Income Taxes (Tables)

12 Months Ended

Dec. 31, 2011

Differences between our effective tax rate for financial statement purposes and the Federal Statutory rate

	2011			2010			2009

Statutory tax rate		35.0	%		35.0	%		35.0	%

Federal tax at statutory rate	$	124,252		$	171,439		$	181,493
Nontaxable municipal bond interest and dividend received
deduction		(29,021)			(26,968)			(24,109)
State income taxes, net of federal tax benefit		3,050			2,397			4,107
Foreign income taxes		25,410			32,008			32,319
Foreign tax credit		(25,410)			(32,008)			(32,310)
Uncertain tax positions (net of federal tax benefit (expense) on state
positions: $212 in 2011, $(52) in 2010 and $(88) in 2009)		38			(1,532)			(1,704)
Other, net		1,444			(605)			4,887
Income tax expense	$	99,763		$	144,731		$	164,683
Effective tax rate		28.1	%		29.5	%		31.8	%

The components of income tax expense

		2011		2010		2009

Federal current		$	47,993	$	113,837	$	125,126
Federal deferred			21,075		(3,218)		5,704
	Total federal		69,068		110,619		130,830
State current			2,203		1,797		3,001
State deferred			2,489		1,891		2,511
	Total state		4,692		3,688		5,512
Foreign current			28,543		31,691		27,996
Foreign deferred			(2,790)		317		2,137
	Total foreign		25,753		32,008		30,133
Uncertain tax positions			250		(1,584)		(1,792)
	Income tax expense	$	99,763	$	144,731	$	164,683

Composition of deferred tax assets and liabilities

		2011		2010

Excess of financial statement unearned premium over tax		$	26,217	$	22,897
Discounting of loss reserves, net of salvage and subrogation			62,402		61,738
Excess of financial statement accrued expenses over tax			17,373		22,635
Allowance for bad debts, not deductible for tax			6,216		5,721
Stock-based compensation expense in excess of deduction for tax			9,712		12,339
Financial statement loss for Lloyd's syndicates in excess of deduction for tax			7,571		0
Federal tax net operating loss carryforwards			4,451		3,859
State tax net operating loss carryforwards, net of federal tax benefit			2,179		2,205
Federal benefit of state uncertain tax positions			424		211
Valuation allowance			(7,607)		(7,767)
	Total deferred tax assets		128,938		123,838
Unrealized gain on increase in value of securities			120,854		48,656
Deferred policy acquisition costs, net of ceding commissions, deductible for tax			29,271		21,244
Amortizable goodwill for tax			84,110		72,252
Book basis in net assets of foreign subsidiaries in excess of tax			10,903		8,295
Property and equipment depreciation and other items			11,856		11,322
	Total deferred tax liabilities		256,994		161,769
	Net deferred tax liability	$	(128,056)	$	(37,931)

Changes in the valuation allowance

		2011		2010		2009

Balance at beginning of year		$	7,767	$	6,119	$	4,698
Net operating loss carryforwards			(120)		1,676		1,472
Other			(40)		(28)		(51)
	Balance at December 31	$	7,607	$	7,767	$	6,119

Changes in our liability for unrecognized gross tax benefits

		2011		2010		2009

Balance at beginning of year		$	2,274	$	3,821	$	5,002
Gross increases
Tax position of current year			160		289		670
Tax position of prior years			763		259		664
Gross decreases
Statute expirations			(595)		(1,244)		(1,630)
Settlements			0		0		(766)
Tax positions of prior years			(80)		(851)		(119)
	Balance at December 31	$	2,522	$	2,274	$	3,821

- Definition

Tabular disclosure of deferred tax liabilities not recognized because of the exceptions to comprehensive recognition of deferred taxes, including a description of the temporary differences, events that would cause the temporary differences to become taxable, the cumulative amounts of the temporary differences and the amounts not recognized as deferred tax liabilities or a statement that the determination of the deferred tax liabilities is not practicable.

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- Definition

Tabular disclosure of valuation allowances to reduce deferred tax assets to net realizable value, including identification of the deferred tax asset more likely than not will not be fully realized and the corresponding amount of the valuation allowance.

+ References+ Details