Deferred Policy Acquisition Costs and Deferred Sales Inducements

Policy acquisition costs deferred and amortized are as follows:



	December 31,
	2015			2014			2013
	(Dollars in thousands)
Balance at beginning of year	$	2,058,556		$	2,426,652		$	1,709,799
Costs deferred during the year:
Commissions	651,094			421,802			420,378
Policy issue costs	6,545			5,080			5,422
Amortization	(286,114		)	(163,578		)	(365,468		)
Effect of net unrealized gains/losses	475,055			(631,400		)	656,521
Balance at end of year	$	2,905,136		$	2,058,556		$	2,426,652

Sales inducements deferred and amortized are as follows:



	December 31,
	2015			2014			2013
	(Dollars in thousands)
Balance at beginning of year	$	1,587,257		$	1,875,880		$	1,292,341
Costs deferred during the year	486,924			330,079			337,787
Amortization	(209,390		)	(131,419		)	(253,113		)
Effect of net unrealized gains/losses	367,357			(487,283		)	498,865
Balance at end of year	$	2,232,148		$	1,587,257		$	1,875,880

We periodically revise the key assumptions used in the calculation of amortization of deferred policy acquisition costs and deferred sales inducements retrospectively through an unlocking process when estimates of current or future gross profits/margins (including the impact of realized investment gains and losses) to be realized from a group of products are revised. The unlocking adjustment in 2015 decreased amortization of deferred policy acquisition costs by $11.0 million and amortization of deferred sales inducements by $5.6 million and included the impact of account balance true ups as of September 30, 2015, which have been favorable to us due to stronger equity market performance than we assumed, favorable adjustments to lapse assumptions to reflect better persistency experienced than assumed and unfavorable adjustments to investment spread to reflect lower spreads being earned than assumed. In 2015, the favorable impact of the account balance true-up and lapse assumption change was largely offset by reductions in estimated future gross profits attributable to revisions to the assumptions for the lifetime income benefit rider liability. The unlocking adjustment in 2014 decreased amortization of deferred policy acquisition costs by $35.5 million and amortization for deferred sales inducements by $12.6 million and included the impact of account balance true-ups as of September 30, 2014 and adjustment to future period assumptions for interest margins, surrenders and certain expenses. The unlocking adjustment in 2013 decreased amortization of deferred policy acquisition costs by $18.5 million and amortization for deferred sales inducements by $11.1 million.