Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Income Tax Expense (Benefit)

The following table presents income tax expense (benefit) for 2018, 2017 and 2016:

	Federal		State		Foreign		Total
	($ in millions)
Year ended December 31, 2018
Current	$	(83.3)	$	5.6	$	32.0	$	(45.7)
Deferred		29.9		0.9		(0.1)		30.7
	$	(53.4)	$	6.5	$	31.9	$	(15.0)
Year ended December 31, 2017
Current	$	(41.3)	$	2.7	$	41.0	$	2.4
Deferred		(66.6)		0.6		(0.2)		(66.2)
	$	(107.9)	$	3.3	$	40.8	$	(63.8)
Year ended December 31, 2016
Current	$	49.4	$	4.9	$	23.4	$	77.7
Deferred		109.6		0.3		(0.5)		109.4
	$	159.0	$	5.2	$	22.9	$	187.1

Difference between Federal Income Tax Rate and Effective Income Tax Rate

The following table presents the difference between the federal income tax rate and the effective income tax rate:

	Year Ended December 31,
	2018			2017			2016
Federal income tax rate		21.0	%		35.0	%		35.0	%
Foreign tax credits		(0.3	)		(6.4	)		(0.6	)
Income subject to dividends-received deduction		(18.3	)		(25.5	)		(1.6	)
Tax-exempt interest		(36.0	)		(94.1	)		(6.5	)
State taxes, net of federal tax benefit		13.8			6.5			0.6
Prior period adjustment		(0.1	)		(3.3	)		2.4
Tax benefit from sale of subsidiary		-			(54.1	)		-
Other, net		(18.1	)		(32.0	)		(0.4	)
Effective tax rate		(38.0	)  %		(173.9	)  %		28.9	%

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

The following table presents the tax effects of temporary differences that give rise to the deferred tax assets and deferred tax liabilities as of December 31, 2018 and 2017:

	As of December 31,
	2018		2017
	($ in millions)
Deferred tax assets:
Loss and LAE reserves	$	122.9	$	114.2
Minimum tax credit carry forward		68.8		137.2
Compensation accruals		88.1		97.4
Unearned premiums		85.9		84.2
OTTI losses		5.4		9.6
State net operating loss carry forward		23.5		18.3
Other		89.8		73.7
Gross deferred tax assets before valuation allowance		484.4		534.6
Valuation allowance		(23.5)		(18.3)
Gross deferred tax assets		460.9		516.3
Deferred tax liabilities:
Net unrealized gains on investments		127.2		227.5
Deferred acquisition costs		101.1		98.7
Purchase accounting adjustments		11.3		13.5
Other		56.4		40.1
Gross deferred tax liabilities		296.0		379.8
Net deferred tax assets	$	164.9	$	136.5

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

The following table presents the tax years of Alleghany and TransRe tax returns that remain subject to examination by major tax jurisdictions as of December 31, 2018.

Major Tax Jurisdiction	Open Tax Years
Australia	2014 - 2017
Canada	2014 - 2017
France	2009, 2010 and 2017
Germany	2013 - 2017
Hong Kong	2014 - 2017
Japan	2010 - 2017
Singapore	2014 - 2018
Switzerland	2016 - 2017
U.K.	2016 - 2017
U.S.	2015 - 2017