Income Taxes (Tables)

12 Months Ended

Dec. 31, 2013

Total income taxes were allocated as follows:

	2013			2012
Total tax expense on income	$	184		$	646

Tax expense (benefit) on components of shareholders’ equity:
Net unrealized gains (losses) on investment securities		(7,247	)		3,688
Fair value adjustment to derivative financial instrument		49			257
Total tax expense (benefit) on shareholders’ equity		(7,198	)		3,945
Total tax expense (benefit)	$	(7,014	)	$	4,591

A reconciliation of the differences between income taxes computed at the federal statutory income tax rate and the income tax expense is as follows:

	2013			2012
Federal income tax provision at statutory rate of 35%	$	3,922		$	1,779
Dividends received deduction		(149	)		(175	)
Small life insurance company deduction		(586	)		(485	)
Other		50			46
Change in asset valuation allowance due to change in judgment relating to realizability of deferred tax assets		(3,059	)		(440	)
Adjustment for prior years’ estimates to actual		6			(79	)
Income tax expense	$	184		$	646

Deferred tax liabilities and assets at December 31, 2013 and 2012 were comprised of the following:

	2013			2012
Deferred tax liabilities:
Deferred acquisition costs	$	(3,766	)	$	(4,197	)
Deferred and uncollected premiums		(734	)		(743	)
Net unrealized investment gains		(3,341	)		(10,588	)
Other		(8	)		(8	)
Total deferred tax liabilities		(7,849	)		(15,536	)
Deferred tax assets:
Net operating loss carryforwards		844			1,575
Insurance reserves		5,109			4,516
Capital loss carryforwards		2,177			5,236
Impaired assets		1,406			1,406
Alternative minimum tax credit		309			306
Bad debts and other		576			601
Total deferred tax assets		10,421			13,640
Asset valuation allowance		(2,209	)		(5,268	)
Net deferred tax asset (liability)	$	363		$	(7,164	)

The components of income tax expense were:

	2013			2012
Current - Federal	$	513		$	743
Deferred - Federal		2,730			343
Change in deferred tax asset valuation allowance		(3,059	)		(440	)
Total	$	184		$	646