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 for the year ended December 31, 2014 primarily reflected the difference between the Company’s previously assumed interest rates versus the continued low interest rate environment, partially offset by favorable persistency and mortality experience and a benefit from updating the Company's variable annuity living benefit withdrawal utilization assumption. The impact for the year ended December 31, 2013 primarily reflected the impact of assumed interest rates and changes in assumed policyholder behavior. The impact for the year ended December 31, 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:



	2014			2013			2012
	(in millions)
Balance at January 1	$	2,663		$	2,399		$	2,440
Capitalization of acquisition costs	336			339			313
Amortization, excluding the impact of valuation assumptions review	(360		)	(285		)	(275		)
Amortization impact of valuation assumptions review	(7		)	78			(11		)
Impact of change in net unrealized securities losses (gains)	(24		)	132			(68		)
Balance at December 31	$	2,608		$	2,663		$	2,399

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



	2014			2013			2012
	(in millions)
Balance at January 1	$	409		$	404		$	464
Capitalization of sales inducement costs	5			5			7
Amortization, excluding the impact of valuation assumptions review	(51		)	(48		)	(45		)
Amortization impact of valuation assumptions review	(2		)	25			(13		)
Impact of change in net unrealized securities losses (gains)	1			23			(9		)
Balance at December 31	$	362		$	409		$	404