AM Best

JUNE 14, 2017 03:32 PM (EDT)

A.M. Best Affirms Credit Ratings of Massachusetts Mutual Life Insurance Company and Its Subsidiaries

 Erik Miller
Senior Financial Analyst
+1 908 439 2200, ext. 5187

William Pargeans
+1 908 439 2200, ext. 5359

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644


OLDWICK - JUNE 14, 2017 03:32 PM (EDT)
A.M. Best has affirmed the Financial Strength Rating of A++ (Superior) and the Long-Term Issuer Credit Ratings of “aa+” of Massachusetts Mutual Life Insurance Company (MassMutual) and its life/health subsidiaries, C.M. Life Insurance Company and MML Bay State Life Insurance Company (both domiciled in Enfield, CT). Concurrently, A.M. Best has affirmed the Long-Term Issue Credit Ratings (Long-Term IR) of “aa-” on the existing surplus notes of MassMutual and the “aa+” on notes issued under funding agreement-backed securities programs of MassMutual Global Funding, LLC and MassMutual Global Funding II. The outlook for each Credit Rating (rating) is stable. The above companies are headquartered in Springfield, MA. (See below for a detailed listing of the Long-Term and Short-Term IRs.)

The affirmation of the FSR reflects the broad portfolio of product offerings in both the individual and institutional market places, which has led to a diversified liability structure while sustaining its strong asset management capabilities. While MassMutual enjoys a leading market position in whole life sales, its subsidiaries also control well-recognized investment and mutual fund companies, including Oppenheimer. MassMutual’s investment expertise is supported by a group of diverse asset managers, enabling MassMutual to compete effectively on a global basis.

A.M. Best notes that MassMutual possesses statutory flexibility to maintain its risk-based capital position through the management of its policyholder dividend scale and by securitizing or reinsuring redundant reserves. Moreover, MassMutual’s balance sheet contains a material amount of unrecognized equity as the estimated fair market value of its subsidiary holdings is considerably higher than what is recognized for statutory purposes.

A.M. Best further notes that the company benefits from a U.S. GAAP guideline that reclassifies non-controlling interests as part of equity. While this change has increased the statutory carrying value of MassMutual’s asset management and international operations, A.M. Best would classify this as “non-economic.” However, A.M. Best recognizes that the higher statutory carrying amount still remains significantly below the estimated fair value of these operations. Also contributing to the increase in MassMutual’s total available capital is the issuance of additional surplus notes. A.M. Best views surplus notes as a lower quality of capital than retained earnings or paid-in capital because surplus notes are debt instruments that have the expectation of repayment. Therefore, A.M. Best notes that MassMutual’s quality of capital has declined as a result of the issuance of surplus notes, which has been increasing over the years. However, A.M. Best believes MassMutual’s overall financial flexibility remains favorable. Additionally, MassMutual’s statutory operating profits have been trending downward over the past several years due in part to increased spending, including acquisition activity, dividend rates and structural shifts in the asset management industry.

A.M. Best will continue to monitor capital growth to see if lower net income will negatively impact risk-adjusted capital going forward. It also is A.M. Best’s opinion that MassMutual has many profitable operating segments and combined with a recent acquisition, has the ability to deliver profitable growth going forward.

The following Short-Term IR has been affirmed:

Massachusetts Mutual Life Insurance Company

— AMB-1+ on commercial paper program

The following Long-Term IRs have been affirmed with a stable outlook:

Massachusetts Mutual Life Insurance Company

— “aa-” on $250 million 7.625% surplus notes, due 2023

— “aa-” on $100 million 7.500% surplus notes, due 2024

— “aa-” on $250 million 5.625% surplus notes, due 2033

— “aa-” on $750 million 8.875% surplus notes, due 2039

— “aa-” on $400 million 5.375% surplus notes, due 2041

— “aa-” on $500 million 4.5% surplus notes, due 2065

— “aa-” on $475 million 4.9% surplus notes, due 2077

MassMutual Global Funding, LLC—“aa+” program rating

— “aa+” on all outstanding notes issued under the program

MassMutual Global Funding II—“aa+” program rating

— “aa+” on all outstanding notes issued under the program

This press release relates to Credit Ratings that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

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