XML 27 R14.htm IDEA: XBRL DOCUMENT v2.4.0.6
Income Taxes
 3 Months Ended
Mar. 31, 2012
Income Taxes [Abstract]  
Income Taxes

9. Income Taxes

Deferred income taxes represent the temporary differences between the GAAP and tax basis of the Company’s assets and liabilities. The tax effects of temporary differences are as follows for the periods presented (in thousands):

 

                 
    As of March 31,     As of December 31,  
    2012     2011  

Deferred income tax assets:

                

Unearned premiums

   $ 7,305     $ 9,007  

Advance premiums

     2,345       1,451  

Unpaid losses

     2,977       3,139  

Stock option expense

     4,142       4,026  

Accrued wages

     993       958  

Allowance for uncollectible receivables

     236       276  

Additional tax basis of securities

     995       2,407  

Restricted stock grant

     86       315  

Unrealized losses on investments

     2,881       6,425  
   

 

 

    

 

 

  

Total deferred income tax assets

     21,960       28,004  
   

 

 

    

 

 

  

Deferred income tax liabilities:

                

Deferred policy acquisition costs, net

     (4,551 )      (5,013 ) 
   

 

 

    

 

 

  

Total deferred income tax liabilities

     (4,551 )      (5,013 ) 
   

 

 

    

 

 

  

Net deferred income tax asset

   $ 17,409     $ 22,991  
   

 

 

    

 

 

  

A valuation allowance is deemed unnecessary as of March 31, 2012 and December 31, 2011, because management believes it is probable that the Company will generate taxable income sufficient to realize the tax benefits associated with the net deferred income tax asset shown above in the near future.

Tax years that remain open for purposes of examination of the Company’s income tax liability by taxing authorities include the years ended December 31, 2010, 2009 and 2008. The Company’s 2009 consolidated federal income tax return is currently under examination by the Internal Revenue Service.

 

The following table reconciles the statutory federal income tax rate to the Company’s effective tax rate for the periods presented:

 

                 
    Three Months Ended
March 31,		  
    2012     2011  

Statutory federal income tax rate

     35.0 %      35.0 % 

Increases resulting from:

                

Disallowed meals & entertainment

     0.3 %      0.1 % 

Disallowed compensation

     0.3 %      0.6 % 

State income tax, net of federal tax benefit (1)

     3.6 %      3.6 % 

Other, net

     0.0 %      0.5 % 
   

 

 

    

 

 

  

Effective tax rate

     39.2 %      39.8 % 
   

 

 

    

 

 

  

 

(1) Included in income tax is State of Florida income tax at a statutory tax rate of 5.5%.