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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

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,
			2020						2019						2018
			(Dollars in thousands)
Consolidated statements of operations:
Current income taxes			$	3,430					$	12,528					$	120,289
Deferred income taxes (benefits)			141,071						56,947						(12,563)
Total income tax expense included in consolidated statements of operations			144,501						69,475						107,726
Stockholders' equity:
Expense (benefit) relating to:
Adoption of expected credit loss model			(2,543)						—						—
Change in net unrealized investment losses			247,578						412,117						(240,459)
Total income tax expense (benefit) included in consolidated financial statements			$	389,536					$	481,592					$	(132,733)

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, 2020, 2019, and 2018 as follows:

			Year Ended December 31,
			2020						2019						2018
			(Dollars in thousands)
Income before income taxes			$	815,961					$	315,565					$	565,742
Income tax expense on income before income taxes			$	171,352					$	66,269					$	118,806
Tax effect of:
State income taxes			5,749						5,111						5,777
Tax exempt net investment income			(4,602)						(4,385)						(4,223)
Tax rate differential on net operating loss carryback			(30,041)						—						—
Worthless stock deduction			—						—						(7,448)
Other			2,043						2,480						(5,186)
Income tax expense			$	144,501					$	69,475					$	107,726
Effective tax rate			17.7		%				22.0		%				19.0		%

Deferred Tax Assets and Liabilities

The tax effects of temporary differences that give rise to the deferred tax assets and liabilities at December 31, 2020 and 2019, are as follows:

			December 31,
			2020						2019
			(Dollars in thousands)
Deferred income tax assets:
Policy benefit reserves			$	1,463,227					$	1,733,672
Credit losses/Impairments			28,519						15,166
Amounts due reinsurer			—						8,784
Other policyholder funds			3,789						4,359
Deferred compensation			2,161						3,705
Share-based compensation			2,189						2,775
Net operating loss carryforwards			—						37,509
Other			3,569						14,677
Gross deferred tax assets			1,503,454						1,820,647
Deferred income tax liabilities:
Deferred policy acquisition costs and deferred sales inducements			(1,146,016)						(1,303,385)
Net unrealized gains on available for sale fixed maturity securities			(639,769)						(392,189)
Derivative instruments			(119,444)						(109,287)
Policy benefit reserves			(123,270)						(147,924)
Investment income items			(28,719)						(42,105)
Amounts due reinsurer			(5,636)						—
Other			(4,603)						(3,654)
Gross deferred tax liabilities			(2,067,457)						(1,998,544)
Net deferred income tax liability			$	(564,003)					$	(177,897)

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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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