BlackRock to Evaluate Commercial Mortgage Holdings for Insurance Industry

BlackRock Inc., the world’s biggest money manager, was hired by state insurance regulators to assess the industry’s potential losses from holding commercial mortgage-backed securities.

BlackRock will review more than 7,000 CMBS securities by year-end, the National Association of Insurance Commissioners said today in a statement released on its website. The New York- based firm will calculate loss expectations for the holdings, which in turn determines how much capital insurers must hold to cushion potential declines, the NAIC said.

“These assessments continue to distinguish and supplement the stringent capital requirements of NAIC and state insurance regulators,” Jane Cline, president of the NAIC, said in the statement.

Since the onset of the credit crisis in late 2007, BlackRock has built its reputation by advising financial institutions and governments worldwide on how to value and dispose of mortgage-related assets. The BlackRock Solutions unit uses proprietary systems to price fixed-income securities. BlackRock was selected last year as one of eight asset managers to buy toxic assets from banks under the U.S. government’s Public-Private Investment Program.

Brian Beades, a spokesman for BlackRock, declined to comment.

BlackRock won from among 16 bidders, the NAIC said. Last year the NAIC hired Pacific Investment Management Co., the Newport Beach, California-based manager of the world’s largest bond fund, to assess insurers’ home-loan securities.

Pimco was chosen from among 11 vendors by the association in November to help evaluate more than 21,000 residential mortgage-backed securities.

To contact the reporter on this story: Hugh Son in New York at hson1@bloomberg.net

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