Deferred Acquisition Costs

6 Months Ended

Jun. 30, 2019

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,
	2019			2018			2019			2018
Property casualty:
Deferred policy acquisition costs asset, beginning of period	$	485		$	446		$	464		$	438
Capitalized deferred policy acquisition costs	280			251			534			483
Amortized deferred policy acquisition costs	(239		)	(225		)	(472		)	(449		)
Deferred policy acquisition costs asset, end of period	$	526		$	472		$	526		$	472

Life:
Deferred policy acquisition costs asset, beginning of period	$	266		$	245		$	274		$	232
Capitalized deferred policy acquisition costs	15			15			31			28
Amortized deferred policy acquisition costs	(12		)	(11		)	(25		)	(21		)
Shadow deferred policy acquisition costs	(9		)	7			(20		)	17
Deferred policy acquisition costs asset, end of period	$	260		$	256		$	260		$	256

Consolidated:
Deferred policy acquisition costs asset, beginning of period	$	751		$	691		$	738		$	670
Capitalized deferred policy acquisition costs	295			266			565			511
Amortized deferred policy acquisition costs	(251		)	(236		)	(497		)	(470		)
Shadow deferred policy acquisition costs	(9		)	7			(20		)	17
Deferred policy acquisition costs asset, end of period	$	786		$	728		$	786		$	728

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.