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Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes
7.
Income Taxes

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

 

 

December 31,

 

 

 

2024

 

 

2023

 

 

 

(in thousands)

 

Deferred income tax assets:

 

 

 

 

 

 

Discounting of net unpaid loss and loss adjustment expenses

 

$

14,552

 

 

$

15,035

 

Unearned premiums

 

 

6,257

 

 

 

6,072

 

Accrued expenses and other

 

 

2,145

 

 

 

2,103

 

State income tax

 

 

2,501

 

 

 

2,495

 

Accrued policyholder dividends

 

 

1,408

 

 

 

1,723

 

Accrued insurance-related assessments

 

 

1,557

 

 

 

1,870

 

Total deferred tax assets

 

 

28,420

 

 

 

29,298

 

 

 

 

 

 

 

 

Deferred income tax liabilities:

 

 

 

 

 

 

Deferred policy acquisition costs

 

 

(4,737

)

 

 

(4,578

)

Net unrealized gain on securities available-for-sale

 

 

(2,389

)

 

 

(839

)

Property and equipment and other

 

 

(130

)

 

 

(365

)

Salvage and subrogation

 

 

(302

)

 

 

(284

)

Loss reserves adjustment

 

 

(1,414

)

 

 

(2,829

)

Total deferred income tax liabilities

 

 

(8,972

)

 

 

(8,895

)

Net deferred income taxes

 

$

19,448

 

 

$

20,403

 

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

 

 

Year Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

 

 

(in thousands)

 

Current:

 

 

 

 

 

 

 

 

 

Federal

 

$

11,351

 

 

$

13,621

 

 

$

12,753

 

State

 

 

867

 

 

 

1,020

 

 

 

427

 

 

 

 

12,218

 

 

 

14,641

 

 

 

13,180

 

Deferred:

 

 

 

 

 

 

 

 

 

Federal

 

 

1,408

 

 

 

655

 

 

 

(802

)

State

 

 

(6

)

 

 

(27

)

 

 

(334

)

 

 

 

1,402

 

 

 

628

 

 

 

(1,136

)

Total

 

$

13,620

 

 

$

15,269

 

 

$

12,044

 

As of December 31, 2024, 2023 and 2022, 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,

 

 

 

2024

 

 

2023

 

 

2022

 

 

 

(in thousands)

 

Income tax computed at federal statutory tax rate

 

$

14,502

 

 

$

16,249

 

 

$

14,206

 

Tax-exempt interest, net

 

 

(1,945

)

 

 

(1,997

)

 

 

(2,268

)

State income tax

 

 

679

 

 

 

779

 

 

 

3

 

Dividends received deduction

 

 

(85

)

 

 

(125

)

 

 

(134

)

IRC section 162(m) compensation adjustment

 

 

158

 

 

 

46

 

 

 

(17

)

Prior year adjustments

 

 

10

 

 

 

13

 

 

 

14

 

Other

 

 

301

 

 

 

304

 

 

 

240

 

 

 

$

13,620

 

 

$

15,269

 

 

$

12,044

 

 

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, 2024, 2023 and 2022.

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 2024.

Tax years 2019 through 2024 are subject to examination by the federal and state taxing authorities.