NATIONAL HARBOR, Md. — State insurance regulators are exploring alternatives to credit rating agencies to evaluate the risk found in insurance company portfolios, including the possibility of establishing a nonprofit rating organization of their own.

At a hearing held here by a working group of the National Association of Insurance Commissioners, state regulators made it clear they believe the financial crisis proved that the agencies’ ratings are unreliable.

They pressed rating agency officials to defend their practices and products at the hearing.

Insurance companies hold nearly $450 billion of tax-exempt and taxable municipal bonds, in addition to corporate debt. As of the second quarter, property and casualty insurance companies held $393.5 billion of muni bonds and life insurance companies held $49.9 billion of munis out of a total of $2.78 trillion of holdings, according to the Federal Reserve’s latest Flow of Funds data.

“We’re considering all reasonable options [that] lead to a reduced reliance on the rating agencies,” said Michael McRaith, the Illinois insurance director and co-chair of the working group. One of the options under consideration is the establishment of a nonprofit rating agency that would be operated by NAIC, they said.

Wisconsin insurance commissioner Sean Dilweg said NAIC is currently contacting investors to evaluate their interest in such an entity and has reached out to groups, including the Government Finance Officers Association, for their input.

A nonprofit agency would serve as competition to the current rating agencies, and its nonprofit status would protect it from the conflicts of interest inherent in the existing agencies, the regulators said.

Chris Evangel, the managing director of the NAIC’s securities valuation office, said during the meeting yesterday that the biggest impediment to establishing an in-house rater is cost.

“It’s a matter of having those resources in house and building that team. You cannot do that overnight,” he said. Evangel added that when the securities valuation office rates securities, it does so after they have been purchased, and it would have to “flip that model” to compete with Moody’s Investors Service, Standard & Poor’s, and Fitch Ratings.

Other options floated yesterday include establishing minimum industry standards for credit analysts as well as restrictions against revolving-door practices that would prevent analysts who leave their jobs from immediately going to work for entities they have been involved in rating.

Meanwhile, Jerome Fons of Fons Risk Solutions and a former economist with Moody’s, told the group that he doubts the rating agencies will ever regain the public’s trust.

“Unfortunately, the major rating firms willingly traded their reputations for short-term profits,” he said. “Denial, blame-shifting, and a refusal to address the causes of the crisis leave little room for ­sympathy.”

But rating agency officials defended themselves, saying that their ratings historically have been reliable and that they have taken steps in the wake of the financial crisis to improve their operations.

Meanwhile, the House Government Oversight and Government Reform Committee postponed until Sept. 30 a hearing that had been scheduled for yesterday on the rating agencies because of a clash between Democrats and Republicans over a document, congressional sources said.

GOP members were furious that Democrats appeared to have withheld from them until just before the hearing a document they had obtained from former Moody’s analyst Eric Kolchinsky, which complained about the agency’s rating process, its inherent conflicts of interest, and his concerns that it had led to inflated ratings of collateralized debt obligations.

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