MassMutual Financial Narrows Net Loss in 2009, Sees Strong Sales of Whole Life

Massachusetts Mutual Life Insurance Co. posted a statutory net loss of $283 million in 2009 but that was a big improvement from the $1.1 billion net loss in the prior year.

Net gain from operations before dividends and taxes, however, which MassMutual says is its main earnings measure as a mutual company, grew to $1.8 billion in 2009, up 37% from 2008. The company also saw record sales in its core product -- whole life insurance, and in its other key business, retirement services.

Mark Cybulski, a spokesman for MassMutual Financial Group, said the 2009 net loss included net realized capital losses -- primarily the impact of equity and credit market performance on its investment portfolio. That figure represented an improvement of $777 million on a big decrease in net realized capital losses and on the improvement in net gain from operations. The latter reflected, in part, higher earnings in the company's variable annuity business, he said.

Although MassMutual has a well-diversified investment portfolio designed to optimize returns over the long term, the portfolio is not immune to short-term volatility, Cybulski said. "While we have started to see a significant recovery in the equity markets and in some credit sectors, other areas continue to be under stress, which has impacted our overall results through investment gains and losses.

"Longer term, as market conditions continue to recover, we expect this measure to continue to improve," Cybulski said. MassMutual completed an initiative last year to streamline operations to improve its competitive position. The company made staffing adjustments as a part of this process, which resulted in a roughly 8% reduction in the company's overall work force, Cybulski said.

As for business fundamentals, weighted sales for whole life grew 8% to $203 million, while sales in its retirement-services business totaled $4.8 billion, a gain of 24%.

"Our unwavering focus on doing what is right for our policyholders enabled us to not only weather the worst of the economic storm, but also post unprecedented sales in two key product lines, strengthen our capital and surplus levels, grow assets under management and continue to pay high policyholder dividends," said Roger W. Crandall, president and chief executive officer of MassMutual, in a statement. He succeeded Stuart H. Reese as CEO on Jan. 1.

Surplus increased 9% to $9.3 billion.

Total revenues dropped by $1 billion to $18.3 billion.

The economic slump in the United States is helping MassMutual recruit much-needed agents to the industry. The company's agent force "is probably one of the biggest parts of our success," Michael Fanning, executive vice president of MassMutual's U.S. insurance Group, recently told BestWire (BestWire, Feb. 22, 2010).

In 2009, the company recruited more than 2,000 agents, bringing its total agent force to more than 5,000, a 9% jump, he said. Given the slumping economy, MassMutual is focusing on career changers, Fanning said.

MassMutual Financial Group is the 13th-largest U.S. life insurer based on 2008 admitted assets of $125.1 billion, according to BestLink, which provides online access to A.M. Best's Global Insurance & Banking Database.

Massachusetts Mutual Life currently has a Best's Financial Strength Rating of A++ (Superior).

(By Fran Matso Lysiak, senior associate editor, BestWeek: [email protected])