Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences between the amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of ProAssurance’s deferred tax assets and liabilities were as follows:



(In thousands)	2015		2014
Deferred tax assets
Unpaid loss discount	$	44,886	$	44,002
Unearned premium adjustment	22,889		23,972
Compensation related	18,130		18,623
Intangibles	1,435		1,957
Total deferred tax assets	87,340		88,554
Deferred tax liabilities
Deferred acquisition costs	9,287		9,180
Unrealized gains on investments, net	13,933		31,342
Fixed assets	3,401		3,689
Basis differentials–investments	17,492		31,657
Intangibles	24,644		27,294
Other	3,486		4,210
Total deferred tax liabilities	72,243		107,372
Net deferred tax assets (liabilities)	$	15,097	$	(18,818	)

At December 31, 2015, ProAssurance had no available net operating loss carryforwards, capital loss carryforwards, or Alternative Minimum Tax credit carryforwards. ProAssurance files income tax returns in the U.S. federal jurisdiction and various states.

ProAssurance had receivables for federal income taxes of $16.4 million at December 31, 2015 and $1.1 million at December 31, 2014, both carried as a part of Other assets.

The statute of limitations is now closed for all tax years prior to 2012.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits for 2015, 2014 and 2013, was as follows:



(In thousands)	2015		2014			2013
Balance at January 1	$	577	$	4,823		$	4,823
Increase for tax position acquired as result of a business combination	—		414			—
Increases for tax positions taken during the current year	7,618		163			—
(Decreases) for tax positions taken during the current year	—		(4,823		)	—
Balance at December 31	$	8,195	$	577		$	4,823

At December 31, 2015 and 2014, approximately $0.9 million of ProAssurance's uncertain tax positions, if recognized, would affect the effective tax rate. As with any uncertain tax position, there is a possibility that the ultimate benefit realized could differ from the estimate Management has established. Management believes that it is reasonably possible that a portion of unrecognized tax benefits at December 31, 2015, may change during the next twelve months. However, an estimate of the change cannot be made at this time.

ProAssurance recognizes interest and/or penalties related to income tax matters in income tax expense. Interest recognized in the income statement was not significant during the years ended December 31, 2015, 2014 and 2013. The accrued liability for interest was not significant at December 31, 2015 or 2014.

A reconciliation of “expected” income tax expense (35% of income before income taxes) to actual income tax expense for each of the years ended December 31, 2015, 2014 and 2013 were as follows:



(In thousands)	2015			2014			2013
Computed “expected” tax expense	$	45,099		$	91,702		$	139,005
Tax-exempt income	(12,913		)	(13,250		)	(14,509		)
Tax credits	(22,407		)	(17,918		)	(17,888		)
Non-taxable gain on acquisition	—			—			(11,310		)
Non-U.S. Loss	1,806			1,741			—
Other	1,073			3,165			4,338
Income tax expense	$	12,658		$	65,440		$	99,636