Taxation (Tables)

12 Months Ended

Dec. 31, 2015

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)	2015		2014		2013
Current tax expense	$	304	$	481	$	231
Deferred tax expense	158		153		249
Provision for income taxes	$	462	$	634	$	480

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)	2015			2014			2013
Expected tax provision at Swiss statutory tax rate	$	258		$	273		$	331
Permanent differences:
Taxes on earnings subject to rate other than Swiss statutory rate	193			224			124
Change to deferred taxes related to unrealized foreign exchange losses ⁽¹⁾	—			139			—
Tax-exempt interest and dividends received deduction, net of proration	(32		)	(33		)	(27		)
Net withholding taxes	35			33			27
Change in valuation allowance⁽¹⁾	2			(20		)	4
Other	6			18			21
Total provision for income taxes	$	462		$	634		$	480

⁽¹⁾2014 includes a charge to deferred taxes related to non-recognition of foreign tax credits related to unrealized foreign exchange losses.

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)	2015		2014
Deferred tax assets:
Loss reserve discount	$	663	$	794
Unearned premiums reserve	190		99
Foreign tax credits	969		1,103
Investments	29		9
Provision for uncollectible balances	65		81
Loss carry-forwards	72		40
Compensation related amounts	189		185
Other	65		—
Total deferred tax assets	2,242		2,311
Deferred tax liabilities:
Deferred policy acquisition costs	412		213
VOBA and other intangible assets	384		321
Un-remitted foreign earnings	827		939
Unrealized appreciation on investments	195		406
Depreciation	68		77
Other	—		43
Total deferred tax liabilities	1,886		1,999
Valuation allowance	38		17
Net deferred tax assets	$	318	$	295

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)	2015			2014
Balance, beginning of year	$	23		$	27
Additions based on tax provisions related to the current year	1			2
Reductions for tax positions of prior years	(7		)	—
Reductions for the lapse of the applicable statutes of limitations	(1		)	(6		)
Balance, end of year	$	16		$	23