Fitch Rates Massachusetts Mutual’s Surplus Note Issue ‘AA-‘

The following is from Fitch Ratings on April 10:

Fitch Ratings has assigned an 'AA-' rating to Massachusetts Mutual Life Insurance Company's (MassMutual) $500 million 4.50 percent surplus notes due in 2065. MassMutual's Long-term Issuer Default Rating is not affected by this rating action. MassMutual's Rating Outlook is Stable.

On Feb. 23, Fitch affirmed the ratings of MassMutual and its insurance operating subsidiaries with a Stable Outlook.

KEY RATING DRIVERS

The ratings are equivalent to the ratings assigned to MassMutual's existing surplus notes and reflect standard notching based on Fitch's criteria. Surplus notes are subordinate in right of payment to both policyholder and senior debt obligations of the insurance company. Interest and principal payments on the surplus notes are subject to prior approval of the Commissioner of Insurance of the State of Massachusetts.

MassMutual is expected to use proceeds from the surplus notes for general corporate purposes. Fitch continues to view MassMutual's statutory capital as very strong and in line with rating expectations. At Dec. 31, 2014, MassMutual had total adjusted capital (TAC) of $16.4 billion and a risk based capital ratio (RBC) of 497 percent.

MassMutual currently has $1.75 billion of surplus notes outstanding. As of Dec. 31, 2014 on a pro forma basis, MassMutual's ratio of surplus notes to TAC will increase to 13.3 percent from 12 percent as of Dec. 31, 2013. Fitch views this level as within ratings expectations and in line with Fitch's guidelines for standard notching from the IFS rating.

RATING SENSITIVITIES

Key rating triggers that could lead to an upgrade include:

--Sustained improvement in quality and stability of operating results, investment performance and capital generation.

Key rating triggers that could lead to a downgrade include:

--Increased volatility in capital and earnings due to higher than expected credit-related losses, adverse outcome to litigation or other unexpected developments.

--NAIC risk-based capital ratio below 400 percent.

--Surplus notes to TAC ratio above 15 percent.

--A change in MassMutual's legal organizational structure (which Fitch considers unlikely) or a significant change in the macro environment.

Fitch has assigned the following rating to MassMutual's surplus note offering:

--$500 million 4.50 percent surplus notes due 2065 at 'AA-';

Additional information is available at 'fitchratings.com'.

Applicable Criteria and Related Research:

--'Insurance Rating Methodology' (September 2014).

Applicable Criteria and Related Research:

Insurance Rating Methodology

http://fitchratings.com/creditdesk/reports/ report_frame.cfm?rpt_id=756650

Additional Disclosure

Solicitation Status

http://fitchratings.com/gws/en/disclosure/ solicitation?pr_id=982747

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