Provision for Taxes

12 Months Ended

Mar. 31, 2014

Disclosure Text Block [Abstract]

Provision for Taxes

Earnings before taxes and the provision for taxes consisted of the following:

		Years Ended March 31,
		2014		2013		2012
		(In thousands)
Pretax earnings:
U.S.	$	516,207	$	389,342	$	302,748
Non-U.S.		21,315		19,145		22,888
Total pretax earnings	$	537,522	$	408,487	$	325,636
Current provision (benefit)
Federal	$	131,246	$	116,788	$	10,899
State		12,641		12,199		5,514
Non-U.S.		3,787		3,344		4,786
		147,674		132,331		21,199
Deferred provision (benefit)
Federal		37,979		8,466		89,327
State		7,553		1,458		8,310
Non-U.S.		1,925		1,524		1,433
		47,457		11,448		99,070
Provision for income tax expense	$	195,131	$	143,779	$	120,269
Income taxes paid (net of income tax refunds received)	$	138,384	$	144,682	$	10,739

 The difference between the tax provision at the statutory federal income tax rate and the tax provision attributable to income before taxes was as follows:

	Years Ended March 31,
	2014	2013	2012
	(In percentages)
Statutory federal income tax rate	35.00%	35.00%	35.00%
Increase (reduction) in rate resulting from:
State taxes, net of federal benefit	2.38%	2.08%	2.70%
Foreign rate differential	(0.33)%	(0.45)%	(0.55)%
Federal tax credits	(0.32)%	(0.51)%	(0.21)%
Interest on deferred tax	0.00%	0.00%	0.12%
Dividend received deduction	(0.03)%	(0.03)%	(0.06)%
Other	(0.40)%	(0.89)%	(0.07)%
Actual tax expense of operations	36.30%	35.20%	36.93%

Significant components of our deferred tax assets and liabilities were as follows:

		March 31,
		2014		2013
		(In thousands)
Deferred tax assets:
Net operating loss and credit carry forwards	$	2,040	$	2,007
Accrued expenses		150,935		153,807
Policy benefit and losses, claims and loss expenses payable, net		22,479		24,137
Unrealized losses		1,857		-
Other		-		454
Total deferred tax assets	$	177,311	$	180,405
Deferred tax liabilities:
Property, plant and equipment	$	593,654	$	552,548
Deferred policy acquisition costs		16,250		12,270
Unrealized gains		-		9,245
Other		3		-
Total deferred tax liabilities		609,907		574,063
Net deferred tax liability	$	432,596	$	393,658

 The net operating loss and credit carry-forwards in the above table are primarily attributable to $15.4 million of state net operating losses that will begin to expire March 31, 2015 if not utilized.

ASC 740 prescribes a minimum recognition and measurement methodology that a tax position is required to meet before being recognized in the financial statements. The total amount of unrecognized tax benefits at April 1, 2013 was $13.9 million. This entire amount of unrecognized tax benefits if resolved in our favor, would favorably impact our effective tax rate. During the current year we recorded tax expense (net of settlements), resulting from uncertain tax positions in the amount of $3.0 million. At March 31, 2014, the amount of unrecognized tax benefits and the amount that would favorably affect our effective tax rate was $16.9 million.

A reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period are as follows:

		Unrecognized Tax Benefits
		March 31,
		2014		2013
		(In thousands)
Unrecognized tax benefits beginning balance	$	13,862	$	11,780
Additions based on tax positions related to the current year		3,000		2,163
Settlements		(12	)	(81	)
Unrecognized tax benefits ending balance	$	16,850	$	13,862

 We recognize interest related to unrecognized tax benefits as interest expense, and penalties as operating expenses. At April 1, 2013, the amount of interest and penalties accrued on unrecognized tax benefits was $4.3 million, net of tax. During the current year we recorded expense from interest and penalties in the amount of $0.4 million, net of tax. At March 31, 2014, the amount of interest and penalties accrued on unrecognized tax benefits was $4.7 million, net of tax.

We file income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. With some exceptions, we are no longer subject to audit for years prior to the fiscal year ended March 31, 2011. No provision was made for U. S. taxes payable on undistributed foreign earnings since these amounts are permanently reinvested.