MetLife posts earnings drop; misses view

By Lilla Zuill

NEW YORK (Reuters) - MetLife Inc (MET.N), the largest U.S. life insurer, said on Tuesday its second-quarter profit fell on investment losses and a decline in insurance earnings, sending its shares sliding nearly 10 percent.

Net earnings dropped about 19 percent to $915 million, or $1.26 a share, as catastrophe losses also took a hit on its homeowners business. The results missed Wall Street's estimates.

MetLife recorded profit of $1.13 billion, or $1.48 a share, in the year-ago period.

Chief Executive C. Robert Henrikson blamed lower earnings on higher-than-expected catastrophe losses after tornadoes and hail storms wreaked havoc across parts of the United States earlier this year, and "the continuing decline in the equity markets."

MetLife cut its full-year earnings outlook, citing the disappointing performance of equity markets in the quarter. It now sees operating earnings of $5.70 to $5.90 a share, lowered from its previous view of $5.90 to $6.20 a share.

Analysts, on average, expected MetLife to earn $6.16 a share in 2008 operating profit.

WALL STREET MISS

Second-quarter operating income, which excludes realized investment gains or losses, fell 27.5 percent to $942 million, or $1.30 a share. Analysts, on that basis, expected earnings of $1.51 a share, according to Reuters Estimates.

"Top line growth was good, but they had some trouble with lower underwriting profitability," Morningstar analyst Alan Rambaldini said. "That is their business, so that is where investors may be more concerned."

Rambaldini said investment losses may be a lesser concern because the decline was largely tied to market conditions and small in proportion to MetLife's $350 billion investment portfolio.

MetLife shares fell to $47.60 in post-market trading after closing up 5 percent in the regular session to $52.81.

MetLife recorded net realized investment losses of $233 million in the quarter, three-quarters of which were related to the credit crisis that has roiled markets.

Net investment income was 5 percent lower at $4.58 billion.

The 140-year-old, New York-based company reported 10 percent growth in premiums and fees. Total revenue, including investment income and realized losses, climbed nearly 4 percent to $13.7 billion from a year ago.

But MetLife posted lower earnings across several lines of business, including income from its auto and home division that was more than halved to $52 million, due to high losses from disasters.

(Editing by Jeffrey Benkoe, Leslie Gevirtz)