Members of the National Association of Insurance Commissioners voted unanimously here to approve a short-term rule for assessing the riskiness of hybrid securities.
Meanwhile, the NAIC's hybrid risk-based capital working group approved a work plan for developing a long-term solution to the hybrid securities valuation controversy.
The working group changed the work plan slightly before approving it, and officials say it will continue to fine-tune the plan, which was developed by the American Academy of Actuaries, Washington.
The NAIC, Kansas City, Mo., has been trying to develop a rule that insurers can use this year when making risk-based capital calculations, but the NAIC also is trying to develop another, long-term approach.
The AAA work plan is defining the term "hybrid securities" to include "those securities whose proceeds are accorded some degree of equity treatment to the issuer by one or more of the nationally recognized statistical rating organizations and/or which are recognized as regulatory capital by the issuer's primary regulatory authority."
The hybrid RBC working group removed a work plan draft sentence that noted that receiving input from parties other than the AAA is the responsibility of the NAIC's hybrid task force.
Nancy Bennett, a life actuary representing the AAA, said the AAA will look at hyrid risk from the investor's perspective rather than at risk from the issuer's perspective.
The NAIC plenary, the body that represents all voting NAIC members, also approved:
