Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The components of income tax expense for the years ended December 31 are summarized as follows:

(in thousands)	2021		2020
Current:
Federal	$	12,911	$	8,886
State	176		137
Total current	13,087		9,023
Deferred:
Federal	4,740		1,236
State	85		(18)
Total deferred	4,825		1,218
Total	$	17,912	$	10,241

For state income tax purposes, ITIC and NITIC generally pay only a gross premium tax found in other expenses in the Consolidated Statements of Operations.

At December 31, the approximate tax effect of each component of deferred income tax assets and liabilities is summarized as follows:

(in thousands)	2021		2020
Deferred income tax assets:
Accrued benefits and retirement services	$	3,382	$	3,189
Net operating loss carryforward	186		118
Other-than-temporary impairment of assets	161		167
Allowance for doubtful accounts	66		65
Postretirement benefit obligation	39		39
Reinsurance and commission payable	39		9
Other	1,550		1,129
Total	5,423		4,716
Deferred income tax liabilities:
Net unrealized gain on investments	10,964		8,090
Recorded statutory premium reserve, net of reserves for claims	1,835		1,199
Excess of tax over book depreciation	1,662		1,149
Intangible assets	1,002		1,086
Other	3,081		1,784
Total	18,544		13,308
Net deferred income tax liabilities	$	(13,121)	$	(8,592)

At December 31, 2021 and 2020, there were no valuation allowances recorded. Based upon the Company’s historical results of operations, the existing financial condition of the Company and management’s assessment of all other available information, management believes that it is more likely than not that the benefit of these deferred income tax assets will be realized.

A reconciliation of the U.S. federal statutory income tax rate of 21.0% for the years ended December 31, 2021 and 2020, to income tax expense, is as follows:

(in thousands)	2021		2020
Anticipated income tax expense	$	17,836	$	10,429
Increase (decrease) related to:
State income taxes, net of federal income tax benefit	139		108
Tax-exempt interest income, net of amortization	(1,310)		(1,199)
Other, net	1,247		903
Provision for income taxes	$	17,912	$	10,241

In accounting for uncertainty in income taxes, the Company is required to recognize in its Consolidated Financial Statements the impact of a tax position if that position is more likely than not of being sustained on an audit, based on the technical merits of the position. In this regard, an uncertain tax position represents the Company’s expected treatment of a tax position taken in a filed tax return, or planned to be taken in a future tax return, that has not been reflected in measuring income tax expense for financial reporting purposes. There were no unrecognized tax benefits or liabilities as of December 31, 2021.

The amount of unrecognized tax benefit or liability may increase or decrease in the future for various reasons, including adding amounts for current tax year positions, expiration of open income tax returns due to the expiration of the applicable statute of limitations, changes in management’s judgment about the level of uncertainty, status of examinations, litigation and legislative activity and the additions or eliminations of uncertain tax positions.

The Company’s policy is to report interest and penalties related to income taxes in the other expenses line item in the Consolidated Statements of Operations.

The Company, or one of its subsidiaries, files income tax returns in the U.S. federal jurisdiction and various states. With few exceptions, the Company is no longer subject to U.S. federal or state and local examinations by taxing authorities for years before 2018.