v3.25.2
Income Taxes
 12 Months Ended
Dec. 31, 2024
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The following table sets forth the components of the Company’s income tax expense for the years ended December 31, 2024, 2023 and 2022:
($ in thousands)202420232022
Current income tax expense$42,626 $14,736 $120 
Deferred tax (benefit) expense related to temporary differences(8,715)9,382 10,267 
Total income tax expense$33,911 $24,118 $10,387 
The Company’s provision for income taxes generally does not deviate substantially from the statutory tax rate. The effective tax rate may vary slightly from the statutory rate due to tax adjustments for tax-exempt income, dividends-received deduction and non-deductible expenses.
The following table sets forth the differences between income taxes expected at the federal statutory income tax rate of 21% and the reported income tax expense for the years ended December 31, 2024, 2023 and 2022:
202420232022
($ in thousands)AmountPercentageAmountPercentageAmountPercentage
Income tax expense at federal statutory rate$32,075 21.0 %$23,121 21.0 %$10,454 21.0 %
Tax advantaged investments(239)(0.2)(295)(0.3)(324)(0.7)
Other2,075 1.4 1,292 1.2 257 0.6 
Total income tax expense$33,911 22.2 %$24,118 21.9 %$10,387 20.9 %
The following table sets forth the tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2024 and 2023:
($ in thousands)20242023
Deferred tax assets:
Unearned premiums$18,178 $15,365 
Losses and loss adjustment expenses16,967 11,581 
Net operating losses9,389 10,655 
Unrealized losses on fixed maturity securities, available-for-sale5,893 6,113 
Stock options/awards2,453 1,714 
Other6,067 4,237 
Total deferred tax assets58,947 49,665 
Less valuation allowance(586)(586)
Total deferred tax assets after valuation allowance58,361 49,079 
Deferred tax liabilities:
Deferred policy acquisition costs15,277 11,528 
Unrealized gains on equity securities4,818 3,243 
Other long-term investments2,625 6,460 
Depreciation1,426 1,260 
Section 481(a) adjustment1,391 3,477 
Other2,338 1,120 
Total deferred tax liabilities27,875 27,088 
Deferred income taxes$30,486 $21,991 
The Company paid $37.0 million in federal income taxes during the year ended December 31, 2024. The Company’s federal income tax returns for tax years 2021 to 2023 are subject to examination by the Internal Revenue Service. The Company has no current U.S. federal or state and local income tax examinations on-going at this time.
At December 31, 2024, the Company carried no balance for uncertain tax positions. The Company had no accrual for the payment of interest and penalties at December 31, 2024 or 2023.
The Company has federal net operating loss carryforwards of approximately $44.7 million. These net operating losses are set to expire beginning in 2032. The Company is limited on the utilization of $44.7 million of the net operating losses under Internal Revenue Code Section 382 (“Sec 382”) which imposes limitations on a corporation’s ability to utilize tax attributes if the corporation experiences an “ownership change” which occurred during 2014. The Sec 382 limitation is expected to result in an expiration of $2.8 million ($0.6 million tax effected) of net operating losses. A valuation allowance was established against the balance that is expected to expire without utilization.
The Company generated a capital loss carryforward in 2022, resulting in a deferred tax asset of $1.7 million as of December 31, 2024. No valuation allowance is recorded against this deferred tax asset as the Company expects to utilize this carryforward before it expires in 2027.
The Company provides a valuation allowance against deferred tax assets when it is more likely-than-not that some portion, or all, of deferred tax assets will not be realized. Its deferred tax valuation allowance at December 31, 2024 and 2023 was $0.6 million.