Question-and-Answer Session
Operator
(Operator Instructions)
(Technical Difficulty)
Your first question comes from Jukka Lipponen - KBW.
Jukka Lipponen - KBW
My first question is going to be since, a roughly half of your unrealized losses are in the Closed Block, what would it take for those losses potentially to ever affect shareholders?
Phil Polkinghorn
Jukka, this is Phil. I don’t have an exact number, but our dividend to policyholders is based upon investment performance, obviously. As Jim said that there is a fair bit of the unrealized that we expect to recover, but should a significant portion of it not recovered. There is roughly $300 million per year of annual dividends to policyholders.
Obviously, your future investment income expectations forge what you pay the best. That’s what the total dollar amount that could be used to observe that versus the investment performance, but as we said, right now we don’t see the lion share of the unrealized being realized.
Jim Wehr
We don’t expect any of them to be realized.
Jukka Lipponen - KBW
My second question is, how did the surrenders and policy loan requests trend month-by-month in the fourth quarter? And I also would like to just comment, but I would strongly urge you to reconsider your decision of not providing segment P&L.
Dona Young
Well, I won’t address your comment. We hear your comment, but we will not discuss that on this call. I’m sure that Peter and the IR people will work with you and other analysts as you’re rebuilding your models, but with respect to the surrender trends and policy loans, we track them weekly. For the fourth quarter surrender activity in the aggregate was inline with historical trends within any short period, you will have fluctuations by product type and we certainly have those fluctuations, but it trended fairly consistently with prior periods.
With respect to policy loan activity, I think policy loan activity in the fourth quarter was up slightly, but that was because of scheduled loan activity that was part of the design of the policy as the way the policy was constructed. So we didn’t see any unusual trend in that regard.
Operator
Your next question comes from Bob Glasspiegel - Langen McAlenney.
Bob Glasspiegel - Langen McAlenney
In the quarter, you wrote-off $219 million of DAC related to sort of bad markets, I assume that’s equities and the DAC in the balance sheet, went up by $270 million. In spite of that, which I assume is driven by the credit marks through the bond portfolio. Are you bumping up against limits on how much higher your DAC can go? Aren’t the bond, the credit markets and the equity markets sort of a little bit correlated?
- To read the full transcript on Seeking Alpha, click here »
