Components of Income Tax Expense | Our income tax expense as presented in the consolidated financial statements is summarized as follows: | | | | | | | | | | | | | | Year Ended December 31, | | 2016 | | 2015 | | 2014 | | (Dollars in thousands) | Consolidated statements of operations: | | | | | | Current income taxes | $ | 57,412 |
| | $ | 75,568 |
| | $ | 116,545 |
| Deferred income taxes (benefits) | (10,408 | ) | | 41,916 |
| | (46,504 | ) | Total income tax expense included in consolidated statements of operations | 47,004 |
| | 117,484 |
| | 70,041 |
| Stockholders' equity: | | | | | | Expense (benefit) relating to: | | | | | | Change in net unrealized investment losses | 74,471 |
| | (279,860 | ) | | 363,572 |
| Share-based compensation | (527 | ) | | (3,649 | ) | | (5,716 | ) | Extinguishment of convertible debt | — |
| | — |
| | (9,284 | ) | Total income tax expense (benefit) included in consolidated financial statements | $ | 120,948 |
| | $ | (166,025 | ) | | $ | 418,613 |
|
|
Effective Income Tax Rate Reconciliation | Income tax expense in the consolidated statements of operations differed from the amount computed at the applicable statutory federal income tax rate of 35% as follows: | | | | | | | | | | | | | | Year Ended December 31, | | 2016 | | 2015 | | 2014 | | (Dollars in thousands) | Income before income taxes | $ | 130,247 |
| | $ | 337,314 |
| | $ | 196,064 |
| | | | | | | Income tax expense on income before income taxes | $ | 45,586 |
| | $ | 118,060 |
| | $ | 68,622 |
| Tax effect of: | | | | | | State income taxes | 2,559 |
| | 2,924 |
| | 1,145 |
| Tax exempt net investment income | (2,167 | ) | | (3,834 | ) | | (3,669 | ) | Extinguishment of convertible debt | — |
| | — |
| | 4,202 |
| Other | 1,026 |
| | 334 |
| | (259 | ) | Income tax expense | $ | 47,004 |
| | $ | 117,484 |
| | $ | 70,041 |
| Effective tax rate | 36.1 | % | | 34.8 | % | | 35.7 | % |
|
Deferred Tax Assets and Liabilities | The tax effects of temporary differences that give rise to the deferred tax assets and liabilities at December 31, 2016 and 2015, are as follows: | | | | | | | | | | December 31, | | 2016 | | 2015 | | (Dollars in thousands) | Deferred income tax assets: | | | | Policy benefit reserves | $ | 2,354,786 |
| | $ | 2,092,731 |
| Other than temporary impairments | 15,681 |
| | 7,801 |
| Derivative instruments | — |
| | 91,638 |
| Amounts due reinsurer | 1,321 |
| | — |
| Other policyholder funds | 6,474 |
| | 6,861 |
| Litigation settlement accrual | 1,709 |
| | 7,100 |
| Deferred compensation | 7,963 |
| | 8,346 |
| Share-based compensation | 5,407 |
| | 5,286 |
| Net operating loss carryforwards | 3,745 |
| | 6,637 |
| Other | 9,658 |
| | 8,031 |
| Gross deferred tax assets | 2,406,744 |
| | 2,234,431 |
| Deferred income tax liabilities: | | | | Deferred policy acquisition costs and deferred sales inducements | (1,951,333 | ) | | (1,860,722 | ) | Net unrealized gains on available for sale fixed maturity and equity securities | (170,925 | ) | | (96,454 | ) | Derivative instruments | (75,405 | ) | | — |
| Amounts due reinsurer | — |
| | (9,677 | ) | Investment income items | (39,118 | ) | | (32,466 | ) | Other | (1,385 | ) | | (2,429 | ) | Gross deferred tax liabilities | (2,238,166 | ) | | (2,001,748 | ) | Net deferred income tax asset | $ | 168,578 |
| | $ | 232,683 |
|
|