to fully transition the
responsibility from the entity or entities listed in a) to the alternative entities listed in b).
Each service provider listed in Exhibit 8 should be identified and discussed with one or
more resources, as appropriate.

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The specific resources the Company must consider in its response are:
1. Financial. The plan must ensure that sufficient financial resources will be
available to continue proper operations, should occurrences adversely affect the
Company’s financial condition. In some cases, RMA will require that a
Contingency Plan include guarantees or sufficient assurances from parent
companies, or other entities, that financial resources will be available to meet the
terms of the Agreement.
2. Computer and Information Systems. The plan must describe backup computer
and information systems, how these systems will be deployed, and an estimate as
to how long it would take to resume normal operations.
3. Crop Insurance Expertise. The plan must ensure that the Company will have
sufficient expertise in crop insurance sales, underwriting, loss adjustment, data
processing, and other facets of crop insurance sales and service to assure
continued operations.
RMA requires assurance that the Company management team and Board of Directors
have considered all resources needed to meet the terms of the Agreement, and have
authorized the provisions of the Contingency Plan.

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