Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

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,
	2018		2017
Deferred tax assets:
Loss and loss expense reserves	$	60	$	123
Unearned premiums	105		100
Other	33		27
Total gross deferred tax assets	198		250
Deferred tax liabilities:
Investment gains and other, net	542		740
Deferred acquisition costs	131		123
Life policy reserves	117		111
Investments	18		10
Other	17		11
Total gross deferred tax liabilities	825		995
Net deferred income tax liability	$	627	$	745

The differences between the 21 percent and 35 percent statutory federal income tax rate and our effective income tax rate were as follows:



(Dollars in millions)	Years ended December 31,
	2018					2017					2016
Tax at statutory rate:	$	53		21.0	%	$	256		35.0	%	$	284		35.0	%
Increase (decrease) resulting from:
Tax-exempt income from municipal bonds	(20		)	(8.0	)	(36		)	(4.9	)	(34		)	(4.2	)
Dividend received exclusion	(15		)	(6.0	)	(34		)	(4.7	)	(33		)	(4.1	)
Tax accounting method changes	(50		)	(19.9	)	—			—		—			—
Deferred tax benefit due to tax rate change	—			—		(495		)	(67.8	)	—			—
Other	(4		)	(1.4	)	(6		)	(0.8	)	4			0.5
Provision for income taxes	$	(36	)	(14.3	)%	$	(315	)	(43.2	)%	$	221		27.2	%

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits.



(Dollars in millions)	Years ended December 31,
	2018		2017		2016
Gross unrecognized tax benefits at January 1	$	—	$	—	$	—
Gross increase in prior year positions	—		—		—
Gross decrease in prior year positions	—		—		—
Gross increase in current year positions	34		—		—
Settlements with tax authorities	—		—		—
Lapse of statute of limitations	—		—		—
Gross unrecognized tax benefits at December 31	$	34	$	—	$	—