Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Components of Income Tax Expense (Benefit), Continuing Operations [Abstract]

Components Of Income Tax Expense

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

	Year Ended December 31,
	2018			2017			2016
	(Amounts in thousands)
Federal
Current	$	14,190		$	10,898		$	17,444
Deferred	(39,244		)	10,934			(21,947		)
	$	(25,054	)	$	21,832		$	(4,503	)
State
Current	$	1,982		$	955		$	2,239
Deferred	(1,815		)	(579		)	(56		)
	$	167		$	376		$	2,183
Total
Current	$	16,172		$	11,853		$	19,683
Deferred	(41,059		)	10,355			(22,003		)
Total	$	(24,887	)	$	22,208		$	(2,320	)

Reconciliation Of Income Taxes

Additionally in 2018, as a result of a determination made by the Office of Management and Budget, the Company reversed the previously recorded provisional 6.6% sequestration reduction to its alternative minimum tax (“AMT”) credit that originally resulted from repeal of the corporate AMT and reclassification of AMT credit carryforwards to current taxes receivable as a refundable credit.

In computing taxable income, property and casualty insurers reduce underwriting income by losses and loss adjustment expenses incurred. The amount of the deduction for losses incurred associated with unpaid losses is discounted at the interest rates and for the loss payment patterns prescribed by the U.S. Treasury. The Act changes the prescribed interest rates to rates based on corporate bond yield curves and extends the applicable time periods for the loss payment pattern. These changes are effective for tax years beginning after 2017 and are subject to a transition rule that spreads the additional tax payments from the amount determined by applying these changes versus the previous calculated amount over the subsequent eight years beginning in 2018. The changes included in the Act related to discounting of unpaid losses are broad and complex. The Securities Exchange Commission has issued rules that would allow for a measurement period of up to one year after the enactment date of the Act to finalize the recording of the related tax impacts. The Company recorded a total deferred tax liability adjustment of approximately $8.6 million at December 31, 2018 related to the changes in discounting of unpaid losses included in the Act based on the guidance published in 2018 by the Internal Revenue Service.

The following table presents a reconciliation of the tax expense (benefit) based on the statutory rate to the Company's actual tax expense (benefit) in the consolidated statements of operations:

	Year Ended December 31,
	2018			2017			2016
	(Amounts in thousands)
Computed tax (benefit) expense at 21% for 2018 and 35% for 2017 and 2016	$	(6,429	)	$	58,480		$	24,753
Tax-exempt interest income	(13,507		)	(26,038		)	(26,197		)
Dividends received deduction	(1,082		)	(2,296		)	(2,303		)
State tax expense	439			158			1,907
Nondeductible expenses	390			348			303
Cumulative impact from change in tax rate	—			(11,449		)	—
(Reversal in 2018) reduction of AMT credit carryforward due to sequestration in 2017	(4,088		)	4,088			—
Other, net	(610		)	(1,083		)	(783		)
Income tax (benefit) expense	$	(24,887	)	$	22,208		$	(2,320	)

Deferred Tax Assets And Liabilities

The following table presents the significant components of the Company’s net deferred tax assets and liabilities:

	December 31,
	2018			2017
	(Amounts in thousands)
Deferred tax assets:
20% of net unearned premiums	$	52,644		$	47,110
Discounting of loss reserves and salvage and subrogation recoverable for tax purposes	9,245			6,451
Write-down of impaired investments	356			387
Tax credit carryforwards	—			230
Expense accruals	7,019			6,192
Tax asset on net unrealized loss on securities carried at fair value	1,055			—
Other deferred tax assets	3,257			3,174
Total gross deferred tax assets	73,576			63,544
Deferred tax liabilities:
Deferred policy acquisition costs	(45,178		)	(41,612		)
Tax liability on net unrealized gain on securities carried at fair value	—			(27,574		)
Tax depreciation in excess of book depreciation	(4,594		)	(5,686		)
Undistributed earnings of insurance subsidiaries	(3,017		)	(3,907		)
Tax amortization in excess of book amortization	(2,729		)	(2,280		)
Other deferred tax liabilities	(4,719		)	(5,417		)
Total gross deferred tax liabilities	(60,237		)	(86,476		)
Net deferred tax assets (liabilities)	$	13,339		$	(22,932	)

Summary Of Unrecognized Tax Benefits

The following table presents a reconciliation of the beginning and ending balances of unrecognized tax benefits:

	December 31,
	2018		2017
	(Amounts in thousands)
Balance at January 1	$	9,674	$	12,954
Additions (reductions) based on tax positions related to:
Current year	662		85
Prior years	279		(3,365		)
Balance at December 31	$	10,615	$	9,674