Tuesday after the bell, MetLife Inc. (MET), one of the leading insurance providers in the world, reported lower than expected net income and income from continuing operations for the second quarter of fiscal 2008 over the same period last year, negatively impacted by the continuing decline in the equity markets and increase in number of catastrophes in homeowners' business segment. Total revenues for the quarter, however, increased marginally from the corresponding quarter last year.
The New York-headquartered company reported net income available to common shareholders of $915 million, or $1.26 per diluted share, for the second quarter, lower than $1.13 billion, or $1.48 per common share, reported for the corresponding quarter last year. The company noted that the net income available to common shareholders for the quarter includes net investment gains and losses earned in both the comparable quarters.
Excluding the net investment gains and or losses, operating earnings for the quarter declined to $942 million, or $1.30 per diluted share, from $1.31 billion, or $1.72 per diluted share, reported in the same quarter last year.
On average, 19 analysts polled by First Call / Thompson Financial expected the company to report earnings of $1.51 per share for the latest quarter.
Total revenues for the quarter increased marginally to $13.72 billion from $13.22 billion reported in the same period last year. Analysts expected the company to report revenues of $13.89 billion for the quarter.
Commenting on the results for the quarter, Robert Henrickson, Chairman, President and Chief Executive of the company said, "During the second quarter of 2008, MetLife achieved a new record in top-line results, with premiums, fees and other revenues reaching $9.5 billion. While our earnings this quarter were impacted by several factors, including the continuing decline in the equity markets and higher catastrophes in our homeowners business, our business fundamentals continue to be strong. "
Segment analysis
Institutional Business segment
Total revenue from the institutional business segment, comprising of Group life insurance, non-medical health insurance and Retirement & Savings, increased 16% during the second quarter of 2008 over the same period last year. However, operating earnings from this segment decreased to $448 million from $521 million, impacted by lower investment income, liability adjustment on a large institutional annuity contract and less favorable group life underwriting results.
Individual Business segment
This segment comprises of Traditional life insurance, Variable & Universal Life insurance, Annuities and other related businesses. Operating income from this segment declined to $323 million from $449 million in the same period last year, negatively impacted by higher losses from the investments.
Total annuity deposits during the second quarter declined to $3.81 billion from $4.49 billion reported in the corresponding quarter last year.
Six-month results
For the first six months of fiscal 2008, MetLife reported a marginal increase in total revenues at $26.7 billion from $26.13 billion reported in the corresponding six month period in 2007.
Net income available to common shareholders for the six-month period declined to $1.53 billion, or $2.10 per diluted share, from $2.11 billion, or $1.76 per diluted share, reported in the same period last year.
Earnings guidance
Looking ahead for fiscal 2008, the company has revised its previously announced outlook for full year. The company now expects to report operating earnings in the range of $5.90 to $6.20 per diluted share for the year. Earlier the company had projected earnings in the range of $5.70 to $5.90 per diluted share. The company however, cautioned that its forecast for full year 2008 does not include the impact of unusual events.
Stock movement
The stock closed the regular trading session at $52.81, up 5.01% or $2.51 on a volume of 8.5 million shares. In the after-hours trading, the stock declined sharply by more than 9% and is presently quoted at $47.69.
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