MetLife ( MET) reported late Monday a 21% increase in second-quarter net profits, but the big insurer lowered its earnings outlook for remainder of the year. "Given the likelihood that we will continue to experience a weak equity market for the remainder of the year, particularly in the third quarter, we are revising our earnings guidance," said MetLife Chairman and Chief Executive Robert Benmosche, in a prepared statement. The company said it expected operating earnings for the next two quarters to range between $1.20 and $1.30 a share. Wall Street analysts surveyed by Thomson Financial/First Call were estimating MetLife would report operating earnings of $1.35 over the second half of the year. For the second quarter, the firm reported net earnings of $387 million, or 53 cents a share. But that included a $117 million charge for bad investments. The company earned $320 million, or 41 cents a share, in the year-ago period. MetLife's net earnings, despite taking some hits in its investment portfolio, got a boost from a 13.6% year-over-year increase in revenue from insurance premiums and fees. Analysts were focusing on MetLife's operating earnings, which excludes those losses. By that measure, the firm earned $504 million, or 69 cents a share, a few cents better than the 64-cent estimate.
Shares of MetLife are trading at 10 times 2002 earnings, based on actual results and analysts' estimates compiled by First Call. By comparison, Prudential Financial ( PRU), the big New Jersey-based insurer and financial-services firm, which is set to report earnings on Tuesday, trades at a forward 2002 P/E of 13.5. MetLife's stock is off 16% for the year. The company has scheduled a Tuesday morning conference call to discuss its results in greater detail. Unlike property and casualty insurers, which are benefiting right now from passing on sharp price increases in insurance coverage to their customers, the economic environment for life insurers is more difficult. That's because there isn't as much pricing pressure in the life insurance market and many firms are being forced to take sizeable charges and write-offs for bad investments they have made both in stocks and bonds.