(Bloomberg) – MetLife Inc., the largest U.S. life insurer, said third-quarter profit tumbled 52 percent on derivative losses and costs tied to the spinoff of a U.S. retail business as Chief Executive Officer Steve Kandarian reorganizes the company.
Net income slipped to $571 million from $1.2 billion a year earlier, New York-based MetLife said Wednesday in a statement. Profit excluding some investment results was $1.28 a share, beating the $1.15 average estimate of 10 analysts surveyed by Bloomberg.
Kandarian is reshaping the insurer as it copes with heightened regulatory scrutiny and low interest rates that weigh on investment income. He filed in October to spin off Brighthouse Financial Inc., and is phasing out the cartoon character Snoopy as the face of MetLife’s marketing. He also sold a network of about 4,000 advisers to Massachusetts Mutual Life Insurance Co., and announced plans in August to reduce annual costs by about $1 billion by the end of 2019 — a move that will include job cuts.
“MetLife had a solid third quarter of 2016 on an operating basis, driven primarily by improved market conditions and strong expense discipline,” Kandarian said in the statement. “We continue to focus on long-term shareholder value by generating more predictable and higher free cash flow.”
MetLife dropped 1 percent to $46.34 at 4:01 p.m. in New York, extending its loss for the year to 3.9 percent. Results were released after the close of regular trading.
MetLife reorganized its business units, breaking out the Brighthouse segment. That decreased operating earnings by $254 million in the quarter. The insurer also posted $683 million in net derivative losses tied to swings in equity markets, foreign currencies and interest rates.
Brighthouse, the U.S. retail business slated for separation, reported operating earnings that plunged 80 percent to $68 million from the same period a year earlier. The operation to be led by Eric Steigerwalt consists largely of variable annuities and life insurance sold to individuals. Annuity sales dropped 34 percent and life-insurance sales tumbled 46 percent, the firm said.