Deferred Policy Acquisition Costs

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



	P&C			Annuity and Other (*)
	Deferred			Deferred			Sales												Consolidated
	Costs			Costs			Inducements			PVFP			Unrealized			Total			Total
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

Additions	497			198			8			—			—			206			703
Amortization:
Periodic amortization	(485		)	(130		)	(26		)	(11		)	—			(167		)	(652		)
Annuity unlocking	—			(20		)	—			—			—			(20		)	(20		)
Included in realized gains	—			2			1			—			—			3			3
Foreign currency translation	(2		)	—			—			—			—			—			(2		)
Change in unrealized	—			—			—			—			(186		)	(186		)	(186		)
Balance at December 31, 2014	$	221		$	925		$	132		$	74		$	(531	)	$	600		$	821


(*)	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 $209 million and $198 million of accumulated amortization at December 31, 2014 and 2013, 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.