Moody's rates MetLife

Moody's Investors Service said it assigned an A2 rating to MetLife Inc.'s 5.5% $200 million senior notes due 2014 and 6.375% $400 million senior notes due 2034.

The outlook is stable.

Moody's said that it expects the proceeds from these notes to be used to repay a portion of the $1 billion principal amount of MetLife's 3.911% debentures due May 15, 2005. The rating agency added that because the proceeds of the new notes will be held at the holding company and will be used to fund the May 2005 maturity, that it will not include this debt in its calculation of MetLife's consolidated financial leverage.

Moody's said that MetLife's ratings are based on the company's strong brand recognition, its leading market positions in individual and group insurance businesses, a large career agent sales force, as well as its diversified earnings and business mix, and improving profitability. According to Moody's, the insurance operations also benefit from the stable profitability of the closed block.

Offsetting these strengths somewhat, the rating agency added, are the slow industry growth outlook for individual life products, growing exposure to institutional spread business, moderate financial leverage, MetLife's shift of business toward lower-margined products, and continued exposure to commercial real estate. In addition, the rating agency noted that since demutualization in 2000, management's focus on shareholder returns has somewhat increased the company's risk profile.

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