In our company’s early years, groundbreaking innovation meant installing phones and buying typewriters. Growing our customer base meant serving New England farmers, steamship workers, and Gold Rush pioneers headed west. Today, adapting to change means investing in data analytics, tapping into global markets, and more.
Yet, while the world continues to shift dramatically, our pledge to our customers has stayed the same: to provide stability and security in a world of change and uncertainty. That mission is at the heart of what we call Live Mutual: a vision of a world where stronger ties between people – from friends and family to coworkers and even strangers – help us navigate life’s most difficult moments. In 2018, we were proud to advance that commitment – and put ourselves in a stronger position to have a lasting impact on the lives of the people we serve.
A Strong Foundation for the Future
As a mutual company, we measure our progress not on where our share price ended up for the year or whether we beat analysts’ estimates. We measure it on how much closer we are to helping people build a more confident future.
We did that in 2018 in an environment that was more volatile than we have seen in some time. While we continued to benefit from historically low unemployment, solid wage growth, and modest inflation pressure, trade wars increased uncertainty, and slowly rising interest rates helped roil the markets. Geopolitical developments like Brexit, shifting diplomacy with North Korea, and growing populist movements all exacerbated the uncertainty.
In this increasingly unsettled environment, we once again provided a measure of certainty and stability. Strong demand for our holistic financial solutions for both individuals and institutions drove revenue to a record $32 billion last year, while helping to increase the insurance protection we provide to more than $700 billion, giving people the security and peace of mind to face life’s uncertainties. Along the way, we also helped more than half a million new people on their path to a more secure financial future, whether it was as a breadwinner protecting his or her family, a worker looking to save a few extra dollars for retirement, or a retiree receiving a pension payment.
These commitments were supported by a company as financially strong as ever, as we increased our total adjusted capital to nearly $20 billion and maintained among the highest ratings of any company in any industry.1 This same stability enabled us to approve an estimated $1.72 billion dividend payout in 2019 to our eligible participating policyowners – our highest payout ever and the 151st consecutive year we have paid a dividend.2
Most importantly, we continued to fulfill our commitments to you, delivering more than $5.3 billion in benefits – with real dollars going to real people. Young adults. Families. Business owners. Retirees. Nothing makes me prouder than the fact that we helped so many in 2018 – and laid a strong foundation to help even more in the years ahead.
Adapting to a Rapidly Changing World
As we operate from this position of strength, we are constantly assessing what we must do to build on our success and stay competitive in a rapidly changing world. In 2018, we continued on our path to stay nimble, while seizing opportunities to position us strongly for the long term.
One of our biggest priorities continues to be responding to the biggest trend reshaping our world: digital transformation. We are seizing the opportunities that technology has brought to make our solutions more affordable and accessible to more people.
That’s why we have expanded our use of data analytics to provide protection in a fraction of the time, identify better ways to keep your assets safe, and help you make the best real-time decisions about your finances. It’s also why we are providing our dedicated network of advisors with digital capabilities to serve you better, and are creating a seamless digital experience for purchasing insurance – from the time you first apply to when we deliver a claim.
Yet as we adapt to immediate trends, we have also taken steps to maintain our long-term performance so we can continue investing in our business and honor our commitments decades from now. As such, we have begun to evolve our approach to what have long been our key strategic differentiators – our international insurance and asset management businesses – by finding successful and innovative partners to help maximize their value.
The 2018 sale of our majority interest in MassMutual Japan to Nippon Life and sale of MassMutual Asia to Yunfeng Financial Group and several Asia-based investors are primary examples. Both transactions enable us to benefit from maintaining an ongoing interest in strongly positioned entities, as well as through potential strategic partnerships that will yield additional opportunities over time. We expect to reap similar advantages with our transaction announced last October, in which OppenheimerFunds, Inc., our retail asset management affiliate, will combine with Invesco Ltd., to form one of the largest asset management firms in the world. Expected to close in 2019, the transaction will give us the largest ownership stake in the combined firm, with expanded global scale, greater diversity of offerings, and additional capital that will increase our financial strength.
Overall, these transactions will help us maximize our investments in these businesses, which have delivered strong results across various market cycles and provided excellent value to our policyowners.
Moves like these – and the opportunities they bring – are why I’m so confident in MassMutual’s future. Still, one thing makes me most confident of all: our people. We’ve always known our strategy would only work if our people are empowered to do their best. So our approach is founded on one key principle: people who are at their best in life are at their best at work.
From fostering diversity and inclusion to advancing continuous improvement and learning, we are putting our employees in the best position to succeed. We did this in 2018 by modernizing and expanding our benefits to give our employees greater choice and flexibility, as well as announcing plans to expand our presence in our home state – recommitting to the city we have called home since our founding and establishing a new Boston campus. This will create an overall environment that fosters greater collaboration and innovation for generations to come.
And finally, investments like this are not just limited to our workforce and workplace – they extend to our communities as well. We achieved major milestones on the way to improving the places where we live and work, from reaching more than a million students with financial and life lessons through our FutureSmart program to giving away more than $700 million in insurance protection through our LifeBridge program.3 Our ongoing work through these programs is helping us build communities where everyone has the opportunity to flourish.
A Live Mutual Future
Taken together, our ongoing progress puts us in a strong position to continue what has driven us since the beginning: helping people secure their future and protect the ones they love.
When I look back on the 168 years since MassMutual was founded, I take great pride in knowing this purpose has always been at the heart of how we see the world and our place in it.
I am proud of the investments we have made in 2018 to help make living mutually a reality for our policyowners and customers, and incredibly excited for what we will accomplish in the new year and beyond.
Thank you for being part of the MassMutual community. We look forward to working with you to advance a future where we can all Live Mutual – this year and for many years to come.
Sincerely,
Roger W. Crandall
Chairman, President, and Chief Executive Officer
1 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 March 1, 2019, and are subject to change.
2 Dividends are determined annually, subject to change, and not guaranteed.
3 MassMutual pays the premiums.
