
	Year Ended December 31
	2019		2018		2017
	(in millions of dollars)
Net Income	$	281.8	$	104.4	$	409.8


Stockholders' Equity - Accumulated Other Comprehensive Income (Loss)
Change in Net Unrealized Gain on Securities Before Adjustment	757.0		(614.2)		328.1
Change in Adjustment to Deferred Acquisition Costs and Reserves for Future Policy and Contract Benefits, Net of Reinsurance	(511.7)		371.7		(245.0)
Change in Net Gain on Hedges	(17.0)		(8.2)		(24.4)
Change in Foreign Currency Translation Adjustment	0.2		(0.6)		—
Change in Unrecognized Pension and Postretirement Benefit Costs	(9.3)		17.0		(8.3)
Total	$	501.0	$	(129.9)	$	460.2

A reconciliation of the income tax provision at the U.S. federal statutory rate to the income tax rate as reported in our consolidated statements of income is as follows. Certain prior year amounts have been reclassified to conform to current year


	Year Ended December 31
	2019		2018		2017
Statutory Income Tax	21.0	%	21.0	%	35.0	%

U.S. Deferred Tax Liability Remeasurement	—		—		(7.0)
Deemed Repatriation Tax on Foreign Earnings and Profit (E&P)	—		1.8		4.7
Tax Exempt Income	(0.5)		(1.3)		(0.8)
Tax Credits	(1.1)		(2.4)		(1.5)
Policyholder Reserves	—		(2.4)		—

Other Items, Net	1.0		(0.1)		(1.2)
Effective Tax	20.4	%	16.6	%	29.2	%


	December 31
	2019		2018
	(in millions of dollars)
Deferred Tax Asset
Reserves	$	1,154.6	$	668.5
Employee Benefits	201.6		179.5
Other	19.4		17.7
Gross Deferred Tax Asset	1,375.6		865.7
Less: Valuation Allowance	28.3		18.4
Net Deferred Tax Asset	1,347.3		847.3

Deferred Tax Liability
Deferred Acquisition Costs	115.6		129.7
Fixed Assets	58.5		56.2
Invested Assets	1,213.7		493.4
Intangible Assets	21.4		24.0
Other	33.5		34.1
Gross Deferred Tax Liability	1,442.7		737.4
Net Deferred Tax Asset (Liability)	$	(95.4)	$	109.9

Our consolidated statements of income include amounts subject to both domestic and foreign taxation. The income and related tax expense (benefit) are as follows. The federal statutory rates used were 21 percent for 2019 and 2018 and 35 percent for 2017:


	Year Ended December 31
	2019		2018		2017
	(in millions of dollars)
Income Before Tax
Domestic	$	1,289.5	$	492.6	$	1,289.0
Foreign	92.6		135.2		115.0
Total	$	1,382.1	$	627.8	$	1,404.0

Current Tax Expense (Benefit)
Federal	$	273.6	$	194.6	$	374.9
State and Local	1.3		(0.6)		0.4
Foreign	(0.1)		33.4		26.0
Total	274.8		227.4		401.3

Deferred Tax Expense (Benefit)
Federal	(9.5)		(114.6)		14.2
State and Local	(0.1)		(0.2)		(0.3)
Foreign	16.6		(8.2)		(5.4)
Total	7.0		(123.0)		8.5

Total Tax Expense	$	281.8	$	104.4	$	409.8

On December 22, 2017, the U.S. Federal government enacted the TCJA, which reduced the federal corporate tax rate from 35 percent to 21 percent effective January 1, 2018. Although the TCJA's 21 percent corporate tax rate became effective on January 1, 2018, we are required to adjust deferred tax assets and liabilities through continuing operations on the date of enactment. As a result, in 2017, we recorded an income tax benefit of $97.9 million for the TCJA's corporate tax rate reduction and an income tax expense of $66.4 million for the deemed repatriation transition tax on accumulated foreign E&P.

TCJA brought a large number of complex changes to many areas of the tax code. The Securities and Exchange Commission issued Staff Accounting Bulletin No. 118 (SAB 118) allowing a one-year measurement period after the enactment date of TCJA to finalize the calculation and record the related tax impacts. We finalized and recorded adjustments to our initial estimates during 2018. As a result of guidance from the Internal Revenue Service (IRS), we recorded additional deemed repatriation transition tax on accumulated foreign E&P of $11.5 million, for a total of $77.9 million. We recorded no other material changes to our calculations of the impact of the TCJA during the one-year measurement period after the enactment period as allowed by SAB 118.

Effective January 1, 2018, the TCJA created a U.S. shareholder tax on certain foreign subsidiary income above a routine equity return on tangible depreciable business assets, or a tax on Global Intangible Low-taxed Income (GILTI). The Financial Accounting Standards Board has provided additional guidance to address the accounting effects of GILTI, requiring companies to elect to either recognize deferred taxes related to GILTI or include in tax expense in the period incurred. We have elected to treat GILTI as a period cost.

Under the TCJA, a modified territorial tax system was adopted that required a one-time Deemed Repatriation Tax on accumulated foreign E&P. Future repatriation of foreign E&P subject to the one-time Deemed Repatriation Tax will not be subject to further U.S. taxation other than tax on foreign currency translation gain or loss. As of December 31, 2019, our plans for the future repatriations of cash from our foreign subsidiaries include only the amount of capital above that which is required by Solvency II. The remainder of our investment in our foreign subsidiaries is indefinitely reinvested and we have not recorded any deferred taxes on the approximately $0.7 billion of the excess of the U.S. GAAP carrying values over the tax basis of investments in our foreign subsidiaries.


	December 31
	2019		2018		2017
	(in millions of dollars)
Balance at Beginning of Year	$	262.2	$	1.4	$	1.5
Increases (Decreases) for Tax Positions Related to Prior Years	(21.1)		261.5		0.3
Increases (Decreases) for Tax Positions Related to Current Year	—		—		—
Settlements with Tax Authorities	—		—		—
Lapse of the Applicable Statute of Limitations	(0.1)		(0.7)		(0.4)
Balance at End of Year	241.0		262.2		1.4
Less Tax Attributable to Temporary Items Included Above	(127.1)		(148.2)		—
Total Unrecognized Tax Benefits That if Recognized Would Affect the Effective Tax Rate	$	113.9	$	114.0	$	1.4

During 2018, we recorded $261.1 million gross unrecognized tax benefits for a policyholder reserves position taken on our 2017 federal tax return, which if recognized, would decrease our tax expense by $112.9 million. The balances of unrecognized tax benefits for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility are $127.1 million and $148.2 million at December 31, 2019 and 2018, respectively. It is reasonably possible that this item could reverse in the next 12 months following review by the IRS. We recognize interest expense and penalties, if applicable, related to unrecognized tax benefits in tax expense. We recognized $12.8 million of interest expense related to unrecognized tax benefits during 2019 and a de minimis amount in 2018 and 2017. We held corresponding liabilities related to this interest expense in our consolidated balance sheets.

We file federal and state income tax returns in the United States and in foreign jurisdictions. Tax years subsequent to 2014 remain subject to examination by the IRS. Tax years subsequent to 2015 remain subject to examination by the IRS for the subsidiaries not included in the consolidated tax return. All other major foreign jurisdictions remain subject to examination for tax years subsequent to 2017 with the exception of Poland for which tax years subsequent to 2013 remain subject to examination. We believe sufficient provision has been made for all potential adjustments for years that are not closed by the statute of limitations in all major tax jurisdictions and that any such adjustments would not have a material adverse effect on our financial position, liquidity, or results of operations.

We file state income tax returns in nearly every state in the United States. Tax years subsequent to 2014 remain subject to examination depending on the statute of limitation established by the various states, which is generally three to four years. Tax years subsequent to 2010 remain subject to examination in California.

We have accumulated federal net operating loss carryforwards of $10.6 million and $6.5 million as of December 31, 2019 and 2018, respectively. Current year net operating losses relate to subsidiaries not yet included in the consolidated U.S. federal tax return and are not expected to expire unused. Our federal capital loss carryforward, also related to subsidiaries not included in the consolidated U.S. federal return, was $0.7 million at both December 31, 2019 and 2018 and is expected to be utilized by the time it expires in 2022. We have net operating loss carryforwards for state and local income tax of approximately $183 million, most of which is expected to expire unused between 2020 and 2039.

We record valuation allowances to reduce deferred tax assets to the amount that is more likely than not to be realized. Our valuation allowance was $28.3 million and $18.4 million at December 31, 2019 and 2018, the majority of which related to our cumulative deferred state income tax benefits. The de minimis remaining amount of our valuation allowance relates to unrealized tax losses on buildings which we own and occupy in the U.K. We recorded a decrease in our valuation allowance in 2018 of $1.9 million and an increase of $9.9 million during 2019, primarily in other comprehensive income.