William Mullaney - President of the U.S. Business organization William Moore - President of MetLife Auto & Home and Senior Vice President of Eastern Zone - Individual Business William Toppeta - President of International and President of International - Metropolitan Life Insurance Company Steven Kandarian - Chief Executive Officer, President and Director William Wheeler - Chief Financial Officer, Executive Vice President, Chief Financial Officer of Metropolitan Life and Executive Vice President of Metropolitan Life John McCallion - Head of Investor Relations and Vice President Steven Goulart - Chief Investment Officer and Executive Vice President C. Henrikson - Chairman, Chairman of Executive Committee, Member of Investment Committee and Director of Metropolitan Life Insurance Company

Thomas Gallagher - Crédit Suisse AG John Nadel - Sterne Agee & Leach Inc. Jamminder Bhullar - JP Morgan Chase & Co Nigel Dally - Morgan Stanley Suneet Kamath - Sanford C. Bernstein & Co., Inc. Edward Spehar - BofA Merrill Lynch Colin Devine - Citigroup Inc

Ladies and gentlemen, thank you for standing by. Welcome to the MetLife First Quarter Earnings Release Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. Before we get started, I would like to read the following statement on behalf of MetLife. Except with respect to historical information, statements made in this conference call constitute forward-looking statements within the meaning of the federal securities laws, including statements relating to trends in the company's operations and financial results and the business and the products of the company and its subsidiaries. MetLife's actual results may differ materially from the results anticipated in the forward-looking statements as a result of risks and uncertainties, including those described from time to time in MetLife's filings with the U.S. Securities and Exchange Commission. MetLife specifically disclaims any obligation to update or revise any forward-looking statement whether as a result of new information, future developments or otherwise. With that, I would like to turn the call over to John McCallion, Head of Investor Relations.

Thank you, and good morning, everyone. Welcome to MetLife's First Quarter 2011 Earnings Call. We will be discussing certain financial measures not based on Generally Accepted Accounting Principles, so-called non-GAAP measures. We have reconciled these non-GAAP measures to the most directly comparable GAAP measures in our earnings press release and in our quarterly financial supplements, both of which are available at metlife.com. A reconciliation of forward-looking financial information to the most directly comparable GAAP measure is not accessible because MetLife believes it is not possible to provide a reliable forecast of net investment and net derivative gains and losses, which can fluctuate from period to period and may have a significant impact on GAAP net income. Joining me this morning on the call are Rob Henrikson, Chairman of the Board; Steve Kandarian, President and Chief Executive Officer; Bill Toppeta, President of International Business; and Bill Wheeler, Chief Financial Officer. After their prepared remarks, we will take your questions. Also here with us today to participate in the discussion are other members of management, including Bill Mullaney, President of U.S. Business; Bill Moore, President of Auto & Home; and Donna DeMaio, President of MetLife Bank. With that, I'd like to turn the call over to Rob.

Thank you, John, and good morning, everyone. As you will hear in a moment, MetLife delivered very strong results in the first quarter as we remain committed to the fundamentals of the business. As you know, the Board of Directors has elected Steve Kandarian as President and Chief Executive Officer effective May 1 this week. Over the coming months, Steve and I will continue to work very closely together ensuring a smooth transition of responsibilities, with Steve dedicating his time to running the business. I have great confidence in his ability to lead MetLife into a new era of global growth and outstanding performance. I will remain Chairman of the Board through the end of the year and will continue to focus on various functions within the organization. Since the beginning of the year, I have visited our Japan operations in February, China in March and the Middle East offices in April, hearing from the local management teams about their businesses. It is clear the leadership teams and employees are extremely talented and committed to a successful integration of Alico. I will continue to visit our worldwide locations, gathering input and feedback on the integration process. We are very pleased with the process we've made and the direction we are heading as the leading global life insurance company. This morning, Bill Toppeta will provide an update on the impacts to MetLife of the recent tragic events in Japan. However, let me just say we are humbled by the humanitarian actions of our own associates in the region and inspired to see the MetLife family come together in Japan and around the world to support each other. It is a true demonstration of one MetLife. Now Steve will take you through the highlights of the first quarter.

Good morning, everyone. As I begin my new role as MetLife's President and CEO, I am honored to have the opportunity to lead this great company. I have the good fortune of succeeding Rob Henrikson, who has been a great leader and has created a solid growth platform on which we will continue to build. We are operating from a position of strength and have many opportunities to extend our lead in the marketplace. Thank you, Rob. Now let's get started on our results. The first quarter of 2011 was a very good quarter for MetLife. Our businesses are performing well as we continue our commitment to disciplined growth and expense management. We had record top line performance with premiums, fees and other revenues increasing to $11 billion, up 27% over the prior year and 15% sequentially. Operating earnings grew to $1.4 billion, up 64% over the prior year and 17% sequentially. And our book value per share increased 10% over the prior year, primarily due to strong operating earnings in investment results. In addition, our investment portfolio provided solid results for the quarter. As we disclosed on Monday, the board of directors has appointed Steve Goulart as our new Chief Investment Officer. I'm confident that under his leadership, the investment department will continue to provide value for our shareholders through solid returns and security for our policyholders through a strong balance sheet. While Bill Wheeler will provide you the details of our results, I'd like to share some highlights. In U.S. Business, premiums, fees and other revenues were $7 billion, down from the prior year and the prior quarter, primarily due to lower pension closeout sales and the impact of continued high unemployment, as well as a challenging pricing environment for the group insurance businesses. Operating earnings were up…

Thank you, Steve, and good morning, everyone. Before I begin, I would also express our sorrow about the recent tragic events in Japan and our admiration for the strength and resilience of the Japanese people in general and of our Japan colleagues in particular. Overall, the situation in Japan is challenging but appears to be improving, and it remains fluid. Our operations have responded well to the challenges and have begun to return to normal operations. We've taken many steps to aid and relief efforts. Our Japan business provided direct support to impacted employees, agents and their families. We have made various charitable contributions and have been helping our customers in the regions hit by the earthquake and tsunami. I'm happy to report that none of our employees or career agents has been killed or seriously injured. Sadly, however, 2 of our independent agents are missing and presumed dead. Under the circumstances, we decided that certain actions were appropriate. For the March 11 earthquake and subsequent tsunami, we have waived the earthquake and tsunami exclusions in our accidental death riders. In the affected regions, we have extended the grace period for premium payments and have reduced interest rates for new policy loans while at the same time expediting the process for claims, surrenders and policy loans. From the onset of this crisis, we have been operating our business continuity program with over 300 of our associates temporarily reassigned from Tokyo to our facilities in Kobe, Osaka and Nagasaki. We currently expect to keep the business continuity program operating through September and thus through the peak power demand months of the summer. With respect to the financial implications of the disaster, as you know, we report our MetLife Alico operations on a one-month lag basis. And thus, since the loss events…

Thanks, Bill, and good morning, everyone. MetLife reported $1.33 of operating earnings per share for the first quarter. As noted in the press release, our first quarter results reflect 3 months of Alico operations from December 1, 2010 through February 28, 2011. This morning, I'll walk through our financial results and point out some highlights, as well as some unusual items, which occurred during the first quarter. Let's begin with premiums, fees and other revenues. Total premiums, fees and other revenues, which were $11 billion in the first quarter, were up 27% from the first quarter of last year and up 15% over the fourth quarter of 2010. This growth is due to having a full quarter's results from Alico, which we acquired in November of last year. To give you a better sense of International's overall growth for the quarter, our International revenues were $3.8 billion. This is approximately 10% higher than the first quarter of 2010 on a combined basis as if we had owned Alico in both periods. In Japan, the year-over-year pro forma increase in revenues was approximately 14%. This was driven by a 45% increase in sales, which increased in all product and distribution channels with the strongest gains coming from the bank and direct marketing channels. Higher persistency and a favorable exchange rate also contributed to the growth. In the other international regions, the year-over-year pro forma increase in revenues was approximately 7%. Strong revenue growth in Latin America and Korea as well as favorable exchange rates were the main drivers of this growth. Turning to the U.S. business, premiums, fees and other revenues of $7 billion were down 5% as compared to the prior year quarter. This includes a 2% decrease in insurance products revenue as growth in dental was offset by lower…

[Operator Instructions] Your first question comes from the line of Suneet Kamath with Sanford Bernstein. Suneet Kamath - Sanford C. Bernstein & Co., Inc.: I have 2 questions. The first one is on capital management for Bill Wheeler. I think I know the answer to the -- when will you start redeploying capital, which I'm guessing is the end of the year. But I wanted to drill down a little bit in terms of the why in terms of the timing. In some of the conversations I've had with investors have sort of suggested that maybe the way that we're thinking about excess capital in terms of risk-based capital might, if we looked at it under sort of bank regulatory capital requirements and some of the new Basel rules, your excess capital might be a little bit lower than what RBC would imply. And also, there's a risk of being named systemically important. So I just was hoping you could provide some color in terms of you're thinking about potential excess capital away from RBC and maybe under some of these other metrics.

Sure, Suneet, so I think you're right. I mean, we've talked about -- in a lot of different public forums over the past period of time really, including Investor Day last December, we've talked about capital management as sort of being an end of 2011 exercise. And obviously, we pay an annual dividend, and we would declare that normally at the October board meeting. And you could say, "Gee, why this timing?" I feel that there's a couple of reasons for that. One is we wanted to make sure that Alico has gone as expected, and I would say so far it's gone very well. Secondly, we have to make sure we're in good sync with the rating agencies. And I think they have had a number of concerns over the past couple of years, and I think we've demonstrated that those concerns are unwarranted, but we felt that we would have to get into our 2011 year before some of those concerns went away. And those are really I think some of the big drivers. It is true that we are a bank holding company, and so we have to produce bank holding company capital ratios. Just to give you a sense of this, our Tier 1 bank holding company capital ratio is in excess of 8%. I think to be a well-capitalized bank, you need Tier 1 capital of approximately 6%. So obviously, there's a substantial capital cushion there as well. So I guess, I don't -- I'm not sure that's really a gating factor in terms of managing capital going forward. Suneet Kamath - Sanford C. Bernstein & Co., Inc.: Okay. But in terms of some of the newer Basel rules, do you have those updated?

We don't, and it's not -- I don't think it's -- first of all, I think the Basel III capital ratios are unclear exactly what impact, if any, they will have on us. I believe we will probably not need to comply with Basel III in the way you might think. And obviously, the implementation of Basel III is more than half a decade off. So I don't think that's driving a difference between capital management, mid-year versus end of the year. Suneet Kamath - Sanford C. Bernstein & Co., Inc.: Got it. And then on the SIFI, any comments there?

We really don't. We don't know anything more than I think the general public in terms of where the FSOC will come out on SIFIs for the insurance industry. Obviously, we don't believe the life insurance industry should be considered systemically important, and we think there's a lot of good reasons why. But time will tell about where that decision gets made. Suneet Kamath - Sanford C. Bernstein & Co., Inc.: Okay. And then my final question is just on your operating expense ratio. As you mentioned, it came in below plan. Away from what's going on in Japan in terms of the business continuity expenses, is there any thought to seeing a higher level of expenses in the balance of the year, investment in advertising or branding or anything like that? Or should we think that maybe you could come in below plan for the full year?

There are some advertising initiatives scheduled in Japan, and there's a rebranding initiative. In fact, in much of the rest of the world, we had rebranding initiatives that have already occurred in the first quarter. Those special advertising or rebranding initiatives are really -- are reported as part of our integration cost, which means they're not included in operating income. They're below the line. And so that's what's going on with that kind of advertising. With regard to our overall expense ratio, I fully expect we're going to have a good year, and whether we'll be actually below our planned guidance or just at sort of the bottom end of it, I can't say yet. It's probably too early, but obviously we're off to a very good start.

Our next question comes from the line of Jimmy Bhullar with JP Morgan. Jamminder Bhullar - JP Morgan Chase & Co: I had a question on Alico. I don't think -- I think you changed your disclosure in the supplement. But if you could maybe give some numbers around what the Alico earnings were or just talk about them. I think last quarter, the number was $114 million, and that was a little disappointing even though it was just one month. Then also related to that, if you could give some comments on what you've seen in terms of business activity at Alico in Japan in like the second half of March maybe and into April, whether you've seen some disruption related to the earthquake? And the final question just on variable investment income, it seems like private equity assets would have done very pretty well, maybe even hedged funds, but if you could talk about anything that would have changed. It seems like the results are poised to be relatively strong in the second quarter also as it relates to variable investment income.

It's Bill Toppeta. I guess I'll start. In terms of Alico, I would say it is performing at the earnings plan. And we've melded in the operations, so we're not going to be reporting them separately. But its performance is quite strong, and I think if you look at the Alico plan that we had, we're just right on the button in terms of the earnings, and that's also true on the MetLife side as well. So we gave you the planned ranges back on Investor Day. I'd say we're on track for those planned ranges. In terms of the situation in Japan, sure, we've seen a slowdown in activity, certainly, during March. Remember, the second quarter there will be March, April and May. The event took place on March 11, so naturally, there was a suspension of direct marketing sales in Japan. There was also an impact, obviously, in the Tokyo area, which accounts for about 30% to 40% of the sales. So we have a pipeline effect here, which is that there's business in the pipeline, and so it's a little early to make any judgments about what the impact ultimately is going to be. But the 3 months that we're focused on now, obviously, will be March, April and May. I'd say the situation is pretty fluid, and I'd rather not speculate on it beyond that. Jamminder Bhullar - JP Morgan Chase & Co: Have you seen a stabilization or some improvement as the month has -- as we've gotten further away from it?

Well, I think what we've seen is we've seen people coming back to activity. The question is what will be the result of that activity. So what we're seeing in terms of numbers is from pipeline effect, I believe, and so it's very hard to sort out what's going to happen going forward. I think you just have to wait for the result.

The next question comes from the line of Nigel Dally with Morgan Stanley.

Hold on. I think your last question was on variable income too. This is Steve Goulart, by the way. And the first thing I'd say is all components of variable income performed very well in the last quarter. You called out private equity funds and again, those performed very well. And remember there's also a lag, so what you saw in the first quarter really reflected the equity market performance in the fourth quarter, so that was very strong. And we -- to our outlook, obviously, the first quarter equity markets continued to be very strong as well, probably not quite as strong as the fourth quarter, but we would anticipate that strong performance to continue.

Nigel Dally [Morgan Stanley].

A question on banking, on the Banking segment, clearly, a more difficult quarter. I know you reduced your expectations from where you were at Investor Day. But based on the results this quarter, it seems like maybe even your lowered expectations may be tough to hit. So perhaps some color on the outlook for that division. Also, in the hopefully, remote possibility that having a bank means that you're going to be treated different from your peers with regards to required capital, is disposing the bank a possibility?

This is Donna DeMaio. I'll take the first part of your question. The first quarter results for the bank are largely due to the overall decline in refinancing activity across the country. The mortgage market, which approached almost $2 trillion last year, is hovering around $1 trillion, $1.1 trillion depending on how you measure it for this year, largely due to refis, and we are no exception to that. So our refi balance -- our refis were down approximately 2/3 from the highs in 2010. Also, the first quarter is historically the lowest volume quarter due to seasonality, and we will expect that to pick up as the year continues.

Nigel, with the second part of your question, in terms of the regulation of the insurance industry potentially by the Fed and because our -- mainly really for technical reasons, we're actually a bank holding company as opposed to a thrift holding company, which many of our peers are. I don’t -- it's not clear to me how that will all play out. Obviously, the substance of the issue is, is that we should be treated the same as the rest of the industry. We are mainly an insurance company, and we do have a nationally chartered bank, but we're an insurance company. And so the substance of the issue should be that the capital requirements and stuff should be the same as our peers, and it's a little early I think to speculate about how that will play out and how we'll negotiate with the Fed and others regarding those issues.

Okay. Very helpful.

We have a question from the line of Colin Devine with Citi.

I have a couple of questions. First, with respect to the Auto & Home business, the volatility you've seen in cats and maybe over the last 4, 5 quarters, has that given you any cause to rethink how you're using reinsurance to manage the volatility on that? Second, Bill, you mentioned, I thought it was sort of a 5% assumed market increase in your GMIB pricing. Can you reconcile that for me with the guarantees on the product, which range from 5% up to 7%, in fact, I think 7.5%, and that's net of fees? And then third, it's my understanding that despite, obviously, an exceptional quarter in terms of sales gains for your VAs is ratcheting up the step-up guarantee on it now this month from 5% to 6%. Why on the back of such a strong quarter for sales does the company feel the need to ratchet up the future wars once again?

Colin, this is Bill Moore. Just overall, our reinsurance position is really to utilize insurance to cover solvency-type events, and that's what we've built our models around. Our overall philosophy around how we handle a reinsurance cost or the catastrophes associated with that is through pricing. Our homeowner pricing projections for 2011 are in the 7% to 9% range, about 1/2 of that is for non-cat activity, about 4 points and about 4 points for cat activity. We are in the process now of evaluating our long-term cat projections and will be making appropriate pricing changes accordingly.

And Colin, with regard to the riders and plan assumptions, we historically have always as part of our planned -- earnings planned projection process assumed 5% growth in the S&P 500. And I think we've acknowledged that, that's conservative. That isn't quite the same as how we model out the pricing, of course, in our variable annuity products where we assume over time obviously over the life of those products, we assume something more like an 8% or 9% return on the S&P 500, which of course is consistent with historical performance. And I think you know -- I'm sure you know this, that the roll-up rate in the rider isn't necessarily sort of the investment performance guarantee that we're -- or is only one factor in the guarantee that we're making. Obviously, as a GMIB company, equally or more important is the assumptions we make regarding interest rates and the annuitization rate when people can exercise that rider, and that obviously is a big factor into -- and annuitization rate is pretty low by the way. So that's a big factor in the underlying guarantee. So the performance of the equity markets is only a piece of it.

Bill, if you can comment on the step-up, but also just to be fair, I think that with your comment on annuitization factor, it may be low, but your product does offer a 5% annual withdrawal benefit, your GMIB does, a dollar-for-dollar withdrawal. So I'm not sure it's, frankly, it's that conservative.

Well, we probably reached how much we can discuss this in a public forum, but obviously, the withdrawal features in those products are modestly -- though they exist, they are modestly utilized, and that's obviously -- and a certain level of utilization is factored into pricing of the overall product as well.

Maybe we can just go to why the guarantee is going to 6% from 5%?

Sure, Colin. It's Bill Mullaney. Let me put VA sales in perspective for the quarter and why we decided to make the announcement of a new product in March. As you said, VA sales were strong in the quarter, $5.7 billion, which was a 40% increase year-over-year. We think that there's going to be pretty strong industry growth this quarter. It's early because we don't have the full numbers. But we expect the industry growth for VAs for the quarter to be, I would say, somewhere between 20% and 30%, so we will pick up some market share. I will tell you that the sales that we made in the quarter because of the level of interest rates and the product changes that we introduced in February, those returns that we expect to get on the sales for the quarter are quite strong. We want to be an active player in this market, we've talked about the fact that we want to continue to be a top 3 player, and we think the VA market is going to grow. So last year we really took some time and began thinking about how we could play in this marketplace and have a product that continued to deliver good returns for us but had a lower risk profile and provided good value for consumers. And so as you know, in March, we announced our GMIB Max product. We began selling that product this week, and we really view this product as a significant leap forward in terms of how VAs are going to be constructed in the future. It builds off the GMIB platform that we have and many of the mechanics that are in the new product are the same. But it's different in that, there's a limited number of fund…

The next question comes from the line of Mark Finkelstein with Macquarie Securities. [Technical Difficulty]

So just to go back to that point, the reason that the volatility in the new VA product is lower is because the fund choices are more conservative and the hedging is done within the fund as opposed to at the higher level. Is that the right way to think about that?

That's right. There's a greater level of hedging done inside the funds, number one. And then secondly, there's a limited number of funds and so -- that people can invest in. So when there's equity market volatility, unlike some of these asset transfer features that are in other kinds of products, the professional management of these funds along with the hedging is designed to really limit extreme market volatility having a significant impact on returns.

Okay. And how does the margin expectation or I should say the return expectation on the new product compare to the legacy product?

The return that we expect to get on the new GMIB Max is a slightly better return than we expect to get on the current product.

Okay. And then just changing gears a little bit, you've talked a lot about sales in Japan, obviously, very strong quarter, not affected by the earthquake. Can you just talk about Alico trends outside of Japan in terms of sales levels?

Sure. It's Bill Toppeta. I would say in most of the regions around the world, we're strong on sales, and the only exception that I would make to that is Europe. I would say Europe sales have been a bit weak compared to plan. Some of that is connected -- I think most of that, it's fair to say, is connected to sales of credit life insurance in Europe connected to less lending in the region. So I think as the lending comes back, we would expect the credit life sales to come back, but that's the only soft point. I think everybody else is extremely strong, and of course, overall, we're way up on sales.

Okay. And then final question real quick, do you see the spreads in Corporate Benefit Funding as sustainable from here out on a core basis, obviously, backing off the variable income outperformance?

Yes, if you normalize to the top end of variable investment income, obviously, part of the reason Corporate Benefit Funding did so well was the high performance of variable investment income. But if you sort of normalize that outperformance, yes, I think those spreads are sustainable. What we've also seen is our core spread has improved in variable investment income because we've -- I would say we're more fully invested and we're probably managing -- we've lengthened a little bit to, I would say, better match the liability duration. So that's what's driving the margin improvement there, and that is sustainable.

We have a question from the line of Tom Gallagher with Crédit Suisse. Thomas Gallagher - Crédit Suisse AG: First -- 3 questions. First is, Bill, can you expand a little bit on this change in earnings definition about how you're, I guess, what excluding GMIB, is it the change in the liability because I don't think those were marked. Are you trying to just get rid of the disconnect between performance of the hedge asset and the lack of mark of the GMIB liability? That's my first question. Second question is just a further elaboration on MetLife Bank. I heard the answer that directionally 1Q is weak. I didn't hear a response as to whether or not you still think you can get to a $200 million level for the full year, so if you could provide more color on that. And third, can you give us an update on what's going on with how far out you're hedging your Alico Japanese earnings? I think you had -- last comment that I recall you making was 70% of 2011 was hedged at 86 yen/dollar. Have you added to that program? And how far out are you going? Are you going out to 2012 or 2013?

Okay. See if I get them all. With regard to the earnings definition of GMIB, our changing operating earnings, so we obviously hedge the GMIB rider, and so the change in value of the derivatives was in the operating earnings, and that was -- so as stock market goes up, those derivatives, those hedges actually are negative as you might guess, because they're hedges, and then that's offset somewhat by the reserve adjustments we would have to make regarding the GMIB rider. But this is one of those moments where we make a good economic hedge, but the accounting hedge is not perfect. And so we were always explaining every time there was a big move in the stock market, either negative or positive, you'd see a meaningful change in the value of the derivatives. And because of where we are and I would say the DAC amortization quarter, we're now below the midpoint, so what that means is our DAC amortization is very stable, which is good. That's what you want. But it means it doesn't react meaningfully to changes in the market in any given quarter. So you have a kind of a noisy mismatch between DAC amortization and the riders. And so this quarter, for example, if we had not made this change, we would have seen obviously a very positive event, a nice rally in the stock market in the quarter, but it would have actually cost us money in operating earnings because of how the hedge works. Now obviously, that's not, I think, directionally appropriate. And also, by the way, it's not -- it makes us not comparable with all our peers who are in the same business, who have all now moved all this hedging activity below the line. So that's why we made this change. It makes us more comparable, and I think it also just helps make our operating earnings results for any given period make more sense. So that's regarding the earnings definition with regard to the bank earnings projection.

On the earnings -- this is Donna DeMaio. On the earnings projections for the bank, we would expect our run rate more to be in the range of $30 million to $40 million a quarter, really due to the softness in the housing market. Again, when the original plan was put out, the overall mortgage market was projected to be around $1.5 trillion plus. That was revised late last year to be more around $1 trillion to $1.2 trillion. Our results are a direct result of the size of the market, but as long as unemployment stays high and the market stays soft, we will be impacted. Also coupled with interest rates hovering around 5%, the refis have substantially gone down, which will also impact our business. So our run rate will be more in the range of $30 million to $40 million a quarter.

So just to add onto that a little bit, Tom. When we gave our Investor Day guidance last December, we talked about the bank earning something slightly over $200 million. Of course, what happened immediately after Investor Day is interest rates shot up. That changed the overall projection regarding mortgage originations in 2011, and so we revised the bank's plan pretty meaningfully, even before the year ended, and I think we talked a little bit about that though we didn't quantify the new target. So we feel the bank is performing pretty much in accordance with our new plan projections. And finally, your question regarding yen hedging, hedging of earnings on the yen. We have not made any additional -- or nothing of substance in additional yen hedging of earnings with regard to Alico Japan. I would say, in general, we don't intend to hedge exchange rates to protect ourselves with earnings volatility. I'm not sure, in general, that's money well spent. We -- because we're not -- unlike some others for instance, the yen, which is our largest foreign currency exposure is only 20%, and it's rare that all the currencies move in the same direction in any given quarter. So there will always be -- some will be up, and some will be down. And I think spending a lot of money trying to minimize volatility there is probably not prudent. That said, I think there are some -- occasionally opportunities where the market environment is such that we -- that it makes sense to put on a hedge, and of course, that's what we did this year when we had such a big tightening in the yen versus the dollar over the last 9 months or so. And I'm not sure we will add to this yen hedge. We might, but I don't think there's any guarantee that we will.

We have a question from the line of Ed Spehar with Bank of America Merrill Lynch.

A couple of questions. First, Bill, on the issue of systemically important financial institutions, considering that you were -- I guess how do you avoid being categorized as such considering that you're one of the 19 companies in the government stress test? And then I have a couple of follow-ups.

Well, you're right. We are one of the top 19, and so I think by definition, that makes us a SIFI under the law. But I don't necessarily believe all SIFIs are going to be treated the same. And I think there's obviously a good basis for that in terms of how SIFIs are dealt with. I don't think we're all -- I don't think there's anything that's in the law that says all the rules have to be the same. And of course, we don't know who else may be labeled as SIFIs or not with regard to our peers in the industry whether just because they’re large or because they own thrifts. And I think that there is uncertainty about that, and that will have to sort itself out over time.

Do you have any indication based on preliminary discussions that there is some carving out occurring even under the SIFI proposals?

I think we heard the same rumors that everybody else does. And so I think the rumor of the moment is that the insurance industry will -- may not be labeled as SIFIs. But I think we're months away yet from any kind of ruling from the FSOC. So I think there's -- so I think it's really -- it's too early to really to call this.

Okay. And then the final question is on cash flow and statutory earnings. What's the typical -- could you just remind us the typical pattern of the domestic subs in terms of the first quarter as a percent of the full year? And also, if you look at the sources of cash to the holding company outside of the domestic subs, what are the relevant numbers to talk about there at this point for the first quarter or maybe thinking about the full year?

Sure. So our statutory earnings from our domestic insurance companies for the full year would be roughly $2.5 billion. And though the statutory accounting is interesting at times, and so that number can jump around a little bit. Last year, for instance, it was more like $3 billion. The first quarter is generally a weak quarter with regard to statutory earnings, and there's some reasons for this. But the biggest reason has to do with how we deal with hedging or reinsuring A/XXX and XXX risk. We don't do that. To save money, we don't necessarily true up our hedging of those what I would call real straining reserves. We don't true up our hedging of that every quarter. We do it periodically over the course of a year. And so because -- that's one big reason why statutory earnings are generally lower in the first quarter, and there are some others. But so the way to think about this $600 million of operating income is it's almost exactly the same number that we had last year, okay? So operating earnings in our domestic life insurance subs on a statutory basis is basically flat year-over-year. So in my mind, it's a good result and kind of consistent with our history. With regard to cash flow outside our domestic subs, we've talked about 2 things. We've talked about that we do expect dividend payments from both our newly acquired Alico businesses as well as some of our key MetLife International businesses, mainly Mexico. And we think that sort of ongoing dividends, normal dividends from those operations should well exceed $500 million a year, somewhere between $500 million and $1 billion a year. Given how fast we're growing in some of these countries -- and by the way our growth rate, obviously as we've shown this quarter, is quite fast. There is also an opportunity that which we discussed on Investor Day to take some special dividends out of some of the Alico subsidiaries or branches because of the high level of capitalization of those subs and branches when we acquired the company. They were carrying quite a bit of capital over and above which is needed to support the operations. So we estimated that at roughly $1 billion, some of which is in Japan and not readily accessible, but we expect to pull out most of that excess dividend, a lot of it this year and maybe the rest of it over the next year or 2.

And just one follow-up, Bill, on that $500 million to $1 billion of dividends from Alico and other international, how would that compare to whatever the statutory earnings type number is? Like what type of a payout is that from those subs?

I think roughly 50%.

And our last question comes from the line of John Nadel with Sterne Agee. John Nadel - Sterne Agee & Leach Inc.: So a couple quick ones. Just to be clear, on the hedging cost and the change in the accounting, the actual cost of buying the hedges though is still in your operating earnings, correct?

No, not necessarily. The cost is -- because the fees that we record from the GMIB riders, which obviously pay for the hedges, we pulled those out of operating earnings as well. So that's all now below the line. John Nadel - Sterne Agee & Leach Inc.: Okay, got it. Then just to think about equity market sensitivity, obviously, a substantial change in your business mix and the change in the VA hedging accounting. Can you sort of update us on what you think your sensitivity is to a 1% move up or down in the S&P?

Yes, a 1% move now is about $0.02 a share over the course of a year. And that means we're not really that sensitive to equity movements obviously because of where we are in the back quarter with regard to amortization. We're in such a stable place that it's just not going to fluctuate that much. John Nadel - Sterne Agee & Leach Inc.: Okay, okay. Then just a quick question following up on Bill Mullaney's comment on the VA sales. Just wondering if you can give us a sense for what "quite strong" means for the returns on the recently sold business, Bill.

Sure, John. We've always talked about acceptable returns for us being north of 15%. And so the product that we're putting in the market today meets that definition. John Nadel - Sterne Agee & Leach Inc.: Okay. And then finally, just on group insurance sales, can you give us some sense for what your sales looked like in the January 1 or first quarter sales? And how competitive an environment it is? And what that means for premium levels in 2011 for Group Life and Non-Medical?

Sure. Well, I think you saw that our revenues were down in both the Group Life and Non-Medical Health, Group Life in particular, Non-Medical Health was roughly flat year-over-year. That's pretty consistent with what we talked about on Investor Day for Group Life. We said that Group Life would be down. It's down a little more in the first quarter, but we expect that to even out more towards the back half of the year, so we’ll come in within the guidance we talked about on Investor Day. Sales, in general, were weak, particularly in the large end of the market. There was less quoting activity for very large cases, and for the cases that we did quote on, what it would take for us to win that business particularly in life insurance would have been to write those cases at a level that was far below what we were comfortable with. And we also lost a couple of large cases, which I mentioned at Investor Day. But we are seeing, I think, some improvement in the pricing environment in certain segments of our business. Disability, in particular, I think you saw that we had strong disability results this quarter, which was a function of improving incidents, a return to more average historical levels for recoveries. But also the fact that we've been taking pricing actions over the last 2 cycles that allow us to get a good return at these elevated incidence levels. And we think that, that's going to force the market to begin to bring their prices up to more in line with what the current performance of the businesses are. And the last thing I'll just mention is -- you may have seen that we were awarded the TRICARE Dental business, which is a pretty significant dental contract for us. And that will be having an impact in our business in 2012. John Nadel - Sterne Agee & Leach Inc.: Thanks very much. Just a quick follow-up. I mean, so, Bill, so order of magnitude, I mean -- can you sort of -- can you give us a sense for how much group insurance sales were down year-over-year?

Yes, I would say as a working number probably 25%. John Nadel - Sterne Agee & Leach Inc.: With most of that, I assume, driven by the large end of the market?

Yes. We didn't really have a large case sale in 2011, which is rare for us. We usually have 1 or 2 big case sales. And we just didn't have any of those this year, and that was really the difference. John Nadel - Sterne Agee & Leach Inc.: Smaller end of the market, flat to up or...

Yes, smaller end of the market is performing within our expectation, so we feel pretty good about that.

Thank you everyone.

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