NAIC Rule on CTLs: Unintended Consequences

July 26, 2011
The National Association of Insurance Commissioners (“NAIC”) recently changed the designation of select debt securities that typically trade in the secondary market at either a discount from face value or at a premium. This update reviews the NAIC’s traditional approach to credit tenant loans, discusses details of the new rule and assesses the potential impact of the new regulations, which have set off a firestorm among life insurance companies that invest in credit tenant loans and other so-called “loan-backed and structured securities.”