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FOR IMMEDIATE RELEASE
HYBRID SECURITIES CLASSIFICATION FOCUS OF JUNE 11 MEETINGKANSAS CITY, MO - (May 23, 2006) -The National Association of Insurance Commissioners (NAIC) announced today that a public meeting of the NAIC Valuation of Securities Task Force will meet June 11 to discuss the transparency of the current process governing the classification of insurer-owned hybrid securities. "Assessing the investment risks insurers take when building adequate reserves, monies which are set aside to pay policyholders' claims, goes to the very heart of our mission: to ensure the insurance industry's safety and soundness," said Howard Mills, Chair of the Task Force and New York Insurance Superintendent. "Yet at the same time, we recognize there are steps regulators can take to share information about our own decision-making process, especially when the ramifications of our decisions extend beyond the insurance industry." The public session will be led by Michael Moriarty, director of the NYSID's Capital Markets Bureau. The meeting will be held at 10:30 a.m. at the Wardman Park Marriott Hotel, 2660 Woodley Road NW, Washington, D.C., as part of the NAIC's regularly scheduled summer meeting. Mr. Moriarty will invite interested parties to comment on the ways in which the NAIC's Securities Valuation Office (SVO) can enhance communications to the financial services industry when classifying hybrid securities, and to what extent the SVO can offer a rationale for its classification decisions. Hybrid securities are investments structured to have characteristics of both equity (common and preferred stock) and debt. The classification of these securities is of great importance to insurers because, when a hybrid security is determined by the SVO to be equity rather than debt, the insurer will face substantially higher risk-based capital charges. The SVO, headquartered at 48 Wall Street in Manhattan, is responsible for the day-to-day credit quality assessment and valuation of securities owned by all of the nation's state-regulated insurance companies. Task Force members from 14 other states are scheduled to participate in the meeting.
About the NAIC About the NAIC Headquartered in Kansas City, Missouri, 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 the five U.S. territories. The NAIC’s overriding objective is to assist state insurance regulators in protecting consumers and helping maintain the financial stability of the insurance industry by offering financial, actuarial, legal, computer, research, market conduct and economic expertise. Formed in 1871, the NAIC is the oldest association of state officials. For more than 135 years, state-based insurance supervision has served the needs of consumers, industry and the business of insurance at-large by ensuring hands-on, frontline protection for consumers, while providing insurers the uniform platforms and coordinated systems they need to compete effectively in an ever-changing marketplace. For more information, visit NAIC on the Web at: http://www.naic.org/press_home.htm
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