A top insurance regulator says the National Association of Insurance Commissioners should give the public more information about how it rates the riskiness of hybrid securities.
New York State Insurance Superintendent Howard Mills has written a letter to the NAIC, Kansas City, Mo., emphasizing the need for transparency and also asking the NAIC to defer acting on risk classifications of hybrid securities until commissioners decide how to handle the products.
Mills writes in the letter that he does not mean to criticize the NAIC’s Securities Valuation Office, the agency that rates the riskiness of insurance company investment holdings.
The SVO has been operating under the confidentiality guidelines established by the SVO Purposes and Procedures Manual, Mills concedes.
But “in order to defend a position, one must disclose the basis for the decision,” Mills writes.
Hybrid securities are financial instruments that combine some of the characteristics of stock with some of the characteristics of debt securities.