AM Best Affirms Credit Ratings of Massachusetts Mutual Life Insurance Company and Its Subsidiaries

2020 JUN 23 (NewsRx) -- By a News Reporter-Staff News Editor at CDC & FDA Daily -- AM 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, AM Best has affirmed the Long-Term Issue Credit Ratings (Long-Term IR) of “aa-” on the existing surplus notes of MassMutual and “aa+” on notes issued under the 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 Rating [Short-Term IR].)

The ratings reflect MassMutual’s balance sheet strength, which AM Best categorizes as strongest, as well as its strong operating performance, very favorable business profile and very strong enterprise risk management (ERM).

MassMutual is one of the largest and most recognizable brands in the United States life insurance market, with diverse product offerings, such as life insurance, annuities, disability and bank-owned life insurance, as well as pensions and institutional asset management. MassMutual is also recognized as a market leader in ordinary life insurance sales, particularly whole life. In recent years, MassMutual’s organizational structure and business profile has become more U.S.-focused with the sale of its majority interests in certain Asian subsidiaries and OppenheimerFunds, Inc. to Invesco. However, MassMutual retained a sizeable economic interest through its ownership of preferred and common stock in Invesco. MassMutual continues to serve the institutional asset market through Barings, which is a wholly owned asset management affiliate.

MassMutual’s risk-adjusted capitalization is assessed at the strongest level. Investment risk is higher when compared with industry benchmarks, but the company has been proactive in reducing its risk exposure over the last few years. AM Best views the invested asset portfolio as well-diversified and of good overall credit quality with robust stress testing and good asset-liability management. Financial flexibility is very strong, and MassMutual maintains a significant ability to access the capital markets given its moderate levels of financial leverage and strong interest coverage ratios, even when incorporating unconsolidated non-recourse debt held at an affiliate entity. Operating leverage remains within AM Best’s expectations, and MassMutual has very strong liquidity that should buffer its balance sheet in the current COVID-19-driven economic environment.

Operating performance historically has been strong, although MassMutual may face challenges in the current economic environment given the potential for a resurgence in equity market volatility, asset impairments, ongoing low interest rates and top-line revenue pressure. The overall impact to earnings from the current economic environment is expected to be manageable. MassMutual’s ERM is assessed at the very strong level, which reflects its economic capital, stress modeling and detailed ERM mitigation policies and procedures.

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