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Income Taxes | 12 Months Ended
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Dec. 31, 2020
Income Tax Disclosure [Abstract] |
Income Taxes |
7. | Income Taxes
The Company’s deferred income tax assets and liabilities are as follows:
|  | December 31, |
|  | 2020 |  |  | 2019 |
|  | (in thousands) |
Deferred income tax assets: |  |  |  |  |  |  |  |
Discounting of net unpaid loss and loss adjustment expenses |  | $ | 19,297 |  |  | $ | 19,985 |
Unearned premiums |  |  | 6,984 |  |  |  | 7,638 |
Accrued expenses and other |  |  | 2,947 |  |  |  | 2,612 |
State income tax |  |  | 2,212 |  |  |  | 2,484 |
Accrued policyholder dividends |  |  | 2,020 |  |  |  | 2,330 |
Capital loss carryforward |  |  | — |  |  |  | 20 |
Accrued insurance-related assessments |  |  | 1,963 |  |  |  | 2,672 |
Total deferred tax assets |  |  | 35,423 |  |  |  | 37,741 |
Less: Valuation allowance |  |  | (2,169 | ) |  |  | (2,025 | )
Net deferred tax assets |  |  | 33,254 |  |  |  | 35,716 |
Deferred income tax liabilities: |  |  |  |  |  |  |  |
Deferred policy acquisition costs |  |  | (4,547 | ) |  |  | (4,838 | )
Callable bond amortization |  |  | — |  |  |  | (2 | )
Unrealized gain on securities available-for-sale |  |  | (7,194 | ) |  |  | (3,970 | )
Property and equipment and other |  |  | (260 | ) |  |  | (271 | )
Salvage and subrogation |  |  | (516 | ) |  |  | (636 | )
Loss reserves adjustment due to the Tax Act |  |  | (7,072 | ) |  |  | (8,486 | )
Total deferred income tax liabilities |  |  | (19,589 | ) |  |  | (18,203 | )
Net deferred income taxes |  | $ | 13,665 |  |  | $ | 17,513 |
The components of consolidated income tax expense (benefit) are as follows:
|  | Year Ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
|  | (in thousands) |
Current: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 17,760 |  |  | $ | 20,658 |  |  | $ | 16,407 |
State |  |  | 900 |  |  |  | 1,297 |  |  |  | 1,004 |
|  |  | 18,660 |  |  |  | 21,955 |  |  |  | 17,411 |
Deferred: |  |  |  |  |  |  |  |  |  |  |  |
Federal |  |  | 1,403 |  |  |  | 732 |  |  |  | (1,389 | )
State |  |  | 254 |  |  |  | 140 |  |  |  | (73 | )
|  |  | 1,657 |  |  |  | 872 |  |  |  | (1,462 | )
Total |  | $ | 20,317 |  |  | $ | 22,827 |  |  | $ | 15,949 |
As of December 31, 2020 and 2019, the Company had a valuation allowance against its deferred income tax benefits of $2.2 and $2.0 million, respectively. During 2018, there was no valuation allowance on the Company’s deferred income tax assets and liabilities. Income tax expense from operations is different from the amount computed by applying the U.S. federal income tax statutory rate of 21% to income before income taxes as follows:
|  | Year Ended December 31, |
|  | 2020 |  |  | 2019 |  |  | 2018 |
|  | (in thousands) |
Income tax computed at federal statutory tax rate |  | $ | 22,453 |  |  | $ | 24,258 |  |  | $ | 18,392 |
Tax-exempt interest, net |  |  | (3,226 | ) |  |  | (2,999 | ) |  |  | (2,965 | )
State income tax |  |  | 1,080 |  |  |  | 1,178 |  |  |  | 720 |
Dividends received deduction |  |  | (89 | ) |  |  | (59 | ) |  |  | (44 | )
Other |  |  | 99 |  |  |  | 449 |  |  |  | (154 | )
|  | $ | 20,317 |  |  | $ | 22,827 |  |  | $ | 15,949 |
In December 2018, the IRS released its guidance for determining the Tax Act transition adjustment related to the discounting of loss reserves. During the period ended December 31, 2018, the Company recorded an increase in its deferred tax assets and a corresponding increase in its deferred tax liabilities as a result of the transition adjustment, which had no impact on tax expense recognized in 2018. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic. The bill intended to bolster the U.S. economy, among other things, and provide emergency assistance to qualifying businesses and individuals. The Company was able to take advantage of a provision in the Act delaying payment of certain payroll taxes until 2021 and 2022. The CARES Act had no material impact on the Company’s financial statements. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. There were no uncertain tax positions as of December 31, 2020, 2019 and 2018. Tax years 2017 through 2020 are subject to examination by the federal and state taxing authorities.

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- 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
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