MetLife Inc.’s private equity investments boosted earnings above analysts’ expectations in the third quarter despite a sluggish economy.

The biggest U.S. life insurer reported adjusted earnings of US$1.73 a share, beating the US$1.59 median estimate of 11 analysts and up from US$1.27 a year earlier.

Key Insights

Variable investment income doubled from a year earlier to US$652 million in the third quarter, driven by a rebound in private equities.

“In what continues to be a challenging environment, MetLife delivered strong financial performance,” Chief Executive Officer Michel Khalaf said in a statement.

“Variable investment income rebounded sharply, the diversity of our businesses was evident in our underwriting results and we demonstrated strong expense discipline. We were also pleased to resume share repurchases in the third quarter.”

Net income, which includes derivative losses and some hedges, declined to US$633 million from US$2.2 billion a year earlier.

The Federal Reserve’s interest-rate policy has been weighing on MetLife and other insurers. The company reduced its long-term interest-rate assumption to 2.75 per cent from 3.75 per cent and extended the time horizon to 2032.

Market Reaction

MetLife shares closed 2.4 per cent lower, at US$39, before earnings were announced. They’re down 23 per cent this year.

Get More

Earnings for the MetLife Holdings unit, which contains a closed block of business, surged 70 per cent in the quarter, while profit rose 33 per cent in Asia and 27 per cent in the U.S. Latin America was a laggard, with earnings dropping 75 per cent in the region.

Earlier, Prudential Financial Inc. shares fell after the company said it would keep share buybacks on pause amid lingering uncertainty over the impact of the COVID-19 outbreak.