7.	Income Taxes

The Company’s deferred income tax assets and liabilities are as follows:


	December 31,
	2013		2012
	(In thousands)
Deferred income tax assets:
Discounting of net unpaid loss and loss adjustment expenses	$	17,493	$	21,878
Unearned premiums		14,008		12,043
Accrued expenses and other		4,336		3,870
Accrued policyholder dividends		684		916
Impaired securities		874		94
Accrued insurance-related assessments		3,989		3,564
AMT tax credit		—		64

Total deferred tax assets		41,384		42,429
Deferred income tax liabilities:
Deferred policy acquisition costs and deferred charges		(7,937)		(8,165)
Unrealized gain (loss) on securities available-for-sale		2,313		(1,604)
Property and equipment and other		(266)		(356)
Salvage and subrogation		(288)		(442)
Guaranty fund related items		(1,561)		(2,341)

Total deferred income tax liabilities		(7,739)		(12,908)

Net deferred income taxes	$	33,645	$	29,521

The components of consolidated income tax expense (benefit) are as follows:


	Year Ended December 31,
	2013		2012		2011
	(In thousands)
Current:
Federal	$	15,270	$	7,372	$	4,529
State		504		302		172

		15,774		7,674		4,701
Deferred:
Federal		(207)		116		(1,525)

Total	$	15,567	$	7,790	$	3,176

In 2012 and 2013, the Company made no adjustment to the valuation allowance. In 2011, the Company recorded a reduction of $1.4 million in the valuation allowance established in 2008 for unrealized losses resulting from other-than-temporary impairments. As of December 31, 2013, there is no valuation allowance.

Income tax expense from operations is different from the amount computed by applying the U.S. federal income tax statutory rate of 35% to income before income taxes as follows:


	Year Ended December 31,
	2013		2012		2011
	(In thousands)
Income tax computed at federal statutory tax rate	$	20,721	$	13,000	$	9,575
Tax-exempt interest, net		(5,458)		(5,333)		(5,105)
State income tax		504		302		172
Dividends received deduction		(113)		(79)		(29)
Valuation allowance		—		—		(1,442)
Other		(87)		(100)		5

	$	15,567	$	7,790	$	3,176

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. There were no uncertain tax positions as of December 31, 2013 and 2012.

Tax years 2009 through 2013 are subject to examination by the federal and state taxing authorities. In April 2012, the Company was notified by the Internal Revenue Service that the examination for tax year 2009 had been completed, but remains subject to state taxing authorities.