Income Taxes

The Company uses the estimated annual effective tax rate method in computing its interim tax provision. Certain items, including changes in the realizability of deferred tax assets and changes in liabilities for uncertain tax positions, are excluded from the estimated annual effective tax rate and the actual tax expense or benefit is reported in the period that the related item is incurred.

However, in the third quarter of 2016, the Company utilized the discrete-period method under ASC 740 to compute its interim income tax provision due to significant variations in the relationship between the income tax expense and the pre-tax loss. The discrete-period method is applied when the application of the estimated annual effective tax rate is impractical because it is not possible to reliably estimate the annual effective tax rate.

The Company's effective tax rates for the three and nine months ended September 30, 2016 were 33.6% and (138.4)%, respectively. These effective tax rates differed from the statutory rate of 35% primarily due to the effect of the relative dividends received deduction ("DRD") and noncontrolling interest.

The Company's effective tax rates for the three and nine months ended September 30, 2015 were (44.7)% and 15.6%, respectively. These effective tax rates differed from the statutory rate of 35% primarily due to the effect of the relative DRD and noncontrolling interest.

Tax Regulatory Matters

During April 2016, the Internal Revenue Service ("IRS") completed its examination of the Company's returns through tax year 2014. The 2014 audit settlement did not have a material impact on the Company. The Company is currently under audit by the IRS, and it is expected that the examination of tax year 2015 will be finalized within the next twelve months. The Company and the IRS have agreed to participate in the Compliance Assurance Process for the tax years 2015 and 2016.