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Taxation (Tables)

12 Months Ended

Dec. 31, 2019

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)	2019			2018		2017
Pre-tax income:
Switzerland	$	440		$	950	$	527
Outside Switzerland	4,809			3,707		3,195
Total pre-tax income	$	5,249		$	4,657	$	3,722
Provision for income taxes
Current tax expense:
Switzerland	$	29		$	89	$	46
Outside Switzerland	879			563		313
Total current tax expense	908			652		359
Deferred tax expense (benefit):
Switzerland	11			3		2
Outside Switzerland	(124		)	40		(500		)
Total deferred tax expense (benefit)	(113		)	43		(498		)
Provision for income taxes	$	795		$	695	$	(139	)

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)	2019			2018			2017
Expected tax provision at Swiss statutory tax rate	$	411		$	365		$	291
Permanent differences:
Taxes on earnings subject to rate other than Swiss statutory rate	376			372			263
Tax-exempt interest and dividends received deduction, net of proration	(49		)	(75		)	(199		)
Net withholding taxes	40			33			30
Excess tax benefit on share-based compensation	(12		)	(19		)	(48		)
Impact of 2017 Tax Act	—			(25		)	(450		)
Corporate owned life insurance	(13		)	2			(37		)
Other	42			42			11
Provision for income taxes	$	795		$	695		$	(139	)

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)	2019			2018
Deferred tax assets:
Loss reserve discount	$	826		$	584
Unearned premiums reserve	519			471
Foreign tax credits	247			262
Provision for uncollectible balances	37			37
Loss carry-forwards	143			137
Debt related amounts	74			71
Compensation related amounts	261			263
Cumulative translation adjustments	33			43
Unrealized depreciation on investments	—			102
Lease liability	140			—
Other, net	—			95
Total deferred tax assets	2,280			2,065
Deferred tax liabilities:
Deferred policy acquisition costs	588			621
Other intangible assets, including VOBA	1,468			1,440
Un-remitted foreign earnings	73			47
Investments	40			59
Unrealized appreciation on investments	470			—
Depreciation	157			123
Lease right-of-use asset	129			—
Other, net	45			—
Total deferred tax liabilities	2,970			2,290
Valuation allowance	114			79
Net deferred tax liabilities	$	(804	)	$	(304	)

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)	2019			2018
Balance, beginning of year	$	14		$	13
Additions based on tax positions related to the current year	12			1
Additions based on tax positions related to prior years	23			—
Reductions for tax positions of prior years	—			—
Reductions for the lapse of the applicable statutes of limitations	(2		)	—
Balance, end of year	$	47		$	14

Summary of Income Tax Examinations [Table Text Block]

The following table summarizes tax years open for examination by major income tax jurisdiction:



At December 31, 2019
Australia	2014	-	2019
Canada	2012	-	2019
France	2017	-	2019
Germany	2015	-	2019
Italy	2010	-	2019
Mexico	2014	-	2019
Spain	2012	-	2019
Switzerland	2015	-	2019
United Kingdom	2015	-	2019
United States	2014	-	2019