XML 25 R15.htm IDEA: XBRL DOCUMENT v3.8.0.1
Deferred Acquisition Costs and Deferred Sales Inducement Costs
 9 Months Ended
Sep. 30, 2017
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 updated market-related inputs and implemented model changes related to our living benefit valuation. In addition, management conducted its annual review of life insurance and annuity valuation assumptions relative to current experience and management expectations including modeling changes. These aforementioned changes are collectively referred to as unlocking. The impact of unlocking to DAC in the third quarter of 2017 primarily reflected improved persistency and mortality on life insurance contracts and a correction related to a variable annuity model assumption partially offset by updates to market-related inputs to the living benefit valuation. The impact of unlocking to DAC in the third quarter of 2016 primarily reflected low interest rates that more than offset benefits from persistency on annuity contracts without living benefits. In addition, the Company’s review of its closed LTC business in the prior year period resulted in the write-off of DAC, which was included in the impact of unlocking.
The balances of and changes in DAC were as follows:
 
2017
 
2016
 
(in millions)
Balance at January 1
$
2,648

 
$
2,730

(1) 
Capitalization of acquisition costs
220

 
274

(2) 
Amortization, excluding the impact of valuation assumptions review
(201
)
 
(279
)
 
Amortization, impact of valuation assumptions review
12

 
(81
)
 
Impact of change in net unrealized securities (gains) losses
(18
)
 
(105
)
 
Balance at September 30
$
2,661

 
$
2,539

(1) 

(1) 
DAC balances were restated for the correction of commission expense accrual for certain insurance and annuity products in the fourth quarter of 2016. See Note 1 in the 2016 10-K.
(2) 
Includes a $27 million benefit related to the write-off of the deferred reinsurance liability in connection with the loss recognition on LTC business.
The balances of and changes in DSIC, which is included in other assets, were as follows:
 
2017
 
2016
(in millions)
Balance at January 1
$
302

 
$
335

Capitalization of sales inducement costs
3

 
4

Amortization, excluding the impact of valuation assumptions review
(26
)
 
(32
)
Amortization, impact of valuation assumptions review
(1
)
 
4

Impact of change in net unrealized securities (gains) losses
1

 
(14
)
Balance at September 30
$
279

 
$
297