Standard and Poor’s Ratings Services has lowered its ratings on Massachusetts Mutual Life Insurance Co. and its affiliates.

S&P, New York, lowered the ratings of MassMutual, Springfield, Mass., to AA+ from AAA because of what it says are lower quality of capital and reduced financial flexibility of the company’s asset management units. At the same time, S&P removed MassMutual’s ratings from CreditWatch, where it had been placed with negative implications June 17.

The company’s outlook is stable, says S&P.

“MassMutual’s business profile and competitive advantages, though among the strongest in the industry, are more consistent with those of AA+-rated peers,” said S&P credit analyst Robert Hafner.

In a statement, MassMutual spokesman Mark Cybulski said the company was disappointed that S&P revised its rating. He added, however, that “it is important to note that MassMutual maintains among the highest financial strength ratings of any company in any industry. Our surplus and liquidity levels–both of which are key indicators of our overall financial strength–remain very strong. In fact, our ratings have been recently affirmed by Fitch Ratings (AAA) and A.M. Best (A++), with MassMutual retaining the highest possible ratings from both agencies.”

In S&P’s view, the quality of MassMutual’s capital has fallen because about 30% of its capital base comes from the unstable value of its asset-management units, such as OppenheimerFunds Inc., Babson Capital Management L.L.C., and Baring Asset Management Ltd., rather than more liquid financial assets.

“MassMutual’s 2008 liquidity ratio declined to 220%, which is below our expectation that the ratio would remain above 230% at year-end,” the agency said.

At the same time, S&P stated, “We expect MassMutual’s operating performance to remain very strong and supportive of the ratings,” adding, “the stability and strength of MassMutual’s business profile is very strong.”

The ratings on a subsidiary, MassMutual Life Insurance Co., remain unchanged as AA/Stable, the rating agency said.