A.M. Best has placed under review with developing implications the financial strength rating (FSR) of A+ (Superior) and the issuer credit rating (ICR) of "aa-" of the primary life / health insurance subsidiaries of MetLife .
Concurrently, A.M. Best has placed the ICR of "a-", as well as all issue ratings of MetLife under review with developing implications.
The actions follow MetLife’s public announcement on 12 Jan 2016 that it will pursue the separation of a substantial portion of its US retail segment and is evaluating structural alternatives for this separation.
These alternatives include a public offering of shares in an independent, publicly-traded company, a spin-off oar a sale.
A.M. Best said it notes the new retail-focused company will maintain the more capital intensive lines of business, including variable annuities with living benefit riders and universal life with secondary guarantees.
The ratings agency said this action would result in a significant amount of exposure to market volatility and interest rate risk. However, A.M. Best said at this time the level of capitalisation for this company has not been set.
A.M. Best acknowledged that MetLife will maintain its industry leading position in the group insurance market and will continue to focus on growing its corporate benefit funding segment, which includes structured settlements and pension risk transfer business.
The ratings will remain under review until A.M. Best receives more definitive direction from the management of MetLife on the final separation strategy to be pursued, as well as the ultimate capital structure and allocation between the organizations.