Deferred policy acquisition costs (“DAC”) represent those costs that are incremental and directly related to the successful acquisition of new or renewal of existing insurance contracts. We defer incremental costs that result directly from, and are essential to, the acquisition or renewal of an insurance contract. Such DAC generally include agent or broker commissions and bonuses, and medical fees that would not have been incurred if the insurance contract had not been acquired or renewed. Each cost is analyzed to assess whether it is fully deferrable. We partially defer costs, including certain commissions, when we do not believe that the entire cost is directly related to the acquisition or renewal of insurance contracts. Commissions that are not deferred to DAC are recorded in Non-deferrable insurance commissions in the Consolidated Statements of Income (Loss).

We also defer a portion of employee total compensation and payroll-related fringe benefits directly related to time spent performing specific acquisition or renewal activities, including costs associated with the time spent on underwriting, policy issuance and processing, and sales force contract selling. The amounts deferred are derived based on successful efforts for each distribution channel and/or cost center from which the cost originates.

DAC for all contracts, except for those with limited to no exposure to policyholder behavior risk, (i.e., certain investment contracts), is grouped and amortized on a constant level basis (i.e., approximating straight line amortization with adjustments for expected terminations) over the expected term of the related contracts using assumptions consistent with those used in estimating the related liability for future policy benefits, or any other related balances, for those corresponding contracts, as applicable. Capitalized expenses are only included in DAC amortization as expenses are incurred. For amortization purposes, contracts are grouped into annual cohorts by issue year and product and to segregate reinsured and non-reinsured contracts. For life insurance contracts, amortization is based on insurance in-force, while initial deposits are used for deferred annuity contracts, structured settlements and pension risk transfer products. Changes in future assumptions (e.g., expected duration of contracts or amount of coverage expected to be in force) are applied by adjusting the amortization rate prospectively. The Company has elected to implicitly account for actual experience, whether favorable or unfavorable, in its amortization expense each period. DAC is capped at the amount of expenses capitalized as the DAC balance does not accrue interest. DAC is not subject to recoverability testing.

Value of Business Acquired (“VOBA”): VOBA is determined at the time of acquisition and is reported in the Consolidated Balance Sheets with DAC. This value is based on the present value of future pre-tax profits discounted at yields applicable at the time of purchase. VOBA is amortized, consistent with DAC, i.e., over the life of the business on a constant level basis.

Internal Replacements of Long-duration and Investment-oriented Products: For some products, policyholders can elect to modify product benefits, features, rights or coverages by exchanging a contract for a new contract or by amendment, endorsement, or rider to a contract, or by the election of a feature or coverage within a contract. These transactions are known as internal replacements. If the modification does not substantially change the contract, we do not change the accounting and amortization of existing DAC and related actuarial balances. If an internal replacement represents a substantial change, the original contract is considered to be extinguished and any related DAC or other policy balances are charged or credited to income, and any new deferrable costs associated with the replacement contract are deferred.


	Individual Retirement		Group Retirement		Life Insurance		Institutional Markets		Corporate and Other		Total
(in millions)
DAC:
Balance at January 1, 2025	$	3,020	$	1,049	$	4,127	$	95	$	1,990	$	10,281
Capitalization	833		95		368		40		45		1,381
Amortization expense	(475)		(91)		(333)		(17)		(132)		(1,048)
Other adjustments(a)	—		—		—		—		(1,739)		(1,739)

Balance at December 31, 2025(b)	$	3,378	$	1,053	$	4,162	$	118	$	164	$	8,875

Balance at January 1, 2024	$	2,656	$	1,055	$	4,092	$	70	$	2,121	$	9,994
Capitalization	768		78		411		38		82		1,377
Amortization expense	(404)		(84)		(342)		(13)		(213)		(1,056)
Other, including foreign exchange	—		—		(7)		—		—		(7)
Dispositions	—		—		(27)		—		—		(27)
Balance at December 31, 2024(b)	$	3,020	$	1,049	$	4,127	$	95	$	1,990	$	10,281

Balance at January 1, 2023	$	2,409	$	1,060	$	4,718	$	51	$	2,234	$	10,472
Capitalization	602		77		450		28		103		1,260
Amortization expense	(355)		(82)		(372)		(9)		(216)		(1,034)
Other, including foreign exchange	—		—		36		—		—		36
Reclassified to Assets held-for-sale(c)	—		—		(740)		—		—		(740)
Balance at December 31, 2023(b)	$	2,656	$	1,055	$	4,092	$	70	$	2,121	$	9,994

We offer deferred sales inducements (“DSI”) which include enhanced crediting rates or bonus payments to contract holders (bonus interest) on certain annuity and investment contract products. To qualify for accounting treatment as an asset, the bonus interest must be explicitly identified in the contract at inception. We must also demonstrate that such amounts are incremental to amounts we credit on similar contracts without bonus interest and are higher than the contracts’ expected ongoing crediting rates for periods after the bonus period. DSI is reported in Other assets, while amortization related to DSI is recorded in Interest credited to policyholder account balances. DSI amounts are deferred and amortized on a constant level basis over the life of the contract consistent with DAC. Changes in future assumptions (e.g., expected duration of contracts) are applied by adjusting the amortization rate prospectively rather than through a retrospective catch up adjustment. The Company has elected to implicitly account for actual experience, whether favorable or unfavorable, in its amortization expense each period, consistent with DAC.


	Individual Retirement		Group Retirement		Corporate and Other		Total
(in millions)


Balance at January 1, 2025	$	218	$	152	$	70	$	440
Capitalization	—		—		—		—
Amortization expense	(36)		(12)		(6)		(54)
Other adjustments(a)	—		—		(63)		(63)
Balance at December 31, 2025	$	182	$	140	$	1	$	323
Other reconciling items(b)							4,112
Other assets, including restricted cash							$	4,435

Balance at January 1, 2024	$	254	$	164	$	79	$	497
Capitalization	5		1		—		6
Amortization expense	(41)		(13)		(9)		(63)

Balance at December 31, 2024	$	218	$	152	$	70	$	440
Other reconciling items(b)							1,602
Other assets, including restricted cash							$	2,042

Balance at January 1, 2023	$	291	$	177	$	90	$	558
Capitalization	7		1		—		8
Amortization expense	(44)		(14)		(11)		(69)

Balance at December 31, 2023	$	254	$	164	$	79	$	497
Other reconciling items(b)							1,797
Other assets, including restricted cash							$	2,294