2.2.0.25falsefalse006015 - Disclosure - Income Taxestruefalsefalse1falsefalseUSDfalsefalse1/1/2010 - 12/31/2010 USD ($) $FROM_Jan01_2010_TO_Dec31_2010http://www.sec.gov/CIK0001289592duration2010-01-01T00:00:002010-12-31T00:00:00USDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170SharesStandardhttp://www.xbrl.org/2003/instancesharesxbrli0USDUSD$2true0us-gaap_IncomeTaxExpenseBenefitAbstractus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringNo definition available.falsefalseIncome Taxes [Abstract]3false0us-gaap_IncomeTaxDisclosureTextBlockus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00<p style='margin-top:0pt; margin-bottom:12pt'><font style="font-family:Times New Roman;font-size:9pt;font-weight:bold;margin-left:0px;">Note 15</font><font style="font-family:Times New Roman;font-size:9pt;font-weight:bold;">&#8212;Income Taxes</font></p><p style='margin-top:0pt; margin-bottom:12pt'><font style="font-family:Times New Roman;font-size:9pt;margin-left:0px;">The Company files a consolidated Federal income tax return. 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border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:10px;">&#160;</td><td style="width: 8px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 72px; border-bottom-style:solid;border-bottom-width:1px;text-align:right;border-color:#000000;min-width:72px;"><font style="FONT-FAMILY: Times New Roman;FONT-SIZE: 8pt;COLOR: #000000;"> 5,634</font></td><td style="width: 10px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:10px;">&#160;</td><td style="width: 8px; border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 72px; border-bottom-style:solid;border-bottom-width:1px;text-align:right;border-color:#000000;min-width:72px;"><font style="FONT-FAMILY: Times New Roman;FONT-SIZE: 8pt;COLOR: #000000;"> -</font></td></tr><tr style="height: 15px"><td style="width: 8px; 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border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 72px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:1px;text-align:right;border-color:#000000;min-width:72px;"><font style="FONT-FAMILY: Times New Roman;FONT-SIZE: 8pt;COLOR: #000000;"> 9,811</font></td><td style="width: 10px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:10px;">&#160;</td><td style="width: 8px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 72px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:1px;text-align:right;border-color:#000000;min-width:72px;"><font style="FONT-FAMILY: Times New Roman;FONT-SIZE: 8pt;COLOR: #000000;"> 128,121</font></td><td style="width: 10px; 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border-top-style:solid;border-top-width:1px;text-align:left;border-color:#000000;min-width:72px;">&#160;</td><td style="width: 10px; border-top-style:solid;border-top-width:1px;text-align:left;border-color:#000000;min-width:10px;">&#160;</td><td style="width: 8px; border-top-style:solid;border-top-width:1px;text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 72px; border-top-style:solid;border-top-width:1px;text-align:left;border-color:#000000;min-width:72px;">&#160;</td><td style="width: 10px; border-top-style:solid;border-top-width:1px;text-align:left;border-color:#000000;min-width:10px;">&#160;</td><td style="width: 8px; border-top-style:solid;border-top-width:1px;text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 72px; border-top-style:solid;border-top-width:1px;text-align:left;border-color:#000000;min-width:72px;">&#160;</td><td style="width: 10px; border-top-style:solid;border-top-width:1px;text-align:left;border-color:#000000;min-width:10px;">&#160;</td><td style="width: 8px; border-top-style:solid;border-top-width:1px;text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 72px; border-top-style:solid;border-top-width:1px;text-align:left;border-color:#000000;min-width:72px;">&#160;</td></tr><tr style="height: 15px"><td style="width: 8px; text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td colspan="2" style="width: 267px; text-align:left;border-color:#000000;min-width:267px;"><font style="FONT-FAMILY: Times New Roman;FONT-SIZE: 8pt;COLOR: #000000;">Deferred acquisition costs net of deferred ceding </font></td><td style="width: 8px; text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 72px; text-align:left;border-color:#000000;min-width:72px;">&#160;</td><td style="width: 10px; text-align:left;border-color:#000000;min-width:10px;">&#160;</td><td style="width: 8px; text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 72px; text-align:left;border-color:#000000;min-width:72px;">&#160;</td><td style="width: 10px; text-align:left;border-color:#000000;min-width:10px;">&#160;</td><td style="width: 8px; text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 72px; text-align:left;border-color:#000000;min-width:72px;">&#160;</td><td style="width: 10px; text-align:left;border-color:#000000;min-width:10px;">&#160;</td><td style="width: 8px; text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 72px; text-align:left;border-color:#000000;min-width:72px;">&#160;</td></tr><tr style="height: 15px"><td style="width: 8px; text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 10px; text-align:left;border-color:#000000;min-width:10px;">&#160;</td><td style="width: 257px; text-align:left;border-color:#000000;min-width:257px;"><font style="FONT-FAMILY: Times New Roman;FONT-SIZE: 8pt;COLOR: #000000;">commission revenue</font></td><td style="width: 8px; text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 72px; 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text-align:right;border-color:#000000;min-width:72px;"><font style="FONT-FAMILY: Times New Roman;FONT-SIZE: 8pt;COLOR: #000000;"> 40,673</font></td></tr><tr style="height: 15px"><td style="width: 8px; text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td colspan="2" style="width: 267px; text-align:left;border-color:#000000;min-width:267px;"><font style="FONT-FAMILY: Times New Roman;FONT-SIZE: 8pt;COLOR: #000000;">Depreciation and amortization</font></td><td style="width: 8px; text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 72px; text-align:right;border-color:#000000;min-width:72px;"><font style="FONT-FAMILY: Times New Roman;FONT-SIZE: 8pt;COLOR: #000000;"> 42,497</font></td><td style="width: 10px; text-align:left;border-color:#000000;min-width:10px;">&#160;</td><td style="width: 8px; text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 72px; text-align:right;border-color:#000000;min-width:72px;"><font style="FONT-FAMILY: Times New Roman;FONT-SIZE: 8pt;COLOR: #000000;"> -</font></td><td style="width: 10px; text-align:left;border-color:#000000;min-width:10px;">&#160;</td><td style="width: 8px; text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 72px; text-align:right;border-color:#000000;min-width:72px;"><font style="FONT-FAMILY: Times New Roman;FONT-SIZE: 8pt;COLOR: #000000;"> 42,497</font></td><td style="width: 10px; text-align:left;border-color:#000000;min-width:10px;">&#160;</td><td style="width: 8px; text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 72px; text-align:right;border-color:#000000;min-width:72px;"><font style="FONT-FAMILY: Times New Roman;FONT-SIZE: 8pt;COLOR: #000000;"> 14,439</font></td></tr><tr style="height: 15px"><td style="width: 8px; text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td colspan="2" style="width: 267px; text-align:left;border-color:#000000;min-width:267px;"><font style="FONT-FAMILY: Times New Roman;FONT-SIZE: 8pt;COLOR: #000000;">Net unrealized appreciation of securities</font></td><td style="width: 8px; 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border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 72px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:1px;text-align:right;border-color:#000000;min-width:72px;"><font style="FONT-FAMILY: Times New Roman;FONT-SIZE: 8pt;COLOR: #000000;"> 13,479</font></td><td style="width: 10px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:10px;">&#160;</td><td style="width: 8px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:1px;text-align:left;border-color:#000000;min-width:8px;">&#160;</td><td style="width: 72px; border-top-style:solid;border-top-width:1px;border-bottom-style:solid;border-bottom-width:1px;text-align:right;border-color:#000000;min-width:72px;"><font style="FONT-FAMILY: Times New Roman;FONT-SIZE: 8pt;COLOR: #000000;"> 153,290</font></td><td style="width: 10px; 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The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. </font></p><p style='margin-top:0pt; margin-bottom:12pt'><font style="font-family:Times New Roman;font-size:9pt;margin-left:0px;">Preserver</font><font style="font-family:Times New Roman;font-size:9pt;"> Group, Inc. (&#8220;PGI&#8221;), acquired by the Company in 2007 and</font><font style="font-family:Times New Roman;font-size:9pt;"> CastlePoint and SUA, acquired </font><font style="font-family:Times New Roman;font-size:9pt;">in 2009</font><font style="font-family:Times New Roman;font-size:9pt;">,</font><font style="font-family:Times New Roman;font-size:9pt;"> have </font><font style="font-family:Times New Roman;font-size:9pt;">net operating </font><font style="font-family:Times New Roman;font-size:9pt;">tax loss carryforwards </font><font style="font-family:Times New Roman;font-size:9pt;">(&#8220;NOLs&#8221;) </font><font style="font-family:Times New Roman;font-size:9pt;">that the Company </font><font style="font-family:Times New Roman;font-size:9pt;">expects</font><font style="font-family:Times New Roman;font-size:9pt;"> will be used in the future, subject to change of ownership limitations pursuant to Section&#160;382 of the Internal Revenue Code (&#8220;</font><font style="font-family:Times New Roman;font-size:9pt;">Section 382</font><font style="font-family:Times New Roman;font-size:9pt;">&#8221;)</font><font style="font-family:Times New Roman;font-size:9pt;">. As of December 31, 2010, the Tower NOLs totaled $42.6 million and are related to PGI, CastlePoint and SUA for $33.4 million, $6.5 million and $2.6 million, respectively. In addition, the Reciprocal Exchanges have NOLs of $13.0 million. </font></p><p style='margin-top:0pt; margin-bottom:12pt'><font style="font-family:Times New Roman;font-size:9pt;margin-left:0px;">Section&#160;382 imposes</font><font style="font-family:Times New Roman;font-size:9pt;"> annual</font><font style="font-family:Times New Roman;font-size:9pt;"> limitations on a corporation's ability to utilize its</font><font style="font-family:Times New Roman;font-size:9pt;"> </font><font style="font-family:Times New Roman;font-size:9pt;">NOL</font><font style="font-family:Times New Roman;font-size:9pt;">s </font><font style="font-family:Times New Roman;font-size:9pt;">if it experiences an &#8220;ownership change.&#8221; As a result of the acquisitions, Preserver, CastlePoint and SUA</font><font style="font-family:Times New Roman;font-size:9pt;">'s NOLs </font><font style="font-family:Times New Roman;font-size:9pt;">are subject to annual limitation</font><font style="font-family:Times New Roman;font-size:9pt;">s</font><font style="font-family:Times New Roman;font-size:9pt;"> of $2.8&#160;million, $11.1&#160;million and $4.6&#160;million, respectively. 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The Company has recorded a valuation allowance of $5.6 million at December 31, 2010 to reflect the amount of the Reciprocal Exchanges' deferred taxes that may not be realized.</font></p><p style='margin-top:0pt; margin-bottom:12pt'><font style="font-family:Times New Roman;font-size:9pt;margin-left:0px;">As of December 31, 2010 and 2009, the Company had no material </font><font style="font-family:Times New Roman;font-size:9pt;">uncertain tax positions</font><font style="font-family:Times New Roman;font-size:9pt;"> and no adjustments to liabilities or operations were required.</font></p><p style='margin-top:0pt; margin-bottom:12pt'><font style="font-family:Times New Roman;font-size:9pt;margin-left:0px;">The Internal Revenue Service is currently performing an audit of The Company's 2006 tax year. The audit has been extended to September 30, 2011. 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