Income Taxes (Tables)

12 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

Income Tax Expense

Income tax expense consists of the following:

	Years ended December 31,
(In millions)	2016			2015			2014
Current	$	(33	)	$	(19	)	$	(84	)
Deferred	(19		)	33			138
Income tax expense (benefit)	$	(52	)	$	14		$	54

Total income taxes were as follows:

	Years ended December 31,
(In millions)	2016			2015			2014
Income tax expense (benefit)	$	(52	)	$	14		$	54
Income tax expense (benefit) from OCI	259			(424		)	317
Total income taxes	$	207		$	(410	)	$	371

Components of Income Before Income Taxes

Income tax expense was calculated based on the following components of income before income taxes:

	Years ended December 31,
(In millions)	2016		2015		2014
Pre-tax income – Bermuda	$	596	$	510	$	271
Pre-tax income – Germany	16		8		—
Pre-tax income – U.S.	141		74		261
Income before income taxes	$	753	$	592	$	532

Provision for Income Taxes and Expected Tax Provision Reconciliation

A reconciliation of the difference between the provision for income taxes and the expected tax provision at the weighted average tax rate is as follows:

	Years ended December 31,
(In millions)	2016			2015			2014
Expected tax provision computed on pre-tax income at weighted average income tax rate	$	54		$	28		$	91
(Decrease) increase in income taxes resulting from:
Deferred tax valuation allowance	(116		)	(6		)	(22		)
Prior year true-up	8			2			(12		)
Corporate owned life insurance	(7		)	(7		)	(6		)
Stock compensation expense	5			—			—
State taxes and other	4			(3		)	3
Total income tax expense (benefit)	$	(52	)	$	14		$	54
Effective tax rate	(7		)%	2		%	10		%

Deferred Income Tax Assets and Liabilities

Deferred income tax assets and liabilities consisted of the following:

	December 31,
(In millions)	2016			2015
Deferred tax assets
Insurance liabilities	$	1,478		$	1,351
Net unrealized losses on AFS	—			84
Net operating and capital loss carryforwards	221			160
Tax credits	18			—
VOBA	69			72
Employee benefits	52			57
Other	27			20
Total deferred tax assets	1,865			1,744
Valuation allowance1	(72		)	(193		)
Deferred tax asset, after valuation allowance	1,793			1,551
Deferred tax liabilities
Investments, including derivatives	668			429
Net unrealized gains on AFS	178			—
VOBA	346			372
DAC	230			98
Other	6			46
Total deferred tax liability	1,428			945
Net deferred tax asset2	$	365		$	606
1A portion of the valuation allowance reduction was recorded in other comprehensive income.
2Net deferred tax asset includes deferred tax liability relating to ADKG, which is included in other liabilities on the consolidated balance sheets.

Valuation Allowance

The valuation allowance consists of the following:

	December 31,
(In millions)	2016		2015
U.S. federal and state net operating losses	$	22	$	100
U.S. other deferred tax assets	—		27
German other deferred tax assets	50		66
Total valuation allowance	$	72	$	193