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 June 30,						Six months ended June 30,
	2017			2016			2017			2016
Property casualty:
Deferred policy acquisition costs asset, beginning of period	$	428		$	397		$	408		$	388
Capitalized deferred policy acquisition costs	237			218			463			428
Amortized deferred policy acquisition costs	(217		)	(203		)	(423		)	(404		)
Deferred policy acquisition costs asset, end of period	$	448		$	412		$	448		$	412

Life:
Deferred policy acquisition costs asset, beginning of period	$	232		$	221		$	229		$	228
Capitalized deferred policy acquisition costs	12			12			25			24
Amortized deferred policy acquisition costs	(12		)	(11		)	(20		)	(22		)
Amortized shadow deferred policy acquisition costs	(2		)	(10		)	(4		)	(18		)
Deferred policy acquisition costs asset, end of period	$	230		$	212		$	230		$	212

Consolidated:
Deferred policy acquisition costs asset, beginning of period	$	660		$	618		$	637		$	616
Capitalized deferred policy acquisition costs	249			230			488			452
Amortized deferred policy acquisition costs	(229		)	(214		)	(443		)	(426		)
Amortized shadow deferred policy acquisition costs	(2		)	(10		)	(4		)	(18		)
Deferred policy acquisition costs asset, end of period	$	678		$	624		$	678		$	624

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.