Moody's lowers FWD Life view to negative

Moody's Investors Service said it affirmed the Baa3 issuer rating, Baa3 senior unsecured debt rating and Ba2(hyb) rating on its the subordinated perpetual capital securities of FWD Life Insurance Co. (Bermuda) Ltd.

The outlook was revised to negative from stable.

The outlook revision follows news that FWD will acquire MetLife Ltd. and Metropolitan Life Insurance Co. of Hong Kong Ltd. from MetLife, Inc., Moody's said.

The outlook revision reflects the uncertainty surrounding the funding plan of this transaction and the potential negative pressure on the financial profile of FWD Ltd. and FWD Life, particularly on its liquidity and financial flexibility, the agency said.

This is because FWD Ltd.'s earnings coverage is already weak, currently lower than 1x, following the issuance of two hybrid capital securities in the past few years, Moody's said.

The ratings reflect the insurer's stable market presence and differentiated branding, the agency said.

The combined companies strengths are offset by the sensitivity of the insurer's solvency ratio to interest rate movements, partly mitigated by several management actions, such as coinsurance arrangements, and the reduction in crediting rates and dividends for certain products in 2016 and 2017, Moody's said.

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