Federal Income Taxes

12 Months Ended

Dec. 31, 2015

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



($ in thousands)	2015			2014		2013
Tax at statutory rate of 35%	$	81,442		68,996		50,331
Tax-advantaged interest	(13,164		)	(12,926	)	(12,718	)
Dividends received deduction	(1,817		)	(1,121	)	(1,174	)
Other	370			355		(52	)
Federal income tax expense from continuing operations	$	66,831		55,304		36,387

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



($ in thousands)	2015		2014
Deferred tax assets:
Net loss reserve discounting	$	74,436	84,502
Net unearned premiums	72,057		66,470
Employee benefits	30,432		33,721
Long-term incentive compensation plans	15,551		13,625
Temporary investment write-downs	5,419		3,939
Net operating loss	1,454		2,136
Alternative minimum tax credits	—		7,400
Other	8,132		9,237
Total deferred tax assets	207,481		221,030
Deferred tax liabilities:
Deferred policy acquisition costs	72,481		63,242
Unrealized gains on investment securities	24,228		43,289
Other investment-related items, net	5,566		5,088
Accelerated depreciation and amortization	12,510		10,962
Total deferred tax liabilities	114,785		122,581
Net deferred federal income tax asset	$	92,696	98,449

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, 2015 or 2014.

As of December 31, 2015, we had federal tax NOL carryforwards of $4.2 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	$	75	26
2030	3,999		1,400
2031	79		28
Total NOL carryforwards	$	4,153	1,454

Stockholders' equity reflects tax benefits related to compensation expense deductions for share-based compensation awards of $22.0 million at December 31, 2015, $20.2 million at December 31, 2014, and $19.2 million at December 31, 2013.

We have analyzed our tax positions in all open tax years, which as of December 31, 2015 were 2012 through 2014. The 2013 tax year is currently under audit. We do not have unrecognized tax expense or benefit as of December 31, 2015.

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" on our Consolidated Statements of Income.