MetLife Scaling Back, Cutting Jobs After Profit Loss

Aug. 05--MetLife Inc. announced Thursday it will cut jobs following bleak second-quarter financial results, including a 94 percent drop in profit partly the result of low interest rates.

Steven Kandarian, chief executive officer, told investor analysts on a conference call Thursday that the largest U.S. life insurer intends to reduce expenses by $1 billion, including job cuts, by the end of 2019. He did not provide details.

"We know this will require us to reduce head count, which is never an easy step for an organization to take," he said.

However, Kandarian cited "significant headwinds" facing the industry, forcing MetLife to "do even more to avoid simply running in place."

MetLife has its headquarters in New York City and employed 68,000 workers as of last year. The company has about 650 remaining employees in Bloomfield, where it has been reducing the number of workers in recent years. The company is the town's second-largest taxpayer.

Central banks in the U.S. and Europe have kept interest rates low to boost economic growth. The result for MetLife has been a cut in its bond-dominated investment portfolio valued at more than $500 billion, Bloomberg reported.

In addition, the June 23 vote in Britain to exit the European Union has sparked investor worries, leading to lower interest rates.

The 10-year Treasury yield is near record lows and "lower for longer is not going away anytime soon and life insurance companies will need to adapt to the low rate environment," Kandarian said.

MetLife also cited a charge resulting from an annual review of its variable annuities business as it separates a part of its U.S. retail business and changes in its variable annuity reserves.

Net income of $64 million, or 6 cents per share, was down from $1.04 billion, or 92 cents per share in the year-ago quarter, MetLife reported late Wednesday. It missed Wall Street estimates of $1.5 billion, or $1.35 per share according to analysts surveyed by Bloomberg.

Revenue for the quarter ended June 30 was $15.24 billion, down 6 percent from the second quarter of 2015.

The share price plunged more than 9 percent in afternoon trading, to $39.38.

John Hele, chief financial officer, said low interest rates will continue to put pressure on MetLife's earnings, driving efforts to bring costs in line with revenue.

MetLife announced a deal this week in which Computer Sciences Corp. will administer almost 7 million policies for the insurer. CSC said it would offer employment to more than 1,000 people who work for MetLife in the U.S. and India, Bloomberg reported.

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