Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income Tax Expense (Benefit)

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	)

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,
	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	)%

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(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.

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, 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

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, 2020.

Major Tax Jurisdiction	Open Tax Years
Australia	2015 - 2020
Canada	2016 - 2020
France	2017 - 2020
Germany	2019 – 2020
Hong Kong	2014 – 2020
Japan	2020
Luxembourg	2019 - 2020
Singapore	2016 – 2020
Switzerland	2018 – 2020
U.K.	2014 - 2020
U.S.	2015 - 2020