Deferred Policy Acquisition Costs

Expenses directly related to successfully acquired insurance policies – primarily commissions, premium taxes and underwriting costs – are deferred and amortized over the terms of the policies. We update our acquisition cost assumptions periodically to reflect actual experience, and we evaluate the costs for recoverability. The table below shows the deferred policy acquisition costs and asset reconciliation.



(Dollars in millions)	Three months ended September 30,						Nine months ended September 30,
	2016			2015			2016			2015
Property casualty:
Deferred policy acquisition costs asset, beginning of period	$	412		$	390		$	388		$	379
Capitalized deferred policy acquisition costs	216			201			644			606
Amortized deferred policy acquisition costs	(207		)	(197		)	(611		)	(591		)
Deferred policy acquisition costs asset, end of period	$	421		$	394		$	421		$	394

Life:
Deferred policy acquisition costs asset, beginning of period	$	212		$	210		$	228		$	199
Capitalized deferred policy acquisition costs	11			11			35			34
Amortized deferred policy acquisition costs	(15		)	(10		)	(37		)	(29		)
Amortized shadow deferred policy acquisition costs	(2		)	4			(20		)	11
Deferred policy acquisition costs asset, end of period	$	206		$	215		$	206		$	215

Consolidated:
Deferred policy acquisition costs asset, beginning of period	$	624		$	600		$	616		$	578
Capitalized deferred policy acquisition costs	227			212			679			640
Amortized deferred policy acquisition costs	(222		)	(207		)	(648		)	(620		)
Amortized shadow deferred policy acquisition costs	(2		)	4			(20		)	11
Deferred policy acquisition costs asset, end of period	$	627		$	609		$	627		$	609

No premium deficiencies were recorded in the condensed consolidated statements of income, as the sum of the anticipated loss and loss expenses, policyholder dividends and unamortized deferred acquisition expenses did not exceed the related unearned premiums and anticipated investment income.