Income Taxes

Income tax expense consists of:



(In thousands)	Current Expense		Deferred Expense		Total
December 31, 2013
Domestic	$	116,802	$	47,370	$	164,172
Foreign	22,362		7,053		29,415
Total expense	$	139,164	$	54,423	$	193,587

December 31, 2012
Domestic	$	156,339	$	11,448	$	167,787
Foreign	23,029		469		23,498
Total expense	$	179,368	$	11,917	$	191,285

December 31, 2011
Domestic	$	60,420	$	37,176	$	97,596
Foreign	22,011		2,338		24,349
Total expense	$	82,431	$	39,514	$	121,945

Income before income taxes from domestic operations was $598 million, $624 million and $469 million for the years ended December 31, 2013, 2012 and 2011, respectively. Income before income taxes from foreign operations was $101 million, $78 million and $49 million for the years ended December 31, 2013, 2012 and 2011, respectively.

A reconciliation of the income tax expense and the amounts computed by applying the Federal and foreign income tax rate of 35% to pre-tax income are as follows:



(In thousands)	2013			2012			2011
Computed “expected” tax expense	$	244,611		$	245,675		$	179,580
Tax-exempt investment income	(40,679		)	(50,665		)	(57,246		)
Change in valuation allowance	—			—			(2,328		)
Impact of lower foreign tax rates	(4,851		)	(5,234		)	(3,199		)
State and local taxes	2,906			(753		)	2,355
Other, net	(8,400		)	2,262			2,783
Total expense	$	193,587		$	191,285		$	121,945

At December 31, 2013 and 2012, the tax effects of differences that give rise to significant portions of the deferred tax asset and deferred tax liability are as follows:



(In thousands)	2013		2012
Deferred tax asset:
Loss reserve discounting	$	87,394	$	119,547
Unearned premiums	149,107		132,014
Other-than-temporary impairments	49,483		62,187
Restricted stock units	52,671		49,553
Other	92,698		83,740
Gross deferred tax asset	431,353		447,041
Less valuation allowance	—		—
Deferred tax asset	431,353		447,041
Deferred tax liability:
Amortization of intangibles	11,886		12,458
Deferred policy acquisition costs	136,635		120,532
Unrealized investment gains	148,215		274,497
Other	114,497		99,809
Deferred tax liability	411,233		507,296
Net deferred tax asset (liability)	$	20,120	$	(60,255	)

The Company had current tax receivables of $24,737,000 and a current tax payables of $22,546,000 at December 31, 2013 and 2012, respectively. at December 31, 2013, the Company had foreign net operating loss carryforwards of $870,000, which expire beginning in 2014. The Company had provided a valuation allowance against the unutilized foreign tax credits which were fully utilized in the 2010 federal tax return. The reduction in the valuation relates primarily to the full utilization of the foreign tax credit carryforward. At December 31, 2013 and 2012, the Company had no deferred tax assets for which a valuation allowance is required. The statute of limitations has closed for the Company’s tax returns through December 31, 2009.

The realization of the deferred tax asset is dependent upon the Company’s ability to generate sufficient taxable income in future periods. Based on historical results and the prospects for future current operations, management anticipates that it is more likely than not that future taxable income will be sufficient for the realization of this asset.