5. Deferred Policy Acquisition Costs

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

Deferred Policy Acquisition Costs

On January 1, 2012, the Company adopted the amendments to ASC 944, Financial Services – Insurance (ASU 2010-26) as further discussed in Note 3 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 periods ended September 30, 2012 and 2011 are as follows:

Deferred Policy Acquisition Costs:	Three Months Ended						Nine Months Ended
($ in millions)	September 30,						September 30,
	2012			2011			2012			2011
				As restated and amended						As restated and amended
Policy acquisition costs deferred	$	20.4		$	31.1		$	63.7		$	71.5
Costs amortized to expenses:
Recurring costs		(5.1	)		(33.8	)		(78.2	)		(94.4	)
Assumption unlocking		(1.2	)		(1.2	)		(1.2	)		(1.2	)
Realized investment gains (losses)		(18.0	)		6.1			(13.2	)		5.3
Offsets to net unrealized investment gains or losses included in AOCI (1)		5.8			(17.7	)		(25.6	)		(30.1	)
Change in deferred policy acquisition costs		1.9			(15.5	)		(54.5	)		(48.9	)
Deferred policy acquisition costs, beginning of period		432.7			501.9			489.1			535.3
Deferred policy acquisition costs, end of period	$	434.6		$	486.4		$	434.6		$	486.4

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(1) An offset to deferred policy acquisition costs and accumulated other comprehensive income (“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.

During the three months and nine months ended September 30, 2012 and 2011, deferred expenses primarily consisted of third-party commissions related to fixed indexed annuity sales.