Deferred Policy Acquisition Costs

A progression of deferred policy acquisition costs is presented below (in millions):



	P&C			Annuity and Other (*)
	Deferred			Deferred			Sales			Present Value									Consolidated
	Costs			Costs			Inducements			of Future Profits			Unrealized			Total			Total
Balance at December 31, 2010	$	181		$	812		$	189		$	164		$	(315	)	$	850		$	1,031
Additions	433			239			18			—			—			257			690
Amortization:
Periodic amortization	(425		)	(146		)	(24		)	(21		)	—			(191		)	(616		)
Annuity unlocking	—			(2		)	6			1			—			5			5
Included in realized gains	—			13			—			—			—			13			13
Change in unrealized	—			—			—			—			(222		)	(222		)	(222		)
Balance at December 31, 2011	189			916			189			144			(537		)	712			901

Additions	438			212			15			—			—			227			665
Amortization:
Periodic amortization	(423		)	(148		)	(30		)	(17		)	—			(195		)	(618		)
Annuity unlocking	—			(33		)	(4		)	—			—			(37		)	(37		)
Loss recognition charge	—			(67		)	—			(12		)	—			(79		)	(79		)
Included in realized gains	—			(1		)	—			—			—			(1		)	(1		)
Sale of subsidiaries	—			(92		)	—			(16		)	—			(108		)	(108		)
Change in unrealized	—			—			—			—			(173		)	(173		)	(173		)
Balance at December 31, 2012	204			787			170			99			(710		)	346			550

Additions	468			222			11			—			—			233			701
Amortization:
Periodic amortization	(460		)	(140		)	(30		)	(14		)	—			(184		)	(644		)
Annuity unlocking	—			4			(2		)	—			—			2			2
Included in realized gains	—			2			—			—			—			2			2
Foreign currency translation	(1		)	—			—			—			—			—			(1		)
Change in unrealized	—			—			—			—			365			365			365
Balance at December 31, 2013	$	211		$	875		$	149		$	85		$	(345	)	$	764		$	975


(*)	Includes AFG’s run-off long-term care and life segment and Medicare supplement and critical illness segment (sold in August 2012).

The present value of future profits (“PVFP”) amounts in the table above are net of $198 million and $184 million of accumulated amortization at December 31, 2013 and 2012, respectively. The loss recognition charge recorded in the fourth quarter of 2012 for AFG’s closed block of long-term care insurance resulted in the write off of all remaining deferred policy acquisition costs for this business. During each of the next five years, the PVFP is expected to decrease at a rate of approximately one-sixth of the balance at the beginning of each respective year.