NU Online News Service, Dec. 8, 2003, 6:02 p.m. EST, Anaheim, Calif. – Regulators here for the winter meeting of the National Association of Insurance Commissioners, Kansas City, Mo., have given initial approval to a proposal to exempt lower-rated securities purchased by insurers from routine review by the NAIC’s Securities Valuation Office.[@@]
During the meeting, regulators agreed to exempt securities that the SVO rates a 3-6 if those securities also are rated by a nationally recognized statistical rating agency.
The SVO unit is the NAIC’s securities filing and rating unit. At the SVO, 1 is the highest investment rating and 6 is the lowest.
In March, the New York State Insurance Department began a project to streamline the SVO.
The first phase of the effort exempted securities rated 1 and 2 from SVO scrutiny. The second part of the streamlining will exempt securities in the 3-6 category.
Changes to the electronic filing system to reflect the exemption for 1- and 2-rated securities should be in place starting Jan. 1, 2004. The SVO will make the changes for the lower-rated securities later, according to regulators who spoke at an SVO oversight working group meeting.