Credit analyst does not see MetLife outperforming its credit peers

By Ronda Fears

Nashville, Feb. 11 - MetLife Inc. boosted its asbestos-related reserves like its peers, but Kathy Shanley, senior bond analyst at Gimme Credit, said that even though the company turned the corner to profits, she does not expect it to outperform comparable credits in the insurance industry.

MetLife (A2/A) increased it reserves for asbestos-related liabilities by $402 million, resulting in a $169 million after-tax charge to earnings. The company posted earnings $561 million in fourth quarter, up from a loss of $296 million a year ago.

MetLife's asbestos-related exposure is partially offset by an excess insurance policy, purchased for $878 million in 1998, that provides coverage up to $1.5 billion after a $400 million self-insured retention, the analyst noted.

At year-end, MetLife has an excess insurance recoverable of $1.2 billion on its books.

Shanley said the rating agencies probably expected investment losses, since much of the damage was evident at Sept. 30.

"We view MetLife as mid single-A, but we don't see it positioned to outperform comparable insurance sector names," Shanley said.

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