Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Text Block [Abstract]

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

	Years Ended December 31,
In millions	2018		2017		2016
Domestic	$	(287)	$	(638)	$	(362)
Foreign		(9)		(23)		23
Income (loss) before income taxes	$	(296)	$	(661)	$	(339)

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

		Years Ended December 31,
In millions		2018		2017		2016
Current taxes:
	Federal	$	-	$	4	$	4
	State		1		-		1
Deferred taxes:
	Federal		(1)		945		(8)
	Foreign		-		(5)		2
Provision (benefit) for income taxes			-		944		(1)
Income taxes charged (credited) to shareholders' equity related to:
	Change in unrealized gains (losses) on AFS securities		5		(1)		8
	Change in AFS securities with OTTI		-		1		5
	Change in foreign currency translation		-		21		1
Total income taxes charged (credited) to shareholders' equity			5		21		14
Total effect of income taxes		$	5	$	965	$	13

Income tax rate reconciliation from statutory to effective tax rate

		Years Ended December 31,
		2018	2017	2016
Federal income tax computed at the statutory rate		21.0%	35.0%	35.0%
Increase (reduction) in taxes resulting from:
	Tax Reform/Change in Tax Rate	0.0%	(71.4)%	0.0%
	Mark-to-market on warrants	(0.7)%	1.4%	(1.5)%
	Change in valuation allowance	(20.9)%	(116.9)%	(2.2)%
	Nondeductible compensation	0.0%	0.0%	(1.4)%
	Deferred inventory adjustments	(1.0)%	0.8%	3.6%
	Foreign Taxes	0.0%	8.2%	0.0%
	Basis difference in foreign subsidiary	0.0%	0.0%	(33.0)%
	Other	1.6%	0.1%	(0.3)%
Effective tax rate		0.0%	(142.8)%	0.2%

Deferred tax assets and liabilities

		As of
In millions		December 31, 2018		December 31, 2017
Deferred tax liabilities:
	Unearned premium revenue	$	59	$	75
	Deferral of cancellation of indebtedness income		-		14
	Deferred acquisition costs		16		21
	Partnership basis difference		3		11
	Basis difference in foreign subsidiaries		-		1
	Net deferred taxes on VIEs		55		38
Total gross deferred tax liabilities			133		160
Deferred tax assets:
	Compensation and employee benefits		7		11
	Accrued interest		158		131
	Loss and loss adjustment expense reserves		135		87
	Net operating loss		512		582
	Foreign tax credits		62		62
	Other-than-temporary impairments		22		22
	Net unrealized losses on insured derivatives		8		14
	Net losses on financial instruments at fair value and foreign exchange		30		13
	Net unrealized losses in accumulated other comprehensive income		32		5
	Other		1		3
Total gross deferred tax assets			967		930
	Valuation allowance		834		770
Net deferred tax asset		$	-	$	-