We capitalize costs that vary with and are related primarily to the acquisition of new and renewal insurance and annuity contracts. These costs include primarily commissions, costs of policy issuance and underwriting, and variable field office expenses that are incurred in producing new products. We amortize these deferred policy acquisition costs, or DAC, over the expected lives of the contracts, based on our estimates of the level and timing of gross profits or gross premiums, depending on the type of contract. As described in more detailed below, in calculating DAC amortization we are required to make assumptions about investment returns, mortality and other items that impact our estimates of the level and timing of gross profits or gross premiums. As of December 31, 2009, DAC for our life products was $1.6 billion and DAC for our annuity products was $840 million.
General, administrative and other expenses decreased by $7 million, from $114 million in 2008 to $107 million in 2009, primarily driven by higher net reinsurance expense allowances resulting from growth in the term products, partially offset by higher expenses to support business growth.
Asset management fees increased by $10 million from $16 million to $26 million primarily due to higher fee revenue from separate account funds invested in the Advanced Series Trust driven by an amendment to an existing revenue sharing agreement in April 2009.
General, administrative and other expenses increased by $13 million, from $97 million in 2008 to $110 million in 2009, primarily due to higher expenses to support business growth.
We incorporate risk of non-performance of our affiliates’ in the valuation of the embedded derivatives associated with our living benefit features on our variable annuity contracts and the no lapse feature of our universal life contracts. In light of recent developments, including rating agency downgrades to the claims-paying ratings of Prudential Insurance, beginning in the first quarter of 2009, we incorporated an additional spread over LIBOR into the discount rate used in the valuation of the embedded derivative liabilities to reflect an increase in our market perceived non-performance risk, thereby reducing the value of the embedded derivative assets. We amortize deferred policy acquisition and other costs over the expected lives of the contracts based on the level and timing of gross profits on the underlying product. In calculating gross profits, we consider mortality, persistency, and other elements as well as rates of return on investments associated with these contracts and include profits and losses related to these contracts that are reported in affiliated legal entities other than the Company as a result of, for example, reinsurance agreements with those affiliated entities. Losses from operations for 2009 included $70 million of increased amortization of deferred policy acquisition and other costs associated with the change in non-performance risk on the valuation of the embedded derivative associated with the living benefit feature of our variable annuity contracts. Losses from operations for 2009 also included $111 million of realized losses associated with the impact of the change in non-performance risk in the valuation of the embedded derivative associated with the no lapse feature of our universal life contracts.
As discussed above, recent market conditions negatively impacted the level of our capital. In order to address these adverse capital impacts on us and our affiliates, Prudential Financial undertook various initiatives in 2008 to redeploy certain assets to its insurance subsidiaries, including Prudential Insurance, from its non-insurance subsidiaries. In addition, Prudential Insurance made a capital contribution to the Company in 2008 of $360 million.
The change in statutory reserves, including the implementation of VACARVM, a new statutory reserve methodology for variable annuities with guaranteed benefits, effective December 31, 2009 was approximately $65 million decline to the statutory surplus of the Company.