INCOME TAXES (Tables)

3 Months Ended

Mar. 31, 2019

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):



	As of March 31, 2019			As of December 31, 2018
General expenses	$	1,121		$	1,067
Unearned premiums	1,294			1,265
Claims liabilities	552			552
Impairment on real estate owned	119			119
Unrealized losses on securities available-for-sale	—			368
Unrealized loss on interest rate swaps	42			49
Deferred tax assets	3,128			3,420

Trading securities	(1		)	—
Depreciation	(77		)	(79		)
Deferred policy acquisition costs	(1,627		)	(1,645		)
Pre-1984 policyholder surplus account	(447		)	(463		)
Unrealized gains on securities available-for-sale	(92		)	—
Unrealized gains on equity securities	(544		)	(517		)
Deferred tax liabilities	(2,788		)	(2,704		)
Net deferred tax asset	$	340		$	716

Changes in Temporary Differences in Federal Income Tax

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



	Three months ended March 31,
	2019			2018
Deferred policy acquisition costs	$	(18	)	$	(20	)
Trading securities	1			—
Unearned premiums	(29		)	(26		)
General expenses	(54		)	1
Depreciation	(2		)	(3		)
Claims liabilities	—			15
AMT credit	—			787
Impact of repeal of special provision on pre-1984 policyholder surplus	(16		)	(16		)
Unrealized gains on equity securities	26			(43		)
Deferred income tax expense (benefit)	$	(92	)	$	695

Schedule of Effective Income Tax Rate Reconciliation

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



	Three months ended March 31,
	2019		2018
Federal income tax rate applied to pre-tax income/loss	21.0	%	21.0	%
Dividends received deduction and tax-exempt interest	(0.3	)%	(1.2	)%
Company owned life insurance	(16.0	)%	4.6	%
Other, net	1.2	%	1.1	%
Effective federal income tax rate	5.9	%	25.5	%