MassMutual Ascend Upgraded To ‘AA’; Massachusetts Mutual Life Insurance Co. Ratings Affirmed At ‘AA+’; Outlooks Stable
February 25, 2025 by S&P
NEW YORK (S&P Global Ratings) Feb. 20, 2025–On Feb. 20, 2025, S&P Global Ratings raised to ‘AA’ from ‘A+’ its financial strength and long-term issuer credit ratings on MassMutual Ascend Life Insurance Co. and its core subsidiary, Annuity Investors Life Insurance Co. (collectively, MM Ascend).
At the same time, we affirmed our ‘AA+’ financial strength and long-term issuer credit ratings on Massachusetts Mutual Life Insurance Co. and its core subsidiaries, C.M. Life Insurance Co. and MML Bay State Life Insurance Co. (collectively, MassMutual). The outlooks on all of the ratings are stable.
We also affirmed our ratings on all outstanding hybrids and debt instruments issued by MassMutual (see the Ratings List for full details).
As a highly strategic subsidiary of MassMutual, our ‘AA’ financial strength and long-term issuer credit ratings on MM Ascend are now set one notch below the ‘aa+’ group credit profile on MassMutual. This reflects the financial support the entity has already received from the group and likely will receive should the need arise in the future. Because MM Ascend has been rebranded with the MassMutual name, integrated with the broader group’s enterprise risk management and financial planning, and become a strong sales engine for the group, we view it as highly unlikely to be sold. However, we do not view the products that MM Ascend offers as core to the group’s strategy, so we expect group support for its entities that offer whole life may be a higher priority in stressful times.
We view MassMutual’s financial risk profile as excellent, anchored by its sizeable, sustainable capital redundancy at the 99.99% confidence level, per our risk-based capital model as of year-end 2023. Despite its sizeable exposure to Invesco and its increasing exposure to Martello Re, which is currently unrated by S&P Global, we view the group’s risk exposure as moderately low and its leverage and fixed-charge coverage levels as manageable.
MassMutual’s highly effective risk controls, supported by robust hedging strategies, help protect its operating earnings and capital cushion. We generally view the group’s investments as high quality but note it has meaningful exposure to ‘BBB’ rated bonds–about 39% of its fixed-income portfolio. This is a result of the company’s investments in less liquid privately placed bonds. MassMutual also has a significant exposure to a single obligor (about 18% ownership of Invesco).
We expect MassMutual will maintain financial leverage below 25% and fixed-charge coverage above 4x through the next two years. As of year-end 2023, MassMutual’s debt mainly consisted of roughly $4.8 billion of surplus notes outstanding, and fixed-charge coverage on a statutory basis was approximately 6.6x.
In our view, MassMutual’s well-recognized brand, diversified revenue sources (life, asset management, and annuities), and strong distribution system support its excellent competitive position and business risk profile. This is evidenced by its consistently top-three market position in whole life insurance and its top-10 position in fixed annuities, the latter of which has been bolstered by MM Ascend. The company’s operating performance, as measured by pre-dividend return on assets, has been slightly below the peer average in recent years, but it has the lowest expense ratio among similarly rated peers. MM Ascend’s multichannel distribution platform (weighted heavily in financial institutions) and better-than-peer return on assets have rounded out MassMutual’s already excellent competitive position.
MassMutual’s diverse, seasoned, largely independent board of risk-aware directors; robust fiscal planning; and adequate liquidity support the current ratings. Per our calculations, the group had a liquidity ratio of about 280% as of year-end 2023.
The stable outlook on MassMutual reflects our expectation that the company will maintain its excellent competitive position and financial risk profile as it continues to grow its whole life and annuities businesses. We also expect the company will appropriately manage its growth and maintain financial leverage of less than 25% on a statutory basis.
We could lower our ratings in the next 12-24 months if:
- MassMutual’s competitive position deteriorates because of a weakening market position or less diversified earnings;
- Its product mix becomes overweight in risky offerings;
- We lower our sovereign rating on the U.S.; or
- MassMutual’s capital adequacy drops significantly below the 99.99% confidence level for a sustained period, which could result from earnings compression or substantial changes in the group’s capital-management strategy.
We could also lower our ratings on MM Ascend if we believe it has or will become significantly less strategically important to MassMutual.
Our ratings on MassMutual are constrained by the ‘AA+’ long-term sovereign rating on the U.S., so we are unlikely to raise them in the next 24 months.
Related Criteria
- General Criteria: Hybrid Capital: Methodology And Assumptions, Feb. 10, 2025
- Criteria | Insurance | General: Insurer Risk-Based Capital Adequacy–Methodology And Assumptions, Nov. 15, 2023
- General Criteria: Environmental, Social, And Governance Principles In Credit Ratings, Oct. 10, 2021
- Criteria | Insurance | General: Insurers Rating Methodology, July 1, 2019
- General Criteria: Group Rating Methodology, July 1, 2019
- General Criteria: Methodology For Linking Long-Term And Short-Term Ratings, April 7, 2017
- General Criteria: Principles Of Credit Ratings, Feb. 16, 2011
Certain terms used in this report, particularly certain adjectives used to express our view on rating relevant factors, have specific meanings ascribed to them in our criteria, and should therefore be read in conjunction with such criteria. Please see Ratings Criteria at www.spglobal.com/ratings for further information. Complete ratings information is available to RatingsDirect subscribers at www.capitaliq.com. All ratings affected by this rating action can be found on S&P Global Ratings’ public website at www.spglobal.com/ratings.
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