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Income Taxes | 9 Months Ended
--- | ---
Sep. 30, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | 13. INCOME TAXES Income Tax Expense
Income Tax Rate Reconciliation
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2020 | 2019 |  | 2020 | 2019
Tax provision at U.S. federal statutory rate | $ | 111 |  | $ | 138 |  |  | $ | 308 |  | $ | 396 |
Tax-exempt interest | (12) |  | (14) |  |  | (36) |  | (43) |
Dividends received deduction ("DRD") | (4) |  | (3) |  |  | (5) |  | (5) |
Executive compensation | 1 |  | — |  |  | 6 |  | 5 |
Increase in deferred tax valuation allowance | 6 |  | — |  |  | 19 |  | — |
Stock-based compensation | — |  | (3) |  |  | (1) |  | (7) |
Sale of business | (8) |  | — |  |  | (8) |  | — |
Tax credits | (4) |  | — |  |  | (4) |  | — |
Carryback benefit | (11) |  | — |  |  | (11) |  | — |
Other | (6) |  | — |  |  | — |  | 1 |
Provision for income taxes | $ | 73 |  | $ | 118 |  |  | $ | 268 |  | $ | 347 |
Uncertain Tax Positions
Rollforward of Unrecognized Tax Benefits
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2020 | 2019 |  | 2020 | 2019
Balance, beginning of period | $ | 14 |  | $ | 14 |  |  | $ | 14 |  | $ | 14 |
Gross increases - tax positions in prior period | — |  | — |  |  | — |  | — |
Gross decreases - tax positions in prior period | — |  | — |  |  | — |  | — |
Gross increases - tax positions in current period | 1 |  | — |  |  | 1 |  | — |
Balance, end of period | $ | 15 |  | $ | 14 |  |  | $ | 15 |  | $ | 14 |
The entire amount of unrecognized tax benefits, if recognized, would affect the effective tax rate in the period of the release. Other Tax Matters On March 27, 2020, as part of the business stimulus package in response to the COVID-19 pandemic, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security ("CARES") Act. The CARES Act established new tax provisions including, but not limited to: (1) five-year carryback of net operating losses ("NOLs") generated in 2018, 2019 and 2020; (2) accelerated refund of alternative minimum tax ("AMT") credit carryforwards; and (3) retroactive changes to allow accelerated depreciation for certain depreciable property. The legislation resulted in a benefit of $6 related to the ability to carryback non-insurance losses to recover taxes paid in prior years as described below. The changes to AMT recovery periods do not impact the Company due to the fact that the Company was already expecting to receive a refund or reduction of regular tax payable for all the remaining AMT credits in 2020. For the period ending September 30, 2020 the Company recorded a tax benefit of $11 related to the expected carryback of losses from the Navigators Group 2019 pre-acquisition tax return to recover taxes paid in prior years at the previous statutory tax rate of 35%, of which $6 was due to the non-insurance carryback provision of the CARES Act. For the three and nine months ended September 30, 2020, the Company recorded a tax benefit of $8 related to the excess tax over GAAP basis on the sale of the Continental Europe Operations. For discussion of this transaction, refer to Note 2 - Business Acquisition and Disposition. In July of 2020, the Company received a $206 refund of AMT credits including $1 of interest, with the remaining balance of AMT credits to be utilized against 2020 federal estimated tax payments. For the period ending September 30, 2020, the Company has utilized all US net operating loss carryforwards as a reduction of 2020 current tax liability. The Company has foreign net operating losses of $11 for which a valuation allowance of $11 has been established. While the foreign NOLs do not expire, this assessment reflects uncertainty in the Company's ability to generate sufficient taxable income in the near term in those specific jurisdictions. Management has assessed the need for a valuation allowance against its deferred tax assets based on tax character and jurisdiction. In making the assessment, management considered future taxable temporary difference reversals, future taxable income exclusive of reversing temporary differences and carryovers, taxable income in open carry back years and other tax planning strategies. From time to time, tax planning strategies could include holding a portion of debt securities with market value losses until recovery, altering the level of tax exempt securities held, making investments which have specific tax characteristics, and business considerations such as asset-liability matching. Management views such tax planning strategies as prudent and feasible and would implement them, if necessary, to realize the deferred tax assets. The federal audits for the Company have been completed through 2013, and the Company is not currently under federal examination for any open years. The statute of limitations is closed through the 2015 tax year with the exception of NOL carryforwards utilized in open tax years. Navigators Group is currently under federal audit for the 2016 year and has completed examinations through 2015. Management believes that adequate provision has been made in the Company's Condensed Consolidated Financial Statements for any potential adjustments that may result from tax examinations and other tax-related matters for all open tax years.

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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://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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