Income Taxes

The significant components of deferred tax assets and liabilities included in the consolidated balance sheets at December 31 were as follows:



(Dollars in millions)	At December 31,
	2014		2013
Deferred tax assets:
Loss and loss expense reserves	$	197	$	206
Unearned premiums	145		137
Investments	16		19
Other	41		46
Total	399		408
Deferred tax liabilities:
Unrealized investment gains, net	937		807
Deferred acquisition costs	183		178
Life policy reserves	110		86
Other	9		10
Total	1,239		1,081
Net deferred income tax liability	$	840	$	673

Deferred tax assets and liabilities reflect temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount recognized for tax purposes.

The differences between the 35 percent statutory federal income tax rate and our effective income tax rate were as follows:



(Dollars in millions)	Years ended December 31,
	2014					2013					2012
Tax at statutory rate:	$	252		35.0	%	$	250		35.0	%	$	198		35.0	%
Increase (decrease) resulting from:
Tax-exempt income from municipal bonds	(33		)	(4.6	)	(32		)	(4.5	)	(33		)	(5.9	)
Dividend received exclusion	(29		)	(4.0	)	(26		)	(3.6	)	(24		)	(4.2	)
Other	6			0.8		5			0.7		4			0.7
Provision for income taxes	$	196		27.2	%	$	197		27.6	%	$	145		25.6	%

The provision for federal income taxes is based upon filing a consolidated income tax return for the company and its subsidiaries. As of December 31, 2014 and 2013, we had no operating or capital loss carry forwards.

Unrecognized Tax Benefits

As a result of positions either taken in our 2011 through 2013 federal tax returns filed with the IRS or expected to be taken in the 2014 filing, we believe it is more likely than not that our tax liability will be sustained upon examination by the IRS. We therefore carry no amount for unrecognized tax benefits for the years ended 2011 through 2014.

The statute of limitations for federal tax purposes have closed for tax years 2008 and earlier. Although all issues for tax years 2009 and 2010 have been settled and agreed to, the statute of limitations for these two tax years remains open until December 31, 2015. Our recent settlement with the IRS of tax years 2009 and 2010 resulted in no material changes to the returns as filed.

Income taxes paid in our consolidated statements of cash flows are shown net of refunds received of less than

$1 million in both 2014 and 2013 and $11 million in 2012.

In addition to our IRS filings, we file income tax returns with immaterial amounts in various state jurisdictions. The statute of limitations for state income tax purposes has closed for tax years 2009 and earlier.