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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The CNA Tax Group is included in the consolidated federal income tax return of Loews and its eligible subsidiaries. Loews and the Company have agreed that for each taxable year, the Company will 1) be paid by Loews the amount, if any, by which the Loews consolidated federal income tax liability is reduced by virtue of the inclusion of the CNA Tax Group in the Loews consolidated federal income tax return, or 2) pay to Loews an amount, if any, equal to the federal income tax that would have been payable by the CNA Tax Group filing a separate consolidated tax return. In the event that Loews should have a net operating loss in the future computed on the basis of filing a separate consolidated tax return without the CNA Tax Group, the Company may be required to repay tax recoveries previously received from Loews. This agreement may be canceled by either party upon 30 days written notice.
For the years ended December 31, 2023, 2022 and 2021, the Company paid $263 million, $254 million and $238 million to Loews related to federal income taxes.
For 2021 through 2023, Loews and the Company participate in the Internal Revenue Service (IRS) Compliance Assurance Process (CAP), which is a voluntary program for large corporations. Under CAP, the IRS conducts a real-time audit and works contemporaneously with the Company to resolve any issues prior to the filing of the tax return. For 2021 and 2023, the Company was selected to participate in the phase of CAP reserved for taxpayers whose risk of noncompliance does not warrant use of IRS resources. The Company believes that this approach should reduce tax-related uncertainties, if any.
As of December 31, 2023 and 2022, there were no unrecognized tax benefits.
The Company recognizes interest accrued related to unrecognized tax benefits and tax refund claims in Income tax (expense) benefit on the Consolidated Statements of Operations. The Company recognizes penalties (if any) in Income tax (expense) benefit on the Consolidated Statements of Operations. During 2023, 2022 and 2021 the Company recognized no interest and no penalties. There were no amounts accrued for interest or penalties as of December 31, 2023 or 2022.
The following table presents a reconciliation between the Company's income tax expense at statutory rates and the recorded income tax expense.
Years ended December 31
(In millions)2023
2022 (1)
2021 (1)
Income tax expense at statutory rates$(319)$(172)$(308)
Tax benefit from tax exempt income30 41 51 
Foreign taxes and credits(5)15 (3)
State income tax expense(13)(10)(13)
Other tax expense(6)(6)(5)
Income tax expense$(313)$(132)$(278)
(1) As of January 1, 2023, the Company adopted ASU 2018-12 using the modified retrospective method applied as of the transition date of January 1, 2021. Prior period amounts in the financial statements have been adjusted to reflect application of the new guidance. See Note A to the Consolidated Financial Statements for additional information.
As of December 31, 2023, no deferred taxes are required on the undistributed earnings of subsidiaries subject to tax.
The following table presents the current and deferred components of the Company's income tax expense.
Years ended December 31
(In millions)2023
2022 (1)
2021 (1)
Current tax expense$(311)$(221)$(235)
Deferred tax (expense) benefit(2)89 (43)
Total income tax expense$(313)$(132)$(278)
(1) As of January 1, 2023, the Company adopted ASU 2018-12 using the modified retrospective method applied as of the transition date of January 1, 2021. Prior period amounts in the financial statements have been adjusted to reflect application of the new guidance. See Note A to the Consolidated Financial Statements for additional information.
Total income tax presented above includes foreign tax expense of approximately $52 million, $1 million and $18 million related to pretax income from foreign operations of approximately $198 million, $141 million and $124 million for the years ended December 31, 2023, 2022 and 2021. Foreign tax expense for the year ended December 31, 2022 included a $10 million tax benefit for the revaluation of net deferred tax assets related to a U.K. tax rate change.
The deferred tax effects of the significant components of the Company's deferred tax assets and liabilities are presented in the following table.
December 31
(In millions)2023
2022 (1)
Deferred Tax Assets:
Insurance reserves:
Property and casualty claim and claim adjustment expense reserves$202 $178 
Unearned premium reserves213 198 
Policyholder reserves160 75 
Deferred Revenue62 64 
Employee benefits23 35 
Deferred retroactive reinsurance benefit88 89 
Net unrealized losses418 706 
Other assets111 116 
Gross deferred tax assets1,277 1,461 
Deferred Tax Liabilities:
Investment valuation differences83 59 
Deferred acquisition costs126 113 
Net unrealized gains— — 
Software and hardware18 21 
Other liabilities34 17 
Gross deferred tax liabilities261 210 
Net deferred tax asset$1,016 $1,251 
(1) As of January 1, 2023, the Company adopted ASU 2018-12 using the modified retrospective method applied as of the transition date of January 1, 2021. Prior period amounts in the financial statements have been adjusted to reflect application of the new guidance. See Note A to the Consolidated Financial Statements for additional information.
As of December 31, 2023, the CNA Tax Group had no loss carryforwards and a tax credit carryforward of $2 million which expires in 2033. The foreign operations had loss carryforwards of $169 million, which have no expiration. The foreign operations had a tax credit carryforward of $9 million, which has no expiration.
Although realization of deferred tax assets is not assured, management believes it is more likely than not that the recognized net deferred tax asset will be realized through recoupment of ordinary and capital taxes paid in prior carryback years and through future earnings, reversal of existing temporary differences and available tax planning strategies. As a result, no valuation allowance was recorded as of December 31, 2023 or 2022.