NEW YORK (Reuters) - MetLife Inc MET.N has changed its derivatives trading strategy after two consecutive quarters in which losses from wrong-way trades hurt the insurer's profit.

FILE PHOTO: A MetLife Inc building is shown in Irvine, California, U.S., January 24, 2017. REUTERS/Mike Blake

The largest U.S. life insurer has altered the “technique and structure” of certain hedges to make the company less sensitive to interest rate movements, Chief Executive Officer Steven Kandarian told analysts on a call to discuss first-quarter results on Thursday.

Operating profit beat analyst expectations, but included after-tax net losses of $602 million related to its derivatives portfolio in the first quarter. The prior quarter included $3.2 billion worth of such losses.

MetLife's derivatives losses largely pertain to its planned divestiture of a retail insurance business called Brighthouse Financial. Other insurers that reported results recently, including American International Group Inc AIG.N and Prudential Financial Inc PRU.N, have not had the same issues.

On the call, JPMorgan analyst Jamminder Singh Bhullar said he was “a little surprised” by the losses, considering interest rates did not move in a significant way against the type of positions executives described during the first quarter.

Kandarian cited several factors in response: a rising U.S. stock market, a decline in 10-year Treasury note prices, higher rates for hedges, accounting standards that treat MetLife’s positions unfavorably, plus general “ineffectiveness” all hurt the company, he said.

The “ineffectiveness” alone cost MetLife $139 million, Chief Financial Officer John Hele said. Two-thirds of the losses were “non-economic,” meaning they reflect accounting standards regarding how assets and liabilities are valued, rather than the underlying health of the business, MetLife said.

All major financial companies use a type of derivative known as swaps to offset possible losses from changes in interest rates. However, rates have been at lows for a historic amount of time, as the Federal Reserve and other central banks tried to boost economies following the 2008 financial crisis.

The Fed began raising rates last year and hiked its key rate target again in March, hurting companies that expected rates to remain low for longer. Changes in market values can cause large swings in earnings related to derivatives because of the way companies must treat them under accounting rules.

MetLife’s painful derivatives positions are largely a result of positions it put in place to ensure Brighthouse would be financially strong from a capital perspective, and the spinoff would go smoothly. The company is awaiting regulatory approvals for the spinoff, which are unlikely to happen within the first half of the year, Kandarian said.