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Analyst Blog

Credit rating agency A.M. Best Co. has provided MetLife, Inc.’s (MET - Analyst Report) 4.785% senior secured notes worth $1 billion with an “a–” debt rating. Proceeds from the 30-year fixed rate senior note issuance will be used for general corporate purposes. It includes the repayment of the $1.35 billion outstanding notes that are scheduled to mature in 2014.

The rating takes into consideration MetLife’s competitive market strength, strong brand value and diverse business mix. Moreover, strong operating leverage and a wide scale of operations were also taken into account. Further, A.M. Best Co.’s rating recognizes MetLife’s financial leverage that is projected to remain within 30% and interest coverage that is anticipated to remain higher than five times going forward.

MetLife’s $1 billion notes have been assigned ratings by other credit ratings agencies as well. On Nov 7, 2013, Moody’s Investors Service, the credit rating wing of Moody’s Corporation (MCO - Analyst Report) provided the 30-year fixed rate $1 billion senior unsecured notes of MetLife with an “A3” rating. Strong brand value, scale of distribution, operating leverage, financial strength and an attractive product portfolio acted in favor of the company. The rating carried a negative outlook.

The very next day, another credit rating agency, Fitch Ratings assigned the senior debt of MetLife with an “A–” rating. The rating carried a stable outlook. The strong financial performance and balance sheet of MetLife led to the A– rating.

Strong ratings from credit rating agencies increase creditworthiness of a company in the market. We believe that MetLife’s present score with the three credit rating agencies will help it write more business going forward.

MetLife currently carries a Zacks Rank #3 (Hold).  Among other multiline insurers worth considering, Kemper Corporation (KMPR - Snapshot Report) carries a favorable Zacks Rank #1 (Strong Buy) while AXA Group (AXAHY - Snapshot Report) carries a Zacks Rank #2 (Buy).