February 7, 2008 / 12:17 AM / 12 years ago

Prudential, MetLife profits fall on investment losses

NEW YORK (Reuters) - Giant life insurers MetLife Inc and Prudential Financial Inc (PRU.N) said on Wednesday that profits fell in the fourth quarter, hurt by investment losses and, in the former’s case, comparison with a large investment gain a year ago.

New York-based MetLife (MET.N) reported net income of $1.08 billion, or $1.44 a share, down from $3.83 billion, or $4.95 a share, in the year-earlier quarter, when the insurer recorded a $3 billion gain from its sale of two Manhattan apartment complexes.

Quarterly operating earnings, excluding some gains and losses and the most common performance measure used by analysts, rose to $1.2 billion, or $1.60 per share, compared with $1 billion, or $1.36 per share, in the prior period, the company said. Revenue rose 7.6 percent to $13.83 billion.

Analysts on average had expected the life and health insurer, with a market capitalization of more than $44 billion, to post a profit equal to $1.43 a share on revenue of $13.79 billion, according to Reuters Estimates.

In December, MetLife said it expected operating profit per share of $1.40 to $1.45 for the fourth quarter and $5.90 to $6.20 for 2008.

In the quarter, MetLife recorded net realized after-tax investment losses of $182 million, including $49 million, in credit-related losses.

Investment losses also took a bite out of rival Prudential’s results.

The Newark, New Jersey-based company reported an 11 percent drop in net income to $792 million, or $1.75 a share, from $893 million, or $1.88 a share, in the year earlier quarter.

Analysts had on average expected net income per share of $1.88, according to Reuters Estimates.

Prudential said net income for the most recent quarter included $14 million of pre-tax net realized investment losses and related charges and adjustments.

Net realized investment losses in the most recent quarter included $106 million of losses from impairments and sales of credit-impaired securities, and $9 million from disposals of asset-backed securities collateralized by sub-prime mortgages.

These losses were partially offset by gains on sales of fixed maturity securities and private bond prepayments, the company said.

In 2008, Prudential expects earnings per share for 2008 in the range of $7.50 to $7.80, based on after-tax adjusted operating income. The outlook fell short of analysts expectations of a 2008 profit equal to $8.16 a share.

Total revenue rose to $6.64 billion from $6.478 billion, below the $6.75 billion that Wall Street had anticipated.

Benefit costs and expenses at Prudential rose nearly 6 percent to $5.69 billion during the quarter.

Reporting by Lilla Zuill; Editing by Carol Bishopric, Phil Berlowitz, Gunna Dickson and Andre Grenon

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