Good afternoon, everyone. Welcome to our first-ever Latin America Investor Day. We're extremely excited to talk about our attractive business models in growth markets across the region. For those of you joining us via webcast, presentation materials are available on metlife.com through a link on our investor relations page. This is our cautionary statement. I'm not going to read it, but I will point out that we'll be discussing forward-looking information today and talking about non-GAAP financial measures. The safe harbor statement contained in the appendix covers the forward-looking statements made here today. Forward-looking statements include our near and long-term outlooks and any other statements providing information about future periods. As the statement notes, actual results might differ materially from projected results.
For a discussion of the factors that could cause actual results to differ, please see the risk factors in our 10-K, 10-Q, and other reports filed with the SEC. The explanatory note on non-GAAP financial information in the appendix includes how we calculate non-GAAP financial measures and the reasons we believe this information is useful. Reconciliations to the most directly comparable GAAP measures are also included in the appendix. Turning to the agenda, we're going to kick off with some introductory remarks from Bill Wheeler, President of Americas. Bill will be followed by Oscar Schmidt, who heads the Latin America business, and Conor Murphy, CFO of Latin America. We'll take a short break. Following the break, we will hear from regional management. We'll start with Mario Traverso, SVP Business Development and Distribution, to talk about our high-growth emerging businesses in agency, direct, and employee benefits.
After Mario, we'll hear from Sofía Belmar, who heads our worksite marketing business in Mexico, to talk about our dominant position in this attractive distribution channel. After Sofía, we'll hear from Ricardo Rodríguez-Marengo, head of Provida, to talk about our market-leading position in the Chilean pension market. We will take a short break as we set up for Q&A. We have plenty of time for Q&A, but I ask that you limit yourself to one question and one follow-up. After we work our way through all the initial questions, we'll come back to you. At the end of Q&A, we'll have some very brief closing remarks from Bill Wheeler, and we would expect to be done no later than 5:30. With that, I'd like to hand it over to Bill.
Good afternoon. Nice to see all of you. I guess, on behalf of MetLife, excuse me, and the Latin American management team, I want to welcome you to Santiago. For those of you who traveled all the way from the States, thanks for taking that long flight to hear our story. I think you'll find it very interesting. A couple of things I just want to point out, I'm going to turn it over to the management team to tell the story in great detail. A few takeaways that I hopefully you'll get from today. Our business in Latin America is a unique franchise. Oscar has a few slides, which he'll show you in a minute, which shows our relative market share. We are the market share leader in this business in Latin America.
I think more importantly, if you look at our competitors, most of them are focused on one country or one channel or frankly, one product area. We sell a wide variety of products through every significant channel in virtually every country we participate in, and those seven countries we participate in are over 80% of Latin America's GDP. That is what makes this franchise unique, is our incredible footprint and our incredible market presence. The other thing about this business is it's been built by a series of acquisitions, frankly, over the last 15 years. There's also been a couple of divestitures in there. What you'll see today is we've done a very good job of integrating those acquisitions into a coherent business, and then we've taken them and enhanced them significantly.
When Sofía speaks, you'll see how much we've improved and grown the worksite marketing business in Mexico. The reality is, even though we've only owned Provida for not quite 18 months, the same is happening there as well. We've grown by acquisition, and we'll continue to do that, but we've also grown organically. Another thing I think you'll get a sense of today is the management team that's running this business. I think our managers at both the regional level and the country level are very strong, and the talent pool inside MetLife Latin America is very deep. Finally, this is a business which has put up very strong numbers over the past few years. The revenue and earnings growth has been quite good. Our ROEs are very high, and our cash flow is very high.
We expect that same performance going into the future, and I think at the end of the day today, you'll see why you'll share that confidence with me. With that, I'd like to call Oscar Schmidt, my colleague, Oscar Schmidt, to the stage, our head of Latin America, to give you an overview of the business. Thank you.
Here we go. Thank you, Bill, good afternoon, everyone. Well, thank you for coming to Santiago to attend our first Latin American Investor Day. I'm particularly honored to have you all here, not only because of the opportunity, but because you will have the chance to get to know and hear some of our leaders in the region. They are really a good sample of the talent we have here at Helios 360. Before starting with my presentation, let me introduce you the speakers that are going to talk to you this afternoon. Number one, I'm going to introduce you my extraordinary and talented CFO that I forgot to introduce last night. Maybe many of you know Mr. Conor Murphy. From Ireland. By the way, I also forgot to introduce Charlie. Where is Charlie? Anyway, sorry, Charlie. He's also very talented.
He has been doing all the work. He has been doing all the work, actually, thank you, Charlie. After that, we're going to get to the business. We're going to have two deep dives in the business today. One is going to be run by Sofía Belmar from Mexico. Sofía, thank you, Sofía. She's going to introduce our worksite marketing business in Mexico. Then we'll have Ricardo Rodríguez-Marengo. He's going to talk about our AFP Provida. We're in Chile, Provida, our recent acquisition. By the way, these two businesses are the largest in the region. Before that, my colleague, before Sofía and Ricardo, Mario Traverso, my colleague, will go through the rest of the businesses before then as a portfolio. Mario will not only talk about the rest of the businesses, but to talk about our strategy in general across the region.
With that, let's jump into the presentation. What I'm going to do essentially is to try to cover the macro environment, both the industry and the economy in the region, then specifically talk about our strategy and what do we expect going forward. Bill said we're the largest life insurance company in the region. I will specifically talk about that in a minute to see how we compare with some colleagues. We operate in seven countries, around 25 million customers across the region, and we have been enjoying very healthy double-digit growth over the last years. Again, as Bill said, we're well-diversified in terms of products and distribution. This is something we're going to go back again and again during the presentation because we think this is core to our successful strategy looking backwards and also what we're planning to do going forward.
We're not only diversified both in terms of product and distribution. Those products have high margins, good cash flows. My colleague, Conor Murphy, will talk about our financial around products, very efficient in terms of capital usage and high ROE. Again, we have been having strong bottom-line growth, operating earnings 20% in the last 10 years, some of which was through acquisitions, also organic. This is important to mention. When we do acquisitions, we essentially see it as a way to acquire future organic growth, right? These two things go together. When we're buying a company, we want to be sure that company is going to grow organically down the road. Essentially, yes, we grew through acquisitions, but also we grew those companies organically, and that we plan to continue doing going forward. Mexico is a good example.
Sofía is going to talk about one business in particular in Mexico, but the overall transaction, we acquired a company called Hidalgo back in 2002. That was a good deal, but we have been growing that business organically around 12% since then. I think that is an example that you will see during Sofía's presentation. Let me jump and go into what is our strategy, what do we do, what is that diversification? Essentially, we have four pillars or four cylinders for our strategy. The first one is to expand our agency, our agency model, face-to-face consultative selling for individuals, build out our direct marketing business. Mario is going to talk about that. Then grow our employee benefits business, our corporate business, employer driven, but also providing benefits to employees, and finally realize the full value of our recent Provida acquisition.
Those are our four strategies. You will see that again and again during the rest of the afternoon. We plan to continue pursuing double-digit top and bottom line growth while maintaining our high cash flows and capital efficient products and high ROE as well. The other important element of our strategy. We are focused on few markets. We don't want to be everywhere. We're focused on few markets, in those few markets, we want to be really, really relevant. It's like footprint has to be concentrated in relevant markets, in those markets, we want to be really diversified in terms of what we do. Doing as much as possible in terms of the way we access the market, not everywhere, just in two markets. You will hear that during the afternoon a few times.
It is important when we talk about strategy that we check whether we are aligned with demographic trends or not. This is what we're trying to introduce here. By the way, Mario is going to take this idea and further elaborate on it. We observe four strategies here across the region, we want to link it with specific strategies that we are building to respond to those trends. Let's talk about the first one. We observe that Latin America, there is affluent middle class growing. What happened is existing middle class back 10 years ago, through this decade of economic growth, that middle class is becoming more affluent. People is moving up, obviously that changes their habits, their consumption patterns.
The ideal line of business or channel to respond to that segment is agency, because products in general terms are more sophisticated, are a combination of betterment as well as protection. That's where agency has a good fit. That's our response. The second trend that we're observing across the region is emerging middle class. More people is moving from upper segments to middle class, again, starting to behave differently, starting to respond to their protection needs through insurance products. Agency is not necessarily the ideal talent for that, the ideal channel for that. direct marketing is much better because it's more efficient from the cost point of view, based on simple products, very attractive, low average premium, low average ticket. direct marketing is what we use to respond to that trend.
The third trend that we observe is, okay, 10 years of economic growth across the region, unemployment is going down. In some countries, it's really low, you actually struggle to attract and retain talent. Overall, that is very attractive for us from the employee benefits side. Because in the old days in Latin America, only big companies, particularly international ones, were truly providing employee benefits. Now, what's happening is in the struggle for talent, more and more mid-sized companies have to introduce the concept because they need to attract talent, otherwise they cannot compete. That is expanding our employee benefits market from just big companies, more and more into the big market. That's another trend. Our response, Mario will talk about that, is through our employee benefits business. Finally, Provida.
As we said, we recently acquired the leader in the AFP market in Chile. Ricardo will talk about that. We believe that Chile is the best pension system, certainly in Latin America. Somebody may argue that it's a really good system across world for pensions. There are salary growth experiences observed during the recent years in the country that will continue. That's very good for the business because of the way we build our top line. Ricardo will talk about that. How do we make money? How do we make this? Salary growth is important, and that's happening, as well as the formal economy is reducing and more formal economy means more revenues, more clients in the AFP system. That's another very healthy trend that we're capturing through Provida, particularly in the segment where Provida operates. Ricardo will talk about that.
Let me talk about the footprint where we operate. We said, I want to focus on a few countries where we can be really relevant. If we're talking about being relevant in a country, we have to start with Mexico. We bought a company called Aseguradora Hidalgo back in 2002 to the Mexico government. It was a government-run company, and that made us very relevant in Mexico. Mexico today is the third largest country operation for MetLife, and obviously is the largest in Latin America. We are there, the largest life insurance company. Our market share just in life insurance is 30% in Mexico. We don't operate in property and casualty. We do not operate in auto insurance, just in life insurance and medical. Just with that, we are also the insurance leader.
We are the leader in life insurance with 30% market share, but actually, Sofia will talk about that, where without operating in half of the market, we're still the market leader. Insurance overall, around 16% market share. Clear leadership in life insurance, but also in insurance in general. By the way, there's a terrific, as I said, organic growth story that happened after that acquisition that made us increase our market share since the acquisition. Again, Sofia is going to give you numbers. The second country I want to focus on is Chile, where we are today. As you all realize it's a beautiful country, and we like it because think about it's a 17 million people country, and it is the fourth largest country for MetLife. That is quite remarkable. It's U.S., Japan, Mexico, and Chile.
It's very important for us. We really like Chile. Here, we are the largest life insurance company, the market leader in terms of premiums, but we are also the leader in the pension business through the Provida acquisition. That's why Chile is very important for us, and it's a combination of these two businesses. By the way, when you add Mexico and Chile together, you are above 85% of Latin America earnings. That says how important these two countries are for us. Going to Argentina. Argentina, we are the largest life insurance company in Argentina. The market leader. The business there is comprised of two things. One is the run-off block of an annuity business. Of course, that as a run-off block, earnings are slowly declining. Also we have a growing and very attractive direct marketing business in Argentina.
There is actually great expertise on that business that we inherited from the Alico acquisition. That Argentina direct marketing was very strong when we acquired Alico. Going into Brazil. Brazil, we have a significant employee benefits business, very strong, both in the big companies, as well as in the mid-market, mid-size companies. We operate across the country, and we also have a very attractive dental business that is adding growth to the employee benefits platform. Also, we have a growing and attractive direct marketing business, Mario is going to cover that during his presentation. Colombia and Uruguay are small, but are growing for us in importance. I really want to particularly talk about for a second on Uruguay. Uruguay is a small country, true, 3 million people country, but we have 32% market share there. That is a good thing.
It's not a huge country, but you have one-third of the market. That is a good reason to stay there. Ecuador is a small country. It's a small operation for us, but was just part of the Provida acquisition. We took Chile and Ecuador was there. In this next slide, I just want to emphasize the point that I made before. Look, we operate in seven countries. I've just explained. These seven countries represent 82% of LATAM GDP and 73% in terms of population. We don't think we need more countries. We think our footprint is just right. We really need to improve our presence and continue further penetrating markets in the places we already operate. Let's talk about the economy for a minute.
Here, it is true that Latin America has been enjoying a very healthy economy, very healthy GDP growth over the last few years, many years, and it has been declining recently. We plotted here three countries, Mexico, Chile, and Brazil. Obviously, we care a lot about these countries. As you heard before, Mexico and Chile alone represent 85%, or more than 85%, of our earnings. See the pattern. While GDP growth have declined, consensus is expecting a recovery and we think the numbers will go close enough to the very similar figures we have been observing during the last decade. We think Latin America is going to continue to be a good place to grow and to invest, particularly when you see the kind of margins we can obtain, Conor is going to talk about that.
How do we connect this GDP growth trend with insurance growth? Well, we have been observing in most of the countries, very healthy insurance premium growth, like 10%, above 10%, and that's going to continue. We think it's very strongly connected with the demographic trends that I referred to before, which is more people moving into middle class, existing middle class, moving into affluent middle class. That means that the GDP growths that are three, insurance premiums are going to continue growing higher than that. We observed that in the past, and we expect that it's going to continue. Of course, Mexico and Chile are the two we care most about because of our presence in those countries.
We said we have a big presence in LATAM, we wanted just for you to have an idea, we're putting names here, to show you how relevant we are in comparison with the rest of the industry. We are the clear leader in premium, when we say premium, we're talking about statutory gross written premium. This ignores Provida, because as you know, the nature of Provida is different. It's a fee-based business, it's not included in this ranking. This is just life insurance. As you can see here, we're the leader. I will elaborate in a minute about what do we do exactly. Let me say here that in general terms, you can see some multinational companies that operate in few countries that are listed here.
Other are just country players that operate just in one place, national companies, local companies. We have a clear leadership, but it's not obvious. We don't have too many companies that operate across the region as we do. To continue digging into this point, we said again, guys, operating in few relevant countries and to be diversified in distribution and product in those countries is very relevant. What is our differentiating factor? I mentioned before, remember I mentioned the four initiatives. We have agency, we have direct marketing, we have employee benefits, and we also have Provida. Here I'm talking about three initiatives because I'm including Provida in the agency role. Why? Because, actually, Provida is an agency. Now, we treat it separate because it's a pension business. It's highly regulated. Ricardo will elaborate on that. From the business point of view, it is an agency.
It's a face-to-face consultative selling. That's what it is. We are putting Provida in agency role. What do we do in the region here, if you compare our presence with other companies? Essentially, we do these three things everywhere where we operate consistently. Okay? It's not that we operate in one country doing one thing or in another country doing another thing. We do these three things like three cylinders in all countries where we operate, that gives us the relevance that I keep talking about. Where most of our competitors, our peers, either operate in just one country or sometimes they operate in more than one line of business, but not consistently. Maybe they do agency in one country, employee benefits in another.
Within this regional consistency, the ability to leverage horizontally across the geography, the expertise in agency, the expertise in employee benefits, and the expertise in direct marketing, I think that has been our differentiating factor, hopefully will continue to be that in the future. You will hear something during the afternoon, which is organic growth. The driver for our strategy is to build more organic growth because we foresee in the future, in the mix, more organic than acquisitions, as we observed in the past. It's very important that we stay disciplined around our strategy because that's where organic expansion comes from. I'm talking about opportunities as well as challenges. Insurance markets continue to grow in Latin America, as we said before, just because we're coming out of low penetration. In general terms, life insurance penetration in Latin America is very low compared to mature markets.
I would say the industry is catching up and will continue catching up, further penetrating mid-markets and even affluent markets. We're going to continue. As Bill said, we have executed many transactions over the last 15 years still. Again, however, we're mostly focused on organic growth right now. We still see some opportunities for M&A that are probably more country-centric, more joint ventures, partnerships that are easier to be executed and also are efficient in terms of capital usage, require less capital. Compared to in the past, it was more global or regional deals and larger. Actually talking about deals and talking about discipline, after the Alico acquisition, we divested 14 jurisdictions immediately after the deal, I would say. Predominantly in the Caribbean as well as Central America. Again, why? Because we want to stay focused on few relevant markets, and that requires discipline.
We continue to be really disciplined in analyzing new opportunities, right? We know that you got to have the discipline to see a number of deals. You know that to get the right price and the right conditions requires work, and you never know which one is the one that's going to work. We'll continue. Challenges. We observed fiscal reform in Mexico in 2013 and in Chile in 2014, and we went through it, and obviously, when I say fiscal reform, needless to say, higher taxes. We're still waiting for one that is, maybe one day we see another one in the other direction, hopefully soon. That does increase corporate tax rates both. We see conversations for risks that further regulatory reforms may happen in Chile, particularly on the SVS business arena. Ricardo will cover that.
Finally, in terms of challenges, we have been observing a strengthening dollar across the region. That has been a challenge. Conor is going to cover that specifically in terms of how do we see that going forward and in terms of the impact in the region. What do we expect? What's the outlook? Let me repeat what Bill Wheeler said on the December 2013 outlook call, I'm sure you all remember. We said Latin America is going to continue growing, double-digit growth in revenue, right? That's what we said. We also said that operating earnings will be consistent with top line growth in the short term, but then will expand in the out years.
The reason for that, you will see that embedded into my representation, we're investing in few organic initiatives, that investment is producing this effect of top line and bottom line going to grow similarly in the short term. Then as we capitalize on those investments, obviously bottom line is going to grow faster than top line. We think our strategies, the ones I'm referring to here, my colleagues will further elaborate, will support this operating earnings growth with the modest amount of investment. I think Conor is going to help us to see how important cash is for us in terms of investment. Finally, in conclusion, LATAM has been a valuable property for MetLife.
It's a great franchise, has been a great franchise, and I think we managed to build a great story, both in terms of earnings growth, ROEs, and particularly cash growth, dividends. I think we are pretty confident, and I thank Bill for what he said in the beginning in terms of the talent pool we have in the region. We think we have the talent, we have the resources, and we have the opportunity that is going to allow us to continue delivering shareholder value as we did in the past. I'm very excited for the opportunity to hear more details about this strategy, particularly in the deep dive that Sofía, Ricardo, and Mario are going to run. Before that, let me introduce you to my star CFO, Mr. Conor Murphy.
Thank you, Oscar. That's tough to live up to. Thank you, everyone. Great to see you. Great to see so many familiar faces and old friends. I'm going to go a little deeper into the numbers. I'm going to talk about the key drivers, going to give you a sense of the growth opportunities, and talk a little bit about some of the operating efficiencies that we're working on, give you a sense of how we make money. We'll talk about our ROEs and the high cash flows that the LATAM operations are generating. First, let me just break down 2014. I'll begin with PFO's revenues. As Oscar said, we're going to have two deep dives today on the two biggest businesses, which are the Provida and the worksite marketing. As a reminder, Provida is a fee business, so it doesn't have a significant impact on revenues.
Then there are 3 other businesses that we're referring to as the emerging markets, the agency, the employee benefits, and the direct marketing. You can see collectively, they're driving a lot of the revenues for the region. The last segment of the pie here, the Mexico public, we wrote a large institutional government case in Mexico in 2014. That percentage is a little higher this year than it might normally be. On the right side, we have our operating earnings at a country level. This is before corporate overhead, and we've also removed the interest on excess capital that we've earned at a country level. If you will, this is the earnings from the insurance operations in the country. You can see Provida, significant, about a quarter of our earnings. Worksite marketing, about a third of our earnings.
Collectively, they're 60% of our earnings that we're going to go into a lot deeper. Then the same 3 emerging market businesses that Mario's going to get into, that's another 25%. Those first two businesses, they grow. The earnings expectation for the growth in those businesses is that low double digits that we talk about for the region overall. The next 25% that Mario's going to talk about grows much faster. Let me take a moment on the last two segments. Oscar already referred to the annuity block in Argentina. It generates good earnings, but it's going to dampen our overall growth in the region. And the Mexico public. When we acquired Aseguradora Hidalgo 12 years ago, we had a number of large government employee benefit cases. The persistency has actually been better than we expected.
It's not a very significant part of our earnings story today, and it's a little hard to predict. We won a large case last year, but we expect over the long term that this will probably decline a little bit in terms of its relative contribution to the overall earnings profile. Those last two will grow a little bit slower. Now a three-year perspective, because while we've been in the region for a very long time, we've been talking about LATAM as a reporting segment for the last three years. To give you a sense of the revenue growth, worksite marketing has been growing at that low double digits number that I referred to. Agency has also been growing at around that low double digits. But agency here includes the SPIA or single premium immediate annuity business that we have here in Chile.
The rest of agency, the actual agent force, if you will, is growing much faster than that. Mexico public, a little higher. As I said, we wrote a very large case in Mexico last year. Direct marketing, growing very well. Obviously, Provida now has entered the picture. Employee benefits, the last few years, actually, the employee benefit revenues have been a little subdued. Some of that is underwriting noise. Some of it is intentional, where we've really tried to focus on the more profitable customers. We've weeded the portfolio, if you will, and selectively taken out some and focused on the rest. We expect the employee benefit growth to be much higher from this phase in the future. Earnings, taking the same three years. I'm starting with the reported earnings for the QFS.
The first thing that I'm isolating is just the currency impact. I'm bringing everything to a constant currency 2014. You can see the impact of the strong dollar on the earnings over the last couple of years. It's been pretty significant, and I'm going to come back to that in a moment. After that, you can see the corporate overhead allocated to the region. We have some corporate level tax adjustments and other items. A reminder of U.S.-sponsored direct. We have a direct-to-consumer business that we started two years ago in the U.S., and the startup losses in that business have been included in the LATAM and other earnings for the last couple of years. That brings you to what we're referring to as the country operating earnings. What the countries manage to, what the countries earn on a local currency basis.
We've isolated then some interest on the excess surplus to bring you back to that number, the insurance earnings, if you will, at a country level. Before I go further into those, let me just bring you to the table at the bottom. Beginning with the same operating earnings as reported. On our Outlook call in December, we talked about how the allocation methodology for capital was changing in 2015. It's a zero-sum game for Met in total, but from the LATAM perspective, there'll be an interest charge. We also have another direct-to-consumer startup entity within MetLife that was previously reported in corporate and other. Those two direct marketing businesses have been combined now into one division under Bill. We're going to recast the startup losses from that business in with the first one into LATAM in the first quarter of 2015.
The impact of those two reclassifications is it's going to have an impact on the LATAM earnings base, if you will, the base earnings for LATAM of over $100 million. Coming back to the country earnings after the interest in surplus, the 529, the 562, and the 679. Strong growth, but obviously Provida is the significant driver behind that. This is the last three years. The CAGR is a two-year CAGR, 13%. If you took Provida out of that, we acquired Provida in the fourth quarter of 2013. If you took Provida out of that, the growth is pretty flat. It's actually not much more than 1%. From a business perspective, the agency business, the worksite marketing business, the direct marketing business, all of those have grown over the last two years, if it's a two-year CAGR, in that 8%-11% range.
Mexico public's earnings have actually declined. Part of that is we had a tough underwriting quarter, second quarter of 2014, and part of it is the regulatory reform that Oscar referred to, and the employee benefits earnings. I said, we weeded out the portfolio a little bit. We didn't have a great underwriting year in 2014 either. The 2012 to 2014, it's a tough comparison. You were to look at it from the perspective of the three years that we've had LATAM as a standalone segment, I started at year-end 2011, if you will, the core growth is 7%, again, before the second quarter 2014 underwriting or the lower earnings in employee benefits. You look at it from a country perspective, Mexico is about half of the earnings. Chile, the next biggest contributor. Oscar said, we have a significant insurance presence in Chile.
We already had a big insurance presence, when we acquired Alico, the biggest piece of Alico for LATAM, because Alico wasn't very significant for LATAM, but the biggest piece was an insurance business here in Chile. Combined, those two businesses are a $100 million insurance business. Argentina, good earnings. Brazil, modest earnings. A strong GB franchise, a great dental business, and we're investing in some other businesses. The two others, Uruguay and Colombia, as we said, smaller but growing in importance. Those are $10 million businesses for us, $10 million in earnings. Back to FX for a moment. I plotted the Mexican peso, Chilean peso, and Brazilian real over the same three-year period. I could have done the Argentine peso, that's a completely unique creature. I said, Colombia and Uruguayan pesos are just not that relevant from an earnings perspective.
You can see it's been a pretty significant decline. The good news is that the Mexican peso, the one that matters most, declines the least, but still a fairly substantial decline. I just charted Bloomberg consensus for the next two years. That would imply a relative strengthening from where we are. Building on Oscar's GDP slide, I've added the U.S. GDP alongside the three countries. Pretty strong in 2011. You can see, relatively speaking, weaker in 2014. I know you're all familiar with. Bless you. Perhaps a simplistic way to look at currency, the projected outperformance of Mexico and Chile relative to the U.S. would imply a relative strengthening. Brazil hopefully will follow suit, again, it's not that material for us if Brazil proves to be a different story.
Okay, let me set Mario and Sofía and Ricardo up a little bit, give you a little overview of the growth at a channel level before I go into products. Starting in the left, worksite marketing, about a third of our earnings. We're projecting in the near term a growth rate of the 10%-12% range. Some of that's going to come from the natural in-force growth, the natural growth in the in-force, and some of it will simply be from expanding our customer base and actually more so expanding the offerings to the existing customers. Provida, 27%, about $185 million in 2014. That's at a 93% ownership, which is where we were at the end of the year.
Ricardo's going to talk about the growth opportunities there, partly from the growth in the salary, obviously then the increased agencies, the increased branches, and improved persistency and so on. Mario, collectively, as a reminder, these businesses, just 25%, that's going to grow much higher. We're expecting cumulatively an 18%-20% growth from direct marketing agency and employee benefits. Okay. Now, back to the 2014 earnings, to take it from a product perspective, you heard Oscar talk about we're focused on very simple, capital-efficient, high-margin products. We're focused on growing products that have underwriting margin or fee income or both. Those products have high ROEs. They have very predictable results over the long term, in the short term, they have some underwriting volatility. Just to reconcile for you a little bit, individual life, that's where the worksite marketing resides.
Most of that is universal life. Sofía will talk about it further, very simple products, obviously underwriting margin and fee income. Asset management, 29%, that's Provida, we also have a smaller Afore business in Mexico. That's fee income with some encaje income. Those two businesses, the two we're going to talk about today in more detail, really are those sort of simple products are generating two-thirds of the earnings in the region. I mentioned fees. We have an annuity business in Chile. The expected growth isn't as high as the rest of the portfolio. That's absolutely by our own choosing, that's interest margin. Accident health and group, they're growing very well, not from a terribly big base. We have some credit business. That's also not a focus area for us going forward.
BancoEstado, we have a joint venture here in Chile with a state-owned bank, it's a terrific joint venture. We've had that for over 10 years, from a revenue perspective, it's brokerage commission, that contributes about $10 million a year as well. As I mentioned, Mexico public and the annuity runoff, they may have moderate growth, they're just not expected to grow as high. That'll be single digits, perhaps even less. Okay. Both Oscar and Bill have talked about how we've taken this group of countries and really focused on running it from a regional perspective. You're going to hear today our strategies are regional. We've hired great talent or reallocated great talent to regional responsibilities so that we can focus on growing businesses from a regional perspective and leveraging more and more, not just regional capabilities, but certainly the U.S.
capabilities and the global capabilities of MetLife as well. From an expense perspective, the fixed expenses are growing at about 50% of revenues, which is what you want. We successfully removed $32 million in pre-tax expense out of our base in 2014. We have a global service center in India, and we are actively exploring a second one in the region. A regional service center in LATAM for LATAM for all of the Spanish and perhaps Portuguese-speaking countries as well. We expect to be talking more about that soon. We've been able to leverage the U.S. as well, and an example on the technology front would be the global data center.
We have a U.S.-based global data center, and we're taking the individual country data centers, moving them all to the U.S., and we're able to do that and improve efficiencies and reduce costs. We've done two countries already, Colombia and Brazil, very successful, and we're working on the other four as we speak. Clearly, been speaking about the high ROEs. This is really a reiteration of the outlook call when John presented ROEs at a segment level. He showed you that on the new capital basis, the ROEs for LATAM are north of 15%. As you know from Bill and your knowledge of us, we've had a significant amount of acquisitions as well. We've got a fairly large amount of goodwill. The tangible ROEs are north of 20%.
Going back to the product analysis of how we're going to be focused on underwriting margin and fees, you should expect that that level of ROEs and capital efficiency should continue. Which brings me to cash. We have a very high level of capital distributions as a percentage of operating earnings, GAAP operating earnings in the region. We've been running at 60%-70% over the last few years. We have $700 million of excess capital in Mexico, which we are returning over three years. We made the first payment in late 2014. That's why we are at 86% of distributions in 2014. We expect to be in the 85%-95% range for 2015, at least that for 2016, and then you should expect that we're back in the 60%-70% range after that.
A solid base for future earnings growth, clear and achievable growth opportunities, a focus on efficiency to help us along the way, and you should expect a continuation of our track record of high ROEs and strong cash generation. As a reward for putting up with that, I think you get a 10-minute break. Is that correct? Thank you.
[Break]
If you could all find your seats, we are going to get started. We're now going to start with regional management, and our first presenter is Mario Traverso, who will discuss our emerging businesses. Mario? Thank you.
Good afternoon, everyone. Today, I will cover in detail our emerging business in Latin America. Emerging businesses consider our retail agencies, our direct marketing unit, and our employee benefits division. Throughout my presentation, I would like to share with you how are we going to grow, expand, and innovate in each one of these three line of business that in 2014 represented 25% of our earnings in Latin America and are expected to grow at a range between 18%-20% CAGR. In this slide, you can see our country operating earnings distribution. As mentioned before, emerging businesses represent 25% of our earnings. Please note that we are excluding worksite marketing and Provida, my colleagues, Ricardo and Sofía, will cover next. As Conor mentioned, we are also excluding our institutional government businesses in Mexico.
These are the institutional cases that we inherited from our Hidalgo acquisition in 2002. We have succeeded with them longer, better than expected. We expect that this emerging businesses block will outperform the other businesses in term of growth. As you can see from the slide, it increases its participation from the 25% mentioned before to a range between 28%-32% in 2017. This expansion is due to the strong foundations we have built in the past year, allowing us to accelerate organic growth. Oscar mentioned earlier that there are a series of demographic trends emerging in the region. Here you can see how our strategy matches those trends. Starting from the top, we are strengthening and expanding our agencies to market the asset segment in the region.
We do have plans to grow our agent count in most of the countries, and we are executing according to our plan and expectations. We are building a direct marketing as an engine of growth. Direct marketing, jointly with worksite marketing and Provida, let us capture the opportunity coming from the emerging middle class. The opportunity is big. Estimates indicate that more than 40 million people did switch from poverty to middle class in Latin America. Finally, yet importantly, we are continually leveraging our global capabilities for employee benefits. Our segmented strategies are allowing us to reach not only large and multinational type of accounts, but also the mid and the underserved small and medium enterprise market. As you can see, we are responding to demographic trends with focused strategies. With the coming slides, I will share with you more details about each one of these line of businesses.
Let me start with our agencies. We have a very well-established retail agency to target face-to-face the growing high and middle income segment in the region. This is our largest distribution channel. We do have more than 4,500 agents and more than 8,000 if we consider worksite marketing and Provida. We are significantly growing these businesses in selected countries. In Chile, we do have the largest captive agency force, and we do have plans to grow it by around 30%, from 900 agents in 2014 to 1,200 in 2017. We are 1,100 in that channel. In Colombia, we are more than doubling the size of our agency force there, from 350 agents in 2014 to more than 900 in 2017. Another leading case is our annuity business in Chile. We are the largest company in the industry with a 21% market share.
Agencies represent 55% of this emerging business block, and we expect it will continue to grow to a low double-digit CAGR during the next three years. How are we going to do this? We have a strong record of accomplishment and a proven expertise in agencies in Latin America. We have developed a systemic approach to the business with a strong model of recruiting, selection, training, compensation, and recognition of our agents. In the past, we have been able to grow, maintaining at the same time our persistency and productivity level. We also put our customer on top of everything we do. We are improving our Net Promoter Scores on a monthly basis, and this improvement is based on 3 main pillars. First, a comprehensive lifetime approach covering our customer needs from their accumulation and protective phase to their retirement phase.
Second, with a broad range of high-margin products, integrating our traditional life insurance with new accident and health coverage, supported by the very disciplined cross-selling approach. Finally, we are investing in technology. We are developing our CRM solutions both at country and regional level, and also implementing digital solutions to service our agents. Direct marketing is the second line of business I would like to cover this afternoon. As mentioned, direct marketing is a key regional growth engine to target the mid-market segment through our sponsorship. Sponsors for us are large institutions with meaningful relationships with their customers, and we are sharing efforts not only to sell insurance policies, but also to collect the premiums. We do have more than 100 sponsors across the regions. We are grouping our sponsors in 3 main categories. The first one, banks and financial institutions.
We do have more than 25 financial institution partnerships across the region, giving us access to more than 4,000 branches. Examples of this are Citibank in Brazil and BancoEstado in Chile. Secondly, we partner with large retailers. For instance, Cencosud in Chile, Liverpool in Mexico, and Olímpica in Colombia. Thirdly, we partner with large utility companies like Eletropaulo in Brazil, which is the largest electricity company there, and Gas Natural in Colombia. We have 9 million customers, and during 2014, we sold more than 4 million policies. We are gaining scale every year. We offer a broad portfolio of products including life, accident and health, and non-insurance products, and we are adding new personal coverage during 2015. We estimate that direct marketing will be growing at approximately 25% CAGR during the next three years. How are we planning to do this?
Our strategy implies both acquiring new sponsors and also expanding our current relationships. With that in mind, we did focus on two big things. The first one, we implemented organizational improvement and talent improvement. For instance, we redesigned our direct marketing organization both at country and regional level in order to facilitate innovation across areas while also leveraging our capabilities. We also brought new talent into the organization, enhancing our capabilities, critical ones like digital analytics and predictive modeling. On the other hand, we strengthened our full provider capabilities through, first, new products like HealthPocket and MetLife Defender. Second, new channels like digital. We are focusing not only on digital branding, digital servicing, and social networking, but also we are focusing on digital lead generation and e-commerce as well. Thirdly, we are building on our existing capabilities on predicting and analytics. Finally, we are investing in technology.
We are also executing on our strategy of expansion to the direct-to-consumer business. We are leveraging our current capabilities in this sponsorship business in order to develop direct relationships with individuals in order to get first, customer ownership, and second, potentially high margins. Employee benefit is the last business I would like to cover this afternoon. MetLife is a clear leader across the region. We are the number one employee benefits life insurance company in Chile, and we are the number one in Mexico. We are also the number one non-bank player in Brazil. In LATAM, we do have 13,000 corporate clients representing more than 8 million employees. With regard to product offering, we mostly distribute life and accident and health. In selected countries like Mexico and Chile, we sell health, and in some others, like Brazil, we also offer dental.
We expect employee benefits to grow approximately at a 30% CAGR during the next three years. How are we going to do this? How are we going to achieve this goal? We have a strong reputation with both the HR community and the distribution channel, not only with the large five multinational brokers, but also with the large network of local ones. This strong reputation was achieved through three main things. The first one, a unique global regional and local leading presence. Second, a remarkable expertise and know-how and high-quality services. Thirdly, with a long-term relationship based on trust. We will also continue iterating our global employee benefit capabilities while at the same time deepening our local presence. Just to illustrate this balanced strategy, during 2014, 40% of our sales were multinational accounts, like PepsiCo, EMC, Hewlett-Packard, Pricewaterhouse.
This significant 40% also means that 60% were related with local accounts. There are also market trends we are benefiting from given our leading presence. On the one hand, the economic activity level will continue feeding the need of talent retention. We know that employee benefit is a key tool for that. On the other hand, as mentioned before, there is an underserved and under-penetrated small and medium enterprise market. We do have plans to tackle that. We are also investing in technology to innovate both at customer and distribution channel service. Just to give you an example, our dental operation in Brazil uses technology to dramatically differentiate our offering from our competitors. We are using technology to improve our not only distribution capabilities and service in them, but also our dentist network. With this last slide, I would like to summarize my key takeaways.
During my presentation, we discussed about our leading position and our robust growth strategy in each one of the three line of business. We saw how are we planning to expand our well-established agency and growing it at a low double-digit CAGR during the next three years. We saw how are we planning to innovate and grow in our direct marketing operation and growing it at approximately 25% CAGR. We covered employee benefit leading position, and we saw how are we planning to grow it approximately 30% CAGR during the next three years. We also mentioned that these three line of business are backed by a very well-diversified portfolio with a strong focus on high-margin, low capital-demanding products.
As a consequence of all of this, we are confident that we can not only maintain our competitive advantages, but also build on them in order to grow this emerging block of business that in 2014 represented 25% of our earnings at a growth rate of a range between 18%-20% CAGR during the next three years. Thank you very much for listening. With that, my colleague, Sofía, will share with us our unique worksite marketing operation in Mexico. Thank you.
Thank you. Good afternoon. It's a privilege to present you the Mexico worksite marketing. During this presentation, I will talk about a business model that not only represents profits and business for MetLife, but also a very strong and successful financial inclusion model for the middle and low-income population. I also will speak about the origins, but mainly about how MetLife has evolved and strengthened the business, leveraging constant growth, reinforcing entry barriers, and developing strategies such as data analytics and distribution best practices. Our presence of more than 80 years has given us an edge in terms of differentiating from our competitors. As I will explain with more detail, this business model is based on the opportunity coming from worksite sales collected through payroll deductions. This business has proven itself a successful story, achieving a double-digit compound annual growth during a long period.
According to the most recent census in Mexico, about 10 million people, this is almost 10% of the Mexico population, speaks one of the 364 registered ancient languages spoken in the country. Mainly in the center and southern states such as Chiapas, Oaxaca, Veracruz, Quintana Roo, Yucatán. These people is distributed in 64,000 communities country-wide. MetLife and its predecessor, Aseguradora Hidalgo, which began operations in 1931, have devoted the past 83 years to build the strongest financial inclusion business in Mexico as we provide insurance products and services for low and middle-income families. Here you see the phrase, "Mi Seguro Lo Es." This is Zapoteco dialect and means we are with you. This phrase has one of our sales brochures used in the Oaxaca region with the Zapoteco community.
Our capability to reach the farthest communities and provide financial security where no other competitor can is one of our main differentiators, and it's a key pillar for this business. MetLife acquired Aseguradora Hidalgo in 2002 for an approximately price of $920 million. The investment was paid off in the first 5 years with the earnings flow of the company. The paid price for the acquisition was fair. MetLife, since the beginning, focused on an organic growth and diversification strategy, which has remarkably strengthened the company. Just to give you some examples, at the time of the acquisition, the market share comparing with the companies that in that time sold automobile property and casualty, major medical and life was 12.2%. Nowadays, that market share reaches 15.5%. That's in a competitive landscape that included 49 companies in 2002 versus 71 companies commercializing those line of business in 2014.
MetLife also has diversified towards private and different distribution mechanisms. Just to give you another example, our market share in major medical was 7% in 2002, and now it is 14%. We have doubled our market presence. Aseguradora Hidalgo was a government insurance company focused and specialized in covering government employees. Another very important data is that the statutory earnings had a very important growth. They were $68 million at the time of the acquisition, and in 2014, it raised to $495 million. There were some extraordinary events, but normalized, it's about $400 million. The acquisition has given us 4 important advantages. The first one is the extensive access to government workers through collection slots. The slots allow us to collect via payroll deductions the life insurance. An efficient operation model that supports a high volume business.
This model is very well known by our sales force that are experts in the agile management of high volume operations. The nationwide presence. The nationwide presence let us give a broad service and give us the infrastructure to meet customer needs country-wide. Last but not least, a comprehensive product, very comprehensive from the customer standpoint. I will elaborate on each one of those 4 elements further on. If we take a look at our market presence according to the official insurance sector sources, the insurance industry in Mexico represents 2% of the gross domestic product. If we zoom in in the companies that commercialize automobile, property and casualty, major medical, and life, our market share is 15.5%. Only 5 companies represent more than 50% of the market. If we zoom in in the lines of business of major medical and life, that is very important.
It's the only lines of business that we commercialize in the country. Our market share is 25.3%. If we zoom in in the specific business, we're speaking about worksite marketing in individual lives, our market share is 79%. We are speaking for the first column, 71 companies present, for the second, 49 companies, and for worksite marketing, 21 competitors. This is a proven and successful business model, and more than 80 years of experience supports our knowledge of the Mexican government with approved and successful business models. I would like you to take your imagination to the environment where we develop our activities. Imagine a public school, but not in a city. Imagine a public school in an isolated community where maybe children have to walk hours on paved roads. Maybe the school has the very basic services, maybe not even water faucets or toilets.
Imagine a hospital in a rural community also with very basic services. Those are the kinds of environments where our agents develop their daily activities. Our agents make sometimes four hours of road to get the schools and to give service to those teachers or to the people that they are selling. Our main customers are public school teachers, doctors, nurses, and government officials. As we have reviewed, the slots in the payroll are one of the primary competitive advantage that MetLife acquired with the acquisition. Because of its proved efficiency, turned into high persistency. Something also very important, besides payroll deduction since three years ago and searching for new business opportunities, we began developing the banking collection as a proper alternative to reach those markets.
When it comes to distribution, our distribution is based on a sales force comprised of 21 promotorias, over 3,300 agents distributed in 223 offices. The promotorias are independent companies, very similar to the independent agents model, with a commercial exclusivity contract on insurance with MetLife in the lines of business commercialized by MetLife. Their main activities are attracting sales force. This includes recruitment, selection, training, and then routing the agents to the company and to the organization, also operational work such as data entry, policy issues. Those operational activities allow us to make a huge part of our costs variable. Those promoters are remunerated through a variable commission based on sales growth and persistency. We have also another very important aspect, in distribution, that is our nationwide presence. We have offices in 140 cities where customers can interact directly with MetLife.
In contrast to the individual life traditional private market, where to get a prospect, an agent has to ask for referrals, maybe call to get an appointment, then visit the customer, spend one hour with the customer, maybe come back to present the value proposition after doing the needs analysis. In this business, the potential customers are visited face-to-face directly in their worksite without a scheduled appointment. This can be done thanks to the agreement with government entities that allow us to have presence at the workplace and sell their individual policies. Another very, very important aspect is the MetLife brand recognition that allow us also to move freely at the government facilities. Although the prospecting is not through referrals, data analytics is fundamental for the promoter and key to manage the agent's activity to get new sales opportunities.
All the process of both new sales and cross-sell and upsell are very, very simple processes. A productive agent can close around four sales per day. Due to the market segment, we have a very transactional business, much higher than any traditional life insurance model. Just to give you some numbers, the sales we got in 2014 were $196 million, with an average annual premium per policy of $600 and an average face amount of $23,000. This is about a third part of a typical life insurance private market. Just giving you a reference, a teacher's annual income is about $7,700, and the average premium per policy in that segment is $515. A teacher devotes 6.7% of his salary to pay his insurance. This business also has a very high persistency, over 90%.
Also to give you a benchmark, according to LIMRA, Life Insurance Marketing and Research Association, in a study named LATAM and Caribbean Life Insurance Persistency, for the private market, the average is among 82%-85%. In this worksite marketing, over 90% is an excellent number. Regarding our product value proposition named Met 99, it's a universal life platform with 18 riders. Our customers can enhance their policy with different additional benefits such as savings, critical illness, personal accidents, funeral expenses, among others. Something very important, our admin system allow us to put all of those basic coverage, plus the rider, under one umbrella policy. This means that in the same slot of the payroll deduction, everything will come together, the new sales and the riders that we do through the life of the policy.
Just to mention how important and relevant riders are, during 2014, of the 100% policies sold, 45% were new business and 55% were riders or face amount increases to current customers through the upsell and cross-sell efforts. Another example of how important riders are, during 2014, we launched two new riders, the personal accident and additional funeral expenses for parents or other dependents. In only six months of operation, we reached $7 million in sales and more than 270,000 people insured. Here's an example of how Met 99 flexibility allow us to align with different life events, identifying milestones in our customer life and the different riders we can offer them in a specific moment.
For example, you have somebody that today is 22, maybe he lives still with his parents and they are partly dependent on his wage, so he can acquire a death benefit and a total or permanent disability. Five years after, maybe he lives alone and he gets a job promotion. He may have more additional income, so he begins to concern about retirement, and he can complement his coverage with collective accidental death and a savings premium. Maybe he gets married. Now he's 34, and he acquired for him and his spouse an additional death benefit like coverage and the benefit cancer for both. He has two children, and he decides, as he's concerned about health costs of accidents, personal accident rider and maybe the educational benefit to cover his kids in case he pass away. He may be 60, maybe he is now a widow.
One of his parents has passed away and the other one is dependent on him. He may acquire the funeral expenses for the survival parent in order to not leave a problem to his children. All of this is the same policy. About the bank collection opportunity. We have consolidated our expertise in banking collections. In the past, when a government decided to retreat from the payroll deduction scheme, we used to lose the market. Nowadays, if this happens, this mechanism allows us the continuity in markets which have closed the payroll deduction and also in those where people can't be reached through payroll deductions. Banking collection has given us the opportunity to reach more than 800,000 prospects in markets that some years ago were simply inaccessible.
The advanced progress of this mechanism has reached a persistency around 80%, something similar to the one that we actually have in the private market. This is still a substantially untapped market. We have a high market presence, but still also a high white space opportunity. Of a total of 4.3 million government employees, there are 3 million where MetLife has payroll deduction slots. Of those 3 million, 1.8 are our actual customers. Our penetration in the market with payroll deduction slots is 60%. We still have an opportunity of 2.5 million people, both Worksite Marketing and banking collection. Composed 1.2, the ones that had a slot for payroll deduction, and we haven't reached them yet, 0.6 without a slot, and 0.7 non-permanent employees that can or cannot have a payroll deduction slot. Our business model has 4 important stages. First is the market understanding.
Here, in spite we sell the same product to different markets, we have to understand the specific profiles per government entity to define the strategy to improve market penetration by creating new sales teams. It's totally different how you sell to a teacher than to a doctor, to a policeman, to a government officer. The presentation of the solution is totally different. The second is the aspect of the opportunities analysis. Thanks to the data analytics system that we have, we can generate in real time the opportunities for the market, for the segment, and for specific customers so the agent can generate the leads and a daily agenda to visit the work entity and to do their activity of cross or upsell or even new sales. Here it's very important to consider that the prospects are visited in their workplace, so there's a time restriction in the face-to-face selling.
All of this under an umbrella of a marketing campaign that again is totally tropicalized to the government entity where we are selling. In just 2 years, we have launched more than 300 different marketing campaigns for this piece. As our principal takeaways, we have been capable to maintain and reinforce our long-term successful track in Mexico. Worksite Marketing is a proven and successful business model, we enhance it through alternative collection mechanisms. We have strengthened the implementation of high-performance sales practices with our distribution channels, we endorse our market leader position with opportunities for a continued double-digit growth, protecting the low and middle income market segment with a comprehensive and accessible value proposition. Thank you.
Now it's my pleasure to introduce you to Ricardo Rodríguez-Marengo, CEO of Provida Chile.
Thank you, Sofía. Good afternoon, everyone. I'm going to share with you a presentation about Provida, and I will walk you through our business environment, an overview of the company, the Chilean pension system, and our strategy to grow consistently over time. First of all, let me point out three main concepts that we will see throughout the presentation. First of all, Chile has the most established pension market in Latin America, accumulating more than CLP 165 billion under management, representing 70% of Chilean GDP. Second, Provida is the market leader since the inception of the system, competing in different scenarios, supported basically by the strongest brand in the industry, growth, distribution capabilities, and customer loyalty. Our diversified customer portfolio and scale drive profitability and growth. Third, MetLife is giving us the possibility to leverage the brand, marketing capabilities, and technology.
Very important to talk about the pension systems to understand our business environment. Chile has a defined contribution pension system, private pension system, since 1981, based on individual saving accounts. It's an individual market, and this is very important in terms of our margins. An important reform was done during 2008, introducing major changes to the system. Mainly, I would like to point out the introduction of the solidarity pillar to provide minimum pensions to the people that couldn't save enough money during their working life. Second, an auction to capture the new entrants and increase competition. We will talk later about that. AFPs are single purpose companies. The only ones allowed to collect 10% contributions plus fees from the workers' salaries. We are the only one company allowed to do that.
Of course, we can collect also voluntary savings and since our affiliates pensions, and in this case, we compete with another asset managers like insurance companies, mutual funds, and banks. We have also a retirement product without a mortality component called phased withdrawals. Really, it's not very important till now in the market. We invest the money in five different funds with different risk return strategies. This is required to have really a robust and world-class investment process to mitigate fiduciary risk. Regarding the auction, every two years, the pension superintendent runs the auction process. The AFP that offers the lowest fees in the market obtain the right to capture the new entrants for a two years period. AFP Modelo was created for this purpose, and they won the first two auctions. Last year, Capital won the third one. The affiliates should stay there for a two years period.
Every single month when they reach the 2-year period, they are free to choose another AFP. This is an important source for us of growth because we are recovering the new entrants after the 2-year period. Fortunately, those years will pass through here, and we are recovering this important source of growth every single month. Let me talk to you about our revenue generation. We have 3 sources of fees. First, and the most important fee is related with the mandatory products. We charge our fees on salaries. It's not on assets under management like other asset management industries in the world. On average, we charge 1.16% on salaries. If we translate this fee in a asset under management fee under certain assumption, it's like charging 45-50 basis points on salaries through the working life of our clients.
In the voluntary products, we charge on assets under management, and the average is 55 basis points. In the phased withdrawals, we charge on the pension payments, and it's about, in the industry, an average of 1.2%. I think that what is very important to say is that 95% of the fees in the industry are related with the mandatory business, and this is really important. 95% of the fees are related in the mandatory business. Only 5% of the fees are related with the retirement products and the voluntary products. Finally, it's important to add that AFP are required by law to maintain a 1% asset of the funds under management, and the investment product of this asset is another source of growth and revenues for us. As I mentioned before, our main business is related with the mandatory product, and we charge fees on salaries.
It's important to talk about salary growth in Chile. During the last 3 years, the salary pool grew 11.4% on an annual basis, and due to really very high growth rates in both contributors and salaries. Our national average salary growth is about 6% a year. The industry grew at 8.4%, as we will see later. These figures are supported by a new middle class, as Oscar and Mario told you in other presentations. A new middle class that is growing very fast, pulls up low salaries, and of course, with very low unemployment rates. Let me tell you something about the Chilean pension system. The Chilean pension system has been very successful in terms of transforming contributions into pensions, while the funds perform and over-perform the original expectations at a rate of inflation plus 8.5 in the last 34 years.
It's also very well ranked among the most prestigious indexes in the world, like the Global Aging Preparedness Index or the Mercer CFA Institute Global Pension Index. Nevertheless, we must face a lot of challenges. Most experts agree that the issues are related with life expectancy and retirement ages, particularly for women. They retire at 60, and they live till 90 in Chile, so they have to support more years with the pension. Some informality in the labor market and individual independent workers that didn't contribute on a mandatory basis for the last 34 years. These two issues generate lasting contributions that finally impact on pensions. Of course, the increasing volatility to the financial market. The government, Bachelet administration, created a special commission to study and propose the changes that may be introduced in the system to face this new scenario.
We also have a state-owned AFP bill in its legislative stage. At this moment, we are not very sure if some of these changes will be implemented during this administration. Let me talk about Provida. Provida is the market leader since inception of the system due to the extensive branch network, the seniority and size of the agency channel, and the strongest brand in the industry. Market share supports profitability, and Provida is ranked number 1 in customers and number 1 in assets under management. In the voluntary business, we are number 4 with a 14% market share. I think that it's very important to remark that our leadership in the mandatory business, that represents 95% of the fees in the industry, allows us to be number 1 in revenues with 30% market share and even higher share in operating earnings.
We know that our diversified client portfolio, very strong in the middle and middle-low segment, is really an important asset for growth in the future. During the last five years, Provida has been moving from a mass market company to a segmented value proposition company. This means that we have to deliver different value proposition and build different distribution channels to serve the different target segments. We define our agency channel. We improve our advisory model with a multi-product approach. We were able also to move from a transaction-oriented branch network to a real distribution channel focused on sales, referrals, and customer service. Let me tell you that MetLife allows Provida to leverage technology, marketing capabilities, best practices, and the strength of the brand. Looking ahead, we have several sources of growth. In the mandatory business, the main drivers are related with the new entrants and salary growth.
The inclusion of independent workers on a mandatory basis in the coming years will be a great opportunity of growth, too. In a sense, Provida is the market leader in this segment too, with 34% of independent workers that contribute on a voluntary basis in the market. We know we have a lot of affiliates that will begin contributing to our business. Talking about the new entrants, we talk about the auction process. What is happening is that while the time is going, Modelo is increasing the free clients very sharply in the last years. This year, Modelo will increase 150,000 free clients in the market, totalizing 600,000 free clients by the end of the year. This is an important source of growth for us.
Our experience is that we are growing very fast, and we have positive net transfers again, Modelo, and these net transfers are growing very fast month by month. The voluntary products and the retirement products are still not very important in the market, and it's not very important for us. We know they have high growth rates, and we are improving our value proposition to capture these sources of growth, too. To grow, we will continue taking advantage of our scale and our diversified customer portfolio, building a differentiated distribution model, and increasing persistency and loyalty from our clients. Let me talk again about salary growth. I told you that the national salary growth was about 5.9% in the last three years, while Provida and the pension system grew at 8.6%. We have a minimum and a maximum considerable salary.
It's about more than $300 a month to the maximum $3,000 a month. The minimum grew at 7.3% and the maximum at 6.3%. The growing middle class reports really these figures and pulls up the lower segments. In our customer database, that is 33% of the market. It's more than a proxy. The lower salaries are growing more than double the rate of the high-end segments. We know we have an important asset to be positioned in this segment. I mentioned many times about our branch network. You know that Chile is a long and narrow country. From north to south, it's almost 3,000 miles. It's like going from Seattle to Miami or from London to Dakar. The population is about 17 million people. Of course, we have some concentration in the major cities, but we have customers everywhere.
It's very important to have a face-to-face contact because we are saying to our customers that we will be there in 30 years, 40 years to pay their pensions. The face-to-face contact is really important. Last year, we provide 1.5 million face-to-face advisories to our customer database. This is a great opportunity to increase persistency, loyalty, and obtain referrals. Also, we have more than 5 million transactions in our self-service kiosks along Chile. Our branch network really is an asset to grow in the future. Last year, we opened 24 new branches, totalizing 82. This is about more than double the second-largest branch network in the industry. This national presence allows Provida to be closer. 97% of our affiliates are closer than 30 miles from a branch, and 89% are closer than 12 miles from a branch.
We know that this footprint drives loyalty, lower turnover ratios, and of course, growth. First, let me tell you something about the nature of our operations. We collect contributions from 400,000 employers and companies every single month. Also, we pay more than 250,000 pensions a month. We process more than 50,000 pension applications, and we have more than 10 million interactions a year. I think that this chart is a very important chart to show you the way we are improving customer service with a significant reduction in the complaints of our clients. An example of this is the pension application process that used to last days and weeks, and nowadays, through our branch network, we have a 10-minute process where an affiliate, with only one visit, can finish their application.
We think that quality service and level planning are strongly related, and of course, we need a fully committed team to improve customer service. We are very proud because we have been rewarded as a Great Place to Work company for the last three years. Now, our challenge is to move from a customer service perspective to a customer experience-driven company. I think that this chart is really important. Improving customer service, improving advisory, improving the proximity to our clients is the way to improve loyalty and reduce our turnover ratio. Let me share with you the turnover ratio of all the players in the system. As we can see, we are the blue line, and we are the second best in the industry, very close to the first one. The first one is not a low-cost company. The low-cost company used to have very high turnover ratio.
The fee is not the main driver for people and the market to decide which is the best AFP to be in. We think that this chart demonstrates that with the highest fee in the market, we have a competitive marketing mix for our customer portfolio to support growth and profitability in the future. Our marketing mix is focused on a segmented value proposition to serve the targeted markets, specialized channels by segment, proximity through our branch network, proximity through our digital offer and remote channels, and simple transaction to improve customer service. All of this under the umbrella of Provida and MetLife Company. As you can see in the chart, the performance and attrition ratio improved since the MetLife acquisition very sharply. Let me talk about our performance against the competitors.
As we can see, with a competitive turnover ratio and very competitive distribution channels, we were able to maintain net positive transfers against the rest of the competitors in the last quarters. Basically, since MetLife acquisition, we were able to have more than 22,000 new clients. This represents, if we translate this in fees on an annual basis, 2% growth in fees. Really, we are improving every single month, and of course, this is a very important chart to support growth. Let me talk about our voluntary value proposition. Due to the transformation I mentioned before, moving from a mass-market AFP to a segmented value proposition company, we are improving our performance in the voluntary products. Of course, with MetLife, really MetLife is very strong in the high-end market, and that's leveraged our value proposition.
As you can see in the chart, from MetLife acquisition, we were able to grow our voluntary assets to almost 25%. This is a very good performance, and we know that we will continue improving the value proposition for the high-end, and this is an opportunity for us. Finally, let me give you some key takeaways. Chile has the most established pension market in Latin America and is very well-ranked among other pension systems in the world. We have a very regulated market, Provida has been very successful adapting our strategy, our organization, to face different scenarios, including the important reform that Bachelet did in 2008. As a proof of this, Provida is the market leader since the inception of the system based on the strongest brand, broad distribution capabilities, customer loyalty, a diversified customer portfolio, and of course, our scale.
We know that our market share allows us to deploy the strategy we shared today with you, and it's an opportunity to continue building marketing and distribution capabilities in the future to assure our leadership in the long run. Finally, our growth is accelerating, we are taking advantage of being part of MetLife in terms of brand, marketing capabilities, digital development, best practices, and a brand that allows us to be more competitive in the voluntary segment. Thank you very much to you, we have a five-minute break. Thank you.
You think you're in love. Yes, you probably are. You wanna be straight about it. You wanna be straight about it now. You think you're in love. Yes, you probably are. You wanna be straight about it. You wanna be straight about it now. Can you imagine what the people would say? Can you? It's a sudden authority. The crime of the century. You know it. Are you sure that it's love? You probably ain't. Because I wanna be straight about it. You shouldn't be straight about it now. By the look in your eye. You probably ain't. You shouldn't be straight about it. You gotta be straight about it now. What is love made of? Brother you know. What has you so rattled? Everyone knows. It's love. It's love. You think you're in love.
Yes you probably are. You wanna be straight about it. You gotta be straight about it now. You think you're in love. Yes you probably are. You wanna be straight about it. You gotta be straight about it now. You think you're in love. Yeah.
[Foreign language] Ay, niña. Yo me encuentro solito por la tarde. Yo me siento enamorado. Yo me siento triste solo. Yo vi, yo va, cada día te quiero más. Yo vi, yo vi, yo vi, yo va, cada día te quiero más. Yo vi, yo vi, yo vi, yo va, cada día te quiero más. Yo vi, yo va, cada día te quiero más. Yo vi, yo vi, yo vi, yo va, cada día te quiero más. Yo vi, yo vi, yo vi, yo va, cada día te quiero más. Ya no me importa más. Que la distancia ya todo lo ha apagado. Voy recordando ya de ti. Y no me digas, es para igual
[Foreign language] Cada día te quiero más. Tobi, tobi, tobi. Cada día te quiero más. Tobi, tobi, tobi. Cada día te quiero más. Tobi, tobi. Cada día te quiero más. Tobi, tobi. Cada día te quiero más. Tobi, tobi. Cada día te quiero más. Tobi, tobi. Cada día te quiero más. Tobi, tobi. Cada día te quiero más. Tobi, tobi. Cada día te quiero más. Tobi, tobi. Cada día te quiero más. Have you ever been close to tragedy or been close to folks you had? Have you ever felt a need so powerful so heavy you could last? No. I never had to knock on wood, but I never want to have. Which makes me wonder if I could. It makes me wonder if I never had to knock on wood.
I'm glad I haven't yet, because I'm sure it isn't good. Let's be impression that I get. Have you ever had the urge to go so high you needed strength muscles would let? Has it ever come down to do or die, you got to ride or forever rest? No, I never had to knock on wood, but I never want to have. Which makes me wonder if I could. It makes me wonder if I never had to knock on wood. I'm glad I haven't yet, because I'm sure it isn't good. Let's be impression that I get. I'm not a coward, I've just never been tested. I'd like to think that if I was, I would pass. Don't get me twisted and confused with all the drink I want. I might be a coward, I'm afraid of what I might find out.
I never had to knock on wood, but I never want to have. Which makes me wonder if I could. It makes me wonder if I never had to knock on wood. I'm glad I haven't yet, because I'm sure it isn't good. Let's be impression that I get. Never had to put I better knock on wood, 'cause I know someone who has. Which makes me wonder if I could. It makes me wonder if I never had to put I better knock on wood, 'cause I'm sure it isn't good. I'm glad I haven't yet. Let's be impression that I get. Do you remember the feeling inside your heart? Love is changing your mind tonight. While chasing the clouds away. I want to swing it in the trees that sway. Sing it as we dance through the night.
Keep in love while the stars come out to play, oh yeah. Oh, do you remember? Oh, does it look better? Oh, never was a better day.
If we could find our seats, we'd like to start the Q&A session.
I want to put you over heaven above.
You're talking to the wife. You have enough females in the house.
Just for a second.
I wasn't asking. Okay. We're going to get started with Q&A. Please wait for the microphone, give your name and firm. Like I said, one question, one follow-up. We have plenty of time for questions. Just in fairness, we'll let everyone ask their first question and we'll come back to you. I also want to point out that in addition to the presenters, we also have John Hele, the CFO, who I know most of you know, and Ricardo Anzaldua, who is our General Counsel, are also both here in the front of the room. Okay, with that, we'll go to the man with the mic, Tom Gallagher.
Thanks. Thomas Gallagher, Credit Suisse. My main question is just a high-level question. You have a 15% ROE in this business. Where are new business ROE right now? Where can this 15% ROE go to if you look out four or five years from now?
See, I'll see if Murphy disagrees with this. It'll head north. It's not 15, by the way. It's 15 plus, I think is what we said. It's plus.
15.1?
Yeah. It has as high ROE as anything in segment life right today, any business segment. If you look at the businesses that are growing the fastest and who are the biggest, right? We've highlighted two of them today, Worksite Marketing and Provida. The ROEs in those businesses are well north of 15. I think as the mix shifts a little bit and the business continues to grow, I think you'll likely see that number head north.
When you say head north, can you quantify that out if you look out over a longer term horizon? Are we talking about 16 towards something closer to 20?
It's a lot.
Thanks.
Steven.
Steven Schwartz, Raymond James. The worksite marketing presentation that we just saw for Mexico, Hidalgo, is there other worksite marketing business in Mexico, and is it substantial?
Well, let's take that one maybe. Go ahead. Jump in. I guess it is a very large business in Mexico, and as you could see, it's pretty unique. It's focused on a government segment employee, and it's driven by relationships that we acquired through the Hidalgo acquisition that we supported that business and we increased and we improved it. Of course, you can extend the same business into the private sector. As Sofía explained, you can also extend that business into segments of the government where we are not present today, right? In theory, yes, but Sofía will tell you a little bit about where we are right now in that expansion.
Sofía. Sofía, could you stand as well? Thank you. Here's a mic.
We are actually in more than 200 private companies testing these models.
Okay.
It's still early, but having presence in those companies is a very good signal of the potential to develop the same model in the private company.
Okay. Sofía, just as a follow-up, the large case that you won and was noted, was that a private company?
The large case? No, this was a government.
That was a government case.
Yes.
Everything turned over.
Let me just make that clear before we forget. That was a big group benefits case.
Okay.
Okay? Not a worksite case. That was group.
Okay. That answers my question. Thanks, Bill.
Okay. Behind Steven. Erik.
Thanks. Erik Bass with Citi. Just hoping you could put the employee benefits opportunity in context a little bit more. In the countries that you're targeting, how big is the overall market today? How do you see that growing and what are the key catalysts for growing the market?
Right. Well, you know how relevant group business is for us in the U.S., and you know how big the business is in the U.S. Well, number one, relative to the size of the economies in Latin America, the employee benefits business is not as big as it is in the U.S. I would say they're hard to find anything close to the U.S. business, to the group business in the U.S. outside the U.S., right? Certainly not in Latin America. There are group businesses in every country, and we're expanding and growing. If you think about where we make our money, significant, more than half is agencies. Group is a very important business. If you think long term, how far we can go growing the business, it's going to be an important supplemental business, but it's not going to be like 50% or anything close to that.
There are a number of reasons for that. The companies are competing for low cost and increasing their benefits like they do when it's inevitable, right? Companies are not willing to just increase cost for the sake of adding benefits. They do it when they cannot attract or retain talent, now that it's happening. Not to make the business our largest contributor. It's not going to be that case. I think in the chart that somebody showed, maybe it was you, Mario, that said that the employee benefits was 4% of our earnings in 2014, and it was going to grow a little less than 10% a year. Employee benefits in Latin America, really in most emerging markets, is a business in its infancy.
Again, as somebody said, Most of these companies that have employee benefits are really generally big multinationals or very big local players, the very biggest companies in the country. What we're starting to see, though, is that's coming down market and getting into smaller employers. That's just basic coverage, group life, medical, in Brazil, dental. If you think about where that business is today, where it'll be a decade from now, and the fact that there's going to be lots and lots of worksite marketing, I think, done much in the way we do in the U.S., not necessarily the Mexican model. That business has a huge amount of potential, and we want to be on the ground floor of it, right?
The way we're really starting, we've always sold group in Latin America, but our effort over the last couple of years was to really leverage the U.S. multinational relationships who all have employees around the world. Sales volumes have jumped significantly with that effort. That's kind of the story.
I'm letting you.
Earnings contributor today. It's about a $40 million business compared to 2014.
Okay. That's a fair point.
30% we said 30% growth over the next three years.
30% growth over the next three years. You have to think about two sides, right? One is the traditional employee benefits, and the other one is worksite marketing, too, and you have to see the combination. There is big potential for the voluntary side, long term because it's coming out of a low base, probably exporting worksite marketing experience. There's also the other side, which is more traditional, as Schmidt explained, when you refer to clients.
Right. It's 6%-9% of our earnings in 2017.
Right.
Not gross rate. Right.
Yeah.
Hi, Jimmy Bhullar, J.P. Morgan. I had a question for Ricardo on Provida. You've been at the company since before the MetLife acquisition, if you look at the slide that you've shown us, there's been a dramatic improvement in turnover rates, in customer complaints. It's a limited amount of data, maybe talk about what it is that you've been doing or what's been done at the company that's helped improve the results. Specifically in terms of turnovers, you're still better than before, still worse than most of your competitors. Can you get to an average type level?
It's working? Yes. Well, of course, I think that what has changed is that before in BBVA, Provida, it wasn't a core part of the core business. We did invest in the agency channel very sharply. What has happened is since MetLife that we're investing, really. Of course, we were working to improve customer service in a long period, in the last five years, we improved that, we are taking advantage of that process. Really what is happening is that MetLife brand really leveraged our performance, we have seen that the turnover ratio, really, because we were on sale two years because we announced the selling process two years before the closing. We improved during this period, doubling the agents, increasing the branches, of course, we worked redesigning our processes. This is a process that began five years ago.
Really, MetLife is taking advantage of that process. That's what is happening. In terms of the turnover ratio, we are the second best. The other one is also a very large company, and what we have seen in the market is the high-end and the low-cost companies are not performing in the same way than the mass group, the universal companies.
Let me just add to that a little bit because I think Ricardo's being gentle. The whole reason that Provida came up for sale is its prior owner had some financial difficulties. I mean, that's well known. As you said, the business was rumored to be for sale for quite a long time. Even though I think there were some very good strategies that Ricardo and his management team had put together for Provida, the execution was difficult. There was just a lot of uncertainty. Nothing says it better than that cash flow chart. When ownership was resolved, right, and we were announced as the new owner, suddenly it was a sea change in terms of mentality, and it's like, obviously the competitors couldn't sell against Provida like they probably used to be able to because then play up that uncertainty and stuff.
A lot of this had to do with really just the uncertainty was gone. Also, the prior owner, frankly, was unwilling to spend money. That's why in the first 18 months, we opened 24 branches, right? Because the need was obvious, and we said, "Let's move forward. Let's get going." By the way, we didn't talk about today, if you were to benchmark the investment performance, okay, pre and post ownership, right? We can all have different theories about why our investment performance has improved so much, but it's pretty dramatic since the ownership change. A lot of good things are going on at Provida right now.
What about the question around the assertion of the net transfers relative to peers?
Well, yeah, just Jimmy, I don't know if you misspoke. As Ricardo said, we have the second-best turnover rate in the industry. Not worse than average, but the second best. That's what that chart shows.
Right. If you remember the chart, there's only one company that is better to us, lower attrition, it's very close, actually very close. Well, that company is not a low-fee company. It's not an upper-segment company. Actually, it's a company pretty similar to us. That tells you something about what people are looking for. With low fee, what are they looking for? Also, we feel that having low turnover, low attrition adds a lot of value to the business. A lot.
Thank you. We go to Seth, right here in the middle. Oh, okay.
All right, thanks. Hey, Ryan Krueger with KBW. I had a question on worksite marketing. The 33% of earnings that you showed for worksite marketing, is essentially all of that Mexico, or are there material contributions from other countries?
Yeah. Mexico.
Yeah. Oh, there you are. Sorry, Ryan. 33% was worksite marketing, and then when I did the product and I had the 37.
The other four is mixture of other individual life, but it's 33 of worksite plus four more across the rest of the region.
Okay. Then, I guess in terms of Mexico, can you just talk about the rate of growth you're seeing amongst government employees over, say, the last five years or so, and then how the penetration rate within that has trended?
Okay. As you know, in government, there's not a very high turnover in employment. The government number of employees is almost steady. It has grown 0.03% in the last year. The minimum wage increased in 3.93% since 2009. The business growth is much more focused as you age and you change your needs on the cross-selling and upselling activities, as I showed. 55% of the growth of this business is much more focused on those activities.
I got to make sure I get this right. Almost no increase in government employees, very modest. Almost just under 4% increase in wages annually. In terms of penetration, the penetration was in the 50-
60
five or three years ago, and now it's, how long ago was it?
60. Now it's-
Now it's 60, but what was it in the past? It's grown, obviously.
Yeah.
Another way to look at it is average age in that segment is 47, when in the private sector, for a similar situation, it's 41, 42. It tells you that there's less turnover, right? That's why the average age is higher. That's also very good for persistence.
Yeah, but the-
You can retain customers.
The penetration in 2010 was 55%. All of these data analytics models what allow is go with a very laser strategy on the target market.
Thanks. Seth Weiss, Bank of America Merrill Lynch. A couple questions on some of the growth opportunities at Provida. Ricardo, you highlighted independent workers as a growth opportunity. My understanding is that starting later this year, they're going to have to start contributing into the AFP system, where before they hadn't. I believe independent workers is a large portion of the workforce in Chile. Can you help size this opportunity for us?
Yes. Of course, the regulations said that they will contribute on a mandatory basis from this year. The government thinks that perhaps they are going to delay part of this obligation, and to split it. We are talking about more or less 200,000 independent workers that issue bills. Our analysis is that we have more or less 34% of these independent workers in our affiliates nowadays. All I have to say is an analysis that most of these clients are already in Provida as affiliates, but they are not contributing on a mandatory basis. Of course, the regulations, of course, this year they begin. We'll have a very sharp growth in workers this year because our analysis about between 50,000-75,000 customers that they should contribute.
This is not an exact figure, but there's a lot of independent workers that are already affiliated in the AFPs. They are not new book entrants going to the lower fee. It's an opportunity, but we have to look at it if the government will delay this obligation this year to split it in some different years. It's about 200,000 workers in Chile.
That's the total pool, not just at Provida.
That's the total pool. Provida, we have 34% of the independent workers that contribute on a voluntary basis
Every single year. Our market share of the independent workers that contribute nowadays on a voluntary basis is 34%. I think that this is a proxy of what we have embedded in our portfolio.
Perhaps one more follow-up on Provida. I've heard talks of the contribution rate perhaps increasing beyond 10%. Where do you see that going, and what does that mean in terms of the fee structure, considering that you earn fees on salary, not fees on deposits? Would an increased contribution necessarily lead to higher revenues?
Well, yes, most of the experts agree that we need to increase contribution rate because we have to face life expectancy and a lot of issues in the future, and the performance of our funds will be not the same like in the first 15 years of the system. We charge on salary, so if the contribution rate grows, we have the same fee. This is not a lever. The only way is to increase the fee. If you have the salary and we charge our fee on salary, and then you have a 10% contribution rate. If the law, for example, changed and we have a 12 contribution rate, we'll continue charging the same fee on salaries. I think that is important.
It's not for our business, I think it's important for the system and for the affiliates in Chile to increase the contribution rate to face the new.
Actually, that is the scenario. Let's say moving from 10 to 12 and, as Ricardo said, the business will not change. We'll have more funds to manage, we'll spend more money in managing those. Costs will go slightly up, and we'll have to increase the encaje, the capital that we retain. It's not very good for the business. I think it's marginal impact, it's good for the sustainability of the system long term, which is good.
David.
Hi. Just a question on Provida. Could you help us think about the voluntary opportunity versus the mandatory opportunity? Do you think about the voluntary opportunity as being the bigger opportunity as you go forward, or is the mandatory really what drives the growth?
What I try to show you is that this is a mandatory business. 95% of the fees are related with the mandatory product. That is because we are the only companies allowed to compete in this business, and of course, because of the demography in Chile. We think that the voluntary product has higher growth rates. At the same time, the salary pool is growing low double digits. Perhaps the voluntary product will grow 15, 20, but nowadays they are less than 3% of the fees. We have 1% growth annually on fees. I think it's good for us, and we will try to take advantage of that. That's the reason why we are moving from a mass market into a segmented value proposition company. It will add 1%, the best case, to our revenue growth. We are not thinking that is the main driver.
The main driver is growing middle class, like in the rest of Latin America, growing middle class. That pulls up the low salaries, and lower salaries in our customer database are growing faster than the high-end salaries because of this phenomenon. We are really well positioned to capture this growth.
Just to clarify that.
This is really important because we're in the right segments of the market for the highest wage growth, right? In terms of inflation and where wage pressure really is. Never mind the protest outside the hotel, which we staged for you to make this point. That growth rate in those segments of the population will grow our top line many times faster than the voluntary opportunities. Voluntary is part of the equation, but it's not the biggest by a long shot.
Just to clarify, that 3% of fees for voluntary, is that for the market or for Provida?
The market is 95% mandatory and 5% voluntary plus phased withdrawals. In the case of Provida, we have a higher in mandatory. Mandatory is 97%, and we have 3% in the rest. The market as a whole is 95% and 5% voluntary plus retirement products, the phased withdrawals.
The way to think about it is the system makes all workers in the country to be forced to contribute mandatorily every month, right? That's the mandatory product. They can also contribute, if they want, voluntarily. What is the segment that can actually afford that? If you compare all the mandatory with the segment contributing in addition, yeah, it is important. I think our vision is we need to focus on the mandatory.
Sean, then we'll pass it to you, Yaron.
Thanks. Sean Dargan from Macquarie. I had a question about Conor's comments on operating efficiency. Do you, at least in Spanish-speaking countries, have a shared service program or platform in a low-cost country? I mean, is that common? Because we're conditioned to hearing somebody from India on the other end of the line. Is that something that happens in Spanish-speaking countries?
Hon-
Is there room to further drive that?
Well, historically, all of our insurance businesses in Latin America, each country had pretty much a fully integrated business. They did their own service, they paid their own claims, totally a vertically integrated company in each little country. Not very efficient. What we are in the process of doing is consolidating those operations on a regional basis. Of course, the uniter of all that is Spanish. We've done some of that to date, but we expect to do a lot more in the coming years and truly run this as a region as opposed to seven individual countries. There's a lot of leverage there yet to do, and that should be a driver of the expense ratio for a while.
Yaron and then Colin.
Thank you. Yaron Kinar with Deutsche Bank. If I turn back to slide 61 in Sofía's presentation, a couple of questions on that. First, the 60% penetration, is that just the number of customers that are buying Met products, or is that if, let's say, one customer has four riders-
No, it's the-
Next slide
customers that have the basic death coverage, and they may have a rider.
Okay.
The average riders we have per customer are four riders.
Okay.
Per customer.
The 60% penetration can be customers that have one rider, four riders, or eight riders.
Exactly.
Okay. My follow-up question would be on the $2.5 million customer opportunity. Is that a number that's a current number, or is that something that already includes potential additional growth opportunities or a growing market?
It's the number of customers that today we can reach from both through payroll deduction or through banking collections that are actually government employees.
Do you see that two and a half million number growing with time?
Yes. This number does not consider the opportunities in the private market. This is only for the government markets that I described in this slide.
To be clear, there will be some growth in government employees. It hasn't been a big grower in terms of the number of employees. There will be a lot more employees, hopefully, from the private sector. Then, of course, remember, half our sales here are cross-sell or up-sell, right? More than half, actually. Colin.
Colin Devine, Jefferies. Two quick ones. First for Sofía, on the $600 million, the base premium on the worksite policies, how much are the riders adding to that?
The riders are adding an average premium of amongst $200 and $300 per year. The rider sale is much more smaller than the average premium of.
Perfect
Base coverage.
For Ricardo, what is the size of the SPIA block, the annuity block that you have now, and how do you see that growing?
He doesn't want to say a guy. Let me explain it. As you know, the way the Chilean system works, there is a Chinese wall between an AFP and everything else you can have in the country, right? You have to run the two business separate. We have a general manager for the AFP, Ricardo, and another gentleman running our insurance business. That business, the insurance company, we have five different lines of business inside. One is the annuity. Our market share in annuities is around 21%. That means that we capture around 21% of the new money that flows every year from new annuitants. That's our presence. We have been running that business for many years since we acquired this company, Santander.
Remember how big the block is.
What's the size of the block, roughly?
Jesse probably knows.
$500 million.
$530 new premiums per year.
Yeah.
About a $5 billion block.
$600 million in.
Someone here knows.
$600, yeah. Okay.
Per year. It can vary. Every year you decide how much you want to capture.
$5 billion.
Recycling already? All right. Steven.
It's Raymond James. Actually, I did want to follow up on Colin's question. If you have a 33% market share in Provida, you have a 21% market share in annuities, how is that a growth opportunity per slide 73?
Oh.
I mean, you seem to be losing 10%, no?
Well, I'll let me try.
Exactly that.
When a Provida customer comes in and says, "I'm ready to retire. What should I do with my money?" The guy in the Provida branch can't go, "Well, here's your" You're not allowed to do that. You can't do that kind of cross-sell. He has to make choices, and he has to give them options. There is a Chinese wall. There's a real one. You have to give them choices or how they might do that. They could just take phased withdrawals from Provida as well. It's their decision. We have to capture those annuitants, not necessarily by leveraging Provida.
Okay. Going back to the turnover rate slide. By the way, I think the problem here was purple versus blue. If you look at all of them except for the top one that was coming down, the turnover rates all seem to be slightly going up for the others. What is driving that?
It was a confusing presentation. Well, I try. No, really what's happened is that the market began to be more competitive since last reform because-
I'm sorry, since last when, Ricardo?
Last reform, the pension reform in 2008.
Okay. All right.
When the auction was introduced, we were not able to capture the new entrants. We began to be more aggressive between AFPs, and transfer in, transfer out went up.
Okay.
The other, what had happened is that Provida had a very low size of the agency channel. When we began to have the size we need to balance our customer portfolio, of course, transfer in, transfer out are growing in the business.
Okay. Thanks.
That's the reason.
All right. Thank you.
Ryan.
Thanks. Ryan Krueger, KBW. I had one more follow-up on Provida, actually. In terms of, you charge fees on salaries, but only up to the cap, right? If they raise the contribution rate, that would not benefit you, but if they raise the salary cap, that would benefit revenue. Is that correct?
Yes.
Okay.
Yes, it is true. The salary cap and the minimum is growing every single year.
According to what? To inflation?
According to inflation plus real salary. The minimum is more political because it is the minimum salary that is negotiated with the unions, the government. In general, the minimum moves little higher than the maximum.
Diehard. Seth.
Since we have the Provida turnover slide there, a question just about the value proposition of which AFP you choose. You mentioned fees are not the primary driver, and we see it on the slide listed there. If we look at returns, because of requirements to hit minimum thresholds based on averages, returns seem to cluster very closely together across AFPs. What is the value proposition? What are you selling when you try to get somebody to turn over from their other plan?
Well, first, when you sell pensions, you are telling your customers that you will pay the pensions in 30, 40 years. The first thing is confidence. Imagine a guy living in, I don't know, in the south of Chile, and he went to the low-cost company. There's no branches, there's no executives there, and he has to believe that someone will pay his pension in 40 years. It's very tough. The value proposition in the pension markets are related with if your company is reliable for you, if you are closer with their needs. That's the reason why we know that a broad branch network along Chile is an important lever. A very specialized agency channel to advise our customers in terms of pension, tax management.
The type of fund that better matches their needs in relation of the personal investment profile is the way that we can obtain loyalty from them and reduce the turnover ratio. It is what is happening in most of these asset management industries. That finally you need executives, you need branches in order to have someone to turn and ask what you need. The value proposition is related with advisory, customer service, and of course, the brand that is telling you that you will pay the pensions in 30, 40 years. I think that this is the main issue. I would not recommend my parents, my relatives, to go to a place that I'm not sure that it will be there in 30 years. I think that this is the most important and not the fee, of course.
As you have said, the performance is very close. Advisory, distribution capabilities, marketing capabilities, perhaps in the future, customer experience, of course, I think that these are the advantage.
You just mentioned it right at the end, the number of customer complaints coming down. Provida implemented a Net Promoter Score system way before MetLife did. In terms of trying to understand what customers care about and what kind of service matters to them. They've really traded on, we're going to provide you good service. Historically, I think the AFP system got a lot of complaints from consumers. I can remember the first time I met with the regulator here, I think you and Arturo were there. First thing she wanted to say to us, because we hadn't bought the company yet, so we're talking to the regulator.
The first thing she said to us was, "You got to work on your customer service, and you guys got to make the Chilean citizenry happy in terms of that they're getting good service." That's been a key focus of management.
Ricardo said something, I don't know, I was following. He said, "If you are eligible for retirement," that means you're 65, if you're a man or 60 woman, and you go to a branch and you say, "How many minutes it takes?
10.
10 minutes, you said to apply and retire. It's not just to apply, to retire. That's the service. I don't know what happens in other countries. To go to a branch and retire in two minutes, I define it as great service.
I knew it, Colin.
Bill, since you brought it up, maybe you could give us a few more details on the fund performance, how it was before and where they stand today.
Yeah, please.
Oh, God.
Our management.
Really, the last year, we are improving the performance in the last years. Within the last year, we were very well ranked. We have one first place, two second place, two third places. Our objective is to be above the average. We are not looking to be first because we know that we have to take risks to try to be always the first. We know that this is not a value proposition. The value proposition is good performance above the average and, of course, advising our customers. The performance is improving really well. Last year is first, second, first. That's more or less the way we want to be. If you want to be the first one, there's a lot of risk there.
The main risk here is execution risk. Our process is very robust, is world-class, and we are very concerned about every single decision we make. Sometimes we need to be more conservative. We feel glad to be perhaps second. I think that always second is the best in the first performance we want.
Sorry, Ricardo, if I could add, I think the difference between first and second is also very close.
Oh, yes. Finally, you compete for two basis points. Really, it's more important for the sales force that for us, really, we tend to be in 15% for last year, 15% return. To be 15.02 or 15 is not the deal. Finally, you lose every single day or you win two, three, these points to the benchmark. This is improving, and of course, under MetLife, we are leveraging, of course, all the knowledge we have in Morristown, and we are training our people there. We hire more professionals. We're investing in technology now. We feel confident about that.
Two things we wouldn't do. Number one is, as Ricardo said, try to be the first and then add volatility in the ranking, right?
Yes.
One year first, then fourth. We prefer to be more stable, maybe second stable. I get it. It's just I vibe right now to become the always the second. The other thing I wouldn't do is to communicate and position our brand or our value proposition to customers saying.
Yes.
We are the ones that are going to promise you great performance. That's not a good idea. I think we wouldn't do that. It's very important to sustain your value proposition as a combination of things and not just that.
So on the-
If I may add.
Yes.
I don't know, 8 years ago, we decided that it's not to be the cheapest one, the low-cost one and the best performer because they are attributes that you can't assure in the future. If you still think that you are the lowest price or you are the best performer, something that you can lose in a moment. That's the reason why we invest in advisory service branch network that really are the main drivers in asset management industry.
Maybe just Ricardo on the last part. The funds are very concentrated. They're very structured, so the returns are very much clumped together, so it's not a big differentiator.
Yes.
Yaron.
Thank you. Ricardo, I think this is turning into the Ricardo show, another follow-up for you. Turning back to slide 68 and the voluntary product fees that are charged. I think you had said it amounted to about 55 basis points of AUM, and I just want to confirm that was the number.
Was that there?
That the voluntary product fees charged as % of AUM-
Yes, average is 55 basis points.
Okay. The reason I ask this is your peers who presented earlier were talking about a much higher number, I think roughly double. I was curious to maybe better understand what would drive that fee base, and maybe if you could give us more color on what the average is for the industry.
This is the average. Perhaps there's a company charging a little more and some companies charging a little less. We are in the average. You have companies charging 0.7, but you have companies charging. We are talking about not the product called Cuenta Dos. Cuenta Dos here is like a savings account that you have liquidity, and it is not like really a pension product. That charge 90 basis points. We are talking about the pension, the voluntary pension products. The APV and deposit, the pension, the savings deposit that we have.
Employer.
Huh?
Employer deposit.
Yes. Employer deposits and APV. That are product for the pension, not for liquidity. The Cuenta Dos is not a very important product in the market. It's not for pensions.
Maybe they can help. Remember, the voluntary is a charge on assets under management fees, right? On the mandatory, you charge on salary.
Right.
Different numbers.
Yeah. To that last point, I think, Ricardo, you had said that the mandatory saving fees were about 45-50 basis points of salary.
Yes, perhaps I made a mistake.
Yeah.
I said that we charge in average the system 1.20% in average in the system on salaries. If we translate these fees in an asset under management fee during the working life of a worker, of a client, it's like charging 45%-50% on assets.
45 basis points.
It's same saying salaries again.
The point we make is, listen, 45, 50 basis points for such a sophisticated high service system is not expensive.
Okay.
We can do all day.
All right.
We'll just sit here all day.
Ricardo is willing to take another question.
Closing remarks.
Closing remarks? Okay.
A little now.
Do I have to stand up?
No, you can stay down.
Okay. Well, look, repetition is my middle name. In all seriousness, I think you get a sense that there's a really interesting collection of businesses in our Latin America region. We highlighted a couple of the big ones. We highlighted other sources of growth in direct and in agency, which Mario, you got shut out. I'm sorry. The reality, in group, those are all very interesting growth drivers for us, which has nothing to do with Provida and nothing to do with Mexican Worksite. They're going to deliver a lot of value, too. There's a lot of really good stuff going on in Latin America, and I hope you get a feel for that now.
In terms of financial performance, I might leave you with just one little anecdote because I think as a management team and we've seen the performance of various parts of Latin America over the last two or three years, we've said, "Wow, this is a great business and it's growing fast." On a reported U.S. GAAP basis, sometimes the growth rate has seemed a little muted. You do see, I think, appreciate there are some businesses that are not growing, they're shrinking. The Argentine runoff annuity business, there's obvious reasons for that. There's no new sales. The second one is really what we call Mexico Public. Little story here. When we bought Hidalgo in 2002, it was very profitable. It basically was a monopoly by the Mexican government.
Part of the deal with us buying it was it would no longer be a monopoly. We said, "Gee, those group contracts, the margins are going to shrink fast as competition happens." When we bought the business, we sort of took that into account. The reality is those margins didn't shrink for a solid decade. We enjoyed very good margins in that business for a long time. It finally did happen. We finally started to get real competition and the margins, they didn't disappear, but they came close. That's what's sort of driving a lot of the last three years. You're seeing the Mexico public business go from really quite full margins to pretty thin margins. It will be a thin margin business going forward and not a big growth driver for us.
That put a little damper on our growth rate over the last three years. Which is hard, you can't normalize for that. It's just a story. I think if you look at this business in terms of what the drivers are and what the economics and the performance of various business segments, I think you can get very excited about how fast this business grows, its return on capital, which is very attractive. Obviously, the best thing you can talk about is the cash flows generated. 60-something % sort of normalized, but honestly, while we've been doing that, we've been building up capital in Mexico.
Before we sort of reorganized internationally so that we could pull cash flow more easily out of our, more tax efficiently out of our various host countries, we kept money in places like Mexico, even though they were generating a lot of cash. Now we have a, I would say, a more efficient system, and we'll be pulling it out. That's part of the story, too, that going forward, I think this is going to give a lot of cash for MetLife to redeploy and hopefully return to stockholders. With that, I want to thank all of you for coming. I also want to thank the MetLife Latin America management team, those of you who spoke and everybody else who contributed to these presentations. Very good job, and thank you.