The National Association of Insurance Commissioners (NAIC) will extend Morningstar Credit Ratings designation on the NAIC credit rating provider list to all mortgage-backed securities (RMBS) and asset-backed securities.
Morningstar had previously only been designated by the NAIC to provide credit ratings on commercial mortgage-backed securities (CMBS). The ratings agency ratings have featured frequently in recent CMBS and single-family rental securitization deals.
The inclusion of Morningstar ratings means insurance companies will have more choices among credit rating providers for determining risk-based capital under NAIC guidelines.
“This is significant for insurance companies investing in MBS and ABS, as those firms using a current, monitored rating from a designated credit rating provider are exempt from making a filing for the respective securities with the NAIC’s Security and Valuation Office, which will save them time,” said Vickie Tillman, president of Morningstar Credit Ratings in a press release.
On June 13 the ratings agency published a new methodology for U.S. RMBS ratings that coveres prime jumbo, alternative-A, and subprime RMBS. The methodology covers also covers agency risk-sharing securities and securities backed by non-qualified mortgages, nonperforming loans, and reperforming loans.