content_image/221266.jpg content_image/221272.jpg content_image/221273.jpg
subsidiaries are regulated by such statutory requirements. The statutory net income for the years ended, and statutory surplus as of, December 31 of the Company’s life insurance and HMO subsidiaries were as follows: 

<img src='content_image/221266.jpg'>

The minimum statutory surplus required by regulators for the Company’s life insurance and HMO company subsidiaries was approximately $1.7 billion as of December 31, 2012. As of December 31, 2012, statutory surplus for each of the Company’s life insurance and HMO subsidiaries is sufficient to meet the minimum required by regulators. As of December 31, 2012, the Company’s life insurance and HMO subsidiaries had investments on deposit with state departments of insurance with statutory carrying values of $337 million. The Company’s life insurance and HMO subsidiaries are also subject to regulatory restrictions that limit the amount of 

## Income Taxes NOTE 20 

## A. Income Tax Expense 

The components of income taxes for the years ended December 31 were as follows: 

annual dividends or other distributions (such as loans or cash advances) insurance companies may extend to the parent company without prior approval of regulatory authorities. The maximum dividend distribution that the Company’s life insurance and HMO subsidiaries may make during 2013 without prior approval is approximately $1.1 billion. Restricted net assets of the Company as of December 31, 2012, were approximately $8.7 billion. Certain life insurance subsidiaries of the Company are permitted to loan up to $750 million to the parent company without prior approval. 

<img src='content_image/221272.jpg'>

Total income taxes for the years ended December 31 were different from the amount computed using the nominal federal income tax rate of 35% for the following reasons: 

<img src='content_image/221273.jpg'>

## Effect of Permanently Invested Foreign Earnings 

The Company provides for income taxes on the undistributed earnings of certain foreign operations using the foreign jurisdictions’ tax rate, as compared to the higher U.S. statutory tax rate. 

Commencing in the first quarter of 2012, the Company began using this approach to compute income taxes attributable to its China and Indonesia operations, based upon a determination that the related earnings would be permanently invested overseas. The Company 

