(5)

Deferred Policy Acquisition Costs

The following table summarizes changes in the DAC balance, as of the dates indicated:


	December 31,
(in millions)	2018			2017			2016
Balance at beginning of year	$	5,676		$	5,432		$	5,200
Capitalization of DAC		942			923			823
Amortization of DAC, excluding unlocks		(440	)		(461	)		(412	)
Amortization of DAC related to unlocks		17			69			(21	)
Adjustments to DAC related to unrealized gains and losses on available-for-sale securities		635			(287	)		(158	)

Balance at end of year	$	6,830		$	5,676		$	5,432

The Company conducted its annual comprehensive review of model assumptions related to financial services operations used to project DAC and other related balances, including valuation of business acquired (“VOBA”) and unearned revenue reserves. For the year ended December 31, 2018, the Company recognized a decrease in amortization for DAC of $17 million and a decrease in amortization for other related balances of $43 million. The updated assumptions were primarily related to favorable market rates of return and changes to expected future mortality. This was partially offset by updated assumptions for expected policyholder renewal premiums, persistency and lapse rates.

For the year ended December 31, 2017, the Company recognized a decrease in amortization for DAC of $69 million and a decrease in amortization for other related balances of $13 million. The updated assumptions were primarily related to favorable market rates of return and changes to expected future mortality. This was partially offset by updated assumptions for expected policyholder renewal premiums, persistency and lapse rates.

For the year ended December 31, 2016, the Company recognized an increase in amortization for DAC of $21 million and a decrease in amortization for other related balances of $75 million. The updated assumptions were primarily related to a decrease in expected lapse rates and mortality performance. This was partially offset by updated assumptions for persistency, interest rates and market rates of return.

As disclosed in Note 2, ASU 2018-12, Financial Instruments – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts, will simplify DAC amortization to be on a constant basis over the life of the contract, effective upon adoption.