Can you put that 2% in perspective?
Relative to the other financial organizations in the stress test, it was the lowest number by far. Their average loss in that asset class was more than 10%.

How big is MetLife's overall investment portfolio?
We have a $338 billion general account, which makes us one of the largest fixed-income investors in the world.

MetLife backs a proposal by the American Council of Life Insurers [ACLI] to stop using the rating agencies' ratings for residential mortgage-backed securities. Why?
Our capital adequacy is measured by risk-based capital, so we have to hold a lot more capital against something that's rated BB versus AAA. The rating agencies moved virtually every nonagency RMBS from 2006 on — whether it was subprime, prime, or Alt-A — from AAA to below investment grade. That caused a significant capital strain for everyone in our industry that holds these securities. Rather than go through [an appropriate] analysis, the rating agencies just decided to downgrade everything. The ACLI's proposal is to hire an outside firm to analyze these securities and come up with new risk ratings that are better linked to what the real losses are likely to be.

MetLife holds around $43 billion in RMBS?
That's right. Most of that is agency RMBS, which is not affected by this. These are relatively short securities. Eventually, most of them will pay; very few will default. Losses will be relatively nominal, but it's going to be a pretty big capital drain for two or three years.

What is your outlook for the economy?
We're expecting a fairly weak recovery. Usually you get a much bigger bounce coming out of a recession, but we think that this bounce will be relatively modest, because consumers are probably not going to spend the way they did during the last 10 or 15 years. Before, the savings rate was close to zero; now, consumers are saving. But higher savings should help us. People are still buying insurance products, and if anything, those products are becoming more important to them.

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