Deferred Policy Acquisition Costs

12 Months Ended

Dec. 31, 2016

Deferred Costs [Abstract]

Deferred Policy Acquisition Costs

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)	Years ended December 31,
	2016			2015			2014
Property casualty:
Deferred policy acquisition costs asset, January 1	$	388		$	379		$	366
Capitalized deferred policy acquisition costs	840			801			783
Amortized deferred policy acquisition costs	(820		)	(792		)	(770		)
Deferred policy acquisition costs asset, December 31	$	408		$	388		$	379
Life:
Deferred policy acquisition costs asset, January 1	$	228		$	199		$	199
Capitalized deferred policy acquisition costs	49			45			44
Amortized deferred policy acquisition costs	(43		)	(37		)	(37		)
Amortized shadow deferred policy acquisition costs	(5		)	21			(7		)
Deferred policy acquisition costs asset, December 31	$	229		$	228		$	199
Consolidated:
Deferred policy acquisition costs asset, January 1	$	616		$	578		$	565
Capitalized deferred policy acquisition costs	889			846			827
Amortized deferred policy acquisition costs	(863		)	(829		)	(807		)
Amortized shadow deferred policy acquisition costs	(5		)	21			(7		)
Deferred policy acquisition costs asset, December 31	$	637		$	616		$	578

No premium deficiencies were recorded in the consolidated statements of income in 2016, 2015 and 2014, 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.