Income Taxes (Tables)

9 Months Ended

Sep. 30, 2012

Income Tax Disclosure [Abstract]

Schedule of Deferred Tax Assets and Liabilities

The tax effect of significant differences representing deferred tax assets and liabilities are as follows (dollars in thousands):

	September 30, 2012			December 31, 2011
	(unaudited)
General expenses	$	1,232		$	1,151
Unearned premiums	1,866			1,714
Claims liabilities	260			271
Trading securities	(1		)	—
Litigation settlement	3,570			425
AMT credit	246			—
NOL carry forward	3,221			1,363
Other-than-temporary impairments on securities owned	231			258
Unrealized loss on interest rate swaps	530			407
Deferred tax assets	11,155			5,589
Depreciation	(106		)	(144		)
Deferred policy acquisition costs	(3,266		)	(3,250		)
Unrealized gains on securities available-for-sale	(2,245		)	(2,281		)
Deferred tax liabilities	(5,617		)	(5,675		)
Net deferred tax asset (liability)	$	5,538		$	(86	)

Changes in Temporary Differences in Federal Income Tax

The appropriate income tax effects of changes in temporary differences are as follows (dollars in thousands):

	Nine Months Ended September 30,
	2012			2011
Deferred policy acquisition costs	$	16		$	401
Other-than-temporary impairments	27			(152		)
Trading securities	1			(26		)
Unearned premiums	(152		)	(100		)
General expenses	(81		)	333
Depreciation	(38		)	(21		)
Claim liabilities	11			7
Litigation settlement	(3,145		)	(425		)
AMT credit	(246		)	—
NOL carry forward	(1,858		)	(700		)
Deferred income tax (benefit) expense	$	(5,465	)	$	(683	)

Schedule of Effective Income Tax Rate Reconciliation

Total income tax (benefit) expense varies from amounts computed by applying current federal income tax rates to income or loss before income taxes.  The reason for these differences and the approximate tax effects are as follows:

	Nine Months Ended September 30,
	2012		2011
Federal income tax rate applied to pre-tax income/loss	34.0	%	34.0	%
Dividends received deduction and tax-exempt interest	1.1	%	2.2	%
Company owned life insurance	0.8	%	0.1	%
Small life deduction	3.9	%	4.6	%
Other, net	(0.1	)%	(6.4	)%
Effective federal income tax rate	39.7	%	34.5	%