MassMutual Announces Record 2012 Financial Results
Sales in key businesses, assets under management, year-end surplus and capital reach historic highs
Feb 27, 2013
(Springfield, MA) - Massachusetts Mutual Life Insurance Company (MassMutual) today announced strong consolidated statutory financial results1 for 2012, including double digit growth and record sales in its key businesses, increased earnings that support an increased policyowner dividend payout, and unprecedented levels of statutory surplus and total adjusted capital. These highlights reflect the company’s historic ability to achieve strong results despite uncertain economic conditions, as well as successful execution of MassMutual’s strategy to provide superior financial strength, high dividends and a high quality customer experience to its policyowners and clients.
For the year ended 2012, sales2 of whole life insurance – the company’s core product – were $303 million, up 26 percent from the prior year and the seventh consecutive year of record sales. Retirement plan and services sales and deposits totaled $11.1 billion, up significantly from $6.2 billion in 2011 and the fourth consecutive year of record sales and deposits. Net gain from operations before policyowner dividends and taxes – the company’s primary earnings measure as a mutual company – was $2.1 billion, up 22 percent from 2011, and net income soared to $872 million, nearly doubling from $459 million earned the prior year. Assets under management3 rose 15 percent to $508 billion, the highest reported in the company’s history. The company’s statutory surplus and total adjusted capital – both key indicators of the company’s overall financial strength – grew to record levels of $12.7 billion (up 11 percent) and $14.4 billion (up 9 percent), respectively.
“Our principles and values as a mutual company have long stood the test of time and helped guide us to an outstanding year in 2012,” said Roger Crandall, Chairman, President and CEO, MassMutual. “Our consistent focus on the customer, the strength and stability provided through our products, and our dedicated employees and financial professionals who work to help our customers achieve financial peace of mind all contributed to what in many ways was a record year for our company.”
“Despite the uncertainty in the U.S. and global economies, our strategy proved to be resilient in 2012 as we achieved strong results across all key measures, maintained our capital at record levels, explored and entered new markets, and approved the highest estimated dividend payout in our company’s history,” Mr. Crandall continued. “While it is likely our environment will remain uncertain and our industry will remain competitive, we have an excellent foundation and results on which to build, and we'll continue to work relentlessly to help provide strength, security and stability even during the most unstable times.”
Results for MassMutual and its consolidated life insurance subsidiaries for the year ended Dec. 31, 2012 compared to the year ended Dec. 31, 2011 (unless otherwise noted) include:
- Sales results within the company’s key product lines:
- Whole life sales increased 26 percent.
- Total U.S. Insurance sales increased 30 percent.
- Retirement plan and services sales and deposits increased 79 percent.
- Investment Management sales increased 11 percent.
- Surplus was $12.7 billion as of Dec. 31, 2012, up 11 percent from $11.4 billion. - Total adjusted capital was $14.4 billion at the end of 2012, up 9 percent from $13.2 billion a year earlier. - Net gain from operations before policyowner dividends and taxes was $2.1 billion, up 22 percent from $1.7 billion. - Net income was $872 million, up 90 percent from $459 million. - Revenue of $26.7 billion increased 36 percent from $19.7 billion. - An estimated dividend payout4 for 2013 of $1.39 billion to eligible participating policyowners, the company’s highest payout ever. This approved dividend reflects a dividend interest rate of 7 percent on eligible participating life insurance policies5.
MassMutual Financial Group’s enterprise-wide results6 for 2012 include:
- Assets under management were $508 billion as of Dec. 31, 2012, an increase of 15 percent from $443 billion at the end of 2011.
- Worldwide insurance in force was $521.1 billion at the end of 2012, up 3 percent from $503.7 billion at the end of 2011.
- Premium and other deposits was $35.5 billion for 2012, a 55 percent increase from $22.9 billion in 2011.
“The strong operating fundamentals of MassMutual’s core businesses – coupled with our enduring financial strength and excellent investment results – enabled us to produce remarkable results in 2012, including significant growth in earnings, sales, revenues, assets under management and cash flows,” said Michael Rollings, Executive Vice President and Chief Financial Officer, MassMutual. “In addition, our major subsidiaries – including OppenheimerFunds, Babson Capital Management and Baring Asset Management, as well as our international businesses – were key contributors to our overall results and helped offset some of the profit impact from the low interest rate environment, and our policyowners benefited from their strong performance.”
Key Milestones and Achievements
The company also reported significant progress and recognition toward achieving its strategic objectives and cited several noteworthy achievements:
- Successfully completed the acquisition of The Hartford’s Retirement Plans business for $355 million, enabling MassMutual to build on the record growth in its retirement business, add complementary markets and distribution capabilities, and nearly double the number of retirement plan participants it serves to approximately three million. MassMutual agreed to purchase the business in 2012 and ultimately acquired it on Jan. 1, 2013.
- Sustained its leadership position in customer service. In 2012, MassMutual’s call centers and representatives captured top awards for client service and best practices for the fourth year in a row by ContactCenterWorld, a global association for contact center best practices and networking.
- Won recognition for its commitment to diversity and inclusion. The company was named a Top 50 Company for Executive Women for the first time in 2012 by the National Association of Female Executives (NAFE), and the company was once again honored with this recognition in February 2013. MassMutual was again honored by Working Mother magazine as one of its 100 Best Companies (Working Mother, October 2012), and by DiversityInc. for the second year in a row as one of 25 Noteworthy Companies (DiversityInc., Summer 2012).
- Established the Office of the CEO in early 2013, which will focus on key decisions for the company, prioritize critical initiatives and resources, and help enable effective alignment across MassMutual. The Office of the CEO consists of Mr. Crandall, Mr. Rollings, Michael Fanning, Executive Vice President and head of the U.S. Insurance business, and Elaine Sarsynski, Executive Vice President and head of Retirement Services and Chairman and CEO of MassMutual International LLC.
Consolidated Statutory Results ($ in Millions)
|Life Company Assets||$167,510||$148,600||13%|
|Life Company Liabilities||$154,823||$137,183||13%|
|Net Gain from Operations before Policyholder Dividends and Taxes||$2,077||$1,709||22%|
|Dividends to Participating Policyholders||$1,379||$1,313||5%|
Financial Strength Ratings7
A.M. Best Company, A++ (Superior)
Fitch Ratings, AA+ (Very Strong)
Moody’s Investors Service, Aa2 (Excellent)
Standard & Poor’s, AA+ (Very Strong)
For more information about MassMutual’s consolidated statutory financial results, visit: http://www.massmutual.com/aboutmassmutual/financialinfo/documents.
1 These are consolidated statutory results of Massachusetts Mutual Life Insurance Company and its U.S.-domiciled life insurance subsidiaries: C.M. Life Insurance Company and MML Bay State Life Insurance Company.
2 Sales are classified as weighted sales, which are based on weighted annualized new premium, with single premium payments weighted at 10 percent.
3 Assets under management include assets and certain external investment funds managed by MassMutual subsidiaries, including OppenheimerFunds Inc., Babson Capital Management LLC, Baring Asset Management Limited, and Cornerstone Real Estate Advisers LLC.
4 Dividends are not guaranteed.
5 The dividend interest rate is not the rate of return on the policy. Dividends consist of an investment component, a mortality component and an expense component. Therefore, dividend interest rates should not be the sole basis for comparing insurers or policy performance.
6 Enterprise-wide results include the results for Massachusetts Mutual Life Insurance Company and its U.S.-domiciled life insurance subsidiaries, as well as the affiliated companies of MassMutual Financial Group.
7 Ratings are for Massachusetts Mutual Life Insurance Company and its U.S.-domiciled life insurance subsidiaries: C.M. Life Insurance Company and MML Bay State Life Insurance Company. Ratings are as of 2/26/13 and are subject to change.
Founded in 1851, MassMutual is a leading mutual life insurance company that is run for the benefit of its members and participating policyholders. The company has a long history of financial strength and strong performance, and although dividends are not guaranteed, MassMutual has paid dividends to eligible participating policyholders every year since the 1860s. With whole life insurance as its foundation, MassMutual provides products to help meet the financial needs of clients, such as life insurance, disability income insurance, long term care insurance, retirement/401(k) plan services, and annuities. In addition, the company’s strong and growing network of financial professionals helps clients make good financial decisions for the long-term.
MassMutual Financial Group is a marketing name for Massachusetts Mutual Life Insurance Company (MassMutual) and its affiliated companies and sales representatives. MassMutual is headquartered in Springfield, Massachusetts and its major affiliates include: Babson Capital Management LLC; Baring Asset Management Limited; Cornerstone Real Estate Advisers LLC; The First Mercantile Trust Company; MassMutual International LLC; MML Investors Services, LLC, Member FINRA and SIPC; OppenheimerFunds, Inc.; and The MassMutual Trust Company, FSB.