Prudential to Weather Recession Better Than MetLife

By Andrew Frye
Bloomberg News
February 27, 2009

Feb. 27 (Bloomberg) -- Prudential Financial Inc., the second-biggest U.S. life insurer, may weather a deepening recession better than No. 1 MetLife Inc., Standard & Poor's said.

Prudential had its A credit rating affirmed with a stable outlook yesterday, while S&P downgraded New York-based MetLife to A- with a negative outlook. The rating firm, which expects investment losses to continue as the economy declines, completed a review of insurers' holdings in corporate debt and commercial- mortgage holdings and cut credit grades at 10 carriers.

Prudential "is well positioned from a capital standpoint to absorb those future stresses," S&P credit analyst Kevin Ahern said today in a conference call with investors. "The concern that we have in the MetLife situation is the impact of the asset stress analysis."

Life insurers, which hold bonds and mortgage investments to back policies, are facing further losses as companies and consumers struggle to repay or refinance debt. Prudential, based in Newark, New Jersey, had a $1.57 billion loss in the fourth quarter, while MetLife has reported six consecutive profit declines.

MetLife plummeted $5.53, or 23 percent, to $18.46 at 4:15 p.m. in New York Stock Exchange composite trading, while Prudential fell $2.46, or 13 percent, to $16.41.

S&P's downgrades "are in line with the market that everyone is facing," Christopher Breslin, a spokesman for MetLife, said in an interview.

S&P cut the insurance subsidiaries at both companies one grade to AA-, assigning Prudential a stable outlook and MetLife a negative outlook.

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