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Income Taxes | 12 Months Ended
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Dec. 31, 2023
Income Taxes [Abstract] |
Income Taxes |
14. | Income Taxes
The components of our provision for income tax expense (benefit) were as follows:
|  | Year Ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
Current income tax expense (benefit) |  |  |  |  |  |  |  |  |  |  |  |
Federal |  | $ | 2,567 |  |  | $ | (11,280 | ) |  | $ | 3,930 |
State |  |  | 278 |  |  |  | (2 | ) |  |  | 354 |
Total current |  |  | 2,845 |  |  |  | (11,282 | ) |  |  | 4,284 |
Deferred income tax expense (benefit) |  |  | (1,882 | ) |  |  | (3,972 | ) |  |  | (1,310 | )
Total income tax expense (benefit) |  | $ | 963 |  |  | $ | (15,254 | ) |  | $ | 2,974 |
The provision for income tax expense (benefit) differs from the amount that would be computed by applying the statutory federal rate to income (loss) before income taxes as a result of the following:
|  | Year Ended December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
Income (loss) before income taxes |  | $ | (4,263 | ) |  | $ | (69,029 | ) |  | $ | 11,306 |
Expected provision for federal income taxes at 21% |  | $ | (895 | ) |  | $ | (14,496 | ) |  | $ | 2,374 |
State income taxes, net of federal impact |  |  | 90 |  |  |  | (2 | ) |  |  | 474 |
Tax-exempt interest |  |  | (204 | ) |  |  | (187 | ) |  |  | (197 | )
Dividends received deduction |  |  | (118 | ) |  |  | (147 | ) |  |  | (122 | )
Section 832(b)(5)(B) proration amount |  |  | 77 |  |  |  | 78 |  |  |  | 72 |
Compensation-related expenses |  |  | 27 |  |  |  | 213 |  |  |  | 326 |
Goodwill impairment |  |  | 1,419 |  |  |  | — |  |  |  | — |
Research and development credit |  |  | (59 | ) |  |  | (70 | ) |  |  | (30 | )
Change in valuation allowance |  |  | (189 | ) |  |  | (314 | ) |  |  | 77 |
Other |  |  | 815 |  |  |  | (329 | ) |  |  | — |
Total income tax expense (benefit) |  | $ | 963 |  |  | $ | (15,254 | ) |  | $ | 2,974 |
We re-measure existing deferred income tax assets (including loss carryforwards) and liabilities when a change in tax rate occurs and record an offset for the net amount of the change as a component of income tax expense (benefit) from continuing operations in the period of enactment. We record any change to a previously recorded valuation allowance as a result of re-measuring existing temporary differences and loss carryforwards as a component of income tax expense (benefit) from continuing operations. The valuation allowance against certain deferred income tax assets was $505, $694, and $1,008 at December 31, 2023, 2022, and 2021, respectively. The income tax effects of temporary differences that give rise to significant portions of our deferred income tax assets and deferred income tax liabilities at December 31, 2023 and 2022, were as follows:
|  | December 31, |
|  | 2023 |  |  | 2022 |
Deferred income tax assets: |  |  |  |  |  |  |  |
Unearned premium |  | $ | 7,371 |  |  | $ | 6,725 |
Unpaid losses and loss adjustment expenses |  |  | 1,681 |  |  |  | 1,430 |
Net unrealized losses on investments |  |  | 6,421 |  |  |  | 6,586 |
Net operating loss carryovers |  |  | 851 |  |  |  | 1,194 |
Deferred compensation |  |  | 579 |  |  |  | 500 |
Other |  |  | 1,269 |  |  |  | 1,465 |
Total deferred income tax assets |  |  | 18,172 |  |  |  | 17,900 |
Deferred income tax liabilities: |  |  |  |  |  |  |  |
Deferred policy acquisition costs |  |  | 7,693 |  |  |  | 6,766 |
Intangibles |  |  | 1,243 |  |  |  | 1,356 |
Other |  |  | 318 |  |  |  | 79 |
Total deferred income tax liabilities |  |  | 9,254 |  |  |  | 8,201 |
Net deferred income tax asset |  |  | 8,918 |  |  |  | 9,699 |
Valuation allowance |  |  | (505 | ) |  |  | (694 | )
Deferred income tax asset, net |  | $ | 8,413 |  |  | $ | 9,005 |
At December 31, 2023 and 2022, we had no unrecognized tax benefits, no accrued interest and penalties, and no significant uncertain tax positions. No interest and penalties were recognized during the years ended December 31, 2023, 2022, or 2021. At December 31, 2023 and 2022, the Company, other than Battle Creek and Westminster, had no income tax related carryforwards for net operating losses, alternative minimum tax credits, or capital losses. Battle Creek, which files its federal income tax returns on a stand-alone basis, had net operating loss carryforwards of $3,756 and $3,963 at December 31, 2023 and 2022, respectively. The net operating loss carryforwards expire through 2032. Westminster, which became part of the Company’s consolidated federal income tax return beginning in 2020, had $1,270 of net operating loss carryforward at December 31, 2022. This net operating loss carryforward expired in 2023.

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