TEXT-S&P: MetLife ratings unaffected by post-tax goodwill
Nov 6 - Standard & Poor's Ratings Services said today that its ratings on MetLife Inc. (NYSE: MET; A-/Stable/A-2) remain unaffected by the approximate $1.6 billion post-tax goodwill impairment charges that the company took in third-quarter 2012 related to its retail annuity business. The noncash goodwill impairment charge will not have a material impact on the company's capital position, as indicated by our statutory risk-based capital analysis, because goodwill is not recognized in our model. We estimate the company's debt leverage for third-quarter 2012 at 25.7%--or 26.8% pro forma after its equity unit component remarketing and $400 million senior debt maturity; we expect both to occur in the fourth quarter. While the temporarily higher debt leverage creates double leverage strain at the statutory entities, this is offset by about $5 billion in cash at the holding company, as well as our comfort in MET's strong operating performance from diversified segments and regions, and EBITDA fixed-charge coverage remaining in the expected 6.5x to 7x range for 2012 and 2013. We expect financial leverage to be around 37% and continue to view the company's leverage and coverage as appropriate for the current holding company counterparty credit rating. Financial flexibility remains strong and we believe will improve through retained earnings and prospective debt retirement. This news demonstrates the challenges for MET and others in the life insurance industry given the low interest rate environment.
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