An official in the New York Insurance Department says insurance regulators from across the country. including Connecticut, are expected to discuss dropping Moody’s Investors Service from a list of acceptable rating organizations at a meeting later this week, according to Reuters.
Hampton Finer, deputy superintendent of insurance for New York, told Reuters in an interview late Saturday that concerns about Moody’s arose after the credit-rating firm turned down an invitation to attend a regulatory hearing on Thursday, where it was to be questioned about its ratings process, particularly in light of the financial crisis.
Connecticut Insurance Department Commissioner Thomas R. Sullivan shares some of the concerns of his colleagues and is looking forward to asking some tough questions at the day-long public hearing on Thursday, his office said today.
“If we don’t feel like we can get answers to our questions, the question is if we should put them on our ARO (acceptable rating organizations) list,” said Finer.
Finer added that Moody’s had been cooperative in answering most, but not all, questions in a regulatory questionnaire earlier in the year.
“We are a little stunned,” that Moody’s refused to attend the hearing, he said. “This is not going to be like a congressional hearing. No one is out to embarrass them.”
A spokesman for Moody’s did not immediately respond to a request for comment.
With nearly $3 trillion of rated bonds, the insurance industry is the largest sector of the U.S. financial services industry to rely on capital ratings, according to the National Association of Insurance Commissioners (NAIC).
The three leading ratings firms — Moody’s, Fitch and Standard & Poor’s — have been criticized for fueling the financial crisis by assigning and maintaining high ratings on mortgage-backed securities, even as concerns about the health of the U.S. home market grew.
The NAIC, which represents state insurance regulators, wants to lessen its reliance on the ratings firms, according to a March report. The group has also held discussions over whether to launch its own system for assigning ratings.
