A.M. Best Revises Outlooks to Positive for MetLife, Inc.’s Property/Casualty Subsidiaries; Affirms Credit Ratings of MetLife, Inc. and Its Life/Health Subsidiaries

Oct 18, 2018 03:21 pm

A.M. Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) of “a+” of MetLife’s Property and Casualty companies, consisting of Metropolitan Property and Casualty Insurance Company and seven fully reinsured subsidiaries, as well as Metropolitan Group Property and Casualty Insurance Company (both domiciled in Warwick, RI) (collectively referred to as MetLife Auto & Home).

Concurrently, A.M. Best has affirmed the FSR of A+ (Superior) and the Long-Term ICRs of “aa-” of the Metropolitan Life Insurance Company (MLIC) (New York, NY) and Metropolitan Tower Life Insurance Company (Lincoln, NE) (collectively referred to as MetLife Insurance Group). Additionally, A.M. Best has affirmed the Long-Term ICR of “a-” and the Long- and Short-Term Issue Credit Ratings (Long-Term IR; Short-Term IR) of MetLife, Inc. (MetLife) (headquartered in New York, NY) [NYSE: MET]. The outlook of these Credit Ratings (ratings) is stable. (See link below for a detailed listing of the companies and ratings.)

The ratings of MetLife Auto & Home reflect its balance sheet strength, which A.M. Best categorizes as very strong, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management (ERM).

The positive outlooks reflect a trend of favorable underwriting performance that has consistently outperformed the composite on a five- and 10-year basis. It further reflects A.M. Best’s expectation that MetLife Auto & Home’s operating performance may continue to drive organic surplus growth.

The ratings of MetLife Insurance Group reflect its balance sheet strength, which A.M. Best categorizes as strong, as well as its strong operating performance, very favorable business profile and appropriate ERM.

The rating affirmations of MetLife Insurance Group reflect its industry-leading position in U.S. group benefits and its affiliated international companies in which it holds several market-leading positions in mature and emerging markets. The holding company’s liquidity and financial flexibility are major factors in A.M. Best’s balance sheet assessment of strong. Financial leverage of approximately 25% is moderate, although interest coverage is below similarly rated peers, which is due partially to costs and an expense overhang associated with the Brighthouse Financial, Inc. spinoff. The company’s operating performance also remains strong within its core business lines with lower volatility and more predictable earnings streams on a post spin-off basis. However, while overall premiums and earnings will be impacted by the gradual decline of retained run-off business within the MetLife Holdings segment, A.M. Best expects favorable operating trends to continue in its core group insurance, retirement and asset management business lines. A.M. Best notes that MetLife’s liability profile is of higher credit worthiness on a post spin-off basis.

MetLife announced two material weaknesses in internal controls in early 2018, both of which impacted 2017 year-end results. The first was related to unrecorded pension liabilities in its pension risk transfer business, and the second included a revision related to a release of reinsurance reserves for its legacy Japanese variable annuity block of business following an internal review of reserving practices. While A.M. Best remains concerned about the two material weaknesses, MetLife is currently in the process of implementing remediation practices to improve controls over its operational and reserving practices along with ensuring the timely communication and escalation of issues throughout the company. Despite these two material weaknesses, A.M. Best believes that MetLife maintains an appropriate level of ERM capabilities for its risk profile.

For a listing of MetLife’s FSRs, Long-Term ICRs and Long- and Short-Term IRs, please visit MetLife, Inc..

This press release relates to Credit Ratings 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 see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

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A.M. Best
Michael Adams, +1 908 439 2200, ext. 5133
Senior Financial Analyst—L/H
Christopher Sharkey, +1 908 439 2200, ext. 5159
Manager, Public Relations
Jacqalene Lentz, +1 908 439 2200, ext. 5762
Jim Peavy, +1 908 439 2200, ext. 5644
Director, Public Relations