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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Components of Income Tax Expense

Our income tax expense as presented in the consolidated financial statements is summarized as follows:

	Year Ended December 31,
	2019				2018				2017
	(Dollars in thousands)
Consolidated statements of operations:
Current income taxes	$	12,528			$	120,289			$	188,356
Deferred income taxes (benefits)	56,947				(12,563		)		(46,730		)
Total income tax expense included in consolidated statements of operations	69,475				107,726				141,626
Stockholders' equity:
Expense (benefit) relating to:
Change in net unrealized investment losses	412,117				(240,459		)		177,162
Total income tax expense (benefit) included in consolidated financial statements	$	481,592			$	(132,733	)		$	318,788

Effective Income Tax Rate Reconciliation

Income tax expense in the consolidated statements of operations differed from the amount computed at the applicable statutory federal income tax rates of 21% for the years ended December 31, 2019 and 2018, and 35% for the year ended December 31, 2017 as follows:

	Year Ended December 31,
	2019				2018				2017
	(Dollars in thousands)
Income before income taxes	$	315,565			$	565,742			$	316,271
Income tax expense on income before income taxes	$	66,269			$	118,806			$	110,695
Tax effect of:
State income taxes	5,111				5,777				1,961
Tax exempt net investment income	(4,385		)		(4,223		)		(4,288		)
Impact of Tax Reform	—				—				35,932
Worthless stock deduction	—				(7,448		)		—
Other	2,480				(5,186		)		(2,674		)
Income tax expense	$	69,475			$	107,726			$	141,626
Effective tax rate	22.0		%		19.0		%		44.8		%

Deferred Tax Assets and Liabilities

The tax effects of temporary differences that give rise to the deferred tax assets and liabilities at December 31, 2019 and 2018, are as follows:

	December 31,
	2019				2018
	(Dollars in thousands)
Deferred income tax assets:
Policy benefit reserves	$	1,733,672			$	1,538,371
Other than temporary impairments	15,166				9,804
Net unrealized losses on available for sale fixed maturity securities	—				19,928
Derivative instruments	—				141,075
Amounts due reinsurer	8,784				—
Other policyholder funds	4,359				3,368
Deferred compensation	3,705				3,334
Share-based compensation	2,775				3,169
Net operating loss carryforwards	37,509				2,286
Other	14,677				9,439
Gross deferred tax assets	1,820,647				1,730,774
Deferred income tax liabilities:
Deferred policy acquisition costs and deferred sales inducements	(1,303,385		)		(1,214,998		)
Net unrealized gains on available for sale fixed maturity securities	(392,189		)		—
Derivative instruments	(109,287		)		—
Policy benefit reserves	(147,924		)		(172,578		)
Investment income items	(42,105		)		(37,795		)
Amounts due reinsurer	—				(12,620		)
Other	(3,654		)		(1,614		)
Gross deferred tax liabilities	(1,998,544		)		(1,439,605		)
Net deferred income tax asset (liability)	$	(177,897	)		$	291,169

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- Definition

Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 9
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Tabular disclosure of the components of net deferred tax asset or liability recognized in an entity's statement of financial position, including the following: the total of all deferred tax liabilities, the total of all deferred tax assets, the total valuation allowance recognized for deferred tax assets.

+ References

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 2
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- Definition

Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 12
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