Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Text Block [Abstract]

Income (loss) from operations before provision (benefit) for income taxes

	Years Ended December 31,
In millions	2013		2012		2011
Domestic	$	435	$	1,486	$	(2,231)
Foreign		(19)		112		(8)
Income (loss) before income taxes	$	416	$	1,598	$	(2,239)

Income tax expense (benefit) on income (loss) and shareholder' equity

		Years Ended December 31,
In millions		2013		2012		2011
Current taxes:
	Federal	$	0	$	3	$	(1)
	State		8		2		1
	Foreign		1		(6)		15
Deferred taxes:
	Federal		165		350		(919)
	Foreign		(8)		15		(16)
Provision (benefit) for income taxes			166		364		(920)
Income taxes charged (credited) to shareholders' equity related to:
	Change in unrealized gains and losses on investments		(81)		86		116
	Change in other-than-temporary impairment losses		4		42		9
	Change in foreign currency translation		1		(2)		(1)
	Share-based compensation		4		7		4
Total income taxes charged (credited) to shareholders' equity			(72)		133		128
Total effect of income taxes		$	94	$	497	$	(792)

Income tax rate reconciliation from statutory to effective tax rate

		Years Ended December 31,
		2013	2012	2011
Federal income tax computed at the statutory rate		35.0%	35.0%	35.0%
Increase (reduction) in taxes resulting from:
	Tax-exempt interest	(1.1)%	(0.7)%	1.5%
	Mark-to-market on warrants	3.8%	(0.7)%	0.3%
	Change in valuation allowance	(12.6)%	(5.6)%	6.2%
	Change in uncertain tax positions	2.8%	(0.1)%	(1.0)%
	State income tax, net of federal benefit	2.0%	0.1%	0.0%
	Out-of-period adjustment	0.0%	(3.8)%	0.0%
	Foreign taxes	(0.8)%	(1.2)%	0.1%
	Basis difference in foreign subsidiary	11.4%	0.0%	0.0%
	Other	(0.6)%	(0.2)%	(1.0)%
Effective tax rate		39.9%	22.8%	41.1%

Deferred tax assets and liabilities

		As of December 31,
In millions		2013		2012
Deferred tax liabilities:
	Unearned premium revenue	$	220	$	241
	Deferral of cancellation of indebtedness income(1)		114		114
	Deferred acquisition costs		87		102
	Net unrealized gains in accumulated other comprehensive income		0		32
	Other		57		64
Total gross deferred tax liabilities			478		553
Deferred tax assets:
	Compensation and employee benefits		31		23
	Loss and loss adjustment expense reserves		85		112
	Net operating loss and tax credit carryforwards		917		441
	Capital loss carryforward and other-than-temporary impairments		93		183
	Net unrealized losses on insured derivatives		400		982
	Net losses on financial instruments at fair value and foreign exchange		47		98
	Net unrealized losses in accumulated other comprehensive income		30		0
	Alternative minimum tax credit carryforward		22		19
	Net deferred taxes on VIEs		55		40
Total gross deferred tax assets			1,680		1,898
	Valuation allowance		93		146
Net deferred tax asset		$	1,109	$	1,199
(1) Pursuant to Internal Revenue Code Section 108(i), cancellation of indebtedness income will be amortized ratably into taxable income over five years beginning in 2014.

Change in unrecognized tax benefit

In millions
Unrecognized tax benefit as of January 1, 2011		$	26
The gross amount of the increase/(decrease) in the UTB as a result of tax positions taken:
	During a prior year		21
The amounts of decreases in the UTB as a result of the applicable statute of limitations			0
Unrecognized tax benefit as of December 31, 2011		$	47
The gross amount of the increase/(decrease) in the UTB as a result of tax positions taken:
	During the current year		26
The amounts of decreases in the UTB related to settlements with taxing authorities			(26)
Unrecognized tax benefit as of December 31, 2012		$	47
The gross amount of the increase/(decrease) in the UTB as a result of tax positions taken:
	During the current year		18
The amounts of decreases in the UTB related to settlements with taxing authorities			0
Unrecognized tax benefit as of December 31, 2013		$	65