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Income Taxes | 12 Months Ended
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Dec. 31, 2017
Income Tax Disclosure [Abstract] |
Income Taxes | NOTE 15. INCOME TAXES On December 22, 2017, Public Law 115-97, more commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”), was enacted. The Tax Act includes numerous changes to existing federal income tax law, including a permanent reduction in the federal corporate income tax rate from 35% to 21%, effective January 1, 2018. Pursuant to SAB 118, the Company recorded certain provisional amounts for the estimated income tax effects of the Tax Act on deferred income taxes. The Company estimates that the reduction in the corporate income tax rate decreased its net deferred income tax liability as of December 22, 2017 by $10.5 million. The effect of the rate change was recorded as a decrease to income tax expense in the Company’s Consolidated Statement of Income for the year ended December 31, 2017. Final determination of the effects of the Tax Act on deferred income taxes requires additional information, including data from third parties, actuarial computations and other items. The Company expects to complete its determination of the effect of the Tax Act on its deferred income tax assets and liabilities pursuant to its annual income tax return filing process which is expected to be completed during the fourth quarter of 2018. The Company had not previously provided for Federal income taxes on $14.7 million of Mutual Savings Life’s income earned prior to 1984, which was not subject to income taxes under certain conditions prior to the Tax Act. Under the Tax Act, such income is now subject to taxation. Accordingly, the Company recognized current income tax expense of $3.1 million in the Company’s Consolidated Statement of Income for the year ended December 31, 2017. NOTE 15. INCOME TAXES (Continued) The tax effects of temporary differences that give rise to significant portions of the Company’s Net Deferred Income Tax Assets and Deferred Income Tax Liabilities at December 31, 2017 and 2016 were:
DOLLARS IN MILLIONS |  | 2017 |  | 2016
Deferred Income Tax Assets: |  |  |  |
Insurance Reserves |  | $ | 55.7 |  |  | $ | 83.4 |
Unearned Premium Reserves |  | 26.7 |  |  | 42.1 |
Tax Capitalization of Policy Acquisition Costs |  | 41.9 |  |  | 70.7 |
Payroll and Employee Benefit Accruals |  | 37.2 |  |  | 60.5 |
Net Operating Loss Carryforwards |  | 31.8 |  |  | 52.2 |
Other |  | 3.7 |  |  | 13.2 |
Total Deferred Income Tax Assets |  | 197.0 |  |  | 322.1 |
Deferred Income Tax Liabilities: |  |  |  |
Investments |  | 90.6 |  |  | 113.0 |
Deferred Policy Acquisition Costs |  | 76.8 |  |  | 116.2 |
Life VIF and P&C Customer Relationships |  | 6.9 |  |  | 13.5 |
Goodwill and Other Intangible Assets Acquired |  | 22.3 |  |  | 37.1 |
Depreciable Assets |  | 12.1 |  |  | 12.5 |
Other |  | 3.1 |  |  | 4.0 |
Total Deferred Income Tax Liabilities |  | 211.8 |  |  | 296.3 |
Net Deferred Income Tax Assets (Liabilities) |  | $ | (14.8 | ) |  | $ | 25.8 |
The expiration of federal net operating loss (“NOL”) carryforwards and their related deferred income tax assets at December 31, 2017 is presented below by year of expiration.
DOLLARS IN MILLIONS |  | NOL Carry-forwards |  | Deferred Tax Asset
Expiring in: |  |  |  |
2020 |  | $ | 7.8 |  |  | $ | 1.6 |
2021 through 2025 |  | 30.5 |  |  | 6.5 |
2026 through 2030 |  | 29.8 |  |  | 6.2 |
2031 through 2037 |  | 83.3 |  |  | 17.5 |
Total All Years |  | $ | 151.4 |  |  | $ | 31.8 |
Except for the NOL carryforwards scheduled to expire in 2031 through 2037, all of the NOL carryforwards were acquired in connection with business acquisitions made in prior years and are subject to annual usage limitations under the Internal Revenue Code. The Company expects to fully utilize these federal NOL carryforwards. A reconciliation of the beginning and ending amount of Unrecognized Tax Benefits for the years ended December 31, 2017, 2016 and 2015 is presented below.
DOLLARS IN MILLIONS |  | 2017 |  | 2016 |  | 2015
Liabilities for Unrecognized Tax Benefits at Beginning of Year |  | $ | 5.1 |  |  | $ | 3.8 |  |  | $ | 7.2 |
Additions for Tax Positions of Current Year |  | 3.1 |  |  | 1.5 |  |  | 0.2 |
Additions for Tax Positions of Prior Years |  | — |  |  | — |  |  | — |
Reduction for Expiration of Federal Statute of Limitations |  | (0.1 | ) |  | (0.2 | ) |  | (3.6 | )
Liabilities for Unrecognized Tax Benefits at End of Year |  | $ | 8.1 |  |  | $ | 5.1 |  |  | $ | 3.8 |
During March of 2017, the Internal Revenue Service commenced an examination of Kemper and its eligible subsidiaries’ consolidated Federal income tax return for the years ended December 31, 2014, and 2015. NOTE 15. INCOME TAXES (Continued) Unrecognized Tax Benefits at December 31, 2017, 2016 and 2015 include $7.6 million, $4.6 million and $3.3 million, respectively, for tax positions for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. Because of the impact of deferred income tax accounting, other than for interest and penalties, the disallowance of the shorter deductibility period would not affect the effective income tax rate but would accelerate the payment of cash to the taxing authority to an earlier period. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense. The liability for Unrecognized Tax Benefits included accrued interest of $0.5 million, $0.5 million and $0.5 million at December 31, 2017, 2016 and 2015, respectively. Net interest related to unrecognized tax benefits for the years ended December 31, 2017 and 2016 was insignificant. Tax expense includes interest benefit of $3.3 million related to unrecognized tax benefits for the year ended December 31, 2015. The statute of limitations related to Kemper and its eligible subsidiaries’ consolidated Federal income tax returns is closed for all tax years up to and including 2013. The statute of limitations related to Kemper and its eligible subsidiaries’ consolidated Federal income tax return for the tax year ended December 31, 2014 has been extended to March 15, 2019. The expiration of the statute of limitations related to the various state income tax returns that Kemper and its subsidiaries file varies by state. The components of Income Tax Expense from Continuing Operations for the years ended December 31, 2017, 2016 and 2015 were:
DOLLARS IN MILLIONS |  | 2017 |  | 2016 |  | 2015
Current Income Tax Benefit (Expense) |  | $ | (23.1 | ) |  | $ | 8.2 |  |  | $ | (25.7 | )
Deferred Income Tax Benefit (Expense) |  | (15.1 | ) |  | 2.3 |  |  | 2.2 |
(Increase) Decrease Unrecognized Tax Benefits |  | (3.0 | ) |  | (1.3 | ) |  | 3.4 |
Income Tax Benefit (Expense) |  | $ | (41.2 | ) |  | $ | 9.2 |  |  | $ | (20.1 | )
Income taxes paid, net of income tax refunds received, were $13.0 million in 2017. Income tax refunds received, net of income taxes paid, were $0.5 million in 2016. Income taxes paid, net of income tax refunds received, were $44.4 million 2015. A reconciliation of the Statutory Federal Income Tax Expense and Rate to the Company’s Effective Income Tax Expense and Rate from Continuing Operations for the years ended December 31, 2017, 2016 and 2015 is presented below.
DOLLARS IN MILLIONS |  | 2017 |  | 2016 |  | 2015
Amount |  | Rate |  | Amount |  | Rate |  | Amount |  | Rate
Statutory Federal Income Tax Expense |  | $ | (56.4 | ) |  | 35.0 | % |  | $ | (1.2 | ) |  | 35.0 | % |  | $ | (35.1 | ) |  | 35.0 | %
Tax-exempt Income and Dividends Received Deduction |  | 9.8 |  |  | (6.0 | ) |  | 9.8 |  |  | (279.5 | ) |  | 9.8 |  |  | (9.7 | )
Unrecognized Tax Benefit (Expense) |  | — |  |  | — |  |  | — |  |  | — |  |  | 2.1 |  |  | (2.1 | )
Indemnification Recoveries |  | — |  |  | — |  |  | 0.2 |  |  | (6.5 | ) |  | 3.7 |  |  | (3.6 | )
State Income Taxes |  | 0.1 |  |  | (0.1 | ) |  | (0.6 | ) |  | 16.9 |  |  | (0.6 | ) |  | 0.5 |
Long-term Equity Based Compensation |  | 0.4 |  |  | (0.2 | ) |  | — |  |  | — |  |  | — |  |  | — |
Tax Reform |  | 7.4 |  |  | (4.6 | ) |  | — |  |  | — |  |  | — |  |  | — |
Other, Net |  | (2.5 | ) |  | 1.5 |  |  | 1.0 |  |  | (28.9 | ) |  | — |  |  | — |
Effective Income Tax Benefit (Expense) from Continuing Operations |  | $ | (41.2 | ) |  | 25.6 | % |  | $ | 9.2 |  |  | (263.0 | )% |  | $ | (20.1 | ) |  | 20.1 | %
NOTE 15. INCOME TAXES (Continued) Comprehensive Income Tax Benefit (Expense) included in the Consolidated Financial Statements for the years ended December 31, 2017, 2016 and 2015 was:
DOLLARS IN MILLIONS |  | 2017 |  | 2016 |  | 2015
Income Tax Benefit (Expense): |  |  |  |  |  |
Continuing Operations |  | $ | (41.2 | ) |  | $ | 9.2 |  |  | $ | (20.1 | )
Discontinued Operations |  | (0.5 | ) |  | (2.2 | ) |  | (3.1 | )
Unrealized Depreciation (Appreciation) on Securities |  | (25.9 | ) |  | 0.9 |  |  | 62.8 |
Foreign Currency Translation Adjustments on Investments |  | (0.6 | ) |  | 0.1 |  |  | 0.5 |
Tax Effects from Postretirement Benefit Plans |  | (0.6 | ) |  | (7.3 | ) |  | (9.1 | )
Tax Effects from Cash Flow Hedge |  | 2.4 |  |  | (0.6 | ) |  | — |
Tax Effects from Long-term Equity-based Compensation included in Paid-in Capital |  | — |  |  | (1.1 | ) |  | (1.0 | )
Comprehensive Income Tax Benefit (Expense) |  | $ | (66.4 | ) |  | $ | (1.0 | ) |  | $ | 30.0 |

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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://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32559-109319 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32718-109319 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32639-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=65882285&loc=d3e32537-109319 + Details
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