MetLife posts third-quarter loss
MetLife Inc
But its operating profit in the latest quarter rose 18 percent, meeting Wall Street expectations.
MetLife's shares, which had shot up earlier in the day as a spate of better-than-expected insurance earnings stoked investor optimism, fell modestly in after-hours trading.
It was likely a case of buy on the rumor, sell on the news, said Alan Rambaldini, an analyst with Morningstar in Chicago.
New York-based MetLife's net loss was $650 million, or 79 cents a share, compared with a profit of $600 million, or 83 cents per share, in the year-ago quarter.
Its operating profit increased to $718 million, or 87 cents a share, on par with analysts' average expectations, according to Thomson Reuters I/B/E/S.
MetLife's report followed a slew of other insurers posting stronger-than-expected third-quarter results, as a rally in equity markets saved them from the investment losses that plagued the sector in late in 2008 and early into this year.
On Wednesday, Lincoln National Corp, Assurant and Aflac all reported earnings that pleased markets, as did Genworth Financial on Thursday, sending its shares 10 percent higher after hours.
MetLife's loss included $1.4 billion of net realized investment losses, of which $582 million were derivatives losses tied to improvement in the company's own credit spreads.
Under accounting rules, when its own credit spreads improve, MetLife has to record a decline in the value of insurance liabilities. This also led to a loss in the second quarter.
In the year-ago quarter, the company's results had included a $483 million investment gain, driven by the increase in the value of the U.S. dollar and wider credit spreads.
In July, MetLife CFO William Wheeler said the fluctuations in the value of its derivatives tied to credit spreads were accounting noise and that overall the insurer had earned more on these complex financial instruments than it had lost.
Life insurers such as MetLife and its next biggest rival, Prudential Financial
, have been particularly susceptible to the upheaval in credit markets because of the sector's holding of trillions of dollars of investments.
FLAT POLICY SALES
In the third quarter, MetLife's premiums, fees and other revenue were flat at $8.5 billion.
I would have thought they would have had more growth in premiums, said Rambaldini.
However, he added that it appeared MetLife had continued to take market share from weaker competitors in the quarter.
U.S. annuity deposits were $4 billion, including a 19 percent increase in fixed annuity deposits. MetLife also recorded increased premiums, fees and other revenue in its group life and nonmedical health divisions.
MetLife had already in recent quarters surpassed rivals American International Group Inc
The company's investment portfolio also got a shot in the arm in the quarter, expanding 5 percent to $338.3 billion, as net unrealized investment losses on bonds fell to $1.4 billion from $13.9 billion at the end of June, as credit markets improved.
The company's shares, which rose 7.85 percent to close at $36.84 in the regular session, fell 2.2 percent to $36 in after-market trade. The stock has more than tripled since its 52-week low of $11.37 in March.
(Editing by Andre Grenon and Steve Orlofsky)
© Copyright Thomson Reuters 2024. All rights reserved.