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Deferred Policy Acquisition Costs

12 Months Ended

Dec. 31, 2011

Note 12. Deferred Policy Acquisition Costs

The following table summarizes the components of the Property and Casualty Group’s and EFL’s deferred policy acquisition costs assets for the years ended December 31:

(in millions)	Erie Insurance Group
	2011		2010
Property and Casualty Group
Deferred policy acquisition costs asset at beginning of year	$ 327		$ 313
Capitalized deferred policy acquisition costs	684		649
Amortized deferred policy acquisition costs	(668	)	(635	)
Deferred policy acquisition costs asset at end of year – Property and Casualty Group	$ 343		$ 327
Erie Family Life Insurance Company
Deferred policy acquisition costs asset at beginning of year	$ 140		$ 154
Capitalized deferred policy acquisition costs	18		17
Amortized deferred policy acquisition costs	(12	)	(16	)
Amortized shadow deferred policy acquisition costs	(2	)	(15	)
Deferred policy acquisition costs asset at end of year – EFL	$ 144		$ 140
Deferred policy acquisition costs asset at end of year – Erie Insurance Group	$ 487		$ 467

- Definition

Disclosure of accounting policy for capitalizing costs incurred to write or acquire insurance contracts, the basis for and methodology for capitalizing such costs, the accounting for such deferred acquisition costs (DAC) when modifications or internal replacements of related insurance contracts occur and the effect on results of operations, and the methodology and amount of amortization. This disclosure addresses the nature, type, and amount of capitalized costs incurred to write or acquire insurance contracts.

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