Amidst detractors noting a possible conflict of interest, the National Association of Insurance Commissioners (NAIC) released a discussion draft outlining the economic assumptions regulators will use to evaluate residential mortgage backed securities (RMBS). The document is available on the Valuation of Securities Task Force page of the NAIC Web site.
On November 17, the NAIC selected bond-fund company Pacific Investment Management Co. (PIMCO) as a third-party financial modeler to assist state regulators as they establish a new guidelines based on methodology that will ultimately determine the risk-based capital (RBC) requirements for more than 18,000 RMBS securities owned by U.S. insurers at the end of 2009. Previously, the NAIC relied on rating-agency ratings in its capital guidelines.
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