Federal and Foreign Income Tax (Tables)

12 Months Ended

Dec. 31, 2012

Income Tax Expense and Taxes Paid

(a)  Income tax expense and taxes paid consisted of the following components:

	Years Ended December 31
	2012		2011		2010
	(in millions)
Income tax expense
Current tax
United States	$	276	$	260	$	436
Foreign		143		236		242
Deferred tax, principally United States		32		25		136
	$	451	$	521	$	814
Federal and foreign income taxes paid	$	472	$	598	$	500

Reconciliation of Effective Income Tax Rate and Statutory Federal Corporate Tax Rate

The effective income tax rate is different than the statutory federal corporate tax rate. The reasons for the different effective tax rate were as follows:

	Years Ended December 31
	2012						2011						2010
	Amount			% of Pre-Tax Income			Amount			% of Pre-Tax Income			Amount			% of Pre-Tax Income
	(in millions)
Income before federal and foreign income tax	$	1,996					$	2,199					$	2,988
Tax at statutory federal income tax rate	$	699			35.0	%	$	770			35.0	%	$	1,046			35.0	%
Tax exempt interest income		(233	)		(11.7	)		(243	)		(11.0	)		(241	)		(8.1	)
Other, net		(15	)		(.7	)		(6	)		(.3	)		9			.3
Federal and foreign income tax	$	451			22.6	%	$	521			23.7	%	$	814			27.2	%

Tax Effects of Temporary Differences that Gave Rise to Deferred Income Tax Assets and Liabilities

The tax effects of temporary differences that gave rise to deferred income tax assets and liabilities were as follows:

	December 31
	2012		2011
	(in millions)
Deferred income tax assets
Unpaid losses and loss expenses	$	605	$	632
Unearned premiums		341		339
Foreign tax credits		870		853
Employee compensation		119		116
Postretirement benefits		324		293
Other-than-temporary impairment losses		294		286
Total		2,553		2,519
Deferred income tax liabilities
Deferred policy acquisition costs		341		341
Unremitted earnings of foreign subsidiaries		951		894
Unrealized appreciation of investments		1,084		934
Other invested assets		225		235
Other, net		114		117
Total		2,715		2,521
Net deferred income tax liability	$	162	$	2