Deferred Acquisition Costs

6 Months Ended

Jun. 30, 2012

Deferred Acquisition Costs

Note 6 – Deferred Acquisition Costs

The expenses associated with issuing 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 our deferred acquisition costs for recoverability. All acquisition costs reflect ASU 2010-26, Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts, which we adopted on January 1, 2012. The table below shows the deferred policy acquisition costs and asset reconciliation, including the amortized deferred policy acquisition costs.

(In millions)	Three months ended June 30,						Six months ended June 30,
	2012			2011			2012			2011
Deferred policy acquisition costs asset at beginning of period	$	483		$	472		$	477		$	458
Capitalized deferred policy acquisition costs		192			168			362			332
Amortized deferred policy acquisition costs		(181	)		(156	)		(337	)		(306	)
Amortized shadow deferred policy acquisition costs		(10	)		(5	)		(18	)		(5	)
Deferred policy acquisition costs asset at end of period		484		$	479		$	484		$	479

There were no premium deficiencies recorded in the reported condensed consolidated statements of comprehensive income, as the sum of the anticipated loss and loss adjustment expenses, policyholder dividends and unamortized deferred acquisition expenses did not exceed the related unearned premiums and anticipated investment income.