A.M. Best Assigns Debt Ratings to Teachers Insurance and Annuity Association of America’s Newly Issued Surplus Notes

A.M. Best has assigned debt ratings of “aa” to the newly issued surplus notes of Teachers Insurance and Annuity Association of America (TIAA) (New York, NY). The surplus notes were issued in two tranches: $1.65 billion, 4.90% fixed rate, maturing on September 15, 2044 and $350 million, 4.375% fixed to floating rate, maturing on September 15, 2054. The outlook assigned to the ratings is stable. The existing ratings of TIAA and its subsidiary, TIAA-CREF Life Insurance Company (New York, NY), are unchanged.

TIAA intends to use the net proceeds from the newly issued surplus notes to fund a portion of the consideration related to its pending acquisition of Nuveen Investments (Nuveen) – a diversified investment management company – and for general corporate purposes.

Following the close of the acquisition, A.M. Best expects TIAA to remain adequately capitalized for its current ratings. A.M. Best will continue to monitor the integration process, along with the impact on TIAA’s operating results, risk-adjusted capitalization, financial leverage and interest coverage. If the transaction is deemed to impact TIAA’s financial flexibility or risk-adjusted capital metrics beyond A.M. Best’s expectations, then negative rating pressure could result.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.