Here’s some good news for the credibility of the ratings agency industry, for once.
HORSHAM, Pa., Sept. 23 /PRNewswire/ — The National Association of Insurance Commissioners (NAIC) has voted to include Realpoint as an Acceptable Rating Organization, which means that US insurance companies can now rely on its CMBS ratings to calculate their capital strength and their required reserves
Insurance companies have historically relied on ratings from the big-three rating agencies [Fitch, Moody's, Standard & Poor's] to quantify the risks of their CMBS and other structured-finance investments. Riskier holdings, which are reported on insurance companies’ statutory Annual Statements, require greater capital reserves.
Seeking alternatives to the big-three, insurance companies had asked the NAIC to recognize Realpoint as an Acceptable Rating Organization because of its stable ratings and its strong history of analyzing CMBS.
We like Realpoint since they freely distribute their research and are (in our opinion) realistic in their pronouncements on the CMBS market.
On a wider note, recognition of smaller agencies — the Egan-Jones-es and Lace Financials of the world — in terms of opening up the market beyond the big three agencies. What’s more, Reuters reported the NAIC was considering removing Moody’s from its list of acceptable ratings organisations.
Related links:
The rating agency bailout - FT Alphaville
Congress takes on credit ratings – Wall Street Journal