Income Taxes (Tables)

12 Months Ended

Dec. 31, 2019

Schedule of Deferred Tax Assets and Liabilities

The composition of deferred tax assets and liabilities and the related tax effects as of December 31, 2019 and 2018, are as follows (in thousands):


	2019		2018
Deferred tax liabilities:
Deferred policy acquisition costs	$	(4,829)	$	(3,001)
Net unrealized holding gain on investments		(6,408)		(1,087)
Agency relationship		(17)		(22)
Intangible assets		(1,882)		(2,179)
Goodwill		(357)		(357)
Bond amortization		(77)		(72)
Fixed assets		(1,529)		(992)
Other		(315)		(279)
Total deferred tax liabilities		(15,414)		(7,989)

Deferred tax assets:
Unearned premiums		9,438		6,931
Amortization of non-compete agreements		36		71
Pension liability		842		867
Net operating loss carry-forward		2,154		93
Unpaid loss and loss adjustment expense		3,284		2,505
Rent reserve		18		54
Bonus accrual		722		632
Investment impairments		489		1,446
Other		616		373
Total deferred tax assets		17,599		12,972

Deferred federal income taxes, net	$	2,185	$	4,983

Schedule of Effective Income Tax Rate Reconciliation

A reconciliation of the income tax provisions based on the applicable statutory tax rate of 21% to the provisions reflected in the consolidated financial statements for the years ended December 31, 2019 and 2018, respectively, is as follows (in thousands):


	2019		2018
Computed expected income tax (benefit) expense at statutory tax rate	$	(217)	$	2,689
Meals and entertainment		102		75
Tax exempt interest		(421)		(435)
Dividends received deduction		(191)		(94)
State taxes (net of federal benefit)		414		266
Other		(94)		(45)
Income tax (benefit) expense	$	(407)	$	2,456

Current income tax (benefit) expense	$	(1,224)	$	4,300
Deferred tax expense (benefit)		817		(1,844)
Income tax (benefit) expense	$	(407)	$	2,456

Summary of Operating Loss Carryforwards

The net operating losses will expire if unused, as follows (in thousands):


Year
2022	$	—
2028		2
2029		25
2031		45
2032		77
2033		73
2034		59
2035		33
2036		50
2037		29
2038		40
2039		67
Indefinite		9,758
	$	10,258