AM Best Downgrades Issuer Credit Rating of Mutual of America Life Insurance Company, Affirms Financial Strength Rating

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has downgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “a” (Excellent) from “a+” (Excellent) and affirmed the Financial Strength Rating (FSR) of A (Excellent) of Mutual of America Life Insurance Company (MofA) (New York, NY). The outlook of the Long-Term ICR has been revised to stable from negative, while the FSR is stable.

These Credit Ratings (ratings) reflect MofA’s balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, favorable business profile and appropriate enterprise risk management (ERM).

The rating downgrade of the Long-Term ICR reflects AM Best’s view of the company’s operating performance assessment as marginal, and considers the continuing deterioration and recent volatility in Mutual of America’s operating performance. Furthermore, the company’s Long-Term ICR also reflects the continued weakness in its balance sheet strength assessment, driven by market volatility and continued declines in risk-adjusted capitalization with increased losses.

The stable outlooks reflect AM Best’s expectation that MofA will continue to execute on the necessary steps to curb volatility, improve its overall operating performance and its strategic business profile in the near future. MofA’s business profile has experienced some additional weakness, but not enough deterioration to drive the FSR down further.

The company’s risk-adjusted capitalization has continued to decline a bit over the past few years, and is projected to be at the very strong level, as measured by Best’s Capital Adequacy Ratio (BCAR). Surplus has declined a bit as well. The company’s investment portfolio maintained a good credit quality through the COVID-19 pandemic and was without financial leverage, but this will be changing toward privately managed investments in the near future. The company’s net income has declined significantly in recent years, mainly due to general account margin compression, realized losses from impairments and significantly higher operating expenses, including additional costs related to business transformation initiatives. The company’s return-on-equity (ROE) ratio remains lower than the industry average, despite MofA not having a tax liability.

The company has a competitive position in its target market of providing pension products to nonprofit organizations and small for-profit businesses, although almost all of general account reserves are interest-sensitive, and more than half of the total assets are separate account assets. MofA is continuing to invest heavily in technology to enhance its infrastructure, sales efforts and margins as it still expects to gain market share in the near future.

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.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2022 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.