2011 Investment Performance of the TIAA General Account
This statement is updated each quarter with the latest performance information for the TIAA General Account.
Since 1918, TIAA’s disciplined, long-term approach to asset management has enabled us to deliver on our mission to help individuals and institutions plan for lifelong financial security. In recent times, the volatility of financial markets underscores why it is critical to recognize and appropriately manage risk. TIAA strives to identify emerging risks to our business and in the broader economy, and then we take the necessary steps to try to manage and mitigate those risks. By virtue of our mission, we are in it for the long term.
Unlike publicly owned companies that seek return for shareholders, our goal is to create value for individuals and institutions, in the form of high-value services and guaranteed income for life. TIAA’s General Account supports our guaranteed fixed annuity, TIAA Traditional Annuity. The General Account primarily invests in corporate and government bonds, structured finance instruments (such as mortgage-backed securities) and real estate.
TIAA ended the third quarter of 2011 with a record level of capital reserves and recent affirmations of our financial strength by all four major independent rating agencies. TIAA is among the highest-rated insurance companies in the United States, and our capital reserves underscore our company’s stability, claims paying ability and overall financial strength.*
TIAA had $222.4 billion in total statutory admitted assets, including $15.1 billion in its separate accounts as of September 30, 2011. Moreover, our capital and contingency reserves – which determine our claims-paying ability – grew strongly, ending the third quarter of 2011 at $26.4 billion, an increase of $1.2 billion over year-end 2010.
As of September 30, 2011, TIAA’s General Account portfolio had $0.6 billion in investment losses consisting of net realized capital losses of $0.3 billion and net unrealized capital losses of $0.3 billion.
In addition, the crediting rate for TIAA Traditional Annuity – currently 3.50% for Retirement Annuities (RA) – remains highly competitive. The average annual return for the TIAA Traditional Annuity RA contracts for the 10-year period ended October 31, 2011 is 5.51%, which is significantly higher than the average 10-year Treasury yield during that period and well above the general rate of inflation for most of the past three decades.
Due to capital position of the General Account, TIAA’s guarantees of principal and minimum rates of interest remain strong. Accordingly, the Trustees of TIAA set the interest rates at a level that allows TIAA to guarantee and pay lifetime income to millions of retirees.
Note: This statement pertains to the TIAA General Account. The TIAA General Account is an insurance company general operating account. It is not available to investors and does not present investment returns to participants. The performance of the investments held in the TIAA General Account support the TIAA Traditional Annuity's guarantees of principal, minimum guaranteed returns, additional amounts and payout obligations.
*For its stability, claims-paying ability and overall financial strength, TIAA currently holds among the highest ratings from the four leading insurance company rating agencies: A.M. Best (A++ as of 2/11), Fitch (AAA as of 6/11), Moody's Investors Service (Aaa as of 6/11) and Standard & Poor's (AA+ as of 8/11). These ratings are subject to change and do not apply to variable annuities, mutual funds or any other product or service not fully backed by TIAA's claims-paying ability. Per S&P criteria, the downgrade of U.S. long-term government debt limits the highest rating of U.S. insurers to AA+ (the second-highest rating available).
TIAA accounts for investments in accordance with statutory accounting principles as prescribed or permitted by the New York State Insurance Department. A realized loss on an investment is recorded when an impairment is considered to be other-than-temporary. An impairment in the valuation of an investment is considered to have occurred if an event or change in circumstance indicates that the carrying value of the asset may not be recoverable or that the receipt of contractual payments of principal and interest may not occur when scheduled. When an impairment has been determined to have occurred, the investment is written down to either fair value or the present value of the discounted cash flows, depending on the asset class, and a realized loss is recorded. TIAA considers available evidence to evaluate the potential impairment of its investments. Realized losses also include losses on investments that have been sold or otherwise disposed of as well as losses on investments that continue to be held in the portfolio.
New Funds applied to TIAA Traditional from November 1, 2011 through November 30, 2011 will be credited with interest at the annual effective rate of 3.50% for Retirement Annuities, 3.00% for SRA, 2.75% for RCP and 1.00% for IRAs and Keoghs until November 30, 2011. Funds transferred to TIAA Traditional between November 1, 2011 and November 30, 2011 will begin earning interest at the beginning of the next calendar day following the effective date of the transfer, and will be credited with the indicated rates through February 29, 2012.