Derivative Gain Boosts MetLife Profit

Earnings Reuters

The MetLife building is seen in New York, March 8, 2010. AIG is selling its foreign life insurance unit to MetLife Inc for about $15.5 billion, its second major asset sale in a week as it raises funds to repay a $182.3 billion U.S. government bailout.   REUTERS/Shannon Stapleton (UNITED STATES - Tags: POLITICS BUSINESS) - RTR2BE3K

The MetLife building is seen in New York, March 8, 2010. AIG is selling its foreign life insurance unit to MetLife Inc for about $15.5 billion, its second major asset sale in a week as it raises funds to repay a $182.3 billion U.S. government bailout.... REUTERS/Shannon Stapleton (UNITED STATES - Tags: POLITICS BUSINESS) - RTR2BE3K (Reuters)

MetLife Inc (MET), the largest U.S. life insurer, reported a 36% rise in net income, helped by a derivative gain linked to credit spreads, but operating earnings fell short of market expectations as claims increased.

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MetLife, whose shares fell about 2% in extended trading on Wednesday, said total claims and benefits rose 4% to $9.37 billion in the first quarter ended March 31.

The company, heavily exposed to persistently low U.S. interest rates, has a large derivatives program designed to reduce that risk.

MetLife recorded a net derivative gain, after tax and other adjustments, of $343 million in the quarter compared with a loss of $630 million in the same period of 2013.

The company also took an after-tax charge of $343 million related to the sale of its UK pension risk transfer business to Rothesay Life Ltd.

MetLife Chief Executive Steve Kandarian has tried to scale back on capital-intensive businesses such as annuities to focus more on traditional life insurance and pension products.

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The insurer's net profit rose to $1.30 billion, or $1.14 per share, in the quarter from $956 million, or 87 cents per share, a year earlier.

On an operating basis, the company earned $1.37 per share.

Total operating revenue rose by 1% to $17.12 billion.

Analysts on average had expected earnings of $1.39 per share on revenue of $17.67 billion, according to Thomson Reuters I/B/E/S.

MetLife shares were trading at $51 in extended trading, after closing at $52.35 on the New York Stock Exchange.

The company will hold an earnings conference call on Thursday. 

(Reporting by Avik Das and Aman Shah in Bangalore; Editing by Ted Kerr)