Automated Valuation Service (AVS)
Frequently Asked Questions (FAQs)
General AVS Questions
Will we be charged the one time $275 set-up fee since we will not be changing services?
If you all ready have an AVS User ID, the $275 set-up charge will not apply
What is the cost on receiving a portfolio valuation file for each quarter-end? Does a year-end valuation file need to be requested for each quarter or is this an Ad-hoc Valuation Report Portfolio Listing Report? Can these files be printed out so as to provide an audit trail?
A quarterly valuation is an optional, ad-hoc report and costs $385 each time you request one. You do not need to request a valuation at year-end, because these will be run automatically. The year-end valuations cost $550. All these reports can be printed, or you can even request a printed copy be sent to you.
What does the portfolio listing reports provide?
A listing report provides you with the description of all the securities in your portfolio but does not give you the NAIC designations or pricing.
If an insurance company had subsidiaries is there an additional set-up charge fee per company?
You are not charged for subs if you maintain all of them in one portfolio. You will get only one report with the information for all your companies, which you would somehow sort out on your end. If you wish to set up each company with its out portfolio you will get separate reports for each, but you will have to pay all the fees, including the $1400 annual fee for each portfolio.
For multiple cusip holdings, do you get charged once or for each time the cusip is submitted?
You are only charged when the CUSIP is added to the portfolio, and a CUSIP cannot be added if it is all ready in the portfolio.
What is the deadline for submitting files and requesting valuations at both quarter end and month end?
Quarter-End: Most customers submit an update file with new CUSIPs and then request a valuation. To get the earliest possible valuation back, you should request the valuation on the last business day of the quarter. Do not request it any earlier. The update file can be sent that day or a few days before. The valuation would then be available on the second business day of the new quarter. If you do not get your request in on the last business day, you can submit it on the second business day of the new quarter or any day thereafter. The report will be available the next day.
Month-End: All rules from Quarter-End apply, with one exception - you will need to request your valuation file in the first business day of the month.
There is a security in my portfolio that is not showing any information on my Valuation File.
Securities are dropped from the VOS database as a result of no Annual Update being filed. If therefore, you had a security in your portfolio that had not been updated, but had also not been removed either manually or though the batch update process, would continue to appear in your portfolio but would show no information.
*For specific direction on how to maintain your Full-Access, AVS System Portfolio, please see your AVS Users Guide.
I have a security in my AVS Valuation or Listing that has no check digit.
When a check digit and all other data is missing from an AVS Valuation or Listing, that means that the security is in the user's portfolio, but is not available in the AVS Product. It is intentionally put in the Valuation or Listing as a sign to the user that the security is in their portfolio even if AVS doesn't have any other information about it.
Government Exempt Questions
Are U.S. government securities still exempt from filing?
With enhancements deployed in the ISIS August 2004 Release, Government Exempt securities, per P&P Manual Appendix 16, 17, and 18, will no longer be displayed as Filing Exempt or Unconfirmed Filing Exempt. If you have these Government Exempt securities in your AVS portfolio, then your AVS valuation and listing files will display only the Cusip information for those securities. All other fields for the government exempt securities will be blank. In addition, you will no longer be able to add these securities to your portfolio.
Filing Exemption General Questions
Understanding the NAIC Filing Exemption (FE) Rule
This document provides general information and answers to frequently asked questions regarding the new filing exemption (FE) rule adopted by the Valuation of Securities Task Force of the NAIC Financial Conditions Committee. While every attempt has been made to set forth accurate information in this document, the Purposes & Procedures Manual of the NAIC Securities Valuation Office (the P&P Manual) is the official NAIC source for filing requirements.
What is FE?
FE or filing exemption is a new rule adopted by the NAIC which grants an exemption from filing with the SVO for bonds and preferred stock that have been assigned a current, monitored rating by an NRSRO. FE replaces the PE or provisionally exempt rule. FE also includes filing exemption for public common stock but the basis for the exemption is the same as it was under the PE policy – that is, public common stock that is not restricted to transferability and is listed on the New York Stock Exchange, American Stock Exchange or traded on the NASDAQ National Market System does not need to be filed with the SVO.
How is FE Defined?
Until the publication of the July 1, 2004 P&P Manual, the definition for FE appears in the Special Insert section of the December 31, 2003 version of the SVO P&P Manual. FE is defined as follows:
“FE means exempt from filing with the SVO and is used by an insurance company to report an NAIC Designation for an exempt security on the NAIC Financial Statement Blank. The administrative symbol FE is used with an NAIC 1 through 6 Designation and signifies that the reported security meets the criteria set forth in Part Four, Section 2 (c) of this Manual and that the NAIC Designation was arrived at by the insurer by converting the NRSRO rating(s) into a corresponding NAIC Designation in accordance with Section 4 of the Appendix to this Manual.”
What are the criteria for FE?
The only FE criterion is that the security, at the CUSIP/PPN/CINS level, has an NRSRO rating. It is only necessary to have one NRSRO rating. If more than one NRSRO rating exists, then the second highest NRSRO rating is used. Split ratings are resolved in accordance with the “second highest” portion of the rule. Split rated securities are not filed with the SVO. In addition, please note that Dominion Bond Rating Service (DBRS) was added to the approved NRSRO list in October 2003. Its ratings may be used for a security to qualify as FE.
Who should I ask specific questions about FE Securities?
Displaying FE information in the ISIS system is not a service that the SVO office provides. This information comes from NRSRO and pricing data feeds and is neither produced nor reviewed by the SVO Office. Any questions about FE Securities will need to be directed to the rating and/or pricing agency.
How will FE Preferred Stocks appear in the AVS/ISIS system?
If a Preferred stock is FE, it will appear as 1FE, 2FE, etc. The filer will assign the P or RP suffix when they report the security on their Quarterly or Annual Statutory Statements.
I have a security that was had a VOS designation at the end of the year, but shows a FE Designation on my most current valuation file. I do not feel that this security qualifies as FE. Is this security really FE?
Securities in VOS with a current year review date are excluded from the FE process and display in AVS as VOS securities. On the day after the Addendum, all securities in VOS have, by definition, a prior year review date and are therefore NOT EXCLUDED from the FE process. They all flow through FE and will be assigned an FE Designation if there's a rating on any of the rating agency feeds.
*These securities will stay FE until an Annual Update ATF is completed by an analyst who will then give it a current year review date.
Yesterday the CUSIP was FE and today it is in VOS. What happened?
An ATF was filed and the security was assigned an NAIC designation and current year review date using the FE rule.
When did the FE Rules go into effect?
The FE policy was effective as of January 1, 2004
Who adopted the FE Rules?
The FE Rules began as a proposal from the New York Insurance Department to enhance the SVO process. It was first exposed for comment at the March 2003 NAIC SVO Oversight Working Group meeting. The FE Rules were adopted in two steps. The first step occurred at the September 2003 NAIC quarterly meeting, when securities with NRSRO ratings equivalent to NAIC 1 or 2 were adopted as filing exempt. Securities with NRSRO ratings equivalent to NAIC 3-6 were adopted as filing exempt at the December NAIC quarterly meeting. Both steps have an effective date of January 1, 2004.
What types of asset-backed securities are filing exempt?
All asset-backed securities with an NRSRO rating are FE.
Are Commercial Mortgage-Backed securities eligible for FE?
Yes, as long as it has an NRSRO rating.
Will the NAIC/SVO monitor exempt securities?
SVO staff will not; however, the NAIC has computer system capabilities to compare insurer holdings of FE securities to NRSRO data feeds. Insurance regulators are responsible for determining insurance company compliance with exemption requirements
How will FE securities get into the NAIC database?
Securities reported as FE in an insurer’s quarterly/annual Schedule D will be added to the NAIC database. A systems comparison to the NRSRO data feeds will then be done.
Securities are included in the database as FE dependant upon whether or not the particular security has an NRSRO rating in the NRSRO data feeds.
What does “Unconfirmed FE” mean?
“Unconfirmed FE” refers to securities that are:
- In Schedule D or were individually submitted for FE status, and
- Failed to achieve FE status, and is one of the following:
- In VOS but not currently reviewed or Not in VOS.
Filing Exemption Filing Questions
Who should I ask specific questions about FE Designations?
Displaying FE information in the ISIS system is not a service that the SVO office provides. This information comes from NRSRO and pricing data feeds and is neither produced nor reviewed by the SVO Office. Any questions about FE Securities will need to be directed to the rating and/or pricing agency.
What does filing exempt designation mean for the filer?
A filing exempt status means a filer is not required to submit a NRSRO rated security with the SVO. If the filer chooses to ignore the filing exempt status of the security, then an NRSRO rated security will be reviewed using the FE based rule.
What if there is only one NRSRO rating available?
The security is filing exempt and the NRSRO rating is translated to the NAIC Designation equivalent.
What happens if there is more than one NRSRO rating?
In this case, the second highest NRSRO rating is used. For example, if there are three NRSRO ratings which translate to the equivalent of NAIC 1, NAIC 1 and NAIC 2, then the second NAIC 1 is the second highest.
A company determines that a security is FE, but the security has been filed by a second company and rated by the NAIC/SVO. How should the first company report the security?
The rating that is selected by the NAIC when it conducts its cross check of the NRSRO data feeds controls, and all owners of the security must report their holdings using the determinations of the NAIC.
Is it permissible to file a security for an NAIC Designation even though the security is FE?
Yes. An insurer or its authorized agent may file a security with the NAIC/SVO even if that security is FE. If a security is filed, however, it loses its FE status and becomes subject to the appropriate SVO filing rules and fees.
Can a company do its own conversion of ratings for filing exempt securities?
Yes. For a complete listing of NRSRO ratings and NAIC Designation equivalents, please refer to the Appendix, Section 4 of the SVO P&P Manual.
What do I do if the security no longer qualifies under the FE rules?
Since all rated securities are exempt from filing with the SVO, the only way a security becomes ineligible for FE is if it is no longer rated by an NRSRO. In that case, the normal NAIC/SVO filings procedures apply, and securities no longer qualifying for FE must be filed with the NAIC/SVO within 120 days of the loss of the FE status.
Is the insurer responsible for checking ratings from all NRSRO’s?
Yes. Due diligence requires that all NRSRO ratings be known before FE is claimed by a company.
If an insurer is uncertain if a security is filing exempt or not, what should it do?
It should confirm the existence of an NRSRO rating for that CUSIP. You can additionally look up a specific security using either the AVS or ATF portions of the ISIS System.
Will the filer be charged for submitting a security to find out the filing exempt status?
No
If a filer submits a security and the ATF process determines it is FE, will the filer be charged?
No. The filer will only be charged if they choose to continue the ATF process and submit the ATF to the SVO for review. The filer will then be charged the appropriate ATF Filing Fee.
If the issuer is rated, but the CUSIP is not, is this FE?
No. The CUSIP must have the NRSRO rating in order to qualify for FE.
For structured securities, Bloomberg recently changed the terminology for the rating date from confirmed date to effective date. Is this date acceptable for a current NRSRO rating?
Yes.
What should a filer do if a security is an unconfirmed FE within the FE database, and they feel it qualifies as FE?
The filer can “Submit the CUSIP for Filing Exempt” through the ISIS system. There’s a “Filing Exempt” link at the top of the ISIS Screen, on the blue bar. The system will determine if the CUSIP qualified as FE and will display a message on the screen.
Filing Exemption Reporting Questions
Who should I ask specific questions about an FE Valuation?
Displaying FE information in the ISIS system is not a service that the SVO office provides. This information comes from NRSRO and pricing data feeds and is neither produced nor reviewed by the SVO Office. Any questions about FE Securities will need to be directed to the rating and/or pricing agency.
What is the procedure for assigning a suffix of "FE" to a security?
The insurer is responsible for assigning the FE suffix to the Designations it reports for filing exempt securities in its Annual and Quarterly Statutory Statements.
If a security is filing exempt (FE), will it require a "Z" suffix in the quarterly and annual statements?
No.
Will common stock be reported on Schedule D with an “FE” or “L” or both?
Common stock will only report “L” on Schedule D.
A security was SVO rated in 2003, but has not been reviewed for 2004. We have until the end of 2004 to file the annual update if we want. NRSRO ratings exist for this security, so it is FE eligible. How would I handle this?
We would recommend reporting this as FE beginning first quarter 2004.
If we have a private rating letter for a security, do we have to submit evidence of it to designate the security as FE, or just be able to support the FE designation and answer questions from the state examiners?
At this point in time, the company should just maintain evidence of the private letter rating to support its FE designation. Industry is exploring the possibility of having private letter ratings included in the data feeds.
In the past, the SVO has categorized a debt security as preferred. How should I classify this for FE purposes?
If the FE security is classified by the NRSRO as debt, it should be reported as debt. If it is classified by the NRSRO as preferred stock, it should be reported as preferred stock.
Filing Exemption Pricing Questions
Will the SVO be pricing FE securities and equities that are filing exempt?
To the extent that prices are received through the NRSRO data feeds, the SVO will continue to provide prices for filing exempt securities.
What pricing information will display for FE securities?
FE securities will display a price, price date, price code and market indicator when pricing is available.
Filing Exemption AVS/ISIS System Questions
How will the Valuation of Securities on CD-Rom display a security that is filing exempt?
Filing Exempt securities will be reflected in a separate Filing Exempt database menu option.
When I try to do an ATF for a CMBS and I enter the CUSIP number and click the next button, the next screen responds with – “This CUSIP # you entered is FE eligible, do you want to continue filing?” Do these securities still need to be filed?
No. The message is informing the user that according to the NAIC/SVO system, an NRSRO rating exists. Since an NRSRO rating exists, an SVO filing is not required.
What is the definition of the “Filing Year” field on the ATF screen/documents?
“Filing Year” is the year the filer is requesting the review be applied to. For instance, under normal circumstances, the filing year would be the current year. However, if the filer were asking for a review for a previous year, they would enter that year in this field on the screen.
How can I identify within my valuation file from AVS whether or not a security is Unconfirmed FE?
Within the 2004 AVS file format, Unconfirmed FE securities are identified by a blank in the Source Column.
I have an FE security that is not showing up as FE. How do I get it added to the system?
FE securities are added to the FE database in two ways. First, by an application run daily that matches securities in the Schedule D database to the NRSRO feeds and, second, through an application in the ISIS on line system that allows you to submit a specific CUSIP to determine if it is FE eligible. The address of the free on-line application is http://isis.naic.org/cgi-bin/Login.cgi.
The designation for an FE security is wrong. How do I get it changed?
A security is determined to be FE by an automated process involving data feeds from rating agencies and the CUSIP Bureau. The designations assigned to FE securities are accurate. The NRSRO data feeds we purchase are the same as the feeds provided to the market and cannot be modified by either the NAIC or the SVO. If there is a discrepancy between your data and the information you're receiving from ISIS, please contact the appropriate rating agency for guidance.
My FE security is not showing a price. How can the price be added to the system? How do I report the security on my Schedule D if ISIS doesn't give me a price.
Prices for FE securities are obtained when available from pricing feeds. Neither the NAIC nor the SVO can add or change a price for an FE security. You should contact the Financial Services Department at 816-783-8400 for further instructions on how to report prices for FE securities on your financial statements. If you must have an NAIC derived price, you will have to file the security with the SVO through the ATF system.
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