Income Taxes

12 Months Ended

Dec. 31, 2023

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)	2023		2022
Current:
Federal	$	8,389	$	10,685
State	389		164
Total current	8,778		10,849
Deferred:
Federal	(4,150)		(4,510)
State	(84)		(134)
Total deferred	(4,234)		(4,644)
Total	$	4,544	$	6,205

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)	2023		2022
Deferred income tax assets:
Accrued benefits and retirement services	$	3,990	$	3,860
Net operating loss carryforward	246		202
Impairment of assets	186		185
Reinsurance and commission payable	62		28
Allowance for doubtful accounts	29		59
Lease assets	1,354		1,280
Other	563		519
Total	6,430		6,133
Deferred income tax liabilities:
Net unrealized gain on investments	3,157		5,615
Recorded statutory premium reserve, net of reserves for claims	2,223		2,497
Intangible assets	797		885
Excess of tax over book depreciation	657		1,551
Lease liabilities	1,324		1,252
1031 gain	935		912
Other	883		1,086
Total	9,976		13,798
Net deferred income tax liabilities	$	(3,546)	$	(7,665)

At December 31, 2023 and 2022, 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, 2023 and 2022, to income tax expense, is as follows:

(in thousands)	2023		2022
Anticipated income tax expense	$	5,508	$	6,323
Increase (decrease) related to:
State income taxes, net of federal income tax benefit	307		130
Tax-exempt interest income, net of amortization	(525)		(577)
Other, net	(746)		329
Provision for income taxes	$	4,544	$	6,205

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, 2023.

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 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 2019.