Taxation (Tables)

12 Months Ended

Dec. 31, 2013

Schedule of components of income tax provision

The following table presents the provision for income taxes:



	Years Ended December 31
(in millions of U.S. dollars)	2013		2012			2011
Current tax expense	$	231	$	305		$	485
Deferred tax expense (benefit)	249		(35		)	17
Provision for income taxes	$	480	$	270		$	502

Reconciliation schedule of the difference between the provision for income taxes and the expected tax provision at the Swiss statutory income tax rate

The following table presents a reconciliation of the difference between the provision for income taxes and the expected tax provision at the Swiss statutory income tax rate:



	Years Ended December 31
(in millions of U.S. dollars)	2013			2012			2011
Expected tax provision at Swiss statutory tax rate	$	331		$	233		$	160
Permanent differences:
Taxes on earnings subject to rate other than Swiss statutory rate	124			129			323
Tax-exempt interest and dividends received deduction, net of proration	(27		)	(24		)	(21		)
Net withholding taxes	27			23			19
Favorable resolution of prior years' tax matters and closing statutes of limitations	(5		)	(124		)	—
Change in valuation allowance	4			4			(2		)
Other	26			29			23
Total provision for income taxes	$	480		$	270		$	502

Schedule of the components of net deferred tax assets

The following table presents the components of the net deferred tax assets:



	December 31		December 31
(in millions of U.S. dollars)	2013		2012
Deferred tax assets:
Loss reserve discount	$	807	$	849
Unearned premiums reserve	93		98
Foreign tax credits	1,236		1,131
Investments	3		43
Provision for uncollectible balances	78		110
Loss carry-forwards	54		55
Other	184		110
Total deferred tax assets	2,455		2,396
Deferred tax liabilities:
Deferred policy acquisition costs	138		68
VOBA and other intangible assets	351		379
Un-remitted foreign earnings	982		795
Unrealized appreciation on investments	210		586
Other	94		59
Total deferred tax liabilities	1,775		1,887
Valuation allowance	64		56
Net deferred tax assets	$	616	$	453

Reconciliation schedule of unrecognized tax benefits

The following table presents a reconciliation of the beginning and ending amount of gross unrecognized tax benefits:



	December 31			December 31
(in millions of U.S. dollars)	2013			2012
Balance, beginning of year	$	26		$	134
Additions based on tax provisions related to the current year	5			19
Reductions for settlements with tax authorities	—			(16		)
Reductions for the lapse of the applicable statutes of limitations	(4		)	(111		)
Balance, end of year	$	27		$	26

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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