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,
	2018			2017			2018			2017
Property casualty:
Deferred policy acquisition costs asset, beginning of period	$	472		$	448		$	438		$	408
Capitalized deferred policy acquisition costs	229			223			712			686
Amortized deferred policy acquisition costs	(225		)	(220		)	(674		)	(643		)
Deferred policy acquisition costs asset, end of period	$	476		$	451		$	476		$	451

Life:
Deferred policy acquisition costs asset, beginning of period	$	256		$	230		$	232		$	229
Capitalized deferred policy acquisition costs	15			13			43			38
Amortized deferred policy acquisition costs	(6		)	(17		)	(27		)	(37		)
Amortized shadow deferred policy acquisition costs	2			(1		)	19			(5		)
Deferred policy acquisition costs asset, end of period	$	267		$	225		$	267		$	225

Consolidated:
Deferred policy acquisition costs asset, beginning of period	$	728		$	678		$	670		$	637
Capitalized deferred policy acquisition costs	244			236			755			724
Amortized deferred policy acquisition costs	(231		)	(237		)	(701		)	(680		)
Amortized shadow deferred policy acquisition costs	2			(1		)	19			(5		)
Deferred policy acquisition costs asset, end of period	$	743		$	676		$	743		$	676

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.