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,
	2018			2017			2018			2017
Property casualty:
Deferred policy acquisition costs asset, beginning of period	$	446		$	428		$	438		$	408
Capitalized deferred policy acquisition costs	251			237			483			463
Amortized deferred policy acquisition costs	(225		)	(217		)	(449		)	(423		)
Deferred policy acquisition costs asset, end of period	$	472		$	448		$	472		$	448

Life:
Deferred policy acquisition costs asset, beginning of period	$	245		$	232		$	232		$	229
Capitalized deferred policy acquisition costs	15			12			28			25
Amortized deferred policy acquisition costs	(11		)	(12		)	(21		)	(20		)
Amortized shadow deferred policy acquisition costs	7			(2		)	17			(4		)
Deferred policy acquisition costs asset, end of period	$	256		$	230		$	256		$	230

Consolidated:
Deferred policy acquisition costs asset, beginning of period	$	691		$	660		$	670		$	637
Capitalized deferred policy acquisition costs	266			249			511			488
Amortized deferred policy acquisition costs	(236		)	(229		)	(470		)	(443		)
Amortized shadow deferred policy acquisition costs	7			(2		)	17			(4		)
Deferred policy acquisition costs asset, end of period	$	728		$	678		$	728		$	678

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.