By Aparajita Saxena and Sruthi Shankar
(Reuters) - MetLife Inc's shares <MET.N> were down 2.6 percent on Thursday after the largest U.S. life insurer said it expected charges of about $1 billion in the third quarter related to the spinoff of its U.S. retail business, Brighthouse Financial.
The company also said on a post-earnings call it expected $3 billion in dividend from the unit, down from the $3.4 billion it had estimated earlier, as Brighthouse needed to add $400 million to its reserves.
"(MetLife) disclosed several below-the-line items that will reduce book value and net income in the third quarter related to Brighthouse spinoff amounting to more than $1.1 billion, which is bigger than expected," Autonomous Research analyst Erik Bass said.
MetLife unveiled the spinoff last year as part of its strategy to boost its cash flow and reduce the amount of capital it holds.
Shares of Brighthouse, which holds $223 billion of total assets and about 2.8 million insurance policies and annuity contracts, start trading on Aug. 7.
"I think there's a degree of uncertainty about how Brighthouse Financial spinoff is going to impact MetLife," CFRA analyst Cathy Seifert said.
MetLife posted a better-than-expected quarterly operating profit on Wednesday, helped by stronger underwriting in all its businesses.
Shares of peers Prudential Financial Inc <PRU.N> and American International Group Inc <AIG.N> were also down, a day after the companies reported quarterly results.
Prudential's shares were down 3.5 percent after the company said earnings from its individual life business would be hurt in the near-term due adjustments related to an annual review of its actuarial assumptions.
AIG reported a better-than-expected operating profit but the largest U.S. property and casualty insurer said it would slow its pace of buybacks, sending its shares down 0.6 percent.
Buybacks were a key part of the company's two-year turnaround plan launched last year by former CEO Peter Hancock.
Brian Duperreault, who took over from Hancock in May, said the company would shift its focus to organic and inorganic growth from share buybacks.
"The company is being cautious about what they say - a view reinforced by the fact that they have stopped giving guidance about share buybacks," CFRA's Seifert said.
"Overall, the company sounds a bit muted."
(Additional reporting by Diptendu Lahiri and Nikhil Subba in Bengaluru; Editing by Saumyadeb Chakrabarty)