The accounting treatment for MPCI is different than the more traditional property and casualty insurance lines. For income statement purposes, gross premiums written consist of the aggregate amount of MPCI premiums paid by farmers, and does not include any related federal premium subsidies. The Company's profit or loss from its MPCI business is determined after the crop season ends on the basis of a profit sharing formula established by law and the RMA. For income statement purposes, any such profit share earned by the Company, net of the cost of third party reinsurance, is shown as net premiums written, which equals net premiums earned for MPCI business; whereas, any share of losses payable by the Company is charged to losses and loss adjustment expenses. Due to various factors, including timing and severity of losses from storms and other natural perils and crop production cycles, the profit or loss on MPCI premiums is primarily recognized in the second half of the calendar year. The Company relies on loss information from the field to determine (utilizing a formula established by the RMA) the level of losses that should be considered in estimating the profit or loss during this period. Based upon available loss information, the Company has historically recorded an estimate of the profit or loss during the third quarter and then re-evaluated the estimate using additional loss information available. Due to the nature of the CRC product whereby results are influenced by changes in the market prices of various commodities in the fourth quarter and the increasing significance of CRC as a percentage of MPCI, the Company intends to record its initial estimate of the profit or loss for the 2000 crop results in the fourth quarter of 2000.
Forward-looking information set forth herein does not take into account any impact from any adverse weather conditions during the 2000 crop season, or the various other factors noted above which may affect crop and noncrop operation results. See "Business-Uncertainties Affecting the Insurance Business" and "Management's Discussion and Analysis of Financial Condition and Results of Operations-General" above for additional information regarding these events and factors.
In 1997, AICI Capital Trust, a Delaware business trust organized by the Company (the "Issuer Trust") issued 3.795 million shares or $94.875 million aggregate liquidation amount of its 9% Preferred Securities (liquidation amount $25 per Preferred Security). The Company owns all of the common securities (the "Common Securities") of the Issuer Trust. The Preferred Securities represent preferred undivided beneficial interests in the Issuer Trust's assets. The assets of the Issuer Trust consist solely of the Company's 9% Junior Subordinated Debentures due 2027 which were issued in 1997 in an amount equal to the Preferred Securities and the Common Securities. Distributions on the Preferred Securities and Junior Subordinated Debentures are cumulative, accrue from the date of issuance and are payable quarterly in arrears. The Junior Subordinated Debentures are subordinate and junior in right of payment to all senior indebtedness of the Company and are subject to certain events of default and redemptive provisions, all described in the Junior Debenture Indenture. At December 31, 1999, the Company had $94.875 million outstanding at a weighted average interest cost of 9.2%.
The Company's profit or loss from its MPCI business is determined after the crop season ends on the basis of a profit sharing formula established by law and the RMA. Commencing with the 1997 year, the Company receives a profit share in cash, with 60% of the amount in excess of 17.5% of its MPCI Retention (as defined in the profit sharing agreement) in any year carried forward to future years, or it must pay its share of losses. Prior to the 1997 year, the amount carried forward to future years was any amount in excess of 15% of its MPCI retention. The Company received $51.5 million in payments under the MPCI program in March of 1999. The Company is expecting to receive a net payment of approximately $61.6 million under the MPCI program in March of 2000. See "Management's Discussion and Analysis of Financial Condition and Results of Operations General" above for additional information regarding the effects of the seasonal nature of the crop business on the Company's cash flow.
The Company identified its information technology ("IT") systems requiring modification to be Year 2000 compliant and implemented a corrective plan to make necessary modifications to, and to test, the Company's IT systems for Year 2000 compliance. The Company also reviewed its Non-IT systems which rely on microprocessors, such as copiers, fax machines, telephone equipment and mail room equipment and made, or required lessors and other providers to make, all of its Non-IT systems Year 2000 compliant. As of the date of this report, the Company's IT and Non-IT systems have functioned normally at all times prior and subsequent to January 1, 2000. None of the Company's material relationships with third parties have been disrupted by the advent of year 2000 as of the date of this report.