MetLife profit misses on weak returns from bonds, hedge funds

(Reuters) - Insurer MetLife Inc reported a quarterly operating profit way below analysts' expectations as returns on investments in bonds and hedge funds fell and expenses rose.

The company's shares declined more than 3 percent in extended trading on Wednesday.

MetLife, which has considerable investments in bonds, has been hurt by weak yields due to historically low interest rates.

The company's net investment income fell 5.5 percent to $4.71 billion in the first quarter ended March 31.

MetLife said its variable investment income more than halved to $109 million, hit by weak returns from hedge fund investments.

The insurer's net operating profit fell 19 percent to $1.33 billion, or $1.20 per share, missing the average analyst estimate of $1.38 per share, according to Thomson Reuters I/B/E/S.

 

MetLife won a major regulatory and legal battle in March when a federal judge struck down the U.S. government's label deeming the company "too big to fail", which the U.S. government subsequently appealed against last month.

The label, created after the massive financial crisis that started in 2007, implies the company has to comply to higher levels of capital requirements.

MetLife shares were trading at $42.51 after the bell.

Up to Wednesday's close, the stock had fallen nearly 9 percent this year.

(Reporting By Sudarshan Varadhan in Bengaluru; Editing by Kirti Pandey)