MetLife Inc.’s profit slid to US$68 million in the second quarter, down 96 per cent from a year earlier, on sluggish investment income.

The biggest U.S. life insurer’s adjusted earnings dropped to 83 cents U.S. a share, falling short of the 91-cent average estimate of 11 analysts.

Key Insights

• Net investment income fell 13 per cent to US$4.09 billion.
• Profit fell by 29 per cent in both the U.S. and Asian businesses, driven by declines in variable investment income. The company also reported US$710 million in net derivative losses because of stronger equity markets and higher longer-term interest rates.
• “The decline in our private equity portfolio was squarely within our expectations,” Chief Executive Officer Michel Khalaf said in a statement. “On underwriting, our well-diversified set of businesses provided meaningful offsets to increased claims from COVID-19.”
• The company’s long-term U.S. interest-rate assumption stands at 3.75 per cent. A 25-basis-point cut to that forecast would reduce net income by US$100 million after taxes, it said in a presentation. On Tuesday, Prudential Financial Inc. posted a second-straight quarterly loss and said it expects low rates will continue to weigh on results.

Market Reaction

• MetLife shares rose 3.8 per cent to US$38.28 in New York. They’re down 25 per cent this year.