Deferred Policy Acquisition Costs

12 Months Ended

Dec. 31, 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 consolidated statements of income in 2024, 2023 and 2022, 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)	Years ended December 31,
	2024		2023		2022
Property casualty:
Deferred policy acquisition costs asset, January 1	$	749	$	682	$	602
Capitalized deferred policy acquisition costs	1,748		1,488		1,383
Amortized deferred policy acquisition costs	(1,611)		(1,421)		(1,303)
Deferred policy acquisition costs asset, December 31	$	886	$	749	$	682

Life:
Deferred policy acquisition costs asset, January 1	$	344	$	331	$	314
Capitalized deferred policy acquisition costs	42		42		44
Amortized deferred policy acquisition costs	(30)		(29)		(27)

Deferred policy acquisition costs asset, December 31	$	356	$	344	$	331

Consolidated:
Deferred policy acquisition costs asset, January 1	$	1,093	$	1,013	$	916
Capitalized deferred policy acquisition costs	1,790		1,530		1,427
Amortized deferred policy acquisition costs	(1,641)		(1,450)		(1,330)

Deferred policy acquisition costs asset, December 31	$	1,242	$	1,093	$	1,013

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


(Dollars in millions)
Year ended December 31, 2024	Term		Whole life		Deferred annuity		Universal life		Total
Balance, beginning of period	$	236	$	48	$	8	$	52	$	344
Capitalized deferred policy acquisition costs	32		7		1		2		42
Amortized deferred policy acquisition costs	(23)		(3)		(1)		(3)		(30)
Balance, end of period	$	245	$	52	$	8	$	51	$	356

Year ended December 31, 2023
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