Deferred Acquisition Costs

3 Months Ended

Mar. 31, 2020

Deferred Costs [Abstract]

Deferred 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)	Three months ended March 31,
	2020			2019
Property casualty:
Deferred policy acquisition costs asset, beginning of period	$	512		$	464
Capitalized deferred policy acquisition costs	280			254
Amortized deferred policy acquisition costs	(256		)	(233		)
Deferred policy acquisition costs asset, end of period	$	536		$	485
Life:
Deferred policy acquisition costs asset, beginning of period	$	262		$	274
Capitalized deferred policy acquisition costs	15			16
Amortized deferred policy acquisition costs	(9		)	(13		)
Shadow deferred policy acquisition costs	23			(11		)
Deferred policy acquisition costs asset, end of period	$	291		$	266
Consolidated:
Deferred policy acquisition costs asset, beginning of period	$	774		$	738
Capitalized deferred policy acquisition costs	295			270
Amortized deferred policy acquisition costs	(265		)	(246		)
Shadow deferred policy acquisition costs	23			(11		)
Deferred policy acquisition costs asset, end of period	$	827		$	751

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.