MetLife to cut jobs; shares plunge

NEW YORK: MetLife Inc the largest U.S. life insurer by assets, said on Wednesday it will cut jobs, one day after it announced plans to raise capital in the middle of a global credit squeeze. The company's shares plunged more than 20 percent in early trading.

The insurer, which didn't specify the number of jobs to be cut, said the layoffs would conclude this month. MetLife has 49,000 employees around the world, according to Reuters data. The company said on Tuesday it would sell 75 million common shares to supplement its capital position and to be used for both general corporate purposes and potential strategic initiatives.

The share offering, expected to price on Wednesday, was worth close to $2.76 billion, based on the closing price of the stock on Tuesday on the New York Stock Exchange. Insurers have been under pressure to keep solid capital positions in order to maintain their ratings as they have been hit by the worst global credit crisis since the Great Depression.

Keeping high ratings is key for insurers because lower ratings can mean higher costs and, in some cases, even a loss of business. "This is about more than just building a war chest for doing an M&A deal," MetLife Chief Financial Officer Bill Wheeler said in a conference call with analysts.

The company also estimated its excess capital position to be more than $4 billion, and said sources of liquidity include cash and cash equivalents of about $21 billion as of September 30, up from $14 billion as of June 30. Wheeler said a two-notch ratings downgrade would affect collateral requirements on MetLife's derivative positions by only $200 million.

Earlier this week, Allianz SE, Europe's biggest insurer, said it would invest $2.5 billion in US life and property insurer Hartford Financial Services Group Inc. Last month, American International Group Inc, once the world's largest insurer, received a federal bailout after losses in its financial products unit drove it to the brink of collapse. MetLife shares were down $7.69, or 20.8 percent, at $29.18 on the New York Stock Exchange.