Afternoon, everyone. We're here with Ramy Tadros, President of U.S. Business. Ramy, if you could discuss the businesses that you run, they generate 60% of MetLife's adjusted earnings. Could you start by giving us a brief overview?
Sure. Thank you, Wilma, great to be here today. At the highest level, you've got the Group Benefits business and the Retirement and Income Solutions business, which make up the bulk of that 60%. Think of those as businesses where we see secular tailwinds that are gonna drive growth for years to come, businesses where we have distinct competitive advantages that would allow us to kind of achieve that growth at good margins. Give you just more flavor on that. Group Benefits, arguably the most attractive segment of the life insurance market today. It's a business that's characterized by high ROE, rational competitive environment. Within that segment, we are the largest player in the market.
We generated about $25 billion worth of premium last year, which makes us three times the size of our next competitor. We have the broadest product portfolio in that business, and we're a market leader in every single product that we operate in, whether number one or number two. Group Benefits generated about 25% of MetLife's earnings. Retirement and Income Solutions, this is an institutional retirement platform, spanning the U.S. and the U.K. Think of it as a business that's also benefiting from the demographic trends in terms of retirees and retirement needs. Here again, we're also a leading player in every single category that we operate in, number one, number two, or number three.
We have a range of solutions spanning Pension Risk Transfer, which has been a particular strong area of growth for us here, where we serve the de-risking needs of DB corporate plan sponsors who wanna de-risk and exit the pension business, all the way to being one of the leading providers of Stable Value solutions for this DC plan participants. In a week like this with very high market volatility, by the way, those Stable Value funds tend to be very countercyclical. We see a lot of folks going and seeking safety in some of our Stable Value solutions in environments like this. Think of those as Group Benefits and the Retirement business making up the bulk of that 60%.
Great. Met is the number one Group Benefits provider in the U.S., 16% market share and 25% with national accounts. Even with the level of scale, the group business is guided to grow 4%-7% versus 3% for the market. What are some of the ways that you can extend that leadership in Group Benefits?
Yeah. Well, we get this question often, which is you're the market leader, you have been outpacing market growth, and is that sustainable? Look, the answer to that is in a nutshell is pretty simple. This is an industry where scale begets scale. I'll explain two kind of main reasons. One is, it's an industry where capabilities really matter. We compete on digital experiences, underwriting accuracy, channel relationships, and a lot of different capabilities that sit inside of each of our product portfolio. Over the last five years, we invested $2 billion in building and adding more capabilities in this business. If you have that scale, you continue to invest in this business, you create more space between you and the market.
There's that dynamic going on. When you look at Group Benefits in particular, there are, I would say three factors in that market that has allowed us to continue to outgrow the industry that are particular to that industry. One is, when you look at employers, when employers look to choose their benefit providers, invariably they wanna do more with fewer. That reduces complexity on their end and makes it easier from an HR perspective and an employee experience perspective. Because of that consolidation happening in terms of doing more with fewer, we have invariably been at the winning end of that because we have the broadest product portfolio, and we could meet the needs of very different segments in the market.
Just to give you kind of maybe some numbers on that one. We talked about a 25% market share in national accounts, which we define as employers with 5,000 or more employees. Those customers of ours on average offer 12 products. We typically have three of the 12. While we have a 25% market share, we still see a long runway for growth there. In fact, 80% of our sales are coming from existing customers, and the average customer has been with us more than 20 years. That dynamic of the employer doing more with fewer. The other dynamic in this industry that's also giving us tailwinds that are accelerating the growth is the channel is consolidating.
If you look at, be it privately owned consultants and brokers or the publicly owned brokers, they are going through a series of roll-ups and M&As. That's continuing to happen, and it's still a trend that's gonna play out in the future. What happens when that consolidation occurs is these brokers tend to also consolidate the set of employers they do business with. If broker A and broker B each had five different insurers, they come together, out of the 10, only five or six will make it on that shortlist. That consolidation helps us because we invariably end up on that shortlist. The consolidation of the channel is also helping us as the number one carrier in the industry.
The last piece, which has contributed to about a third of our growth over time, is all about driving up participation rates of our products in the workplace. The way you should think about this business, there's the employer making a choice. They may give you life insurance, disability, dental, employer-paid, and then they offer you a set of additional products that are paid by the employee that give you additional coverage, like a Cancer Insurance product or a health indemnity product, a Hospital Indemnity product rather. When we look at that runway, we see participation rates here that are low double digits. A lot of white space for us to capture within the employers that we serve today.
People ask me, "So why is it low double digits?" You look at it, and you're like, there are two specific, we call, gaps that we are unlocking. One is a confusion gap, which is survey after survey, you talk to people who've gone through an open enrollment experience, irrespective of their financial acumen, by the way. Half of them tell you, "We're confused." They don't know why they're making these choices and what just happened in those 20 minutes. Then the other piece is you look at it, and it's not surprising, you've got a massive protection gap in this country. People are underinsured by every single measure you look at.
What we're building, deploying technology, data analytics, AI, is to get to people at that time of open enrollment and give them guided advice as to what protection they need based on their particular circumstances. Over time, nudge them to use these products and become more aware of the coverage they bought. That's continuing to drive double-digit growth for us in that segment in what is otherwise a very mature market. So those three factors, doing more with fewer, consolidation of the channel, and the growth in the participation rate in the work site continue to help us kind of drive above industry growth rates.
That makes sense. Great, great color there. You have a high single-digit market share with the regional accounts, so less than at the national level, and of course, that's more fragmented as well. What is your strategy to grow there in the regional market? Do you approach that differently?
Sure. Look, it's not 25%. It's close to 8.5%-9% in regional markets, which we define as employers with 5,000 or less in terms of their employee population. The number one player in that market is not a single company. It's Delta Dental, which is a, an amalgamation of different state-based dental insurance companies. So if you think about as a commercial competitor, we're actually the leading player even in regional markets. As you said, it's more fragmented. When you think about the runway there, we look at that market that is more fragmented, and we see a avenue for faster growth. Some of it is happening from the broker consolidation that I talked about. The other dynamic in this market is there's more white space.
Midsize employers, when we look at it, three out of four of them don't offer the full suite that some of their larger employers offer. We often find ourselves going to employers who are looking to introduce new benefits, unlike the national account space that's more saturated. The other dynamic in regional markets is, which favors for us size, is the connectivity into the broader ecosystem of benefits is very important. Let me just spend 30 seconds on that. If you're an employer, you're invariably using a benefit administrator or human capital firm to help you administer your benefits. You think of the Workday or the ADPs of the world, et cetera.
As an insurer, if you are tightly connected with those firms, deep API integrations, you're much more easier to do business with, and that gets you the front of the line in terms of being more competitive and offering a more compelling value proposition to that employer. Those integrations take kind of two to happen, right? We look at these firms, they look at us, and they're like, "Who are we gonna prioritize in terms of who we integrate with?" They do the same. Over time, that's another factor that's giving us more tailwinds in this business because we have deeper integrations in a consolidating market space that again, gives us kind of other avenues for growth and differentiation.
Very interesting. Can you provide more color on Met's Leave Management program, how that's evolved in recent years, and if there's any additional capabilities you're interested in adding to the platform?
Sure. Leave Management was a space that kind of we've identified more than five years ago that's gonna provide different and evolving needs in the marketplace. In a nutshell, a lot of what's driving that is regulatory complexity and state-based leave plans. If you're an employer, whether you're a single state employer or a multi-state employer, these state-based leave plans require you to essentially offer the leave and administer it in a way that is compliant. They're different state by state, and if you're an HR manager, they're highly complex to administer. When we looked at this space five years ago, 2019, there were 37 million Americans who lived in a state that required those plans. By 2027, that number will triple. We'll go from 37 million to about 100 million.
When we looked at that space, we said, "This is gonna be a service and a product that employers are gonna care deeply about. They will not wanna manage it themselves. They wanna outsource it, and we're gonna go after it." At the core of it is investments in technology, digital journeys for employees who wanna go out on leave, integrations with employers in terms of their payroll systems and human capital systems, giving them the right data and analytics around the leave program, and then as well as claims adjudication capabilities. Out of the $2 billion that I've mentioned in technology spend, this was the probably the single largest line item in that space.
Look, we're in a situation we saw that this year we've got a couple of more states come online, 1/1/26, and we're seeing very nice tailwinds for growth there in Leave Management in particular. This is a product that we bundle with the rest of our portfolio because it's, we've made huge investments in it, and we typically sell it alongside life, broader disability, dental business, our voluntary portfolio. A, you know, a good data point here for you is on average, customers who bought our absence products bought four or five other products from us, one won this year.
That's definitely a good stat on the on the sales there with the Leave Management. How is Met integrating AI into Group Benefits? I think you started to kind of go there at the end of your last answer. How do you see automation impacting the revenue and expenses as well?
Sure. Look, as a firm, we've been very clear that we think AI is a transformational technology, and this is at the executive level, at the CEO level. We fundamentally think it's gonna change the nature of work, and we wanna get ahead of it and use it to our advantage in terms of how we serve our customers, and how we develop our own talent and be competitive in the market. We're really looking at this through the lens of kind of competitive advantage, because some of these things are gonna become table stakes. What we're really looking at is finding ways in which they can provide us with an edge.
At the highest level, when you have very high volume of transactions, very large premium to invest data, invest technology over, and then a lot of data underlying all of those, we see that as a real source of competitive advantage in the business that we're in. In terms of making it more real in terms of how we're deploying it, we have an AI-infused reengineering effort that's looking at all of our core processes and reimagining them. That cuts across things like claims, things like call centers, things like customer service functions, and we're seeing benefits in terms of speed, efficiency, and quality accuracy, right?
We are deploying AI in places around underwriting, and there is pricing accuracy is an important driver for us where we can get lift from a predictive modeling perspective. Both of those I would say are well underway, right? The place we're turning our attention to right now is top line. I mentioned that confusion gap. Deploying data and analytics to figure out what's the right advice to give to someone, when to ping them with respect to their specific needs and make them more aware is something we're really focused on. We think there's a lot more potential from a business that's B2B or B2B2C to deploy AI from a lift perspective, from a top-line point of view.
Look, the technology is changing at such an exponential rate that part of what we're also doing across the firm is making sure that our talent is staying up to date. If someone used AI three months ago, it's kind of almost irrelevant at this point. You really want your talent from a tech perspective, from a business perspective to stay at the cutting edge of this because it is changing very quickly, and therefore the art of what's possible is also changing very quickly.
Great. We're gonna turn to the Retirement and Income Solutions business. What are the largest growth you see in the growth opportunities you see in the core retirement business?
Look, I think it comes back to the demographic trends and then an aging population. People look for retirement solutions, and we just published a thought piece on this, which is they're looking for a paycheck, not a pot of gold. A pot of gold is good but causes anxiety. A paycheck is what people actually need in retirement. From that perspective, that's where we're kind of positioned. And from an opportunity perspective, we see a number of different places which are driving nice tailwinds for us from a growth side. One is Pension Risk Transfers. You've got $3 trillion of DB assets sitting on corporate balance sheets. Half of those are sitting in plans which are frozen or closed.
As people age, those plans go from kind of deferred liabilities into folks who are in pay. These are people who have retired from a corporate, receiving a monthly paycheck, and where the pension obligations still reside on the corporate balance sheet. Survey after survey tell you that corporate America wants to get out of the pension business. You wanna focus on your widget business, not the pension business. As that wave continues to go through and as the population ages, we're continuing to see a lot of demand and growth coming in that Pension Risk Transfer part of the market. We're kind of a leader in that space. We wrote over $14 billion of PRTs last year. The other place which we're just entered is on the retail side.
Although we're not a retail player in the U.S., we've entered the retail market on an institutional basis. That's a market that's about $160 billion a year in retail annuities. And we have a couple, we're very selective about these partnerships, where primary retail insurers are coming to us seeking additional capital capacity, seeking the liquidity that we could provide, and now we've entered into reinsurance agreements where we're starting to see flow come from those retail insurers, in the form of us being a reinsurer. That's another oar in the, in the boat, if you will, in terms of getting access to another growth market here. Again, done only on an institutional basis and done in a way that is in line with our enterprise ROE numbers and margins.
Great. Could you talk a little bit, you touched on it, but maybe the demographic outlook, that retirement gap, and how that's building over the next several years?
Yeah. I mean, you just look at every statistic you look at here, you look at the number of people turning 65 every year. I talked about the defined benefit plans, and those as people reach the retirement age, the logic about on Risk Transfer becomes even more compelling. All of these things are gonna play out. They're gonna continue to accelerate. That's one trend we know is definitely gonna happen. We all get older. And so as an insurer, what we have is the ability to provide income and provide guarantees in a way that a pure asset manager cannot. That's if you think is the underlying trend that's going on, and that's what's driving the growth for us here.
The same thing is happening in other developed economies, so we are active in the U.K. market, U.K. Pension Risk Transfer market in particular. Similar trends to what's happening in the U.S. We participate in that market as a reinsurer as well. Again, very similar dynamics, large DB plans looking to exit. In that case, insurance companies looking for a partner that can help them with investment capabilities as well as capital.
I think you touched on it a little bit, but if you could dig a little bit deeper into the institutional retail side that you were talking about, how you use Chariot Re for that and the strategy and outlook there.
Sure. Think of Chariot Re. Chariot Re is a sponsored entity. It's that we have a minority stake in that we launched last year with a seed transaction. We did two transactions last year totaling about $11 billion. The core of the strategy maybe is encapsulated with a simple triangle, right? You got retirement businesses like our U.S. business, like our Japan business, that's seeing a lot of demand for retirement products, and we are well-positioned to capture that and gather those assets. We are getting to a point where some of that demand exceeds our own organic capital deployment capabilities, right? We're looking for capital flexibility, and that's where Chariot Re comes in.
That's the second part of that triangle, which is Chariot Re is providing us access to third-party capital that can be deployed against those liabilities. The third piece of the triangle is with Chariot Re, MetLife Investment Management, which is now a segment in our financials, is managing on a fee basis, the majority of the assets that are sitting on Chariot Re's balance sheet. Really, it's a way for us to enhance our capital flexibility, continue to gather assets in retirement markets where we've got leading distribution positions, but turn what is otherwise a spread business that would have normally been on our balance sheet with our capital into a fee business, where we earn a return on, and we also participate in the economics of it through our minority stake in Chariot Re.
That's the Chariot Re concept. It's supportive of our growth, be it in retail flow reinsurance or PRT insurance, or I said it's not also unique to the U.S., it's also supportive of what we're trying to do outside of the U.S. in places like Japan, where we've got a leading retirement franchise.
Great. Are there any updates regarding further de-risking solutions for MetLife Holdings? What can we expect to see that may help build capital or reduce risk?
I mean, with Holdings, our approach is to be proactive, but also be disciplined. You've seen us over the last few years do one large transaction that was about $19 billion focused on more life UL business. In the fourth quarter, we closed another transaction that's about $10 billion that was focused on our variable annuity business. We continue to be in active dialogue with respect to other parts of what's now legacy. It's sitting in corporate and other, as the size of MetLife Holdings has shrunk over the years. These are always complex transactions. They take long time, years to execute. They need to work for both parties.
We're gonna be very disciplined and make sure we're shareholder-friendly in terms of looking at transactions that make sense to the shareholders and make sense for us to allow us to kind of extract and redeploy capital. We, we continue to be engaged, and this is a market that has more activity in it, which is always encouraging.
Within the businesses you oversee, are there M&A opportunities you would find interesting? How do you evaluate buying versus building out capabilities?
Sure. I mean, if you think about in the U.S., outside of our MIM acquisition with PineBridge, we've done a few acquisitions in Group Benefits that I would call them more tuck-ins in terms of very focused on specific capabilities. More broadly, when we think about the group business, we have a strategy and a clear line of sight towards very profitable, solid organic growth. We have the scale in that business, which I talked about.
We've got the broadest product portfolio that I've also talked about. We don't see the need strategically to go and acquire. Having said that, M&A is always part of the toolkit. We always look at it. We see the deals that come to market and we're active looking at it, but it's not something where I would say is a prerequisite for us to achieve our financial targets, be it in terms of our top-line growth or our bottom-line growth.
I think you highlighted so many great trends. What do you think is most underappreciated about your business, or I guess the biggest opportunity? What would you wanna communicate about the positive outlook?
Yeah. I mean, I would say, with respect to our retirement business, what's underappreciated is the discipline that we have in pricing and our investment philosophy. In weeks like this where there's concerns around things like private credit and risk on the investment side, we have had a philosophy for many, many years to be right down the middle from a investment perspective and a risk appetite perspective, and we feel really good about our general account portfolio. And what's also underappreciated in that business is our liabilities are not callable, right? So, a lot of the, what you're hearing about in the market really doesn't apply to us, neither from the asset perspective or the liability perspective.
I think on the Group Benefits side, this is a business when you're 3x the size of your next competitor, when you still have fragmented markets, beyond looking at the next quarter or the third quarter or the fourth quarter, we just see a tremendous runway here for us. We see trends that are gonna continue to drive growth in that market and we feel we've got a great strategic positioning that's gonna allow us to be a clear winner in that market going forward.
Great. Thank you very much, Ramy. We appreciate it. This was great color, and hopefully, you'll join us for the breakout.
Great. Thank you.