The following table presents income tax expense (benefit) for 2020, 2019 and 2018:

	Federal			State		Foreign			Total
	($ in millions)
Year ended December 31, 2020
Current	$	6.9		$	9.7	$	58.3		$	74.9
Deferred		(45.8	)		0.8		0.8			(44.2	)
	$	(38.9	)	$	10.5	$	59.1		$	30.7

Year ended December 31, 2019
Current	$	87.9		$	12.0	$	70.8		$	170.7
Deferred		62.9			0.5		(0.7	)		62.7
	$	150.8		$	12.5	$	70.1		$	233.4

Year ended December 31, 2018
Current	$	(83.3	)	$	5.6	$	32.0		$	(45.7	)
Deferred		29.9			0.9		(0.1	)		30.7
	$	(53.4	)	$	6.5	$	31.9		$	(15.0	)

(Losses) earnings before income taxes from domestic operations were ($21.0) million, $952.4 million and ($46.4) million in 2020, 2019 and 2018, respectively. Earnings before income taxes from foreign operations were $178.6 million, $171.2 million and $86.0 million in 2020, 2019 and 2018, respectively. Foreign tax expense was primarily attributable to the U.K., Canada, Switzerland and France. Alleghany treats taxes due on U.S. inclusions in taxable income related to Global Intangible Low-Taxed Income as a current-period expense when incurred.

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

	Year Ended December 31,
	2020			2019			2018
Federal income tax rate		21.0	%		21.0	%		21.0	%
Foreign tax expense reduced by foreign tax credits		6.9			0.4			(0.3	)
Income subject to dividends-received deduction		(1.3	)		(0.3	)		(18.3	)
Tax-exempt interest		(6.0	)		(1.0	)		(36.0	)
State taxes, net of federal tax benefit		4.9			0.9			13.8
Prior period adjustment		(2.6	)		0.2			(0.1	)
Other, net ⁽¹⁾		(3.4	)		(0.4	)		(18.1	)
Effective tax rate		19.5	%		20.8	%		(38.0	)%

(1) For 2020, includes various general business credits and tax benefits resulting from corporate acquisitions and dispositions, partially offset by disallowed expense deductions primarily related to certain executive compensation paid in 2020.

The effective tax rate in 2020 primarily reflects modest pre-tax income and the resulting increase of the impact from permanent tax benefits, such as tax-exempt interest income and dividends-received deductions, when expressed on an effective tax rate basis. The higher effective tax rate in 2019 primarily reflects significant pre-tax earnings and the resulting decrease from the impact of these permanent tax benefits when expressed on an effective tax rate basis.

The increase in effective tax rate in 2019 compared with 2018 primarily reflects the impact of higher earnings before income taxes and, to a lesser extent, lower tax-exempt interest income arising from municipal bond securities and lower dividends-received deductions, partially offset by higher state income taxes.

The Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was signed into law on March 27, 2020. Among other provisions, the CARES Act delayed certain employer payroll tax remittance deadlines and created or expanded certain income tax credits and loss carryback provisions. The beneficial impact of the CARES Act to Alleghany is currently not material.

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, 2020 and 2019:

	As of December 31,
	2020			2019
	($ in millions)
Deferred tax assets:
Loss and LAE reserves	$	132.3		$	118.9
Foreign tax credit carry forward		74.1			53.8
Compensation accruals		87.5			94.1
Unearned premiums		112.2			97.4
Allowance for credit losses on available for sale securities		5.7			6.5
State net operating loss carry forward		12.5			22.8
Other		98.0			113.7
Gross deferred tax assets before valuation allowance		522.3			507.2
Valuation allowance		(12.5	)		(22.8	)
Gross deferred tax assets		509.8			484.4

Deferred tax liabilities:
Net unrealized gains on investments		294.7			274.8
Deferred acquisition costs		128.4			113.4
Purchase accounting adjustments		11.7			11.7
Other		118.5			78.6
Gross deferred tax liabilities		553.3			478.5

Net deferred tax (liabilities) assets	$	(43.5	)	$	5.9

Other deferred tax assets include significant amounts of foreign currency exchange losses. Our foreign tax credit carry forwards begin to expire in 2028. A valuation allowance is provided against deferred tax assets when, in the opinion of

management, it is more likely than not that a portion of the deferred tax asset will not be realized. As of December 31, 2020 and 2019, Alleghany recognized $12.5 million and $22.8 million, respectively, of deferred tax assets for certain state net operating and capital loss carryovers, and a valuation allowance of $12.5 million and $22.8 million, respectively, has been established against these deferred tax assets as Alleghany does not currently anticipate it will generate sufficient income in these states to absorb such loss carryovers.

Alleghany’s income tax return is currently under examination by the Internal Revenue Service for the 2015, 2016 and 2017 tax years. 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, 2020.

Alleghany believes that, as of December 31, 2020, it had no material uncertain tax positions. Interest and penalties related to unrecognized tax expenses (benefits) are recognized in income tax expense, when applicable. There were no material liabilities for interest or penalties accrued as of December 31, 2020.