MetLife Second-Quarter Profit Slumps 96% on Investment Declines

(Bloomberg) -- MetLife Inc.’s profit slid to $68 million in the second quarter, down 96% from a year earlier, on sluggish investment income.

• The biggest U.S. life insurer’s adjusted earnings dropped to 83 cents a share, falling short of the 91-cent average estimate of 11 analysts.

Key Insights

• Net investment income fell 13% to $4.09 billion.
• Profit fell by 29% in both the U.S. and Asian businesses, driven by declines in variable investment income. The company also reported $710 million in net derivative losses because of stronger equity markets and higher longer-term interest rates.
• “The decline in our private equity portfolio was squarely within our expectations,” Chief Executive Officer Michel Khalaf said in a statement. “On underwriting, our well-diversified set of businesses provided meaningful offsets to increased claims from Covid-19.”
• The company’s long-term U.S. interest-rate assumption stands at 3.75%. A 25-basis-point cut to that forecast would reduce net income by $100 million after taxes, it said in a presentation. On Tuesday, Prudential Financial Inc. posted a second-straight quarterly loss and said it expects low rates will continue to weigh on results.

Market Reaction

• MetLife shares rose 3.8% to $38.28 in New York. They’re down 25% this year.

Get More

• MetLife’s statement is here. Its presentation is here.

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