TIAA issues $2 billion in notes to bolster capital

AP News
Posted: Dec 16, 2009 2:15 PM

The Teachers Insurance and Annuity Association of America has issued $2 billion in 30-year notes to reinforce its capital position, the association said Wednesday.

The surplus notes will pay an annual interest rate of 6.85 percent and mature in December 2039, TIAA said in a statement. They are subordinate to policyholder obligations.

"We believe this was an opportune time in the markets to issue these notes, which enable us to build capital on terms consistent with meeting clients' long-term financial needs," said Georganne C. Proctor, the association's chief financial officer.

The association statement said that Moody's, Standard & Poor's and Fitch Ratings all have given it the highest possible insurance financial strength rating. All the agencies revised TIAA's outlook from stable to negative, which was consistent with the whole industry, the statement said.

TIAA said that issuing such notes is common for life insurance companies to strengthen their capital base. The notes went to institutional investors and certain non-U.S. investors.

College Retirement Equities Fund (CREF), the companion organization to TIAA, did not issue any notes, the statement said.

TIAA-CREF provides retirement services in the academic, research, medical and cultural fields with $402 billion in combined assets under management as of Sept. 30.