MetLife Inc., the largest U.S. life insurer, said it’s seeking to exit most of its hedge-fund portfolio after a slump in the investments.

The insurer is seeking to redeem $1.2 billion of the $1.8 billion in holdings, a process that may take a couple of years to complete, Chief Investment Officer Steven Goulart said Thursday in a conference call discussing first-quarter results at the New York-based company. The portfolio, which posted negative returns in the quarter, was cut by about $600 million in 2015, he said.

“It’s had up-and-down years and really it’s just too inconsistent, we think, in actual performance,” Goulart said. “What we’ll be left with is a small portfolio of really our most consistently performing managers in hedge funds.”

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MetLife, which has an investment portfolio of more than $520 billion, has been looking in recent years for alternatives to bonds because interest rates are so low. While results from private equity have been satisfactory, hedge funds have been more volatile, Goulart said.

Chief Executive Officer Steve Kandarian is seeking to increase the portion of earnings that can be returned to shareholders. That focus on free cash flow factored into the decision to cut the hedge-fund investments, Goulart said.

Competitor American International Group Inc. is also shifting allocations after posting three straight unprofitable quarters. The company said Tuesday that it has submitted notices of redemption for $4.1 billion of hedge-fund holdings through March 31. Average invested assets in hedge funds at AIG were $10.1 billion for the first quarter.

Private equity

MetLife reported profit Wednesday that missed analysts’ estimates. Investment income fell 17 percent to $4.56 billion, hurt by both hedge funds and low bond yields. Kandarian said Thursday that the insurer will continue to hold some investments beyond bonds.

“Some earnings variability is an acceptable risk, as these asset classes have provided strong returns to MetLife shareholders over time,” Kandarian said. Variable investment income, which includes hedge funds and private equity, “was better than planned in 7 of the past 10 years.”

MetLife dropped 1.6 percent to $43.22 at 9:32 a.m. in New York trading. That extended its decline for the year to 10 percent.