Deferred Policy Acquisition Costs

12 Months Ended

Dec. 31, 2021

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,
	2021		2020		2019
Property casualty:
Deferred policy acquisition costs asset, January 1	$	542	$	512	$	464
Capitalized deferred policy acquisition costs	1,211		1,087		1,034
Amortized deferred policy acquisition costs	(1,151)		(1,057)		(986)
Deferred policy acquisition costs asset, December 31	$	602	$	542	$	512

Life:
Deferred policy acquisition costs asset, January 1	$	263	$	262	$	274
Capitalized deferred policy acquisition costs	59		58		61
Amortized deferred policy acquisition costs	(46)		(49)		(48)
Shadow deferred policy acquisition costs	27		(8)		(25)
Deferred policy acquisition costs asset, December 31	$	303	$	263	$	262

Consolidated:
Deferred policy acquisition costs asset, January 1	$	805	$	774	$	738
Capitalized deferred policy acquisition costs	1,270		1,145		1,095
Amortized deferred policy acquisition costs	(1,197)		(1,106)		(1,034)
Shadow deferred policy acquisition costs	27		(8)		(25)
Deferred policy acquisition costs asset, December 31	$	905	$	805	$	774

No premium deficiencies were recorded in the consolidated statements of income in 2021, 2020 and 2019, 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.