Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Income Tax Expense (Benefit)

The following table presents income tax expense (benefit) for 2017, 2016 and 2015:

	Federal		State		Foreign		Total
	($ in millions)
Year ended December 31, 2017
Current	$	(41.3)	$	2.7	$	41.0	$	2.4
Deferred		(66.6)		0.6		(0.2)		(66.2)
	$	(107.9)	$	3.3	$	40.8	$	(63.8)
Year ended December 31, 2016
Current	$	49.4	$	4.9	$	23.4	$	77.7
Deferred		109.6		0.3		(0.5)		109.4
	$	159.0	$	5.2	$	22.9	$	187.1
Year ended December 31, 2015
Current	$	93.3	$	3.1	$	50.0	$	146.4
Deferred		49.2		(0.4)		-		48.8
	$	142.5	$	2.7	$	50.0	$	195.2

Difference between Federal Income Tax Rate and Effective Income Tax Rate

The following table presents the difference between the federal income tax rate and the effective income tax rate:

	Year Ended December 31,
	2017			2016			2015
Federal income tax rate		35.0	%		35.0	%		35.0	%
Foreign tax credits		(6.4	)		(0.6	)		(0.4	)
Income subject to dividends-received deduction		(25.5	)		(1.6	)		(1.6	)
Tax-exempt interest		(94.1	)		(6.5	)		(6.8	)
State taxes, net of federal tax benefit		6.5			0.6			0.2
Prior period adjustment		(3.3	)		2.4			(0.2	)
Tax benefit from sale of subsidiary		(54.1	)		-			-
Other, net		(32.0	)		(0.4	)		(0.4	)
Effective tax rate		(173.9	)%		28.9	%		25.8	%

Tax Effects of Temporary Differences that Give Rise to Significant Portions of Deferred Tax Assets and Deferred Tax Liabilities

The following table presents the tax effects of temporary differences that give rise to the deferred tax assets and deferred tax liabilities as of December 31, 2017 and 2016:

	As of December 31,
	2017		2016
	($ in millions)
Deferred tax assets:
Loss and LAE reserves	$	114.2	$	212.1
Minimum tax credit carry forward		137.2		28.9
Compensation accruals		97.4		166.7
Unearned premiums		84.2		139.1
OTTI losses		9.6		19.5
State net operating loss carry forward		18.3		25.2
Other		73.7		173.3
Gross deferred tax assets before valuation allowance		534.6		764.8
Valuation allowance		(18.3)		(25.2)
Gross deferred tax assets		516.3		739.6
Deferred tax liabilities:
Net unrealized gains on investments		227.5		125.8
Deferred acquisition costs		98.7		163.3
Purchase accounting adjustments		13.5		30.2
Other		40.1		65.4
Gross deferred tax liabilities		379.8		384.7
Net deferred tax assets	$	136.5	$	354.9

Tax Year Returns that Remain Subject to Examination by Major Tax Jurisdiction

The following table presents the tax years of Alleghany and TransRe tax returns that remain subject to examination by major tax jurisdictions as of December 31, 2017.

Major Tax Jurisdiction	Open Tax Years
Australia	2013 - 2016
Canada	2013 - 2016
France	2009 - 2010 and 2014 - 2016
Germany	2013 - 2016
Hong Kong	2014 - 2016
Japan	2010 - 2016
Singapore	2014 - 2017
Switzerland	2016
U.K.	2015 - 2016
U.S.	2007 - 2016