XML 78 R14.htm IDEA: XBRL DOCUMENT v3.20.1
INCOME TAXES
 3 Months Ended
Mar. 31, 2020
Income Tax Disclosure [Abstract]  
INCOME TAXES INCOME TAXES
The Company recognizes tax-related interest and penalties as a component of tax expense.  The Company files income tax returns in the U.S. federal jurisdiction and various states.  The Company is not subject to examinations by authorities related to its U.S. federal or state income tax filings for years prior to 2014. Tax returns have been filed through the year 2018.
 
Net deferred tax liabilities are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the provisions of the enacted tax laws. Management believes that, based on its historical pattern of taxable income, the Company will produce sufficient income in the future to realize its deferred tax assets. The Company recognized a net deferred tax asset position of $676,000 at March 31, 2020 and a net deferred tax liability position of $96,000 at December 31, 2019.

The tax effect of significant differences representing deferred tax assets and liabilities are as follows:
($ in thousands)
 
As of March 31,
2020
 
As of December 31,
2019
General expenses
 
$
1,161

 
$
1,269

Unearned premiums
 
1,318

 
1,288

Claims liabilities
 
615

 
645

Impairment on real estate owned
 
159

 
119

Unrealized losses on trading securities
 
5

 
—

Unrealized loss on interest rate swaps
 
158

 
14

Deferred tax assets
 
3,416

 
3,335

 
 
 
 
 
Unrealized gains on trading securities
 
—

 
(1
)
Depreciation
 
(91
)
 
(93
)
Deferred policy acquisition costs
 
(1,580
)
 
(1,610
)
Pre-1984 policyholder surplus account
 
(381
)
 
(397
)
Unrealized gains on securities available-for-sale
 
(147
)
 
(663
)
Unrealized gains on equity securities
 
(541
)
 
(667
)
Deferred tax liabilities
 
(2,740
)
 
(3,431
)
Net deferred tax asset (liability)
 
$
676

 
$
(96
)
The appropriate income tax effects of changes in temporary differences are as follows:
($ in thousands)
 
Three months ended
March 31,
 
 
2020
 
2019
Deferred policy acquisition costs
 
$
(30
)
 
$
(18
)
Other-than-temporary impairments
 
(40
)
 
—

Trading securities
 
(6
)
 
1

Unearned premiums
 
(30
)
 
(29
)
General expenses
 
108

 
(54
)
Depreciation
 
(2
)
 
(2
)
Claims liabilities
 
30

 
—

Impact of repeal of special provision on pre-1984 policyholder surplus
 
(16
)
 
(16
)
Unrealized gains (losses) on equity securities
 
(126
)
 
26

Deferred income tax expense (benefit)
 
$
(112
)
 
$
(92
)

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,
 
 
2020
 
2019
Federal income tax rate applied to pre-tax income (loss)
 
21.0
 %
 
21.0
 %
Dividends received deduction and tax-exempt interest
 
0.3
 %
 
(0.3
)%
Company owned life insurance
 
(5.1
)%
 
(16.0
)%
Other, net
 
(0.1
)%
 
1.2
 %
Effective federal income tax rate
 
16.1
 %
 
5.9
 %