Income Taxes



The provision for income taxes consisted of the following:	At December 31,
	2011		2010		2009
Current	$	5,419	$	3,822	$	3,140
Deferred	2,326		4,881		3,411
Total	$	7,745	$	8,703	$	6,551

The reconciliation of the income tax expense at the federal statutory income tax rate of 35% in 2011, 2010 and 2009 is as follows:



	Years Ended December 31,
	2011					2010					2009
	Amount			Percent of Pre-tax Income		Amount			Percent of Pre-tax Income		Amount			Percent of Pre-tax Income
Income taxes at federal income tax rate	$	7,731		35.00	%	$	8,724		35.00	%	$	6,347		35.00	%
Effect of:
Small life deduction	(375		)	(1.70	)	(465		)	(1.87	)	(489		)	(2.70	)
Non-deductible expenses	267			1.21		179			0.72		602			3.32
Non-deductible preferred dividends	105			0.48		301			1.21		308			1.70
Tax exempt interest	(120		)	(0.54	)	(117		)	(0.47	)	(99		)	(0.55	)
State taxes	339			1.53		597			2.40		314			1.73
Goodwill amortization	—			—		(243		)	(0.98	)	(7		)	(0.04	)
Prior year tax true up	(506		)	(2.29	)	(647		)	(2.59	)	(324		)	(1.79	)
Other, net	304			1.37		374			1.50		(101		)	(0.55	)
Income tax expense	$	7,745		35.06	%	$	8,703		34.92	%	$	6,551		36.12	%

The Company had no unrecognized tax benefits for the years ended December 31, 2011, 2010 and 2009. The Company has reviewed its uncertain tax positions and has concluded that they are immaterial and did not require an adjustment to equity upon adoption of ASC 740-10. The Company is no longer subject to U.S. federal or state tax examinations by tax authorities for 2007 or prior years.



The components of the net deferred tax liability are as follows:	At December 31,
	2011		2010
Gross deferred tax assets
Unearned premiums	$	4,825	$	4,439
Deferred revenue	7,518		9,540
Net operating loss carryforward	1,413		167
Unrealized loss on interest rate swap	1,260		—
Research credit	676		—
Unpaid claims	634		132
Deferred compensation	248		249
Bad debt allowance	118		121
Other deferred assets	71		112
Total gross deferred tax assets	16,763		14,760

Gross deferred tax liabilities
Deferred acquisition costs	21,701		22,611
Intangible assets	11,901		9,607
Advanced commissions	2,886		2,486
Depreciation on fixed assets	4,642		3,256
Unrealized gains on investments	424		1,275
Other basis differences in investments	77		64
Other deferred tax liabilities	151		152
Total gross deferred tax liabilities	41,782		39,451

Net deferred tax liability	$	25,019	$	24,691

The Company had a current tax payable of $1.3 million at December 31, 2011, and a current tax receivable of $0.9 million at December 31, 2010.

At December 31, 2011, the Company had net operating loss carry forwards of $3.6 million, which are subject to certain limitations under IRC Section 382 and will begin to expire in 2019. In addition, the Company has research tax credit carry forwards for federal and state income tax purposes in the amount of $0.5 million and $0.2 million, respectively, which are also subject to certain limitations under IRC Section 382 and will begin to expire in 2019.