| Q&A for Filers Compiled from NASVA members over the last few years |
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Please use these convenient bookmarks to choose a topic: Filing | RSAT | Schedule BA | Filing Exemption AVS/ISIS System | Annual/Qtrly Statement Reporting | Pricing | Billing | Miscellaneous | ||
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Section 7: Pricing Q & AQ: It is our understanding that the SVO only uses the monthly feed it received from IDC to price the securities in AVS. Please confirm that the prices you receive are what is referred to as Bid-Ask? Could you offer an explanation for why this particular price type represents, in your opinion, the fair value of the bond? A: The "Bid" price is used as a better gauge for a fair market value of the security.Back to top Q: Why does the SVO have prices in the AVS system that are not current month prices? Is there any thought to deleting the stale prices on a regular basis rather than just performing the pricing delete conducted in December and only pass through current month-end prices for publicly traded securities? A: All prior-month prices received from IDS and IDC Foreign are deleted as part of month-end processing.Back to top Q: Why doesn’t the SVO take ownership for the data verification of all prices it receives on its vendor feeds regardless of whether a security is in the FE database or VOS database? A: The SVO uses IDC and IDC Foreign month-end closing prices. In cases of “bid” and “ask”, we use the “bid” price. If your vendor price does not match the IDC and IDC Foreign price in the SVO database, you should contact your vendor directly.Back to top Q: Can a pricing ATF be submitted at any time throughout the year? If not, what are the restrictions and when can it be submitted? A: Please refer to the "Pricing Request ATF Instructions" document (pages 1 and 2) accessible through the following link, which addresses this question in detail (the document will open in a new window):http://www.naic.org/documents/svo_Pricing_Request_ISISATF2005.pdf Back to top Q: Which pricing vendors does the SVO use and what types of prices does it use from the vendor? For example, does it use Bid Evaluation, Last Trade, Bid, etc. A: IDC is the SVO’s vendor. We use month-end closing prices.Back to top Q: Should all private common stock with a market indicator of “A” and a current year review date have a price assigned? If so, what should a insurer do if it finds this is not happening? A: If a private common stock with a current year review date does not have a current price, the insurer should contact the SVO analyst responsible for that security.Back to top Q: Under what circumstances does the SVO assign a zero price to a security? A: If the application of the analytical methods in Part Six of the P&P Manual are not sufficient to enable the SVO to determine a unit price for a private security designated NAIC6, the SVO will assign that security a unit price of zero. The filer can contact the responsible analyst if he/she is not in agreement with the valuation.Back to top Q: How can a security that is current on its payments be assigned a zero price from the SVO? A: We should be able to price a bond but not equity securities. Please provide us with an example.Back to top Q: When requesting a market price, what type of support should be provided if the price was derived through an internal pricing process (matrix, impairment, etc.)? A: Reference Part Six, Section 3 of the P&P Manual for information on pricing securities for which no public price is available. In addition to the documentation discussed in the P&P Manual, it is always a good idea to provide written rationale for a recommended price.Back to top Q: If multiple pricing requests are submitted for a single security, how does the Credit Analyst determine which market price to populate in AVS? A: The SVO has the discretion to determine which price is the most reasonable which is not necessarily the lowest price. An insurer who disagrees with this price could contact the analyst for an explanation of how that particular security was priced.Back to top Q: What is needed for certain types of supporting documents for pricing to be accepted by the SVO? A: Use of internal pricing models and or internal valuation analysis. You would need to explain not just the price but also what assumptions are used in generating the price. It is more than providing a price, it is also describing the process as well as any premium attached to the daily yields.Back to top Q: Was there any notification to industry that the fee for the P&P manual had changed? A: Yes, the NAIC did notify all existing customers in December/January that the price was being raised to $100.00 and posted the new pricing on our web site and in our catalogs. Regardless, we realize that there is confusion given that the P&P manual itself list the price at $65.00. We apologize for the confusion. What we are going to do is refund $35.00 of the $100.00 for each customer that actually paid their invoice. For those that have not paid, we are going to credit $35.00 toward the invoice and will request payment of the $65.00. We will notify all customers individually of this approach.Back to top Q: If the FE Security (bond, preferred, or common) is on the SVO file with a price, are we required to use this price? A: Yes; however, if you know this price is incorrect, then an insurer should use its best judgment. In addition, please refer to Schedule D 2004 NAIC Annual Statement Instructions, which provide the following instructions regarding the rate used to obtain fair value column: "If this rate is not published in the NAIC Valuation of Securities, obtain a rate from a registered U.S. exchange. If a fair value is not available from these sources, the insurer should determine a rate."Back to top
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