7.DEFERRED POLICY ACQUISITION COSTS AND VALUE OF BUSINESS ACQUIRED

Deferred policy acquisition costs

The balances and changes in DAC are as follows:

	Successor			Predecessor
	Company			Company
	February 1, 2015			January 1, 2015
	to			to			As of
	March 31, 2015			January 31, 2015			December 31, 2014
	(Dollars In Thousands)			(Dollars In Thousands)
Balance, beginning of period	$	—		$	2,653,065		$	2,720,604
Capitalization of commissions, sales, and issue expenses	49,851			22,820			293,672
Amortization	(1,833		)	1,080			(194,517		)
Change in unrealized investment gains and losses	—			(96,830		)	(166,694		)
Balance, end of period	$	48,018		$	2,580,135		$	2,653,065

Value of business acquired

The balances and changes in VOBA are as follows:

	Successor			Predecessor
	Company			Company
	February 1, 2015			January 1, 2015
	to			to			As of
	March 31, 2015			January 31, 2015			December 31, 2014
	(Dollars In Thousands)			(Dollars In Thousands)
Balance, beginning of period	1,278,063			501,981			756,018
Amortization	(26,203		)	(5,895		)	(113,803		)
Change in unrealized gains and losses	16,468			(79,417		)	(140,234		)
Balance, end of period	$	1,268,328		$	416,669		$	501,981

As of February 1, 2015, the existing DAC and VOBA balance was written off in conjunction with the merger previously disclosed in Note 5, Dai-ichi Merger and in accordance with ASC Topic 805 — Business Combinations.

Concurrently, a VOBA asset was created representing the actuarial estimated present value of future cash flows from the Company’s insurance policies and investment contracts in-force on the date of the Merger.

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

	Expected
Years	Amortization
	(Dollars In Thousands)
2015	$	111,538
2016	141,689
2017	131,556
2018	116,248
2019	97,335