MetLife, Prudential Report Big Profit Gains

The nation’s two biggest life insurers posted sharply higher net income for the second quarter.

MetLife
Inc.


MET -1.18%

nearly doubled its second-quarter profit, helped by improved investment results and derivative gains on a financial hedging program. At rival

Prudential Financial
Inc.,


PRU -1.01%

net income rose to $708 million from $197 million a year ago. The year-earlier results were depressed by a net charge of $1.23 billion, primarily for bolstering Prudential’s reserves for long-term-care insurance policies in a product line it discontinued in 2012.

Both companies are in the midst of transitions to new chief executives.

Since May, MetLife has been run by Michel Khalaf, who joined the New York company in 2010 and has extensive experience running overseas operations. At Newark, N.J.-based Prudential, Chief Executive Charles Lowrey completed his second full quarter of leadership after moving to the top job in December from an international post.

MetLife is the biggest life-focused U.S. insurer as measured by market capitalization, while Prudential is the biggest by total assets. Both are leading sellers of life insurance and other benefits offered by employers to their workers. They also have large international life-insurance operations, among other businesses.

MetLife posted a 1% decline to $1.32 billion in adjusted earnings, which exclude realized capital gains and losses and other items judged nonrecurring. Adjusted earnings are closely watched by analysts and investors as a measure of the health of continuing operations.

Per-share adjusted results rose to $1.38, lifted by stock repurchases that reduced the number of shares outstanding. MetLife topped analysts’ expectations for earnings of $1.34 a share.

Also Wednesday, MetLife disclosed it would begin a new $2 billion share-repurchase plan.

Prudential posted a slight increase in adjusted operating earnings to $1.31 billion, or $3.14 a share. That fell below analysts’ expectations of $3.23 a share.

Operating profit increased 53% to $548 million in Prudential’s big business of selling products to employers, but fell 41% to $327 million in operations focused on annuities and life insurance sold to individuals. Prudential cited negative outcomes in its annual second-quarter review of assumptions about the profitability of those lines of business, less favorable underwriting experience and higher expenses.

MetLife’s premiums, fees and other revenue fell 29% to $12 billion. Its year-earlier quarter had a big boost as the company booked a deal to take on approximately $6 billion in pension liabilities for 41,000

FedEx
Corp.

retirees.

Such “pension risk transfer” deals have become important parts of big life insurers’ operations. Many corporate sponsors of old-fashioned pension plans seek to get out of the business of managing these big pools of money.  But they happen sporadically.

Write to Leslie Scism at leslie.scism@wsj.com

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