FEDERAL INCOME TAX (Tables)

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Federal Income Tax Expense (Benefit)

Federal income tax expense (benefit) from both continuing and discontinued operations is composed of the following:

Years Ended December 31,	2018			2017			2016
Current	$	18,493		$	1,989		$	3,239
Deferred	(21,791		)	(26,719		)	5,524
Total	$	(3,298	)	$	(24,730	)	$	8,763

Income Tax Expense Reconciliation

A reconciliation of income tax expense (benefit) computed at the applicable federal tax rate of 21.0 percent in 2018 and 35.0 percent in 2017 to the amount recorded in the accompanying Consolidated Statements of Income and Comprehensive Income is as follows:

Years Ended December 31,	2018			2017			2016
Computed expected income tax expense	$	5,114		$	9,202		$	20,533
Impact of enactment of Tax Act	—			(21,884		)	—
Tax-exempt municipal bond interest income	(4,235		)	(8,875		)	(8,330		)
Nontaxable dividend income	(591		)	(1,540		)	(1,317		)
Valuation allowance reduction	(329		)	(547		)	(547		)
Other, net	(3,257		)	(1,086		)	(1,576		)
Consolidated federal income tax expense (benefit)	$	(3,298	)	$	(24,730	)	$	8,763
Reconciliation of consolidated federal income tax expense (benefit) from:
Continuing operations	$	(11,405	)	$	(29,220	)	$	8,379
Gain on sale of discontinued operations	7,544			—			—
Discontinued operations	563			4,490			384
Consolidated federal income tax expense (benefit)	$	(3,298	)	$	(24,730	)	$	8,763

Components of Net Deferred Tax Liability

The significant components of our net deferred tax liability at December 31, 2018 and 2017 are as follows:

December 31,	2018			2017
Deferred tax liabilities
Net unrealized appreciation on investment securities:
Equity securities	$	38,430		$	50,839
All other securities	(2,478		)	7,599
Deferred policy acquisition costs	19,487			30,404
Investments in partnerships	2,510			3,653
Prepaid pension cost	4,158			3,416
Net bond discount accretion	296			666
Depreciation	1,063			593
Revaluation of investment basis (1)	419			545
Identifiable intangible assets (1)	1,689			1,838
Other	1,639			1,934
Gross deferred tax liability	$	67,213		$	101,487
Deferred tax assets
Financial statement reserves in excess of income tax reserves	$	19,800		$	17,036
Unearned premium adjustment	20,406			19,389
Net operating loss carryforwards	—			329
Underfunded benefit plan obligation	5,622			12,375
Post-retirement benefits other than pensions	12,035			11,942
Other-than-temporary impairment of investments	2,094			2,313
Contingent ceding commission accrual	14			317
Alternative minimum tax credit carryforward	—			6,011
Compensation expense related to stock options	3,506			3,289
Other	4,648			4,145
Gross deferred tax asset	$	68,125		$	77,146
Valuation allowance	—			(329		)
Deferred tax asset	$	68,125		$	76,817
Net deferred tax liability (asset)	$	(912	)	$	24,670

(1) Related to our acquisition of Mercer Insurance Group.