MetLife Inc (NYSE:MET) reported a lower-than-expected quarterly profit as the largest U.S. life insurer paid out more in claims, sending its shares down nearly 2 percent.
Policyholder claims and dividends paid out in the latest quarter rose nearly 9 percent to $9.96 billion, more than offsetting an 8 percent rise in premium revenue.
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"MetLife's second-quarter results demonstrated the benefit of our diverse business mix, as strong investment margins and favorable market performance helped offset unfavorable underwriting results," Chief Executive Steve Kandarian said in statement on Wednesday.
Kandarian has tried to scale back on capital-intensive businesses such as annuities to focus more on traditional life insurance and pension products.
On an operating basis, the insurer earned $1.39 per share, missing analysts' average estimate by 2 cents.
Net income available to the company's shareholders almost tripled to $1.34 billion, or $1.17 per share, in the second quarter ended June 30 from $471 million, or 43 cents per share, a year earlier.
The company's profit in the latest quarter benefited from a $202 million derivative gain. MetLife reported a $1.2 billion loss tied to its derivatives program a year earlier.
MetLife, like other insurers, is heavily exposed to persistently low interest rates. But it has long had a substantial derivatives program designed to smooth out that risk.
Bloomberg reported last week that U.S. regulators are set to label MetLife as a non-bank Systemically Important Financial Institution by the end of July. (http://bloom.bg/1rz1sJd)
If so, the insurer would be subject to much stricter Federal Reserve oversight as a financial company deemed "too big to fail."
Kandarian has repeatedly maintained that MetLife should not be designated as systemically important, arguing that insurance premiums would go up if large life insurers were dubbed systemically risky.
American International Group, GE Capital and Prudential Financial Inc were designated as systemically important last year.
MetLife shares were trading at $53.30 in extended trade after closing at $54.44 on the New York Stock Exchange.
The stock had gained about 6.5 percent in the last three months.
(Reporting by Avik Das and Sudarshan Varadhan in Bangalore; Editing by Sriraj Kalluvila)