Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Income Tax Disclosure [Abstract]

Schedule of Income Tax Expense (Benefit)

The income tax expense (benefit) is comprised of the following (dollars in thousands):

	Year Ended December 31,
	2022			2021		2020
Current tax expense (benefit)	$	(45	)	$	208	$	6
Deferred tax expense (benefit)		(9,396	)		—		—
Total income tax expense (benefit)	$	(9,441	)	$	208	$	6

Summary of Income Tax Expense (Benefit) Reconciliation

The income tax expense (benefit) differed from the amounts computed by applying the statutory U.S. federal income tax rate of 21% in 2022, 2021 and 2020 to pretax income as a result of the following (dollars in thousands):

	Year Ended December 31,
	2022			2021			2020
Income (loss) before income taxes	$	(20,490	)	$	(1,710	)	$	(238	)
Statutory U.S. federal income tax rate		(4,303	)		(359	)		(50	)
State income taxes, net of federal benefit		(5,984	)		174			44
Tax‑exempt investment income and dividend received deduction		(22	)		(40	)		(50	)
Nondeductible meals and entertainment		79			33			23
Valuation allowance on deferred tax assets		3,715			676			(205	)
Equity-earnings from Affiliate		195			170			88
Net gain from sale of agency assets		(2,848	)		—			—
Utilization of state NOLs		(386	)		—			—
PPP Loan forgiveness		—			(578	)		—
Other		113			132			156
Income tax expense (benefit)	$	(9,441	)	$	208		$	6
Effective tax rate		46.1	%		(12.2	)%		(2.6	)%

Schedule of Deferred Tax Assets and Liabilities

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below (dollars in thousands):

	December 31,
	2022			2021
Deferred tax assets:
Discounted unpaid losses and loss adjustment expenses	$	1,217		$	1,555
Unearned premiums		2,324			2,561
Net operating loss carryforwards		12,152			12,544
Net unrealized losses on investments		3,687			418
State net operating loss carryforwards		5,097			822
Other		403			102
Gross deferred tax assets		24,880			18,002
Less valuation allowance		(21,663	)		(14,594	)
Total deferred tax assets, net of allowance		3,217			3,408
Deferred tax liabilities:
Investment basis difference		23			15
Tax rate change transition discounting		137			183
Equity investment in Affiliate		691			470
Net unrealized gains on investments		—			—
Deferred policy acquisition costs		2,161			2,576
Intangible assets		115			115
Property and equipment		41			47
Other		49			2
Total deferred tax liabilities		3,217			3,408
Net deferred tax liability	$	—		$	—