XML 100 R15.htm IDEA: XBRL DOCUMENT
v2.4.0.8

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2013
Income Taxes [Abstract] |
Income Taxes | NOTE 7 - Income Taxes The income tax assets and liabilities included in Other Assets and Other Liabilities, respectively, in the Consolidated Balance Sheets were as follows:
|  | December 31, |
|  |  | 2013 |  |  | 2012 |
Income tax (asset) liability |  |  |  |  |  |  |
Current |  | $ | (1,998) |  | $ | 4,575 |
Deferred |  |  | 163,213 |  |  | 286,726 |
Deferred tax assets and liabilities are recognized for all future tax consequences attributable to “temporary differences” between the financial statement carrying value of existing assets and liabilities and their respective tax bases. There are no deferred tax liabilities that have not been recognized. The “temporary differences” that gave rise to the deferred tax balances were as follows:
|  | December 31, |
|  |  | 2013 |  |  | 2012 |
Deferred tax assets |  |  |  |  |  |  |
Unearned premium reserve reduction |  | $ | 15,555 |  | $ | 14,952 |
Compensation accruals |  |  | 13,188 |  |  | 13,592 |
Other comprehensive income – net funded status of pension and other postretirement benefit obligations |  |  | 6,376 |  |  | 8,352 |
Discounting of unpaid claims and claim expenses tax reserves |  |  | 4,747 |  |  | 4,825 |
Postretirement benefits other than pensions |  |  | 2,048 |  |  | 2,333 |
Impaired securities |  |  | 1,800 |  |  | 1,268 |
Total gross deferred tax assets |  |  | 43,714 |  |  | 45,322 |
Deferred tax liabilities |  |  |  |  |  |  |
Other comprehensive income – net unrealized gains on fixed maturities and equity securities |  |  | 81,497 |  |  | 228,159 |
Deferred policy acquisition costs |  |  | 80,159 |  |  | 62,411 |
Life insurance future policy benefit reserve |  |  | 21,792 |  |  | 18,620 |
Investment related adjustments |  |  | 18,317 |  |  | 15,375 |
Intangible assets |  |  | 4,262 |  |  | 4,262 |
Other, net |  |  | 900 |  |  | 3,221 |
Total gross deferred tax liabilities |  |  | 206,927 |  |  | 332,048 |
Net deferred tax liability |  | $ | 163,213 |  | $ | 286,726 |
The Company evaluated sources and character of income, including historical earnings, loss carryback potential, taxable income from future reversals of existing taxable temporary differences, future taxable income exclusive of reversing temporary differences, and taxable income from prudent and feasible tax-planning strategies. Although realization of deferred tax assets is not assured, the Company believes it is more likely than not that gross deferred tax assets will be fully realized and that a valuation allowance with respect to the realization of the total gross deferred tax assets was not necessary as of December 31, 2013 and 2012. At December 31, 2013, the Company did not have any loss carryforwards or credits. The components of income tax expense were as follows:
|  | Year Ended December 31, |
|  | 2013 |  | 2012 |  | 2011 |
Current |  | $ | 31,610 |  | $ | 26,331 |  | $ | 18,211 |
Deferred |  |  | 11,563 |  |  | 18,976 |  |  | 6,201 |
Total income tax expense |  | $ | 43,173 |  | $ | 45,307 |  | $ | 24,412 |
Income tax expense for the following periods differed from the expected tax computed by applying the federal corporate tax rate of 35% to income before income taxes as follows:
|  | Year Ended December 31, |
|  | 2013 |  | 2012 |  | 2011 |
Expected federal tax on income |  | $ | 53,923 |  | $ | 52,210 |  | $ | 33,221 |
Add (deduct) tax effects of: |  |  |  |  |  |  |  |  |  |
Tax-exempt interest |  |  | (6,829) |  |  | (6,836) |  |  | (7,072) |
Dividend received deduction |  |  | (3,382) |  |  | (2,132) |  |  | (2,010) |
Other, net |  |  | (539) |  |  | 2,065 |  |  | 273 |
Income tax expense provided on income |  | $ | 43,173 |  | $ | 45,307 |  | $ | 24,412 |
The Company’s federal income tax returns for years prior to 2010 are no longer subject to examination by the Internal Revenue Service (“IRS”). In 2011, the IRS completed an examination of the federal returns through 2009 resulting in additional tax expense of $22. The Company recognizes tax benefits from tax return positions only if it is more likely than not the position will be sustainable, upon examination, on its technical merits and any relevant administrative practices or precedents. As a result, the Company applies a more likely than not recognition threshold for all tax uncertainties. The Company records liabilities for uncertain tax filing positions where it is more likely than not that the position will not be sustainable upon audit by taxing authorities. These liabilities are reevaluated routinely and are adjusted appropriately based upon changes in facts or law. The Company has no unrecorded liabilities from uncertain tax filing positions. HMEC and its subsidiaries file a consolidated federal income tax return. The federal income tax sharing agreements between HMEC and its subsidiaries, as approved by the Board of Directors, provides that tax on income is charged to each subsidiary as if it were filing a separate tax return with the limitation that each subsidiary will receive the benefit of any losses or tax credits to the extent utilized in the consolidated tax return. Intercompany balances are settled quarterly with a final settlement after filing the consolidated federal income tax return with the IRS. A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, is as follows:
|  | Year Ended December 31, |
|  | 2013 |  | 2012 |  | 2011 |
Balance as of the beginning of the year |  | $ | - |  | $ | - |  | $ | 38 |
Additions based on tax positions related to the current year |  |  | 641 |  |  | - |  |  | - |
Settlements in tax positions for prior years |  |  | - |  |  | - |  |  | (38) |
Balance as of the end of the year |  | $ | 641 |  | $ | - |  | $ | - |
The Company’s effective tax rate would be affected to the extent there were unrecognized tax benefits that could be recognized. There are no positions for which it is reasonably possible that the total amount of unrecognized tax benefit will significantly increase within the next 12 months. The Company classifies all tax related interest and penalties as income tax expense. Interest and penalties were as follows:
|  | Year Ended December 31, |
|  | 2013 |  | 2012 |  | 2011 |
Interest and penalties expense (benefit), net of releases of previous provisions, recognized in the Consolidated Statements of Operations: |  |  |  |  |  |  |  |  |  |
Gross |  | $ | - |  | $ | 468 |  | $ | (279) |
Net of tax |  |  | - |  |  | 304 |  |  | (181) |
|  | December 31, |
|  | 2013 |  | 2012 |
Interest and penalties (asset) liability included in Other Assets or Other Liabilities in the Consolidated Balance Sheets |  | $ | 1 |  | $ | 307 |

X
- Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 2: 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 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 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=6907707&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=6907707&loc=d3e32537-109319 Reference 6: 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=6907707&loc=d3e32559-109319 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration