In a long-anticipated move, the National Association of Insurance Commissioners (NAIC) has enacted a new set of rules changing how risk rating rationales are created and reported for private credit investments called private placements. Private placements are typically corporate bonds that are not required to be registered with the Securities and Exchange Commission (SEC).
Securian AM fully supports the NAIC rule changes. More transparency into metrics and methodologies will reinforce the already rigorous processes our private credit analysts and portfolio managers follow. Yes, it’s an added expense, and it means additional work for underwriters, but at least in our case those costs are not passed along to our investors. We applaud processes that strengthen our already robust due diligence.
Takeaways from the NAIC rules change
- No impact on current portfolios
- Investors don’t have to do anything—Securian AM handles the new paperwork requirements, including retroactive filings
- Greater scrutiny on ratings agencies strengthens due diligence
- Better risk assessment leads to better decisions