Okay. If we could all find our seats, we're going to start our next presentation. We're starting a few minutes late. Our next presenter is Steven Kandarian, Chairman and CEO of MetLife. We're very appreciative that Steve is here. As I think most of you know, Met reported earnings after the close yesterday, had their conference call this morning. We're appreciative that he was able to find his way over here on a busy day. Anyone who's looked at the results, you'll see that the U.S. earnings were, I think, generally better than what people were forecasting. They were 9% above our estimate on an adjusted basis. No material balance sheet adjustments. There's been fear in the marketplace, obviously, about low interest rates and what that means to companies like MetLife.
I think the fourth quarter results would suggest that you're not seeing anything beyond manageable pressure on earnings from the current challenging rate environment. To go into the details on Met and the outlook, I'd like to pass it over to Steve.
Okay. Good morning, everyone. Is my lav on? Can you hear me? Okay, good. As Ed mentioned, we had a good quarter. We just reported last night and had our call, our earnings call this morning. I'd like to give you some highlights from that presentation we did this morning. Here's our safe harbor slide, which I think all of you are aware of. Essentially, we're talking about some non-GAAP numbers today, and I want to just be sure that everyone understands that we do some adjustments normalizing. Read that at your pleasure. Hope you're a speed reader. Okay. Let me kind of kick it off here. These are the topics we'll be talking about over the next 30 minutes or so.
Solid results for the year and for the quarter, despite some pretty tough macroeconomic headwinds, obviously in Europe, disaster in Japan, where we have a large business now post-ALICO. Tough economy across the entire globe, especially, as I mentioned before, in Europe and even the U.S. lagging. A very strong franchise. The MetLife brand, certainly in the United States, is very strong. It is getting stronger globally. Certainly in Japan, we've seen tremendous progress in terms of our brand awareness in that market, which is our second largest market. A very strong capital position. I'll give you some numbers on that in a little bit. All this really goes to the issue of focusing on and adding shareholder value. That's the key. Solid year, challenging environment, I mentioned that. Earnings up 16% year-over-year, despite low rates. Ed was mentioning the low rates.
Obviously, low rates are not ideal for life insurance companies. It's a spread business. We've done a number of things to mitigate that, and I'll talk to you about that in a little more detail in a minute. Volatile equity markets impact parts of our business, like VAs. Record natural disasters, both here, our largest market, and in Japan, with the tragic tsunami there in March, our second largest market. Our acquisition of ALICO, a $16.3 billion acquisition by MetLife, the largest acquisition in our history, a really transformative acquisition for a largely domestic company, U.S. roots, traditional insurance company, 90% U.S. pre-ALICO, now 60/40 U.S., non-U.S., and growing the non-U.S. piece fast. Looking at 2012, operating earnings we talked about in our call, $480 million- $520 million. We've done here is we've adjusted for the new DAC charging rules that just came out.
We're looking now at the 2011 numbers adjusted for the DAC rules and comparing that to our estimate going forward, which will have the DAC rules in obviously for 2012. We're looking at about 5.5% growth year-over-year, 2011 to projection for 2012 for us. We still have strong fundamentals in our business driving growth, even still with pretty tough economic headwinds. Expense discipline remains a key item for us at MetLife. We've done a fair amount of that over the years, last couple of years. It remains a key focus for the company. I'll be talking about these four different items here on the slide, a global presence, a very strong leadership position in certain markets, growing in other markets. Diversified distribution and products. MetLife is a highly diversified company in every sense of the term, products, distribution, geography.
Risk management, really very much embedded in our culture at MetLife. I want to walk you through some of those things we've done over the years, which I think can demonstrate the seriousness with which we take risk management at MetLife. Financial strength. MetLife obviously has a very strong balance sheet and obviously has served us very well going through the financial crisis. Let me cover each one of these strains in greater detail. We'll begin with the global presence. Established markets, U.S. and Japan, big markets. By far, the two biggest insurance markets in the world, and we have a leading position in the United States and a very strong position in Japan through the ALICO acquisition. In those markets, some people say, "Well, that's the past. It's not going to grow. It's flat.
It's even going to be declining." We actually don't agree with that. We acknowledge it's not going to grow as rapidly as some other markets, but we think there are segments of those markets that still can be growth markets. It does mean us doing business differently than we have in the past to benefit from the potential growth in those markets. Insurance has really lost market share over the last few decades to other financial services in terms of the consumer dollars, and we think we can do a better job in terms of recapturing some of the market share we lost in those established markets. Significant and growing, Mexico, Korea, Poland, and Chile, all very strong markets for us. $100 million or more of earnings from each of those markets, and they grow in the 15% kind of range overall.
Emerging markets, Brazil, Russia, India, China, Turkey. We have significant presence in all those markets and growth rates in those markets exceeding 20%. Here is our new structure. Prior to the ALICO acquisition, we had a U.S. business and an international business. Again, the culture very much of MetLife was dominant domestic life insurance company, traditional life insurance company. With the ALICO transaction, all that changed. We truly became a global company. We are in 60 countries at that point in time. Just because you make an acquisition doesn't mean overnight the entire organization becomes a very different one. There still was that very strong kind of U.S.-centric approach that everyone kind of saw everything through, and New York was the focal point for management, for virtually everything we did.
Over the last several months, I've been working hard on how do we best organize given our new mix of markets. Some of you may know that I became CEO in May of last year. Prior to that, I ran the investments arena within MetLife, beginning in 2005. In between, I also picked up the strategy function in 2007 and marketing in 2009. As I came in as CEO in May, I started thinking about how do we organize this company going forward. It truly is a global company, but we are not organized as a global company, and we spent a lot of time working hard, along with my executive group colleagues, thinking about the best way to organize the company. You see here the three major regions, the Americas, EMEA, and Asia.
We also have Global Employee Benefits, and I'll talk about that in a little more detail in a minute. That cuts across the entire globe. The reorganization was done. That was announced back in November of last year. We got the right people, kind of the right seats going forward with the right skill sets. We've recruited into certain functions for us. We felt we had to really crank up our presence in terms of being a global mindset and a global background and understanding how to do business globally. One of the sectors I showed you there was the Global Employee Benefits business. Maria Morris, who's been with us for many years, a real expert in the insurance side, steeped in understanding employee benefits, is heading up that effort for us. We are the leader by a lot in the U.S. in that segment.
There are roughly 22 million employees in large corporations in the U.S., but there are 40 million employees outside the U.S. in very large corporations. How do we take this great platform that we have in the U.S., a very, very strong position, market share more than double our number two competitor here, and translate that globally on this new platform we have through the ALICO acquisitions? That's what that effort is all about. It's something we're really focused on. It's something that we think will drive earnings in the future.
We look at our different markets really on a portfolio basis. One of the advantages of being a company like MetLife with tremendous diversity, as I mentioned, geographically, product, and so on, is that you can look at these different segments and say, "Things are in a competitive landscape heading in a direction that we don't feel so comfortable with." People are just taking too much risk for one reason or another. We can kind of dial back certain businesses because of how large we are, how diversified we are. We can dial up businesses as well. You can see certain markets that we picked up in the ALICO transaction that we thought really weren't going to be core or markets we really wanted to focus on in the future. We didn't want to spend the management time on them. We divested. The Caribbean, very small markets there.
Taiwan, where we had a historical ALM problem, asset liability management problem, a mismatch between the assets in that business and the liabilities. The products that were very popular in Taiwan were very long liability products. The assets availability in that market were very short, mismatch between the assets and liabilities. We struggled with that for years. We sold that business. Venezuela, for the reasons you can imagine. Say no more. Isle of Man. I had to look at a map to figure out where it was, and certain blocks in the U.K. We have to really focus on the things that are going to move the needle and those that weren't going to move the needle. This freed up $1 billion in capital, half of which will go up to the holding company.
We took a look at places where we thought we could really grow the business, markets we wanted to be in. Turkey, Czech Republic, Hungary, Romania. Turkey through the Dexia transaction we did last year. We just announced and will be closing shortly the Czech, Hungary, Romania transaction with Aviva. Attractive markets. M&A philosophy. MetLife has done a couple of very large transactions in the last decade. 2005, we bought the Travelers business. 2010, we bought the ALICO business from AIG. Those are both very large transactions, both in excess of $10 billion. Obviously MetLife has the capacity, the interest of growing both organically and by acquisition. I'll tell you, we are very disciplined in terms of doing acquisitions.
When I joined the company in 2005 as CIO, there's a group within MetLife that has to approve transactions, and this was 2005 when I joined. For the next couple of years, I'm a member of that group at that time as CIO. CIO sits in that group. There's about four people voted. We said no a lot between 2004 and 2008. Some of the lines of business people came in and they had some deal they really wanted to do, and we saw the auction process, and we said, "Look, this may make sense at a price," but especially at that point in time, some of our competitors, especially in Europe, had very high multiples to their stock, and they were bidding extremely aggressively from our perspective for these deals.
They weren't going to be accretive for probably three years, even on a pretty optimistic scenario. They were dilutive to book value and so on. We looked at those things and said, "This is not the time to go and chase these kinds of deals." There were some unhappy people at the company at the time when we said no, but we kept our powder dry. We did a couple of small transactions that were tuck-ins. We had real synergies that made sense in terms of accretion. When 2008 came, and the crisis came, and we went through that much better than most, we were able to be in a position to be the only insurance company, only company, that was able to bid on the entire company, ALICO. No one else could or would.
We had the ability to do it, were able to pick up that company with accretion on the order of $0.40 year one. Not year three at the sort of hockey stick projection, but year one. Okay. In addition to being diversified geographically, we're diversified in terms of distribution and products, as I mentioned. Different channels. Really key here on this slide is, this is really a philosophic shift for our company, I'd argue even for our industry and others are coming to the same conclusion. The life insurance industry has not done as good a job as it should have historically on interacting with our customers in a way the customer wants to be interacted with. It had this mantra that insurance is sold, not bought. That philosophy that people had was, okay, we have these products, they're complicated, they're very sophisticated.
We're going to kind of tell you, customer, all about these things, and we're going to kind of be there in front of you and kind of go step by step the way we want to walk you through that. I think that, in some cases, that worked, but in other cases, it wasn't ideal. As the world has changed with the internet, as our customer base has become more internet savvy and younger people now at an age where they're going to be buying our kinds of products, and they're used to buying things differently than having someone necessarily across the table from them making a sale. We are not de-emphasizing the face-to-face business, but we are emphasizing other aspects of distribution. Direct bancassurance, third-party distribution in addition to the traditional agents that are MetLife agents.
The key here is not emphasizing one versus the other. It really is a continuum. A customer might want to come to us and they might first approach us on the internet and do some research on our website. They might want to pick up the phone and call someone who's actually knowledgeable, who can explain some of the more intricate aspects of the product where the person has a question. That consumer might decide they want to see someone face-to-face eventually for a sale. All that should be made available to them, and that's how we're really driving our distribution going forward. On the product side, we're not dependent on any one product. We're not a one-trick pony. We're not even two or three-trick pony.
You look at the U.S. business, we kind of broke it out there in different segments, the international business in different segments. One takeaway you can have from this slide is that the non-U.S. business really, in most cases, has certainly on average, lower capital intensity to the products that we sell outside the United States. The U.S. market's more mature. The competition has gravitated toward more complex products, more capital intensive products. We're working on that to try to bring down the risks and the capital intensity of those products in the U.S. Outside the United States, especially with this ALICO transaction, we're able really to grow our business and bring down the overall risk profile of the company. In fact, day one after ALICO closed, our risk profile shifted dramatically from that transaction. Actively managing our portfolio of products.
variable annuities, a popular topic on this morning's call. Multiple questions that Bill Wheeler answered on that. Bill Wheeler's running The Americas for us, I should mention that. He was our CFO. We sold $28 billion of VAs last year. Our budget this year is roughly $18 billion. Some would say, "Are you getting out of the VA business?" We're not. We're right-sizing the VA business, and we're making changes to the product to make it a more sustainable product longer term for us. We're going to stay in the business, but we're going to make sure the risk profile is right. $18 billion is not a small number either. It's about what we were doing pre-2011. You may remember in 2011, we brought a new product to the marketplace. It sold very well. It was actually a de-risk product, which is the good news.
We had some competitors exiting the stage, and the product became very popular again with the consumer base. That drove the high number, the $28 billion number that we saw in 2011, which we don't anticipate seeing certainly in 2012. The bank. MetLife got into the banking business back in, I think it was 2001. Internet bank. 2008 added to it a forward and reverse mortgage business by acquisition. Those two acquisitions in 2008 paid themselves off in two years in terms of earnings in that business. However, as we look at the regulatory landscape today, as we look at our focus post-ALICO, we've decided to exit this business. We have announced the sale of the depository business, the real bank business, in terms of being regulated by the Federal Reserve as a bank holding company.
That transaction was announced a while back, selling that business to GE, anticipated closing mid-year this year. Once all the pieces come together there, we will no longer be a bank holding company regulated by the Fed. In addition, we have announced that we are winding down the forward mortgage business. There's a couple of reasons for that. First, the regulatory environment, as all of you have read in the papers, has become much more onerous. There's a fixed cost, actually, of complying with these kinds of very heavy regulations that are coming down the pike. We are not a major player in the mortgage business. We're a top 15 player, but number 14, which I think is about where we are, is a whole lot different than being one, two, or three in terms of size.
You add on top of that our internet bank was providing inexpensive funding for that mortgage business, along with the regulatory aspects, along with the scale now necessary in our judgment to be successful in that business and our view is it just didn't make sense to stay in it. We looked for a buyer. We couldn't find anyone who wanted the whole thing. We couldn't find the right transaction. It actually worked better from our perspective simply to wind down the business. We also announced our sale of our warehouse business within the bank, and that's being sold to EverBank. I mentioned earlier about the ALICO transaction. Accident & Health is a product that we will be growing. It's a low capital intensity product, high ROE.
Again, this goes to the whole aspect of looking at your products, your geographies as a portfolio, emphasizing what you think will create shareholder value, de-emphasizing getting out of businesses you think that either won't create shareholder value or in some cases actually destroy shareholder value. I mentioned Accident & Health. It's a terrific product. It's very big in Japan. We're taking the expertise that exists from that business in Japan, and we're basically exporting it into other markets in Asia Pacific, other markets in Latin America. It's a high ROI product. It's a low risk product, low capital intensity product. You can see the kind of ex-Japan growth rates we're anticipating for 2012 in that product line, 30%. Again, that's something we're dialing up. All right, let me turn to risk management, one of MetLife's real core strengths. It got us through the financial crisis.
As I mentioned, it put us in position to buy ALICO. I think one of the key things about risk management at MetLife is that it is not reactive. Now, we started buying floors, interest rate floors in the year 2004. Think back in history, 2004. We were just coming out of the last downturn and the high-tech bubble burst. 2002, things were really pretty dire. 2003, the economy started to get some traction. 2004, things were kind of sweeping up and rates went up, and we started buying floors. Why? Cheap insurance. We even had debate internally. This isn't likely to be even needed. You're wasting money, but it's cheap. It isn't that much money. It's just looking at your possible tail risk given your product portfolio. Let's hedge it. It's a good time to hedge it, 2004.
You look at the chart here, $47 billion in notional hedges against low rates. Goes out over a decade in terms of protection against current rates, plus or minus 100 basis points. You see the kind of protection in terms of pre-tax income from these derivatives. We've been asked, what happens to your 2012 earnings? Your projections for 2012 show the 10-year treasury rate going up over time from 2%-3% by year-end 2012. Well, it doesn't look that way with the Fed's pronouncement. We're keeping rates low till 2014. Your 3% projection for the 10-year looks pretty bad right now. It must be hitting your earnings for 2012. Are you going to re-project, reannounce earnings for 2012? The answer is no. The hedges actually cover us completely. Lost income made up by the hedges.
Those hedges we have in place will make up dollar for dollar the loss on income from lower rates for 2012. There will be some diminution going forward after 2012, but for 2012, we're covered. We did a call a while back on low interest rates. We talked about kind of macro basis. We looked at keeping the 10-year Treasury at 2%, I think it was for five years. We still grew, but about half the rate that we would have grown if interest rates went back to more normal levels that we had projected. Okay, peripheral Europe sovereign exposure. In October of 2010, our sovereign exposure to the periphery of Europe was zero. One month later, it was $1.8 billion. I was running investments at the time. Do I go out and buy $1.8 billion of peripheral debt? No.
We bought ALICO. They owned it. During that time, I was sending smoke signals to my friends at AIG, "Please sell the peripheral debt." Actually, it was not really selling off much at that time. Under the antitrust laws, I couldn't do more than send smoke signals, and they chose not to sell. We got it, $1.8 billion. We factored it into our models when we bought ALICO. We kind of had a loss budget for it because we were worried about it. We put in place a plan to sell it down. You can see here the dramatic drop in peripheral sovereigns from the time we picked it up. I said $1.8 billion, which is what we got November one. These are year-over-year numbers. It was $1.6 billion at year-end because we already started selling.
We're down now to, I guess it's What is it, John? $250, $254. I think it's at $254 in terms of book value. Most of it was sales, some impairments, $272 million in after-tax losses. We didn't like that, but we planned for it. We managed down that exposure very quickly. Okay, European bank exposure. I sent the same smoke signals. They were also ignored pre-closing of ALICO. To give them the benefit of the doubt here, the markets they were in many cases, didn't have a lot of assets to pick from. This was not U.S. This is non-U.S. What do you have? You have sovereigns and the big issuers that were investment-grade were largely banks in a lot of these markets.
You expect they'd have a lot of bank exposure in addition to sovereigns, just based upon their business model and the markets they were in, the geographies, and the capital markets in those markets. We were actually able to do something on this one. Even though they wouldn't sell their bank exposure in Europe, what we did is we started selling ours before the close. We knew it was coming to us, and we started managing that risk down from the time we signed up a deal. We knew we had about seven, eight months before close, and we started selling down our exposure, realizing what the combined exposure would look like. You can see the dramatic drop here overall. Most of what's left here, a lot of that really is banks in the U.K., banks in Switzerland, very strong banks.
94% still investment-grade paper that we hold. That was risk management. Let me turn to financial strength of MetLife. Here's the takeaway. MetLife is too strong financially. What I mean by that is we have excess capital we've been trying mightily to return to shareholders. We have an impediment right now. We have to go through a process, a capital plan process with the Federal Reserve because we are a bank holding company regulated by the Federal Reserve. That's the process we're going through. We submitted our CCAR in January of this year. We anticipate hearing back in March, probably mid to late March. Our goal is to return capital to shareholders this year, 2012.
Our RBC ratio looks like it'll come out somewhere in that 420-445 range, which is more than strong enough for the ratings we have and seek to hold. Our Japan solvency margin ratio, very strong, 850-950, will come in some place there. You really need about 600, so we're well above that in terms of maintaining ratings in Japan. $3.5 billion of deployable capital at year-end 2011 passed. As I mentioned, we're committed to returning capital to shareholders. Here's a little walkthrough. You start with 3.5 of what we call deployable capital. That's above a $1 billion buffer that we keep at the holding company. Another $4 billion-$4.5 billion of subsidiary dividends. Some of that are one time, some of that's ongoing. I'd say, rule of thumb, on average, $3 billion would be coming into that number. Why $4 billion-$4.5 billion?
Because we made some sales, as I mentioned before, in the U.K. block and so on. There's some ability for a one-time dividend out of Japan from some excess capital that's trapped there based upon legal structures that will be resolved. When all that comes up, we see $4 billion-$4.5 billion coming into the holding company during the year. We have a mandatory equity unit remarketing where $1 billion of what's now debt converts over to equity. And then out of that, you have interest expense and other expenses of $2 billion-$2.5 billion to the holding company. That gets you to a year-end estimate of $6 billion-$7 billion of deployable capital above the $1 billion buffer. My comment before, we're too strong. We have excess capital we want to return to our shareholders. There's various different ways to do that. Obviously, dividends, obviously, share buybacks.
We also want some dry powder in case there are opportunistic acquisitions in markets we're seeking to grow in. We think we have that excess capital. Let's kind of tie it together here. Key takeaways. Strong presence in both established markets, mature markets that are steady, provide you that kind of steady base of earnings. We're also in a number of high-growth markets where we leverage our global presence. Organizationally, we've talked about that. Focusing on profitable growth where, the risk-adjusted return on equity exceeds our cost of equity capital. That's the goal. A strong capital generation to fuel growth and deliver shareholder value. Key takeaway, MetLife, we think, is the best-positioned company in our industry to generate shareholder value. With that, open up to questions.
Time for a few questions.
Microphones.
Earlier, the Aon CEO had made reference to operational excellence. There's a strong track record at that organization in regards to questioning the status quo in terms of expense structure and how business is delivered to the market. Would you comment in regards to your commitment to that type of operational excellence? What kind of opportunity set do you think exists at Met to challenge the status quo and think about the expense savings opportunities that may help grow your bottom line?
I mentioned I was CIO. In 2007, I was asked to run the strategy group, which actually didn't exist. I had to create one. In 2008, we reported back out to the board. One of our five initiatives was. We called it at that time in 2008, I'm not sure when Aon called it operational excellence. We called it operational excellence in 2008. We went through a whole analysis of our organization at that time, which was pre-ALICO. We made a number of changes to the organization. Not just a cost-cutting effort, which part of it did result in lower costs, but also really how do you do business more efficiently? How do you take some of the layers out of the organization? How do you get decisions made efficiently, quickly, but still well-made?
We did surveys at MetLife for our employees, and a couple of key takeaways from those surveys were, one, we at MetLife make very good decisions. I think those who've followed us over the years in terms of our risk management track record understand the kinds of good decisions we've made. We take way too long to do them, to make those decisions. We worked hard back in 2008 on streamlining things, took out some costs, but really trying to make things more efficient. We now have ALICO, which makes more complex something we just simplified.
We're going through another exercise in our review of our strategy right now, and we've talked about a May 23rd presentation that we'll be making to all of you about our strategy going forward, and you can anticipate we'll be talking about those kinds of issues in terms of next steps. It is very much part of our culture. It's very much part of my mindset as the relatively new CEO of MetLife. I can tell you some things I've done myself. We have a group we call the executive group. It's my direct reports. It's nine people, plus myself. We meet weekly just to kind of go over our collective businesses and inform each other and make big decisions.
I reorganized that agenda, and I've actually said you have to have one or two things that show up on our agenda now at the executive group meeting. It has to be a decision that this group needs to make, not some other group. This has to actually make a decision out of this meeting or a follow-up meeting if we don't have all the facts. It has to be a must-know for the people in this room. Need to knows, show and tells, nice to knows, we don't have time for that. We're in 60 countries. We're a complex company. We can't do show and tells. That culture is being pounded into the organization, and I think that's seeping throughout the organization. Maybe one more? Nope. Nope. Okay. Thank you very much.
Thank you very much