INCOME TAX (Tables)

12 Months Ended

Dec. 31, 2025

Income tax expense (benefit) is composed of the following:



Years Ended December 31,	2025		2024		2023
Current	$	35,398	$	23,469	$	(2,217)
Deferred	(5,653)		(8,392)		(7,803)
Income tax expense (benefit)	$	29,745	$	15,077	$	(10,021)

Total income tax expense (benefit) disaggregated by domestic and foreign jurisdiction for the year ended December 31, 2025 is as follows:


	2025
U.S. federal income tax expense (benefit)	$	25,043
U.S. state income tax expense (benefit)(1)	1,821
Foreign income tax expense (benefit)
United Kingdom	2,881
Income tax expense (benefit)	$	29,745

(1) No individual jurisdiction met the 5% threshold for individual disclosure.

Summary of Reconciliation of Income Tax Expense (Benefit)

A reconciliation of tax calculated at the U.S. federal statutory tax rate to that calculated at the effective tax rate for the year ended December 31, 2025 is as follows:


	2025
	Amount		%
U.S. federal statutory tax rate	$	31,067	21.00	%
State and local income taxes, net of federal income tax effect(1)	1,438		0.97
Foreign tax effects
United Kingdom
Foreign tax withheld	2,881		1.95
Effect of changes in tax laws or rates enacted in the current period	—		—
Effect of cross-border tax laws	1,028		0.69
Tax credits
Foreign tax credit	(4,448)		(3.01)
Other tax credits	(40)		(0.03)
Changes in valuation allowances	—		—
Nontaxable or nondeductible items	(141)		(0.10)
Changes in unrecognized tax benefits	—		—
Other adjustments
Interest income on refunds	(2,581)		(1.74)
Other adjustments	541		0.37
Effective tax rate	$	29,745	20.10	%

(1) State taxes in Illinois made up the majority (greater than 50 percent) of the tax effect in this category.

A reconciliation of income tax expense (benefit) computed at the applicable federal tax rate of 21.0 percent for the years ended December 31, 2024 and 2023 to the amount recorded in the accompanying Consolidated Statements of Income is as follows:



Years Ended December 31,	2024			2023
Income (loss) before taxes	$	77,034		$	(39,721)
Federal statutory rate	21		%	21		%
Expected income tax expense (benefit)	$	16,177		$	(8,339)

Tax-exempt municipal bond interest income	(1,881)			(2,763)
Nontaxable dividend income	(27)			(269)



Compensation	1,228			596

Research & development credit	(16)			540
Other, net	(404)			215
Income tax expense (benefit)	$	15,077		$	(10,021)

Summary of Components of Deferred Tax Assets and Liabilities

The significant components of deferred tax assets and liabilities consist of the following at December 31, 2025 and 2024:



December 31,	2025		2024
Deferred tax assets
Financial statement reserves in excess of income tax reserves	$	26,388	$	23,203
Unearned premium adjustment	24,888		22,700
Employee profit sharing	5,008		3,112


Other-than-temporary impairment of investments	597		14



Compensation expense related to stock options	2,138		1,410

Nonqualified deferred compensation	2,564		2,400
Net unrealized gain (loss) - all other securities	7,103		19,572

Other	4,758		3,639
Gross deferred tax asset	73,444		76,050
Valuation allowance	—		—
Deferred tax asset	73,444		76,050
Deferred tax liabilities



Deferred policy acquisition costs	32,293		30,459
Investments in partnerships	2,270		1,938
Over funded pension benefit	4,933		4,694
Prepaid pension cost	8,832		8,086
Net bond discount accretion	1,213		705
Depreciation	2,614		3,085

Identifiable intangible assets (1)	945		945
Capitalized Software	2,614		534
Other	2,282		2,586
Gross deferred tax liability	57,996		53,032
Net deferred tax asset (liability)	$	15,448	$	23,018

(1) Related to our acquisition of Mercer Insurance Group, Inc.

Summary of Income Taxes Paid (Refunds Received) Domestic and Foreign Jurisdiction

Income taxes paid (net of refunds received) disaggregated by domestic and foreign jurisdiction in 2025 were as follows:


	2025
U.S. federal income taxes paid (refunded)	$	19,490
U.S. state income taxes paid (refunded)(1)	1,180
Foreign income taxes paid (refunded)
United Kingdom	2,881
Income taxes paid (refunded)	$	23,551

(1) No individual jurisdiction met the 5% threshold for individual disclosure.

Schedule of Domestic and Foreign Income (Loss) from Continuing Operations before Income Tax Expense (Benefit)

Domestic and foreign income (loss) before income tax expense (benefit) for the year ended December 31, 2025 is as follows:


	2025
U.S. income (loss)	$	137,596
Foreign income (loss)	10,340
Income (loss) before income taxes	$	147,936