OREANDA-NEWS. S&P Global Ratings said today that it has lowered its long-term counterparty credit and financial strength ratings on New England Life Insurance Co. (NELICO) and First MetLife Investors Insurance Co. (FMLI) to 'A+' from 'AA-'. We also revised our outlook on these two companies to negative from stable.

At the same time, we raised our long-term counterparty credit and financial strength ratings on General American Life Insurance Co. (GALIC) to 'AA-' from 'A+', and revised our outlook to stable from negative. We also raised our rating on the company's surplus note issue to 'A' from 'A-'.

Our other ratings on the MetLife group remain unchanged.

MET announced the proposed separation of its U. S. retail business in January 2016. At that time, the two operating entities that were to be separated were MetLife Insurance Co. USA (MLI-US) and GALIC. On Aug. 5, 2016, MET announced that it is proposing to separate NELICO and FMLI along with MLI-US, while retaining GALIC within the MetLife group.

We view the three to-be-separated operating entities--MLI-US, NELICO, and FMLI (collectively, "the new cos.")--to be nonstrategically important to MET. After the full separation these entities will operate independently from the MET group.

"As is the case with most of our rated nonstrategically important entities, we don't expect the new cos. to benefit from extraordinary support from the MetLife group if the need arises," said S&P Global Ratings credit analyst Deep Banerjee. "Rather, our ratings reflect the stand-alone credit profile of the new cos. In January 2016, we lowered our rating on MLI-US. Now, based on the updated organization structure, we are also lowering our ratings on NELICO and FMLI."

We expect GALIC to continue doing business under the MetLife brand, be fully integrated within the MET group, sell products related to the core business lines, and be adequately capitalized. Therefore, we are raising our rating on GALIC because we consider it to be core to the MetLife group--in line with other core operating entities at MET. If GALIC does not continue to operate in the same business lines as the remaining MET group, or is sold/spun off, we may revise our ratings.

"The negative outlook on the three entities to be separated indicates a one-in-three chance that we may lower our ratings further," Mr. Banerjee continued. "The negative outlook takes into account the potential for deterioration in their credit profiles, as well as the execution risk associated with such a significant transaction."

We could also lower the ratings if:Capitalization declines so that it is no longer redundant at the 'AA' level per insurance capital model;A major disruption in distribution relationships hurts the competitive position of the separated group; orSeparation plans are not executed well, leading to disruption in the operations of the separated group."Our stable outlook on MET's core operating companies, including GALIC, reflects our view that the group will maintain its very strong competitive position and consolidated capitalization at the 'AA' level per our group capital analysis," Mr. Banerjee added. "We may lower our ratings on the group if capitalization remains consistently below the current 'AA' level or if its competitive position deteriorates in its core markets."