Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Income Tax Disclosure [Abstract]

Effective Tax Rate Reconciliation

Effective Tax Rate Reconciliation

	Year Ended December 31,
	2013			2012			2011
	(in millions)
Expected tax provision (benefit) at statutory rates in taxable jurisdictions	$	390		$	76		$	313
Tax-exempt interest	(57		)	(61		)	(62		)
Change in liability for uncertain tax positions	(2		)	2			2
Other	3			5			3
Total provision (benefit) for income taxes	$	334		$	22		$	256
Effective tax rate	29.2		%	16.5		%	24.9		%

Pretax Income (Loss) by Tax Jurisdiction

Pretax Income (Loss) by Tax Jurisdiction

	Year Ended December 31,
	2013			2012			2011
	(in millions)
United States	$	1,118		$	218		$	896
Bermuda	27			(86		)	133
U.K.	(3		)	0			0
Total	$	1,142		$	132		$	1,029

Revenue by Tax Jurisdiction

Revenue by Tax Jurisdiction

	Year Ended December 31,
	2013		2012		2011
	(in millions)
United States	$	1,389	$	875	$	1,504
Bermuda	219		79		301
U.K.	0		0		0
Total	$	1,608	$	954	$	1,805

Components of Deferred Tax Assets and Liabilities

Components of Net Deferred Tax Assets

	As of December 31,
	2013		2012
	(in millions)
Deferred tax assets:
Unrealized losses on credit derivative financial instruments, net	$	402	$	425
Unearned premium reserves, net	63		109
Loss and LAE reserve	134		90
Tax and loss bonds	33		15
Net operating loss ("NOL") carry forward	5		7
Alternative minimum tax credit	90		58
Tax basis step-up	5		5
Foreign tax credit	37		30
FG VIEs	29		179
DAC	40		59
Investment basis difference	73		82
Other	64		48
Total deferred income tax assets	975		1,107
Deferred tax liabilities:
Contingency reserves	47		15
Public debt	98		100
Unrealized appreciation on investments	68		198
Unrealized gains on CCS	16		12
Market discount	24		42
Other	34		19
Total deferred income tax liabilities	287		386
Net deferred income tax asset	$	688	$	721

Reconciliation of Uncertain Tax Positions

The following table provides a reconciliation of the beginning and ending balances of the total liability for unrecognized tax benefits. The Company does not believe it is reasonably possible that this amount will change significantly in the next twelve months.

	2013			2012		2011
	(in millions)
Balance as of January 1,	$	22		$	20	$	18
True-up from tax return filings	4			—		—
Increase in unrecognized tax benefits as a result of position taken during the current period	3			2		2
Decrease due to closing of IRS audit	(9		)	—		—
Balance as of December 31,	$	20		$	22	$	20