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 Condensed 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 over the expected term of the related contracts.

Value of Business Acquired (“VOBA”): VOBA is determined at the time of acquisition and is reported in the Condensed 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.


	Individual Retirement		Group Retirement		Life Insurance		Institutional Markets		Total
(in millions)
DAC:
Balance at January 1, 2024 (a)	$	4,777	$	1,055	$	4,092	$	70	$	9,994
Capitalization	395		41		226		22		684
Amortization expense	(301)		(42)		(177)		(6)		(526)
Other, including foreign exchange	—		—		(7)		—		(7)
Dispositions	—		—		(27)		—		(27)
Balance at June 30, 2024	$	4,871	$	1,054	$	4,107	$	86	$	10,118

Balance at January 1, 2023	$	4,643	$	1,060	$	4,718	$	51	$	10,472
Capitalization	358		37		221		10		626
Amortization expense	(274)		(41)		(189)		(4)		(508)
Other, including foreign exchange	—		—		33		—		33
Balance at June 30, 2023	$	4,727	$	1,056	$	4,783	$	57	$	10,623







VOBA:
Balance at January 1, 2024 (b)	$	2	$	1	$	14	$	—	$	17

Amortization expense	—		—		(1)		—		(1)
Other, including foreign exchange	—		—		(1)		—		(1)

Balance at June 30, 2024	$	2	$	1	$	12	$	—	$	15

Balance at January 1, 2023	$	3	$	1	$	87	$	—	$	91

Amortization expense	(1)		—		(5)		—		(6)
Other, including foreign exchange	—		(1)		8		—		7
Balance at June 30, 2023	$	2	$	—	$	90	$	—	$	92






Total DAC and VOBA:
Balance at June 30, 2024									$	10,133
Balance at June 30, 2023									$	10,715

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.

The following table presents a rollforward of deferred sales inducement assets related to long-duration contracts for the six months ended June 30, 2024 and 2023:


Six Months Ended June 30,	2024						2023
	Individual Retirement		Group Retirement		Total		Individual Retirement		Group Retirement		Total
(in millions)


Balance, beginning of year	$	333	$	164	$	497	$	381	$	177	$	558
Capitalization	3		1		4		4		1		5
Amortization expense	(26)		(7)		(33)		(27)		(7)		(34)

Balance, end of period	$	310	$	158	$	468	$	358	$	171	$	529
Other reconciling items*					1,872						2,151
Other assets, including restricted cash					$	2,340					$	2,680