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Deferred Policy Acquisition Costs
 12 Months Ended
Dec. 31, 2023
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]  
Deferred Policy Acquisition Costs
9. Deferred Policy Acquisition Costs
DAC represent those costs that are incremental and directly related to the successful acquisition of new or renewal of existing insurance contracts. We defer incremental costs that result directly from, and are essential to, the acquisition or renewal of an insurance contract. Such DAC generally include agent or broker commissions and bonuses, premium taxes, and medical and inspection fees that would not have been incurred if the insurance contract had not been acquired or renewed. Each cost is analyzed to assess whether it is fully deferrable. We partially defer costs, including certain commissions, when we do not believe that the entire cost is directly related to the acquisition or renewal of insurance contracts. Commissions that are not deferred to DAC are recorded in General operating and other expenses in the Consolidated Statements of Income (Loss).
We also defer a portion of employee total compensation and payroll-related fringe benefits directly related to time spent performing specific acquisition or renewal activities, including costs associated with the time spent on underwriting, policy issuance and processing, and sales force contract selling. The amounts deferred are derived based on successful efforts for each distribution channel and/or cost center from which the cost originates.
Short-duration insurance contracts: Policy acquisition costs are deferred and amortized over the period in which the related premiums written are earned, generally 12 months. DAC is grouped consistent with the manner in which the insurance contracts are acquired, serviced and measured for profitability and is reviewed for recoverability based on the profitability of the underlying insurance contracts. Investment income is anticipated in assessing the recoverability of DAC. We assess the recoverability of DAC on an annual basis or more frequently if circumstances indicate an impairment may have occurred. This assessment is performed by comparing recorded net unearned premiums and anticipated investment income on in-force business to the sum of expected losses and loss adjustment expenses incurred, unamortized DAC and maintenance costs. If the sum of these costs exceeds the amount of recorded net unearned premiums and anticipated investment income, the excess is recognized as an offset against the asset established for DAC. This offset is referred to as a premium deficiency charge. Increases in expected losses and loss adjustment expenses incurred can have a significant impact on the likelihood and amount of a premium deficiency charge.
Long-duration insurance contracts: DAC for all long-duration contracts, except for those with limited to no exposure to policyholder behavior risk, (i.e., certain investment contracts), is grouped and amortized on a constant level basis (i.e., approximating straight line amortization with adjustments for expected terminations) over the expected term of the related contracts using assumptions consistent with those used in estimating the related liability for future policy benefits, or any other related balances, for those corresponding contracts, as applicable. Capitalized expenses are only included in DAC amortization as expenses are incurred. For amortization purposes, contracts are grouped into annual cohorts by issue year and product and to segregate reinsured and non-reinsured contracts. For life insurance contracts, amortization is based on insurance in-force, while initial deposits are used for deferred annuity contracts, structured settlements and pension risk transfer products. Changes in future assumptions (e.g., expected duration of contracts or amount of coverage expected to be in force) are applied by adjusting the amortization rate prospectively. The Company has elected to implicitly account for actual experience, whether favorable or unfavorable, in its amortization expense each period. DAC is capped at the amount of expenses capitalized as the DAC balance does not accrue interest. DAC is not subject to recoverability testing.
Value of Business Acquired (VOBA) is determined at the time of acquisition and is reported in the Consolidated Balance Sheets with DAC. This value is based on the present value of future pre-tax profits discounted at yields applicable at the time of purchase. VOBA is amortized, consistent with DAC, i.e., over the life of the business on a constant level basis.
Internal Replacements of Long-duration and Investment-oriented Products: For some products, policyholders can elect to modify product benefits, features, rights or coverages by exchanging a contract for a new contract or by amendment, endorsement, or rider to a contract, or by the election of a feature or coverage within a contract. These transactions are known as internal replacements. If the modification does not substantially change the contract, we do not change the accounting and amortization of existing DAC and related actuarial balances. If an internal replacement represents a substantial change, the original contract is considered to be extinguished and any related DAC or other policy balances are charged or credited to income, and any new deferrable costs associated with the replacement contract are deferred.
The following table presents the transition rollforward for DAC*:
Individual
Retirement		Group
Retirement		Life
Insurance		Institutional
Markets		Total
(in millions)
Pre-adoption December 31, 2020 DAC balance$2,359 $560 $4,371 $26 $7,316 
Adjustments for the removal of related balances in Accumulated other comprehensive income (loss) originating from unrealized gains (losses)2,062 534 547 7 3,150 
Post-adoption January 1, 2021 DAC balance$4,421 $1,094 $4,918 $33 $10,466 
*Excludes $2.5 billion of DAC in General Insurance.
Prior to the adoption of LDTI, DAC for investment-oriented products included the effect of unrealized gains or losses on fixed maturity securities classified as available for sale. At the Transition Date, these adjustments were removed with a corresponding offset in AOCI. As the available for sale portfolio was in an unrealized gain position as of the Transition Date, the adjustment for removal of related balances in AOCI originating from unrealized gains (losses) balances reduced DAC.
The following table presents a rollforward of DAC:
Years Ended December 31, 2023General
Insurance		Individual
Retirement		Group
Retirement		Life
Insurance		Institutional
Markets
(in millions)Total
Balance, beginning of year$2,310 $4,597 $1,060 $4,839 $51 $12,857 
Capitalization4,135 705 78 473 28 5,419 
Amortization expense(3,747)(567)(82)(403)(9)(4,808)
Other, including foreign exchange(45)— — 54 — 9 
Dispositions*(578)— — — — (578)
Reclassified to held for sale— — — (814)— (814)
Balance, end of year$2,075 $4,735 $1,056 $4,149 $70 $12,085 
Years Ended December 31, 2022
Balance, beginning of year$2,428 $4,553 $1,078 $4,904 $38 $13,001 
Capitalization3,648 562 62 429 21 4,722 
Amortization expense(3,536)(519)(80)(415)(7)(4,557)
Other, including foreign exchange(230)1 — (79)(1)(309)
Balance, end of year$2,310 $4,597 $1,060 $4,839 $51 $12,857 
Years Ended December 31, 2021
Balance, beginning of year$2,489 $4,421 $1,094 $4,918 $33 $12,955 
Capitalization3,658 579 62 420 10 4,729 
Amortization expense(3,566)(447)(78)(427)(6)(4,524)
Other, including foreign exchange(153)— — (7)1 (159)
Balance, end of year$2,428 $4,553 $1,078 $4,904 $38 $13,001 
*Includes amounts related to the sale of Validus Re through the date of disposition.
DEFERRED SALES INDUCEMENTS
We offer DSI which include enhanced crediting rates or bonus payments to contract holders (bonus interest) on certain annuity and investment contract products. To qualify for such accounting treatment as an asset, the bonus interest must be explicitly identified in the contract at inception. We must also demonstrate that such amounts are incremental to amounts we credit on similar contracts without bonus interest and are higher than the contracts’ expected ongoing crediting rates for periods after the bonus period. DSI is reported in Other assets, while amortization related to DSI is recorded in Interest credited to policyholder account balances.
DSI amounts are deferred and amortized on a constant level basis over the life of the contract consistent with DAC. Changes in future assumptions (e.g., expected duration of contracts) are applied by adjusting the amortization rate prospectively rather than through a retrospective catch up adjustment. The Company has elected to implicitly account for actual experience, whether favorable or unfavorable, in its amortization expense each period, consistent with DAC.
The following table presents the transition rollforward for DSI*:
(in millions)Individual
 Retirement		Group
 Retirement		Total
Pre-adoption December 31, 2020 DSI balance$190 $91 $281 
Adjustments for the removal of related balances in Accumulated other comprehensive income (loss) originating from unrealized gains (losses)284 114 398 
Post-adoption January 1, 2021 DSI balance$474 $205 $679 
*Other assets, excluding DSI, totaled $12.8 billion.
Prior to the adoption of LDTI, deferred sales inducements for investment-oriented products included the effect of unrealized gains or losses on fixed maturity securities classified as available-for-sale. At the Transition Date, these adjustments were removed with a corresponding offset in AOCI. As the available for sale portfolio was in an unrealized gain position as of the Transition Date, the adjustment for removal of related balances in AOCI originating from unrealized gains (losses) balances reduced DSI.
The following table presents a rollforward of DSI:
Years Ended December 31,202320222021
(in millions)Individual
Retirement		Group
Retirement		TotalIndividual
Retirement		Group
Retirement		TotalIndividual
Retirement		Group
Retirement		Total
Balance, beginning of year$381 $177 $558 $428 $191 $619 $474 $205 $679 
Capitalization7 1 8 9 — 9 10 — 10 
Amortization expense(55)(14)(69)(56)(14)(70)(56)(14)(70)
Balance, end of year*$333 $164 $497 $381 $177 $558 $428 $191 $619 
*At December 31, 2023, 2022 and 2021, Other assets, excluding DSI, totaled $12.6 billion, $11.8 billion and $14.0 billion, respectively.