Income Taxes (Tables)

12 Months Ended

Dec. 31, 2017

Schedule of Deferred Tax Assets and Liabilities

The composition of deferred tax assets and liabilities and the related tax effects as of December 31, 2017 and 2016, are as follows (in thousands):



	2017		2016
Deferred tax liabilities:
Deferred policy acquisition costs	$	(3,361)	$	(6,717)
Net unrealized holding gain on investments		(4,688)		(7,395)
Agency relationship		(28)		(56)
Intangible assets		(2,476)		(4,623)
Goodwill		(357)		(559)
Bond amortization		(111)		-
Fixed assets		(860)		(1,106)
Other		(303)		(435)
Total deferred tax liabilities		(12,184)		(20,891)

Deferred tax assets:
Unearned premiums		6,901		11,184
Amortization of non-compete agreements		107		238
Pension liability		746		1,436
Net operating loss carry-forward		200		319
Unpaid loss and loss adjustment expense		3,422		6,208
Rent reserve		158		247
Bond amortization		-		434
Bonus accrual		302		291
Investment impairments		1,956		1,419
Other		329		480
Total deferred tax assets		14,121		22,256

Deferred federal income taxes, net	$	1,937	$	1,365

Schedule of Effective Income Tax Rate Reconciliation

A reconciliation of the income tax provisions based on the 35% statutory tax rate to the provision reflected in the consolidated financial statements for the years ended December 31, 2017, 2016 and 2015, is as follows (in thousands):



	2017		2016		2015
Computed expected income tax (benefit) expense at statutory tax rate	$	(5,800)	$	2,967	$	11,160
Meals and entertainment		81		81		32
Tax exempt interest		(987)		(1,164)		(1,259)
Dividends received deduction		(196)		(133)		(141)
State taxes (net of federal benefit)		165		203		176
Tax law change		1,276		-		-
True up bond amortization		464		-		-
Other		(22)		(2)		55
Income tax (benefit) expense	$	(5,019)	$	1,952	$	10,023

Current income tax (benefit) expense	$	(3,444)	$	1,547	$	11,053
Deferred tax (benefit) expense		(1,575)		405		(1,030)
Income tax (benefit) expense	$	(5,019)	$	1,952	$	10,023

Summary of Operating Loss Carryforwards

The net operating losses will expire if unused, as follows (in thousands):



Year
2022	$	553
2028		2
2029		25
2031		45
2032		77
2033		73
2034		59
2035		33
2036		50
2037		37
	$	954