Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Schedule of Deferred Tax Assets and Liabilities

Components of Net Deferred Tax Assets

	As of December 31,
	2019			2018
	(in millions)
Deferred tax assets:
Unearned premium reserves, net	$	76		$	98
Investment basis differences	48			49
Foreign tax credit	36			36
Net operating loss	32			34
Deferred compensation	26			25
Alternative minimum tax credit	12			20
Other	24			35
Total deferred income tax assets	254			297
Deferred tax liabilities:
Unrealized appreciation on investments	86			54
Public debt	44			50
Market discount	11			31
DAC	33			23
Unrealized gains on CCS	11			16
Loss and LAE reserve	29			7
Other	21			12
Total deferred income tax liabilities	235			193
Less: Valuation allowance	36			36
Net deferred income tax asset (liabilities)	$	(17	)	$	68

Deferred and Current Tax Assets (Liabilities) (1)

	As of December 31, 2019			As of December 31, 2018
	(in millions)
Deferred tax assets (liabilities)	$	(17	)	$	68
Current tax assets (liabilities)	47			22

____________________

(1)

Included in other assets or other liabilities on the consolidated balance sheets.

Schedule of Impact of Tax Cuts and Jobs Act of 2017

The table below summarizes the impact of the Tax Act on the consolidated statements of operations.

Summary of the Tax Act Effect

(Benefit) Provision

	Year Ended December 31,
	2018			2017
	(in millions)
Transition tax	$	(1	)	$	93
Foreign tax credit realized	—			(31		)
Write down of unremitted earnings	—			(38		)
Net impact of repatriation	(1		)	24
Write down of deferred tax asset due to tax rate change	(3		)	37
Net impact of Tax Act	$	(4	)	$	61

Effective Tax Rate Reconciliation

A reconciliation of the difference between the provision for income taxes and the expected tax provision at statutory rates in taxable jurisdictions is presented below.

Effective Tax Rate Reconciliation

	Year Ended December 31,
	2019			2018			2017
	(in millions)
Expected tax provision (benefit)	$	91		$	97		$	300
Tax-exempt interest	(19		)	(23		)	(49		)
Bargain purchase gain	—			—			(20		)
Change in liability for uncertain tax positions	1			(15		)	(26		)
Effect of provision to tax return filing adjustments	(6		)	(1		)	(8		)
State tax	1			6			9
Taxes on reinsurance	(5		)	6			(4		)
Effect of adjustments to the provisional amounts as a result of 2017 Tax Cuts and Jobs Act	—			(4		)	61
Foreign taxes	6			—			4
Other	(6		)	(7		)	(6		)
Total provision (benefit) for income taxes	$	63		$	59		$	261
Effective tax rate	13.7		%	10.2		%	26.3		%

Pretax Income (Loss) by Tax Jurisdiction

Pretax Income (Loss) by Tax Jurisdiction

	Year Ended December 31,
	2019			2018			2017
	(in millions)
U.S.	$	440		$	461		$	873
Bermuda	33			121			145
U.K. and other	(9		)	(2		)	(27		)
Total	$	464		$	580		$	991

Revenue by Tax Jurisdiction

Revenue by Tax Jurisdiction

	Year Ended December 31,
	2019		2018		2017
	(in millions)
U.S.	$	779	$	801	$	1,543
Bermuda	146		177		216
U.K. and other	38		23		(20		)
Total	$	963	$	1,001	$	1,739

Reconciliation of Uncertain Tax Positions

The following table provides a reconciliation of the beginning and ending balances of the total liability for unrecognized tax positions.

	2019			2018			2017
	(in millions)
Beginning of year	$	14		$	28		$	50
Effect of provision to tax return filing adjustments	5			1			8
Increase in unrecognized tax positions as a result of position taken during the current period	—			—			1
Decrease in unrecognized tax positions as a result of settlement of positions taken during the prior period	—			—			(31		)
Reductions to unrecognized tax benefits as a result of the applicable statute of limitations	(4		)	(15		)	—
Balance as of December 31,	$	15		$	14		$	28