Income Tax Matters (Tables)

6 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

Schedule of deferred tax assets and liabilities

Significant components of the Company’s deferred tax assets and liabilities as of June 30, 2022, and December 31, 2021 were as follows:

(in thousands)	June 30, 2022		December 31, 2021
Deferred tax assets:
Loss carryforwards	$	2,464	$	2,244
Capitalized costs		103		127
Stock option granted		1,142		1,060
Policy acquisition costs		4,813		3,640
General business credits		6		6
Derivative option allowance		—		510
Sec 163(j) limitation		172		171
Benefit reserves		9,889		6,720
Property and equipment		59		33
Unrealized losses on investments		5,654		—
Other		1,464		1,464
Total deferred tax assets		25,766		15,975
Less valuation allowance		(22,108)		(14,431)
Total deferred tax assets, net of valuation allowance		3,658		1,544
Deferred tax liabilities:
Unrealized losses on investments		—		1,084
Intangible assets		147		147
Derivative option allowance		2,906		—
Bond Discount		605		313
Total deferred tax liabilities		3,658		1,544
Net deferred tax assets	$	—	$	—

Schedule of effective tax rate reconciliation

There was income tax benefit of $2.1 million and expense of $0.7 million for the three months ended June 30, 2022, and 2021, respectively. There was income tax expense of $2.6 million and $2.2 million for the six months ended June 30, 2022 and 2021, respectively. This differed from the amounts computed by applying the statutory U.S. federal income tax rate of 21% to pretax income, as a result of the following:

	Three months ended June 30,				Six months ended June 30,
(in thousands)	2022		2021		2022		2021
Computed expected income tax benefit (expense)	$	(409)	$	892	$	(1,508)	$	927
Reduction (increase) in income taxes resulting from:
IMR and reinsurance		61		(108)		(18)		(175)
Nondeductible expenses		(3)		(2)		(5)		(3)
Change in valuation allowance		2,480		(1,532)		(1,052)		(2,933)
Dividends received deduction		—		3		—		5
Deferred tax adjustment		(4)		—		(14)		—
Subtotal of increases		2,534		(1,639)		(1,089)		(3,106)
Tax benefit (expense)	$	2,125	$	(747)	$	(2,597)	$	(2,179)