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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The significant components of deferred tax assets and liabilities included in the consolidated balance sheets at December 31 were as follows:
(Dollars in millions)At December 31,
20242023
Deferred tax assets:  
Unearned premiums$193 $165 
Loss and loss expense reserves141 120 
Net operating loss on international earnings19 26 
Foreign tax credits23 — 
Other80 70 
Total gross deferred tax assets456 381 
Deferred tax liabilities:  
Investment gains and other, net 1,434 1,290 
Deferred acquisition costs212 184 
Life policy reserves96 104 
Deferred international earnings56 21 
Investments55 35 
Other79 71 
Total gross deferred tax liabilities1,932 1,705 
Net deferred income tax liability$1,476 $1,324 
 
Deferred tax assets and liabilities reflect temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount recognized for tax purposes.

Deferred tax assets are reduced by a valuation allowance when management believes it is more likely than not that some, or all, of the deferred tax assets will not be realized. After considering all positive and negative evidence of taxable income in the carryback and carryforward periods as permitted by law, we believe it is more likely than not that all of the deferred tax assets on our U.S. domestic operations will be realized. As a result, we have no valuation allowance at December 31, 2024 and 2023, for our U.S. domestic operations.

For financial reporting purposes, income (loss) before income taxes includes the following components:
(Dollars in millions)For the years ended December 31,
202420232022
United States$2,766 $2,195 $(719)
International92 81 25 
Total income (loss) before income taxes$2,858 $2,276 $(694)
The provision (benefit) for income taxes consists of:
(Dollars in millions)For the years ended December 31,
202420232022
Provision (benefit) for income taxes:
Current – United States federal$445 $209 $148 
            International4 1 — 
Total current449 210 148 
Deferred – United States federal101 216 (355)
                     International16 7 — 
Total deferred117 223 (355)
Total provision (benefit) for income taxes$566 $433 $(207)

The differences between the 21% statutory federal income tax rate and our effective income tax rate were as follows:
(Dollars in millions)Years ended December 31,
202420232022
Tax at statutory rate:$600 21.0 %$478 21.0 %$(146)21.0 %
Increase (decrease) resulting from:     
Tax-exempt income from municipal bonds(21)(0.7)(21)(0.9)(20)2.9 
Dividend received exclusion(22)(0.8)(22)(1.0)(21)3.0 
Release of unrecognized tax benefit— — — — (34)4.9 
Other9 0.3 (2)(0.1)14 (2.0)
Provision (benefit) for income taxes$566 19.8 %$433 19.0 %$(207)29.8 %
 
The provision (benefit) for federal income taxes is based upon the filing of a consolidated income tax return for the company and its domestic subsidiaries within the United States. We had no operating or capital loss carryforwards in the United States at December 31, 2024 and 2023. As more fully discussed below, Cincinnati Global, has operating loss carryforwards in the United Kingdom.

Unrecognized Tax Benefits
During 2022, we received favorable guidance from the Internal Revenue Service (IRS) supporting our tax position related to our unrecognized tax benefit set up in 2018. As a result of this guidance, we released our $34 million gross unrecognized tax benefit liability at December 31, 2022. The $34 million release was recognized as an additional income tax benefit and is shown separately in our effective income tax rate reconciliation. We had no unrecognized tax benefit at December 31, 2024 or 2023.

During the third quarter of 2024, we were notified by the IRS that the audit of tax years ended December 31, 2021 and 2020, has concluded. Despite the closure, the statute of limitations remains open through September 2025 for these two tax years. The statute of limitations is closed for tax years ended December 31, 2019 and earlier and is open for tax years ended December 31, 2022 and later.

In addition to our IRS filings, we file income tax returns with immaterial amounts in various state jurisdictions and record these amounts in our provision for income taxes for both current and deferred taxes. The statute of limitations for state income tax purposes has closed for tax years ended December 31, 2020 and earlier.

Cincinnati Global operates in the United Kingdom and as such, is subject to tax in that jurisdiction. The statute of limitations for tax return review by His Majesty’s Revenue and Customs (HMRC) has closed for tax returns with a submission deadline ended December 31, 2022, and earlier. There are currently no tax returns under review by HMRC.

Income taxes paid in our consolidated statements of cash flows are shown net of refunds received. We received no refund in 2024, a $2 million refund in 2023 and no refund in 2022.
Cincinnati Global
Deferred tax assets are reduced by a valuation allowance when management believes it is more likely than not that some, or all, of the deferred tax assets will not be realized. After considering all positive and negative evidence of taxable income in the carryback and carryforward periods as permitted by law, we believe it is more likely than not that all of the deferred tax assets of Cincinnati Global will be realized. As a result, we had no valuation allowance at December 31, 2024 or 2023. We had a valuation allowance of $31 million at December 31, 2022.

The following is a tabular reconciliation of the total amounts of our Cincinnati Global valuation allowance:
(Dollars in millions)Years ended December 31,
202420232022
Valuation allowance, January 1$— $31 $53 
Current year operations— (31)(22)
Valuation allowance, December 31$— $— $31 

Cincinnati Global had no operating loss carryforwards in the United States and $78 million in the United Kingdom at December 31, 2024, and none in the United States and $100 million in the United Kingdom at December 31, 2023. These Cincinnati Global losses can only be utilized within the Cincinnati Global group in both the United States and in the United Kingdom and cannot offset the income of our domestic operations in the United States.