Massachusetts Mutual Life Insurance Company (MassMutual) announced today it has approved payment of an estimated $1.39 billion in dividends to eligible participating policyowners in 2013, the highest payout ever in the company's 161-year history. The dividends to be paid in 2013, approved by MassMutual's Board of Directors, include a dividend interest rate(1) of 7.0 percent on all eligible participating life insurance policies, a rate that remains unchanged from the prior year. The approved estimated payout for 2013 reflects the company's continued strong performance amid economic uncertainty, as well as the enduring value that comes from owning an eligible participating policy from MassMutual.
"Approving a record estimated dividend payout amid continued challenging economic conditions is further proof of the soundness of our business strategy and the value we deliver as a mutual company that is run for the benefit of our members and participating policyowners," said Roger Crandall, Chairman, President and CEO, MassMutual. "Our inherent focus on doing what is right for our customers - coupled with our continued financial strength and strong business fundamentals - has enabled us to pay dividends consistently since the 1860s, and allowed us to reach this milestone of which we are extremely proud. At a time when all Americans need to take greater responsibility for their financial future, we stand by our commitment to be there for our policyowners during the challenges and opportunities life brings as we continue to successfully execute our strategy to provide financial strength, outstanding service and high dividends."
The approved estimated payout of $1.39 billion represents an increase of more than 4 percent over the approved estimated payout of $1.33 billion in 2012. This payout comes at a time when MassMutual maintains among the highest financial strength ratings(2) in its industry and is reporting very strong levels of surplus ($12.7 billion as of 9/30/12) and total adjusted capital ($14.4 billion as of 9/30/12), which are key indicators of the company's overall financial strength. The 2013 payout marks the 15(th) consecutive year that MassMutual's estimated payout exceeds $1 billion. By the end of 2012, the company expects to have paid $20 billion in dividends over the past 20 years.
Customers who purchase eligible participating products from MassMutual receive an equitable share of the company's divisible surplus in the form of dividends as approved by MassMutual's Board of Directors each year. Dividends, which are not guaranteed, are primarily the combined result of investment experience, mortality savings and expense savings. MassMutual has achieved this milestone as a result of the success and soundness of the company's financial strength, operating fundamentals and long-term investment strategy.
Dividends for a given policy are influenced by such factors as policy series, issue age, gender, underwriting class, policy year and policy loan rate, as well as changes in experience. Of the total $1.39 billion dividend payout, an estimated $1.36 billion has been approved for eligible participating policyowners who have purchased whole life insurance, the company's core product. More than 97 percent of eligible participating whole life policies will receive a dividend in 2013 that is the same or higher than they received in 2012.
"There's no better proof of our commitment to sharing our success with our policyowners than this approved dividend payout," said Michael Fanning, Executive Vice President and head of MassMutual's U.S. Insurance Group. "MassMutual's whole life insurance sales(3) are up 27 percent through the third quarter of this year, indicating that consumers are increasingly looking to the guarantees and benefits our whole life insurance product offers - including the opportunity to receive dividends - as essential qualities during a time of continued economic uncertainty."
Whole life policyowners can use dividends for a broad range of purposes. Options include receiving dividends in cash or using them to pay premiums, purchase paid-up additional insurance coverage, accumulate at interest, or repay policy loans and policy loan interest.
(1)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.
(2) Financial strength ratings for MassMutual and its subsidiaries, C.M. Life Insurance Company and MML Bay State Life Insurance Company are as follows: A.M. Best Company, A++ (Superior); Fitch Ratings, AA+ (Very Strong); Moody's Investors Service, Aa2 (Excellent); and Standard & Poor's, AA+ (Very Strong). Ratings are as of 10/28/2012 and are subject to change.
(3) Sales are classified as weighted sales, which are based on weighted annualized new premium, with single premium payments weighted at 10 percent.
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 consistently 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.
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