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Income Taxes | 12 Months Ended
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Dec. 31, 2012
Income Taxes [Abstract] |
INCOME TAXES | NOTE 12 – INCOME TAXES The following table reconciles the statutory federal income tax rate to the Company’s effective tax rate for the periods presented:
|  | For the years ended December 31, |
|  | 2012 |  |  | 2011 |  |  | 2010 |
Statutory federal income tax rate |  |  | 35.0 | % |  |  | 35.0 | % |  |  | 35.0 | %
Increases (decreases) resulting from: |  |  |  |  |  |  |  |  |  |  |  |
Disallowed meals & entertainment |  |  | 0.6 | % |  |  | 0.6 | % |  |  | 0.3 | %
Disallowed compensation |  |  | 3.2 | % |  |  | 2.3 | % |  |  | 1.3 | %
State income tax, net of federal tax benefit(1) |  |  | 3.6 | % |  |  | 3.6 | % |  |  | 3.6 | %
Other, net(2) |  |  | (0.1 | %) |  |  | (1.1 | %) |  |  | 0.4 | %
Effective tax rate |  |  | 42.3 | % |  |  | 40.4 | % |  |  | 40.6 | %
(1) | Included in income tax is Florida income tax at a statutory rate of 5.5%.
(2) | Other represents true-ups recorded upon completion of prior years tax returns, partially offset by estimates of penalties and interest for current year underpayment of estimated 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 as of the periods presented (in thousands):
|  | As of December 31, |
|  | 2012 |  |  | 2011 |
Deferred income tax assets: |  |  |  |  |  |  |  |
Unearned premiums |  | $ | 11,430 |  |  | $ | 9,007 |
Advanced premiums |  |  | 1,132 |  |  |  | 1,451 |
Unpaid losses and LAE |  |  | 3,449 |  |  |  | 3,139 |
Regulatory assessments |  |  | 2,447 |  |  |  | — |
Stock-based compensation |  |  | 3,048 |  |  |  | 4,341 |
Accrued wages |  |  | 778 |  |  |  | 958 |
Allowance for uncollectible receivables |  |  | 205 |  |  |  | 276 |
Additional tax basis of securities |  |  | 573 |  |  |  | 2,407 |
Change in unrealized losses on investments |  |  | 2,782 |  |  |  | 6,425 |
Total deferred income tax assets |  |  | 25,844 |  |  |  | 28,004 |
Deferred income tax liabilities: |  |  |  |  |  |  |  |
Deferred policy acquisition costs, net |  |  | (6,666 | ) |  |  | (5,013 | )
Total deferred income tax liabilities |  |  | (6,666 | ) |  |  | (5,013 | )
Net deferred income tax asset |  | $ | 19,178 |  |  | $ | 22,991 |
A valuation allowance is deemed unnecessary as of December 31, 2012 and 2011, respectively, 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. Liabilities for unrecognized tax benefits, if any, are recorded in accordance with issued FASB guidance on Accounting for Uncertainty in Income Taxes. The Company recognizes accruals for interest and penalties, if any, related to unrecognized tax benefits in income tax expense. The Company filed a consolidated federal income tax return for the fiscal years ended December 31, 2011, 2010, and 2009 and intends to file the same for the year ended December 31, 2012. The tax allocation agreements between the Company and the Insurance Entities provide that they will incur income taxes based on a computation of taxes as if they were stand-alone taxpayers. The computations are made utilizing the financial statements of the Insurance Entities prepared on a statutory basis of accounting and prior to consolidating entries which include the conversion of certain balances and transaction of the statutory financial statements to a U.S. GAAP basis. Tax years that remain open for purposes of examination of its income tax liability due to taxing authorities, include the years ended December 31, 2011 and 2010.

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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/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(h)) -URI http://asc.fasb.org/extlink&oid=6881521&loc=d3e23780-122690 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32718-109319 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32537-109319 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32639-109319 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6907707&loc=d3e32559-109319 + Details
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