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,
	2017			2016			2015
Property casualty:
Deferred policy acquisition costs asset, January 1	$	408		$	388		$	379
Capitalized deferred policy acquisition costs	897			840			801
Amortized deferred policy acquisition costs	(867		)	(820		)	(792		)
Deferred policy acquisition costs asset, December 31	$	438		$	408		$	388

Life:
Deferred policy acquisition costs asset, January 1	$	229		$	228		$	199
Capitalized deferred policy acquisition costs	51			49			45
Amortized deferred policy acquisition costs	(46		)	(43		)	(37		)
Amortized shadow deferred policy acquisition costs	(2		)	(5		)	21
Deferred policy acquisition costs asset, December 31	$	232		$	229		$	228

Consolidated:
Deferred policy acquisition costs asset, January 1	$	637		$	616		$	578
Capitalized deferred policy acquisition costs	948			889			846
Amortized deferred policy acquisition costs	(913		)	(863		)	(829		)
Amortized shadow deferred policy acquisition costs	(2		)	(5		)	21
Deferred policy acquisition costs asset, December 31	$	670		$	637		$	616

No premium deficiencies were recorded in the consolidated statements of income in 2017, 2016 and 2015, 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.