TIAA Statement on "Triple-A" Financial Strength Ratings from Fitch and S&P

New York, June 19, 2009

The recent affirmation of the "AAA" insurer financial strength (ISF) rating of the Teachers Insurance and Annuity Association of America ("TIAA") by both Fitch Ratings and Standard & Poor’s (S&P) reflects TIAA’s exceptionally strong capacity to meet policyholder and contract obligations, according to Fitch, and "strong financial flexibility," according to S&P.

The two rating agencies affirmed their highest ratings for TIAA, while revising their respective outlooks to negative from stable. Fitch also said it will downgrade by one notch the senior debt rating assigned to TIAA Global Markets, Inc. (TGM), consistent with typical notching practices.

Fitch Ratings

In a statement released today, Fitch said it "recognizes TIAA’s extremely strong risk-adjusted capitalization, the ability of the company to offset investment losses through strong statutory operating earnings, an exceptionally stable liability structure and the existence of hidden capital through reserve conservatism."

Fitch also said it views TIAA’s liability structure as extremely stable and relatively low risk and TIAA’s statutory profitability as strong relative to "AAA"-rated mutual company peers. According to Fitch, TIAA "enjoys substantial cost advantages from economies of scale and a low-cost distribution system, and has significant flexibility in setting crediting rates. Operating profitability has increased significantly in 2009 due to a reduced crediting rate."

The negative outlook reflects TIAA’s "significant exposure to structured securities, particularly commercial mortgage backed securities…[which]together with a large commercial mortgage portfolio, exposes the company to potential weakness in the commercial mortgage sector in the ongoing difficult economic environment."

TIAA’s debt ratings have historically been the same as its Insurer Financial Strength Rating due to the company’s exceptionally strong credit profile, and in contrast to the rest of the industry where there is normally a one-notch difference. TGM issues debt as part of a spread arbitrage program for the benefit of policyholders. TGM’s total assets are about $3 billion, less than two percent of TIAA’s total assets under management.

Standard & Poor’s

In a statement released yesterday, S&P cites TIAA’s "extremely strong competitive position that it has cultivated by delivering a strong value proposition to the U.S. higher education pension market," as well as the company’s ability to preserve, generate and maintain capital.

S&P’s noted TIAA’s "extremely strong competitive position that it has cultivated by delivering a strong value proposition to the U.S. higher education pension market," as well as the company’s ability to preserve, generate and maintain capital.

An insurer rated AAA has extremely strong financial security characteristics, according to S&P, which said its decision to revise the outlook on TIAA to negative from stable reflects losses and credit impairments, as well as general economic conditions. A negative outlook is not necessarily a precursor of a rating change, according to S&P.

For more information on Fitch and S&P’s rating of TIAA, see these questions and answers.

On May 26, 2009, Moody’s Investors Service affirmed TIAA’s "Aaa" insurance financial strength rating, the highest Moody’s assigns, and affirmed TIAA’s outlook as "stable."

These ratings do not apply to variable annuities, mutual funds, or any other product or service not fully backed by TIAA’s/TIAA-CREF Life’s claims-paying ability.

About TIAA-CREF
TIAA-CREF (www.tiaa-cref.org) is a national financial services organization with more than $350 billion in combined assets under management (as of 3/31/09) and is the leading provider of retirement services in the academic, research, medical and cultural fields.

Media Contact:

Chad Peterson, Director, Corporate Media Relations
cpeterson@tiaa-cref.org, 212 916-4808 Cell: 917 715-9083