1. (a) The after-tax rate of return for property and casualty insurance, corresponding to the lower boundary of the range of reasonable returns, is 10.0 percent.

2. (b) For the rollback period, leverage factor for each line shall be determined on a groupwide basis from the following table:

   Line

   Leverage Ratio

   Fire

   3.50:1

   Allied Lines

   3.50:1

   Farmowner Multiple Peril

   2.50:1

   Homeowner Multiple Peril

   2.50:1

   Commercial Multiple Peril

   1.75:1

   Inland Marine

   3.50:1

   Medical Malpractice

   1.00:1

   Earthquake

   2.00:1

   Other Liability

   1.00:1

   Private Passenger Auto Liability

   2.00:1

   Commercial Auto Liability

   2.00:1

   Private Passenger Auto Physical Damage

   5.50:1

   Commercial Auto Physical Damage

   5.50:1

   Aircraft

   1.00:1

   Fidelity

   2.00:1

   Glass

   5.50:1

   Burglary & Theft

   4.00:1

   Boiler & Machinery

   2.50:1

3. (c) To the extent that an insurer has operated during calendar-year 1989 on less surplus than the leverage factor would prescribe, the insurer's actual leverage ratio shall be used. The insurer's actual leverage ratio shall be computed by allocating the insurer's surplus to lines in proportion to the insurer's average 1989 reserves as specified in section 2644.21.

Note: Authority cited: Sections 1861.01 and 1861.05, Insurance Code. Reference: Sections 1861.01 and 1861.05, Insurance Code; Calfarm Insurance Company v. Deukmejian (1989) 48 Cal.3d 805.

History

1. New section filed 8-13-91 as an emergency; operative 8-13-91 (Register 92, No. 3). A Certificate of Compliance must be transmitted to OAL 12-11-91 or emergency language will be repealed by operation of law on the following day.

2. Amendment of subsection (a), new subsection (b) and renumbering filed 10-8-91 as an emergency; operative 10-8-91 (Register 92, No. 13). A Certificate of Compliance must be transmitted to OAL 2-5-92 or emergency language will be repealed by operation of law on the following day.

3. New section filed 2-20-92 as an emergency; operative 2-20-92 (Register 92, No. 19). A Certificate of Compliance must be transmitted to OAL 6-19-92 or emergency language will be repealed by operation of law on the following day.

4. Certificate of Compliance as to 2-20-92 order transmitted to OAL 6-19-92 and filed 7-28-92 (Register 92, No. 31).