Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

The provision for income taxes consists of the following for the years ended December 31:



(in millions)	Erie Insurance Group
	2013			2012			2011
Indemnity
Current income tax expense	$	89		$	84		$	85
Deferred income tax (benefit) expense	(5		)	(3		)	0
Provision for income taxes – Indemnity	84			81			85
Exchange
Current income tax expense	232			78			110
Deferred income tax expense (benefit)	203			121			(105		)
Provision for income taxes – Exchange	435			199			5
Provision for income taxes – Erie Insurance Group	$	519		$	280		$	90

Schedule of reconciliation of the provision for income taxes, with amounts determined by applying the statutory federal income tax rates to pre-tax income

A reconciliation of the provision for income taxes, with amounts determined by applying the statutory federal income tax rates to pre-tax income, is as follows for the years ended December 31:



(in millions)	Erie Insurance Group
	2013			2012			2011
Indemnity
Income tax at statutory rates	$	86		$	84		$	89
Tax-exempt interest	(2		)	(2		)	(3		)
Dividends received deduction	0			(1		)	(1		)
Erie Family Life losses	—			—			(1		)
Other, net	0			0			1
Provision for income taxes – Indemnity	84			81			85
Exchange
Income tax at statutory rates	462			230			37
Tax-exempt interest	(13		)	(13		)	(15		)
Dividends received deduction	(14		)	(14		)	(13		)
Return to provision adjustments	(1		)	(3		)	(5		)
Other, net	1			(1		)	1
Provision for income taxes – Exchange	435			199			5
Provision for income taxes – Erie Insurance Group	$	519		$	280		$	90

Schedule of temporary differences and carry-forwards, which give rise to consolidated deferred tax assets and liabilities

Temporary differences and carry-forwards, which give rise to consolidated deferred tax assets and liabilities, are as follows for the years ended December 31:



(in millions)	Erie Insurance Group
	2013		2012
Indemnity
Deferred tax assets:
Net allowance for service fees and premium cancellations	$	3	$	3
Other employee benefits	14		9
Pension and other postretirement benefits	24		65
Other	0		3
Total deferred tax assets	41		80
Deferred tax liabilities:
Unrealized gains on investments	11		6
Limited partnerships	3		13
Depreciation	17		15
Prepaid expenses	7		5
Capitalized internally developed software	0		3
Other	1		1
Total deferred tax liabilities	39		43
Net deferred income tax asset – Indemnity	$	2	$	37



Exchange
Deferred tax assets:
Loss reserve discount	$	63		$	78
Liability for future life and annuity policy benefits	2			7
Unearned premiums	197			179
Write-downs of impaired securities	18			19
Other	17			22
Total deferred tax assets	297			305
Deferred tax liabilities:
Deferred policy acquisition costs	185			165
Unrealized gains on investments	489			443
Limited partnerships	61			43
Other	12			19
Total deferred tax liabilities	747			670
Net deferred income tax liability – Exchange	$	(450	)	$	(365	)
Net deferred income tax liability – Erie Insurance Group	$	(448	)	$	(328	)