INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of Components of Income Tax Expense (Benefit)

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


	Year Ended December 31,
	2021		2020		2019
	(In thousands)
Federal:
Current	$	258	$	(29,449)	$	(982)
Deferred	198		(3,494)		567
Federal income tax expense (benefit)	456		(32,943)		(415)
State:
Current	—		(403)		241
Deferred	(140)		(150)		(124)
State income tax expense (benefit)	(140)		(553)		117
Total income tax expense (benefit)	$	316	$	(33,496)	$	(298)

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,
	2021		2020		2019
	(In thousands)
Balance at January 1	$	203	$	382	$	585
Increases/(decreases) for uncertain tax positions taken during the prior years	—		(179)		(203)
Balance at December 31	$	203	$	203	$	382

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,
	2021		2020		2019
	(In thousands)
Computed expected tax expense provision, at federal rate	$	(21,585)	$	(23,447)	$	150
State tax, net of federal tax benefit	(137)		(3,157)		(122)
Tax-exempt interest	(2)		(5)		(3)
Income subject to dividends-received deduction	(21)		(26)		(34)
Goodwill impairment	—		2,309		—
Return to provision	(2,036)		(3,407)		(307)

Executive compensation	30		41		230
Meals and entertainment	—		13		43
Uncertain tax position	—		(179)		(203)
Rate difference on NOL carryback	98		(8,785)		(113)
Change in valuation allowance	23,436		2,968		—
Other	533		179		61
Total income tax expense (benefit)	$	316	$	(33,496)	$	(298)

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,
	2021		2020
	(In thousands)
Deferred income tax assets:
Unearned premiums	$	5,419	$	5,611
Unpaid losses and loss adjustment expenses	3,416		581
Accrued expenses	307		236
Net operating loss carryforwards	27,780		5,350

Share-based compensation	149		232

Depreciation and amortization	771		412
Lease liability	1,623		1,783
Other	45		69
Gross deferred income tax assets	39,510		14,274
Valuation allowance	(30,481)		(2,968)
Total deferred income tax assets	9,029		11,306

Deferred income tax liabilities:
Deferred acquisition costs and other	(3,926)		(6,387)

Unrealized gains on investment securities	(608)		(2,865)
Embedded derivative	(2,601)		—
Lease asset	(1,623)		(1,783)
Other	(271)		(213)
Total deferred income tax liabilities	(9,029)		(11,248)

Deferred income tax asset (liability), net	$	—	$	58