NEW YORK ( TheStreet) -- BlackRock (BLK - Get Report), which has scored multiple government assignments despite the financial crisis, is in the running for the task of helping state regulators size up risks in insurers' investments, the Wall Street Journal reports.
BlackRock, a money manager and risk-advisory firm, is among a handful of firms in talks with the National Association of Insurance Commissioners for contracting a portion of the work which is currently executed by major rating agencies, say regulators and a NAIC official.
The work involves analyzing risk in bonds backed by residential mortgages that insurers own and also helping insurers determine how much capital they need to hold to back up their bonds.
Although a price tag hasn't yet been set for the proposed assignment, the volume of business for BlackRock would be large given that insurers own more than 18,000 different residential-mortgage bonds, totaling more than $366 billion, according to industry figures, the Journal reports.The NAIC this year grew disappointed with the ratings agencies after their rapid downgrades of once triple-A-rated mortgage bonds left many insurers holding large amounts of "junk." The insurance regulators also have spoken to Pimco Advisory, part of bond-powerhouse Pacific Investment Management, a unit of Allianz (AZ); Promontory Financial, a Washington firm; and Andrew Davidson & Co., a New York firm. Under the proposal being considered, the NAIC would arrange the contract and work with the analytical firm. Any firm large enough to handle the job could seek it, with insurers paying fees to the NAIC to cover the cost. The proposal, which is expected to pass soon, originates from the trade group American Council of Life Insurers. A key group of regulators is expected to vote next week on the decision to move away from rating agencies.