Income Taxes

9 Months Ended

Sep. 30, 2012

Income Taxes [Abstract]

Income Taxes

Note 7.  Income Taxes

A reconciliation of the differences between income taxes computed at the federal statutory income tax rate and income tax (benefit) expense is as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Federal income tax provision at statutory rate of 35%	$	335		$	619		$	1,236		$	955
Dividends received deduction		(45	)		(60	)		(127	)		(130	)
Small life insurance company deduction		(375	)		(187	)		(612	)		(187	)
Other permanent differences		12			4			28			37
Change in asset valuation allowance due to change in judgment relating to realizability of deferred tax assets		24			(361	)		(438	)		(361	)
Adjustment for prior years' estimates to actual		(79	)		49			(79	)		49
Income tax (benefit) expense	$	(128	)	$	64		$	8		$	363

The components of the income tax (benefit) expense were as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012			2011
Current - Federal	$	213		$	115		$	331		$	119
Deferred - Federal		(365	)		310			115			605
Change in deferred tax asset valuation allowance		24			(361	)		(438	)		(361	)
Total	$	(128	)	$	64		$	8		$	363

The primary differences between the effective tax rate and the federal statutory income tax rate for the three month and nine month periods ended September 30, 2012 and 2011 resulted from the dividends received deduction ("DRD"), the small life insurance company deduction ("SLD") and the change in deferred tax asset valuation allowance.  The current estimated DRD is adjusted as underlying factors change and can vary from the estimates based on, but not limited to, actual distributions from investments as well as the amount of the Company's taxable income.  The SLD varies in amount and is determined at a rate of 60 percent of the tentative life insurance company taxable income ("LICTI").  The SLD for any taxable year is reduced (but not below zero) by 15 percent of the tentative LICTI for such taxable year as it exceeds $3,000 and is ultimately phased out at $15,000.  The change in deferred tax asset valuation allowance was primarily due to the unanticipated utilization of certain capital loss carryforward benefits that had been previously reduced to zero through an existing valuation allowance reserve.  The provision-to-filed return adjustments are generally updated at the completion of the third quarter of each fiscal year and were $79 and $49 in the three month and nine month periods ended September 30, 2012 and 2011, respectively.