Comment from Kenneth Cohen, Massachusetts Mutual Life Insurance Company

November 3, 2010 The Honorable Timothy F. Geithner Secretary U.S. Department of the Treasury 1500 Pennsylvania Ave., NW Washington, DC 20220 Re: Docket No. FSOC-2010-001-0001. Financial Stability Oversight Council Advance Notice of Proposed Rulemaking Regarding Authority to Require Supervision and Regulation of Certain Nonbank Financial Companies. Dear Secretary Geithner: Massachusetts Mutual Life Insurance Company (MassMutual) submits the following comments in response to the above referenced Advanced Notice of Proposed Rulemaking (ANPR). Founded in 1851 MassMutual is a mutual life insurance company that provides a range of financial protection products – life insurance, annuities, disability income insurance, long term care insurance, and retirement planning products. MassMutual is the parent company whose subsidiaries include Oppenheimer Funds, Inc., Babson Capital LLC, Cornerstone Real Estate Advisors LLC and MML Investors Advisors Services, Inc. At year end 2009 MassMutual and its subsidiaries had $420 billion of assets under management, and MassMutual’s surplus (capital) was $9.2 billion. MassMutual strongly supports the comments submitted by the American Council of Life Insurers dated November 4, 2010 in response to the above referenced ANPR. As the ACLI has noted, individual life insurers and the life insurance industry as a whole have characteristics that mitigate against life insurers being considered as posing a threat to the financial stability of the United States. These characteristics generally include limited interconnectedness with other financial companies; a high level of strong regulation by our primary regulator; financial stability that results from our core activity of providing coverage for long term risks which in turn promotes inherently conservative practices and long term asset-liability matching; very limited leveraging; and limited liquidity risk due to the nature of our products. Since these types of characteristics limit the potential that life insurers individually pose systemic risk, it is critical that the Financial Stability Oversight Council’s systemic risk evaluation process be sufficiently broad and sufficiently sophisticated so as to take into account all of the differentiating factors. Equally important, life insurers should be evaluated by metrics that fit the characteristics of life insurers, as opposed to metrics designed for other financial services institutions (e.g. banks). Finally, the evaluation should involve qualitative criteria and not be reliant on easily identifiable quantitative criteria, such as asset size. Qeustion 2. of the ANPR asks what types of nonbank financial institutions should the Council review for designation under the DFA and further should the analytical framework and considerations vary across industries. The life insurance industry is not a homogeneous; there are different types of insurance organizations within the industry. In particular, mutual life insurers comprise one segment of the industry and are very different from publicly or privately owned stock life insurers both organizationally and in some critical operational aspects. Organizationally, a mutual life insurer cannot and does not issue stock and does not have stockholders. Instead, the policyholders of a mutual life insurer are the “owners” of the company and possess corporate governance authority such as election of directors. Due to this structure, the management of a mutual insurer can focus on the long term interests of the policyholders who purchased coverage for long term protection needs. Management does not need to respond to the short term investment interests of stockholders, which in turn can result in assumption of increased financial risk. In addition, since mutual insurers do not have stockholders, a mutual insurer in a holding company system necessarily is the controlling entity. This means that the ultimate parent is a fully functioning operating insurance company. As such, the holding company is highly regulated by its primary regulator and is subject to prescriptive investment laws, strict risk-based capital and reserving requirements, explicit accounting and underwriting standards, and periodic examinations. Operationally, the primary product issued by the mutual life insurers is traditional whole life insurance. As the name implies, whole life insurance is designed to be purchased and held for the whole of one’s life. A block of whole life insurance is financially stable, long term in nature, and within the realm of permanent life insurance products is probably the most insulated from liquidity demands by policyholders. Finally, mutual life insurers issue participating policies that pay annual policyholder dividends which are part of the price of the insurance product and reflect the given policy’s contribution to the insurer’s prior year’s financial results. For example, in 2011 MassMutual expects to pay out approximately $1.23 billion in policyholder dividends. Since payment of dividends is not guaranteed, they represent a cushion that a mutual life insurer may use to maintain surplus in difficult economic times. The different attributes of mutual insurers generally lead to an even lesser risk of financial failure. Evidence of this effect is found in the highly capitalized positions of the major mutual life insurers (including MassMutual) and the fact that all those insurers are in the small group of most highly rated companies in the financial services industry. These less risky attributes and the strong regulation of the parent mutual company by its primary regulator should also be factored into the systemic risk evaluation system that the FSOC develops. We appreciate this opportunity to submit these comments and trust that they will be of assistance to you and you fellow FSOC members in your deliberations. Sincerely, Kenneth S. Cohen Senior Vice President and Deputy General Counsel cc: The Honorable John M. Huff Director Missouri Department of Insurance, Financial Institutions & Professional Registration