Income Taxes

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Abstract]

Income Tax Disclosure [Text Block]

15. Income Taxes:

The composition of deferred tax assets and liabilities and the related tax effects as of December 31, 2012 and 2011, are as follows (in thousands):

	2012			2011
				(as adjusted)
Deferred tax liabilities:
Deferred policy acquisition costs	$	(8,719	)	$	(7,894	)
Net unrealized holding gain on investments		(5,622	)		(5,047	)
Agency relationship		(94	)		(104	)
Intangible assets		(6,852	)		(7,738	)
Goodwill		(116	)		-
Fixed assets		(685	)		(858	)
Other		(275	)		(400	)
Total deferred tax liabilities		(22,363	)		(22,041	)
Deferred tax assets:
Unearned premiums		9,806			8,864
Alternative minimum tax		1,651			164
Amortization of non-compete agreements		476			536
Pension liability		1,591			1,604
Net operating loss carry-forward		702			1,070
Unpaid loss and loss adjustment expense		7,549			7,699
Goodwill		-			93
Rent reserve		363			223
Investment impairments		1,256			1,254
Other		909			399
Total deferred tax assets		24,303			21,906
Deferred federal income taxes, net	$	1,940		$	(135	)

A reconciliation of the income tax provisions based on the statutory tax rate to the provision reflected in the consolidated financial statements for the years ended December 31, 2012, 2011 and 2010, is as follows (in thousands):  

	2012			2011			2010
				(as adjusted)			(as adjusted)
Computed expected income tax expense (benefit)  at statutory regulatory tax rate	$	1,181		$	(6,926	)	$	2,930
Meals and entertainment		28			44			17
Tax exempt interest		(1,631	)		(1,835	)		(1,829	)
Dividends received deduction		(111	)		(99	)		(172	)
State taxes (net of federal benefit)		298			84			299
Other		(239	)		(222	)		(382	)
Income tax (benefit) expense	$	(474	)	$	(8,954	)	$	863
Current income tax (benefit) expense	$	2,377		$	(6,059	)	$	1,843
Deferred tax benefit		(2,851	)		(2,895	)		(980	)
Income tax (benefit) expense	$	(474	)	$	(8,954	)	$	863

We have available, for federal income tax purposes, unused net operating loss of approximately $2.0 million at December 31, 2012. The losses were acquired as part of the HIC and HCM acquisitions and may be used to offset future taxable income. Utilization of the losses is limited under Internal Revenue Code Section 382. The Internal Revenue Code has provided that effective with tax years beginning September 1997, the carry-back and carry-forward periods are 2 years and 20 years, respectively, with respect to newly generated operating losses. The net operating losses will expire if unused, as follows (in thousands):

Year
2021	$	975
2022		878
2028		2
2030		25
2031		45
2032		79
	$	2,004

We are no longer subject to U.S. federal, state, local or non-U.S. income tax examinations by tax authorities for years prior to 2009. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. There were no uncertain tax positions at December 31, 2012.