Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of Current and Deferred Components of Income Tax Expense (Benefit)

The current and deferred components of income tax expense (benefit) are as follows:


Year Ended December 31	2018		2017			2016

(In millions)

Income tax expense (benefit):
Federal:
Current	$	6	$	157		$	71
Deferred		85		(63	)		102
State and city:
Current		15		22			13
Deferred		9		17			13
Foreign		13		37			21

Total	$	128	$	170		$	220

Components of U.S. and Foreign Income and Reconciliation between Federal Income Tax Expense at Statutory Rates and Actual Income Tax Expense (Benefit)

The components of U.S. and foreign income before income tax and a reconciliation between the federal income tax expense at statutory rates and the actual income tax expense (benefit) is as follows:


Year Ended December 31	2018			2017			2016
(In millions)

Income before income tax:
U.S.	$	775		$	1,322		$	1,207
Foreign		59			260			(271	)

Total	$	834		$	1,582		$	936



Income tax expense at statutory rate	$	175		$	554		$	328
Increase (decrease) in income tax expense resulting from:
Effect of the Tax Act		(6	)		(190	)
Exempt investment income		(64	)		(134	)		(126	)
Foreign related tax differential		1			(36	)		40
Taxes related to domestic affiliate		(7	)		1			(14	)
Partnership earnings not subject to taxes		(14	)		(51	)		(52	)
Valuation allowance		12			7			62
Unrecognized tax positions, settlements and adjustments relating to prior years		2			(8	)		(42	)
State taxes		20			23			18
Other		9			4			6

Income tax expense (benefit)	$	128		$	170		$	220

Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefits, Excluding Tax Carryforwards and Interest and Penalties

A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding tax carryforwards and interest and penalties, is as follows:


Year Ended December 31	2018			2017			2016

(In millions)

Balance at January 1	$	84		$	35		$	54
Additions for tax positions related to the current year		3			51			4
Additions for tax positions related to a prior year		20			5			1
Reductions for tax positions related to a prior year		(48	)		(1	)		(20	)
Lapse of statute of limitations		(1	)		(6	)		(4	)

Balance at December 31	$	58		$	84		$	35

Summary of Deferred Tax Assets and Liabilities

The following table summarizes deferred tax assets and liabilities:


December 31	2018			2017
(In millions)

Deferred tax assets:
Insurance reserves:
Property and casualty claim and claim adjustment expense reserves	$	108		$	74
Unearned premium reserves		108			142
Receivables		13			13
Employee benefits		222			243
Deferred retroactive reinsurance benefit		79			68
Net operating loss carryforwards		251			169
Tax credit carryforwards		101			199
Net unrealized losses		24
Basis differential in investment in subsidiary		8			15
Other		197			211
Total deferred tax assets		1,111			1,134
Valuation allowance		(175	)		(169	)
Net deferred tax assets		936			965

Deferred tax liabilities:
Deferred acquisition costs		(78	)		(77	)
Net unrealized gains					(263	)
Property, plant and equipment		(840	)		(765	)
Basis differential in investment in subsidiary		(586	)		(364	)
Other liabilities		(236	)		(220	)
Total deferred tax liabilities		(1,740	)		(1,689	)

Net deferred tax liabilities (a)	$	(804	)	$	(724	)

(a)	Includes $37 and $25 of deferred tax assets reflected in Other assets in the Consolidated Balance Sheets at December 31, 2018 and 2017.