XML 33 R16.htm IDEA: XBRL DOCUMENT v3.6.0.2
Deferred Policy Acquisition Costs
 12 Months Ended
Dec. 31, 2016
Deferred Policy Acquisition Costs Disclosures [Abstract]  
Deferred Policy Acquisition Costs
DEFERRED POLICY ACQUISITION COSTS
The following reflects the amounts of policy acquisition costs deferred and amortized (dollars in thousands):
 
Years ended December 31,
 
2016
 
2015
 
2014
Balance, beginning of year
 
$
3,392,437

 
$
3,342,575

 
$
3,517,796

Capitalization
 
350,233

 
352,260

 
877,609

Amortization (including interest)
 
(341,115
)
 
(288,630
)
 
(867,621
)
Change in value of embedded derivatives
 
(40,077
)
 
58,754

 
(111,744
)
Attributed to unrealized investment gains (losses)
 
(3,541
)
 
17,510

 
(4,480
)
Foreign currency translation
 
(19,332
)
 
(90,032
)
 
(68,985
)
Balance, end of year
 
$
3,338,605

 
$
3,392,437

 
$
3,342,575


Some reinsurance agreements involve reimbursing the ceding company for allowances and commissions in excess of first-year premiums. These amounts represent acquisition costs and are capitalized to the extent deemed recoverable from the future premiums and amortized against future profits of the business. This type of agreement presents a risk to the extent that the business lapses faster than originally anticipated, resulting in future profits being insufficient to recover the Company’s investment. Prior to 2015, certain renewal commissions that were capitalized and amortized in the same period were reflected in the table above. During 2015, the Company enhanced its process to track certain DAC roll forward component items, in particular, capitalization and amortization of certain renewal commissions have been excluded from the table above. Had the current methodology been used in 2014, the amounts capitalized and amortized would have decreased by $437.9 million.