Income Taxes Income Tax Expense (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Components of Income Tax Expense (Benefit)

Total income taxes were as follows:

	Years ended December 31,
(In millions)	2019		2018			2017
Income tax expense	$	117	$	122		$	106
Income tax expense (benefit) from OCI	698		(431		)	334
Total income taxes	$	815	$	(309	)	$	440

Income tax expense consists of the following:

	Years ended December 31,
(In millions)	2019		2018		2017
Current	$	53	$	78	$	5
Deferred	64		44		101
Income tax expense (benefit)	$	117	$	122	$	106

Schedule of Income before Income Tax

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

	Years ended December 31,
(In millions)	2019			2018		2017
Income before income taxes – Bermuda	$	1,895		$	641	$	1,165
Income before income taxes – U.S.	528			534		274
Income before income taxes – United Kingdom	(121		)	—		—
Income before income taxes – Germany	—			—		25
Income before income taxes	$	2,302		$	1,175	$	1,464

Schedule of Effective Income Tax Rate Reconciliation

The expected tax provision computed on pre-tax income at the weighted average tax rate has been calculated as the sum of the pre-tax income in each jurisdiction multiplied by that jurisdiction’s applicable statutory tax rate. Statutory tax rates of 0%, 21%, and 19% have been used for Bermuda, the U.S. and the United Kingdom (UK), respectively, for the year ended December 31, 2019. Statutory rates of 0% and 21% have been used for Bermuda and the U.S. for the year ended December 31, 2018. Statutory tax rates of 0%, 31% and 35% have been used for Bermuda, Germany and the U.S., respectively, for the year ended December 31, 2017. A reconciliation of the difference between the expected tax provision at the weighted average tax rate and income tax expense (benefit) is as follows:

	Years ended December 31,
(In millions, except for percentages)	2019			2018			2017
Expected tax provision computed on pre-tax income at weighted average income tax rate	$	88		$	112		$	104
Increase in income taxes resulting from:
Deferred tax valuation allowance	16			—			(5		)
Non-deductible expenses	17			—			—
Prior year true-up	2			11			8
Corporate owned life insurance	(6		)	(3		)	(8		)
Stock compensation expense	2			1			5
Change in statutory tax rates	—			—			(7		)
State taxes and other	(2		)	1			9
Income tax expense (benefit)	$	117		$	122		$	106
Effective tax rate	5		%	10		%	7		%

Schedule of Gross Current and Deferred Tax Assets and Liabilities

Current income tax recoverable and deferred tax assets are included in other assets on the consolidated balance sheets, and current income tax payable and deferred tax liabilities are included in other liabilities on the consolidated balance sheets. Current and deferred income tax assets and liabilities were as follows:

	December 31,
(In millions)	2019			2018
Current income tax recoverable	$	—		$	36
Current income tax payable	14			33
Net current income tax recoverable (payable)	$	(14	)	$	3
Deferred tax assets	$	—		$	340
Deferred tax liabilities	423			—
Net deferred tax assets (liabilities)	$	(423	)	$	340

Schedule of Deferred Tax Assets and Liabilities

Deferred income tax assets and liabilities consisted of the following:

	December 31,
(In millions)	2019			2018
Deferred tax assets
Insurance liabilities	$	1,753		$	1,186
Net unrealized losses on AFS	—			112
Net operating and capital loss carryforwards	133			78
Tax credits	2			—
Fixed assets	—			43
Employee benefits	21			24
Other	16			38
Total deferred tax assets	1,925			1,481
Valuation allowance	(63		)	(52		)
Deferred tax assets, after valuation allowance	1,862			1,429
Deferred tax liabilities
Investments, including derivatives	928			296
Net unrealized gains on AFS	585			—
DAC, DSI and VOBA	758			790
Other	14			3
Total deferred tax liabilities	2,285			1,089
Net deferred tax assets (liabilities)	$	(423	)	$	340

Summary of Valuation Allowance

The valuation allowance consists of the following:

	December 31,
(In millions)	2019		2018
U.S. federal and state net operating losses and other deferred tax assets	$	47	$	52
UK net operating losses and other deferred tax assets	16		—
Total valuation allowance	$	63	$	52