MetLife posts loss on interest rate bet

Thu Apr 26, 2012 6:05pm EDT

The MetLife building is seen in New York, March 8, 2010. REUTERS/Shannon Stapleton

The MetLife building is seen in New York, March 8, 2010.

Credit: Reuters/Shannon Stapleton

(Reuters) - MetLife (MET.N), the largest life insurer in the United States, posted a net loss for the first quarter on huge derivative losses tied to a rise in interest rates.

But operating results beat expectations on growth in all three of its geographic regions.

MetLife accidentally released preliminary figures last week, so the broad outlines of results were already known.

The company said on Thursday it lost $174 million, or 16 cents per share, compared with a year-earlier profit of $701 million or 66 cents per share.

On an operating basis MetLife earned $1.37 per share. Before the accidental release last week, analysts polled by Thomson Reuters I/B/E/S had expected earnings of $1.25 per share.

MetLife said it had $1.3 billion in derivative losses in the quarter. The company uses derivatives to hedge changes in interest rates; during the quarter, yields on U.S. 10-year Treasuries rose nearly 34 basis points.

Operating earnings grew by double digits in both the U.S. life and annuity business and in the benefits segment. International growth was strongest, though, as operating earnings rose 22 percent in Latin America and 33 percent in Asia.

International results have become increasingly important for MetLife since it acquired Alico from AIG in November 2010, substantially changing the company's mix of domestic versus overseas operations.

The derivative loss is the latest high-profile headline for MetLife, which butted heads with the Federal Reserve earlier this year over now-blocked plans to raise its dividend and buy back shares.

Earlier on Thursday, MetLife said it would stop selling reverse mortgages, cutting 500 jobs in the process. The company had been by far the largest in that industry, with a market share this year of about 23 percent.

On Tuesday, board member Eduardo Castro-Wright resigned amid a growing scandal over alleged bribe payments by businesses he oversaw for Wal-Mart (WMT.N).

On Monday, the company said it would pay nearly $500 million to end a multistate probe into its use of the Social Security "Death Master" file, after an investigation into whether it was doing enough to find dead policyholders.

(Reporting By Ben Berkowitz; editing by M.D. Golan)