To arrive at the company's actual surplus, the formula would adjust statutory statement surplus by adding in any voluntary reserves for default losses on real estate and mortgages, the Asset Valuation Reserve
and 50 percent of the annual statement dividend liability.
Consequently, if the Commission moves forward to adopt the proposed rules for loss accrual and valuation reserves
generally, we recommend that it eliminate the references to tax contingency and valuation reserves
that are already governed by FASB Statements No.
A valuation reserve
against net deferred tax assets which was released in the fourth quarter of 2012 minimized book income tax expense through June 30, 2012.