Deferred Acquisition Costs

6 Months Ended

Jun. 30, 2022

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,
	2022		2021		2022		2021
Property casualty:
Deferred policy acquisition costs asset, beginning of period	$	665	$	586	$	602	$	542
Capitalized deferred policy acquisition costs	375		325		739		637
Amortized deferred policy acquisition costs	(317)		(281)		(618)		(549)
Deferred policy acquisition costs asset, end of period	$	723	$	630	$	723	$	630

Life:
Deferred policy acquisition costs asset, beginning of period	$	314	$	294	$	303	$	263
Capitalized deferred policy acquisition costs	15		15		30		29
Amortized deferred policy acquisition costs	(11)		(14)		(21)		(23)
Shadow deferred policy acquisition costs	4		(1)		10		25
Deferred policy acquisition costs asset, end of period	$	322	$	294	$	322	$	294

Consolidated:
Deferred policy acquisition costs asset, beginning of period	$	979	$	880	$	905	$	805
Capitalized deferred policy acquisition costs	390		340		769		666
Amortized deferred policy acquisition costs	(328)		(295)		(639)		(572)
Shadow deferred policy acquisition costs	4		(1)		10		25
Deferred policy acquisition costs asset, end of period	$	1,045	$	924	$	1,045	$	924

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.