NEW YORK--(BUSINESS WIRE)-- Fitch Ratings has affirmed the 'AA-' Insurer Financial Strength (IFS) rating of Mutual of America Life Insurance Company (MOA). The Rating Outlook is Stable.

MOA's rating continues to be based on the company's extremely strong balance sheet fundamentals, conservative investment portfolio, and established niche position in the small- and medium-sized not-for-profit pension market.

MOA maintains extremely strong and stable risk-based statutory capitalization, relatively low operating leverage, and no financial leverage. The total financing and commitments (TFC) ratio is zero. MOA's risk-based capital (RBC) ratio was 444% at year-end 2011 and was estimated at 446% as of March 31, 2012. RBC is expected to remain well above 400% over the medium term.

Fitch continues to view MOA as having one of the most conservative investment portfolios in the Fitch universe. The company's investments are concentrated in investment-grade public bonds, which amounted to roughly 90% of invested assets as of March 31, 2012. Total risky assets, which include below-investment grade (BIG) bonds, troubled real estate, unaffiliated common stock and Schedule BA assets, in relation to TAC totaled 44% at year-end 2011 compared to 40% in 2010. The increase is due to an increase in BIGs driven primarily by fallen angels. The BIG/TAC ratio of 36.5% is still low relative to peers and the industry. Fitch notes that MOA has very limited exposure to commercial mortgage related assets at less than 1% of total invested assets.

MOA reported continued improved operating results and net income for the full year 2011 in line with expectations. Net operating gain and net income more than doubled in 2011. NGO of $37 million exceeded the company's projection of $31M million. Net income of $41 million exceeded the projection of $30 million. First quarter operating income is down to about $8 million from $11 millionM in the prior year period on flat revenue growth. On an annualized basis, this is somewhat below plan for 2012. Net income has benefited from modest increases in net realized investment gains.

Fitch notes that MOA has flexibility to adjust crediting rates paid to its pension contract holders in order to increase reported earnings and generate additional statutory capital if necessary.

Fitch's primary concern is MOA's above-average exposure to interest rate risk due to the company's focus on spread-based pension products. MOA's margins improved in 2011 due primarily to reduced crediting rates. In addition, equity market volatility is expected to constrain asset based fee income. On the positive side, Fitch notes that MOA is not exposed to reserve volatility related to guaranteed minimum death and living benefits in its liability structure.

Fitch's ratings also consider MOA's operating profile as a moderate-sized insurer competing in the group pension market against competitors that have much greater scale and financial resources. MOA's business concentration also exposes it to unanticipated adverse regulatory changes that could have a negative impact on revenue and earnings.

MOA has a long-established niche in the small- to medium-sized not-for-profit qualified pension market. Net flows, driven to a large extent by the company's 403(b) and 401(k) growth products, have been positive in 2012 and that is expected to continue for the full year.

Key rating triggers that could lead to a downgrade include an RBC below 400%, adverse regulatory developments that would negatively impact demand for the company's pension products, and sustained negative net flows.

Fitch does not anticipate an upgrade in the near-to-intermediate term due to MOA's operating profile.

Fitch affirms the following rating with a Stable Outlook:

Mutual of America Life Insurance Co.

--IFS at 'AA-'.

Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Insurance Rating Methodology', Sept. 22, 2011.

Applicable Criteria and Related Research:

Insurance Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=651018

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Fitch Ratings
Primary Analyst
Cynthia J. Crosson
Director
+1-212-908-0863
Fitch Ratings
One State Street Plaza
New York, NY 10004
or
Secondary Analyst
Julie A. Burke, CFA, CPA
Managing Director
+1-312-368-3158
or
Committee Chairperson
Donald F. Thorpe, CFA
Senior Director
+1-312-368-2353
Media Relations:
Brian Bertsch, +1-212-908-0549 (New York)
brian.bertsch@fitchratings.com

Source: Fitch Ratings