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,
	2018			2017			2016
Property casualty:
Deferred policy acquisition costs asset, January 1	$	438		$	408		$	388
Capitalized deferred policy acquisition costs	933			897			840
Amortized deferred policy acquisition costs	(907		)	(867		)	(820		)
Deferred policy acquisition costs asset, December 31	$	464		$	438		$	408

Life:
Deferred policy acquisition costs asset, January 1	$	232		$	229		$	228
Capitalized deferred policy acquisition costs	60			51			49
Amortized deferred policy acquisition costs	(39		)	(46		)	(43		)
Shadow deferred policy acquisition costs	21			(2		)	(5		)
Deferred policy acquisition costs asset, December 31	$	274		$	232		$	229

Consolidated:
Deferred policy acquisition costs asset, January 1	$	670		$	637		$	616
Capitalized deferred policy acquisition costs	993			948			889
Amortized deferred policy acquisition costs	(946		)	(913		)	(863		)
Shadow deferred policy acquisition costs	21			(2		)	(5		)
Deferred policy acquisition costs asset, December 31	$	738		$	670		$	637

No premium deficiencies were recorded in the consolidated statements of income in 2018, 2017 and 2016, 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.