Deferred Policy Acquisition Costs

12 Months Ended

Dec. 31, 2020

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,
	2020		2019		2018
Property casualty:
Deferred policy acquisition costs asset, January 1	$	512	$	464	$	438
Capitalized deferred policy acquisition costs	1,087		1,034		933
Amortized deferred policy acquisition costs	(1,057)		(986)		(907)
Deferred policy acquisition costs asset, December 31	$	542	$	512	$	464

Life:
Deferred policy acquisition costs asset, January 1	$	262	$	274	$	232
Capitalized deferred policy acquisition costs	58		61		60
Amortized deferred policy acquisition costs	(49)		(48)		(39)
Shadow deferred policy acquisition costs	(8)		(25)		21
Deferred policy acquisition costs asset, December 31	$	263	$	262	$	274

Consolidated:
Deferred policy acquisition costs asset, January 1	$	774	$	738	$	670
Capitalized deferred policy acquisition costs	1,145		1,095		993
Amortized deferred policy acquisition costs	(1,106)		(1,034)		(946)
Shadow deferred policy acquisition costs	(8)		(25)		21
Deferred policy acquisition costs asset, December 31	$	805	$	774	$	738

No premium deficiencies were recorded in the consolidated statements of income in 2020, 2019 and 2018, 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.