•Expand our relationships with primary care physician groups both within and outside our Medicare Advantage footprint to develop Accountable Care Organizations.
•Acquire and develop capabilities to participate in the growing Medicaid market, especially the dual eligible sector.
Our effective tax rate on continuing operations was 93.6% for 2011, compared with 32.0% for 2010. The high effective tax rate in 2011 was driven by our low pre-tax income which magnified the effective rate impact of revenue based state taxes on lines of business where revenues were relatively constant year-over-year and permanent non-deductible items. Excluding non-recurring tax benefits (discussed below), revenue-based state taxes and certain items that arose in connection with the 338(h)(10) election, the effective tax rate was 56.2% in 2011, compared with 36.2% in 2010 and 36.4% in 2009, with permanent items of $0.8 million contributing 21.1% to the rate. As a result of the Part D Transaction, the restructuring charge and other non-recurring items recognized in 2011, the 2011 effective tax rate on continuing operations is not indicative of our expectation for ongoing income taxes, which we believe will be more in line with our historical experience.
Income from continuing operations for the year ended December 31, 2010 was $81.0 million, or $1.03 per diluted share, compared to of $40.8 million, or $0.50 per diluted share for the year ended December 31, 2009. The net income for the year ended December 31, 2010 includes realized investment gains, net of taxes, of $4.3 million, or $0.05 per diluted share. Net income for the year ended December 31, 2009 includes realized investment losses, net of taxes, of $16.2 million, or $0.20 per diluted share, relating primarily to the recognition of other-than-temporary impairments on investments.
Capital contributions to and dividends from our insurance and HMO subsidiaries are made through their respective holding companies. We did not make any capital contributions to our insurance subsidiaries during 2011. In March 2011, our wholly-owned subsidiary, Constitution Life Insurance Company, declared and accrued a dividend of $11.7 million, which was paid in April 2011. In May 2011, our wholly-owned subsidiary, American Progressive Life and Health Insurance Company of New York, declared and paid a dividend of $13.3 million. In 2011, the parent company funded a $360,000
Adjustment Provisions." All health benefit organizations that contract with CMS must capture, collect, and submit the necessary diagnosis code information to CMS within prescribed deadlines. Accordingly, we collect, capture, and submit the necessary and available diagnosis data to CMS within prescribed deadlines for our Plans. We estimate changes in CMS premiums related to revenue adjustments based upon the diagnosis data submitted to CMS and ultimately accepted by CMS. Risk scores are updated annually by CMS and reconciled to our estimated amounts by us with any adjustments recorded in premium revenue. Although such adjustments have not been considered to be material in the past, future adjustments could be material.
At December 31, 2011, the Company had a net capital loss carryforward of approximately $0.7 million that expire in 2016. We carried valuation allowances on deferred tax assets of $1.9 million at December 31, 2011 and $0.2 million at December 31, 2010, primarily related to state net operating loss carryforwards.