INCOME TAXES (Tables)

9 Months Ended

Sep. 30, 2020

Schedule of Deferred Tax Assets and Liabilities

The tax effect of significant differences representing deferred tax assets and liabilities are as follows:



($ in thousands)	As of September 30, 2020		As of December 31, 2019
General expenses	$	1,320	$	1,269
Unearned premiums	1,423		1,288
Claims liabilities	662		645


NOL carryforward	131		—
Impairment on real estate owned	109		119


Unrealized loss on interest rate swaps	167		14
Deferred tax assets	3,812		3,335

Unrealized gains on trading securities	—		(1)
Depreciation	(91)		(93)
Deferred policy acquisition costs	(1,619)		(1,610)
Pre-1984 policyholder surplus account	(347)		(397)
Unrealized gains on securities available-for-sale	(931)		(663)
Unrealized gains on equity securities	(610)		(667)
Deferred tax liabilities	(3,598)		(3,431)

Net deferred tax asset (liability)	$	214	$	(96)

Changes in Temporary Differences in Federal Income Tax

The appropriate income tax effects of changes in temporary differences are as follows:


($ in thousands)	Nine months ended September 30,
	2020		2019
Deferred policy acquisition costs	$	9	$	17
Other-than-temporary impairments	10		—

Trading securities	(1)		2
Unearned premiums	(135)		(114)
General expenses	(51)		(85)
Depreciation	(2)		—
Claims liabilities	(17)		(30)


Impact of repeal of special provision on pre-1984 policyholder surplus	(50)		(50)
NOL carryforward	(131)		—
Unrealized gains (losses) on equity securities	(57)		15

Deferred income tax benefit	$	(425)	$	(245)

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:


	Nine months ended September 30,
	2020		2019
Federal income tax rate applied to pre-tax income (loss)	21.0	%	21.0	%
Dividends received deduction and tax-exempt interest	0.1	%	(0.5)	%
Company owned life insurance	0.4	%	(18.5)	%





Other, net	(0.1)	%	(0.2)	%
Effective federal income tax rate	21.4	%	1.8	%