AP - Business

MetLife 4Q Net Income Falls On Derivative Losses

February 9, 2011 / 5:00 PM EST / AP

NEW YORK (AP) - MetLife Inc. said Wednesday fourth-quarter net income fell as it recorded increased investment losses, including $1 billion from derivatives. On an operating basis, however, the company posted improved profit, which exceeded analyst expectations

The New York-based life insurance company said net income fell to $51 million, or 5 cents per share, compared with $289 million, or 35 cents per share a year ago.

Excluding one-time charges and investment losses and gains including the loss from derivatives, the company's operating profit was $1.2 billion, or $1.14 per share, compared with $793 million, or 96 cents per share a year ago.

Analysts surveyed by FactSet expected $1.09 per share.

Shares fell 87 cents, or 1.8 percent, to close at $47.60. They slipped 60 cents in after-market trading.

Revenue rose 4 percent to $12.84 billion from $12.34 billion.

Derivative losses of $1.54 billion exceeded the losses of $782 million a year ago. MetLife uses derivatives to hedge its exposure to risks, such as changes in interest rates and fluctuations in foreign currencies. Movements in those arenas cause gains and losses on derivatives for MetLife.

Revenue from premiums rose to $7.32 billion from $7.16 billion

Fees for universal life and investment products rose 9 percent to $1.69 billion from $1.55 billion.

For the year, the company reported net income of $2.67 billion, or $3 per share, compared with a loss of $2.37 billion, or $2.89 per share a year ago.

The year-ago figures reflect $2.91 billion in investment losses and $4.87 billion in derivative losses. That compares with investment losses of $392 million in the current year and derivative losses of $265 million.

Operating earnings were $3.89 billion, or $4.38 per share, compared with $2.37 billion, or $2.87 per share a year ago.

Analysts expected $4.32 per share.

The company increased premiums, fees and other revenue and cut expenses above targeted amounts, CEO C. Robert Henrikson said in a statement. That, combined with the Nov. 1 acquisition of Alico, helped improve operating results, he said.

Alico, acquired from the insurance giant American International Group Inc., operates in more than 50 countries. It is expected to help MetLife expand in Japan, Europe, the Middle East and Latin America.

MetLife, the largest life insurer in the U.S., currently offers services in 17 countries.