FEDERAL INCOME TAXES

Total Federal income taxes were allocated as follows:



	Years Ended December 31,
	2014			2013		2012
	(In thousands)

Taxes (benefits) on earnings from continuing operations:
Current	$	29,395		71,709		51,886
Deferred	22,538			(26,259	)	(3,863	)

Taxes on earnings	51,933			45,450		48,023

Taxes (benefits) on components of stockholders' equity:
Net unrealized gains and losses on securities available for sale	4,072			(24,201	)	13,011
Foreign currency translation adjustments	(358		)	(398	)	(157	)
Change in benefit liability	(1,777		)	3,005		(410	)

Total Federal income taxes (benefit)	$	53,870		23,856		60,467

The provisions for Federal income taxes attributable to earnings from continuing operations vary from amounts computed by applying the statutory income tax rate of 35% to earnings before Federal income taxes. The reasons for the differences and the corresponding tax effects are as follows:



	Years Ended December 31,
	2014			2013		2012
	(In thousands)

Income tax expense at statutory rate of 35%	$	55,133		49,594		49,204
Dividend received deduction	(1,076		)	(1,140	)	(1,292	)
Tax exempt interest	(2,155		)	(2,065	)	(1,977	)
Tax adjustment on foreign currency	(358		)	(214	)	245
Adjustments pertaining to prior tax years	1			(273	)	1,244
Nondeductible insurance	160			160		160
Nondeductible expenses	277			121		112
Amortization of life interest in a trust	—			—		116
Other, net	(49		)	(733	)	211

Taxes on earnings from continuing operations	$	51,933		45,450		48,023

There were no deferred taxes attributable to enacted tax rate changes for the years ended December 31, 2014, 2013 and 2012.

The Company expects its effective tax rate to be less than the statutory rate of 35% due to recurring permanent differences that reduce tax expense, principally tax exempt interest income and the dividend received deduction.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2014 and 2013 are presented below.



	December 31,
	2014			2013
	(In thousands)

Deferred tax assets:
Future policy benefits, excess of financial accounting liabilities over tax liabilities	$	292,262		305,795
Investment securities write-downs for financial accounting purposes	6,246			7,523
Pension liabilities	11,333			9,055
Accrued operating expenses recorded for financial accounting purposes not currently tax deductible	5,588			6,778
Foreign currency translation adjustments	4,318			4,355
Accrued and unearned investment income recognized for tax purposes and deferred for financial accounting purposes	390			369
Other	6			6

Total gross deferred tax assets	320,143			333,881

Deferred tax liabilities:
Deferred policy acquisition and sales inducement costs, principally expensed for tax purposes	(311,680		)	(305,700	)
Debt securities, principally due to deferred market discount for tax	(8,477		)	(8,017	)
Real estate, principally due to adjustments for financial accounting purposes	(1,023		)	(949	)
Net unrealized gains on securities available for sale	(25,185		)	(21,150	)
Fixed assets, due to different bases	(757		)	(897	)
Other	(4,696		)	(4,367	)

Total gross deferred tax liabilities	(351,818		)	(341,080	)

Net deferred tax liabilities	$	(31,675	)	(7,199	)

There were no valuation allowances for deferred tax assets at December 31, 2014 and 2013. In assessing deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and available tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that the Company will realize the benefits of these deductible differences.

In accordance with GAAP, the Company assessed whether it had any significant uncertain tax positions related to open examination or other IRS issues and determined that there were none. Accordingly, no reserve for uncertain tax positions was recorded. Should a provision for any interest or penalties relative to unrecognized tax benefits be necessary, it is the Company's policy to accrue for such in its income tax accounts. There were no such accruals as of December 31, 2014 or 2013. The Company and its corporate subsidiaries file a consolidated U.S. Federal income tax return, which is subject to examination for all years after 2010.

Allocation of the consolidated Federal income tax liability amongst the Company and its subsidiaries is based on separate return calculations pursuant to the "wait-and-see" method as described in sections 1.1552-1(a)(1) and 1.1502-33(d)(2) of the current Treasury Regulations. Under this method, consolidated group members are not given current credit for net losses until future net taxable income is generated to realize such credits.