15.

Income Taxes:

The composition of deferred tax assets and liabilities and the related tax effects as of December 31, 2013 and 2012, are as follows (in thousands):


	2013			2012

Deferred tax liabilities:
Deferred policy acquisition costs	$	(7,905	)	$	(8,719	)
Net unrealized holding gain on investments		(9,730	)		(5,622	)
Agency relationship		(85	)		(94	)
Intangible assets		(6,129	)		(6,852	)
Goodwill		(325	)		(116	)
Fixed assets		(499	)		(685	)
Other		(263	)		(275	)
Total deferred tax liabilities		(24,936	)		(22,363	)

Deferred tax assets:
Unearned premiums		9,822			9,806
Alternative minimum tax		442			1,651
Amortization of non-compete agreements		417			476
Pension liability		797			1,591
Net operating loss carry-forward		611			702
Unpaid loss and loss adjustment expense		8,173			7,549
Rent reserve		366			363
Investment impairments		660			1,256
Other		823			909
Total deferred tax assets		22,111			24,303

Deferred federal income taxes, net	$	(2,825	)	$	1,940

A reconciliation of the income tax provisions based on the statutory tax rate to the provision reflected in the consolidated financial statements for the years ended December 31, 2013, 2012 and 2011, is as follows (in thousands):


	2013			2012			2011

Computed expected income tax expense (benefit) at statutory regulatory tax rate	$	3,878		$	1,181		$	(6,926	)
Meals and entertainment		25			28			44
Tax exempt interest		(1,314	)		(1,631	)		(1,835	)
Dividends received deduction		(101	)		(111	)		(99	)
State taxes (net of federal benefit)		276			298			84
Other		71			(239	)		(222	)
Income tax expense (benefit)	$	2,835		$	(474	)	$	(8,954	)


Current income tax expense (benefit)	$	3,092		$	2,377		$	(6,059	)
Deferred tax benefit		(257	)		(2,851	)		(2,895	)
Income tax expense (benefit)	$	2,835		$	(474	)	$	(8,954	)

We have available, for federal income tax purposes, unused net operating loss of approximately $1.7 million at December 31, 2013. The losses were acquired as part of the HIC and HCM acquisitions and may be used to offset future taxable income. Utilization of the losses is limited under Internal Revenue Code Section 382. The Internal Revenue Code provides that effective with tax years beginning September 1997, the carry-back and carry-forward periods are 2 years and 20 years, respectively, with respect to newly generated operating losses. The net operating losses will expire if unused, as follows (in thousands):


Year

2021	$	650
2022		878
2028		2
2030		25
2031		45
2032		77
2033		70
	$	1,747

We are no longer subject to U.S. federal, state, local or non-U.S. income tax examinations by tax authorities for years prior to 2010. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. There were no uncertain tax positions at December 31, 2013.