Income taxes (Tables)

12 Months Ended

Dec. 31, 2017

Income Tax Disclosure [Abstract]

Income tax expense

Income tax expense consists of the following:

	2017		2016		2015
	($000 omitted)
Current income tax expense:
Federal	1,154		4,718		4,774
State	814		1,447		709
Foreign	4,625		5,983		5,967
	6,593		12,148		11,450
Deferred income tax expense (benefit):
Federal	4,088		6,262		(3,986	)
State	(254	)	(1,347	)	(1,375	)
Foreign	4,494		2,542		(439	)
	8,328		7,457		(5,800	)
Total income tax expense	14,921		19,605		5,650

Reconciliation of income tax expense (benefit) at federal statutory rate

The following reconciles income tax expense (benefit) computed at the federal statutory rate with income tax expense as reported:

	2017		2016		2015
	($000 omitted)
Expected income tax expense (benefit) at 35% (1)	22,253		26,279		(194	)
2017 Act impact from the U.S. corporate tax rate change	(7,196	)	—		—
Nondeductible expenses	2,610		2,772		2,768
Research and development credits	(2,158	)	(3,434	)	—
Federal net benefit offset to Canadian expense (2)	(1,480	)	(639	)	—
2017 Act impact from deemed repatriation of deferred foreign income	1,213		—		—
Return-to-provision and true-up adjustments	923		(4,127	)	(1,329	)
Impairment of goodwill	—		—		7,099
Other – net (3)	(1,244	)	(1,246	)	(2,694	)
Income tax expense	14,921		19,605		5,650
Effective income tax rate (1)	23.5	%	26.1	%	(1,019.4	)%

⁽¹⁾ Calculated using income (loss) before taxes and after noncontrolling interests.

⁽²⁾ For U.S. income tax purposes, the Company’s Canadian operation is a branch of Guaranty. As a result, the Canadian net deferred tax liability is offset in the U.S. as a deferred tax asset but not in an equal amount given differing tax rates in Canada and the U.S.

⁽³⁾ Included within this line is $0.6 million of 2017 net income tax benefit from the remeasurement of the state deferred tax assets and liabilities relating to the 2017 Act.

Schedule of deferred tax assets and liabilities

Deferred tax assets and liabilities as of December 31 are detailed below.

	2017		2016
	($000 omitted)
Deferred tax assets:
Accrued expenses	14,435		26,835
Net operating loss (NOL) carryforwards	6,483		6,275
Federal offset to Canadian deferred tax liability (1)	6,300		4,335
Allowance for uncollectible amounts	1,133		3,454
Foreign currency translation adjustments	925		4,238
Investments	894		978
Tax credit carryforwards	1		6,154
Fixed assets	—		2,067
Other	711		476
Deferred tax assets – gross	30,882		54,812
Valuation allowance	(2,231	)	(2,457	)
Deferred tax assets – net	28,651		52,355
Deferred tax liabilities:
Amortization – goodwill and other intangibles	(18,155	)	(26,851	)
Title loss provisions	(17,889	)	(21,433	)
Deferred compensation on life insurance policies	(2,278	)	(3,345	)
Fixed assets	(1,968	)	—
Unrealized gains on investments	(1,826	)	(3,873	)
Other	(1,383	)	(849	)
Deferred tax liabilities – gross	(43,499	)	(56,351	)
Net deferred income tax liability	(14,848	)	(3,996	)

⁽¹⁾ For U.S. income tax purposes, the Company’s Canadian operation is a branch of Guaranty. As a result, the Canadian net deferred tax liability is offset in the U.S. as a deferred tax asset but not in an equal amount given differing tax rates in Canada and the U.S.