(The following statement was released by the rating agency)
NEW YORK, September 13 (Fitch) Fitch Ratings has affirmed the
and Stable Outlook assigned to MetLife, Inc. (MetLife). At the
same time, Fitch
has placed the Insurer Financial Strength (IFS) rating of New
Insurance Company (NELIC) on Rating Watch Negative, and affirmed
from Rating Watch Negative the IFS rating of General American
Company (GALIC). The Outlook is now Stable. MetLife Insurance
Company USA's IFS
(MetLife USA) remains on Rating Watch Negative. A full list of
rating actions is
shown at the end of this release.
Today's rating actions follow Fitch's review of MetLife's
through first- half 2016 (1H16) and reflect ongoing developments
company's pending separation of a large portion of its U.S.
Retail segment. In
connection with the separation, it is expected that NELIC and
MetLife USA will
be the rated entities separated from MetLife and included in the
organization, which has been named Brighthouse Financial, Inc.
Financial). When the separation was originally announced, GALIC
was expected to
join MetLife USA within Brighthouse Financial.
KEY RATING DRIVERS
The affirmation of MetLife's ratings reflects Fitch's view that
strong balance sheet fundamentals, excellent financial
flexibility, and very
strong market positions in several major insurance product lines
and markets in
the U.S. and select international markets remain consistent with
expectations. Fitch believes that the company's large scale and
brand name will continue to provide the company with significant
advantages. Fitch views the pending separation of the
Financial-related businesses as neutral to MetLife's ratings
based on our view
that any decline in diversification of MetLife as a result of
will largely be mitigated by the lower risk profile of the
The ratings also consider MetLife's above-average investment
operating profitability in recent quarters and continued
challenges associated with the ongoing low interest rate
views the uncertainty around MetLife's ultimate status relative
to a potential
non-bank systemically important financial institution (SIFI)
designation to be
The Rating Watch Negative status of the entities that are
expected to be
separated reflects Fitch's view that the operating risk profile
Financial is more exposed to capital market volatility and
interest rate risk
due to its business concentration in variable annuity and
universal life with
secondary guarantee businesses.
Existing ratings assigned to MetLife USA and NELIC benefit from
diversification and scale of the MetLife enterprise, which
includes very strong
competitive positions in group, voluntary and worksite;
funding; and international insurance. Accordingly, it is likely
ultimate ratings of the separated entities will be lower than
ratings by one or two notches depending on whether or not the
risk profile is sufficiently mitigated via extremely strong
other methods for which details are not yet available. Fitch
expects to resolve
the Rating Watch status of these entities upon finalization of
the form of
separation and further solidification of the capitalization and
MetLife's strong balance sheet fundamentals reflect the
risk-adjusted capitalization and favorable liquidity profile.
the statutory capitalization of MetLife's U.S. and Japanese
to be strong and in line with rating expectations. The company's
insurance subsidiaries (excluding American Life Insurance
combined statutory total adjusted capital of approximately $26.8
year-end 2015, which resulted in consolidated risk-based capital
(RBC) of 505%.
Although the company does not provide intra-year RBC estimates,
domestic life insurance subsidiaries reported combined statutory
gain of approximately $1.3 billion in 1H16 and an increase of
billion in total adjusted capital.
MetLife's Japanese insurance subsidiary represents the company's
insurance business outside the U.S. The Japanese subsidiary
reported a statutory
solvency margin ratio of 870% at the end of first quarter 2016,
which is above
both rating expectations and levels achieved by most Japanese
The company's financial leverage was slightly below 25% at June
30, 2016, down
from approximately 27% at yearend 2015, and within Fitch's
expectations for the
company's current ratings. Financial leverage benefited from the
$1.25 billion of senior notes in June 2016.
Fitch views MetLife's operating profitability to be
fundamentally sound, but
notes ongoing pressure from low interest rates coupled with
favorable underwriting results. Reported operating income for
first half 2016
was significantly affected by the outcome of the company's
actuarial assumption review, which was accelerated into the
second quarter in
2016 from the typical third quarter timing in preparation for
separation of the Brighthouse Financial businesses. Second
earnings were also adversely affected by reserve increases
driven by modeling
improvements. DAC unlocking associated with the VA actuarial
reduced reported operating earnings by $161 million, and the
improvements reduced reported operating earnings by $257
Fitch considers MetLife's GAAP interest coverage to be somewhat
expectations for its current rating category, reflecting lower
noted above. Fitch expects MetLife's GAAP fixed charge coverage
ratio to recover
somewhat from the 5.5x level achieved in 1H16
to a level between 7.0x and 7.5x for full-year 2016.
For two subsidiaries on Rating Watch Negative:
Fitch may downgrade ratings upon application of criteria for
as mentioned above or upon further announcements by the company
For MetLife and remaining subsidiaries:
Key rating drivers that could lead to an upgrade of MetLife's
NAIC risk-based capital ratio above 450%, financial leverage
below 25%, and GAAP
fixed charge coverage ratio above 9x.
Key rating drivers that could lead to a downgrade of MetLife's
NAIC risk-based capital ratio below 350%, financial leverage
above 30%, run-rate
ROE below 10%, and GAAP fixed charge coverage ratio below 5x.
FULL LIST OF RATING ACTIONS
Fitch places the following rating on Rating Watch Negative:
New England Life Insurance Company
--Insurer Financial Strength (IFS) 'AA-'.
Fitch removes from Rating Watch Negative and affirms the
following rating with a
General American Life Insurance Company
--Insurer Financial Strength (IFS) 'AA-'.
Fitch maintains the following rating on Rating Watch Negative:
MetLife Insurance Company USA
--Insurer Financial Strength (IFS) 'AA-'.
Fitch affirms the following ratings with a Stable Outlook:
--Long-Term IDR at 'A';
--Short-Term IDR at 'F1';
--1.756% senior notes due 2017 at 'A-';
--1.903% senior notes due 2017 'A-';
--6.817% senior notes due 2018 at 'A-';
--7.717% senior notes due 2019 at 'A-';
--5.25% sterling senior notes due 2020 at 'A-';
--4.75% senior notes due 2021 at 'A-';
--3.048% senior notes due 2022 at 'A-';
--4.368% senior notes due 2023 'A-';
--5.375% senior notes due 2024 at 'A-';
--3.6% senior notes due 2024 at 'A-';
--3.0% senior notes due 2025 at 'A-';
--3.6% senior notes due 2025 at 'A-';
--6.5% senior notes due 2032 at 'A-';
--6.375% senior notes due 2034 at 'A-';
--5.7% senior notes due 2035 at 'A-';
--5.875% senior notes due 2041 at 'A-';
--4.125% senior notes due 2042 at 'A-';
--4.875% senior notes due 2043 at 'A-';
--4.05% senior notes due 2045 at 'A-';
--4.6% senior notes due 2046 at 'A-';
--6.4% junior subordinated debentures due December 2036 at
--10.75% junior subordinated debentures due August 2039 at
--4.721% senior notes due 2044 at 'A-';
--Floating-rate non-cumulative preferred stock, series A at
--5.25% fixed-to-floating rate non-cumulative preferred stock,
series C at
--Commercial paper at 'F1'.
MetLife Funding, Inc.
--Commercial paper at 'F1+'.
MetLife Capital Trust IV
--7.875% trust securities at 'BBB'.
MetLife Capital Trust X
--9.25% trust securities at 'BBB'.
Metropolitan Life Insurance Company
--IFS at 'AA-';
-- Long-Term IDR at 'A+';
--Surplus notes at 'A';
--Short-Term IDR at 'F1+'.
Metropolitan Life Global Funding I
--Medium-term note program at 'AA-'.
MetLife Short Term Funding LLC
--Commercial paper program at 'F1+'.
Bradley Ellis, CFA
Fitch Ratings, Inc.
70 W. Madison Street
Chicago, IL 60602
Douglas L. Meyer, CFA
Keith M. Buckley, CFA
Media Relations: Hannah James, New York, Tel: + 1 646 582 4947,
Additional information is available on www.fitchratings.com
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