Federal Income Taxes

6 Months Ended

Jun. 30, 2019

Income Tax Disclosure [Abstract]

Federal Income Taxes

A reconciliation of the effective tax rate to the statutory federal tax rate is shown below (in thousands, except percentages):

	Three months ended June 30,										Six months ended June 30,
	2019					2018					2019					2018
	Amount			Rate		Amount			Rate		Amount			Rate		Amount			Rate
Income tax expense before tax on equity in earnings of unconsolidated affiliates	$	21,819		18.1	%	$	21,267		20.0	%	$	81,606		18.3	%	$	25,632		20.0	%
Tax on equity in earnings of unconsolidated affiliates	3,526			2.9		1,348			1.0		12,023			2.7		1,234			1.0
Total expected income tax expense at the statutory rate	25,345			21.0		22,615			21.0		93,629			21.0		26,866			21.0
Tax-exempt investment income	(1,109		)	(0.9	)	(836		)	(0.8	)	(1,918		)	(0.4	)	(1,679		)	(1.3	)
Deferred tax change	—			—		(600		)	(0.6	)	—			—		(909		)	(0.7	)
Dividend exclusion	(860		)	(0.7	)	(1,001		)	(0.9	)	(1,781		)	(0.4	)	(1,986		)	(1.6	)
Miscellaneous tax credits, net	(3,299		)	(2.7	)	(2,529		)	(2.3	)	(4,991		)	(1.1	)	(4,742		)	(3.7	)
Low income housing tax credit expense	1,783			1.5		1,252			1.2		2,941			0.6		2,504			2.0
Change in valuation allowance	165			0.1		2,700			2.5		165			—		2,700			2.1
Other items, net	(77		)	(0.1	)	356			0.3		1,280			0.3		392			0.3
Provision for federal income taxes	$	21,948		18.2	%	$	21,957		20.4	%	$	89,325		20.0	%	$	23,146		18.1	%

American National made income tax payments of $40,440,000 and $14,135,000 during the six months ended June 30, 2019 and 2018, respectively.

As of June 30, 2019, American National has an alternative minimum tax (“AMT”) credit carryforward of $6,933,000, a general business credit carryforward of $758,000 and capital loss carryforwards of $656,000. AMT credit carryforwards may be utilized to offset regular tax liability. If not utilized, the credits are fully refundable by 2021. The general business credits and capital loss carryforwards will expire in 2038 and 2022, respectively, if not utilized.

American National’s federal income tax returns for years 2015 to 2017 are subject to examination by the Internal Revenue Service. Tax returns for 2013 and 2014 are subject to examination with certain limitations. In April 2019, American National received notice from the Internal Revenue Service of its intent to audit tax years 2013 to 2016. The audit is in its preliminary phase. In the opinion of management, all prior year deficiencies have been paid or adequate provisions have been made for any tax deficiencies that may be upheld. As of June 30, 2019, American National had no provision for uncertain tax positions and no provision for penalties or interest were established. In addition, management does not believe there are any uncertain tax benefits that could be recognized within the next twelve months that would impact American National’s effective tax rate.