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SFA Submits Response to NAIC on SVO’s Discretion Over NAIC Designations

Provided by Structured Finance Association

On January 26, 2024, the Structured Finance Association (SFA) submitted a comment letter to the National Association of Insurance Commissioners (NAIC) in response to their exposure draft titled Amendment to the Purposes and Procedures Manual of the NAIC Investment Analysis Office (the “P&P Manual”) Authorizing the Procedures for the SVO’s Discretion Over NAIC Designations Assigned Through the Filing Exemption Process.  

SFA’s comment letter requests that the NAIC do the following:  

  • Narrow the scope of the application of SVO discretion, including the characteristics of the securities which are likely to be the focus of rating reviews.   


  • Amend its discretion procedures to provide insurance company investors the option to engage directly with the Senior Credit Committee and VOSTF in the rating review process, allowing for a more productive, collaborative and cost-effective process.


  • Answer questions about the discretion process, including the basis upon which the IAO will make a determination that the NAIC designation equivalent of a CRP rating is not a “reasonable assessment of risk for regulatory purposes,” and how the three-notch materiality threshold was derived, among others. 


  • Provide clarity on proposed “neutral third parties,” detailing about the responsibilities, and function of this role .