MetLife sells shares at discount after stock sinks

By Elinor Comlay and Juan Lagorio

NEW YORK (Reuters) - MetLife Inc (MET.N) sold new shares at a discount on Wednesday in a bid to shore up its finances, at the conclusion of a day that saw the insurer's shares drop sharply following disappointing results.

MetLife, the latest big U.S. insurer to struggle with the credit crisis, said it sold 75 million shares at $26.50 per share, below its closing price on Wednesday, raising proceeds of nearly $2 billion.

The secondary offering of shares was designed to bolster its balance sheet and potentially allow it to make acquisitions. The offering, which was oversubscribed, was managed by Credit Suisse (CSGN.VX).

But analysts cautioned that raising capital now is difficult after MetLife shares lost half their value in recent weeks amid the worst credit crisis since the Great Depression.

"MetLife's stock has gone down in the last couple of weeks, so I don't know if people are going to be too eager to invest in something they feel that could go down more," said Alan Rambaldini, an analyst of Morningstar.

MetLife rivals Principal Financial Group Inc (PFG.N) and Allstate Corp (ALL.N) will also likely need to raise capital, analysts said, which helped sink the shares of both by roughly 20 percent.

MetLife insisted it did not need the capital, but instead wanted to raise funds to make its balance sheet even more iron- clad.

"This is about more than just building a war chest for doing an M&A deal," chief financial officer, Bill Wheeler, said in a conference call with analysts.

MetLife added it was a moment of "real opportunities" for acquisitions, although when pressed on details, the company's management declined to discuss possible targets or deal sizes.

"I think it's reasonable for companies that are pretty stable to be looking around right now," said Michael Jones, chief executive officer of Clover Capital Management in Rochester, New York. He does not hold MetLife shares.

Rambaldini added that MetLife could be chasing some assets American International Group Inc (AIG.N) is selling in Asia, Eastern Europe and Latin America.

But the financial turmoil is taking a toll on MetLife, which anticipated a decline in variable investment income in the third-quarter results -- mostly driven by negative hedge funds and private equity returns -- as well as the impact of weak equity markets on fee revenues.

"The recent state of the economy was beyond our expectations," Wheeler said.

MORE TO COME

Insurers have been under pressure to keep solid capital positions to maintain their ratings after being hit by a credit crisis that led banks across the world into bankruptcy or into fire sales, and forced government bailouts worth close to $1 trillion.