Insurance companies hold nearly $3 trillion in rated bonds and the insurance industry constitutes the largest sector of the financial services industry to rely on credit ratings to supervise capital asset adequacy. Insurance regulators currently mandate the use of credit ratings to determine capital reserves and other regulatory requirements for insurance companies.
In February this year, the NAIC created a Rating Agency (E) Working Group charged with conducting a comprehensive evaluation of the reliance on NRSRO ratings by state insurance regulators and the NAIC, the insurance industry and the insurance marketplace. The Working Group, co-chaired by Acting New York Insurance Superintendent James J. Wrynn and Illinois Insurance Director Michael T. McRaith, will hold this hearing as part of that evaluation process.
During the hearing, the Working Group will gather information from panels addressing:
* The historical reliance of insurance regulators on ratings and the impact of this reliance;
* Issues concerning ratings, particularly related to structured securities and municipal bonds;
* Recent systemic remedies or procedural changes enacted by NRSROs;
* Recommendations and alternatives to NRSROs for prudential regulation.
Following the hearing, the Working Group will develop and present a final report documenting the findings and any recommendations for corrective action available to the NAIC and its members, as well as recommendations to the federal government on NRSRO regulation.
The public hearing will take place during the NAIC Fall National Meeting on September 24, from 8:30 a.m. – 5:00 p.m. ET at the Gaylord Convention Center in National Harbor, MD.