DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED

12 Months Ended

Dec. 31, 2013

DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED.

DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED

7. DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED

Deferred policy acquisition costs

The balances and changes in DAC are as follows:

	As of December 31,
	2013			2012
	(Dollars In Thousands)
Balance, beginning of period	$	2,493,729		$	2,345,458
Capitalization of commissions, sales, and issue expenses	345,885			311,959
Amortization	(112,117		)	(105,447		)
Change in unrealized investment gains and losses	(6,894		)	(58,241		)
Balance, end of period	$	2,720,603		$	2,493,729

Value of Business Acquired

The balances and changes in VOBA are as follows:

	As of December 31,
	2013			2012
	(Dollars In Thousands)
Balance, beginning of period	$	731,627		$	877,763
Acquisitions(1)	63,627			—
Amortization	(42,543		)	(86,736		)
Change in unrealized gains and losses	17,291			(59,400		)
Balance, end of period	$	770,002		$	731,627

(1) Includes VOBA associated with the MONY acquisition of $219.8 million, offset by $156.1 million ceded to reinsurers.

During 2013, the Company reclassified certain amounts which previously were reported as DAC into VOBA for purposes of presentation within the tables above. Prior years amounts have been similarly presented to make the amounts within these tables comparable for the periods presented. These changes had no effect on previously reported financial statement line items.

The expected amortization of VOBA for the next five years is as follows:

	Expected
Years	Amortization
	(Dollars In Thousands)
2014	$	79,248
2015	74,663
2016	70,235
2017	66,720
2018	63,153