Income taxes (Tables)

12 Months Ended

Dec. 31, 2018

Income Tax Disclosure [Abstract]

Income tax expense

Income tax expense consists of the following:

	2018		2017		2016
	($000 omitted)
Current income tax expense:
Federal	5,540		1,154		4,718
State	1,089		814		1,447
Foreign	6,622		4,625		5,983
	13,251		6,593		12,148
Deferred income tax expense (benefit):
Federal	43		4,088		6,262
State	(864	)	(254	)	(1,347	)
Foreign	1,077		4,494		2,542
	256		8,328		7,457
Total income tax expense	13,507		14,921		19,605

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

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

	2018		2017		2016
	($000 omitted)
Expected income tax expense at 21% in 2018 and 35% in 2017 and 2016 (1)	12,816		22,253		26,279
Nondeductible expenses	1,872		2,610		2,772
Valuation allowance	1,741		—		—
2017 Act impact from the U.S. corporate tax rate change	(745	)	(7,196	)	—
Research and development credits	(732	)	(2,158	)	(3,434	)
2017 Act impact from deemed repatriation of deferred foreign income	(624	)	1,213		—
Return-to-provision and true-up adjustments	(370	)	923		(4,127	)
Net expense (benefit) for the Canadian branch (2)	128		(1,480	)	(639	)
Other – net (3)	(579	)	(1,244	)	(1,246	)
Income tax expense	13,507		14,921		19,605
Effective income tax rate (1)	22.1	%	23.5	%	26.1	%

⁽¹⁾ Calculated using income 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 are $0.1 million and $0.6 million, respectively, of 2018 and 2017 net income tax benefits 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.

	2018		2017
	($000 omitted)
Deferred tax assets:
Accrued expenses	16,013		14,435
Net operating loss (NOL) carryforwards	6,936		6,483
Federal offset to Canadian deferred tax liability	6,618		6,300
Foreign currency translation adjustments	3,194		925
Capitalized expenses	2,356		384
Tax credit carryforwards	1,477		1
Net unrealized losses on investments	1,205		—
Allowance for uncollectible amounts	1,023		1,133
Investments	857		894
Other	1,235		327
Deferred tax assets – gross	40,914		30,882
Valuation allowance	(3,824	)	(2,231	)
Deferred tax assets – net	37,090		28,651
Deferred tax liabilities:
Title loss provisions	(21,936	)	(17,889	)
Amortization – goodwill and other intangibles	(19,891	)	(18,155	)
Deferred compensation on life insurance policies	(2,029	)	(2,278	)
Fixed assets	(1,917	)	(1,968	)
Net unrealized gains on investments	—		(1,826	)
Other	(956	)	(1,383	)
Deferred tax liabilities – gross	(46,729	)	(43,499	)
Net deferred income tax liability	(9,639	)	(14,848	)