INCOME TAXES (Tables)

3 Months Ended

Mar. 31, 2021

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 March 31, 2021		As of December 31, 2020
General expenses	$	1,456	$	1,448
Unearned premiums	1,395		1,313
Claims liabilities	685		698


NOL carryforward	296		632
Impairment on real estate owned	147		147


Unrealized loss on interest rate swaps	—		130
Deferred tax assets	3,979		4,368

Unrealized gains on trading securities	(1)		(3)
Depreciation	(93)		(95)
Deferred policy acquisition costs	(1,551)		(1,555)
Pre-1984 policyholder surplus account	(314)		(331)
Unrealized gains on securities available-for-sale	(649)		(1,083)
Unrealized gains on equity securities	(595)		(595)
Deferred tax liabilities	(3,203)		(3,662)

Net deferred tax asset	$	776	$	706

Changes in Temporary Differences in Federal Income Tax

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


($ in thousands)	Three months ended March 31,
	2021		2020
Deferred policy acquisition costs	$	(4)	$	(30)
Other-than-temporary impairments	—		(40)

Trading securities	(2)		(6)
Unearned premiums	(82)		(30)
General expenses	(8)		108
Depreciation	(2)		(2)
Claims liabilities	13		30


Impact of repeal of special provision on pre-1984 policyholder surplus	(17)		(16)
NOL carryforward	336		—
Unrealized gains (losses) on equity securities	—		(126)

Deferred income tax expense (benefit)	$	234	$	(112)

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,
	2021		2020
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	1.3	%	(5.1)	%





Other, net	(0.1)	%	(0.1)	%
Effective federal income tax rate	21.9	%	16.1	%