Regulators gave initial approval to a proposal to exempt lower rated securities purchased by insurers from filing with an arm of the National Association of Insurance Commissioners.
During the winter NAIC meeting, regulators agreed to exempt securities that NAICs Securities Valuation Office rates 3-6 if those securities are rated by a nationally recognized statistical rating agency. NRSROs are rating agencies.
The SVO unit is the securities filing and rating unit for the NAIC. Rated securities from SVOs range from the highest investment grade ratings of 1 and 2, to lower ratings of 3-6.
In March, the New York insurance department initiated a project to streamline the SVO unit of the NAIC, based in Kansas City, Mo.
The first phase of the effort exempted securities rated 1 and 2. The second part of the streamlining exempts 3-6s.
Changes to the electronic filing system to reflect the exemption for 1 and 2 rated securities should be in place starting Jan. 1, 2004, with adjustments for the lower rated securities in place at a later time, according to regulators speaking at the Securities Valuation Office oversight working group.