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AM Best confirms credit ratings of Massachusetts Mutual Life Insurance Company and its subsidiaries

By on July 8, 2022 0

OLDWICK, NJ–(BUSINESS WIRE)–AM Best Affirmed Massachusetts Mutual Life Insurance Company (MassMutual) Financial Strength Rating (FSR) of A++ (Superior) and Long-Term Credit Ratings (Long-Term ICR) of “aa+” (Superior) ( domiciled in Springfield, MA) and its life/health subsidiaries, CM Life Insurance Company and MML Bay State Life Insurance Company (both domiciled in Enfield, CT). Concurrently, AM Best affirmed the long-term issue credit ratings (long-term IR) of “aa-” (Superior) on MassMutual’s excess notes and “aa+” (Superior) on notes issued in the under the securities backed by the financing agreement. programs of MassMutual Global Funding, LLC and MassMutual Global Funding II. The outlook for these Credit Ratings (rating) is stable. (See below for a detailed list of long-term IRs and short-term issue credit ratings.)

In addition, AM Best revised the outlook from stable to positive for the long-term ICR and affirmed Great American Life’s FSR of A+ (higher) and long-term ICR of “aa-” (higher). Insurance Company (GALIC) and its principal subsidiary, Annuity Investors Life Insurance Company (AILIC) (collectively known as Great American Life Group). The FSR outlook is stable. In addition, AM Best confirmed the FSR of B++ (Good) and the long-term ICR of “bbb+” (Good) of Manhattan National Life Insurance Company (Manhattan Life), a life insurance subsidiary of GALIC. The outlook for these ratings is stable. These companies are domiciled in Cincinnati, OH.

MassMutual’s ratings reflect the strength of its balance sheet, which AM Best rates as the strongest, as well as its strong operating performance, very favorable business profile and very strong enterprise risk management.

Risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is considered the strongest, supporting MassMutual’s ability to support its insurance, investment and commercial. Capital and surplus increased due to organic earnings growth and strong investment income. MassMutual holds high investment allocations in lower quality bonds and Schedule BA assets, but they are effectively managed by MassMutual’s investment subsidiary Barings and are monitored with good asset management capabilities and passives and robust stress tests. Financial flexibility is supported by the organization’s proven ability to access financial markets. MassMutual ensures that sufficient liquidity is available to meet sudden and unforeseen needs, which is monitored and stress tested regularly. Financial and operating leverage ratios and interest coverage ratios remain within AM Best guidelines.

MassMutual continues to generate strong operating performance, although its earnings profile has evolved in recent years. Businesses that are no longer considered essential to its long-term strategic interests have been sold, such as majority stakes in domestic and international subsidiaries, asset management and its retirement business bloc. Currently, the group derives its revenue from the insurance operations, asset management and fixed annuity businesses of the Great American Life Group, and continually invests in technology to emphasize a positive customer experience. AM Best notes that movements in the fair value of accounting for derivatives on its fixed indexed annuity products may cause fluctuations in statutory results. AM Best expects MassMutual to continue to build on its earnings performance as the company fully integrates its recently acquired businesses into its business plan.

MassMutual is considered one of the largest and most recognized insurers in the United States, with leading market positions in life insurance, fixed and indexed annuities, pensions and asset management. institutional assets. The company’s profile has changed in recent years, with greater emphasis on whole life insurance, fixed annuities, pension risk transfer and institutional asset management. The group recently sold its collective retirement business to Empower, and increased its non-majority stake in Rothesay Life, a specialist in retirement insurance in the United Kingdom. MassMutual also acquired Great American Life Insurance Company and its subsidiaries. AM Best rates MassMutual’s ERM program capabilities as strong relative to its risk profile. Proposed initiatives are reviewed for their impact on capital and surplus, as well as how economic capital modeling is used. AM Best expects Mass Mutual to invest more in technology and digital innovation across all delivery platforms, and demonstrate continued improvements in ERM and innovation going forward.

Great American Life Group’s ratings reflect the strength of its balance sheet, which AM Best rates as very strong, as well as its strong operational performance, neutral business profile and appropriate management of business risks.

Great American Life Group’s balance sheet strength is rated as very strong. Risk-adjusted capitalization, as measured by BCAR, is supported by strong earnings growth and is favorably impacted by a recently amended co-insurance agreement with Martello Re Limited. Invested assets are managed by a subsidiary, Barings. While the invested assets are of good credit quality, AM Best expects future investment allocations to emphasize increased allocations to structured securities and private placements over time, similar to those of its parent company, MassMutual. Almost all of Great American Life Group’s reserves are interest rate sensitive.

The change in outlook from positive to stable for the long-term ICRs is due to favorable progress in integrating Great American Life Group into the MassMutual business, and AM Best expects the company to benefit from the resources that MassMutual can offer in the future. MassMutual has already placed on its MassMutual Financial Advisor distribution platform an indexed registered annuity product which is sold on GALIC paper.

Operating performance was supported by favorable statutory earnings, although results may fluctuate due to changes in the fair value of derivatives held on its fixed indexed annuities. Investment income increased slightly in 2021 due to realized gains and higher investment returns. Premium trends are stable, although they have decreased in 2020 due to the COVID-19 pandemic.

AM Best rates Great American Life Group’s business profile as neutral, as fixed and fixed-indexed annuities comprise nearly all of its direct written premiums. The group is among the national leaders in fixed annuity sales, particularly in the banking channel, where it is among the best sellers. The group will also benefit from MassMutual’s innovation capabilities.

Manhattan Life’s ratings reflect the strength of its balance sheet, which AM Best rates as very strong, as well as its marginal operating performance, limited business profile and appropriate management of business risks.

Manhattan Life’s business volume is in liquidation, with most of its liabilities being reinsured by highly rated reinsurers. Risk-adjusted capitalization, as measured by BCAR, is considered the strongest, and the parent company has demonstrated that it will support the life insurance company with capital contributions when needed. Earnings trends have been volatile, as a slight increase in life claims can have a relatively large impact on results. Partially mitigating these factors include its modest share of business relative to the company and support from its parent company.

The following long-term IR has been assigned with a stable outlook:

MassMutual Global Funding II—”aa+” program rating (Superior)

— “aa+” (higher) on $50 million 3.553% senior secured notes, due June 1, 2025

The following short-term IR has been confirmed:

Massachusetts Mutual Life Insurance Company—

— AMB-1+ (Strongest) on commercial paper program

The following long-term IRs have been confirmed with a stable outlook:

Massachusetts Mutual Life Insurance Company—

— “aa-” (higher) on $250 million of 7.625% Excess Notes due 2023 (of which $188 million remain outstanding)

— “aa-” (Upper) on $100 million 7.500% surplus notes due 2024 (of which $75 million remain outstanding)

— “aa-” (Upper) on $250 million of 5.625% Surplus Notes, due 2033 (of which $193 million remain outstanding)

— “aa-” (higher) on $750 million of 8.875% Surplus Notes, due 2039 (of which $129 million remain outstanding)

— “aa-” (higher) on $400 million of 5.375% Excess Notes due 2041 (of which $263 million remain outstanding)

— “aa-” (Higher) on $500 million of 4.5% Surplus Notes, due 2065 (of which $254 million remain outstanding)

— “aa-” (higher) on $475 million of 4.9% Excess Notes, Due 2077

— “aa-” (Higher) on $838.5 million 3.729% excess notes, due 2070

— “aa-” (Higher) on $700 million 3.375% excess notes, due 2050

— “aa-” (higher) on $675 million of 3.2% Excess Notes, Due 2061

— “aa-” (Higher) on $800 million 5.077% excess notes, due 2069

MassMutual Global Funding, LLC—”aa+” (Superior) Program Rating

MassMutual Global Funding II—”aa+” program rating (Superior)

— “aa+” (superior) on all outstanding banknotes issued under the program

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 relevant disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Assessment Activity Web page. For more information on the use and limitations of credit rating opinions, please see Best Credit Score Guide. For more information on the proper use of Best’s Credit Ratings, Best’s Performance Ratings, Best’s Preliminary Credit Ratings, and AM Best’s press releases, please see Guide to Proper Use of Best’s Ratings and Reviews.

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 more than 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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