Podcast Center
Video Center
Webcasts
Resource Center
Events
March 27, 2011 at 08:00 PM
The Valuation of Securities Task Force has agreed to expose a staff proposal that could let insurers invest assets in working capital finance note programs.
The task force, an arm of the National Association of Insurance Commissioners (NAIC), Kansas City, made the decision Sunday in Austin, Texas, at the NAIC’s spring meeting.
Task force members decided to give members of the public 45 days to comment on the proposal, and they also decided to discuss the proposal with NAIC panels that look at issues such as statutory accounting, reporting and blanks.
Insurers have been asking the NAIC about working capital finance note program investments because note marketers say the programs can give insurers relatively high investment returns in exchange for risk levels that are comparable to the risk levels insurers would face if they invested in the program sponsors’ short-term corporate bonds.
Large companies sponsor the programs to help vendors cope with the gap between when the company acknowledges that it must pay an invoice and when it actually pays the invoice.
The large company gets more control over when it sends out payments, and vendors get quick access to cash, task force staff members say in a document posted on the task force section of the NAIC website.
The investor in the program notes faces default risk and billing problem risk, staff members say.
