Higher variable annuity prices held back new deposits for MetLife Inc. (MET) in the third quarter, as investment losses pushed the insurer to a quarterly loss - its third in a row.

Pulling down earnings were $1.4 billion in investment losses, $857 million of it driven by derivative losses. MetLife's improving credit profile caused it to reverse accounting gains it took late last year in the value of its variable annuity guarantees.

Much of the rest of its investment losses were driven by credit-related losses and impairments in the value of some of its invested assets, which improved over the third quarter last year.

But the life insurer's operating earnings increased 18%, "despite the current economic challenges," Chief Executive C. Robert Henrikson said in a press release. Sales also increased in the U.S. and internationally.

Shares slid 2% to $36.10 in after-hours trading. The stock has tripled from its all-time low in March but has fallen nearly 15% from its 52-week high last month.

Annuity deposits dropped 6% in the quarter to $4 billion from the same quarter last year. Variable annuity deposits fell 9% to $3.4 billion, outweighing a 19% increase in fixed annuity deposits to $600 million.

MetLife, along with other variable annuity providers, revamped its variable annuity offering to raise prices and scale back benefits.

Rival Lincoln National Corp. (LNC) reported its first profit in a year Wednesday, and said its individual annuity deposits rose. During its earnings call, the company said it raised prices the least of several competitors.

Insurers have been reporting stronger third-quarter results as business improves and a rallying stock market put an end to big investment losses.

MetLife, the largest U.S. life insurer and a bastion of balance-sheet strength, declined to seek a handout from the government earlier this year, having raised capital on its own. The company has streamlined its structure, and last month said it is gaining market share in every one of its lines of business.

For the latest quarter, MetLife reported a loss of $620 million, or 79 cents a share, compared with a year-earlier profit of $630 million, or 83 cents a share. Operating earnings, which exclude realized capital gains and losses, rose to 87 cents from 84 cents.

Revenue dropped 23% to $10.2 billion, largely on the investment losses. Premiums slid 2.7%.

Analysts estimated earnings of 87 cents on revenue of $12.25 billion, according to a poll by Thomson Reuters.

The company reported an 8% premium decrease in the institutional segment but a 5% increase for the individual business.

Earnings in MetLife's institutional business, which includes group life, retirement and savings products, fell 22%. The individual business, which includes life insurance and annuities marketed through agents, had a 10% increase.

Book value increased 10% from a year earlier and 27% from the second quarter.

- By Lavonne Kuykendall, Dow Jones Newswires; (312) 750 4141; lavonne.kuykendall@dowjones.com

(Kathy Shwiff contributed to this article.)