INCOME TAXES

Temporary differences between the consolidated financial statement carrying amount and tax basis of assets and liabilities that give rise to significant portions of the deferred income tax asset (liability) at December 31, 2016 and 2015 are as follows:



	December 31,
($ in thousands)	2016			2015
Loss reserve discounting	$	13,442		$	13,929
Unearned premium reserve limitation	16,497			16,310
Other policyholders' funds payable	4,574			3,052
Other, net	2,561			1,730
Total deferred income tax asset	37,074			35,021
Net unrealized holding gains on investment securities	(26,786		)	(32,506		)
Deferred policy acquisition costs	(14,328		)	(14,252		)
Retirement benefits	(3,510		)	(3,606		)
Other, net	(3,771		)	(3,686		)
Total deferred income tax liability	(48,395		)	(54,050		)
Net deferred income tax liability	$	(11,321	)	$	(19,029	)

Based upon anticipated future taxable income and consideration of all other available evidence, management believes that it is “more likely than not” that the Company’s deferred income tax assets will be realized.

The actual income tax expense for the years ended December 31, 2016, 2015 and 2014 differed from the “expected” income tax expense for those years (computed by applying the United States federal corporate tax rate of 35 percent to income before income tax expense) as follows:



	Year ended December 31,
($ in thousands)	2016			2015			2014
Computed "expected" income tax expense	$	22,123		$	25,079		$	14,318
Increases (decreases) in tax resulting from:
Tax-exempt interest income	(2,803		)	(2,805		)	(3,285		)
Dividends received deduction	(1,429		)	(1,136		)	(828		)
Proration of tax-exempt interest and dividends received deduction	635			591			617
Investment tax credits	(1,546		)	—			—
Other, net	24			(235		)	93
Total income tax expense	$	17,004		$	21,494		$	10,915

Comprehensive income tax expense included in the consolidated financial statements for the years ended December 31, 2016, 2015 and 2014 is as follows:



	Year ended December 31,
($ in thousands)	2016			2015			2014
Income tax expense (benefit) on:
Operations	$	17,004		$	21,494		$	10,915
Change in unrealized holding gains on investment securities	(5,720		)	(9,689		)	16,146
Change in funded status of retirement benefit plans:
Pension plans	414			(1,748		)	(2,619		)
Postretirement benefit plans	(1,345		)	(1,071		)	(1,330		)
Comprehensive income tax expense	$	10,353		$	8,986		$	23,112

The Company had no provision for uncertain income tax positions at December 31, 2016 or 2015. The Company recognized $1,000 of interest income related to U.S. federal income taxes during 2014. The Company recognized no interest expense or other penalties related to U.S. federal or state income taxes during 2016, 2015 or 2014. It is the Company’s accounting policy to reflect income tax penalties as other expense, and interest as interest expense.

The Company files a U.S. federal income tax return, along with various state income tax returns. The Company is no longer subject to U.S. federal and state income tax examinations by tax authorities for years before 2013.