Wednesday, October 08, 2008

MetLife - Bankrupt

MetLife Inc., the biggest U.S. life insurer, withdrew its 2008 earnings forecast and said third- quarter operating profit fell as much as 48 percent as investment income declined. The company plans to sell 75 million shares.

Operating earnings for the quarter that ended in September declined to between $600 million and $675 million, or 83 cents to 93 cents a share, the New York-based company said today in a preliminary statement. That compares with year-earlier results of $1.16 billion, or $1.52 a share.

"Given the current volatility, the company is withdrawing its 2008 earnings guidance,'' MetLife said. The company will report full results on Oct. 29.

MetLife is writing down its $350 billion investment portfolio as the biggest housing slump since the Great Depression pushes down the value of fixed-income and equity holdings. The insurer, led by Chief Executive Officer Robert Henrikson, was stung by losses related to investments in hedge funds and private-equity firms as well as its stakes in failed companies including Lehman Brothers Holdings Inc. and Washington Mutual Inc.

The company announced plans to sell 75 million shares in a public offering to raise capital amid the financial crisis. The offering may be priced tomorrow, MetLife said in a statement.

MetLife tumbled $7.45, or 17 percent, to $36.87 at 4 p.m. today on the New York Stock Exchange as credit concerns pushed the Standard & Poor's 500 Index to its lowest since 2003. MetLife shares have dropped 48 percent in the past year.

More Defaults

Chief Investment Officer Steve Kandarian predicted in June that more companies would default on their debt as the economy slows. MetLife cut its investments in airline, carmaker and homebuilder bonds, and sold commercial mortgages at a loss in the second quarter to reduce risk.

Hartford Financial Services Group Inc., the Connecticut- based life and property-casualty carrier, said yesterday it would raise $2.5 billion in capital. Insurers plunged in New York trading this week on concerns that investment losses could erode capital.

The largest insurers in the U.S. and Bermuda have posted more than $80 billion in writedowns on mortgage-related holdings as subprime home borrowers fail to repay their debts. Insurers invest premiums before paying claims.

Variable-investment income, which includes hedge-fund and private-equity returns, will be about $117 million below expectations, MetLife said.

Source - Bloomberg


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