aggregate, have a material impact on our results of operations, financial condition or cash flows.
Product Warranties.
We provide warranties to our customers associated with certain product sales.
We record estimated warranty costs in the period in which the related products are delivered.
The warranty liability recorded at each balance sheet date is based on the number of months of warranty coverage remaining for products delivered and the average historical monthly warranty payments.
Warranty obligations incurred in connection with long-term production contracts are accounted for within the contract estimates at completion (EACs).
Our other warranty obligations, primarily for business jet aircraft, are included in other current liabilities and other liabilities on the Consolidated Balance Sheet.
The changes in the carrying amount of warranty liabilities for each of the past three years were as follows:
## Table 0 ##
* Includes warranty liabilities assumed in connection with acquisitions, foreign exchange translation adjustments and reclassifications.
O.
EQUITY COMPENSATION PLANS Equity Compensation Overview We have various equity compensation plans for employees, as well as for non-employee members of the board of directors.
These include the General Dynamics Corporation 2009 Equity Compensation Plan (Equity Compensation Plan) and the 2009 General Dynamics United Kingdom Share Save Plan (U. K.  Plan).
The purpose of the Equity Compensation Plan is to provide an effective means of attracting, retaining and motivating directors, officers and key employees, and to provide them with incentives to enhance our growth and profitability.
Under the Equity Compensation Plan, awards may be granted to officers, employees or non-employee directors in common stock, options to purchase common stock, restricted shares of common stock, participation units or any combination of these.
Stock options may be granted either as incentive stock options, intended to qualify for capital gain treatment under Section 422 of the Internal Revenue Code (the Code), or as options not qualified under the Code.
All options granted under the Equity Compensation Plan are issued with an exercise price at the fair market value of the common stock on the date of grant.
Awards of stock options vest over two years, with 50 percent of the options vesting in one year and the remaining 50 percent vesting the following year.
Stock options that have been awarded under the Equity Compensation Plan expire five years after the grant date.
We grant stock options to participants in the Equity Compensation Plan on the first Wednesday of March based on the average of the high and low stock prices on that day as listed on the New York Stock Exchange.
Grants of restricted stock are awards of shares of common stock that are released approximately four years after the grant date.
During that restriction period, recipients may not sell, transfer, pledge, assign or otherwise convey their restricted shares to another party.
However, during the restriction period, the recipient is entitled to vote the restricted shares and to retain cash dividends paid on those shares.
Participation units represent obligations that have a value derived from or related to the value of our common stock.
These include stock appreciation rights, phantom stock units, and restricted stock units and are payable in cash and/or common stock.
Under the U. K.  Plan, our employees located in the United Kingdom may invest designated amounts in a savings account to be used to purchase a specified number of shares of common stock, based on option grants that the employee may receive, at an exercise price of not less than 80 percent of the fair market value of the common stock.
The options may be exercised three, five or seven years after the date of grant, depending on the terms of the specific award.
We issue common stock under our equity compensation plans from treasury stock.
On December 31, 2009, in addition to the shares reserved for issuance upon the exercise of outstanding options, approximately 32 million shares have been authorized for options and restricted stock that may be granted in the future.
Stock-based Compensation Expense The following table details the components of stock-based compensation expense recognized in net earnings in each of the past three years:
## Table 1 ##
* Stock-based compensation expense (pretax) is included in G&A expenses.
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations Results of Operations – CNA Financial – (Continued) Standard Lines The following table summarizes the results of operations for Standard Lines:
## Table 2 ##
2008 Compared with 2007 Net written premiums for Standard Lines decreased $213 million in 2008 as compared with 2007.
Premiums written in 2008 were unfavorably impacted by competitive market conditions resulting in decreased production, as compared with 2007, across both of CNA’s Business and Commercial Insurance groups.
The competitive market conditions may put ongoing pressure on premium and income levels, and the expense ratio.
This unfavorable impact was partially offset by decreased ceded premiums.
Net earned premiums decreased $314 million in 2008 as compared with 2007, consistent with the decreased net written premiums.
Standard Lines averaged rate decreases of 5.0% for 2008, as compared to decreases of 4.0% for 2007 for the contracts that renewed during those periods.
Retention rates of 82.0% and 78.0% were achieved for those contracts that were available for renewal in each period.
Net results decreased $534 million in 2008 as compared with 2007.
This decrease was attributable to decreased net operating income and higher net realized investment losses.
See the Investments section of this MD&A for further discussion of the net realized investment results and net investment income.
Net operating income decreased $336 million in 2008 as compared with 2007.
This decrease was primarily driven by significantly lower net investment income and higher catastrophe impacts.
The catastrophe impacts were $204 million after tax and minority interest in 2008, which included a $6 million after tax and minority interest catastrophe-related insurance assessment, as compared to catastrophe losses of $43 million after tax and minority interest in 2007.
In 2008, the amount due from policyholders related to losses under deductible policies within Standard Lines was reduced by $90 million for insolvent insureds.
The reduction of this amount, which is reflected as unfavorable net prior year reserve development, had no effect on 2008 results of operations as CNA had previously recognized provisions in prior years.
These impacts were reported in Insurance claims and policyholders’ benefits in the 2008 Consolidated Statement of Income.
The combined ratio increased 6.9 points in 2008 as compared with 2007.
The loss ratio increased 8.0 points primarily due to increased catastrophe losses.
Catastrophes losses related to 2008 events had an adverse impact of 11.1 points on the loss ratio in 2008 compared with an adverse impact of 2.2 points in 2007.
The expense ratio decreased 0.9 points in 2008 as compared with 2007 primarily related to changes in the assessment rates imposed by certain states for insurance-related assessments.
The dividend ratio decreased 0.2 points in 2008 as compared with 2007 due to increased favorable dividend development in the workers’ compensation line of business.
## Table 3 ##
Mortgage Loans Mortgage loans consist primarily of commercial mortgage loans on real estate.
The carrying amount of our commercial mortgage loan portfolio was $11,279.3 million and $10,763.5 million as of December 31, 2008 and 2007, respectively.
Commercial mortgage loans on real estate are generally reported at cost adjusted for amortization of premiums and accrual of discounts, computed using the interest method and net of valuation allowances.
Commercial mortgage loans held for sale are carried at the lower of cost or fair value, less cost to sell, and reported as mortgage loans in the statements of financial position.
Commercial mortgage loans play an important role in our investment strategy by: ?
providing strong risk-adjusted relative value in comparison to other investment alternatives; ?
enhancing total returns and ?
providing strategic portfolio diversification.
As a result, we have focused on constructing a solid, high quality portfolio of mortgages.
Our portfolio is generally comprised of mortgages with conservative loan-to-value ratios, high debt service coverages and general purpose property types with a strong credit tenancy.
Our commercial mortgage loan portfolio consists of primarily non-recourse, fixed rate mortgages on fully or near fully leased properties.
The mortgage portfolio is comprised primarily of credit oriented retail properties, manufacturing office properties and general-purpose industrial properties.
In addition, we have a $261.3 million short-term high rate portfolio of mortgages held by the spread business within the Global Asset Management segment.
For geographic and property type distribution of our commercial mortgage loans, see Item 8.
‘‘Financial Statements and Supplementary Data, Notes to Consolidated Financial Statements, Note 6, Investments.
’’ Credit extensions in the state of California accounted for 20% of our commercial mortgage loan portfolio as of December 31, 2008.
We are, therefore, exposed to potential losses resulting from the risk of catastrophes, such as earthquakes, that may affect the region.
Like other lenders, we generally do not require earthquake insurance for properties on which we make commercial mortgage loans.
With respect to California properties, however, we obtain an engineering report specific to each property.
The report assesses the building’s design specifications, whether it has been upgraded to meet seismic building codes and the maximum loss that is likely to result from a variety of different seismic events.
We also obtain a report that assesses, by building and geographic fault lines, the amount of loss our commercial mortgage loan portfolio might suffer under a variety of seismic events.
Our commercial loan portfolio is highly diversified by borrower.
As of December 31, 2008, 30% of the commercial mortgage loan portfolio was comprised of mortgage loans with principal balances of less than $10.0 million.
The total number of commercial mortgage loans outstanding was 1,223 and 1,254 as of December 31, 2008 and 2007, respectively.
The average loan size of our commercial mortgage portfolio was $9.3 million as of December 31, 2008.
Commercial Mortgage Loan Credit Monitoring.
We actively monitor and manage our commercial mortgage loan portfolio.
Substantially all loans within the portfolio are analyzed regularly and are internally rated, based on a proprietary risk rating cash flow model, in order to monitor the financial quality of these assets.
Based on ongoing monitoring, mortgage loans with a likelihood of becoming delinquent are identified and placed on an internal ‘‘watch list’’.
Among criteria which would indicate a potential problem are: imbalances in ratios of loan to value or contract rents to debt service, major tenant vacancies or bankruptcies, borrower sponsorship problems, late payments, delinquent taxes and loan relief/restructuring requests.
We review our mortgage loan portfolio and analyze the need for a valuation allowance for any loan which is delinquent for 60 days or more, in process of foreclosure, restructured, on the ‘‘watch list’’ or which currently has a valuation allowance.
We categorize loans that are 60 days or more delinquent, loans in process of foreclosure, and loans to borrowers in bankruptcy that are delinquent as ‘‘problem’’ loans.
Valuation allowances have been recognized on problem loans.
Potential problem loans are loans placed on an internal ‘‘watch list’’ for which management has concerns
A valuation allowance totaling $45.4 million, $43.9 million and $40.4 million as of 2013, 2012 and 2011 year end, respectively, has been established for deferred income tax assets primarily related to certain subsidiary loss carryforwards that may not be realized.
Realization of the net deferred income tax assets is dependent on generating sufficient taxable income prior to their expiration.
Although realization is not assured, management believes it is morelikely-than-not that the net deferred income tax assets will be realized.
The amount of the net deferred income tax assets considered realizable, however, could change in the near term if estimates of future taxable income during the carryforward period fluctuate.
The following is a reconciliation of the beginning and ending amounts of unrecognized tax benefits for 2013, 2012 and 2011:
## Table 4 ##
Of the $4.6 million, $6.8 million and $11.0 million of unrecognized tax benefits as of 2013, 2012 and 2011 year end, respectively, approximately $4.6 million, $4.1 million and $9.1 million, respectively, would impact the effective income tax rate if recognized.
Interest and penalties related to unrecognized tax benefits are recorded in income tax expense.
During 2013 and 2012, the company reversed a net $0.6 million and $0.5 million, respectively, of interest and penalties to income associated with unrecognized tax benefits.
As of 2013, 2012 and 2011 year end, the company has provided for $0.9 million, $1.6 million and $1.6 million, respectively, of accrued interest and penalties related to unrecognized tax benefits.
The unrecognized tax benefits and related accrued interest and penalties are included in “Other long-term liabilities” on the accompanying Consolidated Balance Sheets.
Snap-on and its subsidiaries file income tax returns in the United States and in various state, local and foreign jurisdictions.
It is reasonably possible that certain unrecognized tax benefits may either be settled with taxing authorities or the statutes of limitations for such items may lapse within the next 12 months, causing Snap-on’s gross unrecognized tax benefits to decrease by a range of zero to $1.1 million.
Over the next 12 months, Snap-on anticipates taking certain tax positions on various tax returns for which the related tax benefit does not meet the recognition threshold.
Accordingly, Snap-on’s gross unrecognized tax benefits may increase by a range of zero to $0.8 million over the next 12 months for uncertain tax positions expected to be taken in future tax filings.
With few exceptions, Snap-on is no longer subject to U. S.  federal and state/local income tax examinations by tax authorities for years prior to 2008, and Snap-on is no longer subject to non-U.
S.  income tax examinations by tax authorities for years prior to 2006.
The undistributed earnings of all non-U.
S.  subsidiaries totaled $556.0 million, $492.2 million and $416.4 million as of 2013, 2012 and 2011 year end, respectively.
Snap-on has not provided any deferred taxes on these undistributed earnings as it considers the undistributed earnings to be permanently invested.
Determination of the amount of unrecognized deferred income tax liability related to these earnings is not practicable.

Tables referenced above, in order (Table 0 first):
<table><tr><td> Year Ended December 31</td><td>2009</td><td>2008</td><td>2007</td></tr><tr><td>Beginning balance</td><td>$221</td><td>$237</td><td>$219</td></tr><tr><td>Warranty expense</td><td>71</td><td>69</td><td>77</td></tr><tr><td>Payments</td><td>-60</td><td>-52</td><td>-64</td></tr><tr><td>Adjustments*</td><td>7</td><td>-33</td><td>5</td></tr><tr><td>Ending balance</td><td>$239</td><td>$221</td><td>$237</td></tr></table>
<table><tr><td> Year Ended December 31</td><td> 2009</td><td> 2008</td><td> 2007</td></tr><tr><td>Stock options</td><td>$54</td><td>$49</td><td>$42</td></tr><tr><td>Restricted stock</td><td>22</td><td>19</td><td>14</td></tr><tr><td>Total stock-based compensation expense, net of tax*</td><td>$76</td><td>$68</td><td>$56</td></tr></table>
<table><tr><td>Year Ended December 31</td><td>2008</td><td>2007</td><td>2006</td></tr><tr><td>(In millions, except %)</td><td></td><td></td><td></td></tr><tr><td>Net written premiums</td><td>$3,054</td><td>$3,267</td><td>$3,598</td></tr><tr><td>Net earned premiums</td><td>3,065</td><td>3,379</td><td>3,557</td></tr><tr><td>Net investment income</td><td>506</td><td>878</td><td>840</td></tr><tr><td>Net operating income</td><td>200</td><td>536</td><td>405</td></tr><tr><td>Net realized investment gains (losses)</td><td>-285</td><td>-87</td><td>41</td></tr><tr><td>Net income (loss)</td><td>-85</td><td>449</td><td>446</td></tr><tr><td>Ratios:</td><td></td><td></td><td></td></tr><tr><td>Loss and loss adjustment expense</td><td>75.4%</td><td>67.4%</td><td>72.5%</td></tr><tr><td>Expense</td><td>31.6</td><td>32.5</td><td>31.6</td></tr><tr><td>Dividend</td><td></td><td>0.2</td><td>0.5</td></tr><tr><td>Combined</td><td>107.0%</td><td>100.1%</td><td>104.6%</td></tr></table>
<table><tr><td> </td><td colspan="6"> December 31, 2007</td></tr><tr><td> </td><td colspan="2"> Problem, potential problem, and restructured</td><td colspan="2"> All other fixed maturity securities</td><td colspan="2"> Total</td></tr><tr><td> </td><td> Carrying amount</td><td> Gross unrealized losses</td><td> Carrying amount</td><td> Gross unrealized losses</td><td> Carrying amount</td><td> Gross unrealized losses</td></tr><tr><td> </td><td colspan="6"><i>(in millions)</i> </td></tr><tr><td>Three months or less</td><td>$—</td><td>$—</td><td>$670.2</td><td>$240.2</td><td>$670.2</td><td>$240.2</td></tr><tr><td>Greater than three to six months</td><td>—</td><td>—</td><td>110.7</td><td>80.9</td><td>110.7</td><td>80.9</td></tr><tr><td>Greater than six to nine months</td><td>—</td><td>—</td><td>0.5</td><td>0.3</td><td>0.5</td><td>0.3</td></tr><tr><td>Greater than nine to twelve months</td><td>—</td><td>—</td><td>—</td><td>—</td><td>—</td><td>—</td></tr><tr><td>Greater than twelve months</td><td>—</td><td>—</td><td>—</td><td>—</td><td>—</td><td>—</td></tr><tr><td>Total fixed maturity securities, available-for-sale</td><td>$—</td><td>$—</td><td>$781.4</td><td>$321.4</td><td>$781.4</td><td>$321.4</td></tr></table>
<table><tr><td><i>(Amounts in millions)</i></td><td>2013</td><td>2012</td><td>2011</td></tr><tr><td>Unrecognized tax benefits at beginning of year</td><td>$6.8</td><td>$11.0</td><td>$11.1</td></tr><tr><td>Gross increases – tax positions in prior periods</td><td>1.5</td><td>0.7</td><td>0.5</td></tr><tr><td>Gross decreases – tax positions in prior periods</td><td>-1.6</td><td>-4.9</td><td>-0.4</td></tr><tr><td>Gross increases – tax positions in the current period</td><td>0.5</td><td>1.2</td><td>2.8</td></tr><tr><td>Settlements with taxing authorities</td><td>-2.1</td><td>–</td><td>-1.2</td></tr><tr><td>Lapsing of statutes of limitations</td><td>-0.5</td><td>-1.2</td><td>-1.8</td></tr><tr><td>Unrecognized tax benefits at end of year</td><td>$4.6</td><td>$6.8</td><td>$11.0</td></tr></table>

Question: what percent of unrecognized tax benefits as of 2012 would not impact the effective income tax rate if recognized?
Answer: 0.39706
Reasoning program: subtract(6.8,4.1), divide(#0,6.8)