OCTOBER 04, 2017 03:45 PM (EDT)
A.M. Best Affirms Credit Ratings of MetLife Inc. and Its Subsidiaries
FOR IMMEDIATE RELEASE
OLDWICK - OCTOBER 04, 2017 03:45 PM (EDT)
A.M. Best also has affirmed the FSR of A (Excellent) and the Long-Term ICRs of “a+” of MetLife’s property/casualty companies, consisting of Metropolitan Property and Casualty Insurance Company, and seven fully reinsured subsidiaries, as well as a separately rated subsidiary, Metropolitan Group Property and Casualty Insurance Company (both domiciled in Warwick, RI) (together referred to as MetLife Auto & Home).
The outlook of these Credit Ratings (ratings) is stable. (See link below for a detailed listing of the companies and ratings.)
The rating affirmations reflect MetLife’s industry leading position in the group insurance market and diversified geographic presence in which it holds several leading market positions in both mature and emerging markets. A.M. Best believes that MetLife will benefit from a focused business strategy and notes that as a result of the successful spin-off of Brighthouse Financial, Inc. (Brighthouse), MetLife has reduced its exposure to interest rate and equity market sensitive business lines as the majority of its universal life and variable annuity business with secondary guarantees are now part of Brighthouse. However, MetLife still retains roughly a 20% minority interest in Brighthouse. A.M. Best notes that the overall business profile of MetLife has changed due to the spin-off and now MetLife generates almost half of its operating earnings from international business. Despite the continued low interest rate environment that has placed pressure on investment spreads in its retained run-off business lines, MetLife continues to generate strong revenue, stable operating earnings (adjusted for the spin-off ) and cash flows. A.M. Best believes that this will contribute to organic earnings growth as the company executes its strategy of building its global employee benefits and asset management business lines, while improving the expense structure. Financial leverage and interest coverage ratios also remain within A.M. Best’s expectations and MetLife continues to maintain a strong liquidity buffer at its holding company, which is viewed favorably.
Partially offsetting these positive rating factors are stable but elevated levels of risk within its investment portfolio, including commercial-mortgage loans and alternative investments, which remain above industry averages. A.M. Best also notes the relatively high level of operating leverage within the organization primarily due to its securities lending and funding agreement-backed securities programs. However, operating leverage remains within A.M. Best’s guidelines for its current rating on a consolidated basis. Going forward, MetLife will need to successfully execute on its strategy for organic earnings growth and realization of expense efficiencies within its core lines. In the short term, MetLife may face some challenges due to loss of earnings related to its run-off MetLife Holdings segment and the Brighthouse spin-off. Finally, A.M. Best notes ongoing volatility within some existing business lines, high levels of competition within group benefits and the potential for volatility in emerging markets in which MetLife operates which are key markets for its growth strategy.
The ratings for MetLife Auto & Home recognize the companies’ strong capitalization, a level of operating performance that exceeds the composite, a multiple-channel distribution network that includes MetLife’s products and programs and extensive market expertise. Additional positive rating factors include the property/casualty companies’ national geographic diversification and the marketing advantage derived from MetLife’s established brand name recognition. The ratings further acknowledge management’s focused operating strategy that allows the group to consistently generate capital from operating earnings through disciplined underwriting and strong investment returns. Finally, the ratings recognize the financial strength and support provided by MetLife.
Partially offsetting these positive rating factors are MetLife Auto & Home’s moderately elevated underwriting leverage, its exposure to severe weather-related events and a dividend policy that constrains surplus growth.
For a complete listing of MetLife’s FSRs, Long-Term ICRs and Long- and Short-Term IRs, please visit MetLife Inc.
This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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