Rated securities from SVOs range from the highest investment grade ratings of one and two, to lower ratings of three-six.

In March, the New York insurance department initiated a project to streamline the SVO unit of the NAIC, based in Kansas City, Mo.

The first phase of the effort exempted securities rated one and two while the second part of the streamlining exempts three-six.

Changes to the electronic filing system to reflect the exemption for one and two-rated securities should be in place starting Jan. 1, 2004 with adjustments for the lower rated securities in place at a later time, according to regulators speaking at the SVO oversight working group.

The streamlining efforts are part of an overall effort by the NAIC to make regulatory oversight more efficient.

Insurance representatives agreed the second phase of securities exemptions was a positive move.

"We are very supportive of the New York department's proposal. Clearly, it demonstrates that the SVO has been echoing the work of rating agencies," said Doug Barnert, president of Barnert International, New York.

He said the proposal will help reduce cost and create efficiency, and a company still has to get a rating agency to sign off on the security.

Additionally, he continued, most states have laws that limit the amount of lower rated securities that an insurer may hold.

The work has received support from major trade groups. A representative for a large life insurer also expressed support for the elimination of efforts he said duplicated the work of rating agencies.

One of the changes will be the SVO's new headquarters at 48 Wall Street in New York. The unit's operations have been in temporary headquarters near Times Square following the destruction of 7 World Trade Center where it was headquartered prior to Sept. 11, 2001.