State insurance regulators are proceeding in its effort to create a system to better assess the CMBS holdings in insurers’ portfolios. On July 28, the National Association of Insurance Commissioners, Kansas City, Mo., released a request for proposal for a vendor to model expected losses on approximately 7,500 commercial mortgage-backed securities through Dec. 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.
Responses are due by Aug. 11. A vendor is anticipated to be selected by Sept. 3, 2010.