The National Association of Insurance Commissioners (NAIC) is asking for help in coming up with a way to adequately model projected losses on 7,500 commercial mortgage-backed securities (CMBS). Based in Washington DC, the NAIC represents the interests of the chief insurance regulatory officials in all 50 states. By asking for analytical input, the NAIC wants to calculate the solvency reserves required to cover their CMBS holdings. The NAIC insurers investment portfolios against loses. Traditionally, this was a job for the credit ratings agencies, which typically set standards for risk mitigation. However, the recent Dodd-Frank Act repeal of Rule 436(g) exposes rating agencies to liability, therefore it is questionable that these firms will even want to model risk on CMBS vehicles projected to take losses. “State regulators believe that adding this tool will improve our view of structured securities and our industry,” said Jane Cline, NAIC President and West Virginia Insurance Commissioner. “As we decide to extend this type of treatment to CMBS, we will again look to partner with an established leader in the field.” According to a report in the Wall Street Journal, the NAIC successfully used a similar method last year for its RMBS. In that case, PIMCO won the bid. The NAIC is looking for applicants that have at least five years of recent and contiguous experience in modeling CMBS. The winning firm will also need to prove it has the staff, data processing and conflict of interest safeguards for this assignment. A one-hour bidders’ teleconference will be held on August 4, 2010. Responses are due by August 11, with the successful firm picked on September 3. Apply by clicking here. Write to Jacob Gaffney.

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