MetLife LBO, Hedge-Fund Return May `Trend Lower' This Year, Kandarian Says
MetLife Inc., the biggest U.S. life insurer, said results from investments such as buyout and hedge funds may not match those in the second-quarter when so-called variable holdings returned $296 million.
“We expect variable investment income to trend lower for the remainder of the year,” Chief Investment Officer Steve Kandarian said today in a conference call.
MetLife swung to a $1.56 billion profit in the three months ended June 30 on the improved investment results and a gain in sales. Life insurers, which invest premiums before paying claims, often put a portion of their assets in private-equity and hedge funds with the expectation that returns beat bond yields.
The leveraged-buyout market, where funds acquire companies using mostly debt financing, hasn’t fully recovered from a collapse in 2007 when underwriters got stuck with $200 billion of loans. Private-equity firms announced about $35 billion of buyouts for the first half of this year, compared with $6.9 billion in the year-earlier period, according to data compiled by Bloomberg.
MetLife posted a $767 million net investment gain, compared with a $2.6 billion loss in the same period a year earlier. The net loss in second quarter of 2009 was $1.4 billion.
The insurer gained $1.86, or 4.6 percent, to $42.06 at 4:01 p.m. in New York Stock Exchange Composite trading. The company has climbed about 19 percent this year.
To contact the reporter on this story: Andrew Frye in New York at afrye@bloomberg.net; Sarah Frier in New York at sfrier@bloomberg.net.
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