Edward A. Spehar - Head of Investor Relations Steven A. Kandarian - Chairman, Chief Executive Officer, President and Chairman of Executive Committee John C. R. Hele - Chief Financial Officer and Executive Vice President William J. Wheeler - President of Americas Steven Jeffrey Goulart - Chief Investment Officer and Executive Vice President Christopher G. Townsend - President of Asia Michel Khalaf - President of the EMEA Division

Ryan Krueger - Keefe, Bruyette, & Woods, Inc., Research Division Nigel P. Dally - Morgan Stanley, Research Division Thomas G. Gallagher - Crédit Suisse AG, Research Division Seth Weiss - BofA Merrill Lynch, Research Division Joanne A. Smith - Scotiabank Global Banking and Markets, Research Division John M. Nadel - Sterne Agee & Leach Inc., Research Division Suneet L. Kamath - UBS Investment Bank, Research Division Randy Binner - FBR Capital Markets & Co., Research Division Sean Dargan - Macquarie Research Christopher Giovanni - Goldman Sachs Group Inc., Research Division

Welcome to the MetLife's Second Quarter 2014 Earnings Release Conference Call. [Operator Instructions] As a reminder, this conference call 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, including in the Risk Factors sections of those filings. MetLife specifically disclaims any obligation to update or revise any forward-looking statement, whether as a result of new information, further developments or otherwise. With that, I would like to turn the call over to Mr. Ed Spehar, Head of Investor Relations. Please go ahead, sir.

Thank you, Steve, and good morning, everyone. Welcome to MetLife's second quarter 2014 earnings call. We will be discussing certain financial measures not based on Generally Accepted Accounting Principles, so called non-GAAP measures. Reconciliations of these non-GAAP measures and related definitions to the most directly comparable GAAP measures may be found on the Investor Relations portion of metlife.com, in our earnings press release and our quarterly financial supplements. A reconciliation of forward-looking financial information to the most directly comparable GAAP measure is not accessible, because MetLife believes it's 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. Now joining me this morning on the call are Steve Kandarian, Chairman, President and Chief Executive Officer; and John Hele, Chief Financial Officer. After their prepared remarks, we will take your questions. Also here with us today to participate in the discussions are other members of management, including Bill Wheeler, President of Americas; Steve Goulart, Chief Investment Officer; Michel Khalaf, President of EMEA; and Chris Townsend, President of Asia. [Operator Instructions] With that, I'd like to turn the call over to Steve.

Thank you, Ed, and good morning, everyone. Last night, we reported second quarter results, with operating earnings of $1.6 billion. Earnings benefited from strong investment margins in a favorable market environment, but were negatively impacted by weak underwriting results. Operating earnings were essentially flat relative to the second quarter of 2013. Operating earnings per share were $1.39, a 3% decrease from the prior year period. Performance on a per share basis was dampened by the conversion of equity units issued in 2010 to fund the acquisition of ALICO. The final $1 billion tranche of equity units will convert in October of this year. Operating return on equity was 11.4% in the quarter. Investment margins were favorable in the second quarter, variable investment income was strong, driven by bond prepayment fees. And recurring investment margins were stable, even though interest rates were 50 basis points below what we had assumed at the beginning of the year. Despite low interest rates, investment margins have been resilient for 3 main reasons: effective asset liability management; good variable investment income; and income from derivatives, many of which were purchased in the mid-2000s to protect earnings in a low interest rate environment. Second quarter operating earnings were also helped by above average equity market returns. Results this quarter highlight the value of our balanced business mix. As strong investment margins and outperformance in market sensitive lines of business help offset unfavorable underwriting results in certain protection lines of business. I'd like to comment specifically on disappointing underwriting margins and our Group, Voluntary & Worksite Benefits and Retail Life and other segments. Second quarter earnings for Group, Voluntary & Worksite Benefits were below expectations. The shortfall in this segment was primarily driven by results in disability and dental. In disability, claims severity and an operational issue…

Thank you, Steve, and good morning. Today, I will cover our second quarter results, including a discussion of insurance margins, investment spreads, expenses and business highlights. I will then conclude with some comments on cash and capital. Operating earnings in the second quarter were $1.6 billion, essentially flat year-over-year, and operating earnings per share were $1.39, down 3% year-over-year. This quarter included 3 notable items. First, in Retail Life. We had a reserve adjustment to correct the treatment of the disability waiver rider in a number of term life contracts. This benefited operating earnings by $56 million after-tax or $0.05 per share. Second, in our P&C business. We had higher than budgeted catastrophe losses of $28 million after-tax, which was partially offset by favorable prior year reserve development of $7 million after-tax. Therefore, the net decrease to operating earnings was $21 million or $0.02 per share. Finally, pretax variable investment income was $342 million, reflecting higher bond prepayment fees. After taxes and the impact of DAC, variable investment income was $221 million, which was $11 million, or $0.01 per share, above the top end of our 2014 quarterly guidance range. Turning to our bottom line results. Second quarter net income was $1.3 billion, or $1.17 per share. Net income was $255 million below operating earnings in the quarter. Notable items that explain most of this difference are: number one, charges of $104 million after-tax, associated with asymmetrical accounting treatment for insurance contracts; number two, net investment losses of $81 million after-tax; number three, a loss of $62 million after-tax, related to certain variable annuity guarantees, where the hedge assets that are more sensitive to market fluctuations than the GAAP treatment for guarantee liabilities; and number four, partially offset by derivative net gains of $71 million, after-tax and other adjustments, which…

[Operator Instructions] Our first question will come from the line of Mr. Ryan Krueger of KBW. Ryan Krueger - Keefe, Bruyette, & Woods, Inc., Research Division: I wanted to touch on the group underwriting results. I think for a variety of reasons, they've been a bit soft for a few quarters now. Certainly, I heard your comments about looking to fix the claims management and disability. I guess, the question is that, at this point, do you still feel comfortable with the intermediate term outlook that you provided in December, which I think called for the midpoint of your underwriting target ranges? Or should we be revising that to be slightly weaker going forward?

Ryan, its Bill Wheeler. So we forecasted an improvement in underwriting results year-over-year, at '13 to '14, and we gave those guidance ranges for Group Life and Non-Medical Health. And my expect -- and obviously, Group Life this quarter reverted back to the middle of the guidance range. My expectation is that with Non-Medical Health, while it was at the top end and just above the top end of the guidance range of 77% to 82%, that it, too, will fall in the second half of the year and move back inside the guidance range. Will get all the way to the midpoint? I'm not sure yet, but I do expect the ratios to improve for the latter half of the year. Ryan Krueger - Keefe, Bruyette, & Woods, Inc., Research Division: Okay, great. And then, a few weeks ago, there were some proposed backstop capital requirements that were released for global insurance SIFIs, which I know doesn't have direct supervisory authority, but I would appreciate any reaction you had to those?

Ryan, this is Steve. I think those proposed rules are encouraging, they reflect the insurance business model and they dealt with the basic capital requirements that IAIS was proposing. And our hope is that, that approach is taken up as well in the United States, in terms of putting together an approach that provides the right kind of capital standards for insurance companies using an insurance framework, not a bank framework. However, I think we still caution people that there are other aspects to this kind of capital regime that is being -- which is evolving right now. And there are these higher loss absorbency standards that will apply for globally, systemically important insurers. And we haven't really seen a lot on that yet, so really more to come.

Our next question will come from the line of Mr. Nigel Dally of Morgan Stanley.

Just a question on Latin America. I understand you had the adverse mortality in Mexico a bit, but it seems like our results this quarter were mostly still under some pressure, so I'm hoping you can provide some additional data as to what's kind of driving that business.

Nigel, can you just speak a little more slowly, because it's breaking up on our side.

Sure, so a question on Latin America. I understand you had the adverse mortality in Mexico but still same slight results, even excluding that we're under some pressure. So hoping you can provide some details as to what's driving that? Is it a reflection of, say, more volatile markets, spending on growth initiatives? Any color there would be helpful.

Sure, Nigel. So a little color on Latin America in terms of the underperformance. So as John Hele mentioned, we had both relatively weak underwriting in our Mexican worksite marketing business. Now this is a business we've obviously been running for a long time, and it's actually very steady. But we do see some movement in volatility and mortality volatility. And we had a blip up this quarter. So that obviously was a big portion of the difference versus expectations. As I think, it was also mentioned, we had a -- just a group of, I would say, smaller onetime adjustments, things like a reinsurance true up, a litigation reserve. In total, they would have been something in the order of $10 million to $15 million after-tax in terms of results. So I think when you kind of reflect both of those variances in the quarter, you realize that otherwise Latin America had a relatively good quarter or a quarter of near expectations. And obviously, a part -- a big part of that is Provida, and Provida obviously is doing very well and had a very, I don't know if I would -- how unusual I would call it, but certainly a strong quarter with regard to encaje performance.

Great. Then just a question on long-term care. One of your peers saw a sharp increase in severity. Yes, I know that you actually had improvement in underwriting results from the previous year, but any shift that you're seeing with regards to severity trends, which potentially could emerge as a concern for your operations?

Nigel, could you repeat the last part of that question, please?

Sure. Any shifts in severity, that you're seeing in severity across your operations, which potentially could emerge as a concern?

This is John. According to long-term care, we've not seeing any major changes other than what we've been expecting, as we have seen an increase in earnings, and we are getting the rate increases that we had assumed generally that we had hope to get. We don't get it in every state, but it is according to our plans that we've laid out so far. And so it's really where we had expected it to be.

Our next question will come from Mr. Tom Gallagher of Crédit Suisse. Thomas G. Gallagher - Crédit Suisse AG, Research Division: First, just a quick question on the disability claims handling issue. Steve, you had mentioned that, you would expect that to be corrected by the end of the year. So does that imply that we're going to see margins overall and the group business remain on the soft side? Meaning, are we likely to see disability loss ratios remain high there, for the next couple of quarters here?

Tom, it's Bill. I do think disability results will improve, even in the third and fourth quarter. Again, they probably won't get back to our original expectation that we laid out last December, though we didn't, obviously, mention disability specifically, but there -- but I do think disability will probably improve in the third and the fourth, mainly because of some IBNR reserves we put up in the first and second quarter, and those won't recur in the third and fourth quarter. And so given everything else, that should be see some improvement our way. But I don't -- but I think it's right that we -- in terms of the operational issue and then its impact on our financials, you won't see an improvement, really, in probably until 2015. Thomas G. Gallagher - Crédit Suisse AG, Research Division: And Bill, how material were those IBNR reserves you've put up in 1Q and 2Q, for disability?

Well, they weren't -- they don't -- they only -- they explain a part of the variance in our disability performance. There -- I would say if you think of the 3 -- the other reasons that Steve laid out with regard to claims severity and also our operational issue, there -- that would be the third to the 3 reasons. Thomas G. Gallagher - Crédit Suisse AG, Research Division: Okay. And then just my follow-up is, on the corporate side, the loss this quarter was above the high end of guidance, if you just spread it out and looked at it on a quarterly basis. So I guess, for John, should we still take the initial guide that you put up in corporate and other to be a reasonable range? Meaning, are we likely to see the corporate other experience in the loss shrink meaningfully from current levels or can you -- any help with that?

Sure. So corporate's a very hard thing to forecast, obviously, and there is a lot of pieces in there. This quarter we said was above what we think is a normal run rate. We had some onetime expenses with various cost-saving programs. We had a tax booking in there that was more a timing issue. So what I said in my text was that if you take the -- this quarter, the 2013 and the first quarter, adjusted of for notable items, we talked about in the first quarter, that would be $156 million and just sort of average that, within that would be the more appropriate sort of run rate. Thomas G. Gallagher - Crédit Suisse AG, Research Division: Okay, that's helpful. And actually, if I could just sneak in one more for Bill Wheeler. The -- a competitor of yours reported exceptionally strong sales in their group business last night. Can you talk a little bit about what you're seeing on the sales front in the group business, whether its life insurance, disability or dental?

Yes, I would say that the environment is okay and it's constructive. I don't think it's -- I would not say it was very aggressive. Our sales levels in group have been good so far this season. And so -- and where we need to get renewal increases, we've been able to get them. So I think it's -- I would view the overall environment as pretty good.

Our next question will come from the line of Mr. Seth Weiss of Bank of America.

I wanted to just ask about Latin American sales, and I know that was a big one timer in terms of group contracts sold in and I believe in Mexico, but outside of that, could you give us a sense of how sales growth looked like in Latin America?

Sure, Seth. It's Bill again. So we obviously had very high reported sales growth, well north of 50%, or I think the number actually might have been close to 80% sales growth. But that was really driven by a very large government group contract in Mexico. If you just adjust for that and nothing else, then sales growth will look pretty flat. It increased 3% year-over-year. And so a couple of other data points I'd give you, because that's -- obviously, 3% is not our normal expectation, but we didn't try to kind of smooth sales for any other lumpy sales we might have had, either in this period or the year ago period. In the first quarter, for instance, we had sales growth year-over-year of 13%. And if you look at our revenue growth in Latin America year-over-year, it's obviously very good and even when you would take out things like Provida and adjust for currency, it's still double digit. And that's our expectation in terms of top line growth in Latin America, both sort of for sales and for revenues is that we would have double digit. And even though, this sales -- the quarter of this sales level was a little low, adjusted for the big contract, I think double digit is sort of the right level that we should get going forward.

We have a question from the line of Joanne Smith of Scotia Capital.

Yes, in terms of the corporate expenses, I just want to go back that for a minute. What are you doing in terms of regulatory and compliance spend and in terms of gearing up to potentially meet the challenges of being a nonbank SIFI?

Joanne, this is John. So within some of these numbers are some of our costs for this. Right now, of course, we're still in stage 3 with the FSOC and they've asked us for a lot of information. We've been providing that to them. But that's really the extent of it. We have a lot of planning underway, of course, if we are named, but it's still early days right now for us to really understand the true cost impact over time. We also have costs in there for FATCA and some other renew regulations that are taking effect right now as well. But so it's -- it is included, but as I said, the $213 million this quarter is above our normal -- our current running rate for this year.

John, have you looked at some of the spending at the banks to comply with the new capital regime? Because it seems to me that the expenses have been a lot higher than I think anybody had anticipated, and they continue to go up. So when you're doing your planning, have you taken that into consideration?

We're taking a wide range of thought into consideration. It is unclear as to how much regulatory burden it will be for insurers, compared to some banks. I mean, we're in different businesses. It's different, I think, for banks even if you're in retail versus wholesale, and it varies from bank to bank and from place to place. So it's still a learning experience, I think, for all insurers who are SIFIs or who maybe designated as SIFIs.

Okay. And then, I just wanted to go back to the disability issue real quick and just -- have you determined that there are any pricing or other underwriting changes that need to be made? I understand the claims issue, but is there a pricing issue as well?

Joanne, it -- I wouldn't say there's a pricing issue per say, but we're obviously, at this renewal season, where we have cases that are underwater and not performing at expectations. We're seeking renewals that will alleviate that issue. And I would just say, in general, we are being more aggressive about disability pricing this sale season than we have been in recent years.

Joanne, this is John. In our last call, we had -- I had mentioned that we were putting through selective price increases in the disability line.

Okay, but nothing beyond what you said in the last call?

That's right.

Yes.

The next question will come from the line of John Nadel of Sterne Agee. John M. Nadel - Sterne Agee & Leach Inc., Research Division: I just had a question. Gosh, I hate to beat up on corporate this much on your call, but if we're averaging the first half of the year, it looks like the full year is going to be at the upper end of your range in terms of loss. I just want to clarify, does that still include $160 million to $200 million of after-tax sort of onetime costs related to expense initiatives? Is that still your expectation for 2014?

Well, I would -- I think your calculations seem to be correct. It's within the range. It's why we gave a large range. Corporate and Other does vary from quarter-to-quarter, from year-to-year. And it is the total inclusive of all the expenses and information that we put into Corporate. So the answer is yes. John M. Nadel - Sterne Agee & Leach Inc., Research Division: Yes -- no, I just wanted to confirm that the $160 million to $200 million is still a good -- is still the reasonable number, in terms of those onetime costs?

Yes, it's in that ballpark, I mean, and it's within the total range of what we had said. John M. Nadel - Sterne Agee & Leach Inc., Research Division: Okay. And then, maybe a bigger picture question, coming back to the regulatory front. The Wall Street Journal ran an article, I think it was earlier this week, might have been late last week that discussed maybe a hangup as it relates to tailoring rules for insurance companies, that Dodd-Frank is essentially would prevent the use of ratings or rating agency ratings as a means of determining the risk associated with the fixed income holdings. I'm just curious whether you guys think that, that's a real issue. And if so, what kind of workaround that issue has been discussed with regulators?

John, it's Steve. Dodd-Frank does limit the use by the Fed of third party rating agencies. We do think that risk rating of assets is likely to be part of the model they use when they regulate insurance companies. And we think there will be some sort of a workaround. The banks have internal rating systems. The Basel Committee is looking now at harmonizing these kind of systems across the bank regulatory regimes. And I think there will be an evolution in this area that will occur over some period of time that will take into effect the risk weighting of assets. It will surprise me if regulators didn't take into effect, as they regulated entities for soundness and safety, the riskiness of the assets that they were holding. So I think there will be some way to address this issue that was raised in the article you noted. John M. Nadel - Sterne Agee & Leach Inc., Research Division: Okay. I mean, we did see during the financial crisis, PIMCO and BlackRock were used a third-party source for some of the asset backed securities. So that seems to me this can be worked around, too. And just a last quick one. I don't suppose there's anything to announce in the conference call, but there was speculation that FSOC was going to vote on Met either yesterday or today. Is there any update you can provide?

John, we don't know when FSOC will vote. They don't tell us that.

Our next question will come from the line of Suneet Kamath of UBS.

John, in your prepared remarks, I think you mentioned an earnings benefit from a true up of a lag. I think some of your operations were on a -- I don't know if it's a 1 month lag or whatever. So I'm just wondering if you can go through that again, and then also, are there any other significant operations that are still reported on a lag basis that might be trued up in the future?

Yes. So some of the businesses actually from ALICO are driven on a -- reporting on a lag, a 1 month lag there. It's small. It's immaterial for the whole group. We are working to move these through. And we have seen it here in EMEA, this quarter has a $5 million benefit, and we expect the benefit in the next few quarters as we take more countries in EMEA off the lag.

Okay, but there's nothing major in terms of regions that still on a lag that can be trued up?

These ones are small. So they're just -- it just flows through operating earnings, because it's immaterial to the whole company. The one remaining group that does -- or was still -- is still on a 1 month lag is Japan. We expect that would be off for 2016, but that will flow through the balance sheet, that change, because it's a large amount.

Okay, got it. And then, I think in your prepared remarks, also John, you'd mentioned that the impact from lower rates was smaller than what you would have expected in the first half of the year. Is that simply because variable investment income was better? Or what were some of the drivers behind that?

Well, I think our sensitivity, we published in the 10-K, was 2.5% flat for the year and rates weren't 2.5 on average in the first quarter. They were a little above that. And so it wasn't quite as bad as we had put in our sensitivity.

Okay. And have you changed your outlook for rates in the balance of the year? I think your original expectation was that the 10 year would be -- I forget what the number was -- but 3 something by the end of this year. Have you changed your thoughts around that?

It's Steve Goulart. You're right. I think our original plan was based on Bloomberg consensus at that time, which, I think, was 336 [ph] on the 10 year. Obviously, consensus has come down during the course of the year. And we sort of reflect that as we go through our projecting process. Our view has been that the consensus was probably a little bit more aggressive on rates rising than we thought would happen anyway. So I'd say that we've been operating as we expected for most of this year, and our outlook continues to reflect that.

Our next question will come from the line of Randy Binner of FBR Capital Markets. Randy Binner - FBR Capital Markets & Co., Research Division: I want to go back to the disability issue. I guess, I may have missed this, but the claims management operational issue that was referenced, could you expand on exactly what that operational issue was and kind of what can be done to turn it around? It sounded like from the commentary that things turnaround pretty quickly. So just trying to get some understanding of what that operational issue was.

Sure, Randy. So we manage group disability claims out of 4 locations. And there -- and in one of our offices, we've seen a real slip in, and I would see our claims management metrics. And we feel that this is operationally driven, not underwriting driven or anything else. And so what we've done is we've brought in our best claims management people in the company, change the managerial structure there. And I think we're just going to -- you're going to see a focus in terms of our procedures regarding claims management over the next 6 months. We -- it's a manageable issue, and our expectation is that it can be adjusted pretty quickly. Randy Binner - FBR Capital Markets & Co., Research Division: Okay. So nothing outside of just folks not following, I guess, the best procedures, so just kind of standard claim stuff, nothing outside of that?

Yes, that's right. Randy Binner - FBR Capital Markets & Co., Research Division: I wanted to try one on just on buyback real quick, if I can. I heard the equity units' commentary in the opening description and there's 1 billion authorization. I think that's ostensibly to kind of offset the dilution, but I mean, imagine that we continue to have regulatory uncertainty, which seems to be a good assumption, is -- can Met operate a buyback program kind of beyond just offsetting equity unit dilution? I mean, this is capital management in the form of buyback something that can be explored, assuming there's continued regulatory uncertainty?

Randy, as you know, we were cautious and remain cautious in terms of capital management, because of the uncertainty. And we give -- the reasoning behind the program we have currently, the $1 billion, which we think is a modest program, because of the delay in both the ruling around designation in MetLife potentially as a nonbank SIFI and also seeing a draft of the rules. And at this point, we really can't say much more because we, again, have not seen the rules. We've not been designated as of yet. And until we have more information, it's been difficult for us to answer that question. I will simply say that as I noted in my prepared remarks, returning capital to shareholders is a high priority for us. We had to do that consistent with the regulatory environment in which we find ourselves. And as we learn more about that, we'll have more to say.

Our next question will come from the line of Sean Dargan of Macquarie.

I had a question about the Japan sales outlook and the impact of the pricing increases?

The Japan sales increase in what?

I'm sorry, the outlook for Japan sales, was there a reference to the impact of a pricing increase in the prepared remarks?

Yes, there was. And this is Chris Townsend for Asia. So the reference that John made was just in repricing of our yen life-based products, which was -- the actions were taken at the backend of last year, and that will drag through this year in terms of the sales impact going forward. So what you're seeing there is that sales for Asia are down about 12%. We've had pretty good growth in non-Japan Asia, particularly, areas like China, which is up about 30%. But in Japan itself, the actions we've taken have been not only of the pricing, but we've also changed some of the commissions to make sure that the behaviors we want are representative in terms of long-term persistency of relationship with our clients. So as the life sales are impacted because of that repricing, there is an impact, obviously, in terms of the package and what you've spoken about before. But going forward, what you'll see, and this will be about September time of this year, we will relaunch one of the yen-based life products, which will be more competitive and will be very much in the acceptable return area and also a range of A&H products and medical products, which will help the competitiveness and help some of the features and benefits. So sales will drag through third quarter, they will -- but they'll rebound by the end of the year and give us a good fast start into 2015.

And then, just a question about EMEA. Has there been any noticeable impact from the conflict in Ukraine and Russia?

Sean, this is Michel Khalaf. So we have seen a drop in sales in Russia. That's primarily due to the slowdown in the economy. And that's reflective of the fact that our overall growth for the region is below the level that we expect it to be at. So we are obviously -- and we have a diverse business in Russia and multiple channels and multiple product lines. We are seeing an impact and -- but we're also able to adjust our expense structure. So as long as the impact is short term, it is not impacting our bottom line in Russia. We are obviously monitoring the situation very closely.

And our next question will come from the line of Chris Giovanni of Goldman Sachs.

PFC earlier talked about suggestions or proposals they're making on pension reform in Chile. I'm wondering what your views are and what you're communicating to regulators on that topic?

Chris, it's Bill Wheeler. So we're engaged in a very big -- along with Principal and the other members of the industry down there, we're engaged in a big dialogue with the Chilean government. They've convened, I guess, I'd call it a blue ribbon panel of experts, both Chileans and from then the rest of the world, to study issues regarding the pension system there, which has really been a success, but they're looking for ways to make it better. And do things like improved coverage and making sure that all members of Chilean society participate and things like that. And so this blue ribbon panel is in the middle of -- they're holding hearings. We've recently testified before the panel, giving our opinion about what should happen. And what we think is -- it works and needs to improve. And I think Principal did too, as well as other members of the industry, they're going to release a report in the fall sort of with sort of observations. And then in January, the expectation is that they will then release the report with recommendations, which will form the basis of what the government might do in terms of making changes to the pension system. So I think it's a thoughtful process, and I think the Bachelet government, based on the discussions we've had with them are, they want to make sure that the pension system continues to be successful, but they at the same time, want to make sure that there are improvements. I would not call this the Bachelet government's highest priority in terms of what they want to get through legislatively. They have a number of other agenda items they want to work on. So I don't -- this isn't a centerpiece of what they're focused on, but it's -- that's the process that's going on.

Okay. And then for Steve, when you were a bank holding company, you obviously were subject to stress testing and bank capital ratio metrics. I know, at the time, you disagreed a bit in terms of where your internal ratios maybe came out versus the Fed. But I'm wondering if you still update those estimates and if so, how those bank ratios have maybe changed over the past few years?

Well, this is John. We have our own internal stress testing system that we run from a government's point of view. We used to have to provide this information when we were governed under the New York Fed, when we had a bank. We don't have a bank anymore. We don't provide anything to them. Basel I calculations don't make any sense for an insurance company, and nor that Basel I is even used anymore. So we have our own internal system, but we've not done things that are in sort of a bank sense for the Basel III. And we don't know what the capital rules will be, that the Federal Reserve will be introducing, nor when they might introduce them. So we will have to wait and see when they come up with something. Obviously, if we become a SIFI, we will start to do those calculations and see how all that works out, but it's still too -- way too early to understand what's going on there.

Okay. We are just about 9:00. So thank you for your participation and have a good day.

Ladies and gentlemen, today's conference call will be available for replay from today at 10:00 a.m. Eastern time until August 7, midnight of that day. You may access that conference by dialing 1 (800) 475-6701 and entering the access code of 314847. If you're dialing in from an international location, please dial (320) 365-3844 and please use the same access code, 314847. That does conclude our conference call for today. On behalf of today's panel, I'd like to thank you for your participation in today's conference call, and thank you for using AT&T. Have a wonderful day, you may now disconnect.