SFA Signs Joint Trade Comment Letter on NAIC Designations

On July 14, 2023, SFA, along with five other trade associations, submitted a comment letter to the National Association of Insurance Commissioners (NAIC), regarding proposed changes to their Practices and Procedures Manual. These changes would authorize the Securities Valuation Office’s (SVO) discretion over NAIC ratings designations, which would impact the amount of capital required to be held by insurers. The letter notes procedural deficiencies in the proposal, including a lack of an adequate appeals process for those ratings challenged by NAIC staff.

Key Points:

• The trades recommend changes to the NAIC designations process to strike the right balance between the NAIC’s need for ratings oversight with the capital markets’ need for transparency and due process.
• The trades request that the NAIC’s process and methodology for challenging a rating be publicly disclosed, and that NAIC furnish regular reports and public updates.
• The letter emphasizes that the industry should be able to challenge NAIC ratings designations through a transparent appeals process, involving an independent third party.