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Income Tax
 12 Months Ended
Dec. 31, 2022
Income Tax Disclosure [Abstract]  
Income Tax Disclosure
Total income tax expense (benefit) is allocated as follows:
Year Ended December 31
202220212020
(in millions of dollars)
Net Income$317.2 $238.8 $171.0 
Stockholders' Equity - Accumulated Other Comprehensive Income (Loss)
Change in Net Unrealized Gain (Loss) on Securities Before Adjustment(1,890.8)(346.9)250.2 
Change in Adjustment to Deferred Acquisition Costs and Reserves for Future Policy and Contract Benefits, Net of Reinsurance 1,100.8 316.8 (138.2)
Change in Net Gain (Loss) on Hedges(19.2)(9.8)(23.8)
Change in Foreign Currency Translation Adjustment(0.1)4.2 (4.3)
Change in Unrecognized Pension and Postretirement Benefit Costs18.9 42.1 (34.8)
Total$(473.2)$245.2 $220.1 

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:
Year Ended December 31
202220212020
Statutory Income Tax21.0 %21.0 %21.0 %
Net Operating Loss Carryback— (0.7)(3.8)
Tax Exempt Income(1.1)(1.1)(0.8)
Tax Credits(0.3)(0.9)(1.3)
Policyholder Reserves(1.9)2.4 0.7 
Other Items, Net1.7 1.8 1.9 
Effective Tax19.4 %22.5 %17.7 %
Our net deferred tax asset (liability) consists of the following.
December 31
20222021
(in millions of dollars)
Deferred Tax Asset
Invested Assets$664.9 $— 
   Reserves— 889.7 
   Employee Benefits158.3 176.6 
   Other34.4 57.5 
Gross Deferred Tax Asset857.6 1,123.8 
   Less: Valuation Allowance10.3 12.7 
Net Deferred Tax Asset847.3 1,111.1 
Deferred Tax Liability
   Deferred Acquisition Costs113.1 134.9 
   Fixed Assets 48.9 71.1 
   Invested Assets— 1,144.9 
Reserves43.2 — 
   Cost of Reinsurance156.8 171.6 
   Other44.7 47.0 
Gross Deferred Tax Liability406.7 1,569.5 
Net Deferred Tax Asset (Liability)$440.6 $(458.4)
Our consolidated statements of income include amounts subject to both domestic and foreign taxation. The income and related tax expense (benefit) are as follows:
Year Ended December 31
202220212020
(in millions of dollars)
Income Before Tax
   Domestic$1,492.8 $957.0 $924.7 
   Foreign138.6 106.0 39.3 
   Total$1,631.4 $1,063.0 $964.0 
Current Tax Expense (Benefit)
   Federal$306.5 $180.7 $(98.4)
   State and Local12.7 2.6 1.5 
   Foreign154.3 29.5 (19.7)
   Total473.5 212.8 (116.6)
Deferred Tax Expense (Benefit)
   Federal20.9 13.3 250.5 
   State and Local1.1 (2.2)1.0 
   Foreign(178.3)14.9 36.1 
   Total(156.3)26.0 287.6 
Total Tax Expense$317.2 $238.8 $171.0 

On June 10, 2021, the Finance Act 2021 was enacted, resulting in a U.K. tax increase from 19 percent to 25 percent, effective April 1, 2023, which resulted in $24.2 million of additional tax expense in operating earnings for the revaluation of our deferred tax assets and liabilities in 2021. On July 22, 2020, the Finance Act 2020 was enacted, resulting in a U.K. tax rate increase from 17 percent to 19 percent, retroactively effective April 1, 2020, which resulted in $9.3 million of additional tax expense for the revaluation of our deferred tax assets and liabilities in 2020. In addition, we recorded a tax benefit of $36.5 million in 2020 for tax losses that were carried back to a tax year in which the U.S. statutory tax rate was 35 percent pursuant to the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

As of December 31, 2022, our plans for 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.

Our consolidated statements of income include the following changes in unrecognized tax benefits.
December 31
202220212020
(in millions of dollars)
Balance at Beginning of Year$198.8 $219.7 $241.0 
Decreases for Tax Positions Related to Prior Years(21.0)(20.9)(21.0)
Lapse of the Applicable Statute of Limitations(0.4)— (0.3)
Balance at End of Year177.4 198.8 219.7 
Less Tax Attributable to Temporary Items Included Above(63.5)(84.7)(105.9)
Total Unrecognized Tax Benefits That if Recognized Would Affect the Effective Tax Rate$113.9 $114.1 $113.8 
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 $63.5 million at December 31, 2022, $84.7 million at December 31, 2021, and $105.9 million at December 31, 2020. 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, $5.5 million, and $7.8 million of interest expense related to unrecognized tax benefits during 2022, 2021, and 2020, respectively. The liability for net interest expense on uncertain tax positions was approximately $34.0 million, $26.2 million, and $20.6 million as of December 31, 2022, 2021, and 2020, respectively.

We file federal and state income tax returns in the United States and in foreign jurisdictions. Tax year 2017 and tax years subsequent to 2018 remain subject to examination by the IRS. All major foreign jurisdictions remain subject to examination for tax years subsequent to 2020 with the exception of Poland for which tax years subsequent to 2016 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 2016 remain subject to examination depending on the statute of limitation established by the various states, which is generally three to four years.

As of December 31, 2022, we have no federal net operating loss or capital loss carryforwards. We have net operating loss carryforwards for state and local income tax of approximately $187.6 million, most of which is expected to expire unused between 2023 and 2042.

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 $10.3 million and $12.7 million at December 31, 2022 and 2021, respectively, 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 $2.4 million during 2022 and a decrease of $1.8 million in 2021, primarily in other comprehensive income.

Total income taxes paid during 2022 were $375 million. Total income taxes refunded during 2021 were $51 million. Total income taxes paid during 2020 were $200 million.