The board of the Farm Credit System Insurance Corporation approved the payment of approximately $76.6 million in excess insurance funds to Farm Credit System banks.
By law, the Farm Credit Insurance Fund, which FCSIC administers, must maintain a “secure base amount” equal to 2% of the adjusted outstanding insured obligations of the Farm Credit System.
At the end of each year, FCSIC is required to transfer any amount over the secure base amount — after deducting its operating expenses and current insurance obligations — to “allocated insurance reserves accounts,” one for each bank that pays premiums into the Farm Credit Insurance Fund. The board, however, does have the authority to hold the excess funds if conditions warrant. Premium accrual rates for 2025 were previously set by the board in February at 10 basis points, which is below the maximum premium rate of 20 basis points. FCSIC estimates that the 10 basis points will allow the system to grow up to 9% in 2025 and still allow the insurance fund to end 2025 above the secure base amount.
Total amount over the secure base amount at the end of last year was $81.9 million. After subtracting $5.3 million for the corporation’s 2025 operating funds, FCSIC transferred approximately $76.6 million to the allocated insurance reserves accounts, and the FCSIC board has now voted to return the approximately $76.6 million in excess funds to the system banks.
