OLDWICK, N.J.--(BUSINESS WIRE)--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 of these Credit Ratings (rating) is stable. The aforementioned companies are headquartered in Springfield, MA. (See below for a detailed listing of the Long-Term IRs and Short-Term Issue Credit Ratings [Short-Term IR].)
The ratings reflect MassMutual’s balance sheet strength, which A.M. Best categorizes as strongest, as well as its strong operating performance, very favorable business profile and very strong enterprise risk management.
MassMutual’s risk-adjusted capitalization, as defined by Best’s Capital Adequacy Ratio (BCAR), is considered very strong, and supportive of its business, investment and insurance risks. Capital is enhanced qualitatively by retention of redundant reserves on its balance sheet, financial flexibility and the ability to adjust its policyholder dividend scale. At the group level, the estimated fair value of its subsidiaries is higher than its statutory valuations, which qualitatively enhances reported capitalization ratios. Earnings have improved in 2017 and continue to be well-diversified among its main business segments, with good balance between insurance, investment and asset fee margins.
MassMutual’s business profile is enhanced by leading market positions within whole life, disability income and strong institutional capabilities within pension risk transfer, bank-owned life insurance and funding agreements. Distribution is composed of approximately 9,000 career agents. While MassMutual intends to participate in Asian markets, it has moderated its exposure, as evidenced by its recent sale and minority interest of MassMutual Japan.
Partially offsetting these factors include the group’s elevated financial leverage, with debt composed mostly of surplus notes, real estate encumbrances, non-recourse bank debt and foreign debt. In addition, the group has elevated exposure to high risk assets, which are composed mostly of Schedule BA assets and below investment grade bonds. As interest rates remain low, MassMutual may be challenged to increase yield by increasing allocations into more volatile or less liquid asset classes, such as private placements. Finally, while MassMutual has been profitable over the past several years, the group may be challenged to increase earnings due to the highly competitive nature of the markets in which the group operates, which could have the effect of decreasing margins.
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 (of which $310 million remains outstanding)
--
“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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