Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Components Of Deferred Tax Assets And Liabilities

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,
	2019		2018
Deferred tax assets:
Loss and loss expense reserves	$	66	$	60
Unearned premiums	113		105
Deferred international earnings	51		—
Other	39		33
Deferred tax assets before valuation allowance	269		198
Valuation allowance for international operations	41		—
Deferred tax assets net of valuation allowance	228		198
Deferred tax liabilities:
Investment gains and other, net	995		542
Deferred acquisition costs	139		131
Life policy reserves	120		117
Investments	23		18
Other	30		17
Total gross deferred tax liabilities	1,307		825
Net deferred income tax liability	$	1,079	$	627

Schedule of Income before Income Tax

For financial reporting purposes, income before income taxes includes the following components:

(Dollars in millions)	For the years ended December 31,
	2019		2018		2017
United States	$	2,440	$	251	$	730
International	32		—		—
Total income before income taxes	$	2,472	$	251	$	730

Schedule of The Provision (Benefit) of Income Taxes

The provision (benefit) for income taxes consists of:

(Dollars in millions)	For the years ended December 31,
	2019			2018			2017
Provision (benefit) for income taxes:
Current – United States federal	$	137		$	11		$	129
International	(5		)	—			—
Total current	132			11			129
Deferred – United States federal	338			(47		)	(444		)
International	5			—			—
Total deferred	343			(47		)	(444		)
Total provision (benefit) for income taxes	$	475		$	(36	)	$	(315	)

Differences Between The 35 Percent Statutory Income Tax Rate And Effective Income Tax Rate

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

(Dollars in millions)	Years ended December 31,
	2019					2018					2017
Tax at statutory rate:	$	519		21.0	%	$	53		21.0	%	$	256		35.0	%
Increase (decrease) resulting from:
Tax-exempt income from municipal bonds	(19		)	(0.8	)	(20		)	(8.0	)	(36		)	(4.9	)
Dividend received exclusion	(16		)	(0.6	)	(15		)	(6.0	)	(34		)	(4.7	)
Tax accounting method changes	—			—		(50		)	(19.9	)	—			—
Deferred tax benefit due to tax rate change	—			—		—			—		(495		)	(67.8	)
Other	(9		)	(0.4	)	(4		)	(1.4	)	(6		)	(0.8	)
Provision (benefit) for income taxes	$	475		19.2	%	$	(36	)	(14.3	)%	$	(315	)	(43.2	)%

Reconciliation of Unrecognized Tax Benefits

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

(Dollars in millions)	Years ended December 31,
	2019		2018		2017
Gross unrecognized tax benefits at January 1	$	34	$	—	$	—
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	$	34	$	—

Reconciliation of Cincinnati Global Valuation Allowance

The following is a tabular reconciliation of the total amounts of our Cincinnati Global valuation allowance.

(Dollars in millions)	Years ended December 31,
	2019			2018		2017
Valuation allowance at January 1	$	—		$	—	$	—
Acquisition accounting amount	55			—		—
Current year operations	(14		)	—		—
Valuation allowance at December 31	$	41		$	—	$	—