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5. Deferred Policy Acquisition Costs

12 Months Ended

Dec. 31, 2012

Deferred policy acquisition costs

On January 1, 2012, the Company adopted amendments to ASC 944, Financial Services – Insurance (ASU No. 2010-26) as further discussed in Note 2 to these financial statements. Also refer to Note 3 for discussion of accounting policy related to deferral and amortization of acquisition costs.

The balances of and changes in deferred policy acquisition costs as of and for the years ended December 31, are as follows:

Deferred Policy Acquisition Costs:	Years Ended December 31,
($ in millions)	2012			2011			2010
				As restated			As restated
				and amended			and amended

Policy acquisition costs deferred	$	69.8		$	100.7		$	10.1
Costs amortized to expenses:
Recurring costs		(102.6	)		(108.1	)		(149.1	)
Assumption unlocking		(1.4	)		(1.3	)		(50.9	)
Realized investment gains (losses)		0.5			(0.1	)		2.0
Offsets to net unrealized investment gains or losses included in AOCI(1)		(29.2	)		(37.4	)		(64.2	)
Cumulative effect of adoption of new accounting guidance(2)		—			—			(0.6	)
Change in deferred policy acquisition costs		(62.9	)		(46.2	)		(252.7	)
Deferred policy acquisition costs, beginning of period		489.1			535.3			788.0
Deferred policy acquisition costs, end of period	$	426.2		$	489.1		$	535.3

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(1)	An offset to deferred policy acquisition costs and AOCI is recorded each period to the extent that, had unrealized holding gains or losses from securities classified as available-for-sale actually been realized, an adjustment to deferred policy acquisition costs amortized using gross profits or gross margins would result.
(2)	Adjustment relates to the impact of adoption in 2010 of Accounting Standards Update 2010-11, Derivatives and Hedging (Topic 815), Scope Exception Related to Embedded Credit Derivatives.

During the years ended December 30, 2012, 2011 and 2010, deferred expenses primarily consisted of third-party commissions related to fixed indexed annuity sales.

- Definition

Disclosure of accounting policy for capitalizing costs incurred to write or acquire insurance contracts, the basis for and methodology for capitalizing such costs, the accounting for such deferred acquisition costs (DAC) when modifications or internal replacements of related insurance contracts occur and the effect on results of operations, and the methodology and amount of amortization. This disclosure addresses the nature, type, and amount of capitalized costs incurred to write or acquire insurance contracts.

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