Federal Income Taxes

12 Months Ended

Dec. 31, 2016

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



($ in thousands)	2016			2015		2014
Tax at statutory rate of 35%	$	76,984		81,442		68,996
Tax-advantaged interest	(12,126		)	(13,164	)	(12,926	)
Dividends received deduction	(1,114		)	(1,817	)	(1,121	)
Other	(2,284		)	370		355
Federal income tax expense from continuing operations	$	61,460		66,831		55,304

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



($ in thousands)	2016		2015
Deferred tax assets:
Net loss reserve discounting	$	70,065	74,436
Net unearned premiums	78,201		72,057
Employee benefits	17,881		30,432
Long-term incentive compensation plans	17,750		15,551
Temporary investment write-downs	2,475		5,419
Other investment related items, net	1,484		—
Net operating loss	771		1,454
Other	8,344		8,132
Total deferred tax assets	196,971		207,481
Deferred tax liabilities:
Deferred policy acquisition costs	75,310		72,481
Unrealized gains on investment securities	22,681		24,228
Other investment-related items, net	—		5,566
Accelerated depreciation and amortization	14,140		12,510
Total deferred tax liabilities	112,131		114,785
Net deferred federal income tax asset	$	84,840	92,696

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, 2016 or 2015.

As of December 31, 2016, we had federal tax net operating loss ("NOL") carryforwards of $2.2 million. These NOLs, which are subject to an annual limitation of $1.9 million, will expire between 2030 and 2031 as follows:



($ in thousands)	Gross NOL		Tax Effected NOL
2030	$	2,124	744
2031	79		28
Total NOL carryforwards	$	2,203	772

Stockholders' equity reflects tax benefits related to compensation expense deductions for share-based compensation awards of $23.8 million at December 31, 2016, $22.0 million at December 31, 2015, and $20.2 million at December 31, 2014.

We have analyzed our tax positions in all open tax years, which as of December 31, 2016 were 2013 through 2015. The 2013 tax year is currently under audit. We do not expect any material adjustments to arise out of the 2013 audit. We do not have unrecognized tax expense or benefit as of December 31, 2016.

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.