Incremental direct costs of contract acquisition as well as certain costs directly related to acquisition activities (underwriting, policy issuance and processing, medical and inspection and sales force contract selling) for the successful acquisition of new and renewal insurance policies and investment contracts are capitalized in the period they are incurred. Maintenance costs and acquisition costs that are not deferrable are charged to operating expenses as incurred.

For our long-duration insurance products and certain investment contracts, DAC is amortized on a constant level basis over the expected life of the contracts using groupings and assumptions consistent with those used in computing policyholder liabilities. For each of our long-duration insurance products, we select an inforce measure as a basis for amortization that will result in a constant level amortization pattern for the expected life of the contract. If our actual contract terminations differ from our expectation, the amortization pattern is adjusted on a prospective basis.

Some of our life and disability products within the Benefits and Protection segment have renewal commissions resulting in new DAC capitalizations in the years following the initial capitalization. We also have life products that allow for underwritten death benefit increases and cost of living adjustments, resulting in an immaterial amount of new DAC capitalizations each year. The new capitalizations are added to the existing DAC balance when incurred and amortized over the remaining life of the business.

DAC on short-duration group benefits contracts is amortized over the estimated life of the underlying contracts.

We review and update actuarial experience assumptions (such as mortality, surrenders, lapse, and premium persistency) serving as inputs to the models that establish the expected life for DAC and other actuarial balances during the third quarter of each year, or more frequently if evidence suggests assumptions should be revised. We make model refinements as necessary, and any changes resulting from these assumption updates are applied prospectively.

DAC amortization expense of $97.9 million and $95.8 million related to our long-duration and short-duration contracts was recorded in operating expenses on the consolidated statements of operations for the three months ended March 31, 2023 and 2022, respectively.

The following tables summarize disaggregated DAC amounts and reconcile the totals to those reported in the consolidated statements of financial position.

(1)	Includes insignificant balances for long-duration contracts.

Retirement and Income Solutions

The balances and changes in DAC were as follows:


	Workplace						Individual
	savings and		Individual		Pension		fixed
	retirement		variable		risk		deferred		Investment
	solutions		annuities		transfer		annuities		only

	(in millions)
Balances as of January 1, 2022	$	489.0	$	281.2	$	2.7	$	162.2	$	18.1
Costs deferred		48.3		22.5		5.6		—		1.4
Amortized to expense		(39.3)		(25.7)		(0.2)		(31.2)		(4.6)
Balances as of December 31, 2022		498.0		278.0		8.1		131.0		14.9
Costs deferred		12.0		5.2		2.2		—		—
Amortized to expense		(9.8)		(6.4)		(0.1)		(6.3)		(1.2)
Balances as of March 31, 2023	$	500.2	$	276.8	$	10.2	$	124.7	$	13.7

Benefits and Protection

The balances and changes in DAC were as follows:


	Specialty Benefits		Life Insurance
	Individual
	disability		Universal life		Term life		Participating life

	(in millions)
Balances as of January 1, 2022	$	580.7	$	1,596.2	$	678.9	$	102.3
Costs deferred		87.6		70.6		66.7		1.4
Amortized to expense		(42.2)		(97.1)		(59.9)		(10.7)
Balances as of December 31, 2022		626.1		1,569.7		685.7		93.0
Costs deferred		19.9		14.9		16.6		0.3
Amortized to expense		(11.0)		(24.2)		(15.2)		(2.5)
Balances as of March 31, 2023	$	635.0	$	1,560.4	$	687.1	$	90.8

Unearned Revenue Liability

An unearned revenue liability is established when we collect fees or other policyholder assessments, inclusive of cost of insurance charges, administrative charges and other similar fees, for services to be provided in future periods. These unearned front-end fees are deferred and the amortization is recorded using an approach consistent with DAC.

The unearned revenue liability is included within other policyholder funds in the consolidated statements of financial position. The following table summarizes disaggregated unearned revenue liability amounts and reconciles the totals to those reported in the consolidated statements of financial position.


	March 31, 2023		December 31, 2022

	(in millions)
Benefits and Protection - Life Insurance:
Universal life	$	466.6	$	459.0
Other balances (1)		8.8		8.4
Total unearned revenue liability	$	475.4	$	467.4

(1)	Includes insignificant balances for long-duration contracts.

Benefits and Protection

The balances and changes in the unearned revenue liability for Life Insurance – Universal life contracts were as follows:


	For the three months ended		For the year ended
	March 31, 2023		December 31, 2022

	(in millions)
Balance at beginning of period	$	459.0	$	425.3
Deferrals		15.0		61.8
Revenue recognized		(7.4)		(28.1)
Balance at end of period		466.6		459.0
Reinsurance impact		(227.4)		(227.9)
Balance at end of period after reinsurance	$	239.2	$	231.1