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Note 15 - Income Taxes Level 3 (Tables)

12 Months Ended

Dec. 31, 2012

Components of Income Tax Provision [Abstract]

Schedule of Components of Income Tax Expense [Table Text Block]

The components of our consolidated income tax provision are as follows:



	Year Ended December 31,
(In thousands)	2012		2011		2010
Current	$	1,271	$	59,604	$	(155,219	)
Deferred	6,000		6,758		381,408
Total income tax provision	$	7,271	$	66,362	$	226,189

Reconciliation of Taxes at Statutory Rate to Provision (Benefit) for Income Taxes [Table Text Block]

The reconciliation of taxes computed at the statutory tax rate of 35% for 2012, 2011 and 2010 to the provision for income taxes is as follows:



	Year Ended December 31,
(In thousands)	2012			2011			2010
(Benefit) provision for income taxes computed at the statutory tax rate	$	(155,469	)	$	128,979		$	(552,887	)
Change in tax resulting from:
Tax-exempt municipal bond interest and dividends received deduction (net of proration)	(3,101		)	(5,237		)	(15,592		)
Foreign tax expense (benefit)	146			(13,496		)	(10,397		)
State tax expense (benefit)	4,003			(6,224		)	(15,692		)
Unrecognized tax (benefit) expense	(2,906		)	17,860			(25,915		)
Deferred inventory adjustment related to fair value of derivatives and other financial instruments	(23,217		)	—			—
Valuation allowance	188,290			(50,582		)	844,975
Other, net	(475		)	(4,938		)	1,697
Provision for income taxes	$	7,271		$	66,362		$	226,189

Schedule of Components of Deferred Tax Assets and Liabilities [Table Text Block]

The significant components of our net deferred tax assets and liabilities are summarized as follows:



	December 31,
(In thousands)	2012		2011
Deferred tax assets:
Accrued expenses	$	51,049	$	41,011
Unearned premiums	36,060		14,327
PDR	1,290		1,275
NOL	666,633		666,407
Differences in fair value of derivative and other financial instruments	54,335		—
Rescission premium	16,797		20,015
State NOL carryforward	31,744		31,825
Foreign tax credit carryforward	26,292		26,884
Depreciation	5,478		5,037
Partnership investments	65,704		64,544
Loss reserves	39,540		—
Residual interest in LPV	24,084		—
Other	53,319		57,127
Total deferred tax assets	1,072,325		928,452
Deferred tax liabilities:
Deferred policy acquisition costs	30,882		48,969
Convertible debt	28,449		32,091
Differences in fair value of derivative and other financial instruments	—		3,591
Net unrealized gain on investments	8,783		4,191
Loss reserves	—		9,744
Foreign currency	18		22
Other	14,536		16,169
Total deferred tax liabilities	82,668		114,777
Valuation allowance	989,657		797,700
Net DTA	$	—	$	15,975

Effect of Unrecognized Tax Benefits on Consolidated Balance Sheets and Results of Operations [Table Text Block]

The effect of unrecognized tax benefits on our consolidated balance sheets and results of operations is as follows:



(In thousands)	December 31, 2011		Decrease			December 31, 2012
Unrecognized tax benefits	$	125,757	$	(11,744	)	$	114,013
Unrecognized tax benefits that, if recognized, would affect the effective tax rate	$	61,901	$	(2,907	)	$	58,994
Interest and penalties accrued	$	53,842	$	(840	)	$	53,002
Interest and penalties charged to income tax benefit						$	(840	)

Summary of Income Tax Contingencies [Table Text Block]

A reconciliation of the beginning and ending unrecognized tax benefits is as follows:



	Year Ended December 31,
(In thousands)	2012			2011
Balance at beginning of period	$	125,757		$	92,845
Tax positions related to the current year:
Increases	1,209			1,268
Decreases	(1,624		)	(2,005		)
Tax positions related to prior years:
Increases	27,302			51,480
Decreases	(4,243		)	(17,831		)
Lapses of applicable statute of limitation	(34,388		)	—
Balance at end of period	$	114,013		$	125,757

Summary of Income Tax Examinations [Table Text Block]

The following calendar tax years, listed by major jurisdiction, remain subject to examination:



U.S. Federal Corporation Income Tax	2000 - 2007(1), 2009 - 2011
Significant State and Local Jurisdictions (2)	1999 - 2011

_________________________

(1)

We are currently contesting proposed adjustments resulting from the examination by the IRS of our 2000 through 2007 tax years. As part of this process, we have agreed to extend all relevant statute of limitations for the assessment of tax to June 30, 2013. All such statute of limitation extensions have limited the scope of the examinations to the recognition of certain tax benefits that relate to our investment in a portfolio of non-economic REMIC residual interests.


(2)	Arizona, California, Florida, Georgia, New York, Ohio, Pennsylvania, Texas and New York City.

- Definition

Tabular disclosure of tax positions taken in the tax returns filed or to be filed for which it is more likely than not that the tax position will not be sustained upon examination by taxing authorities (i.e., uncertain tax positions) and other types of income tax contingencies, including: (1) the policy on classification of interest and penalties; (2) a tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period; the total amount(s) of: (3) unrecognized tax benefits that, if recognized, would affect the effective tax rate, and (4) interest and penalties recognized in each of the income statement and balance sheet; (5) for positions for which it is reasonably possible that the total amounts unrecognized will significantly change within 12 months of the reporting date the: (i) nature of the uncertainty, (ii) nature of the event that could occur that would cause the change, and (iii) an estimate of the range of the reasonably possible change or a statement that an estimate of the range cannot be made; and (6) a description of tax years that remain subject to examination by major tax jurisdictions.

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- Definition

Tabular disclosure of income tax examinations that an enterprise is currently subject to or that have been completed in the current period typically including a description of the examination, the jurisdiction conducting the examination, the tax year(s) under examination, the likelihood of an unfavorable settlement, the range of possible losses, the liability recorded, the increase or decrease in the liability from the prior period, and any penalties and interest that have been recorded.

+ References+ Details