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Fitch Rates Brighthouse Financial's Senior Notes 'BBB(EXP)'
June 15, 2017 / 7:06 PM / 6 months ago

Fitch Rates Brighthouse Financial's Senior Notes 'BBB(EXP)'

(The following statement was released by the rating agency) CHICAGO, June 15 (Fitch) Fitch Ratings has assigned an expected rating of 'BBB(EXP)' to Brighthouse Financial, Inc.'s (Brighthouse) proposed issuance of up to $3 billion new senior unsecured notes. The expected rating reflects standard notching based on Fitch's rating criteria. Fitch expects proceeds from the debt issuance to be used to pay a dividend to MetLife, Inc. (MetLife) and for general corporate purposes, including potential capital contributions to Brighthouse's life insurance subsidiaries. Fitch also expects that following issuance of the new notes being rated today, Brighthouse's financial leverage will remain significantly below the sensitivity established for the company's ratings on May 31, 2017. The expected rating also relies heavily on a guarantee from MetLife, under which MetLife will fully and unconditionally guarantee, on a senior unsecured basis, the full and prompt payment of principal of, premium, if any, and interest on the notes. The MetLife guarantee will terminate and be automatically and unconditionally released upon a distribution of Brighthouse common stock to MetLife's shareholders. KEY RATING DRIVERS Brighthouse's ratings continue to reflect the company's very strong statutory capitalization, significant operating scale, and strong risk-management capabilities. The business that will be contained within Brighthouse represents approximately 25% of MetLife's current total assets, which places Brighthouse as a top-12 U.S. life insurer on a standalone basis. The ratings also consider the company's above-average exposure to market-sensitive variable annuity and universal life with secondary guarantee businesses, which could have a negative impact on risk-based capitalization and earnings in an adverse market scenario. Fitch believes that further seasoning as a stand-alone company while maintaining a strong capitalization profile would ultimately reflect positively on the company's credit profile. RATING SENSITIVITIES The expected rating Fitch has assigned to Brighthouse's senior unsecured notes relies heavily on MetLife's full and unconditional guarantee on a senior unsecured basis, the full and prompt payment of principal of, premium, if any, and interest on the notes until the contribution of Brighthouse Holdings, LLC, Brighthouse Life Insurance Company, and New England Life Insurance Company (NELICO) to Brighthouse is complete. The ratings also assume a generally uneventful execution of Brighthouse's legal separation from MetLife. Significant adverse developments related to the separation could have negative implications for the ratings. In the near term, a significant decline in management's strategic target for statutory capital backing the variable annuity business at separation could lead to a downgrade. Longer-term, Fitch will apply its Prism capital model to Brighthouse when sufficient information becomes available, which is likely to be in 2017. A Prism capital score below 'Strong' could cause Fitch to reassess its view of Brighthouse's capital strength, which supports the rating. Additional downgrade sensitivities include a financial leverage ratio exceeding 28%, or a significant deterioration in profitability. The primary upgrade sensitivity would include establishment of a track record of strong operating performance, risk management and reasonable stability in capitalization following the company's separation from MetLife. FULL LIST OF RATING ACTIONS Fitch has assigned the following expected rating: Brighthouse Financial, Inc. --Expected senior unsecured rating on proposed issuance: 'BBB(EXP)'. Contact: Primary Analyst Bradley Ellis, CFA Director +1-312-368-2089 Fitch Ratings, Inc. 70 W. Madison Street Chicago, IL 60602 Secondary Analyst Douglas L. Meyer, CFA Managing Director +1-312-368-2061 Committee Chairperson Keith M. Buckley, CFA Managing Director +1-312-368-3211 Media Relations: Alyssa Castelli, New York, Tel: +1 (212) 908 0540, Email: Additional information is available on Applicable Criteria Insurance Rating Methodology (pub. 26 Apr 2017) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here Solicitation Status here#solicitation Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. 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