"Fitch Ratings - Chicago - 16 Apr 2025: Fitch Ratings has downgraded the Insurer Financial Strength (IFS) rating of Mutual of America Life Insurance Company (Mutual of America) to 'BBB+' from 'A-'. The Rating Outlook is Negative.
Today's action is primarily driven by the deterioration in the company's profile, as evidenced by heightened regulatory scrutiny, elevated senior management turnover, and execution risks associated with shifting strategic priorities.
The Negative Outlook continues to reflect core profitability pressures, which could be exacerbated by additional regulatory reserve charges and lead to deterioration in the company's very strong capitalization. Additionally, the material unrealized loss position on the fixed-income portfolio indicates heightened capital vulnerability, as continued net outflows could pressure liquidity and lead to forced liquidation of assets at a loss. However, the company maintains a liquidity buffer to fund expected withdrawals.
Mutual of America's ratings continue to reflect the company's position within the niche non-profit, small case retirement plan market and its differentiated approach to distribution, emphasizing underserved and underpenetrated portions of the market.
KEY RATING DRIVERS
Sizable Operating Loss: Mutual of America reported net income of $53 million for 2024, compared with a net loss of $236 million in 2023 and a net loss of $72 million in 2022. The sale of the remaining stake in its home office building in New York City was primarily responsible for the positive bottom line in 2024, as there was a net loss from operations of $150 million excluding this realized gain.
Net outflows have pressured results, but management has implemented new cost efficiency, customer experience improvement, and asset retention initiatives over the last year. However, Fitch expects profitability to remain challenged over the near-to-medium term, with net operating losses expected to continue over the rating horizon, given the lag between group retirement policy terminations and outflows. Fitch would favorably view material improvements, driven by reduced expenses and improved flows leading to near-net profitability in 2025."