JANUARY 10, 2020 11:58:36 Eastern Standard Time
AM Best Revises Outlooks to Negative for Mutual of America Life Insurance Company
FOR IMMEDIATE RELEASE
OLDWICK - JANUARY 10, 2020 11:58:36 Eastern Standard Time
The ratings reflect MofA’s balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management (ERM).
Despite the overall favorable assessment, the negative outlooks reflect a recent weakness in MofA’s business profile, and the volatility in operating earnings. Risk-adjusted capital and surplus remains at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), and the company’s use of reinsurance is viewed as modest, along with an investment portfolio of good credit quality and no financial leverage. The overall quality of MofA’s capital position is positive and sufficient to support its insurance and business risks. The company’s net income has declined in recent years, mainly due to general account margin compression, some reserve strengthening and slightly higher operating expenses. The return on equity (ROE) profitability ratio continues to be lower than the industry average, despite MofA not paying taxes.
The company has a competitive position in its target market of providing pension products to nonprofit organizations and small for-profit businesses, although almost all of general account reserves are interest-sensitive, and more than half of total assets are separate account assets. MofA is continuing to invest heavily in technology to enhance its infrastructure and margins as it expects to grow and gain market share in the near future.
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AM Best is a global credit rating agency, news publisher and data provider specializing in the insurance industry. The company does business in more than 100 countries. Headquartered in Oldwick, NJ, AM Best has offices in cities around the world, including London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.