
	Year Ended December 31
	2020		2019		2018
	(in millions of dollars)
Net Income	$	171.0	$	281.8	$	104.4


Stockholders' Equity - Accumulated Other Comprehensive Income (Loss)
Change in Net Unrealized Gain on Securities Before Adjustment	250.2		757.0		(614.2)
Change in Adjustment to Deferred Acquisition Costs and Reserves for Future Policy and Contract Benefits, Net of Reinsurance	(138.2)		(511.7)		371.7
Change in Net Gain on Hedges	(23.8)		(17.0)		(8.2)
Change in Foreign Currency Translation Adjustment	(4.3)		0.2		(0.6)
Change in Unrecognized Pension and Postretirement Benefit Costs	(34.8)		(9.3)		17.0
Total	$	220.1	$	501.0	$	(129.9)


	Year Ended December 31
	2020		2019		2018
Statutory Income Tax	21.0	%	21.0	%	21.0	%

Net Operating Loss Carryback	(3.8)		—		—
Deemed Repatriation Tax on Foreign Earnings and Profit	—		—		1.8
Tax Exempt Income	(0.8)		(0.5)		(1.3)
Tax Credits	(1.3)		(1.1)		(2.4)
Policyholder Reserves	0.7		—		(2.4)

Other Items, Net	1.9		1.0		(0.1)
Effective Tax	17.7	%	20.4	%	16.6	%


	December 31
	2020		2019
	(in millions of dollars)
Deferred Tax Asset
Reserves	$	1,279.6	$	1,154.6
Employee Benefits	218.7		201.6
Other	52.9		19.4
Gross Deferred Tax Asset	1,551.2		1,375.6
Less: Valuation Allowance	14.5		28.3
Net Deferred Tax Asset	1,536.7		1,347.3

Deferred Tax Liability
Deferred Acquisition Costs	185.5		115.6
Fixed Assets	74.7		58.5
Invested Assets	1,443.5		1,213.7
Cost of Reinsurance	180.4		10.8
Other	68.7		44.1
Gross Deferred Tax Liability	1,952.8		1,442.7
Net Deferred Tax Asset (Liability)	$	(416.1)	$	(95.4)


	Year Ended December 31
	2020		2019		2018
	(in millions of dollars)
Income Before Tax
Domestic	$	924.7	$	1,289.5	$	492.6
Foreign	39.3		92.6		135.2
Total	$	964.0	$	1,382.1	$	627.8

Current Tax Expense (Benefit)
Federal	$	(98.4)	$	273.6	$	194.6
State and Local	1.5		1.3		(0.6)
Foreign	(19.7)		(0.1)		33.4
Total	(116.6)		274.8		227.4

Deferred Tax Expense (Benefit)
Federal	250.5		(9.5)		(114.6)
State and Local	1.0		(0.1)		(0.2)
Foreign	36.1		16.6		(8.2)
Total	287.6		7.0		(123.0)

Total Tax Expense	$	171.0	$	281.8	$	104.4

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. 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. In 2020, we recorded a tax benefit of $36.5 million for 2020 tax losses that will be carried back to a 35 percent tax year pursuant to the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

On July 22, 2020, the Finance Bill 2019-21 was enacted, resulting in a U.K. tax rate increase from 17 percent to 19 percent, retroactively effective April 1, 2020, which resulted in tax expense of $9.3 million for the revaluation of our tax assets and liabilities, primarily deferred tax liabilities related to policyholder reserves. As of December 31, 2020, our plans for the future repatriations of cash from our foreign subsidiaries can include no more than the amount of capital above that which is required by U.K. regulatory capital requirements. 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
	2020		2019		2018
	(in millions of dollars)
Balance at Beginning of Year	$	241.0	$	262.2	$	1.4
Increases (Decreases) for Tax Positions Related to Prior Years	(21.0)		(21.1)		261.5


Lapse of the Applicable Statute of Limitations	(0.3)		(0.1)		(0.7)
Balance at End of Year	219.7		241.0		262.2
Less Tax Attributable to Temporary Items Included Above	(105.9)		(127.1)		(148.2)
Total Unrecognized Tax Benefits That if Recognized Would Affect the Effective Tax Rate	$	113.8	$	113.9	$	114.0

In 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 $105.9 million at December 31, 2020, $127.1 million at December 31, 2019, and $148.2 million at December 31, 2018. 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 $7.8 million and $12.8 million of interest expense related to unrecognized tax benefits during 2020 and 2019, respectively, and a de minimis amount in 2018. The liability for net interest expense on uncertain tax positions was approximately $20.6 million and $12.8 million as of December 31, 2020 and 2019, respectively, and a de minimis amount in 2018.

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 2016 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 2018 with the exception of Poland for which tax years subsequent to 2014 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 2015 remain subject to examination depending on the statute of limitation established by the various states, which is generally three to four years.

We have no accumulated federal net operating loss carryforwards as of December 31, 2020. Our federal capital loss carryforward, related to subsidiaries not included in the consolidated U.S. federal return, was $0.6 million at December 31, 2020 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 $191 million, most of which is expected to expire unused between 2021 and 2040.

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 $14.5 million and $28.3 million at December 31, 2020 and 2019, 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 of $13.8 million during 2020 and an increase of $9.9 million in 2019, primarily in other comprehensive income.