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FOR IMMEDIATE RELEASE
OLDWICK - FEBRUARY 23, 2024 02:58 PM (EST)
AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Rating of “a” (Excellent) of Mutual of America Life Insurance Company (MofA) (New York, NY). The outlook of these Credit Ratings (ratings) is negative.
The ratings reflect MofA’s balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, favorable business profile and appropriate enterprise risk management.
The negative outlooks reflect AM Best’s concern over the company’s business profile and the overall pressure on its operating performance metrics. Furthermore, there has been continued weakness in MofA’s balance sheet strength, which has been driven by market volatility, continued outflows and declines in risk-adjusted capitalization. AM Best’s expectation is that MofA will continue to execute the necessary steps to curb volatility and improve its overall operating performance along with its strategic business profile in the near future.
The company’s risk-adjusted capitalization is projected to remain at the very strong level, as measured by Best’s Capital Adequacy Ratio (BCAR). MofA’s investment portfolio has begun shifting toward privately managed investments to increase yield. The company’s net income has declined significantly in recent years, mainly due to general account margin compression and outflows, as well as continued higher general operating expenses along with expenses related to business transformation initiatives. MofA’s profitability remains below the industry average, despite not having a tax liability.
The company has a competitive position in its target market of providing retirement savings products to nonprofit organizations and small for-profit businesses; although, almost all of its general account reserves are interest-sensitive and more than half of its total assets are separate account assets. MofA is continuing to invest heavily in reshaping its strategy in an effort to increase sales and margins as it still expects to gain market share in the near future. AM Best will continue to closely monitor the company’s results, as it continues to execute on its business strategy going forward.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments. AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.