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

AM Best has affirmed the Financial Strength Rating (FSR) of A++ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa+” (Superior) of Massachusetts Mutual Life Insurance Company (MassMutual) (domiciled in Springfield, MA) 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-” (Superior) on the surplus notes of MassMutual and “aa+” (Superior) 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. (See below for a detailed listing of the Long-Term IRs and Short-Term Issue Credit Rating.)

Additionally, AM Best has revised the outlook to positive from stable for the Long-Term ICR and affirmed the FSR of A+ (Superior) and the Long-Term ICR of “aa-” (Superior) of Great American Life Insurance Company (GALIC) and its key subsidiary, Annuity Investors Life Insurance Company (AILIC) (collectively referred to as Great American Life Group). The FSR outlook is stable. Furthermore, AM Best has affirmed the FSR of B++ (Good) and the Long-Term ICR of “bbb+” (Good) of Manhattan National Life Insurance Company (Manhattan Life), a life insurance subsidiary of GALIC. The outlook of these ratings is stable. These companies are domiciled in Cincinnati, OH.

The ratings of MassMutual reflect its balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, very favorable business profile and very strong enterprise risk management.

Risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is assessed as strongest, which supports MassMutual’s ability to support its insurance, investment and business risks. Capital and surplus has increased due to organic earnings growth and strong investment income. MassMutual holds elevated investment allocations in below investment grade bonds and Schedule BA assets, but they are managed effectively through MassMutual’s Barings investment subsidiary, and are monitored with good asset liability management capabilities and robust stress testing. Financial flexibility is supported by the organization’s proven ability to access the capital markets. MassMutual ensures that sufficient liquidity is on hand to meet sudden, unanticipated needs, which is monitored and stress tested on a regular basis. Financial and operating leverage ratios along with interest coverage ratios remain within AM Best’s guidelines.

MassMutual continues to generate strong operating performance, though its earnings profile has evolved in recent years. Businesses that no longer are considered core to its strategic long-term interests have been sold, such as majority interests in domestic and international subsidiaries, asset management and its block of retirement business. Currently, the group derives its earnings streams from insurance operations, asset management and fixed annuity business from the Great American Life Group, and is continually making investments in technology to emphasize a positive client experience. AM Best notes that the fair value movements of the accounting of derivatives on its fixed indexed annuity products may cause fluctuations in statutory earnings. AM Best expects that MassMutual will continue to build on its earnings performance as the company fully integrates its recently acquired businesses into its business plan.

MassMutual is regarded as one of the largest and most recognized insurers in the United States with leading market positions in life insurance, fixed and fixed-indexed annuities, pensions and institutional asset management. The business profile has shifted in recent years as with more focus put on whole life, fixed annuity, pension risk transfer and institutional asset management. The group recently sold its group retirement business to Empower, and increased its non-majority interest in Rothesay Life, a pensions insurance specialist in the United Kingdom. MassMutual also acquired Great American Life Insurance Company and its subsidiaries. AM Best assesses MassMutual’s ERM program’s capabilities as strong relative to its risk profile. Proposed initiatives are reviewed in terms of its impact on capital and surplus, as well as how economic capital modeling is utilized. AM Best expects Mass Mutual to invest in technology and digital innovation further across all distribution platforms, and demonstrate continued enhancements to ERM and innovation going forward.

The ratings of Great American Life Group reflect its balance sheet strength, which AM Best assesses as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.

Great American Life Group’s balance sheet strength is assessed as very strong. Risk-adjusted capitalization, as measured by BCAR, is supported by strong earnings growth and is impacted favorably by a recently transacted modified coinsurance arrangement with Martello Re Limited. Invested assets are managed by an affiliate, Barings. While invested assets are of good credit quality, AM Best expects that future investment allocations will emphasize increased allocations to structured securities and private placements over time, similar to that of its parent company, MassMutual. Nearly all of Great American Life Group’s reserves are interest-sensitive.

The outlook change to positive from stable for the Long-Term ICRs is due the favorable progress of integrating Great American Life Group into the MassMutual enterprise, and AM Best expects the company to benefit from the resources that MassMutual can offer going forward. MassMutual already has placed on its MassMutual Financial Advisor distribution platform a registered indexed-linked annuity product that is sold on GALIC paper.

Operating performance has been supported by favorable statutory earnings, although results may fluctuate due to the change in the fair value of derivatives held on its fixed indexed annuities. Investment income was slightly higher in 2021 due to realized gains and higher investment yields. Premium trends have been stable, although they had declined in 2020 due to the COVID-19 pandemic.

AM Best assesses Great American Life Group’s business profile as neutral, as fixed and fixed-indexed annuities comprise nearly all of its direct written premiums. The group is among the national leaders in fixed annuity sales, particularly in the bank channel, where it is among the top sellers. The group also will benefit from the innovation capabilities from MassMutual.

The ratings of Manhattan Life reflect its balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management.

Manhattan Life’s book of business is in runoff mode, with most of its liabilities reinsured through highly rated reinsurers. Risk-adjusted capitalization, as measured by BCAR, is assessed as strongest, and the parent company has demonstrated that they will support the life company with capital contributions when needed. Earnings trends have been volatile, as a small increase in life claims can have a relatively large impact on results. Partially mitigating these factors include its modest portion of business relative to the enterprise and the support of its parent.

The following Long-Term IR has been assigned with stable outlooks:

MassMutual Global Funding II—“aa+” (Superior) program rating

-- “aa+” (Superior) on $50 million 3.553% senior secured notes, due June 1, 2025

The following Short-Term IR has been affirmed:

Massachusetts Mutual Life Insurance Company—

-- AMB-1+ (Strongest) on commercial paper program

The following Long-Term IRs have been affirmed with stable outlooks:

Massachusetts Mutual Life Insurance Company—

-- “aa-” (Superior) on $250 million 7.625% surplus notes, due 2023 (of which $188 million remains outstanding)

-- “aa-” (Superior) on $100 Million 7.500% surplus notes, due 2024 (of which $75 million remains outstanding)

-- “aa-” (Superior) on $250 million 5.625% surplus notes, due 2033 (of which $193 million remains outstanding)

-- “aa-” (Superior) on $750 million 8.875% surplus notes, due 2039 (of which $129 million remains outstanding)

-- “aa-” (Superior) on $400 million 5.375% surplus notes, due 2041 (of which $263 million remains outstanding)

-- “aa-” (Superior) on $500 million 4.5% surplus notes, due 2065 (of which $254 million remains outstanding)

-- “aa-” (Superior) on $475 million 4.9% surplus notes, due 2077

-- “aa-” (Superior) on $838.5 million 3.729% surplus notes, due 2070

-- “aa-” (Superior) on $700 million 3.375% surplus notes, due 2050

-- “aa-” (Superior) on $675 million 3.2% surplus notes, due 2061

-- “aa-” (Superior) on $800 million 5.077% surplus notes, due 2069

MassMutual Global Funding, LLC—“aa+” (Superior) program rating

MassMutual Global Funding II—“aa+” (Superior) program rating

-- “aa+” (Superior) on all outstanding notes issued under the program

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 Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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