A.M. Best Affirms Ratings of Mutual of America Life Insurance Company

OLDWICK, N.J. --(Business Wire)--

A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) and issuer credit rating of "aa-" of Mutual of America Life Insurance Company (MofA) (New York, NY). The outlook for both ratings is stable.

The ratings reflect MofA's strong risk-adjusted capitalization, overall good credit quality of its investment portfolio, improved net gains from operations, well established position in the retirement and pension plan markets with a focus on non-profit organizations, and strong asset/liability management.

MofA's strong level of risk-adjusted capitalization is reflective of its increasing level of capital and surplus funds and its well managed investment portfolio relative to its low risk business profile. The investment portfolio is of good credit quality and consists mostly of high grade fixed income securities, with minimal investments in common equities, other invested assets and a modest amount of mortgages. The company's main real estate holding, the home office, has significant fair value in excess of its book value, which can be viewed as hidden surplus. MofA has successfully niched itself in the competitive retirement plan marketplace, which targets the small to mid-size not for profit organizations. The company's low risk liability rofile, which is comprised of general account and separate account reserves, enables it to have a modest asset/liability mismatch.

Partially mitigating rating factors include MofA's generally positive but fluctuating net income over the past five years, while its rate of returns remain low overall. This is attributed to the company's very conservative investment strategy of allocating a majority of its fixed income portfolio to high quality investment grade securities to support general account reserves and maintaining a high liquidity position. In the retirement plan marketplace, MofA faces competition from larger companies with greater financial resources. In addition, A.M. Best believes MofA could face some disintermediation risk if interest rates rise sharply, since its individual annuity block of business does not carry surrender charges. However, this factor is partially offset by the complexities to unwind the retirement and pension plans and customer loyalty.

MofA is well positioned for its current ratings. Factors that may precipitate negative rating actions include investment losses, operating performance that doesn't meet A.M. Best's expectations over a sustained period and exposure to disintermediation risk if interest rates rise sharply.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: "Understanding BCAR for Life/Health Insurers" and "Risk Management and the Rating Process for Insurance Companies."

Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com