A.M. Best Assigns Debt Rating to MetLife, Inc.'s Junior Subordinated Debenture Issuance.OLDWICK, N.J. -- A.M. Best Co. has assigned a debt rating of "bbb+" to MetLife, Inc.'s (MetLife) (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) (NYSE NYSE See: New York Stock Exchange : MET) announced $1.25 billion junior subordinated debenture subordinated debenture An unsecured bond with a claim to assets that is subordinate to all existing and future debt. Thus, in the event that the issuer encounters financial difficulties and must be liquidated, all other claims must be satisfied before offering, to be drawn down from the existing shelf registration. MetLife and its life/health subsidiaries' existing financial strength, issuer credit and debt ratings are unchanged. The outlook for all ratings is negative. The net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). from this offering will be used to repay commercial paper indebtedness and for general corporate purposes. MetLife's debt-to-capital ratio will increase to roughly 29%; however, A.M. Best believes that future earnings will provide strong debt service coverage and enable capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. to remain fairly constant. The securities have several features that garner equity credit such as a 60-year maturity, the ability of the issuer to defer interest up to 10 years with cumulative and compounding coupons and trigger events. In addition, the notes are subordinated to all other debt within the company. The negative outlook on MetLife and its life/health affiliates' ICRs reflects the relatively high adjusted financial leverage, although its fixed charge coverage remains strong at approximately seven times. A.M. Best will closely monitor leverage to ensure MetLife is able to manage this down to the pre-acquisition target level of 25% as projected by early 2007. The outlook also reflects the risk-adjusted capital position of MetLife and 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. , which has remained below A.M. Best's expectations for the current rating levels. A.M. Best will continue to monitor the rate of growth in MetLife's annuity and international product lines in conjunction with its overall level of risk-adjusted capitalization, in addition to its ability to continue to manage challenges associated with products that have equity market exposure and are interest rate sensitive. 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 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 www.ambest.com. |
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