MetLife Cut by Fitch on Commercial Real Estate Losses (Update1)

By Andrew Frye
Bloomberg News
February 1, 2010

Feb. 1 (Bloomberg) -- MetLife Inc., the largest U.S. life insurer, was downgraded by Fitch Ratings on the prospect of losses tied to investments including commercial real estate holdings.

The issuer default rating was lowered to A from A+ on "concerns regarding the fragile nature of the economic recovery and continued deterioration in the commercial real estate market," the ratings firm said today in a statement on the New York-based insurer. MetLife will probably report $2.2 billion to $2.6 billion in investment losses in the five quarters ending in December 2010, Fitch said.

Chief Executive Officer Robert Henrikson shunned government aid as he reported losses in the first three quarters of 2009. He instead tapped debt and equity investors for cash as mortgage investments deteriorated and the Lehman Brothers Holdings Inc. bankruptcy made funding more expensive. MetLife was downgraded by Moody's Investors Service and Standard & Poor's last year.

"MetLife's operating earnings performance has materially weakened over the past two years," Fitch said today. "While Fitch expects earnings to show improvement in 2010, results will be sensitive to future economic developments and financial market results."

The insurer gained 79 cents, or 2.2 percent, to $36.11 at 12:10 p.m. in New York Stock Exchange composite trading. MetLife has advanced about 26 percent in the last 12 months, making it the worst performer in the seven-stock Standard and Poor's 500 Life & Health Insurance Index. Prudential Financial Inc., the second-biggest life insurer, has doubled in the same period.

Christopher Breslin, a spokesman for MetLife, didn't immediately return a message seeking comment.

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