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Deferred Policy Acquisition Costs | 12 Months Ended
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Dec. 31, 2023
Deferred Costs [Abstract] |
Deferred Policy Acquisition Costs | Deferred Policy Acquisition Costs Expenses directly related to successfully acquired insurance policies – primarily commissions, premium taxes and underwriting costs – are deferred and amortized over the terms of the policies. We update our acquisition cost assumptions periodically to reflect actual experience. For property casualty, we evaluate the costs for recoverability. No premium deficiencies were recorded in the consolidated statements of income in 2023, 2022 and 2021, as the sum of the anticipated loss and loss expenses, policyholder dividends and unamortized deferred acquisition expenses did not exceed the related unearned premiums and anticipated investment income. The adoption of ASU 2018-12 on January 1, 2023, resulted in a simplified amortization of life deferred acquisition costs and the removal of shadow deferred acquisition costs. See Note 1, Summary of Significant Accounting Policies, for further discussion. The table below shows the deferred policy acquisition costs and asset reconciliation:
(Dollars in millions) |  | Years ended December 31,
|  | 2023 |  | 2022 |  | 2021
Property casualty: |  |  |  |  |  |
Deferred policy acquisition costs asset, January 1 |  | $ | 682 |  |  | $ | 602 |  |  | $ | 542 |
Capitalized deferred policy acquisition costs |  | 1,488 |  |  | 1,383 |  |  | 1,211 |
Amortized deferred policy acquisition costs |  | (1,421) |  |  | (1,303) |  |  | (1,151) |
Deferred policy acquisition costs asset, December 31 |  | $ | 749 |  |  | $ | 682 |  |  | $ | 602 |
Life: |  |  |  |  |  |
Deferred policy acquisition costs asset, January 1 |  | $ | 331 |  |  | $ | 314 |  |  | $ | 296 |
Capitalized deferred policy acquisition costs |  | 42 |  |  | 44 |  |  | 43 |
Amortized deferred policy acquisition costs |  | (29) |  |  | (27) |  |  | (25) |
Deferred policy acquisition costs asset, December 31 |  | $ | 344 |  |  | $ | 331 |  |  | $ | 314 |
Consolidated: |  |  |  |  |  |
Deferred policy acquisition costs asset, January 1 |  | $ | 1,013 |  |  | $ | 916 |  |  | $ | 838 |
Capitalized deferred policy acquisition costs |  | 1,530 |  |  | 1,427 |  |  | 1,254 |
Amortized deferred policy acquisition costs |  | (1,450) |  |  | (1,330) |  |  | (1,176) |
Deferred policy acquisition costs asset, December 31 |  | $ | 1,093 |  |  | $ | 1,013 |  |  | $ | 916 |
The removal of shadow deferred policy acquisition costs as a result of the adoption of ASU 2018-12 resulted in a $33 million increase, across all products, from $263 million pre-adoption at December 31, 2020, to $296 million post-adoption at January 1, 2021. The table below shows the life deferred policy acquisition costs asset by product:
(Dollars in millions) |  |  |  |  |  |  |  |  |  |  |  |
Year ended December 31, 2023 |  | Term |  | Whole life |  | Deferred annuity |  | Universal life |  |  |  | Total
Balance, beginning of period |  | $ | 228 |  |  | $ | 43 |  |  | $ | 7 |  |  | $ | 53 |  |  |  |  | $ | 331 |
Capitalized deferred policy acquisition costs |  | 30 |  |  | 8 |  |  | 2 |  |  | 2 |  |  |  |  | 42 |
Amortized deferred policy acquisition costs |  | (22) |  |  | (3) |  |  | (1) |  |  | (3) |  |  |  |  | (29) |
Balance, end of period |  | $ | 236 |  |  | $ | 48 |  |  | $ | 8 |  |  | $ | 52 |  |  |  |  | $ | 344 |
Year ended December 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |
Balance, beginning of period |  | $ | 215 |  |  | $ | 38 |  |  | $ | 7 |  |  | $ | 54 |  |  |  |  | $ | 314 |
Capitalized deferred policy acquisition costs |  | 34 |  |  | 7 |  |  | 1 |  |  | 2 |  |  |  |  | 44 |
Amortized deferred policy acquisition costs |  | (21) |  |  | (2) |  |  | (1) |  |  | (3) |  |  |  |  | (27) |
Balance, end of period |  | $ | 228 |  |  | $ | 43 |  |  | $ | 7 |  |  | $ | 53 |  |  |  |  | $ | 331 |
Year ended December 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |
Balance, beginning of period |  | $ | 201 |  |  | $ | 35 |  |  | $ | 6 |  |  | $ | 54 |  |  |  |  | $ | 296 |
Capitalized deferred policy acquisition costs |  | 35 |  |  | 5 |  |  | 1 |  |  | 2 |  |  |  |  | 43 |
Amortized deferred policy acquisition costs |  | (21) |  |  | (2) |  |  | — |  |  | (2) |  |  |  |  | (25) |
Balance, end of period |  | $ | 215 |  |  | $ | 38 |  |  | $ | 7 |  |  | $ | 54 |  |  |  |  | $ | 314 |

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- Definition The entire disclosure for deferred policy acquisition costs. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 944 -SubTopic 30 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//944-30/tableOfContent + Details
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