Deferred Policy Acquisition Costs

12 Months Ended

Dec. 31, 2022

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,
	2022		2021		2020
Property casualty:
Deferred policy acquisition costs asset, January 1	$	602	$	542	$	512
Capitalized deferred policy acquisition costs	1,383		1,211		1,087
Amortized deferred policy acquisition costs	(1,303)		(1,151)		(1,057)
Deferred policy acquisition costs asset, December 31	$	682	$	602	$	542

Life:
Deferred policy acquisition costs asset, January 1	$	303	$	263	$	262
Capitalized deferred policy acquisition costs	60		59		58
Amortized deferred policy acquisition costs	(44)		(46)		(49)
Shadow deferred policy acquisition costs	13		27		(8)
Deferred policy acquisition costs asset, December 31	$	332	$	303	$	263

Consolidated:
Deferred policy acquisition costs asset, January 1	$	905	$	805	$	774
Capitalized deferred policy acquisition costs	1,443		1,270		1,145
Amortized deferred policy acquisition costs	(1,347)		(1,197)		(1,106)
Shadow deferred policy acquisition costs	13		27		(8)
Deferred policy acquisition costs asset, December 31	$	1,014	$	905	$	805

No premium deficiencies were recorded in the consolidated statements of income in 2022, 2021 and 2020, 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.