INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2012

Components Of Income Before Income Taxes

A summary of the components of income before income taxes and income tax expense (benefit) in the Consolidated Statements of Income are shown below:

FOR THE YEARS ENDED DECEMBER 31	2012			2011			2010
(in millions)
Income (loss) before income taxes:
U.S.	$	(99.1	)	$	(13.3	)	$	205.6
Non-U.S.		127.8			34.9			—
	$	28.7		$	21.6		$	205.6

Components Of Income Tax Expense

Income tax expense (benefit) includes the following components:

FOR THE YEARS ENDED DECEMBER 31	2012			2011			2010
(in millions)
Current:
U.S.	$	2.3		$	(0.6	)	$	5.7
Non-U.S.		16.1			—			—
Subtotal		18.4			(0.6	)		5.7
Deferred:
U.S.		(42.7	)		(20.3	)		50.3
Non-U.S.		6.9			11.0			—
Subtotal		(35.8	)		(9.3	)		50.3
Total income tax expense (benefit)	$	(17.4	)	$	(9.9	)	$	56.0

Details Of Income Tax Difference From The Statutory Rate

The sources of the difference and the tax effects of each were as follows:

FOR THE YEARS ENDED DECEMBER 31	2012		2011		2010
(in millions)
Expected income tax expense	$	10.0	$	7.5	$	72.0
Tax difference related to investment disposals and maturities		(14.3)		(9.7)		(3.2)
Change in valuation allowance		(7.7)		(7.5)		(57.1)
Effect of foreign operations		(3.9)		(1.5)		—
Dividend received deduction		(2.8)		(1.1)		(0.8)
Nondeductible expenses		2.8		4.7		0.5
Expired capital loss carryforward		—		—		47.4
Tax-exempt interest		(1.5)		(2.0)		(2.2)
Tax credits		—		(0.2)		(0.4)
Other, net		—		(0.1)		(0.2)
Income tax expense (benefit)	$	(17.4)	$	(9.9)	$	56.0
Effective tax rate		(60.6)%		(45.8)%		27.2%

Components Of Deferred Tax Assets And Liabilities

The following are the components of the Company’s deferred tax assets and liabilities (excluding those associated with its discontinued operations).

DECEMBER 31	2012		2011
(in millions)
Deferred tax assets
Loss, LAE and unearned premium reserves, net	$	190.6	$	178.9
Tax credit carryforwards		126.8		112.2
Operating loss carryforwards		75.1		79.8
Employee benefit plans		56.4		45.6
Deferred Lloyd’s underwriting losses		13.5		18.6
Investments, net		—		9.3
Other		60.7		63.0
		523.1		507.4
Less: Valuation allowance		—		35.9
		523.1		471.5
Deferred tax liabilities
Deferred policy acquisition costs		115.8		109.7
Investments, net		43.3		—
Software capitalization		31.4		29.9
Deferred foreign sourced income		8.0		—
Other		57.0		57.9
		255.5		197.5
Net deferred tax asset	$	267.6	$	274.0