NAIC Holds Public Hearing On The Role Of Rating Agencies In State Insurance Regulation

Sep 25, 2009

The National Association of Insurance Commissioners (“NAIC”) Rating Agency Working Group held a public hearing on Thursday, September 24, 2009 entitled “The Role of Rating Agencies in State Insurance Regulation,” during which the following topics were discussed:

  • The use of insurance company credit ratings in state insurance regulation;
  • Ways in which rating agencies have changed their approach to rating structured securities in response to the economic crisis;
  • The adequacy of the current credit ratings model in measuring risk; and
  • Suggestions for ways to improve the credit rating system.

Panelists’ presentations and additional materials are accessible by clicking on the individual names on the agenda below.

To listen to the hearings, click on the audio file hyperlinks (also listed below).

Following the hearing, the NAIC’s Rating Agency Working Group will create a final report documenting the findings from the hearing and recommendations for corrective action.  The report also may include recommedations to the federal government on Nationally Recognized Statistical Ratings Organization regulation.


Agenda and Available Panelist Testimony

Panel 1: Use Of Ratings In State Insurance Regulation

State insurance regulators are responsible for ensuring solvency of the regulated insurance companies.  As part of this process, the NAIC and the states use ratings to determine the risk-based capital charge for rated bonds, as well as setting many limits for insurance company risk exposures.  How did that system evolve, and how well does it work today?


  • Chris Evangel, Managing Director, NAIC Securities Valuation Office
  • Nancy Bennett, FSA, CERA, MAAA, Senior Life Fellow, American Academy of Actuaries
  • Michael Moriarty, Deputy Superintendent, New York State Insurance Department
  • Eric Steigerwalt, Senior Vice President and Chief Financial Officer, Metropolitan Life Insurance Company
  • Birny Birnbaum, Center for Economic Justice


Panel 2:  Rating Agencies – What Happened?

Investors rely on credit ratings to be a forward-looking reflection of risk.  Did those ratings fulfill investor expectations?  Looking back, in what ways could the rating agencies have fulfilled those expectations better?  Have rating agencies changed their approach in response to the economic crisis, in particular when rating structured securities?  If so, in what way?  Should there be other changes?  Should ratings be comparable, signifying an equal probability of loss, across corporate, structured, and municipal securities?


  • David Teicher, Managing Director, Moody’s
  • Grace Osborn, Managing Director, North American Head of Insurance Ratings, Standard and Poors
  • Keith Buckley, Group Managing Director, Head of Insurance Group, Fitch Ratings
  • John Olert, Group Managing Director, Head of ABS and Structured Credit Group, Fitch Ratings
  • Mary Keogh, Managing Director, DBRS Limited
  • Josh Rosner, Managing Director, Graham Fisher and Company
  • Jerome Fons, Principal, Fons Risk Solutions
  • David P. Marks, Executive Vice President and Chief Investment Officer, CUNA Mutual Group


Panel 3:  Recommendations And Alternatives To How The NAIC Uses Ratings

The economic crisis has resulted in steep rating downgrades and drops in asset values.  Is the current ratings model adequate in measuring risk, especially the risk of structured securities?  Are there better alternatives for measuring risk of fixed income securities than credit ratings?


  • Mani Sabapathi, CFA, Principal, Structured Product Research, Prudential Insurance
  • Rod Dubitsky, Executive Vice President, PIMCO Advisory
  • Robert Dobilas, President and Chief Executive Officer, Realpoint LLC
  • Matt Richardson, Charles E. Simon Professor of Financial Economics and Director of the Salomon Center, New York University
  • Heather Brilliant, CFA, Director of Stock Analysis, Morningstar, Inc.
  • Michael Macchiaroli, Associate Director of the Division of Trading and Markets, United States Securities and Exchange Commission


Additional Hearing Materials

Audio Files 

NOTE: Due to technical difficulties at the facility, audio begins approximately 15 minutes after the session begins.

  • MP3 Audio 1 (24 mins, 11-meg)
    -End of Chris Evangel through Birny Birnbaum
  • MP3 Audio 2 (39 mins, 18-meg)
    -Eric Steigerwalt and Panel 1 Question and Answer session
  • MP3 Audio 3 (63 mins, 30-meg)
    -Panel 2-All Panelists
  • MP3 Audio 4 (60 mins, 28-meg)
    -Most of Panel 2 Question and Answer session
  • MP3 Audio 5 (57 mins, 27-meg)
    -Remainder of Panel 2 Question and Answer session, Mani Sabapathi through Matt Richardson
  • MP3 Audio 6 (68 mins, 32-meg)
    -Heather Brilliant through Michael Macchiaroli and Panel 3 Question and Answer session


Should you have any questions or comments, please contact Colodny Fass.


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