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Sustainability Accounting Standards Board (SASB)

3 min read June 17, 2020
Sustainability Accounting Standards Board (SASB)

MetLife is reporting to the Sustainability Accounting Standards Board (SASB) Standards for the first time for 2019 to bring industry-specific rigor to our sustainability disclosure. We are reporting to the two Financials Sector Standards most closely aligned with our business: Asset Management & Custody Activities and Insurance. All data is as of December 31, 2019. While we have omitted responses to certain disclosure topics, we will continue to evaluate and expand our response to these disclosures in subsequent reports.??

SASB — SUSTAINABILITY ACCOUNTING STANDARDS BOARD

Transparent Information & Fair Advice for Customers

Code/Metric Response/Reference

FN-AC-270a.1, (1) Number and (2) percentage of covered employees with a record of investment-related investigations, consumerinitiated complaints, private civil litigations, or other regulatory proceedings

See Note 21 of 2019 Form 10-K and Note 15 of the 1Q20 Form 10-Q for MetLife’s disclosure on material legal proceedings, other than ordinary routine litigation incidental to the business.

FN-AC-270a.2, Total amount of monetary losses as a result of legal proceedings associated with marketing and communication of financial product-related information to new and returning customers

See Note 21 of 2019 Form 10-K and Note 15 of the 1Q20 Form 10-Q for MetLife’s disclosure on material legal proceedings, other than ordinary routine litigation incidental to the business.

FN-AC-270a.3, Description of approach to informing customers about products and services?

See 2019 Form 10-K, Item 1. Business

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Employee Diversity & Inclusion

Code/Metric Response/Reference

FN-AC-330a.1, Percentage of gender and racial/ ethnic group representation for (1) executive management, (2) non-executive management, (3) professionals, and (4) all other employees

See report section: Strengthening our Workforce/Diversity & Inclusion/MetLife employee and Board diversity. (page 38)

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Incorporation of Environmental, Social, and Governance Factors in Investment Management & Advisory

Code/Metric Response/Reference

FN-AC-410a.1, Amount of assets under management, by asset class, that employ (1) integration of environmental, social, and governance (ESG) issues, (2) sustainability themed investing, and (3) screening

?

1) MIM is predominately a global fixed income and real estate investment manager. Approximately 3% of our overall AUM is held in index equity funds and other limited equity investments. Our public equity investments are almost exclusively comprised of index strategies. MIM is a passive index investor. As of December 31, 2019, we estimate that approximately $581.5 billion of assets employ ESG integration efforts (See Creating Value as an Investor/Value Creation).?

2) ~$58 billion responsible investments (see Creating Value as an Investor — Responsible Investments for more). (page 48)?

3) MetLife does not currently disclose this metric, but will continue to evaluate in the future.

FN-AC-410a.2, Description of approach to incorporation of environmental, social, and governance (ESG) factors in investment and/or wealth management processes and strategies

MIM ESG Policies — “Our Approach to Environmental, Social, and Governance (ESG) Considerations.” (page 2)

FN-AC-410a.3, Description of proxy voting and investee engagement policies and procedures

Proxy Voting
MIM has implemented policies and procedures (the “Proxy Policies”) that govern how it votes proxies. The Proxy Policies have been designed to ensure that client securities are voted in the best interests of clients in accordance with applicable rules. The Proxy Policies are based on the guiding principle of maximization of economic value of client holdings. MIM does not permit voting decisions to be influenced in any manner that is contrary to, or dilutive of, this guiding principle. The Proxy Policies are designed to ensure that material conflicts of interest on the part of MIM or its affiliates do not affect voting decisions on behalf of clients.?

Based on the guiding principle that all votes made by MIM on behalf of its clients must be made in the best interest of the clients and with the intent to maximize the economic value of clients’ securities holdings, MIM has adopted proxy voting guidelines (the “Guidelines”) that set forth how it plans to vote on specific matters presented for shareholder vote. MIM has retained Institutional Shareholder Services’ (“ISS”) recommended proxy voting guidelines and to monitor and vote proxies. MIM, however, may deviate from the Guidelines with respect to a particular shareholder vote when such action is consistent with the guiding principle of seeking the maximization of economic value to clients, taking into consideration all relevant facts and circumstances at the time of the vote. Prior to deviating from the Guidelines, MIM’s Proxy? Committee, which is comprised of senior investment personnel, and legal and compliance personnel, must first make a determination whether there is any material conflict of interest between MIM (or any of its affiliates) and clients.?

ISS monitors client accounts and their holdings to be sure that all proxies are received and voted. Should a proxy arise that is not covered by the Guidelines, ISS will be directed to vote in a manner approved MIM’s Proxy Committee. In addition, MIM’s Proxy Committee regularly monitors matters presented for shareholder vote and tracks the voting of the proxies.?

Engagement?
MIM ESG Investment Policy — section “Active Engagement.” (page 3)

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Business Ethics

Code/Metric Response/Reference

FN-AC-510a.1, Total amount of monetary losses as a result of legal proceedings associated with fraud, insider trading, anti-trust, anti-competitive behavior, market manipulation, malpractice, or other related financial industry laws or regulations? ?

See Note 21 of 2019 Form 10-K and Note 15 of the 1Q20 Form 10-Q for MetLife’s disclosure on material legal proceedings, other than ordinary routine litigation incidental to the business.

FN-AC-510a.2, Description of whistleblower policies and procedures?

See report section: Managing Sustainably/Risk Management/Ethics and?Compliance. (page 66)

MetLife’s Code of Business Ethics

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Systemic Risk Management

Code/Metric Response/Reference

FN-AC-550a.1, Percentage of open-end fund assets under management by category of liquidity classification

?

?

?

As of December 31, 2019????????????

($ Millions)

Total Invested Assets & Cash1

Highly liquid 81.8%
Moderately liquid 4.8%
Less liquid 13.4%
? 100%

?

Institutional Client Assets Under Management1

Highly liquid 0.0%
Moderately liquid 4.2%
Less liquid 95.8%
? 100%

?

1 Open-end funds (including mutual funds) are a portion of the general account Total Invested Assets & Cash and Institutional Client Assets Under Management. Represents the portion of such open-end funds that are expected to be convertible into cash in up to three days (highly liquid); in more than three days but seven days or less (moderately liquid), or longer (less liquid).

FN-AC-550a.2, Description of approach to incorporation of liquidity risk management programs into portfolio strategy and redemption risk management

See Item 7 of 2019 Form 10-K — Liquidity and Capital Resources.

FN-AC-550a.3, Total exposure to securities financing transactions

Total secured financing type transactions
See Note 8 of 2019 Form 10-K for information regarding Securities Lending, Repurchase Agreements, and FHLB of Boston Advance Agreements — Cash Collateral Received from Counterparties.

Total commitments to lend & fund
See Note 21 of 2019 Form 10-K for information regarding Mortgage Loan Commitments and Commitments to Fund Partnership Investments, Bank Credit Facilities, Bridge Loans, and Private Corporate Bond Investments

FN-AC-550a.4, Net exposure to written credit derivatives

See Note 9 of 2019 Form 10-K for information regarding Primary Risks Managed by Derivatives — Credit Default Swaps — Written.

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Activity Metrics

Code/Metric Response/Reference

FN-AC-000.A, (1) Total registered and (2) total unregistered assets under management (AUM)

? Registered Assets Unregistered Assets Total
Total Invested Assets & Cash1 $12,388? $478,005 $490,393
Institutional Client Assets Under Management $42,882 $99,695 $142,577
Total Registered Assets and Unregistered Assets $55,270 $577,700 $632,970

?

?1 Represents Total Investments plus Cash and Cash Equivalents of MetLife, Inc. at carrying value.? ??

FN-AC-000.B, Total assets under custody and supervision

Total assets under custody and supervision are $632,970 million comprised of Total Invested Assets & Cash1 of $490,393 million plus Institutional Client Assets Under Management of $142,577 million.

1 Represents Total Investments plus Cash and Cash Equivalents of MetLife, Inc. at carrying value

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Transparent Information & Fair Advice for Customers

Code/Metric Response/Reference

FN-IN-270a.1, Total amount of monetary losses as a result of legal proceedings associated with marketing and communication of insurance product-related information to new and returning customers

See Note 21 of 2019 Form 10-K and Note 15 of the 1Q20 Form 10-Q for MetLife’s disclosure on material legal proceedings, other than ordinary routine litigation incidental to the business.

FN-IN-270a.1, Complaints-to-claims ratio

As this is not a metric tracked by the National Association of Insurance Commissioners (NAIC), MetLife does not collect data for or report on this metric.

FN-IN-270a.3, Customer retention rate

As this is not a metric tracked by the National Association of Insurance Commissioners (NAIC), MetLife does not collect data for or report on this metric.

FN-IN-270a.4, Description of approach to informing customers about products

See 2019 Form 10-K, Item 1. Business.

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Incorporation of Environmental, Social, and Governance Factors in Investment Management

Code/Metric Response/Reference

FN-IN-410a.1, Total invested assets, by industry and asset class

(continued)

As of December 31, 2019 ($ Millions)? ? ? ? ? ? ? ??

Total Invested Assets & Cash1, 2

Fixed maturity securities available-for-sale:
US and foreign corporate securities $ 151,918
Foreign government 67,229
US Government & Agency 42,048
Residential mortgage-backed securities 28,547
Asset-backed securities? 14,542
Municipal 13,053
Commercial mortgage-backed securities 10,447
Fixed maturity securities available for sale 327,820
? ?
Equity securities:
Common stock 944
Non-redeemable preferred stock 398
Equity securities 1,342
? ?
Contractholder-directed equities and fair value option securities 13,102
? ?
Mortgage loans:
Commercial mortgage loans? 49,624
Agricultural mortgage loans 16,695
Residential mortgage loans 14,504
Valuation allowances (353)
Held-for-sale 59
Mortgage loans 80,529
? ?
Policy loans 9,680
Real estate and real estate joint ventures ?10,741
Other limited partnership interests 7,716
Short-term investments 3,850
Other invested assets ?19,015
Cash and cash equivalents ?16,598
Total Invested Assets & Cash2 $ 490,393

?

Institutional Client Assets Under Management

Insurance/Financial $ 70,842
Corporate 21,921
Sub-Advisory 29,832
Public 10,490
Commingled Fund 7,573
Other (Non Profit, Taft Hartley, Other) 1,919
Institutional Client Assets Under Management $ 142,577?

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Investment Grade and Below Investment Grade Information3

Investment goals $ 312,133 95.2%
Below investment grade 15,687 4.8%
Total fixed maturity securities available for sale $ 327,820 100.0%

1 Amounts presented are at carrying value. See the following sections of the 2019 Form 10-K for further information about sub-sectors of these asset classes:

US and foreign corporate securities? Item.7 MD&A — Investments — Fixed Maturity Securities AFS — U.S. and Foreign Corporate Fixed Maturity Securities AFS
RMBS Item.7 MD&A — Investments — Fixed Maturity Securities AFS — Structured Products — RMBS
ABS Item.7 MD&A — Investments — Fixed Maturity Securities AFS — Structured Products — ABS
Commercial mortgage loans Item.7 MD&A — Investments — Mortgage Loans — Commercial Mortgage Loans by Geographic Region and Property Type
Real estate and real estate
joint ventures
Item.7 MD&A — Investments — Real Estate and Real Estate Joint Ventures
Other invested assets Item.7 MD&A — Investments — Other Invested Assets

2?Represents Total Investments plus Cash and Cash Equivalents of MetLife, Inc. at carrying value.

3?Based on nationally recognized statistical rating organization ratings where Investment grade is?Aaa/Aa/A and Baa, and Below investment grade is Ba, B, Caa and lower, and In or near default.

FN-IN-410a.2, Description of approach to incorporation of environmental, social, and governance (ESG) factors in investment management processes and strategies

See response to FN-AC-410a.2 above

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Policies Designed to Incentivize Responsible Behavior

Code/Metric Response/Reference

FN-IN-410b.1, Net premiums written related to energy efficiency and low carbon technology

MetLife is unable to measure or disclose this metric at this time, but will continue to evaluate in the future.

FN-IN-410b.2, Discussion of products and/or product features that incentivize health, safety, and/or environmentally responsible actions and/ or behaviors

As a responsible corporate citizen, MetLife recognizes it is important to embed ESG concerns, risks, and opportunities within the products that we offer our customers. Many of the products and services we offer have incentives embedded within to encourage customers to make smarter decisions for their health, well-being, and safety as well as the safety and protection of the environment.??

Health & Well-being Incentives
MetLife believes it is important to provide our customers with tools and resources that benefit their overall health and well-being. Please see the references below for examples of the actions MetLife takes to incentivize healthy behaviors through our products. Examples include:

  • 360Health: 360Health is a combination of insurance and health services offered in China and Korea designed to directly address customer concerns about serious illnesses and offers medically endorsed, end-to-end solutions to help people increase their healthspan, or the number of healthy years in their overall lifespan. For background information, see: Ensuring Confidence for Our Customers/ Products and Services for Financial Confidence. Through 360Health, we incentivize healthy behavior, including the “Health Friends Program,” a mobile application that measures blood pressure and enables agents to engage with customers, and the 360Health webpage which provides health and well-being tips and resources allowing customers to conduct health risk assessments. In Korea, we also provide options specific to customer life stages. For example, single customers can receive discounts on pet loss, fitness centers, and wedding packages and gain access to instructional videos on healthy cooking. Seniors can receive self-assessments for dementia, and can access a senior concierge service and senior rehabilitation exercise programs. Tele-doctor services and online health assessments are popular with our customers in China. Other services include in-home nursing guidance, overseas medical travel healthcare programs, and early diagnosis cancer screenings. All of these services enable easier access to healthcare professionals and advice for protecting against critical illnesses.
  • Japan Value-Added Services (VAS): In Japan we offer nine health-oriented VAS free of charge to incentivize healthy customer behavior. For example, we offer a 24/7 health hotline, a medical second opinion service, mental health support, support for returning to work post-cancer diagnosis, and medical check-up consultations. We also offer a program for fast, transparent claim payments via our mobile app. Additionally, we offer a “club off” program for customers which provides them with exclusive discounts to gyms, restaurants, tutoring, and other services. Currently in development, customers in Japan will have access to a digital wellness platform which will offer health guidance and rewards for wellness behaviors. Expanded VAS will include programs to help customers with childcare; nursing care; cancer; dementia, brain, and heart disease prevention; and more.
  • Step Counting: Also in Japan, MetLife offers a group product that allows policyholders to track their steps to incentivize physical activity. If all employees at the group customer company reach certain activity levels, MetLife provides a financial reward to the company. Employers are therefore encouraged to offer their employees benefits and flexibility that enable them to practice physical activity throughout the work day.

Please also see report section: Ensuring Confidence for Our Customers/Products and Services for Financial Confidence/Creating access and opportunities for women for information on programs and products designed specifically for women which incentivize healthy behavior. (page 17)

Environmental & Safety Incentives?
As weather patterns continue to shift and elevate the extremity of natural disasters such as wildfires, we continue to invest in research and pilots to understand how technology, data analytics, and artificial intelligence can help us provide better support for customers and protect them and their properties from extreme weather events.?

Below are some examples of the actions MetLife and its subsidiaries take to encourage customers to use lower-carbon methods of doing business and incentivize consumer resilience to climate-related events.?

  • Policy Discounts
    • Paperless Discounts: A Paperless Discount may apply to a policy that participates in the electronic communication of all policy documents.
    • Fortified Home Discounts: A premium credit may apply to Homeowners policies, where state-approved fortification improvements have been made.
    • Wind Mitigation Discounts: A premium credit will apply to qualifying dwellings that were built, rebuilt, or retrofitted to better resist hurricanes and other catastrophic windstorm events.
    • Smart Home Devices Discounts: A premium credit will apply to customers that maintain smart home devices that monitor temperature, fire, and water leakage.
  • Product Features
    • Under Homeowners coverage, when repairing or rebuilding a building, we provide an option to use the most advanced materials, including newer environmentally friendly building materials.
    • Under our Automobile program, we pay to use recycled auto parts that are safe and sound, reducing the amount of waste and the number of new parts manufactured.
    • We insure boats under our Boatowner program. This program provides up to $5,000 for the cleanup, containment, or removal of pollutants.

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Environmental Risk Exposure

Code/Metric Response/Reference

FN-IN-450a.1, Probable Maximum Loss (PML) of insured products from weatherrelated natural catastrophes

MetLife determines probable maximum loss (PML) for hurricane and earthquake perils at various return periods. Since there is no universally accepted methodology for determining potential catastrophe (cat) losses, the Company reviews several independent third-party cat models and develops a weighted average of the models. This not only accounts for the varying conclusions of similar experts, but also provides stability in the result if one of the models changes significantly. The third-party models are typically updated every year with most updates having minor changes. Significant changes to the models typically occur once every few years. The Company reviews each new model update for reasonability before the model is incorporated into the analysis.

For the hurricane peril, the Company weights three third-party models to obtain the PML. The Company reviews results based on both the long-term view (historical hurricanes) and near-term view (hurricanes representing the next five years of expected activity under a warm sea surface assumption). The Company also follows the latest developments in expert opinion on the potential impact of climate change on potential hurricane loss exposure.

To mitigate the impact of large hurricane losses, to the extent permitted by law, the Company has in place mandatory hurricane wind deductibles in most states from Texas to Maine ranging from 1% to 5% depending on the state and the area within the state. The Company also excludes wind coverage in the more vulnerable hurricane areas of some states, to the extent permitted by law.

The Company performs stress testing by evaluating the impact of past known significant events (e.g., Hurricane Katrina or Hurricane Andrew) on the current book of business as well as modeling the impact of past known storms on other nearby areas (e.g., modeling the “what if” scenario of Hurricane Katrina making landfall at other points on the Gulf coast). The Company also reviews the impact of various sized hurricanes making landfall at various points on the coast (e.g., modeling of the financial impact of every category hurricane at 10 mile increments along various points of the coast in the Northeast and Gulf, the Company’s two largest hurricane exposure zones). Results are evaluated and considered in the purchase of reinsurance.

The Company calculates PMLs for five separate hurricane regions defined generally as the Northeast, Mid-Atlantic, South (excluding Florida), Florida, and the Gulf. For MetLife, the Northeast PML is by far the largest hurricane cat loss exposed region and is comprised of Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont.

The Company hurricane PML is the northeast weighted model per occurrence property losses (including demand surge and storm surge) with actuarial projections for auto physical damage losses, allocated loss adjustment expenses, projected involuntary pool assessments, and a provision for projected hurricane losses in non-Northeast states incurred in a primarily Northeast hurricane.

For earthquake, the Company weights the results of two separate and distinct third-party models. PMLs are calculated for five distinct regions: the Pacific Northwest, New Madrid, California, the Great Basin, and South Carolina. The greatest earthquake exposure for the Company is in the Pacific Northwest.

The earthquake PML is based on the Pacific Northwest weighted model per occurrence property losses (including demand surge and fire following), with actuarial projections for auto physical damage losses and allocated loss adjustment expenses. The Company continuously reviews and manages policy count and inflation changes in each of its hurricane and earthquake regions.

At times the models vary significantly from one another illustrating the uncertainty around each loss amount at each return period. For example, models may vary on how far inland they forecast hurricanes can travel or may have different probabilities for the intensity of hurricanes. Another example is the assumptions in each model about the impact of trees or the amount of saturation on the ground in the path of the hurricane. Similarly, each model will have different assumptions regarding demand surge, the cost of rebuilding materials and labor in areas devastated by a hurricane. For earthquakes, there is great uncertainty around the losses for each return period mainly because there have not been enough earthquakes in the United States historically to validate the model results.

For tornado and hail events, the Company reviews both per occurrence and annual tornado/hail model results in combination with exposure concentration information, historical loss data, and historical tornado/hail accounts to identify states and areas within states most exposed to tornado and hail losses. Concentration analysis identifies areas in tornado/hail zones that may be impacted the most by individual or possibly even several major tornadoes from the same storm. Stress tests are performed on the areas in tornado/hail zones with the greatest concentrations in small geographic areas such as in Chicago, Dallas, or Atlanta.

FN-IN-450a.2, Total amount of monetary losses attributable to insurance payouts from (1) modeled natural catastrophes and (2) nonmodeled natural catastrophes, by type of event and geographic segment (net and gross of reinsurance)

The Company does not categorize catastrophic events as modeled versus nonmodeled. In determining ultimate losses for a catastrophic event, the Company will review “modeled” results from several cat modelers, especially for hurricanes and earthquakes. However, the Company also reviews other information such as exposed total insured value, location of each risk, risk characteristics of each property, market share, and input from claims personnel to determine the best estimate for the ultimate loss of a catastrophic event. The Company defines a catastrophe as an event designated as a catastrophe by the Property Catastrophe Service (PCS), an industry organization that collects data on catastrophes. The monetary value that the PCS considers as a catastrophic event is $25 million or more damage for the insurance industry.

FN-IN-450a.3, Description of approach to incorporation of environmental risks into (1) the underwriting process for individual contracts and (2) the management of firm-level risks and capital adequacy

For individual risk/contract underwriting as well as to manage capital adequacy, Property & Casualty (P&C) utilizes a variety of industry recognized third-party and proprietary modeling processes. Model results are used to inform our underwriting appetite and to make pricing and reinsurance decisions to manage our exposure to catastrophic events. As a national writer, P&C continuously monitors our exposure to a variety of extreme or catastrophic events. These models are also used to evaluate capital adequacy.

As part of our ongoing practice, our underwriting appetite is regularly reviewed and adjusted to manage our exposure to environmental risk. A full understanding of the risks we insure is inherent in our underwriting process. This understanding begins at the time the individual contract is bound and continues to be monitored during the life of the insurance policy. P&C policies renew annually, allowing us the opportunity to make policy-level adjustments as needed. To support the underwriting process, we utilize a variety of third-party data solutions and our proprietary models to evaluate each risk. This approach enables us to combine property and customer-specific characteristics with catastrophic models to make fully informed decisions.

The P&C pricing methodology is based on a variety of factors, including an estimation of expected loss, the expected expenses associated with managing the risk, and a reasonable profit margin based on the capital allocation required to support the business.

See also, FN-IN-450a.1., report section Ensuring Confidence for Our Customers/ Products and Services for Financial Confidence/Better prepared for climate risks, and our CDP Climate Change 2019 response.

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Systemic Risk Management

Code/Metric Response/Reference

FN-IN-550a.1, Exposure to derivative instruments by category: (1) total potential exposure to noncentrally cleared derivatives, (2) total fair value of acceptable collateral posted with the Central Clearinghouse, and (3) total potential exposure to centrally cleared derivatives

As of December 31, 2019 ($ Millions)?

?

General Account Amount1
As reported on the entity’s Schedule DB
(1) Total potential exposure to non-centrally cleared derivatives ?$ 2,958
(2) Total fair value of acceptable collateral?posted with the Central Clearinghouse $ 688
(3) Total potential exposure to centrally cleared derivatives ?$ 6,765

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1 FN-IN-550a.1 specifically targets disclosures “as reported on the entity’s schedule DB.”?As such, amounts only include our insurance companies that report Schedule DB for?NAIC Statutory purposes.

FN-IN-550a.2, Total fair value of securities?lending collateral assets

See Note 8 of 2019 Form 10-K for information regarding Securities Lending, Repurchase Agreements and FHLB of Boston Advance Agreements — Reinvestment Portfolio at Estimated Fair Value.

FN-IN-550a.3, Description of approach to managing capital and liquidity-related risks associated with systemic non-insurance activities

See response to FN-AC-550a.2 above.

FN-IN-000.A, Number of policies in force, by segment: (1) property and casualty, (2) life, (3) assumed reinsurance

See Item 8 of 2019 Form 10-K,Financial Statements and Supplementary Data, Schedule IV for total dollar amount of policies in force.?

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