MetLife shares fall after insurer posts loss

NEW YORK, Oct 30 (Reuters) - MetLife Inc shares fell nearly 6 percent on Friday, the day after the largest U.S. life insurer reported its third straight quarterly loss. The company is still keeping more capital on the sidelines than it ordinarily would and does not expect investment returns to stage a "springback recovery" in 2010, Chief Financial Officer William Wheeler said on a call with investors Friday morning. Barclays Capital analyst Eric Berg said the third-quarter results showed "signs of sluggishness," but that MetLife was still one of the best bets in the industry. While the company had a net loss, its profit on an operating basis rose 18 percent, meeting Wall Street expectations, despite flat policy sales. "Met is better positioned than peers to navigate hard times should they resurface," Berg said in an investor note. Cost-saving efforts should exceed an initial target of $400 million in annual savings, said Chief Executive Robert Henrikson. Life insurers such as MetLife and its next-biggest rival, Prudential Financial, have been particularly susceptible to the upheaval in credit markets because of the sector's holding of trillions of dollars of investments. But MetLife's investment portfolio got a shot in the arm in the quarter, helped by improvement in credit markets. The size of the portfolio grew 5 percent to $338.3 billion as net unrealized investment losses on bonds fell to $1.4 billion from $13.9 billion at the end of June. Wheeler said MetLife, which has been holding onto more of its cash since the credit crisis took root, would gradually start ramping up investments again. MetLife's $650 million quarterly loss included $1.4 billion of net realized investment losses, of which $582 million were derivatives losses tied to improvement in the company's own credit spreads. Under accounting rules, when its own credit spreads improve, MetLife has to record a decline in the value of insurance liabilities. This also led to a loss in the second quarter. For the year-earlier quarter, the company's results had included a $483 million investment gain, driven by the increase in the value of the U.S. dollar and wider credit spreads. MetLife's shares were down 5.7 percent at $34.75 in morning trading. At Thursday's close, the stock had risen 5.7 percent this year. (Reporting by Lilla Zuill; Editing by Lisa Von Ahn) Keywords: METLIFE/ ([e-mail];[phone]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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