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Income Taxes | 9 Months Ended
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Sep. 30, 2018
Income Tax Disclosure [Abstract] |
Income Taxes |
Income Tax Rate Reconciliation
| Three Months Ended September 30, | Nine Months Ended September 30,
| 2018 | 2017 | 2018 | 2017
Tax provision at U.S. federal statutory rate [1] | $ | 112 |  | $ | 64 |  | $ | 333 |  | $ | 105 |
Tax-exempt interest | (16 | ) | (31 | ) | (50 | ) | (91 | )
Executive compensation | 1 |  | — |  | 8 |  | — |
Stock-based compensation | (3 | ) | (4 | ) | (5 | ) | (12 | )
Tax Reform | 11 |  | — |  | 13 |  | — |
Other | (2 | ) | 7 |  | (2 | ) | 3 |
Provision for income taxes | $ | 103 |  | $ | 36 |  | $ | 297 |  | $ | 5 |
[1]Due to the passage of Tax Reform on December 22, 2017, current and prior period federal statutory rates are reflected at 21% and 35% respectively.
Rollforward of Unrecognized Tax Benefits
| Three Months Ended September 30, | Nine Months Ended September 30,
| 2018 | 2017 | 2018 | 2017
Balance, beginning of period | $ | 9 |  | $ | 12 |  | $ | 9 |  | $ | 12 |
Gross increases - tax positions in prior period | 5 |  | — |  | 5 |  | — |
Gross decreases - tax positions in prior period | — |  | — |  | — |  | — |
Balance, end of period | $ | 14 |  | $ | 12 |  | $ | 14 |  | $ | 12 |
The Company's unrecognized tax benefits were increased by $5 for the three and nine months ended September 30, 2018 due to the filing of the Company's 2017 federal income tax return. The entire amount of unrecognized tax benefits, if recognized, would affect the effective tax rate in the period of the release. In addition, for the three and nine months ended September 30, 2018 the Company recorded a receivable of $5 related to a tax indemnification agreement associated with the sale of Talcott Resolution. The receivable is separate from the tax liability and is classified as an other asset on the balance sheet. For the three and nine months ended September 30, 2018, the Company recorded income tax expenses of $11 and $13, respectively, related to tax reform due to the filing of the Company's 2017 federal income tax return and finalization of the opening balance sheet for the Aetna Group Benefits acquisition as a lower corporate income tax rate (post acquisition) reduced the value of net deferred tax assets that were adjusted during the measurement period. The federal audits have been completed through 2013, and the Company is not currently under examination for any open years. Management believes that adequate provision has been made in the consolidated financial statements for any potential adjustments that may result from tax examinations and other tax-related matters for all open tax years. The Company classifies interest and penalties (if applicable) as income tax expense in the consolidated financial statements. The Company recognized no interest expense for the three and nine months ended September 30, 2018 and 2017. The Company had no interest payable as of September 30, 2018 and 2017. The Company does not believe it would be subject to any penalties in any open tax years and, therefore, has not recorded any accrual for penalties. Net deferred income taxes include the future tax benefits associated with the net operating loss carryover, foreign tax credit carryover and general business credit carryforward as shown in the table below.
Future Tax Benefits
| As of |
| September 30, 2018 | Expiration
| Carryover amount | Expected tax benefit, gross | Dates | Amount
Net operating loss carryover - U.S. | $ | 2,814 |  | $ | 591 |  | 2023 | - | 2036 | $ | 2,814 |
Net operating loss carryover - foreign | $ | 4 |  | $ | — |  | No expiration | $ | 4 |
Foreign tax credit carryover | $ | 5 |  | $ | 5 |  | 2023 | - | 2024 | $ | 5 |
General business credit carryover | $ | 4 |  | $ | 4 |  | 2031 | - | 2037 | $ | 4 |
Net Operating Loss Carryover U.S. Net Operating Losses ("NOLs") reflected above arose in taxable years prior to 2017 and are still subject to prior tax law which allows for carryback and limits the period over which carryforwards may be used to offset taxable income as shown in the above table. Utilization of the Company's loss carryovers is dependent upon the generation of sufficient future taxable income. Given the expected earnings of the Company going forward, including earnings of its property and casualty, group benefits and mutual fund businesses, the Company expects to generate sufficient taxable income in the future to utilize its net operating loss carryover. Although the Company projects there will be sufficient future taxable income to fully recover the remainder of the loss carryover, the Company's estimate of the likely realization may change over time. Tax Credit Carryovers Foreign Tax Credits and General Business Credits- These credits are available to offset regular federal income taxes from future taxable income. The use of these credits prior to expiration depends on the generation of sufficient taxable income to first utilize all U.S. net operating loss carryovers. However, the Company has purchased certain investments which allow for utilization of the foreign tax credits without first using the net operating loss carryover. Consequently, the Company believes it is more likely than not the foreign tax credit carryover will be fully realized. Accordingly, no valuation allowance has been provided. Alternative Minimum Tax Credit Carryovers- As of September 30, 2018, the Company had alternative minimum tax credit (AMT) carryovers, net of a sequestration fee payable, of $789, which are reflected as current income tax receivables within Other Assets in the accompanying condensed consolidated balance sheet. For the three and nine months ended September 30, 2018, the Company recorded a decrease in the AMT of $4 due to the filing of the 2017 federal income tax return as well as filings of the 2014, 2015 and 2016 amended federal income tax returns. AMT credits may be used to offset a regular tax liability for any taxable year beginning after December 31, 2017, and are refundable at an amount equal to 50 percent of the excess of the minimum tax credit for the taxable year over the amount of the credit allowable for the year against regular tax liability. Any remaining credits not used against regular tax liability are refundable in the 2021 tax year to be collected in 2022. The sequestration fee applies to refunds of AMT credits but does not apply if those credits are used against regular tax liability. As of September 30, 2018, the Company's AMT credit carryover was net of an estimated sequestration fee payable of $52, but the amount of the fee that is ultimately payable is subject to change depending on the level and timing of future taxable income and any subsequent changes in the sequestration rate. For the three and nine months ended September 30, 2018, the Company recorded income tax benefits of $0 and $3, respectively, related to the reduction of the sequestration rate from 6.6 percent to 6.2 percent.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 + Details
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