INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2020

Schedule of Components of Income Tax Expense (Benefit)

The components of income tax expense (benefit) include the following:


	Year Ended December 31,
	2020		2019		2018
	(In thousands)
Federal:
Current	$	(29,449)	$	(982)	$	5,162
Deferred	(3,494)		567		(751)
Federal income tax expense (benefit)	(32,943)		(415)		4,411
State:
Current	(403)		241		1,383
Deferred	(150)		(124)		(296)
State income tax expense (benefit)	(553)		117		1,087
Total income tax expense (benefit)	$	(33,496)	$	(298)	$	5,498

We recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense (benefit) in the consolidated statements of operations and statements of comprehensive income (loss). A reconciliation of these uncertain tax positions was as follows:


	Year Ended December 31,
	2020		2019		2018
	(In thousands)
Balance at January 1	$	382	$	585	$	585
Increases/(decreases) for uncertain tax positions taken during the prior years	(179)		(203)		—
Balance at December 31	$	203	$	382	$	585

Schedule of Effective Income Tax Rate Reconciliation

The actual income tax expense (benefit) differs from the “expected” income tax expense (benefit) (computed by applying the combined applicable effective federal and state tax rates to income before income tax expense) as follows:


	Year Ended December 31,
	2020		2019		2018
	(In thousands)
Computed expected tax expense provision, at federal rate	$	(23,447)	$	150	$	4,244
State tax, net of federal tax benefit	(3,157)		(122)		761
Tax-exempt interest	(5)		(3)		(134)
Income subject to dividends-received deduction	(26)		(34)		(13)
Goodwill impairment	2,309		—		—
Return to provision	(3,407)		(307)		158

Executive compensation	41		230		436
Meals and entertainment	13		43		28
Uncertain tax position	(179)		(203)		—
Rate difference on NOL carryback	(8,785)		(113)		—
Change in valuation allowance	2,968		—		—
Other	179		61		18
Total income tax expense (benefit)	$	(33,496)	$	(298)	$	5,498

Significant Components of Net Deferred Tax Liability

Significant components of the Company’s deferred income tax asset (liability), net include the following:


	As of December 31,
	2020		2019
	(In thousands)
Deferred income tax assets:
Unearned premiums	$	5,611	$	10,232
Unpaid losses and loss adjustment expenses	581		1,596
Accrued expenses	236		216
Net operating loss carryforwards	5,350		2,095

Share-based compensation	232		161

Depreciation and amortization	412		—
Lease liability	1,783		1,655
Other	69		23
Gross deferred income tax assets	14,274		15,978
Valuation allowance	(2,968)		—
Total deferred income tax assets	11,306		15,978

Deferred income tax liabilities:
Deferred acquisition costs and other	(6,387)		(12,703)
Depreciation and amortization	—		(1,679)
Unrealized gains on investment securities	(2,865)		(3,270)
Lease asset	(1,783)		(1,655)
Other	(213)		(257)
Total deferred income tax liabilities	(11,248)		(19,564)

Deferred income tax asset (liability), net	$	58	$	(3,586)