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Income Taxes
 12 Months Ended
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.