Ratings agency Moody's Investor Service of
) reiterated the credit and insurance financial strength (IFS)
) and its operating subsidiaries in the U.S. The strong ratings
were further boosted by a lift in the outlook on the company's
Accordingly, Moody's asserted MetLife's senior debt at "A3"
and IFS of "Aa3" was affirmed on the company's U.S. wing -
Metropolitan Life Insurance Co. The outlook for both were raised
to 'stable' from 'negative'. Additionally, the ratings agency
maintained an IFS of "A1" on American Life Insurance Co. (ALICO)
with a stable outlook. ALICO was acquired from
American International Group Inc.
) in Nov 2010.
The upgrade on outlook primarily stemmed from the projection
of rising interest rates as a result of improvement in the
economy. In such a scenario, higher bond yields are likely to
boost MetLife's fixed-income portfolio, in turn enhancing
operating leverage through improved earnings and capital.
Moody's further opines that over the past couple of years,
MetLife has been proactively taking steps to minimize risks and
enhance returns by mitigating risk exposure within variable
annuity (VA) guaranteed benefits, besides improving capital
flexibility and shifting toward fee-based and protection
businesses from capital-intensive products. Moreover, the company
is trying to gain momentum through its diversified mix, reflected
by growth from international operations along with disciplined
However, the low interest rate environment has been hampering
MetLife's spread businesses and its efforts of improving
profitability, cash flows and leverage metrics. Additionally,
weakness in Japanese markets and elevated sovereign market risk
mar the desired growth from emerging economies, wherein MetLife
has expanded aggressively.
Nonetheless, with an improving economy, Moody's remains
confident of MetLife's capital flexibility, earnings growth
potential on the heels of strong market presence, large scale of
operations and brand appreciation. Overall, MetLife has the
potential to write more businesses and outperform the peer group
While MetLife and AIG carry a Zacks Rank #3 (Hold), other
better-ranked life insurers that warrant a look include
ING U.S. Inc.
). Both these stocks carry a Zacks Rank #2 (Buy).
AMER INTL GRP (AIG): Free Stock Analysis
KEMPER CORP (KMPR): Free Stock Analysis
MOODYS CORP (MCO): Free Stock Analysis Report
METLIFE INC (MET): Free Stock Analysis Report
ING US INC (VOYA): Free Stock Analysis Report
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