As per media sources, Standard & Poor's Ratings Services
("S&P") confirmed its long-term financial strength rating and
counterparty credit ratings of 'A+' on MetLife Europe Ltd. ("MEL"),
a subsidiary of American Life Insurance Co. ("ALICO"), which is an
operating subsidiary of
). The outlook remains stable.
These rating affirmations came on the back of MEL's strong
credit portfolio, solid positioning in the U.K. variable annuity
markets, strong capitalization and better investment profile.
S&P is also looking forward to solid results being delivered by
the MEL as a subsidiary of MetLife. However, lack of multiple
business lines and the prevalent sluggish environment of the
industry continue to be headwind in the path of the company's
MEL will play a substantial role in MetLife's international
growth, especially in the markets in U.K as both the company and
ALICO are listed to be marketed by it. The rating agency expects
MEL's sales of variable annuities to exceed GBP 800 million while
intense competition and regulatory issues will weigh on the sales
of pension and protection products.
Alongside, MEL constitutes a very small part of MetLife and
represents less than 5% of ALICO's generally accepted accounting
principles (GAAP) capital and is far below the consolidated capital
of the parent company.
According to the expectations of the agency, if MEL continuously
receives MetLife's support as it is doing presently, it can better
its capital position and maintain a stable risk profile, leading to
volume growth. It also expects the company to perform well beyond
Even though the rating agency is less likely to increase its
current ratings, it expects the company to register solid operating
results with an increase in total sales. However, the ratings might
be downgraded if MetLife decides to divest MEL, if there is a sharp
decline in its profitability or growth prospects, or if MetLife
discontinues its capital support to MEL.
MetLife currently retains a Zacks #2 Rank, which translates into
a short-term Buy rating. We also maintain a long-term Neutral
recommendation on its stock.
American International Group Inc.
), one of the closest competitors of MetLife scores equally well
with the rating agencies. Last month, Fitch Ratings reiterated
Issuer Default Rating (IDR) of 'BBB' on the company with a positive
outlook and the Insurer Financial Strength ratings of 'A' on its
operating units with a stable outlook.
AMER INTL GRP (AIG): Free Stock Analysis Report
METLIFE INC (MET): Free Stock Analysis Report
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