Deferred Acquisition Costs and Deferred Sales Inducement Costs

9 Months Ended

Sep. 30, 2013

Deferred Acquisition Costs and Deferred Sales Inducement Costs

Deferred Acquisition Costs and Deferred Sales Inducement Costs

Deferred Acquisition Costs and Deferred Sales Inducement Costs

In the third quarter of the year, management conducts its annual review of insurance and annuity valuation assumptions

relative to current experience and management expectations. To the extent that expectations change as a result of this

review, management updates valuation assumptions. The impact in the third quarter of 2013 primarily reflected the impact of expected higher interest rates and changes in assumed policyholder behavior. The impact in the third quarter of 2012 primarily

reflected the low interest rate environment and the assumption of continued low interest rates over the near-term.

The balances of and changes in DAC were as follows:

	2013			2012
	(in millions)
Balance at January 1	$	2,399		$	2,440
Capitalization of acquisition costs	252			229
Amortization, excluding the impact of valuation assumptions review	(231		)	(186		)
Amortization impact of valuation assumptions review	78			(11		)
Impact of change in net unrealized securities losses (gains)	112			(75		)
Balance at September 30	$	2,610		$	2,397

The balances of and changes in DSIC, which is included in other assets, were as follows:

	2013			2012
	(in millions)
Balance at January 1	$	404		$	464
Capitalization of sales inducement costs	4			6
Amortization, excluding the impact of valuation assumptions review	(39		)	(30		)
Amortization impact of valuation assumptions review	25			(13		)
Impact of change in net unrealized securities losses (gains)	18			(11		)
Balance at September 30	$	412		$	416