TIAA-CREF

Overview: The Teachers Insurance and Annuity Association, or TIAA, was established in 1918 by the Carnegie Foundation, to improve the financial lot of college professors by offering them pensions. Andrew Carnegie’s interest in this matter dated back to 1890, when he became aware of low pay among professors and subsequently donated $10 million to set up a pension fund for them. In 1952, TIAA launched the College Retirement Equities Fund, or CREF, the world’s first variable annuity.

TIAA and CREF are independent entities with separate boards of trustees. TIAA is a stock insurance company under the laws of the State of New York, but its sole shareholder is the Carnegie Foundation. CREF was created as a nonprofit by an act of the New York State legislature.

TIAA-CREF (pronounced “T-I-A-A creff”) focuses on offering retirement plans, mutual funds and life insurance to employees of educational, medical, research and cultural institutions. However, many of its mutual funds are available to the general public.

Headquarters are in New York City, with major regional offices in Charlotte, NC and Denver, CO.

Job Openings: See this list of current job openings.

Size: TIAA-CREF, a Fortune 100 financial services company, reports these figures:

  • Assets Under Management = $437 billion (12/31/07)
  • Individual Clients = 3.4 million
  • Institutions Served = 15,000
  • Offices in 60 U.S. cities
  • Employees = 7,500

Investment Management Outsourcing: In March 2011, TIAA-CREF announced an initiative to manage funds for the increasing number of endowments and foundations that are seeking to outsource all or part of their investment decisions. This market is projected to grow to as much as $215 billion by 2015, from $105 billion at the end of 2010. The vehicle for providing this service is a new investment fund, Covariance Capital Management, seeded with $1 billion of TIAA-CREF capital.

Positives: Effectively organized and managed as a private nonprofit, TIAA-CREF is insulated from the financial market fluctuations that have battered many of its rivals.

Performance of its investment products has improved markedly of late, after an organizational shakeup under the 2002-08 leadership of CEO Herbert M. Allison, Jr.

TIAA-CREF is just one of three U.S. insurance companies to receive the highest ratings from all major rating agencies: A.M. Best, Standard & Poor’s, Moody’s and Fitch.

Negatives: Despite the recent turnaround in performance, TIAA-CREF still retains image problems after decades as a slow-moving institution with a reputation as a sinecure for the unambitious. TIAA-CREF’s many years of investment underperformance has created a large reservoir of ill will among its large captive audience of clients whose employers chose TIAA-CREF. Indeed, the organization’s insulation from market pressures, and its position as a quasi-monopolistic retirement services provider to major educational institutions, fostered to its culture of underperformance.

Leave a Comment

Your email address will not be published.