b'INSURANCE REGULATORY|US/NAICwas reduced from 15% to 11%, and the RBC factorin the issuance or by following the confidentiality for real estate held through joint ventures, limitedprocess established by the CRP. A private rating liability companies and similar structures (reportedletter rationale report is expected to mirror the on Schedule BA) was reduced from 23% to 13%. Thework product that a CRP would produce for a change to the treatment of foreclosed real estate issimilar publicly rated security.even more dramatic. Previously, foreclosed realThere are some exceptions to the general rule estate received an RBC factor of 23%, but it is nowstated above: treated the same as any other real estate, receiving the new RBC charge of 11%. The requirement to file a private rating letter rationale report is waived for private letter rated New Filing Requirement for Securitiessecurities issued from January 1, 2018 to with Private Letter Ratings December 31, 2021, that are subject to a confidentiality agreement executed prior to On May 24, 2021, the NAIC Valuation of SecuritiesJanuary 1, 2022, which confidentiality agreement (E) Task Force (VOS TF) adopted revisions toremains in force, for which an insurer cannot the Purposes and Procedures Manual of the NAICprovide a copy of a private rating letter rationale Investment Analysis Office (the P&P Manual)report to the SVO due to confidentiality or other along the lines of the proposal discussed in ourcontractual reasons. 2020 Year in Review. Effective on January 1, 2022,The requirement to file a private rating letter as a general rule, insurers that invest in securitiesrationale report is deferred through December that have a private letter rating are required to31, 2023, for private letter rated securities issued provide the NAICs Securities Valuation Officeafter January 1, 2022, for which an insurer cannot (SVO) with a copy of the related private ratingprovide a copy of a private rating letter rationale letter rationale report from the applicable CRPreport to the SVO due to confidentiality or other until such time as industry representatives and thecontractual reasons. After December 31, 2023, if SVO establish reliable procedures for the SVO tothe insurer still cannot provide a copy of such a obtain the necessary information on credit ratingsreport, it will be required to report the securities directly from the CRPs.with an NAIC 5GI designation (resulting in a The phrase private rating letter rationale reportmuch higher RBC charge). means an analytical review of the privately ratedThe revisions to the P&P Manual also provide that security explaining the transaction structure,when a private rating letter rationale report is filed methodology relied upon, and, as appropriate,for a security, the SVO will now evaluate whether the analysis of the credit, legal and operational risksprivate letter rated security is eligible to receive an and mitigants supporting the assigned rating, in aNAIC designation with a CRP credit rating. In other report issued by a CRP on its letterhead or itswords, the SVO will evaluate (i) whether the security controlled website to an issuer or investor,is a fixed-income security eligible for reporting on obtained by an insurer in its capacity as an investorSchedule D and (ii) if so, whether it is eligible for a 66|Global Insurance Industry Year in Review 2021'