Deferred Policy Acquisition Costs

9 Months Ended

Sep. 30, 2024

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 condensed consolidated statements of income, 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 table below shows the deferred policy acquisition costs and asset reconciliation.


(Dollars in millions)	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
Property casualty:
Deferred policy acquisition costs asset, beginning of period	$	878	$	771	$	749	$	682
Capitalized deferred policy acquisition costs	436		355		1,318		1,134
Amortized deferred policy acquisition costs	(427)		(366)		(1,180)		(1,056)
Deferred policy acquisition costs asset, end of period	$	887	$	760	$	887	$	760

Life:
Deferred policy acquisition costs asset, beginning of period	$	351	$	338	$	344	$	331
Capitalized deferred policy acquisition costs	11		10		33		32
Amortized deferred policy acquisition costs	(8)		(7)		(23)		(22)

Deferred policy acquisition costs asset, end of period	$	354	$	341	$	354	$	341

Consolidated:
Deferred policy acquisition costs asset, beginning of period	$	1,229	$	1,109	$	1,093	$	1,013
Capitalized deferred policy acquisition costs	447		365		1,351		1,166
Amortized deferred policy acquisition costs	(435)		(373)		(1,203)		(1,078)

Deferred policy acquisition costs asset, end of period	$	1,241	$	1,101	$	1,241	$	1,101

The table below shows the life deferred policy acquisition costs asset by product:


(Dollars in millions)
Three months ended September 30, 2024	Term		Whole life		Deferred annuity		Universal life		Total
Balance, beginning of period	$	241	$	50	$	8	$	52	$	351
Capitalized deferred policy acquisition costs	9		1		—		1		11
Amortized deferred policy acquisition costs	(7)		—		—		(1)		(8)
Balance, end of period	$	243	$	51	$	8	$	52	$	354

Three months ended September 30, 2023
Balance, beginning of period	$	233	$	45	$	8	$	52	$	338
Capitalized deferred policy acquisition costs	8		2		—		—		10
Amortized deferred policy acquisition costs	(7)		—		—		—		(7)
Balance, end of period	$	234	$	47	$	8	$	52	$	341


(Dollars in millions)
Nine months ended September 30, 2024	Term		Whole life		Deferred annuity		Universal life		Total
Balance, beginning of period	$	236	$	48	$	8	$	52	$	344
Capitalized deferred policy acquisition costs	25		5		1		2		33
Amortized deferred policy acquisition costs	(18)		(2)		(1)		(2)		(23)
Balance, end of period	$	243	$	51	$	8	$	52	$	354

Nine months ended September 30, 2023
Balance, beginning of period	$	228	$	43	$	7	$	53	$	331
Capitalized deferred policy acquisition costs	24		6		1		1		32
Amortized deferred policy acquisition costs	(18)		(2)		—		(2)		(22)
Balance, end of period	$	234	$	47	$	8	$	52	$	341