Income Taxes (Tables)

12 Months Ended

Dec. 31, 2018

Schedule of Components of Income Tax Expense (Benefit)

The following table summarizes the provision for income taxes:



	Year Ended December 31,
	2018			2017			2016
Federal:
Current	$	(1,510	)	$	(1,147	)	$	(1,906	)
Deferred	(1,240		)	(9,911		)	1,920
(Benefit) provision for Federal income tax expense	(2,750		)	(11,058		)	14

State:
Current	(654		)	496			1,001
Deferred	(1,229		)	1,327			290
Provision for State income tax expense	(1,883		)	1,823			1,291
(Benefit) provision for income taxes	$	(4,633	)	$	(9,235	)	$	1,305

Tax Expense Reconciliation

The actual income tax expense differs from the expected income tax expense computed by applying the combined applicable effective federal and state tax rates to income before the provision for income taxes as follows:



	Year Ended December 31,
	2018			2017			2016
Expected income tax expense at federal rate	$	(875	)	$	319		$	2,381
State tax expense, net of federal deduction benefit	(1,205		)	366			934
Dividend received deduction	(170		)	(294		)	(217		)
Other permanent items	564			128			—
Prior period adjustment	—			(791		)	—
Accrual adjustments	(1,391		)	(1,472		)	—
Municipal tax-exempt interest	(735		)	(1,398		)	(1,011		)
Change in enacted tax rate⁽¹⁾	—			(6,777		)	—
Change in Special Loss Discount Account	(821		)	—			—
Other, Net	—			684			(782		)
Reported income tax (benefit) expense	$	(4,633	)	$	(9,235	)	$	1,305

⁽¹⁾ Pursuant to the recently enacted 2017 Tax Act legislation.

Schedule of Deferred Tax Assets and Liabilities

The table below summarizes the significant components of our net deferred tax liability:



	December 31,
	2018			2017
Deferred tax assets:
Unearned premiums	$	19,661		$	17,459
Unrealized loss	2,145			—
Tax-related discount on loss reserve	2,055			1,113
Bad debt expense	89			90
Other-than-temporary impairment	18			16
Investments	302			304
AMT credit carryforward	—			226
Capitalized software	330			—
Other	260			89
Total deferred tax assets	24,860			19,297
Deferred tax liabilities:
Unrealized gain	—			(2,822		)
Deferred acquisitions costs	(26,966		)	(21,549		)
Capitalized software	—			(204		)
Intangible asset	(7,397		)	(10,883		)
Prepaid expenses	(665		)	(535		)
Investments	(221		)	(17		)
Fixed assets	(1,864		)	(689		)
Other	—			(63		)
Total deferred tax liabilities	(37,113		)	(36,762		)
Net deferred tax liability	$	(12,253	)	$	(17,465	)