Good afternoon, ladies and gentlemen. My name is Inagaki with Dai-ichi Life Holdings. Thank you very much for joining us at our 2018 Analyst Day by taking time out of a very busy schedule. This was already explained, so let me move on to the second page. My message is simple, only two points. First, since April this year, we have started CONNECT 2020, a new medium-term plan. It's been around four months, including the profit plan toward achieving the announced targets, we have been on track. The Australian TAL acquired Suncorp, and as was announced before, we came to a conclusion and with respect to the performance, it's very difficult to compare this year with the previous year, but we are on track. We should be able to achieve a 5%-7% growth, and there's no change to the strategy.
We're going to achieve both profit growth and return to the shareholders. This is page three. It's a rather busy slide, but toward the achievement of CONNECT 2020, we are taking various measures smoothly. In the first quarter, domestically, we have focused on multi-brand, multi-channel strategy that helped us record 47% annual growth in new series premiums compared with last year. We have launched a new product suite just from Dai-ichi Life. Dai-ichi Frontier Life continued to sell foreign currency-denominated insurance products, and NeoFirst Life launched business owners insurance. The sales results exceeded our forecasts as we launched products addressing multiple needs of our customers, and as we connected various sales channels within the group to the corresponding products within the group.
Dai-ichi Life Holdings entered into a business alliance with Rakuten Life, and Dai-ichi Life acquired Alpha Consulting to help connect us with new distribution channels, customer domains, and business partners. In overseas life insurance, Protective Life concluded the acquisition of insurance policy blocks from Liberty Life in May. This acquisition started positively contributing to results from the second quarter of this fiscal year. In the asset management business, Dai-ichi Life Holdings now holds more than 15% of interest in Janus Henderson, who are an equity account for the company from the second quarter. We did not include it in this slide, but Janus Henderson now manages general accounts or separate accounts of the insurance companies of the group, generating group synergies. Further development has occurred on the domestic front, connecting Dai-ichi with local communities.
Business alliance with prefecture governments include nursing care for senior citizens, promotion of women in the workplace, support for childcare, and promotion of health exams. Please turn to the next page.
We already have come to the final agreements of this and acquired Suncorp Life by TAL, and it was about AUD 640 million price tag, also including AUD 725 million, including Suncorp Life's dividend payment to Suncorp Group. Although the acquisition is financed with group internal capital and also with the holding company offer capital support, we have confirmed that the effectiveness of the investments and over the higher rates. That's why, the holding company have decided to support for this, the capital support. Next page, please. This is the business performance of the 1st quarter results on track and on the consolidated net income, with the merger of Janus Henderson. Now we have about JPY 23.2 billion of this is the profit we based the removal from this quarter.
Now improving, without this, we think that the business performance was steady. Particularly for Dai-ichi Life have could successfully deal with this, the increasing of the interest rates, we have just re-combinations and the replacements of the debts, that's why for when I look at that, there's the fundamental profits. We have so far attributed that to 77%. It's been progress very well. We have just to stay the same on the guidance. Next page, please. All in all, in now the 1st year of very 1st quarter and very 1st year of this midterm business plan have been very steady. Again, that in this midterm business plan, I like to just domestic and go into the multi-plan, the multi-channels, we like to seek for the goals of the enforced policies.
At the same times, we like to put emphasis on those for the profit growth and that overseas operations. That's why I would like to have in aiming at a growth of 5%-7%, I would like to achieve the JPY 250 billion in 2020. I'd like to have the 8% of that average growth for in terms of the profits. That's why we like to achieve that, the CAGR of the 5%-7% of the growth into 2020. Next page, please. This is also, again, when it comes to the shareholder returns, in this, the current, the new midterm business plan, totally, we like to have the return ratio of the total over 40%, including the dividends and share buyback. That's all my message. Thank you very much.
From now on, I'd like to move on to that Director Mr. Maeda. Mr. Maeda is going to talk about the governance. Mr. Maeda historically have taken the responsibility in NTT Group, he has a good expertise on the global company governance and operations. Based on his expertise, Mr. Maeda is going to make very precious comments in the board of directors meeting. In this, the midterm business plan and CONNECT 2020, Mr. Maeda have aggressively engaged in formulating the strategy. Mr. Maeda is going to talk about the governance after this onward. Please.
Good afternoon, ladies and gentlemen. As was introduced by Mr. Inagaki, my name is Maeda. I have been serving on the board of independent director of Dai-ichi Life Holdings since 2016 when the holding company was established. In fact, this is the first time that I make a presentation in this kind of a setting. There might be some oversight, but please ask me questions later on. My biodata was briefly explained. I was with NTT Group. I was president of NTT Finance at the end. I was responsible for financing of NTT Group overall. Internet expanded and propagated in the East Japan, the optical fiber expansion, how the people in the entire Japan should be able to use it. I have been in the telecommunications industry for 40 years. Of course, I have some experience in global business.
Based on that, well, this, of course, industry is completely different from insurance industry. At the beginning, when it comes to the jargon of insurance business and the accounting and also other things perplexed me a little bit. Perhaps looking at this industry from a different perspective would be a need for Dai-ichi Life Group. NTT Group, as you know, in 1985 from NTT Public Corporation, it was listed, and I think you remember that everybody became shareholders. It became a corporation and the NTT Group's shares, the retail investors bought many of them. In 1997, the Antimonopoly Act was revised, and now in Japan, we are allowed to have holding companies. Early on in 1999, there was a reorganization of NTT. In that process, the NTT became a group with a holding company.
Docomo, the East Japan, NTT Data, all these companies became under the umbrella of holding. Against this backdrop, when it comes to group management, group governance, and also, in other respects, as we did global operations as a group, of course, I have had failures and successes. From that perspective, I think I can make my humble contribution, and that's why I became a member of the board of this company. In light of this, well, I was in a non-life insurance field, but I may have a different perspective. I have been participating in the discussion of the company from that vantage point. Next page. With respect to the governance structure of Dai-ichi Life Holdings, well, as is mentioned in the integrated report, Dai-ichi Life Group has 15 members on the board.
Of this, there are six independent directors, three in the board and three are in the audit board. As you know, Dai-ichi Life Holdings is a company that has the ASC, the Audit and Supervisory Committee. We also have a Nomination Advisory Committee and Remuneration Advisory Committee. We have established a Nomination Advisory Committee and Remuneration Advisory Committee. Ms. Inoue, a female professor of Hitotsubashi University, joined us this year, and we have two women and one from abroad. I think it's a well-balanced structure that we have in place. Particularly as experts, we have the certified public accountants and also lawyers and people from the investment bank who are familiar with finance. I think the company is well balanced in management. Next page, please.
Now, apart from details, I would like to say, when it comes to Dai-ichi Life Group, as was mentioned by Mr. Inagaki, we have CONNECT 2020, a new medium-term management plan that was announced in March. I think this is very important. Usually when this kind of a plan is announced externally, including independent directors, the actual process is rather difficult to understand. An announcement is made all of a sudden. In the case of this company, one year ago, for the last year, when it comes to important points, important junctures, the independent directors were involved in discussions. As you see here, in 2010, Dai-ichi Life became a listed company. It was a mutual company for more than 100 years, and it decided to change its structure. I was not involved in this process, but there was a pang of birth.
This was a major decision that was made, and looking toward the future, it demutualized itself, and in 2016 it became a holding company. It adopted a holding company structure. Later on, Tower of Australia and Protective of the U.S., we're going to hear presentation from representatives of these countries. Globalization and grouping of companies, these are going to be very important pillars for the management for the future. From Dai-ichi Life, the company decided to establish a group, and so it demutualized at an early stage. This year, that was the previous midterm plan. We now have a new midterm plan. This is the first midterm plan after we became a holding company, and so we are at a very important juncture.
Against this backdrop, this new concept was externally announced under the management of Mr. Inagaki and the modality of the new structure. Not just management, but I would like to establish a common culture and set common targets as we move forward. We regard this as very important. Next page, please. Now, this explains the process of the medium-term plan. Something is established, and that is authorized in the board of directors and was externally announced. Now, we're spending more than a year, including the independent directors, external directors. I talked about recognition of business environment, the current situation where a company finds itself. As a holding company, how should we move forward with group management? Not just independent companies, all the employees need to have a common understanding.
As we formulated the mid to long-term business, the policy was resolved and released at the end of the day. As independent directors, we thought that this is a very meticulous company when it comes to doing these things. We had very intensive discussions, and when we had to say no, we said no, and we said yes to things that were good. On a case-by-case basis, we had very intensive discussions, including myself. When it comes to the establishment of a medium-term business plan, this was the process that was pursued. Basically, as a life insurer, the meaning of being a holding company, that has to be discussed further. I think that was the starting point. Now that we are a corporation, and we have to have understanding of stakeholders, and we need basic support and assistance from stakeholders.
Sustainable growth needs to be achieved in this industry. To this end, what needs to be done? This is the starting point. Domestically, Dai-ichi Life is a good performing company. Great achievements have been made. The population is declining. The birthrate is declining. Japan is a mature market now. There are many policyholders. We have a lot of assets under management. We have to grow as we have an understanding of shareholders. That's the kind of growth model that we have to establish. We have to be careful. We have to be bold as we move ahead. That's the starting point. Against this background, as a holding company, we have to manage risk. We have to redistribute assets and where we should deploy our human resources appropriately.
Not just the management, but in many ways, including the officers. We play the catch as we deepened our discussion. I explained this process. Next page, please.
And w hen it comes to CONNECT 2020, this midterm business plan, this is really well-structured and well-organized vision, I think. I want all of you to look at and please evaluate. I think it is a very good midterm business plan. When it comes to the CONNECT 2020, I think that now we have just first working on the target number. Not only simply achieving the numerical target, but at the same time, what's more important is that we need to evaluate the process to achieve the targets, including the risk management, so that we can have a really good trust from the shareholders. When it comes to the ERM, which can be realizable ERM, has to be in the setup for achieving this midterm business plan. After this onward, we need to just put emphasis on group synergy.
If we use the connect in CONNECT 2020, that has a lot of meanings and a lot of significance. When it comes to group management, we need to have one of the integrations as the group and integrating management. Also when it comes to business process and know-hows, we can share it and integrate that experience and skills. At the same time, what's more important is that after this, we have the presentation from the CEOs from TAL and Protective. As a group, as a Dai-ichi Life Group, we need to build up the culture that has to be confined and shared in the CONNECT 2020. This is the first we have to do.
After that, we need to go down to the details for the business process. If we cannot unify the culture of the corporate cultures, it will be very difficult for us to actually achieve that ideal target. In the sense that, first of all, instilling and building up and instilling a culture, corporate culture, I think not only for the domestic but also for the overseas companies, we need to distribute and instill the basic ideas and the concept of this CONNECT 2020 so that we can build up the growth models. Board of directors and also directors, they need to check out and monitor the process of realizations. In the sense that we can see that this group synergy is a very important idea, but including not only the group synergy of the natural business process, but also for this corporate culture.
The next. It is Dai-ichi Life Innovation Lab is described here, and it is called the FinTech in the financial industry. InsurTech or insurance technologies. Including the robotics or a lot of the new technologies available so that the Dai-ichi Life Group also should introduce and deploy a lot of these new technologies. We need to just deal with this opportunity with the new technology so that this is the Dai-ichi Life Innovation Lab is working on that. Some of you have observed its activity. We need to change the whole of the systems of their efforts. Also as an outside director, I would like to also check out the progress of the efforts to deal with these new technologies who are making challenge to do something new or risk taking, not only for simply achieving that numbers and the target.
The other thing is that this is the proper PMI is described here. Acquisition of Suncorp was already mentioned by the President, but Suncorp is an Australian company, and it will be explained in the next presentation. Not only we've acquired, but also based on this business alliance with Suncorp, for example, the products of the Dai-ichi Life Group or TAL will be sold over the channels of Suncorp based on the 20 years of the long-term agreement. Here comes the importance of how we can follow up on after the acquisitions and process and merger process. Also we need to just watch and monitor. For this business practice based on the merger will take roots. We know that Suncorp or TAL have that kind of good business performance and track record.
Anyway, we needed to evaluate accurately the result of the merger and acquisitions. The M&A as a whole. We need to check out the alliance of this M&A activities, and it would be in well alliance with the targets and achievements for the CONNECT 2020. The next bullet is talking about the utilization of group human resources. Because Dai-ichi Life Group is a very huge group and have acquired a lot of companies. Still, when it comes to global resources, it is still lacking a substantial number of global resources. That's why we need to deal with it. There are many companies. Some opportunities for networking and exchanging.
All these are internal resources, and so that we can come up with the challenges for each of these companies, organizations, and although that the business process is different. We'd like to merge our efforts for securing the global talent acquisitions and also the training. That's why we need to make our widely and efforts to train and acquire and train these global resources. I think that's now, Dai-ichi Life is very aggressive in this aspect or so that in promoting these efforts, and I think this is the global talent is also a very important aspect. That's we'd like to also have further discussions about this resource. Last of all, just briefly, and this is about the support function for the outside directors.
I mentioned earlier that I don't have so much expertise in the insurance business before I become the outside director. We need some prior briefing of important board agenda. It will be discussed there in a board of directors meeting. So far they have followed the process. Also when you look at the actual business floors, that a lot of advisors are working on, that a lot of this business fails. Actually, the outside directors did not have all those field activities. We try to have them more first-hand experience of the business operations. When it comes to the overseas life insurance business, and particularly in Singapore, and Singapore will become the core office for this region. Australian, the Panin and Ocean Life, Thailand, Indonesia, India.
The top of the management of these three companies make visits to Japan, and we can have a very good meeting for exchanging informations and also challenges and pains. Also, after this onward, we can provide good advice or inputs to these as the stakeholders of these companies. Some of you just wonder about the business performance of all these overseas subsidiaries or any affiliated companies. Anyway, I'd like to also go further to deal with these overseas operations. In summary, I think that the roles of the independent outside directors is how to qualify myself further. After this onward, and I'd like to make my utmost to support that life insurance because now that Dai-ichi have come up with and studied the new midterm business plan.
Dai-ichi have become that incorporated and demutualize it and incorporate it, and also a holding company based companies. A very earlier than the other insurance in Japan. I think that for these challenging efforts and what they're going to deal with, that's all the other business challenges or the issues is very important. In order to just go further, including to the overseas operation, what kind of direction we should take is the big issues. Particularly this is the discussion have been made and including all of the stakeholders, not only for ourselves, but also for the investors and the other stakeholders. Anyway, we have to be ready, and we have to do our utmost that this sustainable growth can be steadily continue and grow so that the team of the outside independent directors to support as much as possible.
It's a very short period of time, I just talk about how that the new midterm business plan that have been formulated. That's all my presentations, thank you very much for your attention. Thank you.
Good afternoon. Thank you today for the opportunity to speak about the Australian life insurance market and about TAL. The life insurance market in Australia is approximately AUD 17 billion in terms of enforced premium. Life insurance provides benefits for financial protection in the event of death, disability, and critical illness. The savings market in Australia is unusual in a global context. The main form of non-bank savings is compulsory superannuation, that is savings for retirement. As I will discuss later, this is an important point because a significant amount of life insurance is funded through compulsory superannuation savings. Penetration of life insurance is very high, 90%+ , due to the group insurance within Australia's superannuation system.
However, the life insurance gap remains an issue underpinned by low consumer engagement. We are currently experiencing a period of significant regulatory and political scrutiny with change across all segments of the industry. This includes structural change as the industry consolidates following a number of mergers and acquisitions. As a result, the outlook for growth across the industry is subdued, some segments, such as superannuation, are likely to contract in the short term. There are two key themes currently in the Australian market. We are undergoing the most significant reform agenda for the past decade. Consumers and regulators globally are expecting higher standards from financial services companies and Australia is no different. Regulation came into force at the beginning of this year, which limits the maximum amount of commission payable to IFAs.
There is a three-year transition, by 2020, maximum commissions for individual business will be substantially lower, higher standards of education will apply for financial advisors. The life insurance industry also has a new code of practice, which sets significantly higher standards for life insurers. A similar code has been implemented for life insurance in superannuation. There is a Royal Commission into the financial services sector underway, whose scope includes life insurance and superannuation. The commissioner is expected to provide a final report by February next year. Any recommendations will be then considered by the government. Earlier this year, the government announced changes to the superannuation industry as part of the annual budget process, which have implications for life insurance in superannuation. Finally, one of the Australian regulators, ASIC, has released a report into direct insurance, which will have implications for this business model.
More generally, we are seeing a greater demand by customers to have more control over their insurance. This trend has been increasing for some time, we expect it to continue. Consumers want more information made available to be better informed and to have more choice. This environment is presenting substantial challenges for the industry, TAL is not immune. Our market position and partnership model has positioned us to embrace the opportunities these changes present. The Australian market has four core channels for life insurance. The retail market is an intermediated channel. Independent financial advisors or IFAs operate independently of the manufacturer and provide advice to customers. The direct channel covers a multitude of ways in which manufacturers sell directly to customers. The group market represents a more wholesale insurance arrangement, providing cover through superannuation schemes. The group channel is almost completely funded from superannuation savings.
All four channels have an element of premiums being funded from superannuation. Increasingly, we are seeing customers interacting across multiple channels. Insurers are expected to be able to accommodate this when responding to customers, capabilities across the channels are converging. The sector is currently undergoing M&A activity, which is at a level not seen for over two decades. This period of disruption and change will impact and reset the market for decades to come. At the center of this activity is the exit of three of the four major banks from the manufacture of life insurance. National Australia Bank exited with the sale of 80% of MLC to Nippon. CBA has announced the sale of CommInsure, its life insurance business to AIA. ANZ has announced the sale of its life insurance business, OnePath, to Zurich. Zurich also acquired Macquarie Life in 2016.
Both Zurich and AIA were already in the Australian market, this represents significant consolidation. We announced on the 9th of August that TAL will acquire the life insurance business of Suncorp. Earlier this week, we signed binding agreements, we are expected to complete around the end of this year, subject to regulatory approvals. The transaction will create a platform for the expansion of TAL's distribution footprint with a 20-year strategic alliance agreement for the sale of life insurance products through Suncorp's distribution network. I'll talk further about this transaction later in the presentation. The activity over the past two years will disrupt the market in the short term as these transactions complete. Longer term, the market will comprise a small number of large players. TAL will be one of these companies. I'll now talk a little bit about TAL specifically, who we are and our strategy.
TAL protects the lives of over four million customers in Australia. In the last year, we paid out over AUD 1.6 billion in claims, in doing so, helped over 25,000 customers when they needed us most. Of all our key performance indicators, this statistic shows that we are helping families. Currently, we have the largest market share in terms of life insurance protection market, we are number one in individual new business sales. We are also a business which works closely with partners. This includes approximately 5,300 advisors, 10 core superannuation partners, and four core strategic alliance partners. As we continue to grow, we will help even more families. We take this responsibility very seriously. We want TAL's reputation to be one of compassion and fairness. We want our customers to trust us and to be confident that we will be there when they need us.
This slide summarizes our strategy and who we are. Our ambition at TAL is that our customers understand and value the protection they have and are confident we will be there when they need us most. Every day, we work to help Australians live a life filled with choices, options, and freedoms, no matter what happens. This ambition and purpose is what drives our people, and we believe this is very consistent and aligned with the culture and history of Dai-ichi Life. This commonality, I believe, has been significant in enabling TAL to become part of the group and to contribute. We have organized our business around five strategic priorities, which enable us to remain focused on what matters. At TAL, it is also about how we do things. Our attitudes and behaviors, in other words, our culture, is a huge component of building trust with customers and partners.
This chart shows the individual market sales in Australia over the last five years. Total market sales have fallen by 30% over the five-year period. This has been in all channels, although less so in retail and direct. During this time, TAL was able to increase market share for sales of individual business from 11% - 16%. This is all before the acquisition of Suncorp Life. Retail remains the largest part of the market and also has the lowest barriers to entry. Competition for market share in retail has increased, and new companies continue to enter the market. The contraction in sales is one of the drivers to market consolidation. Life insurers are looking to be able to operate at higher scale, further reducing unit costs. This reduction is used to maintain margin as prices become increasingly competitive.
It also allows investment in key areas such as digital capability for customers and partners. These charts show the in-force premium and rolling 12 months new sales as at 31st of March this year. It shows TAL as being in the number one position for both. Aggregate market data shows a 9% contraction of the Australian individual risk market. Retail has contracted by 11% over the prior year. Given the challenging market conditions, we are pleased that TAL continues to be number one for individual sales. The key point here, however, is the benefit of our diversification across the contestable channels. While not number one in every channel, our position across retail, direct, and group enables us to diversify some of the volatility related to the cycles in different channels.
TAL continues to be the market leader in terms of individual sales and overall market share at this point in time. However, the competitive landscape is changing with M&A activity, and it will redefine this picture. I will talk more about this in a moment. The agreement for TAL to acquire Suncorp Life is now binding, subject to regulatory approvals. The transaction will create a platform for the expansion of TAL's distribution footprint with a 20-year strategic alliance agreement for the sale of life insurance product through Suncorp's distribution network. Completion of the transaction is anticipated either at the end of this year or possibly early into next year. There are a number of reasons why this transaction is significant to TAL's strategy. The Australian life insurance market is currently experiencing a once in a generation change.
The competitive landscape is transforming. This period will redefine the key industry players and competitive dynamics for the future. The market will be dominated by large, well-funded, multinational life insurance specialists. The combined TAL and Suncorp business creates significant scale and synergy opportunities. Suncorp materially increases TAL's size, business diversity, and customer reach. We'll be able to extract synergies and operating costs and make larger investments in technology. Suncorp Life is an ideal fit for TAL in terms of price and size. It is largely an individual business of AUD 800 million in API, which will increase TAL's scale of direct to customer relationships. The acquisition will better balance us between group and individual business and provide improved protection and diversification against future regulatory change in the group market. The 20-year strategic alliance agreement provides a new and material distribution opportunity.
Suncorp adds to TAL's proven strategic alliance distribution capabilities. It is primarily a direct and digital opportunity with further potential for sales through retail and the bank channel. Further, each of these channels will also provide an additional customer base for TAL's future expanded product strategy, which I'll talk about shortly. We expect it will take TAL to a number one position in the direct market for new life insurance sales as we are partnering with Australia's second largest general insurer with eight million customers. TAL and Suncorp have agreed that the separation and integration of the existing life insurance business will occur over a two to three-year period. Both parties have entered into a transitional services agreement to ensure the transfer occurs appropriately and that it is risk managed.
In parallel, TAL will be working with Suncorp from day one to begin launching propositions into the key brands on this slide. The acquisition and partnership will improve TAL's financials over the medium term, adding to all our key metrics, including net profit after tax. During the first two to three years, as we transition, we will incur costs in respect of separation and integration, which will be recognized and hence will reduce the combined profit of the two businesses. Longer term, however, we will see full financial benefits emerge, both in terms of the profits on the existing in-force business and also through increased sales. The Australian market will soon be dominated by a small number of multinationals. These significant transactions and capital flows will transform competitive dynamics in Australia as new entrants go for growth.
The CBA process is now complete and was announced in September last year. AIA will acquire CommInsure in Australia and the Sovereign business in New Zealand for AUD 3.8 billion. Completion is expected to be this year. The ANZ process is also now complete, being announced in December last year. Zurich Life will acquire ANZ's life assets for AUD 2.9 billion. Completion is expected to be this year. As the various transactions complete, the market positions will change. Based on the current data, we expect that TAL is likely to maintain the number one position. Following the completion of the CBA deal, AIA will be number two, and following the completion of the ANZ deal, Zurich will be number three, replacing Nippon MLC, who will be number four. Based on the chart above, these four companies represent 70% of the market.
This Suncorp acquisition and partnership consolidates TAL's position as a leader in the Australian market. I now want to turn to our group business for a moment. As I mentioned earlier, the savings market in Australia is unusual in the global context. The main form of non-bank savings is compulsory superannuation, that is, saving for retirement. Life insurance is provided on a default basis as part of superannuation. Most Australians access life insurance through the superannuation system. This system of providing insurance is probably one of the most efficient globally. Customers in this system generally receive, say, 80%-85% of their premium back in terms of benefits. This compares favorably to individual business, where generally less than 50% is returned to customers as benefit payments. TAL is a market leader and provides life insurance to four of the top 10 superannuation funds.
This position provides a long-term sustainable base for TAL. The market segment is, however, facing challenges. The 2018 Australian Federal Budget provisions are expected to dramatically change the industry, significantly reducing the size of the market. This will accelerate consolidation in the industry. Short term, the reduction of insurance cover and superannuation will impact TAL. Given our scale and capability, we are well-positioned, however, to take an increased share as the market size reduces and funds consolidate. Overall, the growth outlook for the segment is modest. AustralianSuper is our largest group insurance partner and is also the largest superannuation fund in Australia, with over AUD 120 billion in funds under management and 2 million members. I am pleased to say that we've entered into an agreement with AustralianSuper for a further 10 years beyond the current agreement, extending this relationship to 2030.
Opportunities also exist to extend the partnership with funds to other product lines. Most importantly, these new propositions can be launched at scale from day one. TAL has been investing in digital capability and ways to innovate over a number of years. CoverBuilder was launched in 2016 and provided a new digital proposition to enable self-directed customers to make informed choices and buy retail-grade cover. This was launched direct to customers under the TAL brand. We have further utilized that technology across our channels with our partners. For example, last year, we launched our partnership with Qantas Assure, which created a leading digital customer experience that rewards healthy and active customers. We've been working with artificial intelligence. As part of the sales experience, we launched a chatbot last year, which enabled out-of-hours service in terms of quote comparison.
We've also applied this technology to our claims process, helping our claimants return to health through Cora, an independent chatbot exclusive to TAL. We've also applied machine learning to our underwriting process. TAL developed WunderWriter, which provides automated quality assurance of all underwriting cases in our direct channel. Finally, we've begun the rollout of our claims app. This will provide transparency and simplicity to the claims process for our group customers. An important part of our growth strategy is investment in our digital capabilities. We are towards the end of a significant first phase investment in our retail business, which will transform our digital capability for advisors in the retail market across the advisor digital interface through dynamic pricing capabilities and also workflow tracking. The TAL Adviser Centre will be launched this year and will provide an intuitive, user-driven design that validates and reviews transactions in real time.
In group, we are seeing 40,000 members per annum now increase their insurance cover. We are continuing to invest in our digital interface for members so they can seamlessly and easily adjust their insurance cover. This is both to the benefit of the customer and for our partners to manage the insurance offering. Our scale allows us to invest substantially, and this capability makes it increasingly difficult for smaller competitors and new entrants to provide a comparable offering. Our goal is also to make available other products to these members outside of their superannuation funds. This provides yet another avenue for growth. Finally, I'd like to update you on our product strategy. TAL is moving to position itself with a customer proposition built around four key customer life cycle events. Life insurance is at the core of our business today.
The strength of TAL is our diversified distribution across retail, direct, and group. We are continuing to innovate our core life insurance proposition. This includes a more targeted product suite with products ranging from preferred to impaired lives. We are also continuing to expand our propositions and have been focusing on three key areas as I talked about last year, leveraging our diversified channel strength and scale. These are health, retirement incomes, and education. Firstly, health. There is a strong synergy between life and health insurance from a customer perspective, and we are developing a more integrated life and health proposition. This will be in two forms. First, a TAL health proposition, which we will pilot in the coming months. The second is a trauma product, which can be attached to health insurance. Secondly, Australia has an aging population.
Over the next decade, there will be a substantial number of Australians entering retirement. We've been working with our partners to explore how we can provide longevity protection in the context of an overall retirement package, which provides more certainty for customers while retaining flexibility. Development is on hold. However, we do expect that as demand increases in the medium term, we will be ready and poised to enter this market. Finally, we are developing a proposition for families to meet and protect the education opportunities for their children, our education product will be launched next year. TAL has positioned itself as protecting people, not things. We believe these opportunities extend our core purpose and build on our current market position, capabilities, and partner relationships.
Thank you for this opportunity to speak to you about TAL, the strength of our current position in the market, and our areas for growth.
This is my agenda for today. I would like to cover an overview of Protective. I would like to also give you an overview of our 2017 financial results and also discuss briefly our 2018 priorities. First, an overview of Protective, but before I get into that, I wanted to give you a current update on the U.S. life insurance market. Insurers have been recently, in the last several years, adapting to the low interest rate environment in the U.S., and the industry has been adjusting product designs and business strategies to account for this. The industry had adverse mortality in the first quarter of this year, and that has affected many insurers' first quarter profitability in a negative way.
We believe this is temporary in the industry, and we do see this from time to time where we will have a severe flu season in the first quarter, and then over the remaining quarters of the year, we'll get back to around 100% of what our claims expectation would be. The greater economic stability has supported top-line growth. GDP growth and rising employment levels are expected to fuel demand for life and annuity premiums and products. We are seeing strong capitalization in the insurance industry today. The stronger equity markets have boosted profitability for many of the insurers in the market, boosting capital levels. Also, there's been a focus on technology and innovation. Many companies are investing in technology like advanced underwriting and predictive analytics. Also, the industry is focusing on improving the customer experience.
The consumers in the U.S. today want a customer experience very similar to that provided by Amazon and other non-insurance companies. Basically, the bar has been raised on life insurers in the U.S. to improve their customer service, and this is an area of focus and investment. The graph shows that the U.S. individual life market is a slow growth market with annualized premium compound annual growth of only 1.6% over the past 40 years. This slow growth is despite the fact that there is a continued and growing need for life insurance and protection products in the United States. Now I'm going to give you a brief overview of Protective. Protective Life was founded in 1907 and is based in Birmingham, Alabama. We're a solid competitor in the U.S. life insurance industry, and we have a national footprint.
Protective acquires customers via retail through the life marketing, annuities, and asset protection segments, and via wholesale through acquisition segment by acquiring blocks of policies through reinsurance or through acquiring whole companies. You can see that we had 8.3 million policies and contracts in force as of the end of 2017, and our life insurance in force was $862 billion. We had just short of 2,800 employees at the end of last year, and we've done 56 acquisitions in the company's history, and 49 of those have been life and annuity transactions, with about seven in the asset protection segment where we've made small investments. Just in terms of talking about the Protective business today, we are financially strong. Culture and values drive us. We believe that we are very prudent at risk management. We have a global parent that is very supportive of our growth strategy.
Our business and workforce are growing as a result of some of the acquisitions that we've been able to accomplish. We are gaining a better understanding of our end customer. We are well-positioned to capitalize on opportunities in our industry. This chart demonstrates the strong diversification of Protective's business across segments and product lines. This diversification allows us to deploy capital efficiently across multiple distribution channels, as you can see here. I will discuss each segment later in the presentation. We believe our business mix is an advantage for the company. If you look at the pie chart in the middle, this is our GAAP basis earnings on a pre-tax adjusted operating income basis for all of our segments. It was $643 million last year.
You can see the life marketing segment and acquisitions, which is predominantly a mortality-based business in these segments, represents 47% of our earnings as of last year. This is protection or mortality-based. If you look at the left side of the pie chart, 49% of the business, including annuities and stable value, come from deposit businesses, which are predominantly spread-based businesses with some market risk in our variable annuities that are included in there. Asset protection is relatively small at 4%. On the right-hand side, the pie chart shows our statutory basis earnings in a similar picture in terms of the breakdown and diversity of earnings across products and segments. This sound diversification reduces overall risk and provides steady growth and returns. We use realistic planning assumptions in our forecast and in our pricing. We have a preference for stable insurance risk.
We believe that Protective's distinctive business model allows us to allocate capital rationally between retail growth and acquisition opportunities. The retail lines provide a relatively stable earning stream. Acquisitions periodically enhance earnings growth and create scale. This increased scale benefits our retail lines and also future acquisitions by reducing our overall unit cost. We involve our retail business line leaders in acquisition reviews. This allows us to benefit from their knowledge and experience of the products and distribution channels for the acquisitions that we review. We call this our virtuous cycle. Protective's acquisition strategy has remained consistent over the years. We primarily focus on life properties. This is not our exclusive focus. We prefer in-force runoff mortality blocks. These are typically very stable seasoned liabilities. We have really no interest in long-term care or legacy variable annuity blocks with guaranteed benefits.
We do some selected annuity acquisition opportunities. Usually, these are part of a broader mortality-focused transaction. We do sometimes pick up new opportunities in retail channels, markets, product lines, or distribution technology. A good example of that is our recent Liberty Mutual reinsurance transaction, where it gave us access to sell our products through their captive agent channel. I'll talk more about that in a few minutes. We have done some very small investments in our asset protection division, where we mainly market vehicle service contracts. This is to increase our scale and also to give us some new capabilities from time to time. We do have a very rigorous due diligence and pricing discipline. We really focus on understanding the downside risk of any transaction as we review the cash flows and the risk in that business.
We want to generate risk-adjusted returns to meet or exceed hurdle rates. We do prefer simpler structures without complex financial engineering. Our target size currently is in the $ 500 million- $ 1 billion+ range in terms of invested capital. What we have found is even a smaller deal takes the same amount of work as a larger deal, so we want to kind of target it so it is meaningful to our cash flows and our earnings. Protective is a leader in acquiring blocks of life and annuity policies. We have a lot of institutional knowledge in the company around valuation, due diligence, negotiation, and integration. We have the ability to execute innovative deal structures that's been represented in the past. We have a strong reputation for closing the deal.
We have good relationships with our regulators that allows that to happen. We really have high-quality post-close servicing and integration skills, which is very important to a seller. When an organization is selling a block of non-core business, that business, through reinsurance, stays on their direct company. So they want to make sure that the company that is taking on that risk is going to service their policyholders in a quality manner, and we've had a proven track record of being able to do that. Protective has been delivering growth in a very low growth environment that I talked about earlier in the life business. These are some annual growth rates since 2009 across various items. U.S. population has grown less than 1% during this time period. U.S. GDP has been around 2%, and life sales during these past few years has been around 2% or 3%.
Protective has been able to grow our assets on a compound annual growth rate of around 8.1% during this time period. This growth was achieved by growing our retail life and annuity business and acquiring blocks of life and annuity policies via reinsurance and through company acquisitions during this period. I want us to talk briefly about our 2017 results. First, I will talk about the total company financial results on a GAAP basis. In 2017, we had after-tax adjusted operating income of $1.153 billion. This was favorable to plan by $803 million. We did experience a one-time tax benefit of a net of $767 million due to tax reform, and this was primarily related to the true-up of our deferred tax liability for the change in tax rate going from 35% - 21%.
We'll also see better earnings going forward as a result of having a lower effective tax rate. After-tax operating income before tax reform was $386 million, and this was favorable to our plan by $36 million. We saw very favorable net investment income and spread last year. This was partially offset by a little bit of unfavorable mortality. Our net income was $1.1 billion, and that was favorable to plan almost $800 million. You see a chart there that shows our segments, actual for 2016, 2017, and plan. I am going to cover each segment in the next few slides. First, starting with life marketing. In this segment, we market fixed universal life, indexed UL, VUL, bank-owned life insurance, and a level premium term insurance product on a national basis. These products are marketed primarily through broker general agents, where we have a very good reputation in this marketplace.
We've had very strong sales in 2017. These have been up about 10% over the past two years. We have been focusing on emerging analytics and digital platforms. This has helped us in our affinity and direct channel, where last year we achieved about $9 million in premium in this new area. We did release a new underwriting platform in 2017. This is where we basically developed a predictive model that provides express underwriting for some policies meeting certain risk criteria. This new process improves the customer experience and lowers cost to place a policy for Protective. We had $51 million of pre-tax operating income in this segment last year. That's up from $40 million from the prior year. Moving on to annuities. We've been shifting our emphasis to fixed and indexed products. This shift has continued into 2018.
We believe that this has improved our risk profile versus just selling variable annuities. Sales results were up year over year despite some regulatory uncertainty around a Department of Labor fiduciary rule change that really slowed down sales because of disruption in our distribution channel. We've been able to recover from that, and we're seeing nice sales results in 2017, and also going into 2018. We've had a concerted effort to expand our distribution footprint. We have a renewed and expanded captive P&C agent relationship with Allstate. Their agents are now selling a fixed indexed annuity product to their customers with very good results so far this year. We've expanded our bank fixed annuity sales in Chase Bank. Also just the recent increase in interest rates in the U.S. have caused positive results to occur in our fixed indexed annuities and fixed annuities.
You can see that our sales in 2017 were about $1.6 billion. That's up 18% from the previous year. We had $213 million of earnings on a pre-tax adjusted operating basis. That was $29 million favorable to our plan. We did see very strong equity markets in the U.S. in 2017, and that lifted our variable annuity fee income. Moving on to stable value. This is where we sell fixed and floating rate funding agreements directly to institutional investors. We also market guaranteed investment contracts to 401 and other qualified retirement plans. We've really used this opportunistically to complement our ALM and product cash flows. Our 2017 results were $105 million of pre-tax earnings. This was $58 million favorable to our plan. We saw very strong participating mortgage loan income.
Our funding agreement-backed note program, which we really started back up at the end of 2015, has seen very good growth. That contributed to our variance to plan. Also we saw very favorable adjusted spreads. If you look at the middle part of that chart, you can see that our ending balance ended at about $4.7 billion, and about $3.3 billion of that ending balance came from the funding agreement-backed note program, which we've been able to grow the last couple of years. Moving on to asset protection. We're one of the top providers of extended service contracts on automobiles, recreational vehicles, watercraft, and powersports in the market. We basically sell through a national network of auto dealers and these other marine dealerships. We have successfully integrated an acquisition that we completed at the end of 2016.
It was about $130 million of capital that we deployed, and this was the purchase of U.S. Warranty . We had very favorable service contract loss ratios in 2017, and this is really where the majority of our earnings in this segment are derived. Our GAP Plus business had some higher loss ratios, and we did cancel a couple of fairly large accounts in 2017, so we'll see better results on that going forward. You can see that our sales increased to $584 million in 2017. 98 million of this growth was from the acquisition of U.S. Warranty . having a full year of sales in the business. Also our earnings improved about $8 million - $24 million in 2017. This was really a result of the U.S. Warranty acquisition. Moving to acquisitions, we talked about earlier that in this segment, we acquire and service policies obtained from other companies.
In our company's history, we've had 56 total acquisition transactions, and 49 of those have been life and annuity transactions that are reported in this segment. We have a very disciplined and proven methodology. We were very active at the end of 2017, working with Liberty Mutual on this transaction that we closed in May of this year, and I'll talk more about that in a few minutes. We have seen a very active M&A pipeline in the U.S. as companies are looking at their blocks of business and deciding to divest of non-core lines, and also freeing up capital to redeploy in other areas of the world. If you look at the pre-tax adjusted operating income, it was $250 million.
That was a little bit lower than planned, mainly due to some unfavorable mortality in a couple of our blocks, but this was partially offset by very strong investment income results. We would typically expect to see a little bit of a decline in earnings, absent a new acquisition being added in, of about 4%-6% per year in this segment. We are very successful, as you can see in our history, of adding these additional acquisitions as we kind of move forward in time. The pie chart to the right on this chart shows the contribution to 2017 pre-tax adjusted operating income for the various blocks. We did do a transaction with Genworth where we reinsured some term insurance, and that represented 21% of our earnings last year. This was closed in January of 2016. In addition, the MONY acquisition continues to do extremely well.
It produced about half of our earnings in this segment. This is a closed block of business that we bought in October of 2013 and has been a great acquisition for us and has had very stable earnings and cash flows. You can see the remaining blocks represented about 31% of our earnings in this segment. Now, I'll talk just a minute about the Liberty Mutual transaction. As I said, we signed this in January of 2018, and we closed it back in May. We got a couple of months of earnings during the second quarter as a result of the transaction. This is a deal that we worked with Liberty Mutual Group on and Lincoln National.
Lincoln National bought a legal entity from Liberty Mutual, their interest in this was taking on the group business, then Protective reinsured the life and annuity business out of that entity. Protective also acquired about 250 employees as part of the transaction. Most of these people are in Dover, New Hampshire. We have an 18-month transition period where we'll be moving everything onto our systems and onto our platform as we normally do in an acquisition. We had an opportunity to pick up an opportunity to sell new business in the P&C captive agent channel. Liberty Mutual had a bank channel that didn't really overlap with our existing bank channel, where they were selling a single premium whole life product and annuities, SPDA product in their bank channel. We're also going to keep that channel going.
We do expect these two channels will boost our life and annuity sales by approximately 10%-15% in 2019 when we start writing this business on our paper. Just some summary metrics for the transaction. As I said, we did reinsure this business, we transferred $13.3 billion reserves through this reinsurance transaction. This is about a $1.2 billion estimated investment at the closing. This has been the largest acquisition in Protective's history as measured by invested capital. You can see in the pie chart, this is a pretty diverse set of liabilities. About 59% of the liabilities are annuities. A large part of that is structured settlement. Then 41% are life liabilities. You can see the product mix is well diversified, we do expect very stable cash flows from this block. This has been a very high-quality acquisition for Protective.
We do expect predictable and steady cash flows. We had really good experience that we could go back and look at because this is sort of a closed block that we could look at the experience data from which to price this. We believe that the capital regenerates fairly quick over about a nine-year period where we recover our investment. The assets are well matched to the liability, there's very little reinvestment risk, the asset quality was very good and very similar to Protective's. We do expect strong GAAP and STAT income on this deal. This was a very seasoned, stable block of business. It well aligns with Protective's acquisition strategy, it's really in our acquisition sweet spot.
It does diversify Protective's business mix with a little bit more of the annuities and the structured settlements, it lowers our earnings volatility and broadens our capacity to support growth. It also helps to increase the economies of scale by lowering our unit cost as we bring these additional policies onto our platform. We did not need any financing as a result of this transaction. This is all well within Protective's available capital when we close the deal. Now I'll just speak briefly about our 2018 priorities so we can achieve our business plan. First, we continue to focus on investing in talent and culture. As the world is changing rapidly, we need to really focus on continuous learning and promoting that within our organization. We also need to acquire some new skills and help people learn new skills, particularly in the area of data analytics.
We've had to bring on some new positions like data scientists to help us with some of the automated underwriting and data analytics tasks that we have in front of us. We want really more versatility from our workforce. We're moving people around a little bit more so that they can get more exposure. In terms of customer experience, I told you that in the U.S., the bar has been raised as it should be. We have been working to evolve and meet the end consumer and distributor expectations and making some investments in the area of customer service. Obviously, acquisition integration is a key priority for us in terms of integrating Liberty Mutual acquisition to achieve the expected results.
We're trying to move quickly during this transition period of 18 months so that we can set the team up for the next transaction when it does come. In terms of focused experimentation and building capabilities, we're really trying to find ways to optimize and expand our current business and evolve our business for the long-term success. We've had a very concerted effort on growing our annuities. We told you a little bit about some disruption that occurred as a result of the DOL rule a couple of years ago. We're rebuilding our annuity sales, that's going quite well. We focused our effort to expand our distribution footprint. We want to attain scale as a leader in guaranteed income and asset protection solutions for retirement.
With all the baby boomers that are retiring over the next several years, we think that is a fantastic opportunity for the company to grow this segment. We've also been leveraging digital technology in areas like risk management, where it's a very data-driven business to understand customers and what their preferences are. Customer analytics, we've experimented with some health and wellness offerings. We'll continue to invest in risk-based analytics to improve our underwriting and risk selection. In terms of customer experience, we are making some small investments in omni-channel communication tools and service support platforms, things like web chat, co-browsing, customer guides. This has really helped us, especially in the affinity distribution channel, which is still very small, but it's helped us reach the customer online a little bit more efficiently.
We've talked about this before, but we do sell a term life insurance product to Costco customers online. Some of these technologies are helping us succeed there. We continue to focus on efficient operations, that's just part of our business. Some of the new technology is helping us in this area. We've developed an easy app platform, the accelerated underwriting I talked a little bit about. We've implemented e-signature, we now have an online claim portal. We have a number of RPA projects underway to try to use that technology to help us become more efficient. To wrap up here on Protective, our focus really is on several things here. Continuing to have healthy retail sales momentum in our chosen market and product segments. We think that we have the ability to leverage our distinctive M&A franchise.
We're developing new capabilities to support growth and improve the customer experience. We do have a very focused workforce that's very engaged, and we do have a track record of delivering earnings growth and have a positive outlook for the remainder of 2018. We have a very strong balance sheet. Our asset quality is very strong. We have a low-risk product portfolio with disciplined asset liability management. Protective's financial strength is very robust. We've got very good capital ratios, a low debt to capital ratio with very strong coverage metrics, and excellent liquidity. Last but not least, we have a very strong parent in Dai-ichi. With that, I will stop, and we'll take some questions.