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Federal Income Taxes Federal Income Taxes (Notes)

3 Months Ended

Mar. 31, 2020

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

Federal Income Taxes

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

		Quarter Ended March 31,
($ in thousands)		2020				2019
Tax at statutory rate (21% in 2020 and 2019)		$	3,359			15,476
Tax-advantaged interest		(1,214		)		(1,253	)
Dividends received deduction		(55		)		(83	)
Executive compensation		351				473
Stock-based compensation		(1,881		)		(2,635	)
Other		201				368
Federal income tax expense		$	761			12,346

During First Quarter 2020, we recorded federal income taxes based on our actual effective tax rate during the quarter instead of an estimate of our full-year effective tax rate. This approach gives consideration to the anticipated volatility in certain

components of our net income. Estimating these components is challenging given the uncertainty around the future impact of the COVID-19-related governmental directives and their impact on the financial markets and potential volatility.

Our effective tax rate during First Quarter 2020 was 4.8%, down from 16.8% a year ago. This decrease was driven by net realized and unrealized losses of $44.7 million, pre-tax, which significantly offset the other components of pre-tax net income and reduced the effective tax rate. After considering all positive and negative evidence about our federal net operating and capital loss carryback capacity, expected levels of pre-tax financial statement income, and federal taxable income, we believe it is more likely than not the existing deductible temporary differences will reverse during periods in which we generate net federal taxable income or have adequate federal carryback capacity. As a result, we had no valuation allowance recognized for federal tax assets at March 31, 2020 ($43.1 million net deferred tax asset) or December 31, 2019 ($6.8 million net deferred tax asset).

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- References

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- 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.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI http://asc.fasb.org/topic&trid=2144680

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