Income taxes (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Income tax expense

Income tax expense consists of the following:

	2019	2018		2017
	($000 omitted)
Current income tax expense:
Federal	12,329	5,540		1,154
State	846	1,089		814
Foreign	4,851	6,622		4,625
	18,026	13,251		6,593
Deferred income tax expense (benefit):
Federal	6,631	43		4,088
State	150	(864	)	(254	)
Foreign	1,888	1,077		4,494
	8,669	256		8,328
Total income tax expense	26,695	13,507		14,921

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:

 

	2019		2018		2017
	($000 omitted)
Expected income tax expense at 21% in 2019 and 2018 and 35% in 2017 (1)	22,116		12,816		22,253
Nondeductible expenses	3,249		1,872		2,610
Valuation allowance	1,326		1,741		—
Net expense (benefit) for the Canadian branch (2)	613		128		(1,480	)
Return-to-provision and true-up adjustments	(776	)	(370	)	923
Research and development credits	(278	)	(732	)	(2,158	)
2017 Act impact from the U.S. corporate tax rate change	—		(745	)	(7,196	)
2017 Act impact from deemed repatriation of deferred foreign income	—		(624	)	1,213
Other – net (3)	445		(579	)	(1,244	)
Income tax expense	26,695		13,507		14,921
Effective income tax rate (1)	25.3	%	22.1	%	23.5	%

⁽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.

	2019		2018
	($000 omitted)
Deferred tax assets:
Accrued expenses	18,290		16,013
Federal offset to Canadian deferred tax liability	7,961		6,618
Net operating loss (NOL) carryforwards	7,017		6,936
Tax credit carryforwards	2,230		1,477
Foreign currency translation adjustments	1,765		3,194
Allowance for uncollectible amounts	983		1,023
Net unrealized losses on investments in securities	621		1,205
Investments	424		857
Capitalized expenses	—		2,356
Other	1,370		1,235
Deferred tax assets – gross	40,661		40,914
Valuation allowance	(4,056	)	(3,824	)
Deferred tax assets – net	36,605		37,090
Deferred tax liabilities:
Title loss provisions	(29,704	)	(21,936	)
Amortization – goodwill and other intangibles	(22,379	)	(19,891	)
Net unrealized gains on investments in securities	(4,218	)	—
Deferred compensation on life insurance policies	(2,202	)	(2,029	)
Fixed assets	(1,997	)	(1,917	)
Other	(417	)	(956	)
Deferred tax liabilities – gross	(60,917	)	(46,729	)
Net deferred income tax liability	(24,312	)	(9,639	)