Acquisition Costs, Investment Yields Drag Down MassMutual’s 2016 Net Income 87%
February 28, 2017 by Marie Suszynski
SPRINGFIELD, Mass. – Massachusetts Mutual Life Insurance Co.’s net income fell 87% in 2016 as a result of costs related to its acquisition of MetLife’s advisor force and lower investment yields.
Full-year net income declined to $70 million. Premium income fell 3% to $21.3 billion. Total revenue for year was flat at $29.6 billion.
MassMutual’s acquisition of MetLife Premier Client Group, which closed in July with a final purchase price of $165 million, helped boost the company’s advisor force 60% to more than 9,500 by the end of 2016.
At the time the deal closed, Michael Fanning, executive vice president of MassMutual U.S., said the acquisition would make the company a “distribution powerhouse and pacesetter for the industry” (Best’s News Service, July 5, 2016).
Sales of whole life insurance rose 35% to $657 million as of Dec. 31, 2016. Total sales of life insurance increased 28% to $709 million. MassMutual’s life insurance in force grew to more than $560 billion.
“In a year marked by global instability and market volatility, MassMutual delivered strong results across our businesses,” Roger Crandall, MassMutual’s chairman, president and chief executive officer, said in a statement.
Last June, MassMutual and MetLife agreed to take on $1.6 billion in pension liabilities from Pittsburgh-based professional paint company PPG. In exchange, PPG’s pension plans agreed to buy group annuity contracts from the companies for about 13,400 U.S. salaried and non-union hourly retirees or their survivors (Best’s News Service, June 29, 2016).
Members of MassMutual Financial Group have a current Best’s Financial Strength Rating of A++ (Superior).
(By Marie Suszynski, BestWeek Correspondent: Marie.Suszynski@ambest.com)