A.M. Best Affirms Financial Strength Ratings of MetLife Inc.'s Affiliates, Places Issuer Credit and Debt Ratings Under Review With Negative Implications.OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) of Metropolitan Life Insurance Company (MetLife), the primary insurance company of MetLife Inc. (MET) (NYSE NYSE See: New York Stock Exchange : MET) (both of New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , NY), and its key life/health affiliates. Concurrently, A.M. Best has placed the group's short-term and long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. ratings as well as MetLife's issuer credit rating of "aa" under review with negative implications. These actions follow MET's announcement that it plans to acquire the operations of The Travelers Insurance Company and The Travelers Life and Annuity Company (together known as Travelers) from Citigroup, Inc. (NYSE: C) (all of Hartford, CT) for approximately $11.5 billion. The operations encompass Travelers' U.S. life/health business and international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. , excluding Mexico. A.M. Best views this transaction favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. for MET from a strategic perspective. The addition of Travelers will augment MET's earnings power via increased scale, enhance its market positions in its core life and retirement savings businesses and expand distribution through agreements designating MET as a preferred product provider for several of Citigroup's retail channels. Additionally, A.M. Best expects MET to realize meaningful cost economies over time and recognize the diversification benefits of the transaction in both the domestic and international markets. A.M. Best's review will focus on the credit impact of the various funding scenarios being considered by MET. Under the terms of the transaction, Citigroup will receive between $1.0 billion and $3.0 billion in MET common stock and the balance in cash. MET will likely finance the cash portion through a combination of debt securities, mandatory convertible securities mandatory convertible security A debt security that automatically converts to another security, generally shares of common stock, on a specified date. and cash on hand, as well as through the potential sale of up to $3 billion in certain assets. In any event, A.M. Best anticipates MET's pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma financial leverage will increase to around 30%--giving some equity credit for hybrid securities--but to moderate back to management's 25% target by year-end 2006. Nevertheless, A.M. Best notes the substantial amount of goodwill and intangibles and the diminished level of tangible capital available to MET as a result of this acquisition. Prospectively, A.M. Best expects MET to maintain solid risk-adjusted capitalization of its operating subsidiaries An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. as well as strong cash flow and interest coverage at the holding company. The issuer credit and debt ratings will remain under review pending A.M. Best's meetings with management to gain more clarity surrounding the financing and integration plans to determine the transaction's overall impact on MET's balance sheet strength. A.M. Best has also affirmed the financial strength rating of A (Excellent) of MetLife Auto and Home Pool and its eight fully reinsured property/casualty subsidiaries led by Metropolitan Property and Casualty Insurance Company (both of Rhode Island Rhode Island, island, United States Rhode Island, island, 15 mi (24 km) long and 5 mi (8 km) wide, S R.I., at the entrance to Narragansett Bay. It is the largest island in the state, with steep cliffs and excellent beaches. ). Additionally, A.M. Best has affirmed the financial strength rating of A (Excellent) of Texas Life Insurance Company (Waco, TX). For a comprehensive list of MetLife Inc.'s financial strength, debt and issuer credit ratings, please visit http://www.ambest.com/press/013102metlife.pdf. For Best's Debt Ratings, all other Best's Ratings Best's rating A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders. , an overview of the rating process and rating methodologies, please visit http://www.ambest.com/ratings. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at http://www.ambest.com. |
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion