First American on NAIC Changes
U.S. Bancorp's Asset Management's First American Funds recently posted an update on the "National Association of Insurance Commissioners (NAIC) Policy Change Affecting Government Money Market Funds." They tell us, "Effective July 1, 2018, the NAIC will begin excluding money market funds (MMFs) investing in certain agency securities from its U.S. Direct Obligations/Full Faith and Credit Exempt List for Mutual Funds. This means Government Obligations MMFs will no longer be eligible for inclusion on the list if they invest in securities issued by certain U. S. Government Agencies not considered to be backed by the Full Faith and Credit of the U.S. Government. Examples of these include Federal Home Loan Bank, Federal National Mortgage Association and Federal Farm Credit Banks." The update continues, "The First American Government Obligations Fund is impacted by this change and will no longer be eligible for inclusion on the NAIC U.S. Direct Obligations/Full Faith and Credit Exempt List for Mutual Funds. Treasury MMFs are not affected by this change. The following First American Funds will remain on the NAIC List of Approved Money Market Funds: First American U.S. Treasury Money Market Fund seeks to provide maximum current income and daily liquidity by purchasing U.S. Treasury and other money market funds that invest exclusively in such obligations. First American Treasury Obligations Fund seeks to provide maximum current income and daily liquidity by purchasing U.S. Treasury securities and repurchase agreements collateralized by such obligations. MMFs not appearing on the U.S. Direct Obligations / Full Faith and Credit Exempt List remain eligible investments for insurance companies. However, investments in MMFs that are not on the exempt list are subject to a risk-based capital charge effective July 1, 2018, per NAIC guidelines." (For more, see Crane Data's April 10 News, "NAIC Says Govt Agency MMFs No Longer on Full Faith and Credit List.")
