MetLife Inc., the largest U.S. life insurer, had the outlook on its long-term credit rating revised to negative by Moody’s Investors Service because of a sluggish economy and the low-interest-rate environment.
“The current weak economic environment has constrained current and prospective profitability as well as earnings and coverage metrics,” Moody’s Senior Credit Officer Neil Strauss said today in a statement.
The ratings company affirmed the grade for New York-based MetLife’s senior debt at A3. The insurer’s profitability “has been below expectations” and its 2013 earnings forecast raises uncertainty about whether earnings will improve, Moody’s said in the report.
“It isn’t surprising that Moody’s decided to place MetLife on negative outlook as the decision is consistent with its previously expressed views of the outlook for both the U.S. and global life insurance industries,” John Calagna, a MetLife spokesman, said in an e-mailed statement. “MetLife continues to have financial-strength ratings that are among the highest the rating agency provides.”
The Americas region, MetLife’s largest, has been challenged by slow growth in the U.S., which was targeted for most of the $600 million in cost reductions announced in May. The company, led by Chief Executive Officer Steven Kandarian, 60, said in December it’s planning to cut variable-annuity sales by about 40 percent to as little as $10 billion this year.
The insurer announced Feb. 1 it will buy Santiago-based AFP Provida SA from Banco Bilbao Vizcaya Argentaria SA, bolstering MetLife’s presence in Latin America while trimming its reliance on capital-intensive offerings.
MetLife rose 1 percent to $37.61 in New York. The shares have climbed 14 percent this year, the second-best performance in the 24-company KBW Insurance Index, after Genworth Financial Inc.