WASHINGTON, D.C. (July 28, 2010) — The National Association of Insurance Commissioners (NAIC) has released a request for proposal (RFP) for a vendor to model expected losses on approximately 7,500 commercial mortgage-backed securities (CMBS) as of December 31, 2010. This process will determine the NAIC designations utilized by insurance companies to calculate the solvency reserves required to cover their CMBS holdings.
At the end of 2009, the NAIC used a similar method to establish NAIC designations for more than 21,000 residential mortgage-backed securities (RMBS) owned by U.S.-domiciled insurance companies. At the NAIC's Spring National Meeting in March, its Financial Condition Committee adopted a recommendation to model CMBS at the end of 2010. This recommendation is expected to be approved by the NAIC Executive Committee/Plenary during the upcoming Summer National Meeting, Aug. 12 – 17, in Seattle.
"Nearly three years after the onset of the financial crisis, the U.S. insurance industry continues to remain strong compared to the rest of the financial sector," said Jane L. Cline, NAIC President and West Virginia Insurance Commissioner. "State regulators believe that adding this tool will improve our view of structured securities and our industry. As we decide to extend this type of treatment to CMBS, we will again look to partner with an established leader in the field.”
Applicants must have the following qualifications to be considered:
•Be a nationally recognized institution with at least five years of recent and contiguous experience in modeling CMBS;
•Have the capacity to assign qualified staff to this project until it is completed;
•Have sufficient data processing capability to generate these valuations by early December 2010; and
•Have safeguards in place to avoid conflicts of interest.
Responses to the RFP are due by Aug. 11, 2010. Responses will be reviewed by members of the NAIC staff in conjunction with an independent third party consultant, and a recommendation will be made to the Executive Committee for its approval.
A vendor is anticipated to be selected by Sept. 3, 2010.
ClickHERE to access the RFP.
About the NAIC
Formed in 1871, the National Association of Insurance Commissioners (NAIC) is a voluntary organization of the chief insurance regulatory officials of the 50 states, the District of Columbia and five U.S. territories. The NAIC has three offices: Executive Office, Washington, D.C.; Central Office, Kansas City, Mo.; and Securities Valuation Office, New York City. The NAIC serves the needs of consumers and the industry, with an overriding objective of supporting state insurance regulators as they protect consumers and maintain the financial stability of the insurance marketplace. For more information, visit www.naic.org
