Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

Income Tax Expense (Benefit)

Income tax expense (benefit) consists of the following:

	Federal			State			Foreign		Total
	(in millions)
Year ended December 31, 2014
Current	$	115.4		$	4.9		$	118.2	$	238.5
Deferred		12.9			0.4			-		13.3
	$	128.3		$	5.3		$	118.2	$	251.8
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

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:

	Year Ended December 31,
	2014			2013			2012
Federal income tax rate		35.0	%		35.0	%		35.0	%
Foreign tax credit and other adjustments		-			(0.5	)		-
Income subject to dividends-received deduction		(1.3	)		(0.9	)		(0.5	)
Tax-exempt interest		(6.5	)		(8.1	)		(8.9	)
State taxes, net of federal tax benefit		0.4			0.3			0.1
Non-taxable gain on bargain purchase		-			-			(24.1	)
Non-deductible transaction costs		-			-			1.0
Prior period adjustment		0.1			0.6			-
Other, net		(0.7	)		-			(0.2	)
Effective tax rate		27.0	%		26.4	%		2.4	%

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, 2014 and 2013 are as follows:

	As of December 31,
	2014		2013
	(in millions)
Deferred tax assets:
Loss and LAE reserves	$	288.9	$	334.1
Minimum tax credit carry forward		146.3		144.4
Compensation accruals		149.6		131.5
Unearned premiums		116.6		112.3
OTTI losses		20.8		12.2
Foreign tax credit carry forward		8.4		-
State net operating loss carry forward		16.6		15.8
Other		139.9		102.7
Gross deferred tax assets before valuation allowance		887.1		853.0
Valuation allowance		(16.6)		(15.8)
Gross deferred tax assets		870.5		837.2
Deferred tax liabilities:
Net unrealized gains on investments		239.1		123.4
Deferred acquisition costs		123.6		117.2
Purchase accounting adjustments		60.1		67.9
Foreign tax credit carry forward		-		9.3
Other		58.1		49.6
Gross deferred tax liabilities		480.9		367.4
Net deferred tax assets	$	389.6	$	469.8

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, 2014:

Major Tax Jurisdiction	Open Tax Years
Australia	2009-2013
Canada	2010-2013
France	2009-2013
Germany	2009-2013
Japan	2010-2013
Switzerland	2013
U.K	2013
U.S.	2007-2013