INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2013

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:

YEARS ENDED DECEMBER 31	2013		2012			2011
(in millions)
Income (loss) before income taxes:
U.S.	$	183.5	$	(99.1	)	$	(13.3	)
Non-U.S.		145.6		127.8			34.9
	$	329.1	$	28.7		$	21.6

Components of Income Tax Expense

Income tax expense (benefit) includes the following components:

YEARS ENDED DECEMBER 31	2013		2012			2011
(in millions)
Current:
U.S.	$	8.0	$	2.3		$	(0.6	)
Non-U.S.		0.6		16.1			—
Subtotal		8.6		18.4			(0.6	)
Deferred:
U.S.		52.9		(42.7	)		(20.3	)
Non-U.S.		21.9		6.9			11.0
Subtotal		74.8		(35.8	)		(9.3	)
Total income tax expense (benefit)	$	83.4	$	(17.4	)	$	(9.9	)

Details of Income Tax Difference from Statutory Rate

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

YEARS ENDED DECEMBER 31	2013			2012			2011
(in millions)
Expected income tax expense	$	115.2		$	10.0		$	7.5
Tax difference related to investment disposals and maturities		(17.5	)		(14.3	)		(9.7	)
Effect of foreign operations		(10.8	)		(3.5	)		(1.5	)
Dividend received deduction		(2.5	)		(2.8	)		(1.1	)
Tax-exempt interest		(1.7	)		(1.5	)		(2.0	)
Nondeductible expenses		1.1			2.8			4.7
Change in foreign tax rate		(0.7	)		(0.4	)		—
Change in valuation allowance		—			(7.7	)		(7.5	)
Other, net		0.3			—			(0.3	)
Income tax expense (benefit)	$	83.4		$	(17.4	)	$	(9.9	)
Effective tax rate		25.3	%		(60.6	)%		(45.8	)%

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	2013		2012
(in millions)
Deferred tax assets
Loss, LAE and unearned premium reserves, net	$	185.0	$	190.6
Tax credit carryforwards		123.1		126.8
Operating loss carryforwards		64.5		75.1
Employee benefit plans		38.2		56.4
Deferred Lloyd’s underwriting losses		—		13.5
Other		74.9		60.7
		485.7		523.1
Less: Valuation Allowance		2.9		—
		482.8		523.1
Deferred tax liabilities
Deferred acquisition costs		123.5		115.8
Software capitalization		30.1		31.4
Deferred Lloyd’s underwriting income		13.8		—
Investments, net		8.4		43.3
Deferred foreign sourced income		5.1		8.0
Other		62.2		57.0
		243.1		255.5
Net deferred tax asset	$	239.7	$	267.6

Reconciliation of Beginning and Ending Liability for Uncertain Tax Position

The table below provides a reconciliation of the beginning and ending liability for uncertain tax position as follows:

YEARS ENDED DECEMBER 31	2013			2012		2011
(in millions)
Liability at beginning and end of year, net	$	0.8		$	0.8	$	0.8
Additions for tax positions of prior years		5.4			—		—
Deferred deductions		(4.8	)		—		—
Liability at end of year, net	$	1.4		$	0.8	$	0.8