A.M. Best Assigns Debt Rating to MetLife, Inc.’s New Preferred Shares
30 May 2015 - 5:49AM
Business Wire
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.
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version on businesswire.com: http://www.businesswire.com/news/home/20150529006062/en/
A.M. Best Company, Inc.Michael Adams, FLMI,
908-439-2200, ext. 5133Senior Financial
Analystmichael.adams@ambest.comorAndrew Edelsberg,
CPA, FLMI, 908-439-2200, ext. 5182Vice
Presidentandrew.edelsberg@ambest.comorChristopher
Sharkey, 908-439-2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorJim Peavy,
908-439-2200, ext. 5644Assistant Vice President, Public
Relationsjames.peavy@ambest.com
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