XML 48 R18.htm IDEA: XBRL DOCUMENT
v3.20.4

Income Taxes | 12 Months Ended
--- | ---
Dec. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | The income tax assets and liabilities included in Other assets and Other liabilities, respectively, in the Consolidated Balance Sheets were as follows:
($ in thousands) |  | December 31,
|  | 2020 |  | 2019
Income tax (asset) liability |  |  |  |
Current |  | $ | (12,631) |  |  | $ | (12,184) |
Deferred |  | 206,650 |  |  | 160,624 |
Deferred tax assets and liabilities are recognized for all future tax consequences attributable to "temporary differences" between the financial statement carrying value of existing assets and liabilities and their respective tax bases. There are no deferred tax liabilities that have not been recognized. The "temporary differences" that gave rise to the deferred tax balances were as follows:
($ in thousands) |  | December 31,
|  | 2020 |  | 2019
Deferred tax assets |  |  |  |
Unearned premium reserve reduction |  | $ | 11,488 |  |  | $ | 12,103 |
Compensation accruals |  | 9,487 |  |  | 8,866 |
Reinsurance commissions |  | — |  |  | 6,804 |
Impaired securities |  | 2,127 |  |  | 1,245 |
Other comprehensive income - net funded status of benefit plans |  | 2,981 |  |  | 2,875 |
Discounting of unpaid claims and claim expense tax reserves |  | 2,548 |  |  | 2,530 |
Net operating loss carryforwards |  | — |  |  | 3,803 |
Postretirement benefits other than pensions |  | 270 |  |  | 285 |
Total gross deferred tax assets |  | 28,901 |  |  | 38,511 |
Deferred tax liabilities |  |  |  |
Other comprehensive income - net unrealized gains on securities |  | 124,715 |  |  | 74,645 |
Deferred policy acquisition costs |  | 36,347 |  |  | 49,326 |
Life insurance future policy benefit reserve |  | 26,725 |  |  | 38,210 |
Life insurance future policy benefit reserve (transitional rule) |  | 10,651 |  |  | 12,786 |
Discounting of unpaid claims and claim expense tax reserves (transitional rule) |  | 789 |  |  | 947 |
Investment related adjustments |  | 34,155 |  |  | 15,718 |
Intangibles |  | 210 |  |  | 2,021 |
Other, net |  | 1,959 |  |  | 5,482 |
Total gross deferred tax liabilities |  | 235,551 |  |  | 199,135 |
Net deferred tax liability |  | $ | 206,650 |  |  | $ | 160,624 |
The Company evaluated sources and character of income, including historical earnings, loss carryback potential, taxable income from future reversals of existing taxable temporary differences, future taxable income exclusive of reversing temporary differences, and taxable income from prudent and feasible tax planning strategies. Although realization of deferred tax assets is not assured, the Company believes it is more likely than not that gross deferred tax assets will be fully realized and that a valuation allowance with respect to the realization of the total gross deferred tax assets was not necessary as of December 31, 2020 and 2019. The components of the provision for income tax expense (benefit) were as follows:
($ in thousands) |  | Years Ended December 31,
|  | 2020 |  | 2019 |  | 2018
Current |  | $ | 16,880 |  |  | $ | 31,518 |  |  | $ | 4,152 |
Deferred |  | 9,388 |  |  | 20,488 |  |  | (2,958) |
Total income tax expense |  | $ | 26,268 |  |  | $ | 52,006 |  |  | $ | 1,194 |
Income tax expense for the following periods differed from the expected tax computed by applying the federal corporate tax rate of 21% for 2020, 2019 and 2018 to income before income taxes as follows:
($ in thousands) |  | Years Ended December 31,
|  | 2020 |  | 2019 |  | 2018
Expected federal tax on income |  | $ | 33,512 |  |  | $ | 49,654 |  |  | $ | 4,103 |
Add (deduct) tax effects of: |  |  |  |  |  |
Tax-exempt interest |  | (4,203) |  |  | (4,159) |  |  | (3,726) |
Dividend received deduction |  | (1,475) |  |  | (1,392) |  |  | (412) |
Goodwill impairment |  | 187 |  |  | 5,885 |  |  | — |
CARES Act net operating loss carryback |  | (2,792) |  |  | — |  |  | — |
Employee share-based compensation |  | (541) |  |  | 272 |  |  | (1,134) |
Compensation deduction limitation |  | 663 |  |  | 680 |  |  | 1,754 |
Prior year adjustments |  | (219) |  |  | (716) |  |  | 300 |
Other, net |  | 1,136 |  |  | 1,782 |  |  | 309 |
Income tax expense provided on income |  | $ | 26,268 |  |  | $ | 52,006 |  |  | $ | 1,194 |
The Company's federal income tax returns for years prior to 2014 are no longer subject to examination by the Internal Revenue Service (IRS). The Company recognizes tax benefits from tax return positions only if it is more likely than not the position will be sustainable, upon examination, on its technical merits and any relevant administrative practices or precedents. As a result, the Company applies a more likely than not recognition threshold for all tax uncertainties. The Company records liabilities for uncertain tax filing positions where it is more likely than not that the position will not be sustainable upon audit by taxing authorities. These liabilities are reevaluated routinely and are adjusted appropriately based upon changes in facts or law. The Company has no unrecorded liabilities from uncertain tax filing positions. HMEC and its subsidiaries file a consolidated federal income tax return. The federal income tax sharing agreements between HMEC and its subsidiaries, as approved by the Board, provide that tax on income is charged to each subsidiary as if it were filing a separate tax return with the limitation that each subsidiary will receive the benefit of any losses or tax credits to the extent utilized in the consolidated tax return. Intercompany balances are settled quarterly with a final settlement after filing the consolidated federal income tax return with the IRS. National Teachers Associates Life Insurance Company and NTA Life Insurance Company of New York are not included in the consolidated federal income tax return and will file separate federal income tax returns until they are eligible to participate in the consolidated federal income tax return. This is expected to occur in 2025. A reconciliation of the beginning and ending amounts of unrecognized tax benefits, excluding interest and penalties, is as follows:
($ in thousands) |  | Years Ended December 31,
|  | 2020 |  | 2019 |  | 2018
Balance as of the beginning of the year |  | $ | 1,966 |  |  | $ | 1,734 |  |  | $ | 1,790 |
Increases related to prior year tax positions |  | 205 |  |  | 109 |  |  | — |
Decreases related to prior year tax positions |  | — |  |  | — |  |  | (152) |
Increases related to current year tax positions |  | 151 |  |  | 123 |  |  | 96 |
Settlements |  | — |  |  | — |  |  | — |
Lapse of statute |  | — |  |  | — |  |  | — |
Balance as of the end of the year |  | $ | 2,322 |  |  | $ | 1,966 |  |  | $ | 1,734 |
The Company's effective tax rate would be affected to the extent there were unrecognized tax benefits that could be recognized. There are no positions for which it is reasonably possible that the total amount of unrecognized tax benefit will significantly change within the next 12 months. The Company classifies all tax related interest and penalties as income tax expense. Interest and penalties were both immaterial in each of the years ended December 31, 2020, 2019 and 2018.

X
- References No definition available. + Details
Name: | us-gaap_IncomeTaxDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
Name: | us-gaap_IncomeTaxDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration