MetLife,the largest U.S. life insurer, Monday forecast fourth-quarter and 2008 earnings below analysts' expectations, sending its shares down as much as 3.4 percent.
The company also said it expects a 13 percent to 13.6 percent operating return on equity in 2008, down from 14.6 percent to 14.7 percent this year. It set a goal of 15 percent by the end of 2010.
MetLife said it expects operating profit per share of $1.40 to $1.45 for the fourth quarter and $5.90 to $6.20 for 2008.
Analysts on average expected $1.44 for the fourth quarter and $6.30 for 2008, according to Reuters Estimates.
The insurance company said it expects to buy back $2.2 billion of stock in 2008. MetLife, which expects to have $3 billion in cash in 2008, said it will also consider making acquisitions.
Operating earnings were $1.36 per share in the fourth quarter of 2006 and $5.21 per share for the full year.
MetLife expects revenue of $34.8 billion to $35.2 billion for 2007, and $37.7 billion to $38.7 billion for 2008, according to a regulatory filing.
MetLife had $204 million of unrealized losses on an "Alt-A" and subprime mortgage portfolio as of Oct. 31, the filing shows. The portfolio totaled $8.83 billion as of Sept. 30 and included $6.58 billion of Alt-A residential mortgage-backed debt, $2.18 billion of subprime mortgages, and $62 million of collateralized debt obligations related to subprime mortgages.
Many companies have suffered losses on below-prime mortgages as the U.S. housing market has deteriorated.
In morning trading, MetLife shares were down $1.33 to $64.26 after falling as low as $63.36 earlier in the session.
Through Friday, the shares had risen 11 percent this year, compared with a 7 percent drop in the Standard & Poor's insurance index.