v3.26.3
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Taxes [Abstract]  
Income Taxes
Note 10. Income Taxes

Total income taxes were allocated as follows:

   
Year Ended December 31
  
   
2025
    
2024
  
Total tax expense (benefit) on income
  
$
1,704
    
$
(232
)
Tax expense (benefit) on components of shareholders’ equity:
                
Unrealized gains and losses on available-for-sale fixed maturity securities, including reclassification adjustments
    
1,590
      
(689
)
LDTI future policy benefit discount-rate remeasurement, net of the related reinsurance-recoverable effect
    
(259
)
    
1,843
  
Total tax expense on components of shareholders’ equity
    
1,331
      
1,154
  
Total tax expense
  
$
3,035
    
$
922
  

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

   
Year Ended December 31
  
   
2025
    
2024
  
Federal income tax provision at the statutory rate
  
$
1,621
    
$
(342
)
Statutory rate
    
21
%
    
21
%
                 
Dividends-received deduction
    
(25
)
    
(25
)
Meals and entertainment
    
70
      
77
  
Vested stock and club dues
    
10
      
3
  
Parking disallowance
    
25
      
20
  
Adjustment for prior years’ estimates to actual
    
3
      
35
  
Income tax expense (benefit)
  
$
1,704
    
$
(232
)
Effective tax rate
    
22.1
%
    
14.3
%
                 
State income taxes, net of federal income tax effect(1)(2)     187
       213  

(1) State income taxes were paid to various states and are included in general and administrative expenses in the Consolidated Statement of Operations.
(2) State taxes in Florida made up the majority of the tax effect in this category.
 
        The Company has adopted ASU 2023-09 – Improvements to Income Tax Disclosures which requires the Company to disaggregate state income tax expense, net of the federal income tax effect.
 
The primary difference between the effective tax rate and the federal statutory income tax rate for 2025 resulted from a permanent difference related to meals and entertainment. Another contributing factor to the differences between the effective tax rate and the federal statutory income tax rate was a permanent difference related to dividends-received deduction (“DRD”). The current estimated DRD is adjusted as underlying factors change and can vary from estimates based on, but not limited to, actual distributions from investments as well as the amount of the Company’s taxable income.

The primary difference between the effective tax rate and the federal statutory income tax rate for 2024 resulted from a permanent difference related to meals and entertainment. Also contributing to differences between the effective tax rate and the federal statutory income tax rate was the adjustment for prior years’ estimates to actual that are generally updated at the completion of the third quarter of each fiscal year and were $35 in the year ended December 31, 2024. Another contributing factor to the differences between the effective tax rate and the federal statutory income tax rate was a permanent difference related to the DRD. The current estimated DRD is adjusted as underlying factors change and can vary from estimates based on, but not limited to, actual distributions from investments as well as the amount of the Company’s taxable income.

Deferred tax assets and liabilities at December 31, 2025 and 2024 were comprised of the following:

   
2025
    
2024
  
Deferred tax assets:
            
Deferred acquisition costs
  
$
11,098
    
$
10,264
  
Net unrealized investment losses
    
1,815
      
3,303
  
Impaired assets
    
894
      
791
  
Bad debts and other
    
303
      
207
  
Net operating loss
    
1,503
      
1,945
  
Other
    
37
      
1,324
  
Total deferred tax assets
    
15,650
      
17,834
  
Deferred tax liabilities:
                
Deferred and uncollected premiums
  
$
(348
)
  
$
(738
)
Insurance reserves
    
(258
)
    
(1,126
)
Total deferred tax liabilities
    
(606
)
    
(1,864
)
Net deferred tax asset
  
$
15,044
    
$
15,970
  

The components of income tax expense (benefit) were:

   
Year Ended December 31
  
   
2025
    
2024
  
Federal
            
Current U.S. income tax expense
  
$
 2,109    
$
1,124
  
Deferred U.S. income tax expense (benefit)
    
(405
)
    
(1,356
)
   
$
1,704
    
$
(232
)

The Company has formal tax-sharing agreements, and files a consolidated income tax return, with its subsidiaries. Tax years 2022, 2023 and 2024 are considered open tax years that remain subject to examination by the Internal Revenue Service.