Deferred Acquisition Costs and Deferred Sales Inducement Costs

9 Months Ended

Sep. 30, 2015

Deferred Acquisition Costs and Deferred Sales Inducement Costs

Deferred acquisition costs and deferred sales inducement costs [Text Block]

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 2015 primarily reflected the difference between the Company’s previously assumed interest rates versus the continued low interest rate environment, partially offset by improved persistency. The impact in the third quarter of 2014 primarily reflected the difference between the Company’s assumed interest rates, partially offset by improved persistency and mortality experience and a benefit from updating the Company's variable annuity living benefit withdrawal utilization assumption.

The balances of and changes in DAC were as follows:

	2015			2014
	(in millions)
Balance at January 1	$	2,608		$	2,663
Capitalization of acquisition costs	264			253
Amortization, excluding the impact of valuation assumptions review	(296		)	(274		)
Amortization, impact of valuation assumptions review	(6		)	(7		)
Impact of change in net unrealized securities losses (gains)	64			(30		)
Balance at September 30	$	2,634		$	2,605

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

	2015			2014
	(in millions)
Balance at January 1	$	362		$	409
Capitalization of sales inducement costs	3			4
Amortization, excluding the impact of valuation assumptions review	(44		)	(39		)
Amortization, impact of valuation assumptions review	1			(2		)
Impact of change in net unrealized securities losses (gains)	10			(3		)
Balance at September 30	$	332		$	369