AM Best Affirms Credit Ratings of Teachers Insurance and Annuity Association of America and Its Subsidiary
The ratings reflect TIAA Group’s balance sheet strength, which AM Best assesses as strongest, as well as its very strong operating performance, very favorable business profile and very strong enterprise risk management.
The rating affirmations reflect TIAA’s market-leading position in the higher education and not-for-profit pension marketplaces. TIAA, together with its wholly owned subsidiary, College Retirement Equities Fund (CREF), enjoys significant economies of scale, and combined form one of the largest retirement systems in
The ratings also reflect TIAA’s risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Risk-adjusted capitalization has been enhanced by its very strong operating performance, which has more than offset realized investment losses in recent years. TIAA has significant statutory accounting flexibility to manage its risk-adjusted capital position, including the ability to adjust crediting rates on its large in-force block of general account retirement annuities. TIAA uses a conservative approach to statutory reserves, and as a result, its balance sheet contains a considerable amount of hidden capital. AM Best notes that TIAA’s current adjusted financial leverage and operating leverage are relatively low.
AM Best also views favorably TIAA’s unique liability structure, whereby approximately 70% of its general account reserves are not cashable and can only be received as a death benefit, an
AM Best considers TIAA’s investment management capabilities to be strong, but notes that the overall investment portfolio has generated moderate levels of realized investment losses in recent years. While the company has the strongest level of risk-adjusted capitalization, AM Best continues to be slightly concerned over the group’s sizeable exposure to real estate assets and above-average level of Schedule BA assets. AM Best notes that the increased exposure to real estate has come from commercial mortgages, which have experienced minimal problem loans and the company has worked with borrowers though the pandemic to keep them current. The number of problem loans has continued to improve as we have seen economic improvement in 2021. However, AM Best notes that there are still potential pandemic-related headwinds.
Although operating performance is assessed as very strong, AM Best notes that the majority of TIAA’s earnings are derived through active spread management of its core pension businesses. However, with most of its pension businesses having 3% minimum interest rate guarantees, AM Best believes TIAA potentially could be challenged to sustain and improve its net operating performance as it continues to navigate the persistent low interest rate environment. To mitigate its exposure to these relatively high minimum interest rate guarantees over the long term, TIAA utilizes an indexed minimum interest rate guarantee for new institutional and individual retirement accounts. Additionally, TIAA’s
The following Long-Term IRs have been affirmed with a stable outlook:
-- “aa” (Superior) on
-- “aa” (Superior) on
-- “aa” (Superior) on
-- “aa” (Superior) on
-- “aa” (Superior) on
This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in
Copyright © 2021 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
View source version on businesswire.com: https://www.businesswire.com/news/home/20210728005644/en/
Financial Analyst
+1 908 439 2200, ext. 5340
[email protected]
Manager, Public Relations
+1 908 439 2200, ext. 5159
[email protected]
Senior Director
+1 908 439 2200, ext. 5201
[email protected]
Director, Communications
+1 908 439 2200, ext. 5644
[email protected]
Source: AM Best
T. Rowe Price Adds Retirement Blend Funds To Target Date Lineup
Zentist Platform Reaches $100 Million in Annual Dental Insurance Collections
Advisor News
Annuity News
Health/Employee Benefits News
Life Insurance News