AM Best Affirms Credit Ratings of Teachers Insurance and Annuity Association of America and Its Subsidiary
25 Julio 2024 - 9:44AM
Business Wire
AM Best has affirmed the Financial Strength Rating of A++
(Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR)
of “aaa” (Exceptional) of Teachers Insurance and Annuity
Association of America (TIAA) and its wholly owned insurance
subsidiary, TIAA-CREF Life Insurance Company (TIAA-CREF Life). TIAA
and TIAA-CREF Life collectively are referred to as the TIAA Group.
Concurrently, AM Best has affirmed the Long-Term Issue Credit
Ratings (Long-Term IR) of “aa” (Superior) on TIAA’s surplus notes.
The outlook of these Credit Ratings (ratings) is stable. TIAA and
TIAA-CREF Life are domiciled in New York, NY. (Please see below for
detailed listing of the Long-Term IRs.)
The ratings reflect TIAA Group’s balance sheet strength, which
AM Best assesses as strongest, as well as its very strong operating
performance, very favorable business profile and very strong
enterprise risk management.
The rating affirmations reflect TIAA’s continued market-leading
position in the higher education and not-for-profit pension
marketplaces. TIAA, together with its companion organization,
College Retirement Equities Fund (CREF), enjoys significant
economies of scale as one of the largest retirement systems in the
United States, with assets under management and administration of
approximately $1.5 trillion at year-end 2023. TIAA-CREF Life’s
primary products include individual annuities, funding agreements
and separate account guaranteed interest contracts, which are
marketed to customers of TIAA and the general public.
The ratings also reflect TIAA Group’s risk-adjusted
capitalization, which continues to be at the strongest level, as
measured by Best’s Capital Adequacy Ratio (BCAR). Risk-adjusted
capitalization has been enhanced by TIAA’s very strong operating
performance, which has more than offset realized investment losses
in recent years. The 2023 results were again unfavorable, impacted
by higher operating expenses and declining net flows. TIAA has
significant statutory accounting flexibility to manage its
risk-adjusted capital position, including ability to adjust
crediting rates on its large in-force block of general account
retirement annuities. Also noted is TIAA’s conservative approach to
statutory reserving that further enhances the company’s balance
sheet strength. AM Best notes that TIAA’s current adjusted
financial and operating leverages remain within targeted
levels.
AM Best also views favorably TIAA’s unique long insurance
liability structure with low liquidity needs, whereby nearly
three-quarters of its general account reserves are not cashable and
can only be received as a death benefit, an IRS-required minimum
distribution or in the form of a periodic annuity payout. Contract
holders may transfer funds from TIAA to CREF or to other
employer-approved funding vehicles, but typically in the form of a
10-year annuity payout.
Although AM Best considers TIAA’s investment management
capabilities to be strong, its overall investment portfolio has
generated modest levels of realized investment losses in recent
years, with some continued concern regarding the group’s sizeable
increased exposure to real estate assets, including commercial
mortgage holdings and an elevated level of Schedule BA assets.
TIAA’s mortgage loan portfolio has generally performed well, but
has had continued increased delinquencies and foreclosures in the
past two years. AM Best notes that there are still potential
economic headwinds, despite rising interest rates. Additionally,
TIAA’s Nuveen LLC is expected to provide continued additional
earnings diversification and add additional scale to TIAA’s
business profile going forward.
The following Long-Term IRs have been affirmed with a stable
outlook:
Teachers Insurance and Annuity Association of America—
— “aa” (Superior) on $1.05 billion 6.85% surplus notes due Dec.
16, 2039
— “aa” (Superior) on $1.65 billion 4.90% surplus notes due Sept.
15, 2044
— “aa” (Superior) on $2 billion 4.27% surplus notes due May 15,
2047
— “aa” (Superior) on $350 million fixed to floating rate 4.375%
surplus notes due Sept. 15, 2054
— “aa” (Superior) on $1.25 billion 3.3% surplus notes due March
15, 2050
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.
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Igor Bass Senior Financial Analyst +1 908 882
1646 igor.bass@ambest.com
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Relations +1 908 882 2310
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