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

		Years Ended March 31,
		2018		2017		2016
		(In thousands)
Pretax earnings:
U.S.	$	628,901	$	609,589	$	745,194
Non-U.S.		8,712		18,769		23,717
Total pretax earnings	$	637,613	$	628,358	$	768,911

Current provision
Federal	$	21,780	$	38,723	$	118,974
State		6,471		10,818		15,988
Non-U.S.		1,412		3,334		3,303
		29,663		52,875		138,265
Deferred provision (benefit)
Federal		(199,415)		160,527		125,950
State		15,479		15,210		12,561
Non-U.S.		1,303		1,322		3,134
		(182,633)		177,059		141,645

Provision for income tax expense (benefit)	$	(152,970)	$	229,934	$	279,910

Income taxes paid (net of income tax refunds received)	$	68,671	$	36,880	$	141,901

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,
	2018	2017	2016

Statutory federal income tax rate	31.55%	35.00%	35.00%
Increase (reduction) in rate resulting from:
Deferred tax liability revaluation	(58.25%)	0.00%	0.00%
State taxes, net of federal benefit	2.33%	2.66%	2.34%
Foreign rate differential	0.00%	(0.31%)	(0.24%)
Federal tax credits	(0.32%)	(0.41%)	(0.19%)
Transition tax	1.83%	0.00%	0.00%
Dividend received deduction	(0.03%)	(0.03%)	(0.02%)
Phase III tax	0.63%	0.00%	0.00%
Other	(1.73%)	(0.32%)	(0.49%)
Actual tax expense (benefit) of operations	(23.99%)	36.59%	36.40%

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

		March 31,
		2018		2017
		(In thousands)
Deferred tax assets:
Net operating loss and credit carry forwards	$	3,136	$	1,948
Accrued expenses		104,309		168,331
Policy benefit and losses, claims and loss expenses payable, net		11,148		21,287
Total deferred tax assets	$	118,593	$	191,566

Deferred tax liabilities:
Property, plant and equipment	$	741,607	$	986,334
Deferred policy acquisition costs		12,995		20,901
Unrealized gains		18,863		19,140
Other		3,236		200
Total deferred tax liabilities		776,701		1,026,575
Net deferred tax liability	$	658,108	$	835,009

The net operating loss and credit carry-forwards in the above table are primarily attributable to $45.3 million of state net operating losses that will begin to expire March 31, 2019 if not utilized.

The Tax Reform Act was enacted on December 22, 2017. The Tax Reform Act reduces the U.S. federal corporate income tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred, and repeals the deferral of the phase three tax for life insurance companies. The blended statutory Federal Tax Rate for our full fiscal year ended March 31, 2018 is 31.55%. At March 31, 2018, we have not completed our accounting for the tax effects of enactment of the Tax Reform Act; however, we have made a reasonable estimate of the effects of all items affected by the Tax Reform Act. For these items, we recognized a provisional benefit amount of $355.7 million which is included as a component of tax expense (benefit) from continuing operations.

We re-measured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally 21%. However, we are still analyzing certain aspects of the Tax Reform Act and refining our calculations, which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts. The provisional amount recorded related to the re-measurement of our deferred tax balance was a benefit of $371.5 million for the fiscal year ended March 31, 2018.

For fiscal 2018, we elected to reclassify the income tax effects of the Tax Reform Act in the amount of $8.7 million from accumulated other comprehensive income to retained earnings under ASU 2018-02. In addition, we have adopted the “investment by investment” approach with regard to releasing disproportionate income tax effects from accumulated other comprehensive income.

We calculated and recorded a provisional one-time transition tax on earnings from foreign subsidiaries based on the post-1986 earnings and profits (“E&P”) of our Canadian subsidiaries that were previously deferred from U.S. income taxes. The provisional amount of this one-time transition tax liability for our foreign subsidiaries resulted in an increase in income tax expense of $11.7 million for the fiscal year ended March 31, 2018. We have not yet completed our calculation of the total post-1986 E&P for these foreign subsidiaries. Further, the transition tax is based in part on the amount of those earnings held in cash and other specified assets. This amount may change when we finalize the calculation of post-1986 foreign E&P previously deferred from U.S. federal taxation and finalize the amounts held in cash or other specified assets. No additional income taxes have been provided for any remaining undistributed foreign earnings not subject to the transition tax, or any additional outside basis difference inherent in these entities, as these amounts continue to be indefinitely reinvested in foreign operations. Determining the amount of unrecognized deferred tax liability related to any remaining undistributed foreign earnings not subject to the transition tax and additional outside basis difference in these entities (i.e., basis difference in excess of that subject to the one-time transition tax) is not practicable.

The Tax Reform Act repeals the special rules with regard to distribution to shareholders from pre-1984 policyholders surplus account of our Life Insurance segment. This one-time tax was based on the balance of our pre-1984 policyholder surplus account. We estimated a provisional amount for our one-time tax liability for Phase Three Tax, resulting in an increase in income tax expense of $4.0 million for the fiscal year ended March 31, 2018.

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 March 31, 2017 was $26.7 million. The change in after tax benefit as a result of the change in Federal tax rate from 35% to 21% is $5.8 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 $3.2 million. At March 31, 2018, the amount of unrecognized tax benefits and the amount that would favorably affect our effective tax rate was $35.7 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,
		2018		2017
		(In thousands)

Unrecognized tax benefits beginning balance	$	26,720	$	23,912
Revaluation based on change in after tax benefit		5,755		–
Additions based on tax positions related to the current year		4,139		2,964
Reductions for tax positions of prior years		(96)		(156)
Settlements		(779)		–
Unrecognized tax benefits ending balance	$	35,739	$	26,720

We recognize interest related to unrecognized tax benefits as interest expense, and penalties as operating expenses. At March 31, 2017, the amount of interest and penalties accrued on unrecognized tax benefits was $6.7 million, net of tax. The change in after tax benefit as a result of the change in Federal tax rate from 35% to 21% is $1.4 million. During the current year we recorded expense from interest and penalties in the amount of $0.4 million, net of tax. At March 31, 2018, the amount of interest and penalties accrued on unrecognized tax benefits was $8.5 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, 2015.