The U.S. Securities and Exchange Commission is asking how to apply efforts to de-emphasize credit ratings to the registration requirements for insurance funding agreement securitizations.
SEC officials mention funding agreement securitizations in a proposed rule released today.
The proposed rule, the third in a series of three proposed rules dealing with use of securities ratings, is part of an SEC effort to encourage investors to depend less on rating agencies and more on their own due diligence when evaluating securities.
The topic of insurance funding agreement securitizations crops up in a section on proposed changes in “shelf registration” rules for issuers of asset-backed securities.
Shelf registrations give companies a vehicle for filing the paperwork for a securities sale ahead of time, then selling the securities when they believe conditions are right.
Issuers of asset-backed securities now can use a relatively simple SEC registration form, Form S-3, rather than the longer Form S-1, “if they are rated investment grade by [a nationally recognized securities rating organization] and meet certain other conditions,” SEC officials write in a preamble to the proposed rule.
The “other conditions” include a requirement that less than 20% of the assets in a pool consist of delinquent assets.