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,
	2017			2016			2017			2016
Property casualty:
Deferred policy acquisition costs asset, beginning of period	$	448		$	412		$	408		$	388
Capitalized deferred policy acquisition costs	223			216			686			644
Amortized deferred policy acquisition costs	(220		)	(207		)	(643		)	(611		)
Deferred policy acquisition costs asset, end of period	$	451		$	421		$	451		$	421

Life:
Deferred policy acquisition costs asset, beginning of period	$	230		$	212		$	229		$	228
Capitalized deferred policy acquisition costs	13			11			38			35
Amortized deferred policy acquisition costs	(17		)	(15		)	(37		)	(37		)
Amortized shadow deferred policy acquisition costs	(1		)	(2		)	(5		)	(20		)
Deferred policy acquisition costs asset, end of period	$	225		$	206		$	225		$	206

Consolidated:
Deferred policy acquisition costs asset, beginning of period	$	678		$	624		$	637		$	616
Capitalized deferred policy acquisition costs	236			227			724			679
Amortized deferred policy acquisition costs	(237		)	(222		)	(680		)	(648		)
Amortized shadow deferred policy acquisition costs	(1		)	(2		)	(5		)	(20		)
Deferred policy acquisition costs asset, end of period	$	676		$	627		$	676		$	627

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.