Standard and Poor’s Ratings Services today hit Massachusetts Mutual Life Insurance Co., New York Life Insurance Co. and TIAA-CREF with negative ratings actions.
The New York-based ratings agency put
MassMutual of Springfield on credit watch with negative implications. S&P also revised its outlook on New York Life and TIAA-CREF to “negative,” from “stable.”
The three insurers are AAA-rated, but the ratings agency said that its actions are based on the negative effect that investment losses and credit impairments have had on the companies’ capital, plus S&P’s use of new stress factors in its capital adequacy analysis.
Although
MassMutual has issued $750 million in surplus notes recently, S&P said that the insurer’s capitalization is below expectations for its AAA rating. The ratings agency also said that because the market’s decline has lowered the unrealized value of
MassMutual’s asset management subsidiaries, including OppenheimerFunds Inc. of New York, selling those assets is now a less attractive option.
In an e-mail, Mark Cybulski, spokesman for
MassMutual, wrote: “We are pleased that our AAA financial-strength rating with Standard & Poor's remains, as it is the highest rating offered by the agency. We have a strong surplus position, bolstered by our recent issuance of $750 million in surplus notes, a comprehensive portfolio of products and services, and an active and growing professional-career-agency system.”
New York Life received a negative rating because the insurer’s capital adequacy has become weaker due to equity- and credit-related investment losses. However, even in this weakened state, the insurer’s capital adequacy is “very strong,” according to a research note.
The ratings agency affirmed its AAA counterparty credit and financial-strength ratings on New York Life.
“With S&P’s affirmation of New York Life's AAA today, the company has very recently had all four major rating agencies affirm the highest possible ratings for financial strength,” New York Life spokesman William Werfelman wrote in an e-mail. “We remain in rarefied territory — only three life insurers have the highest possible ratings from all four agencies.”
As for New York-based TIAA-CREF, S&P also cited a weaker capital position due to market conditions. But the agency said that the company has the earnings capacity and financial flexibility to contend with capital shortfalls.
It also affirmed AAA counterparty credit and financial-strength ratings on TIAA-CREF.
In a statement, the company said that the ratings affirmation “reflects the strong financial flexibility of the Teachers Insurance and Annuity Association of America.”
