Taxation (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of components of income tax provision

The following table presents pre-tax income and the related provision for income taxes:



	Year Ended December 31
(in millions of U.S. dollars)	2018		2017			2016
Pre-tax income:
Switzerland	$	950	$	527		$	766
Outside Switzerland	3,707		3,195			4,184
Total pre-tax income	$	4,657	$	3,722		$	4,950
Provision for income taxes
Current tax expense:
Switzerland	$	89	$	46		$	97
Outside Switzerland	563		313			727
Total current tax expense	652		359			824
Deferred tax expense (benefit):
Switzerland	3		2			(27		)
Outside Switzerland	40		(500		)	18
Total deferred tax expense (benefit)	43		(498		)	(9		)
Provision for income taxes	$	695	$	(139	)	$	815

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:



	Year Ended December 31
(in millions of U.S. dollars)	2018			2017			2016
Expected tax provision at Swiss statutory tax rate	$	365		$	291		$	388
Permanent differences:
Taxes on earnings subject to rate other than Swiss statutory rate	372			263			582
Tax-exempt interest and dividends received deduction, net of proration	(75		)	(199		)	(200		)
Net withholding taxes	33			30			20
Excess tax benefit on share-based compensation	(19		)	(48		)	—
Impact of 2017 Tax Act	(25		)	(450		)	—
Corporate owned life insurance	2			(37		)	—
Other	42			11			25
Provision for income taxes	$	695		$	(139	)	$	815

Schedule of the components of net deferred tax assets

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



	December 31			December 31
(in millions of U.S. dollars)	2018			2017
Deferred tax assets:
Loss reserve discount	$	584		$	715
Unearned premiums reserve	471			231
Foreign tax credits	262			340
Provision for uncollectible balances	37			45
Loss carry-forwards	137			90
Debt related amounts	71			77
Compensation related amounts	263			260
Cumulative translation adjustments	43			30
Unrealized depreciation on investments	102			—
Other, net	95			70
Total deferred tax assets	2,065			1,858
Deferred tax liabilities:
Deferred policy acquisition costs	621			635
Other intangible assets, including VOBA	1,440			1,437
Un-remitted foreign earnings	47			66
Investments	59			53
Unrealized appreciation on investments	—			184
Depreciation	123			83
Total deferred tax liabilities	2,290			2,458
Valuation allowance	79			99
Net deferred tax liabilities	$	(304	)	$	(699	)

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)	2018		2017
Balance, beginning of year	$	13	$	17
Additions based on tax positions related to the current year	1		3
Additions based on tax positions related to prior years	—		—
Reductions for tax positions of prior years	—		(4		)
Reductions for the lapse of the applicable statutes of limitations	—		(3		)
Balance, end of year	$	14	$	13