Capitalized Software Development Costs

12 Months Ended

Dec. 31, 2011

Capitalized Software Development Costs

Capitalized Software Development Costs

Note 9.  Capitalized Software Development Costs

We capitalize computer software costs developed or obtained for internal use.  Capitalized costs include internal and external labor and overhead, all of which are attributable to Indemnity.  Capitalization ceases and amortization begins no later than the point at which a computer software project is complete and ready for its intended use.  Capitalized software costs are amortized over the estimated useful life of the software.

The following table outlines the total capitalized software development costs subject to amortization and the related amortization expense:

	Indemnity Shareholder Interest
(in millions)	Years ended December 31,
	2011		2010		2009
Gross carrying amount	$43		$32		$10
Accumulated amortization	(5	)	(1	)	0
Net carrying amount	$38		$31		$10
Amortization expense	$  4		$   1		$   0

The following table outlines the estimated future amortization expense related to capitalized software development costs as of December 31, 2011:

(in millions)
	Indemnity Shareholder Interest
Year ending December 31,	Estimated amortization expense
2012	$6
2013	6
2014	6
2015	6
2016	6

We anticipate incurring additional costs related to our software development initiatives.   These costs are unknown at this time and therefore are not considered in the table above.