Enhancing the Allowance for Insurance Fund Loss Analysis
Closed Solicitation Posted
- Solicitation number
- RFP-23-FCSIC-002
- Agency
-
Farm Credit Administration
- Responses due
- Set-aside
- No set-aside
Opportunity facts
- NAICS code
- 524298 All Other Insurance Related Activities
- Place of performance
- McLean, Virginia 22102, United States
Notice details come from SAM.gov. Updated .
About this opportunity
The Farm Credit Administration is seeking proposals to enhance its Allowance for Insurance Fund loss analysis methodology. The solicitation involves two tasks - reviewing the agency's current risk assessment procedure and risk matrix, and developing enhancements. Additionally, offerors must provide project plans for creating a probability of default model and loss given default rating system for System banks and associations. Proposals will be evaluated based on experience in agriculture credit, allowance for loss methodologies, and stress testing financial institutions. The technical proposal is worth 80% of the total score. Proposals are due by February 7, 2024.
There is no set-aside designated for this procurement. The work will be performed in McLean, Virginia and involve reviewing confidential information, so only U.S.-based contractors may perform the work. The solicitation contemplates a labor-hours contract with fixed hourly rates for the first two tasks, which will review the current methodology and develop enhancements. Additional risk management support may also be requested under this contract.
Notice text
FCSIC has developed an Allowance for Insurance Fund Loss Procedure to evaluate the level of risk an insured bank poses to the Insurance Fund. FCSIC employs a risk matrix that contains general measures, financial ratios, and thresholds for assessing insurance risk. The risk matrix is divided into low-risk, medium-risk, and high-risk categories. Any System bank that breaches a medium- or high-risk threshold is closely scrutinized to determine whether a loss to the Insurance Fund is probable and can be reasonably estimated.
System bank losses could originate from investments, individual borrower loans and/or association direct notes. The probability of bank default related to any of these asset classes is generally very low. However, some associations are very large and a large association failure may cause its funding bank to default on its insured debt, exposing the Insurance Fund to losses.
The following tasks will be required:
Task 1:
- Review FCSIC’s Allowance for Insurance Fund Loss Procedure,
- Evaluate and opine on the appropriateness of the insurance risk matrix thresholds, and
- Develop enhancements to the current methodology for determining when a loss to the Insurance Fund is probable.
Task 2:
- Develop a high-level project plan for creating a model that computes a probability of default for each System bank and association, and
- Develop a high-level project plan for building out a loss given default rating system for the banks and associations in the System.
Additional advice and analytical support related to FCSIC’s risk management process may be requested.
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