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Income Tax
 12 Months Ended
Dec. 31, 2012
Income Tax [Abstract]  
Income Tax

Note 9 INCOME TAX

Pre-tax income for the years ended December 31, 2012, 2011 and 2010 consists of the following (dollars in thousands):

   2012 2011 2010 
Pre-tax income - U.S.$ 644,219 $ 400,278 $ 500,938 
Pre-tax income - foreign  275,004   363,293   305,243 
  Total pre-tax income$ 919,223 $ 763,571 $ 806,181 

The provision for income tax expense for the years ended December 31, 2012, 2011 and 2010 consists of the following (dollars in thousands):
           
            
   2012 2011 2010 
Current income tax expense (benefit):         
U.S.$ 52,378 $ (1,605) $ (217,970) 
Foreign  36,840   50,138   63,233 
 Total current  89,218   48,533   (154,737) 
            
Deferred income tax expense (benefit):         
U.S.  183,929   155,895   392,905 
Foreign  14,183   13,098   32,271 
 Total deferred   198,112   168,993   425,176 
            
  Total provision for income taxes$ 287,330 $ 217,526 $ 270,439 

Provision for income tax expense differed from the amounts computed by applying the U.S. federal income tax statutory rate of 35% to pre-tax income as a result of the following for the years ended December 31, 2012, 2011 and 2010 (dollars in thousands):
              
              
   2012 2011 2010 
               
Tax provision at U.S. statutory rate$ 321,728  $ 267,250  $ 282,163  
Increase (decrease) in income taxes resulting from:            
 Foreign tax rate differing from U.S. tax rate  (14,705)    (9,681)    (7,544)  
 Differences in tax basis in foreign jurisdictions  (21,086)    (11,584)    (5,210)  
 Deferred tax valuation allowance  635    4,147    (11)  
 Amounts related to tax audit contingencies  2,260    5,562    3,942  
 Corporate rate changes - Canada  1,374    (40,593)    --  
 Corporate rate changes - other  (1,070)    (1,933)    --  
 Subpart F  13,571    9,340    --  
 Foreign tax credits  (7,808)    (3,546)    --  
 Return to provision adjustments  (7,351)    (1,863)    (2,322)  
 Other, net  (218)    427    (579)  
  Total provision for income taxes$ 287,330  $ 217,526  $ 270,439  
               
Effective tax rate  31.3%   28.5%   33.5% 

The American Taxpayer Relief Act of 2012 (the “Act”) was signed into law on January 2, 2013. The Act retroactively restored several expired business tax provisions, including the active financing exception. Because a change in tax law is accounted for in the period of enactment, the retroactive effect of the Act on the Company's U.S. federal taxes for 2012 of a benefit of approximately $1.0 million will be recognized in 2013.

In 2011, the Company recognized an income tax benefit associated with previously enacted reductions in federal statutory tax rates and adjustments to various provincial statutory tax rates in Canada. This 2007 tax rate change enactment included phased in effective dates through 2012. These adjustments in tax rates should have been recognized beginning in 2007, when the Canadian tax legislation was enacted. The Company recorded a cumulative tax benefit adjustment of $30.7 million in 2011 in “Provision for income taxes” to correct the deferred tax liabilities that were not properly recorded. If the impact of the tax rates had been recorded in the prior years, the Company estimates that it would have recognized approximately $3.0 million, $6.0 million, $9.0 million and $12.0 million of tax benefit in the years ended 2007, 2008, 2009 and 2010, respectively.

Total income taxes for the years ended December 31, 2012, 2011 and 2010 were as follows (dollars in thousands):
             
    2012 2011 2010 
Provision for income taxes$ 287,330 $ 217,526 $ 270,439 
 Income tax from OCI and additional paid-in-capital:         
  Net unrealized holding gain (loss) on debt and equity securities recognized for financial reporting purposes         
     246,682   275,975   267,445 
  Exercise of stock options  (2,902)   (4,934)   2,255 
  Foreign currency translation   (921)   1,579   (19,633) 
  Unrealized pension and post retirement  (2,779)   (8,581)   911 
   Total income taxes provided$ 527,410 $ 481,565 $ 521,417 

The tax effects of temporary differences that give rise to significant portions of the deferred income tax asset and liabilities at December 31, 2012 and 2011, are presented in the following tables (dollars in thousands):
            
             
    2012 2011    
Deferred income tax assets:         
 Nondeductible accruals$ 77,116 $ 51,101    
 Differences between tax and financial reporting amounts concerning certain reinsurance transactions         
     17,054   17,097    
 Investment income differences  109,275   98,496    
 Deferred acquisition costs capitalized for tax  91,886   67,006    
 Net operating loss carryforward  159,821   174,503    
 Differences in foreign currency translation  621   --    
 Capital loss and tax credit carryforwards  23,595   41,737    
  Subtotal  479,368   449,940    
Valuation allowance  (10,100)   (8,630)    
 Total deferred income tax assets  469,268   441,310    
             
Deferred income tax liabilities:         
 Deferred acquisition costs capitalized for financial reporting  1,082,394   1,047,748    
 Differences between tax and financial reporting amounts concerning certain reinsurance transactions         
     637,002   473,767    
 Differences in the tax basis of cash and invested assets  832,940   574,738    
 Investment income differences  12,719   13,499    
 Differences in foreign currency translation  --   8,604    
  Total deferred income tax liabilities  2,565,055   2,118,356    
             
   Net deferred income tax liabilities$ 2,095,787 $ 1,677,046    
             
Balance sheet presentation of net deferred income tax liabilities:         
 Included in other assets$ 24,714 $ 2,788    
 Included in deferred income taxes  2,120,501   1,679,834    
   Net deferred income tax liabilities$ 2,095,787 $ 1,677,046    

As of December 31, 2012, a valuation allowance for deferred tax assets of approximately $10.1 million was provided on the total deferred tax assets of RGA Holdings Limited UK, RGA Technology Partners, Inc. (“RTP”) Canadian Branch, RTP UK Branch, RGA International German Branch, RGA International Netherlands Branch, RGA International Poland Branch and on RGA's deferred tax asset related to share expense for foreign entities. As of December 31, 2011 a valuation allowance for deferred tax assets of approximately $8.6 million was provided on the total deferred tax assets of RGA Holdings Limited UK, RTP Canadian Branch, RTP UK Branch, RGA International German Branch, RGA International Netherlands Branch and on RGA's deferred tax asset related to share expense for foreign entities. The Company utilizes valuation allowances when it believes, based on the weight of the available evidence, that it is more likely than not that the deferred income taxes will not be realized.

The earnings of substantially all of the Company's foreign subsidiaries have been indefinitely reinvested in foreign operations. A provision of $4.2 million has been made for U.S. taxes on repatriation. No other provision has been made for U.S. tax or foreign withholding taxes that may be applicable upon any repatriation or sale. The determination of the unrecognized deferred tax liability for temporary differences related to investments in the Company's foreign subsidiaries is not practicable. At December 31, 2012 and 2011, the financial reporting basis in excess of the tax basis for which no deferred taxes have been recognized was approximately $663.9 million and $777.3 million, respectively.

During 2012, 2011, and 2010, the Company received federal and foreign income tax refunds of approximately $16.2 million, $11.1 million and $37.5 million, respectively. The Company made cash income tax payments of approximately $113.2 million, $140.1 million and $48.0 million in 2012, 2011 and 2010, respectively. At December 31, 2012 and 2011, the Company recognized gross deferred tax assets associated with net operating losses of approximately $555.4 million and $562.7 million, respectively, $293.7 million of which will begin to expire in 2025. The remaining net operating losses have either a valuation allowance or indefinite carryforward periods. However, these net operating losses, other than the net operating losses for which there is a valuation allowance, are expected to be utilized in the normal course of business during the period allowed for carryforwards and in any event, are not expected to be lost, due to the application of tax planning strategies that management would utilize.

The Company files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. The Company is under continuous examination by the Internal Revenue Service and is subject to audit by taxing authorities in other foreign jurisdictions in which the Company has significant business operations. The income tax years under examination vary by jurisdiction. With a few exceptions, the Company is no longer subject to U.S. federal, state and foreign tax examinations by tax authorities for years prior to 2006.

As of December 31, 2012, the Company's total amount of unrecognized tax benefits was $245.6 million and the total amount of unrecognized tax benefits that would affect the effective tax rate, if recognized, was $30.8 million. It is reasonably possible that the Company's liability for unrecognized tax benefits will decrease by approximately $3.1 million with regards to the items affecting the effective rate over the next 12 months. The reduction relates to the expiration of the statute of limitations.

A reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2012, 2011 and 2010, is as follows (dollars in thousands):

  Total Unrecognized Tax Benefits 
  2012 2011 2010 
Beginning balance, January 1$ 194,260 $ 182,354 $ 221,040 
Additions for tax positions of prior years  47,438   7,968   17,255 
Reductions for tax positions of prior years  --   --   (59,879) 
Additions for tax positions of current year  3,938   3,938   3,938 
Ending balance, December 31$ 245,636 $ 194,260 $ 182,354 

The Company recognized interest expense associated with uncertain tax positions in 2012 and 2011 of $9.9 million and $7.1 million, respectively, and a benefit in interest expense of $1.4 million in 2010. As of December 31, 2012 and 2011, the Company had $49.6 million and $39.8 million, respectively, of accrued interest related to unrecognized tax benefits.