MetLife Swings to Loss in 1Q on Derivatives Costs

AP Photo/Mark Lennihan.AP Photo/Mark Lennihan.

NEW YORK (AP)—MetLife Inc. swung to a loss in the first three months of the year, mainly because its complex financial investments lost value.

The insurance giant released the preliminary figures ahead of schedule Friday after accidentally disclosing them on its website. MetLife said it will disclose revised figures next week that give a more reliable picture of the company’s finances.

MetLife posted a net loss in the quarter ended March 31 of $94 million, or 9 cents per share, compared with net income of $701 million, or 66 cents per share, in the same period a year earlier.

Most of the loss came from declining value of derivatives—financial products whose value is based on the price of another investment. MetLife lost $1.98 billion on derivatives in the first quarter, up from a loss of $315 million in the same period a year earlier.

MetLife buys derivatives to protect against unexpected costs related to changes in interest rates or foreign currency exchange rates, a company spokesman said. MetLife’s per-share profit was $1.85 lower as a result of the derivatives loss, the company said.

The company’s revenue for the quarter rose seven percent, to $16.69 billion from $15.61 billion in the same period a year earlier. It collected more insurance premiums, fees on life insurance and investment products and gains on investments.

MetLife’s operating income, which excludes gains and losses on derivatives, investments, taxes and other non-core items, was $1.46 billion, or $1.37 per share.

The results exceeded the expectations of Wall Street analysts, who consider operating income a crucial indicator of insurance companies’ overall performance. Analysts surveyed by FactSet expected earnings of $1.26 per share on revenue of $16.62 billion.

The release comes two days after MetLife accidentally disclosed the results on its website. MetLife says it posted a document containing revisions of its 2011 financial results on Wednesday evening. On Thursday, it learned that its preliminary first-quarter results were visible as a result of the posting.

MetLife, based in New York, filed the preliminary results with securities regulators on Friday in response to the early disclosure. It warned investors not to “place undue reliance” on the results because they are still being finalized.

MetLife has move up its regular quarterly earnings release to April 26 after the close of trading.

MetLife provides insurance, annuities and employee benefit programs in the United States, Japan, Latin America, the Asia Pacific region, Europe and the Middle East. Its life insurance products include variable, universal, term and whole life products; employee-paid supplemental life products and individual life insurance.

MetLife’s stock price fell 10 cents to $35.28 in morning trading.

Pin It on Pinterest