Income Tax Matters (Tables)

9 Months Ended

Sep. 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 September 30, 2022, and December 31, 2021, were as follows:

(In thousands)	September 30, 2022		December 31, 2021
Deferred tax assets:
Loss carryforwards	$	2,235	$	2,244
Capitalized costs		91		127
Stock option granted		1,001		1,060
Policy acquisition costs		5,705		3,640
Charitable contribution carryforward		—		—
General business credits		6		6
Derivative option allowance		—		510
Sec 163(j) limitation		173		171
Benefit reserves		10,871		6,720
Property and equipment		73		33
Impairments		403		—
Unrealized losses on investments		14,049		—
Other		1,464		1,464
Total deferred tax assets		36,071		15,975
Less valuation allowance		(31,363)		(14,431)
Total deferred tax assets, net of valuation allowance		4,708		1,544
Deferred tax liabilities:
Unrealized losses on investments		—		1,084
Intangible assets		147		147
Derivative option allowance		3,810		—
Bond Discount		751		313
Property and equipment		—		—
Total deferred tax liabilities		4,708		1,544
Net deferred tax assets	$	—	$	—

Schedule of effective tax rate reconciliation

There was income tax expense of $1.3 million and tax benefit of $0.4 million for the three months ended September 30, 2022, and 2021, respectively. There was income tax expense of $3.8 million and $1.8 million for the nine months ended September 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 September 30,				Nine months ended September 30,
(In thousands)	2022		2021		2022		2021
Computed expected income tax benefit (expense)	$	(796)	$	749	$	(2,305)	$	1,676
Reduction (increase) in income taxes resulting from:
IMR and reinsurance		176		65		158		240
Nondeductible expenses		(3)		1		(8)		4
Change in valuation allowance		(641)		333		(1,693)		3,266
Dividends received deduction		—		(1)		—		(6)
Deferred tax adjustment		14		—		—		—
Subtotal of increases		(454)		398		(1,543)		3,504
Tax benefit (expense)	$	(1,250)	$	351	$	(3,848)	$	(1,828)