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This excerpt taken from the ALL 10-Q filed Nov 6, 2008. Amortization of DAC
reflected a credit to income of $11 million in the third quarter of 2008
compared to a charge to income of $145 million in the third quarter of
2007. For the first nine months of 2008
and 2007, amortization of DAC reflected a charge to income of $12 million and
$458 million, respectively. The changes
of $156 million and $446 million in the third quarter and first nine months of
2008, respectively, compared to the same periods in the prior year, were
predominantly the result of reduced actual gross profits for fixed annuities
and interest-sensitive life insurance products due to realized capital losses
recorded in the current year periods.
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Accretion of DAC related to realized capital gains and losses was $151 million and $15 million in the third quarter of 2008 and 2007, respectively. In the first nine months of 2008, accretion of DAC related to realized capital gains and losses was $375 million. This compares to amortization of DAC in the first nine months of 2007 of $5 million. The impact of realized capital gains and losses on amortization of DAC is dependent upon the relationship between the assets that give rise to the gain or loss and the product liability supported by the assets. Fluctuations result from changes in the impact of realized capital gains and losses on actual and expected gross profits.
This excerpt taken from the ALL 10-Q filed Aug 6, 2008. Amortization of DAC
reflected a credit to income of $41 million in the second quarter of 2008
compared to a charge to income of $184 million in the second quarter of
2007. For the first six months of 2008
and 2007, amortization of DAC reflected a charge to income of $23 million and
$313 million, respectively. The changes
of $225 million and $290 million in the second quarter and first six months of
2008, respectively, compared to the same periods in the prior year, were
predominantly the result of reduced actual gross profits for fixed annuities
and interest-sensitive life insurance products due to realized capital losses
recorded in the current year periods.
For the six-month period, the change was also impacted by an increase in amortization deceleration
(credit to income) of $11 million due to our annual comprehensive review of DAC
assumptions (commonly referred to as “DAC unlocking”).
Accretion in the current year periods and amortization in the prior year periods of DAC related to realized capital gains and losses increased income by $171 million and $224 million, pretax, in the second quarter and first six months of 2008, respectively, compared to a decrease to income of $20 million, pretax, in both the second quarter and first six months of 2007. The impact of realized capital gains and losses on amortization of DAC is dependent upon the relationship between the assets that give rise to the gain or loss and the product liability supported by the assets. Fluctuations result from changes in the impact of realized capital gains and losses on actual and expected gross profits.
In accordance with our annual comprehensive review of DAC assumptions, in the first six months of 2008, the Company recognized net amortization deceleration totaling $25 million, including $17 million for fixed annuities and $8 million for interest-sensitive life insurance products. In the first six months of 2007, net amortization deceleration totaled $14 million and included net amortization deceleration of $18 million for interest-sensitive life insurance products and net amortization acceleration of $4 million for fixed annuities. The first six months of 2008 net amortization deceleration of $17 million on fixed annuities was due primarily to higher than expected investment spreads partially offset by increased expenses. The first six months of 2008 net amortization deceleration of $8 million on interest-sensitive life insurance products was due to higher than expected benefit spreads partially offset by increased expenses.
This excerpt taken from the ALL 10-Q filed May 8, 2008. Amortization of DAC decreased 50.4% or $65 million in the first
quarter of 2008 compared to the same period of 2007. The decrease in amortization of DAC in the
first quarter of 2008 compared to the same period of 2007 was due to a
reduction in amortization relating to realized capital gains and losses of $53
million and an increase in amortization deceleration (credit to income) of $11
million due to our annual comprehensive review of DAC assumptions (commonly
referred to as “DAC unlocking”).
The impact of realized capital gains and losses on amortization of DAC is dependent upon the relationship between the assets that give rise to the gain or loss and the product liability supported by the assets. Fluctuations result from changes in the impact of realized capital gains and losses on actual and expected gross profits.
In accordance with our annual comprehensive review of DAC assumptions, in the first quarter of 2008, the Company recognized net amortization deceleration totaling $25 million, including $17 million for fixed annuities and $8 million for interest-sensitive life insurance products. In the first quarter of 2007, net amortization deceleration totaled $14 million and included net amortization deceleration of $18 million for interest-sensitive life insurance products and net amortization acceleration of $4 million for fixed annuities. The first quarter 2008 net amortization deceleration of $17 million on fixed annuities was due primarily to higher than expected investment spreads partially offset by increased expenses. The first quarter 2008 net amortization deceleration of $8 million on interest-sensitive life insurance products was due to higher than expected benefit spreads partially offset by increased expenses.
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