A.M. Best has assigned a debt rating of “bbb” to the $1.5 billion
5.25% fixed-to-floating rate non-cumulative preferred stock, Series C
recently issued by MetLife, Inc. (MetLife) (New York, NY)
[NYSE:MET]. The outlook assigned to the rating is stable.
Proceeds from the sale of the Series C preferred shares will be utilized
primarily to fund the full purchase of MetLife’s existing 6.50%
non-cumulative Series B preferred shares. The Series C preferred shares
rank equally with MetLife’s Series A and Series B preferred shares and
are perpetual, but the dividends are not cumulative or mandatory. The
issuer is restricted in its ability to repay or repurchase the Series C
preferred shares on or prior to Dec. 31, 2018, due to a replacement
capital covenant, which will terminate on that date, for the benefit of
the holders of MetLife’s 10.75% fixed-to-floating rate junior
subordinated debentures due 2069. The Series C preferred shares are
redeemable at MetLife’s option on or after June 15, 2020, or at any time
prior to June 15, 2020, within 90 days of a “regulatory capital event.”
A regulatory capital event encompasses certain changes in laws, rules or
regulations implemented by the company’s capital regulator, currently
the Federal Reserve Board, which currently maintains oversight of
MetLife as a non-bank systemically important financial institution
(SIFI).
A.M. Best notes that MetLife’s pro forma financial leverage is expected
to remain in the 25% range in the near to medium term. Additionally,
MetLife’s financial flexibility remains strong and interest coverage is
expected to remain above five times.
MetLife’s ratings recognize its diverse business mix, favorable
operating results, strong franchise, considerable scale and prominent
market positions across several product lines. MetLife continues to
generate consistent revenue and cash flows, and has reported growth in
operating earnings across the majority of its core segments. Overall
operating results improved in 2014 versus the prior period despite
headwinds from low interest rates and increases in mortality and
morbidity claims during the year. A.M. Best notes that MetLife’s
earnings have benefited from higher net investment income and
asset-based fee revenues driven by favorable equity markets.
The methodology used in determining these ratings is Best’s Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best’s rating process and contains the different rating criteria
employed in the rating process. Best’s Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology.
Additional key criteria utilized include:
-
Analyzing Insurance Holding Company Liquidity
-
Equity Credit For Hybrid Securities
-
Insurance Holding Company and Debt Ratings
This press release relates to rating(s) 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 visit A.M. Best’s Ratings
& Criteria Center.
A.M. Best Company is the world's oldest and most authoritative
insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS
RESERVED.
View source version on businesswire.com: http://www.businesswire.com/news/home/20150529006062/en/
Copyright Business Wire 2015