Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of Income Tax Expense (Benefit)

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

	Year Ended December 31,
	2021		2020		2019
Current tax expense (benefit)	$	208	$	6	$	27
Deferred tax expense (benefit)		—		—		(940	)
Total income tax expense (benefit)	$	208	$	6	$	(913	)

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 2021, 2020 and 2019 to pretax income as a result of the following (dollars in thousands):

	Year Ended December 31,
	2021			2020			2019
Income (loss) before income taxes	$	(1,710	)	$	(238	)	$	(9,121	)
Statutory U.S. federal income tax rate		(359	)		(50	)		(1,915	)
State income taxes, net of federal benefit		174			44			(230	)
Tax‑exempt investment income and dividend received deduction		(40	)		(50	)		(79	)
Nondeductible meals and entertainment		33			23			38
Valuation allowance on deferred tax assets		676			(205	)		966
Equity-earnings from Affiliate		170			88			81
PPP Loan forgiveness		(578	)		—			—
Other		132			156			227
Income tax expense (benefit)	$	208		$	6		$	(913	)
Effective tax rate		(12.2	)%		(2.6	)%		10.0	%

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,
	2021			2020
Deferred tax assets:
Discounted unpaid losses and loss adjustment expenses	$	1,555		$	1,359
Unearned premiums		2,561			2,436
Net operating loss carryforwards		12,544			12,443
Net unrealized losses on investments		418			—
State net operating loss carryforwards		822			837
Other		102			132
Gross deferred tax assets		18,002			17,207
Less valuation allowance		(14,594	)		(13,292	)
Total deferred tax assets, net of allowance		3,408			3,915
Deferred tax liabilities:
Investment basis difference		15			30
Tax rate change transition discounting		183			229
Equity investment in Affiliate		470			278
Net unrealized gains on investments		—			636
Deferred policy acquisition costs		2,576			2,571
Intangible assets		115			115
Property and equipment		47			52
Other		2			4
Total deferred tax liabilities		3,408			3,915
Net deferred tax liability	$	—		$	—