Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

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,
	2020		2019
Deferred tax assets:
Unearned premiums	$	119	$	113
Loss and loss expense reserves	81		66
Deferred international earnings	45		51
Net operating loss on international earnings	26		4
Other	41		39
Deferred tax assets before valuation allowance	312		273
Valuation allowance for international operations	56		41
Deferred tax assets net of valuation allowance	256		232
Deferred tax liabilities:
Investment gains and other, net	1,240		995
Deferred acquisition costs	143		139
Life policy reserves	121		120
Investments	13		23
Other	38		34
Total gross deferred tax liabilities	1,555		1,311
Net deferred income tax liability	$	1,299	$	1,079

Schedule of Income before Income Tax

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

(Dollars in millions)	For the years ended December 31,
	2020		2019		2018
United States	$	1,521	$	2,440	$	251
International	(22)		32		—
Total income before income taxes	$	1,499	$	2,472	$	251

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,
	2020		2019		2018
Provision (benefit) for income taxes:
Current – United States federal	$	147	$	137	$	11
International	—		(5)		—
Total current	147		132		11
Deferred – United States federal	136		338		(47)
International	—		5		—
Total deferred	136		343		(47)
Total provision (benefit) for income taxes	$	283	$	475	$	(36)

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

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

(Dollars in millions)	Years ended December 31,
	2020				2019				2018
Tax at statutory rate:	$	315	21.0	%	$	519	21.0	%	$	53	21.0	%
Increase (decrease) resulting from:
Tax-exempt income from municipal bonds	(20)		(1.3)		(19)		(0.8)		(20)		(8.0)
Dividend received exclusion	(17)		(1.1)		(16)		(0.6)		(15)		(6.0)
Tax accounting method changes	—		—		—		—		(50)		(19.9)
Other	5		0.3		(9)		(0.4)		(4)		(1.4)
Provision (benefit) for income taxes	$	283	18.9	%	$	475	19.2	%	$	(36)	(14.3)	%

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,
	2020		2019		2018
Gross unrecognized tax benefits, January 1	$	34	$	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, December 31	$	34	$	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,
	2020		2019
Valuation allowance, January 1	$	41	$	—
Acquisition accounting amount	—		55
Current year operations	15		(14)
Valuation allowance, December 31	$	56	$	41