Fitch Ratings has given the Large and Highly Rated Mutual US Life Insurers peer group an Insurer Financial Strength (IFS) score ranging from ‘AA+ to ‘AAA’.
This is driven chiefly by the mutual insurers’ capital positions. Compared with stock companies, the mutual insurers generally have a longer-term focus on sustainable returns while maintaining excess capital compared with target levels and rating expectations.
In contrast to the broader US life insurance industry, Fitch views the peer group as having below-average liability risk.
The peer group’s predictable and long-duration liabilities enhance its risk profile as exhibited by Guardian, MassMutual, New York Life and Northwestern Mutual, which are leading producers in the whole life insurance market.
TIAA has a very stable, long-duration general account policy and contract reserves that are not subject to discretionary withdrawal at the option of the policyholder.
Fitch views that all the mutual peers have exceptionally strong capital, with RBC ratios ranging from 435% to 560% as of YE 2021 and Prism Capital Model scores of ‘Extremely Strong’ in 2021.
Nonrisk-based capital metrics generally compare favourably with rating expectations, while the quality of capital is viewed as strong. Macroeconomic volatility and geopolitical uncertainty pose risks to Fitch’s outlook for life insurers. However, this peer group’s exceptionally strong capital is expected to mitigate a material negative impact.
The review affirms the peer group as having very strong company profiles supported by low-risk liabilities, diversification across lines of business and a substantial operating scale.
Fitch states the peer group has firmly entrenched market leadership positions across lines of business and established distribution capabilities.
