Taxation (Tables)

12 Months Ended

Dec. 31, 2017

Income Tax Disclosure [Abstract]

Schedule of components of income tax provision

The following table presents pre-tax income and the related provision for income taxes:

	Year Ended December 31
(in millions of U.S. dollars)	2017			2016			2015
Pre-tax income:
Switzerland	$	527		$	766		$	469
Outside Switzerland	3,195			4,184			2,827
Total pre-tax income	$	3,722		$	4,950		$	3,296
Provision for income taxes
Current tax expense:
Switzerland	$	46		$	97		$	38
Outside Switzerland	313			727			266
Total current tax expense	359			824			304
Deferred tax expense (benefit):
Switzerland	2			(27		)	4
Outside Switzerland	(500		)	18			154
Total deferred tax expense (benefit)	(498		)	(9		)	158
Provision for income taxes	$	(139	)	$	815		$	462

Reconciliation schedule of the difference between the provision for income taxes and the expected tax provision at the Swiss statutory income tax rate

The following table presents a reconciliation of the difference between the provision for income taxes and the expected tax provision at the Swiss statutory income tax rate:

	Year Ended December 31
(in millions of U.S. dollars)	2017			2016			2015
Expected tax provision at Swiss statutory tax rate	$	291		$	388		$	258
Permanent differences:
Taxes on earnings subject to rate other than Swiss statutory rate	263			582			193
Tax-exempt interest and dividends received deduction, net of proration	(199		)	(200		)	(32		)
Net withholding taxes	30			20			35
Excess tax benefit on share-based compensation	(48		)	—			—
Impact of 2017 Tax Act	(450		)	—			—
Corporate owned life insurance	(37		)	—			—
Other	11			25			8
Total provision for income taxes	$	(139	)	$	815		$	462

Schedule of the components of net deferred tax assets

The following table presents the components of net deferred tax assets and liabilities:

	December 31			December 31
(in millions of U.S. dollars)	2017			2016
Deferred tax assets:
Loss reserve discount	$	715		$	1,269
Unearned premiums reserve	231			498
Foreign tax credits	340			2,115
Provision for uncollectible balances	45			72
Loss carry-forwards	90			92
Debt related amounts	77			219
Compensation related amounts	260			449
Cumulative translation adjustments	30			59
Other, net	70			69
Total deferred tax assets	1,858			4,842
Deferred tax liabilities:
Deferred policy acquisition costs	635			842
Other intangible assets, including VOBA	1,437			2,352
Un-remitted foreign earnings	66			2,001
Investments	53			406
Unrealized appreciation on investments	184			60
Depreciation	83			91
Total deferred tax liabilities	2,458			5,752
Valuation allowance	99			78
Net deferred tax assets (liabilities)	$	(699	)	$	(988	)

Reconciliation schedule of unrecognized tax benefits

The following table presents a reconciliation of the beginning and ending amount of gross unrecognized tax benefits:

	December 31			December 31
(in millions of U.S. dollars)	2017			2016
Balance, beginning of year	$	17		$	16
Additions based on tax positions related to the current year	3			3
Additions based on tax positions related to prior years (1)	—			2
Reductions for tax positions of prior years	(4		)	(4		)
Reductions for the lapse of the applicable statutes of limitations	(3		)	—
Balance, end of year	$	13		$	17

⁽¹⁾ Assumed in connection with the Chubb Corp acquisition in 2016.