Income Taxes

3 Months Ended

Mar. 31, 2012

Income Taxes

NOTE 12 – Income Taxes

As of March 31, 2012, and December 31, 2011, we had no liability for unrecognized tax benefits. Details about our liability for unrecognized tax benefits are found in our 2011 Annual Report on Form 10-K, Item 8, Note 11, Income Taxes, Pages 129 and 130.

The differences between the 35 percent statutory income tax rate and our effective income tax rate were as follows:

(Dollars in millions)	Three months ended March 31,
	2012					2011
Tax at statutory rate	$	39		35.0	%	$	26		35.0	%
Increase (decrease) resulting from:
Tax-exempt income from municipal bonds		(8	)	(7.6	)		(9	)	(11.6	)
Dividend received exclusion		(6	)	(4.8	)		(5	)	(6.8	)
Other		1		0.6			2		2.1
Provision for income taxes	$	26		23.2	%	$	14		18.7	%

The change in our effective tax rate was primarily due to changes in pretax income from underwriting results and realized investment gains and losses.