A major financial strength-ratings firm has lowered its ratings a notch on Massachusetts Mutual Life Insurance Co.
New York-based Standard & Poor’s this week downgraded the Springfield-based financial services giant from its top AAA ranking to its second-best AA+ ranking, according to S&P analyst Robert A. Hafner.
“Massachusetts Mutual Life Insurance Co. and its U.S. insurance affiliates’ competitive position and financial profile are very strong,” Hafner said in last week’s ratings statement. “However, the quality of capital is weakened by its dependence on the very material portion of capitalization — approximately 30 percent — derived from the value of its asset-management affiliates.”
“MassMutual’s financial flexibility is weakened by the economic downturn and because the company increased its financial leverage to the maximum tolerance for higher ratings,” Hafner said.
Nevertheless, he added, S&P has removed the company’s ratings from CreditWatch negative status, where it had been since June.
“The outlook is stable, reflecting MassMutual’s sustainable competitive advantages and very strong capitalization,” Hafner said.
MassMutual is disappointed that its rating was lowered, spokesman Mark Cybulski said. But he added that the company still maintains “among the highest financial strength ratings of any company in any industry.”
MassMutual has enjoyed the highest possible ratings from both Fitch Ratings and A.M. Best, he said.
“Our surplus and liquidity levels — both of which are key indicators of our overall financial strength — remain very strong,” Cybulski said.
“We intend to manage the company — both going forward and as we have demonstrated in the past — with the same commitment to operational excellence and discipline as a AAA company,” Cybulski said, despite the current economic uncertainty.
Part of MassMutual’s response to the recession has been job cuts.
Since January, MassMutual has laid off scores of workers at its Enfield complex — 26 in April, 44 in May, and an undisclosed number on Aug. 11.
Sources this month placed the total number of job cuts at about 100 overall, divided between the company’s Springfield and Enfield offices.
Cybulski would not confirm the figure, saying only that there had been a “decrease in staffing levels at our home office facilities in Springfield and Enfield.”
“The total impact of all strategic projects — including actions taken earlier in the year — will be within the range initially given, which is 4 to 8 percent of the work force by year end,” he said.
Applying the 4 to 8 percent target figure to the 2,000 workers at the company’s Enfield operation brings the number of total layoffs by the end of 2009 to a range of 80 to 160.
The company opened its Enfield offices only four years ago in a 460,000-square-foot complex that MassMutual bought from The Phoenix Home Life Insurance Co. Hartford-based Phoenix in 2004 consolidated its work force at its Hartford offices, putting the Enfield complex on the market.
MassMutual’s Enfield offices house life insurance, annuities, and trust operations, including sales, marketing, and customer service. They also house the company’s disability income and large corporate markets operations.
Reader response:
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