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,
	2015		2014
Deferred tax assets:
Loss and loss expense reserves	$	191	$	197
Unearned premiums	151		145
Investments	25		16
Other	42		41
Total gross deferred tax assets	409		399
Deferred tax liabilities:
Unrealized investment gains, net	719		937
Deferred acquisition costs	187		183
Life policy reserves	137		110
Other	4		9
Total gross deferred tax liabilities	1,047		1,239
Net deferred income tax liability	$	638	$	840

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,
	2015					2014					2013
Tax at statutory rate:	$	308		35.0	%	$	252		35.0	%	$	250		35.0	%
Increase (decrease) resulting from:
Tax-exempt income from municipal bonds	(33		)	(3.7	)	(33		)	(4.6	)	(32		)	(4.5	)
Dividend received exclusion	(32		)	(3.6	)	(29		)	(4.0	)	(26		)	(3.6	)
Other	4			0.3		6			0.8		5			0.7
Provision for income taxes	$	247		28.0	%	$	196		27.2	%	$	197		27.6	%

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, 2015, 2014 and 2013, we had no operating or capital loss carry forwards.

Unrecognized Tax Benefits

As a result of positions either taken in our 2012 through 2014 federal tax returns filed with the IRS or expected to be taken in the 2015 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 2012 through 2015.

The statute of limitations for federal tax purposes has closed for tax years 2011 and earlier. There are no federal returns under examination and we have not been notified of any upcoming IRS examinations.

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

$1 million in 2015, 2014, and 2013.

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 2011 and earlier. There are no state income returns under examination and we have not been notified of any upcoming state examinations.