It's a pleasure to have Jay Wintrob here. He is the President and CEO of SunAmerica Financial Group. He's actually been with the original SunAmerica since 1987. In looking through his bio, he's starting an investment. He's probably spent every capacity of investing, retirement savings, protection that you can imagine in the life business. Then prior to that, he practiced law following graduation from UC Berkeley undergrad as well as the law school over there. I consider Jay to be one of the brightest, most thoughtful guys in the life industry. I think it'll be very interesting to hear what he says because SunAmerica Financial Group, just in terms of domestic life and retirement, is bigger than any of the companies that are publicly traded. Jay, it's a pleasure to have you here.
Thanks very much, Andrew. It's great to be back. Last time I was here was 2006, as many of you have heard, a few things have happened at our company since then. I'm pleased to be here to share with you the incredible comeback story that is AIG, and in particular, our life and retirement savings businesses we call SunAmerica Financial Group. First, got to put on the screen the traditional cautionary statement. I was trying to figure out how could I get anybody to pay attention to the cautionary statement. I was thinking, I'm fortunate today, for the first time since I've been working, that my son Gordon is here. He's a student in Boston.
I was thinking the cautionary statement is going to be part of my book on parenting that I'm going to write because if you just change the letters AIG to either the letters D-A-D, dad, or M-O-M, mom, the cautionary statement makes perfect sense. Let me give you some examples. It is possible that dad's actual results and financial condition will differ, possibly materially, from the results and financial condition indicated in these projections. Mom is not under any obligation to update or alter any projections, goals, or assumptions, whether written or oral, that may be made from time to time. If you just think about every time you see one of these statements, you put in mom or dad, that's what it's all about. I'm as bothered this year as I've always been, Andrew, when you've invited me about the name of your conference.
I'm editing it as usual because it is actually very easy in our business to gather assets. Easiest thing you can possibly do. Buy money, pay more than everybody else for the same amount of money. The problem is you take on liabilities, the trick is how do you do it profitably? Especially with historically low interest rates and high market volatility, the emphasis on profitability is more relevant today than ever. I am here to talk today about the opportunities we see at SunAmerica Financial Group to profitably gather assets and how we've approached that. With all the great news continuing to come out of AIG over the last few weeks, I thought you might be interested in just a few highlights of AIG's progress. AIG's insurance businesses, Chartis, SunAmerica Financial Group, and United Guaranty, really represent a world-class insurance franchise.
Chartis, of course, is the world's leading P&C and general insurance organization, serving 97% of the Fortune 1000 companies globally. United Guaranty, our mortgage insurance business, became the market leader in U.S. mortgage insurance in 2011 and modified mortgages to help keep nearly 40,000 people in their homes. Last but not least, SunAmerica Financial Group, really a leader in the U.S. life and retirement savings business. Despite a historic number and the historic severity of natural catastrophes in 2011, Japan earthquake and tsunami, the Thailand flooding, Hurricane Irene coming up the East Coast, just to name a few, our core insurance businesses last year produced $4.3 billion in operating income.
More importantly, we have a very high degree of confidence that we can continue to earn money into the future, and that was a critical element of our decision to release just last quarter, $17.7 billion of the deferred tax asset valuation allowance that was on our balance sheet. We've also been very proactive in our capital management. Two weeks ago, we repurchased $3 billion of AIG stock at a price of $29 per share. That was about half of what the government sold, and that price represents just over 50% of our 2011 year-end book value. Our sale of non-core assets, such as the recent sale of part of our AIA holdings, is really facilitating these future capital management efforts.
With this sale, we reached an agreement with the Treasury to fully repay the Treasury's $8.5 billion that remained in preferred equity investment in what we call the AIA SPV. The proceeds for the repayment include about $5.4 billion we raised with our AIA stock sale, at about $1.6 billion we've received from the Federal Reserve in connection with their sale and closing out of the ML2, Maiden Lane II, securities, and approximately $1.5 billion from a $2 billion debt offering that we completed just earlier this week. With our strong capital base and earnings power, we are on a clear path to continued value creation.
At this point in time, the Treasury's common stock ownership position in AIG has been reduced to about 70% from about 92% in January of 2011, and that was because of the $6 billion sale that went on two weeks ago profitably. 2011 was a year of tremendous success and a number of events for AIG. I wanted to summarize those. We kicked off the year by completing our recapitalization, the big recapitalization, and that included two key factors. We repaid the Federal Reserve Bank of New York in full on the loan they extended to AIG in the fall of 2008, and we did that three years ahead of schedule. That facility was supposed to be outstanding through 2015. Might have been 2014.
We also restructured the Treasury's ownership in our company by exchanging all of their preferred and all the interest they took, both from the TARP money that was advanced and also from the original loan, and converted that into 92% of the common equity of AIG, giving them a clear exit path. That's the stake that's now down to 70%. In addition, we completed the divestitures of our Japan-based life insurers, AIG Star and AIG Edison, as well as our Taiwan-based life insurer, Nan Shan. We also successfully sold the securities we received from MetLife at the end of 2010 when we sold Alico to MetLife. From all those transactions and the repayment to the Federal Reserve and the proceeds from the divestitures, as well as some other items, 2011 was a year in which AIG repaid the U.S. government over $45 billion.
We also took a number of actions last year to strengthen our liquidity. We replaced our existing credit facilities with a new $4.5 billion revolver on much more favorable terms. We also demonstrated our ability to continually access the capital markets. In May, along with the Treasury, we re-IPO'd the company and completed an $8.7 billion equity offering of our common stock. That was the first sale that took the government's ownership from 92% to 77%. We also raised capital at competitive rates in the public debt markets last year. We also completed a successful debt for hybrid securities exchange in the amount of $2.4 billion. Again, we began our share buyback program. Our core businesses were reinvigorated in 2011, reflecting good underlying fundamental growth and performance. Operating income from the core insurance businesses increased 30% in 2011 from $3.3 billion-$4.3 billion.
Very importantly, we redeployed almost $20 billion of cash and short-term assets that we started the year with. We had built that up at the end of 2010 when we thought we were going to be purchasing the ML2 assets from the government. When that turned out to not be the case, we redeployed those assets in a more appropriate longer duration securities at higher yields that matched our liabilities. We also were successful in buying some of the non-agency RMBS sold by the government in the ML2 auctions, as well as some of the same kind of paper that we started to see from banks at the time the government announced the ML2 transaction.
Enhanced capital management is one of our core focus areas at AIG, and I think we're very well positioned to succeed in achieving our goal of redeploying $25 billion-$30 billion of capital between now and the end of 2015. Our non-core assets include the remaining stake in AIA, about 19%, that has a market value at current prices of a little over $7.8 billion. Our aircraft leasing business, ILFC, which we have on our books at $7.5 billion and for which we filed an S-1, and our interest in Maiden Lane III that has a book value of $5.7 billion. Between that and dividends, as you can see, that's what we're counting on to generate the $25 billion-$30 billion of deployable capital through 2015. The bar chart on this slide shows in 2010 and 2011, quarterly distributions from our core insurance businesses to AIG.
If you add up the 2011 numbers, it's $3 billion, about a billion and a half from each of Chartis and SunAmerica Financial Group. This will be increasing to an expected level of $4 billion-$5 billion annually between now and 2015. On the right, you can see that we've maintained our investment-grade ratings throughout our recapitalization activities and after the government support obligations were fully extinguished. Today, our financial strength ratings for Chartis and SunAmerica insurance companies are sufficiently competitive. Due to the progress we've made at AIG and in the core insurance businesses, all of our ratings now have a stable outlook. Before focusing on SunAmerica Financial Group, there's one point I'd like to make clear about AIG, and that is today, as I stand here, AIG is no longer in debt to the U.S. government.
We have fully paid back all the monies once owed to the government. The Treasury does own 70% of our common stock, which they can continue to monetize. They've been an absolutely terrific partner for us, and we're going to continue to work closely with them to assist in their exiting their position at a profit to the American taxpayer. We've repaid the Federal Reserve Bank in full, as well as the Alico SPV. The AIA SPV is now being wound down with the sale of the AIA stock. The securities in Maiden Lane II, of course, have all been sold at a profit by the Federal Reserve Bank, and we've received about $1.6 billion in proceeds. The Federal Reserve Bank still has a non-recourse loan outstanding related to Maiden Lane III of $9.3 billion.
That loan is collateralized by assets with a current value well over twice that amount. Based on some of the speculation you and I have both been reading in the paper, it seems quite apparent there's a lot of interest in those ML3 assets. In the dark days of 2008, I think virtually nobody believed that we'd be standing here today as I am, as a profitable company with a very strong capital position and no longer in debt to the U.S. government. Shockingly, some of our friendly competitors were telling our clients, or their hoped-for clients, that our demise was a certainty. As Yogi Berra likes to say, "It ain't over till it's over." Friends, I'm here to tell you it's far from over at AIG. In many ways, we're really just back at the starting gate at the beginning.
The crisis is well behind us, and especially at SunAmerica, we've really rededicated ourselves to our mission, which is to help Americans meet the increasing challenges of achieving financial and retirement security. For us at SAFG, it's all about achieving profitable growth. As Andrew mentioned, we're one of the largest life insurance organizations in the U.S. We serve about 18 million customers. We've been a longstanding market leader with a 160-year history in this business. We know what our customers want, their hopes, their fears, their aspirations, and I think we have the scale and the breadth of product knowledge to deliver impactful solutions across a range of markets. Our extensive multi-channel distribution organization is really key for us, and it spans both affiliated or career distribution as well as non-affiliated or independent distribution.
Just like AIG, our own financial profile is strong, stable, and balanced, which is obviously an absolute requirement in our business where we're making long-term promises and guarantees. I do think we have the best people in this business. They are experienced, they are results oriented, they are leaders, and I think the market saw the value of the longstanding relationships so many of our team has with our distribution partner firms and with individual producers over the last three and a half years. On this slide, you can see our insurance company brands and our leadership positions across a range of product lines. American General is our life brand. It is a leading provider of term and universal life, as well as offering specialty products such as structured settlements, terminal funding agreements, COLI, BOLI, et cetera. American General serves a little over 13 million customers.
It has an expansive network of independent and career distribution, independent marketing organizations, a career agency force that serves the middle market under our AGLA brand name, and also a direct-to-consumer platform called Matrix Direct. As of year-end, American General ranked fifth in term life sales and fourth in structured settlements. VALIC is our group defined contribution business. It sells group variable and fixed annuities and group funds to teachers and employees of higher education, healthcare, and not-for-profit organizations. VALIC markets its products through a strong national career organization and financial advisors that are comprising a growing independent channel. Over the last years, VALIC has been very successful in capturing more and more rollover deposits as teachers and other customers retire and transition defined contribution dollars to the IRA market.
VALIC ranks number 2 in the K12, kindergarten through 12th grade market in assets, and number 3 in overall 403 assets. Western National is the leading seller of fixed annuities in the U.S. with a distribution focus of banks, thrifts, credit unions, where it has been the number 1 distributor for 16 consecutive years. Western's low cost, high quality, and flexible service capabilities based in Amarillo, Texas, allow us to successfully partner with banks and offer them the flexibility to determine their own crediting rate, guaranteed minimum rates, surrender charges, and commission mix, all while maintaining our target levels of profitability. The ability to trade off commission for higher crediting rates has been an especially attractive feature for banks in this low interest rate environment. Finally, SunAmerica Retirement Markets is our provider of individual variable annuities and comprehensive retirement income solutions.
We market our products there through national, regional, and independent broker dealers and banks. Following reinstatements by all of our preexisting distributors prior to 2008 and the addition of a couple of new firms, as well as some competitive product enhancements and increased wholesaler activity and growth in our wholesaling force, we now rank number 8 in non-captive variable annuity sales. If you add all of this up, SunAmerica Financial Group's rankings are number 4 in total annuity sales, number 1 in fixed annuity sales, and number 6 in variable annuity sales in the U.S. One of the things that makes SunAmerica unique is the breadth of our product portfolio. It is comprehensive. It is highly diversified. We offer solutions for customers of all age groups, income levels, and needs. The product portfolio spans both the individual and the group marketplace.
I think that having a broad-based portfolio is really important for two reasons. First, it does allow us to stay relevant and have an impact throughout our customers' lives, which change. Second, the broad product portfolio allows us to compete in the markets we choose and to react as we see fit to changing market conditions and competitor behavior. In other words, we are not dependent on just one or two product lines and forced to sell those lines regardless of competitive conditions. We have as broad a footprint in terms of distribution as I think you can have in the U.S. Our products are sold by over 300,000 affiliated and non-affiliated distributors and producers. Affiliated distribution provides us with a consistent, dependable source of ongoing sales, and our non-affiliated independent channels really present us with some excellent opportunities for growth.
Back in 2009, early 2009, sales of our products were either suspended or de-emphasized by a number of our distribution partners due to the challenges we had at AIG and the rating agencies. That included some of our banks, our broker-dealers, and our independent marketing organizations. During that challenging time, our affiliated distribution partners, VALIC, AGLA, the Advisor Group, really helped us weather the storm, and these affiliated relationships will continue to be a cornerstone of growth and expansion going forward. It consists of approximately 1,300 career financial advisors at VALIC that serve the defined contribution and the rollover market. A little over 3,000 career life agents at AGLA that focus on serving the broad middle market, and about 4,600 independent financial advisors that have affiliated with one of our 3 Advisor Group independent broker-dealers.
Finally, Matrix Direct, our industry-leading direct-to-consumer life distributor that advertises on radio, TV, and online under the Matrix Direct brand, has also recently completed a successful pilot using the AIG Direct brand in terms of lead generation and sell-through. Over the last few years, we've actually spent a lot of time re-engaging with our independent distribution partners and adding new ones. Most of those partners reinstated our sales by the second half of 2009, and by the third quarter of last year, we'd been reinstated in all of the key distributors that we had lost in 2008 and early 2009. The strong sales momentum I'll show you for 2011 really reflects the great progress we made in strengthening and re-engaging with third-party distribution.
Those channels include, again, banks, thrifts, credit unions, the independent marketing organizations and brokerage general agencies that sell our life product, the national, regional, and independent broker-dealers, as well as benefit consultants and structured settlement brokers. We've also, over the last several years, successfully added independent channels both at VALIC and at AGLA, where traditionally those products had been exclusively distributed through career agents and advisors. Those channels, quite frankly, are gaining tremendous momentum. Let's see. Great. Our premiums, deposits, and other considerations, otherwise known as PDOC, increased 25% in 2011 versus 2010. I think that's really the demonstration of our success in re-engaging distribution. Equally gratifying was that we saw double-digit sales across all the product lines. They were balanced. Variable annuities were up 55%, fixed up 50%, group retirement sales up 16%, retail life up 14%, and retail funds up 75%.
One thing I wanted to mention is that fixed annuity sales, which were very strong in the first half of 2011, basically a $2 billion run rate for each of the first two quarters, declined sharply in the second half of the year, that decline continues into 2012. The reason being quite simply the big decline in rates that took place during the third quarter of 2011 and persisted through the end of the year. We still retain our number one market share, but that industry has contracted as the rates we can offer consumers oftentimes start with a one or a low two, as opposed to some higher rate offered. More important than just the top line for us is net flows. That would be sales minus surrenders and all of our benefit payments. They were strong and positive in each quarter of 2011.
As you can see on the slide here, over the last three years, net flows have improved dramatically from a negative $6.9 billion in 2009 to a positive $2.9 billion last year. I think that those net flows really reflect the growing consumer confidence and continued confidence in our brands, American General, AGLA, U.S. Life, VALIC, Western National, SunAmerica, and AIG. In terms of income, our operating income in 2011 was $3.3 billion out of AIG's $4.3 billion total operating income and was reasonably balanced again among our businesses. Our strategy is to grow while maintaining a sensible balance of mortality-based, spread-based, and fee-based in-force reserves and new product sales. I mentioned our strong, stable financial profile. A couple of numbers. We ended 2011 with over $257 billion in assets.
We distributed a billion and a half dollars to AIG, but even after those distributions, we had over $35 billion in GAAP shareholders' equity, including about $4.4 billion of OCI. Our insurance companies had total adjusted stat capital, which is basically stat capital plus the asset valuation or AVR reserve of over $20 billion and a combined risk-based capital ratio of 520% at year-end. I want to talk for a second about one of the challenges for our industry and thus for our company, which is sustained low interest rates. We've been very proactive in addressing this challenge. Beginning actually as far back as 2005, we've been refiling our product forms in certain states to reduce the guaranteed minimum interest rate, otherwise known as the GMIR, as the states permitted by their state insurance laws, including using the NAIC Index GMIR model.
Not only were we reducing the guaranteed minimums contractually, we were actually then lowering the guaranteed minimums as part of our normal pricing activities on a product-by-product and contract repricing basis. We are very active, much more so than many of our competitors, in our product pricing, particularly new and renewal crediting rates. We're very market sensitive. We review new money rates for fixed annuities and the fixed account or variable products weekly. We've suspended sales of some of our products due to our inability to meet our pricing objectives, even with today's low 1% guaranteed minimum interest rates. We've reduced or eliminated compensation on certain high GMIR business, including on subsequent deposits, and we've also had multiple repricings of some of our life products in 2011 because we there also have to reflect the current low interest rate environment.
Given our current new money rates, our disciplined approach to pricing, and active managing of crediting rates, renewal rates, we are expecting an impact on our pre-tax operating earnings of basically 0 in 2012 with 0 to $10 million. If low rates persist, $65 million-$80 million in 2013. We don't see any change in our statutory capital. I also wanted to say there's a small footnote you can't see here that this whole analysis was done when 10-year treasuries were at 1.86%. That's the assumption through the 2-year period. Obviously, rates have moved higher since that was done, which is helpful, although spreads have contracted. A lot of that's still about where we are on total rate. It is still a very low rate environment on an absolute basis, and that does present challenge for the businesses.
We really think there are some incredibly strong macro factors that are driving demand for traditional life insurance and protection products, and for retirement savings investment income products. I think we have in our industry, and at SunAmerica, probably the best opportunity I've seen since I've been doing this in my career, the opportunity to profitably grow. A couple of stats on that. Today, the market for retirement savings assets, just the qualified market, so IRAs, DC plans, DB plans, is a $16 trillion market, and it's slated to grow at about $1 trillion a year, per year through 2015. Fueling all of this is obviously the enormous and underserved need in the U.S. life and retirement savings market. Our view is that there is clearly a longevity crisis bubbling up in the United States.
The number of people who are older, living longer, and in need of more retirement assets, and more importantly, more guaranteed retirement income, is growing quite rapidly. This demographic fact of life is going to continue for at least the next 2 to 3 decades. Adding urgency to the challenge is that our social safety nets, defined benefit pensions, Social Security, Medicare, and the like are all seriously fraying and likely to go through substantial reform over time. After an unrelenting decade of 0 growth in the stock market and persistently high unemployment, more and more Americans are finding themselves approaching retirement age with basically little or no savings. 50% of Americans aged 50-64, that's the prime pre-retirement period, have 16 months or less of savings, yet they can expect to live another 10, 20, or 30 years.
In addition to the shortage of retirement savings, tens of millions of people in the U.S. have absolutely no form of basic mortality protection, life insurance. In fact, it's the lowest period ever for life insurance ownership. Roughly 4 in 10 Americans don't even have a simple term policy. Roughly 35 million people, it's estimated, are either totally without insurance, life insurance, or are underinsured. Last summer, we republished a study we called the SunAmerica Retirement Reset Study, which was actually a redo of a study we had done 10 years earlier, where we tried to understand the expectations of Americans preparing for retirement, their purpose, their timing, and how they plan to fund their retirement. As I mentioned, this was a follow-up to a similar study 10 years ago. Here's what we found out. Retirees now are planning to retire at age 69.
10 years ago, they said they planned to retire at age 64. Obviously, due to what's happened to them financially in the last 10 years, and I'd like to think a greater understanding of their own longevity and their needs. Further, in addition to needing to save money and generate income for their own retirement, more and more people now expect to provide intergenerational support for family members.
In kind of an odd twist on childcare, where the children would take care of the parents as they aged, you now have 70% of those people who expect to provide intergenerational support saying they need to provide that for their adult children, adult children who don't have the same home equity that they may have built up, who don't have any defined benefit pension that they may have had, and who are looking into the hole, if you will, of what's likely to be for them in terms of Medicare and Social Security. A greater need to save. We also weren't surprised, given all of this, to understand the changing view of investment preferences and risk tolerance over the last decade.
In the SunAmerica Retirement Reset Study, financial peace of mind, those words, achieving financial peace of mind, was determined to be the key goal and was ranked as the key goal six times more than people rating accumulating wealth as their key goal. Also now protecting assets is deemed five times more important than finding investments that could earn a higher return but also carry a higher degree of risk. Respondents more and more said that their ideal investment qualities were guarantees not to lose value and to protect income from market loss. We ask people over and over again what they're concerned about. The number one concern was becoming a burden on their families. Finally, more and more respondents did say they're working with professional financial advisors.
When we asked the question 10 years ago, 40% of the respondents said they had a professional advisor. This time it was 49%, which is a pretty big percentage increase. About 72% of those people said they felt more financially prepared for retirement, which was similar to what we saw 10 years ago. If you consider all of these findings, all the favorable demand drivers I mentioned, the aging population, the fraying safety nets, the fact that Americans are woefully under-saved, historic low levels of life insurance ownership, increasing awareness of longevity risk, and a dramatically increased interest in guarantees and downside protection. Those are all the factors that I see converging to create a very powerful opportunity for the life insurance and retirement savings industry.
I think with our product diversity and distribution breadth, SunAmerica Financial Group is very well prepared to capitalize on the compelling market opportunity. Our plans are to expand and leverage our distribution network, not only increasing the number of firms we do business with or increasing the number of advisors and agents that are part of our career organizations. We see more cross-channel sales efforts. Last year was a good example where Western National was the biggest seller of American General's single premium universal life product we call Inheritance Life, capitalizing on their strong bank relationships. We also plan to continue offering new products. Our goal is to take full advantage of our platform for savings, investment, defined contribution, group benefits, retirement income, and our own underwriting expertise to develop new products and riders. We also see opportunities to profitably grow our asset base and life insurance in force.
One growth area for us is going to be variable annuities, especially as some of our competitors have taken steps to pull back or exit the business. We believe our discipline in the variable annuity market has and will serve us well as we grow this business. For example, our guaranteed benefit rider fees have and remain well above industry averages. We were the first in the industry to index our living benefit fees to market volatility as measured by the VIX index, which helps reduce our exposure to volatility. Just last month, we launched our latest iteration of a de-risked product with a volatility control fund designed to reduce the impact of market volatility on fund performance. We're balanced. Our variable annuity business is really a relatively small piece of our balanced book of business.
We believe we have the capacity, distribution capability, the risk controls, and again, the financial and pricing discipline to capitalize on the growing demand in this market. Another growth opportunity for us is going to be our group benefits business. About two months ago, we announced that the group benefit units of Chartis US Accident and Health, and American General Life companies had merged to form something we're calling AIG Benefit Solutions. This united now organization offers an extensive portfolio of nearly two dozen insurance products and programs, many of which are available on both employer-funded or voluntary employee paid platforms, as well as bringing together unique resources for underwriting, enrollment, and plan administration. We see ourselves well positioned to capitalize on what we see as an industry growth opportunity in the area of voluntary packaged benefit products.
Voluntary benefits, as many of you know, are becoming increasingly important in terms of overall employee benefits as employers look for ways to structure packages that both meet their employees' needs, but quite frankly, keep employers' costs down. All the way as we continue to grow our business, we're going to actively redeploy or dividend excess capital, maintain our core disciplines around product pricing, risk management, especially asset liability management, and tight expense controls. In concluding, before we take questions, I think I speak for the entire management team when I say we're very optimistic and excited about where AIG and SunAmerica Financial Group are going, and we are moving forward. With that, Andrew, be pleased to take questions.
Perfect. I'll kick it off and then we'll open it up to the audience. Jay, just to start with the big picture, just kind of frame it a little more. You were very clear on capital management and earnings growth initiatives. One of the things that the company has highlighted is an aspirational ROE target of about 10+%. That's versus a ballpark normalized of about 6% today. Part one is how confident are you that AIG can get there? And then more specifically to SunAmerica Financial Group, you highlighted that you had about $257 billion in assets under management, $910 billion of insurance in-force. How confident are you that you get to the $320 billion target on assets and $1 trillion in in-force life insurance? I know you've highlighted a number of things there, but what would be the big driver?
Big question. First of all, I think we're making progress on all fronts, and we set those aspirational goals to achieve by the end of 2015. There's a long distance between here and there. It's important probably to understand how we get to the 10%. It's really a mixture of an aspirational goal at SunAmerica of 9%, and those are unlevered after-tax IRRs that we're quoting. At Chartis, it's about a 10%-12% aspirational goal. That blend is what gets us to a 10% or above. Confidence level? I'm confident. There's a lot we need to do, and it's different between Chartis and SunAmerica. I've been focusing obviously more on SunAmerica. For us at SunAmerica at least, a lot of it, again, was getting that cash and short-term assets redeployed in appropriate assets.
Sitting around with $20 billion earning nothing is not really good for the ROE. Again, that was a result of really planning on purchasing those ML2 assets as well as, in effect, having to become very liquid and conservative post-2008. We've successfully gotten that redeployed. Second big part of that is going to be capital management. As I mentioned, we dividended out a billion and a half dollars last year. We'll dividend out more than that in 2012 to help get to that overall goal between ourselves and Chartis of $4 billion-$5 billion. Furthermore, the top line, as you can see, is growing, including net flows. If we stay disciplined in the pricing and we sell more product at higher returns than 9%, while some of the older product runs off that's earning less than 9%, that's the basic formula at SunAmerica Financial Group.
I am confident, but there's still a lot of time between here and there. On the Chartis side, as you know, the story is a slightly different story. Part of it is an asset story, but a big part of it is improving the combined ratio. I won't try to repeat all that's going on at Chartis, but they have a goal of taking their combined ratio at the start of this period from what I think was about 112%, 111% down to, as I recall, it was 90%-95%. Made some progress at that in 2011. I think there's a good chance you'll see more progress going forward. Again, I got to remind everybody, 2011 was an unbelievably bad cat year, and despite that, Chartis earned, I think, a little over $1 billion of operating income.
We spoke about in our fourth quarter, some improvement in some markets on pricing. You'll also see better risk selection out of Chartis, more technical underwriting and pricing. Also kind of a bit of a different philosophy where Chartis is more and more talking about both focusing on value over volume. Chartis always was the largest, I think still will be very large and important in its markets, but a much greater focus now under Peter Hancock and Bob Benmosche, who I like to say are asking all the right questions on the value of what we're writing, and also on risk-adjusted profitability. Truly understanding the cost of capital deployed business line by business line, it's very different country by country. That'll be a big part of it. I guess the last thing, Andrew, as you know, there's a product mix shift going on at Chartis.
Simply stated, more outside of the United States, which is higher margin, less inside the United States. Then on the foreign front, more in the growth economies than the developed economies outside of the U.S. Finally, a greater emphasis on consumer lines rather than commercial lines. I think you'll see that those three components of product mix shift improve margins in Chartis over time. That's how I think that we'll all be focusing on getting there. Yes, please.
Can you talk about your ability to make acquisitions going forward today and then talk about The Hartford and the business that they put up for sale?
The question was, could I talk about our interest and ability to make acquisitions and maybe make a comment about Hartford and the business they put up for sale. I guess I'd answer it this way. We are interested in opportunistic acquisitions if they become available. I must also say that we are not in need of anybody else's platform. We are large. We have scale. We have both distribution and product diversity. As whereas, maybe 10 or 20 years ago, we were looking to build the platform, the platform's there. The question now is, how can we take advantage of it? I guess The Hartford now has put up for sale or announced their individual life variable annuity business. There's no reason we can't look at that. In terms of ability, there's no limits on us. If we can find attractive return opportunities, we'll look.
I would say we'd look at it through a very focused window, looking to see how it can be additive and achieve higher returns. I've always said that we are no longer reliant on acquisitions for our growth strategy. We need to do it the old-fashioned way, product sales, net flows, broad distribution, and disciplined pricing. I think that'll continue to be the major focus. We've been acquisitive in the past, and we'll continue to look. Thanks. Yes, please.
Just to follow up on Andrew's ROE question. A 10% aspirational unlevered IRR, should we assume that AIG long term can maintain a debt to capital ratio comparable to your peers, say 20%, 25%, somewhere in that range?
I think that is a good assumption, depending on who you are and how you calculate it, maybe that adds somewhere between 100 and 200 basis points to the return. That's basically the formula. That's the direction we're moving.
I had one other question as well, if I could. In 2008, we saw that although AIG was one of the more complicated companies in the world, the accounting and the IT systems were just not up to par to manage a company of that sort. Now, this may be more of a non-SunAmerica issue. Perhaps it's more Chartis related, certainly there's lots of other areas of the company as well. Could you speak to that and where in the last four or five years the accounting, the IT, et cetera, has come?
Sure. It's a good point. It really did differ by different parts of the company. The bottom line is, as we've said publicly, through this improvement period. We are moving in the right direction. We're making some very significant investments in infrastructure across all the spheres. Certainly finance, actuarial, pricing, HR, IT generally. Most of those are at what I'll call the corporate office level or in Chartis. A lot of it is overseas. It's necessary, number one. I think it will also help, again, improve profitability over time, simply by virtue of the fact that more people are going to have a better understanding of the business they're writing and the short and long-term profitability of the business. Kind of the peak investment period is actually peaking right now.
I think you'll start to see more in 2013 and 2014, the cost and other savings from the investments that started really under Bob Benmosche's leadership in 2010, and then accelerated last year and going into this year. Again, I look at it not so much just from having the kind of infrastructure that's necessary to manage a large global public company, but really getting people more educated on the value of what they're doing short and long term, so we can adjust pricing, adjust terms, adjust the way we do business, adjust the way we allocate capital. Time for another question?
A couple of just really quick ones to kind of clarify some of the growth. Shifting over to Western National. You've mentioned sales were up 50% last year, but you mentioned the pressure on interest rates kind of slowing it down. What is the Guaranteed Minimum Interest Rate that you offer, and where are you trying to bring that down? I'll give you a third question just to kind of-
Andrew's the master of the multiple-
The multi questions.
multiple part questions.
Yeah.
Have the challenge of remembering the questions.
With rates rising, can you get the sales to go higher, or is it just not enough right now?
I'll take a shot. First of all of our business is now being written at a 1% guaranteed minimum interest rate.
Okay.
In all the states. All new, and that's been the case in Western National for some time, Andrew. We've disclosed in our 10-K in the fourth quarter that roughly 45% of our in-force is currently crediting interest at minimum rate, whatever that minimum may be. There's a chart in there that shows the different minimums. Obviously, on 55% of the business, we still have flexibility, depending on contractual terms, at renewal time to lower rate.
If rates move back up, that's helpful, generally speaking. If rates move down, that's hurtful, generally speaking. If they stay the same, that's why I put that slide up trying to show the impact. In terms of Western specifically, as I mentioned, rates are obviously up in the last couple of months, but spreads have contracted. Right now, I think we're kind of pretty much in the same place, maybe a tad bit better off than we were at the beginning of the year at Western. One thing we've seen historically, and you follow our company, I think in 2003, we had our peak sales year at Western, which was a little over $12 billion. Our trough year, I believe, was 2009. Might've been 2010. Again, in all those years, we were the number one sharer in the market. Our goal is to hold our pricing.
If the whole industry expands or contracts, we're going to expand or contract with them. Western in particular is a business where you do not make it up in volume. You definitely don't make it up in volume. You've got to get it priced right at the outset, and that's what we aim to do. We'll see. Rates are going to be very much a factor there.
Just one other just to round it out with VALIC, which is very big in the pension area. They did $1.9 billion in deposits last year. That was a 27% increase, and your net flows got positive by the fourth quarter. It's also a very competitive business, this 403 area. I don't know if you do much 401 there, but maybe just give us a sense, can you continue that type of deposit growth, and what's the competitive climate there?
First of all, just a little correction. I've got the number here, but VALIC's total deposits last year were a little about $7 billion.
$7 billion. I'm sorry, I meant the fourth quarter. I apologize.
Right. Could've been the fourth quarter. I think there are growth opportunities. Basically, the shift you've seen at VALIC is simple. In what I call the recurring premium part of the business, the one where all of us make our 5% contribution every two weeks out of our paycheck, all of the 401, that business is slow, principally because there are fewer people employed, and also post-global financial crisis, some people stopped contributing or lowered their percentage contribution, and also because compensation has been flat and not growing. That's a slow grower. All the growth in VALIC has been, and where we would expect it to be, is in that rollover marketplace, which I'd like to define more broadly.
That's not only holding on to our own assets when our own participants leave their teaching position or leave service and have the opportunity then to either stay in the plan or roll over into a companion IRA or go to another company. Also, the whole market now is really focusing on everybody else's rollover assets. Money's coming out of corporate 401s, money's coming out of DB plans, and that's where VALIC has made tremendous strides over the last three or four years. When I first got involved there in 2001, the concept of rollovers wasn't even on the chalkboard. Now it's our number one focus area, and that's where the fund flows, I mentioned the market going from $15 trillion-$20 trillion or $16 trillion-$20 trillion by 2015.
The vast majority of those flows is the, I call it the flow of money from DB plans to DC plans to individual IRAs, and ultimately to be spent as people in retirement. Capturing that flow is what the whole industry is about, and it's where VALIC's made progress. I think we do have opportunities, Andrew. While we focus on the 403 or group contribution business, that's really more and more just a portal or a window into customers, and then staying with them as they move out of the workplace and just into preparing for their own retirement with IRAs, Roth IRAs.