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Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes
7.
Income Taxes

The Company’s deferred income tax assets and liabilities are as follows:

 

 

December 31,

 

 

 

2023

 

 

2022

 

 

 

(in thousands)

 

Deferred income tax assets:

 

 

 

 

 

 

Discounting of net unpaid loss and loss adjustment expenses

 

$

15,035

 

 

$

16,164

 

Unearned premiums

 

 

6,072

 

 

 

6,173

 

Accrued expenses and other

 

 

2,103

 

 

 

2,403

 

State income tax

 

 

2,495

 

 

 

2,468

 

Accrued policyholder dividends

 

 

1,723

 

 

 

1,841

 

Accrued insurance-related assessments

 

 

1,870

 

 

 

1,990

 

Net unrealized loss on securities

 

 

—

 

 

 

1,182

 

Total deferred tax assets

 

 

29,298

 

 

 

32,221

 

 

 

 

 

 

 

 

Deferred income tax liabilities:

 

 

 

 

 

 

Deferred policy acquisition costs

 

 

(4,578

)

 

 

(4,391

)

Net unrealized gain on securities available-for-sale

 

 

(839

)

 

 

—

 

Property and equipment and other

 

 

(365

)

 

 

(473

)

Salvage and subrogation

 

 

(284

)

 

 

(320

)

Loss reserves adjustment

 

 

(2,829

)

 

 

(4,243

)

Total deferred income tax liabilities

 

 

(8,895

)

 

 

(9,427

)

Net deferred income taxes

 

$

20,403

 

 

$

22,794

 

The components of consolidated income tax expense (benefit) are as follows:

 

 

Year Ended December 31,

 

 

 

2023

 

 

2022

 

 

2021

 

 

 

(in thousands)

 

Current:

 

 

 

 

 

 

 

 

 

Federal

 

$

13,621

 

 

$

12,753

 

 

$

11,368

 

State

 

 

1,020

 

 

 

427

 

 

 

1,055

 

 

 

 

14,641

 

 

 

13,180

 

 

 

12,423

 

Deferred:

 

 

 

 

 

 

 

 

 

Federal

 

 

655

 

 

 

(802

)

 

 

2,943

 

State

 

 

(27

)

 

 

(334

)

 

 

(1,673

)

 

 

 

628

 

 

 

(1,136

)

 

 

1,270

 

Total

 

$

15,269

 

 

$

12,044

 

 

$

13,693

 

As of December 31, 2023, 2022 and 2021, the Company had no valuation allowance against its 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,

 

 

 

2023

 

 

2022

 

 

2021

 

 

 

(in thousands)

 

Income tax computed at federal statutory tax rate

 

$

16,249

 

 

$

14,206

 

 

$

16,684

 

Tax-exempt interest, net

 

 

(1,997

)

 

 

(2,268

)

 

 

(2,511

)

State income tax

 

 

779

 

 

 

3

 

 

 

911

 

Dividends received deduction

 

 

(125

)

 

 

(134

)

 

 

(107

)

Valuation allowance

 

 

46

 

 

 

(17

)

 

 

(1,803

)

Prior year adjustments

 

 

13

 

 

 

14

 

 

 

344

 

Other

 

 

304

 

 

 

240

 

 

 

175

 

 

 

$

15,269

 

 

$

12,044

 

 

$

13,693

 

 

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, 2023, 2022 and 2021.

The Inflation Reduction Act was enacted on August 16, 2022, and included a new Corporate Alternative Minimum Tax (CAMT). The Company has determined they do not expect to be liable for CAMT in 2023.

Tax years 2019 through 2023 are subject to examination by the federal and state taxing authorities.