AM Best Affirms Credit Ratings of Massachusetts Mutual Life Insurance Company and Its Subsidiaries

OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of A++
(Superior) and the Long-Term Issuer Credit Ratings of “aa+” of
Massachusetts Mutual Life Insurance Company (MassMutual) and its
life/health subsidiaries, C.M. Life Insurance Company and MML Bay State
Life Insurance Company (both domiciled in Enfield, CT). Concurrently, AM
Best has affirmed the Long-Term Issue Credit Ratings (Long-Term IR) of
“aa-” on the existing surplus notes of MassMutual and the “aa+” on notes
issued under funding agreement-backed securities programs of MassMutual
Global Funding, LLC and MassMutual Global Funding II. The outlook of
these Credit Ratings (rating) is stable. The aforementioned companies
are headquartered in Springfield, MA. (See below for a detailed listing
of the Long-Term IRs and Short-Term Issue Credit Rating [Short-Term IR].)

The ratings reflect MassMutual’s balance sheet strength, which AM Best
categorizes as strongest, as well as its strong operating performance,
very favorable business profile and very strong enterprise risk
management.

Risk-adjusted capitalization, as measured by the Best Capital Adequacy
Ratio, is assessed as very strong and supports its growth, business and
insurance risks. MassMutual’s invested asset portfolio is
well-diversified and generally of good credit quality, but has elevated
allocations in Schedule BA assets and below investment grade bonds.
Liquidity capabilities are strong, supported by robust cash inflows and
frequent monitoring, evaluation and testing of short and long-term cash
needs. Mass Mutual’s quality of capital and reserve strength are viewed
positively with significant levels of xxx reserve redundancies retained
on its balance sheet, and an increased focus on whole life products.
MassMutual’s operating performance benefits from diverse earnings with a
good balance between insurance, asset management and investment margins.
While earnings will be less diversified with the pending sale of
OppenheimerFunds, the group should benefit from favorable organic
earnings growth in the longer term, particularly in its ordinary life
line of business, which has shown strong compound annual growth rates.

In the life insurance and asset management marketplace, MassMutual is
one of the largest and most recognizable life insurers in the United
States, with leading market positions in total life sales, ordinary
life, disability income, annuities and bank-owned life insurance.
Distribution has been augmented by the integration of the MetLife agent
network purchased in 2016. Despite the narrowing of the business profile
with the proposed OppenheimerFunds sale, MassMutual will continue to
have strong institutional asset management capabilities through Barings,
a wholly owned asset management affiliate.

In recent years, MassMutual sought to minimize its direct exposure to
businesses, which have become less relevant to its long-term strategy.
Its direct interest in MassMutual Japan was sold in the second quarter,
2018 to Nippon Life. Also, MassMutual Asia, its Hong Kong subsidiary,
was sold in November, 2018 to Yunfeng Financial Group and several
Asia-based investors. Mass Mutual continues to retain a minority
interest in both companies.

In October, 2018, MassMutual announced it had entered into an agreement
to sell OppenheimerFunds, its retail asset management affiliate, to
Invesco in which it will replace operational control of OppenheimerFunds
with an equity interest of $4.0 billion in preferred stock and
approximately $1.7 billion in common stock with attractive coupons in a
tax free exchange. Mass Mutual will own approximately 16% of Invesco’s
common equity and the transaction is expected to close in the second
quarter.

The following Short-Term IR has been affirmed:

Massachusetts
Mutual Life Insurance Company—
— AMB-1+ on commercial paper program

The
following Long-Term IRs have been affirmed with a stable outlook:

Massachusetts
Mutual Life Insurance Company—
— “aa-” on $250 million 7.625%
surplus notes, due 2023
— “aa-” on $100 million 7.500% surplus
notes, due 2024
— “aa-” on $250 million 5.625% surplus notes, due
2033
— “aa-” on $750 million 8.875% surplus notes, due 2039 (of
which $310 million remains outstanding)
— “aa-” on $400 million
5.375% surplus notes, due 2041
— “aa-” on $500 million 4.5%
surplus notes, due 2065
— “aa-” on $475 million 4.9% surplus
notes, due 2077

MassMutual Global Funding, LLC—“aa+” program
rating
— “aa+” on all outstanding notes issued under the program

MassMutual
Global Funding II—“aa+” program rating
— “aa+” on all outstanding
notes issued under the program

The following Long-Term IRs
have been assigned with a stable outlook:

MassMutual Global
Funding II
— “aa+” on $650 million 3.40% senior secured medium
term notes, due 2026
— “aa+” on $200 million 2.73% senior secured
medium term notes, due 2021

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 Understanding
Best’s Credit Ratings. For information on the proper media
use of Best’s Credit Ratings and AM Best press releases, please view Guide
for Media – Proper Use of Best’s Credit Ratings and AM Best Rating
Action Press Releases.

AM Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit www.ambest.com
for more information.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.

Contacts

Frank Walko, CPA, FLMI
Financial Analyst
+1
908 439 2200, ext. 5072
frank.walko@ambest.com

Rosemarie
Mirabella
Director
+1 908 439 2200, ext. 5892
rosemarie.mirabella@ambest.com

Christopher
Sharkey
Manager, Public Relations
+1 908 439
2200, ext. 5159
christopher.sharkey@ambest.com

Jim
Peavy
Director, Public Relations
+1 908 439
2200, ext. 5644
james.peavy@ambest.com