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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Schedule of Components of Income Tax Expense (Benefit)

Significant components of the provision for income taxes from continuing operations are as follows for the years ended December 31:



	2012			2011		2010
	(Dollars in millions)
Current tax expense:
Federal	$	(3.4	)	$	77.8	$	58.9
State	(1.2		)	14.5		12.0
Total current tax expense	(4.6		)	92.3		70.9
Deferred tax expense (benefit):
Federal	11.1			5.1		27.1
State	(2.2		)	2.7		10.1
Total deferred tax expense (benefit)	8.9			7.8		37.2
Interest expense, gross of related tax effects	1.7			0.6		0.6
Total income tax provision	$	6.0		$	100.7	$	108.7

Schedule of Effective Income Tax Rate Reconciliation

A reconciliation of the statutory federal income tax rate and the effective income tax rate on income from continuing operations is as follows for the years ended December 31:



	2012	2011	2010
Statutory federal income tax rate	35.0%	35.0%	35.0%
State and local taxes, net of federal income tax effect	(6.9)	6.9	5.2
Valuation allowance (release) against capital losses, net operating losses or tax credits	(26.5)	21.9	(2.5)
Non-deductible compensation	17.7	2.3	1.1
Tax exempt interest income	(12.7)	(2.2)	(1.2)
Sale of subsidiaries	1.8	(3.9)	(1.2)
Interest expense	5.3	0.5	0.0
Lobbying expense	3.4	0.8	0.4
Other, net	1.8	1.0	1.9
Effective income tax rate	18.9%	62.3%	38.7%

Schedule of Deferred Tax Assets and Liabilities

Significant components of our deferred tax assets and liabilities as of December 31 are as follows:



	2012			2011
	(Dollars in millions)
DEFERRED TAX ASSETS:
Accrued liabilities	$	92.7		$	71.2
Accrued compensation and benefits	70.5			79.6
Net operating and capital loss carryforwards	22.9			75.2
Insurance loss reserves and unearned premiums	15.4			17.4
Deferred gain and revenues	12.4			12.4
Other	2.4			0.8
Deferred tax assets before valuation allowance	216.3			256.6
Valuation allowance	(19.7		)	(63.7		)
Net deferred tax assets	$	196.6		$	192.9

DEFERRED TAX LIABILITIES:
Depreciable and amortizable property	$	63.6		$	51.0
Prepaid expenses	17.7			23.4
Unrealized gains on investments	22.9			11.6
Deferred revenue	25.8			8.3
Other	1.9			2.3
Deferred tax liabilities	$	131.9		$	96.6

Summary of Income Tax Contingencies

A reconciliation of the beginning and ending amount of unrecognized tax benefits, exclusive of related interest, is as follows:



	2012			2011		2010
	(Dollars in millions)
Gross unrecognized tax benefits at beginning of year	$	47.1		$	21.9	$	20.9
Increases in unrecognized tax benefits related to the current year	2.4			25.2		1.0
Increases in unrecognized tax benefits related to prior years	8.0			—		—
Decreases in unrecognized tax benefits related to a prior year	(0.2		)	—		—
Gross unrecognized tax benefits at end of year	$	57.3		$	47.1	$	21.9

- 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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