Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Income Tax Expense (Benefit)

Income tax expense (benefit) consists of the following:

	Federal			State			Foreign		Total
	(in millions)
Year ended December 31, 2013
Current	$	68.4		$	4.6		$	62.7	$	135.7
Deferred		90.4			(0.2	)		—		90.2
	$	158.8		$	4.4		$	62.7	$	225.9
Year ended December 31, 2012
Current	$	107.8		$	1.2		$	0.4	$	109.4
Deferred		(92.9	)		0.6			—		(92.3	)
	$	14.9		$	1.8		$	0.4	$	17.1
Year ended December 31, 2011
Current	$	45.8		$	1.6		$	—	$	47.4
Deferred		0.3			(0.2	)		—		0.1
	$	46.1		$	1.4		$	—	$	47.5

Difference between Federal Income Tax Rate and Effective Income Tax Rate

The difference between the federal income tax rate and the effective income tax rate is as follows:

	2013			2012			2011
Federal income tax rate		35.0	%		35.0	%		35.0	%
Foreign tax credit and other adjustments		(0.5	)		—			(0.9	)
Income subject to dividends-received deduction		(0.9	)		(0.5	)		(4.0	)
Tax-exempt interest		(8.1	)		(8.9	)		(5.7	)
State taxes, net of federal tax benefit		0.3			0.1			0.4
Non-taxable gain on bargain purchase		—			(24.1	)		—
Non-deductible transaction costs		—			1.0			—
Prior period adjustment		0.6			—			—
Other, net		—			(0.2	)		0.1
Effective tax rate		26.4	%		2.4	%		24.9	%

Tax Effects of Temporary Differences that Give Rise to Significant Portions of Deferred Tax Assets and Deferred Tax Liabilities

The tax effects of temporary differences that give rise to the deferred tax assets and deferred tax liabilities as of December 31, 2013 and 2012 are as follows:

	As of December 31,
	2013			2012
	(in millions)
Deferred tax assets:
Loss and LAE reserves	$	334.1		$	359.1
Minimum tax credit carry forward		144.4			194.7
Compensation accruals		131.5			100.9
Unearned premiums		112.3			108.7
OTTI losses		12.2			7.3
Foreign tax credit carry forward		—			53.3
State net operating loss carry forward		15.8			15.3
Other		102.7			88.2
Gross deferred tax assets before valuation allowance		853.0			927.5
Valuation allowance		(15.8	)		(15.3	)
Gross deferred tax assets		837.2			912.2
Deferred tax liabilities:
Net unrealized gains on investments		123.4			137.7
Deferred acquisition costs		117.2			106.2
Purchase accounting adjustments		67.9			110.6
Foreign tax credit carryforward		9.3			—
Other		49.6			25.1
Gross deferred tax liabilities		367.4			379.6
Net deferred tax assets	$	469.8		$	532.6

Tax Year Returns that Remain Subject to Examination by Major Tax Jurisdiction

The following table lists the tax years of Alleghany and TransRe tax returns that remain subject to examination by major tax jurisdictions as of December 31, 2013:

Major Tax Jurisdiction	Open Tax Years
Australia		2009-2012
Canada		2009-2012
France		2009-2012
Germany		2009-2012
Japan		2010-2012
Switzerland		2012
United Kingdom		2010-2012
U.S.		2008-2012