What Is TIAA?
The Teachers, Insurance, and Annuity Association (TIAA) is a nonprofit organization that provides investment and insurance services for those working in education, medicine, culture, and research. TIAA has a history that dates back to the late Andrew Carnegie, whose Carnegie Foundation for the Advancement of Teaching created the initial organization in order to service the pension needs of professors. The financial services company was founded in 1918 with a $1 million endowment from the Carnegie Foundation. It went by the name TIAA-CREF, short for Teachers Insurance and Annuity Association—College Retirement Equities Fund, until 2016 when it rebranded under the shortened name of TIAA.
In 2010, TIAA shifted its model to become a for-profit financial services corporation offering retirement products, 529 College Savings Plans, managed investment accounts, checking and savings products, mortgage loans and other managed investment accounts. The main office is in New York and there are satellite offices in Denver, Dallas, and Charlotte, N.C. Up until 1997, TIAA operated as a tax-exempt non-profit organization. It is now organized as a non-profit organization that has taxable subsidiaries. All of TIAA's profits are disbursed to policyholders.
TIAA's 2016 rebranding was meant to portray a simpler and cleaner image while acknowledging the company's 100-year history. The company continues to offer services to customers such as individual retirement accounts (IRAs), mutual funds, annuities, brokerage, 529 plans, insurance, banking, home loans, and estate planning.
As of December 2017, TIAA had more than 5 million active and retired employee accounts at more than 15,000 institutions, with $1 trillion under management. It is the number-one-ranked asset manager of real assets in farmland and U.S. tax-exempt assets. It has been ranked the number one 'Best Overall Large Fund company,' by the Thomson Reuters Lipper Fund Awards for five years in a row, from 2013-2017.
TIAA: The Addition of CREF in 1952
While the creation of TIAA in 1918 as a means of providing guaranteed lifetime income and insurance was a groundbreaking new resource for teachers and educators, it was the establishment of CREF in 1952 that started the company on the road to becoming a diversified financial services firm. Citing rapidly increasingly life expectancies, CREF allowed individuals the opportunity to add equity investments to their personal portfolios through a variable annuity product. It was designed to use the higher expected returns of stocks to help stretch out the retirement income streams of workers. Fortune Magazine described CREF as "the biggest development in the insurance investment business since the passage of the Social Security Act in 1935." TIAA dropped CREF from its name in 2016.
Since 2012, TIAA has made several acquisitions to grow its portfolio and product offerings.
- In April 2014 TIAA announced it would acquire Nuveen Investments in a deal valued at $6.25 billion.
- In August 2016 TIAA agreed to purchase Everbank Financial Corp. for $2.5 billion in cash. The deal was completed in June 2017.
TIAA has demonstrated a history of accepting investment strategies before the strategies became mainstream. In 1979, the company was one of the first to utilize a broad portfolio of international stocks as part of its investment strategy. In 1990, it added the CREF Social Choice Account to its lineup, giving customers a socially responsible investing option. In 1992, it introduced the Rollover IRA. In 1995, TIAA offered individuals the ability to invest in directly owned real estate properties. In 1998, the company entered the 529 marketplace.
As of mid-2018, TIAA's CEO was Roger Ferguson. He joined the company in 2008. Previously he was the head of financial services for insurer Swiss Re and chairman of Swiss Re American Holding Corp. He is also the former vice-chairman of the Board of Governors of the U.S. Federal Reserve System.