Deferred Policy Acquisition Costs

12 Months Ended

Dec. 31, 2019

Deferred Costs [Abstract]

Deferred Policy Acquisition Costs

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,
	2019			2018			2017
Property casualty:
Deferred policy acquisition costs asset, January 1	$	464		$	438		$	408
Capitalized deferred policy acquisition costs	1,034			933			897
Amortized deferred policy acquisition costs	(986		)	(907		)	(867		)
Deferred policy acquisition costs asset, December 31	$	512		$	464		$	438
Life:
Deferred policy acquisition costs asset, January 1	$	274		$	232		$	229
Capitalized deferred policy acquisition costs	61			60			51
Amortized deferred policy acquisition costs	(48		)	(39		)	(46		)
Shadow deferred policy acquisition costs	(25		)	21			(2		)
Deferred policy acquisition costs asset, December 31	$	262		$	274		$	232
Consolidated:
Deferred policy acquisition costs asset, January 1	$	738		$	670		$	637
Capitalized deferred policy acquisition costs	1,095			993			948
Amortized deferred policy acquisition costs	(1,034		)	(946		)	(913		)
Shadow deferred policy acquisition costs	(25		)	21			(2		)
Deferred policy acquisition costs asset, December 31	$	774		$	738		$	670

No premium deficiencies were recorded in the consolidated statements of income in 2019, 2018 and 2017, 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.