Moody's cuts MetLife view to negative

Moody's Investors Service said it affirmed the credit ratings of MetLife Inc. (senior unsecured debt at A2) and its affiliates and changed the outlook on MetLife's ratings to negative from stable.

These actions follow MetLife's announcement that it has agreed to purchase Travelers Life & Annuity and Citigroup's international insurance businesses (except for the Mexican operations) from Citigroup Inc. for $11.5 billion. The transaction, which is subject to domestic and international regulatory approvals, is expected to close in the third quarter of 2005.

Moody's said that it expects the transaction to be financed with a combination of common stock, equity-like securities, debt securities, cash on hand, and cash generated through certain asset sales. Asset sales could include the sale of MetLife's majority stake in Reinsurance Group of America Inc. and the sale of certain real estate investments.

The change of the outlook to negative is primarily driven by the rating agency's view that the financing structure will be aggressive, with projected financial leverage increasing to 29% until year-end 2006, and reduced interest coverage and fixed charge coverage in the medium term.

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