Federal Income Taxes

12 Months Ended

Dec. 31, 2014

(a) A reconciliation of federal income tax on income at the corporate rate to the effective tax rate is as follows:



($ in thousands)	2014			2013		2012
Tax at statutory rate of 35%	$	68,996		50,331		13,172
Tax-advantaged interest	(12,926		)	(12,718	)	(13,285	)
Dividends received deduction	(1,121		)	(1,174	)	(1,260	)
Other	355			(52	)	1,045
Federal income tax expense (benefit) from continuing operations	$	55,304		36,387		(328	)

(b) The tax effects of the significant temporary differences that give rise to deferred tax assets and liabilities are as follows:



($ in thousands)	2014		2013
Deferred tax assets:
Net loss reserve discounting	$	84,502	87,967
Net unearned premiums	66,470		64,167
Employee benefits	33,721		19,912
Long-term incentive compensation plans	13,625		12,904
Temporary investment write-downs	3,939		7,586
Net operating loss	2,136		2,818
Alternative minimum tax and other business tax credits	7,826		17,042
Other	8,811		10,088
Total deferred tax assets	221,030		222,484
Deferred tax liabilities:
Deferred policy acquisition costs	63,242		59,164
Unrealized gains on investment securities	43,289		31,345
Other investment-related items, net	5,088		618
Accelerated depreciation and amortization	10,962		8,744
Total deferred tax liabilities	122,581		99,871
Net deferred federal income tax asset	$	98,449	122,613

After considering all evidence, both positive and negative, with respect to our federal tax loss carryback availability, expected levels of pre-tax financial statement income, and federal taxable income, we believe it is more likely than not that the existing deductible temporary differences will reverse during periods in which we generate net federal taxable income or have adequate federal carryback availability. As a result, we have no valuation allowance recognized for federal deferred tax assets at December 31, 2014 or 2013.

As of December 31, 2014, we had federal tax net operating loss carryforwards (“NOL”) of $6.1 million. These NOLs, which are subject to an annual limitation of $1.9 million, will expire between 2029 and 2031 as follows:



($ in thousands)	Gross NOL		Tax Effected NOL
2029	$	2,024	708
2030	3,999		1,400
2031	79		28
Total NOL carryforwards	6,102		2,136

Our alternative minimum tax credits, which are available to offset future regular taxable income, can be carried forward for an unlimited period of time.

Stockholders' equity reflects tax benefits related to compensation expense deductions for share-based compensation awards of $20.2 million at December 31, 2014, $19.2 million at December 31, 2013, and $17.7 million at December 31, 2012.

We have analyzed our tax positions in all open tax years, which as of December 31, 2014 were 2011 through 2013. The IRS recently completed a limited scope examination of the 2007 through 2010 tax years, which resulted in no material changes. We do not have unrecognized tax expense or benefit as of December 31, 2014.

In addition, we believe our tax positions will more likely than not be sustained upon examination, including related appeals or litigation. In the event we had a tax position that did not meet the more likely than not criteria, any tax, interest, and penalties incurred related to such a position would be reflected in "Total federal income tax expense (benefit)" on our Consolidated Statements of Income.

- 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.

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