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BULLETIN NO.: MGR-98-020

TO:               All Reinsured Companies; OVERNIGHT MAIL
                  All Risk Management Field Offices
                  All Other Interested Parties

FROM:             Kenneth D. Ackerman    /s/ Kenneth D. Ackerman   July 30, 1998
                  Administrator

SUBJECT: Revised Amendment No.1 to the 1998 SRA to Implement the 1998 Research
 Act

BACKGROUND:

On  June  30,  1998,  the  Federal  Crop  Insurance  Corporation  (FCIC)  issued
MGR-98-018 and Amendment No. 1 to the 1998 Standard Reinsurance  Agreement (1998
SRA) to implement  changes required by Subtitle C of the Agricultural  Research,
Extension,  and  Education  Reform Act of 1998  (1998  Research  Act).  The crop
insurance industry requested additional time to sign and submit the amendment so
that several  issues  regarding  the  administration  of changes  under the 1998
Research Act could be clarified.  On July 22, 1998,  FCIC officials met with the
Industry Steering  Committee to discuss the outstanding issues and the following
was decided: 1) FCIC will collect  administrative fees after it is notified that
policyholders are indebted for non-payment of  administrative  fees and declared
as such through the Ineligible  Tracking System;  and 2) Eligible crop insurance
contracts  for  which  fees are due  shall  be  terminated  due to  indebtedness
effective for the crop year following the termination date used to determine the
policyholder's ineligibility.

ACTION:

Attached  are two copies of the  revised  Amendment  No. 1 to the 1998 SRA which
must be  executed  for FCIC to provide  reinsurance  and subsidy 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  within 10
business  days  after  receipt.  The  amendment  should be signed by the  person
authorized by the reinsured 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-S

                       Washington, DC 20250
                   Phone: (202) 720-4232
Failure to execute  the  amendment  will  terminate  your  Standard  Reinsurance
Agreement as of the end of the 1998 reinsurance year (June 30, 1998).

Attachments (2) - will follow in overnight mail










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1998 Standard Reinsurance Agreement
(Rev. 7/29/98)

                             AMENDMENT NO. 1 TO THE

                       1998 STANDARD REINSURANCE AGREEMENT

The  Standard   Reinsurance   Agreement   between  the  Federal  Crop  Insurance
Corporation  and the  undersigned  Company  is hereby  amended  for the 1999 and
subsequent reinsurance years, as follows:

(I) Section III.A.2. is amended to read as follows:

2.       A&O subsidy for eligible crop insurance contracts will be determined as
         set forth below and will be paid to the Company on the monthly  summary
         report after the Company  submits,  and FCIC accepts,  the  information
         needed to  accurately  establish  the  premium for such  eligible  crop
         insurance  contracts.  Notwithstanding  the provisions of this section,
         under no circumstances will A&O subsidy be paid in excess of the amount
         authorized by statute.

         a.       For any eligible CAT crop insurance contract, zero percent of
                  net book premium.

         b.       For eligible crop insurance  contracts  that provide  coverage
                  under GRP, 22.7 percent of the net book premium  attributed to
                  such eligible crop insurance contracts.

         c.       For  revenue  insurance  plans  that  can  increase  liability
                  whenever the market  price at the time of harvest  exceeds the
                  market price at the time of planting,  21.1 percent of the net
                  book  premium  attributed  to  such  eligible  crop  insurance
                  contracts; and

         d.       For revenue  insurance  plans that can not increase  liability
                  whenever the market price at harvest  exceeds the market price
                  at the time of planting,  24.5 percent of the net book premium
                  attributed to such eligible crop insurance  contracts,  not to
                  exceed the amount that would have been paid had each  eligible
                  producer  purchased  limited or additional  coverage  under an
                  insurance plan that insures loss of individual yield; and

         e.       For all other eligible crop insurance contracts, 24.5 percent
                  of the net book premium attributed to such eligible
                  crop insurance contracts.


(II) Section III.B. is amended to read as follows:

B.       The Company shall remit to FCIC, in accordance with Manual 13, the
         following administrative fees collected from eligible
         producers:

         1.       For CAT:

                  a.       Basic fee:  the greater of $50 or 10 percent of the
                           net book premium for each eligible crop insurance
                           contract; and

                  b.       Additional fee:  $10 for each eligible crop insurance
                           contract.

                  c.       In the  event  the  eligible  producer  is a  limited
                           resource farmer as defined in 7 C.F.R.  400.651,  the
                           Company shall submit the required information to FCIC
                           in accordance with Manual 13 and FCIC shall waive the
                           appropriate fee on the monthly summary report.

         2.       For limited coverage:

                  a.       $50 per eligible crop insurance contract, not to
                           exceed $200 per county and $600 for all counties
                           combined for each eligible producer.

                  b.       In the  event  the  eligible  producer  is a  limited
                           resource farmer as defined in 7 C.F.R.  400.651,  the
                           Company shall submit the required information to FCIC
                           in accordance with Manual 13 and FCIC shall waive the
                           appropriate fee on the monthly summary report.

         3.       For additional coverage, an additional fee of $20 per
                  eligible crop insurance contract.

(III) Section IV is amended to read in its entirety as follows:

FCIC will pay to the  Company an amount  equal to 11.0  percent of the total net
book premium for  eligible CAT crop  insurance  contracts.  The loss  adjustment
expense specified in this section will be included in the monthly summary report
containing  the data obtained from acreage  reports that have met the processing
provisions specified in Manual 13.

(IV) Section V.B.4. is added to read as follows:

4.       Producer premiums and administrative fees collected by the
         Company must be reported as follows:

         For CAT crop  insurance  contracts,  all  administrative  fees  must be
         reported on the monthly summary report  following the month  containing
         the termination date.

         For all other  crop  insurance  contracts,  producer  premiums  and all
         administrative  fees must be reported on the monthly summary report for
         the earlier of the month  following the date of collection or the month
         following the month containing the billing date if uncollected.

(V) Section V.B.9. and 10. are to read as follows:

9.       Policyholders  who do not  pay  administrative  fees on or  before  the
         applicable  termination date are ineligible because of indebtedness and
         the Company shall report such via the Ineligible File Tracking  System.
         Administrative fees payable by such policyholders will offset the total
         fees  reported  in  accordance  with  Section  V.B.4.   Crop  insurance
         contracts  shall be reported as terminated for  indebtedness  effective
         for the crop year  immediately  following the termination  date used to
         determine the policyholder's status of eligibility.

10.      If  the  Company  terminates  the  policy  due to  the  non-payment  of
         administrative  fees  and  reports  such  to  FCIC  through  Ineligible
         Tracking  System,  FCIC will perform  debt  collection  activities  for
         administrative fees which are due from indebted policyholders.

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








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