• Filing Date: 2017-02-22
  • Form Type: 10-K
  • Description: Annual report
v3.6.0.2
Income Taxes
12 Months Ended
Dec. 31, 2016
Income Tax Disclosure [Abstract]  
Income Taxes

Note 17 — Income Taxes

A summary of income tax expense is as follows:

 

     Years Ended December 31,  
     2016      2015      2014  

Current:

        

Federal

   $ 14,918       $ 34,768       $ 36,651   

State

     2,666         5,856         6,222   

Foreign

     96         68         167   
  

 

 

    

 

 

    

 

 

 

Total current taxes

     17,680         40,692         43,040   
  

 

 

    

 

 

    

 

 

 

Deferred:

        

Federal

     182         (275      (4,060

State

     (9      (46      (678

Foreign

     (18      (40      (4
  

 

 

    

 

 

    

 

 

 

Total deferred taxes

     155         (361      (4,742
  

 

 

    

 

 

    

 

 

 

Income tax expense

   $ 17,835       $ 40,331       $ 38,298   
  

 

 

    

 

 

    

 

 

 

The reasons for the differences between the statutory Federal income tax rate and the effective tax rate are summarized as follows:

 

     Years Ended December 31,  
     2016     2015     2014  
     Amount     %     Amount     %     Amount     %  

Income taxes at statutory rate

   $ 16,395        35.0      $ 37,167        35.0      $ 35,337        35.0   

Increase (decrease) in income taxes resulting from:

            

State income taxes, net of federal tax benefits

     1,710        3.6        3,783        3.6        3,601        3.6   

Other

     (270     (0.5     (619     (0.6     (640     (0.7
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income tax expense

   $ 17,835        38.1      $ 40,331        38.0      $ 38,298        37.9   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The Company has no uncertain tax positions or unrecognized tax benefits that, if recognized, would impact the effective income tax rate. The tax returns filed for the years ending December 31, 2015, 2014, and 2013 remain subject to examination by the Company’s major taxing jurisdictions. The Company elected to classify, if any, interest, and penalties arising from uncertain tax positions as income tax expense as permitted by current accounting standards. There have been no material amounts of interest or penalties for the years ended December 31, 2016, 2015 and 2014.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Significant components of the Company’s net deferred income tax assets are as follows:

 

     December 31,  
     2016      2015  

Deferred tax assets:

     

Unearned premiums

   $ 9,331       $ 8,794   

Other-than-temporary impairment losses

     1,246         1,839   

Unrealized net losses on available-for-sale securities

     —           1,125   

Basis difference related to partnership investments

     —           662   

Losses and loss adjustment expenses

     986         825   

Organizational costs

     61         72   

Stock-based compensation

     3,388         2,597   

Accrued expenses

     35         317   

Unearned revenue

     489         503   

Bad debt reserve

     3         1   
  

 

 

    

 

 

 

Total deferred tax assets

     15,539         16,735   
  

 

 

    

 

 

 

Deferred tax liabilities:

     

Property and equipment

     (1,792      (1,437

Intangible assets

     (1,890      —     

Deferred policy acquisition costs

     (6,601      (7,371

Unrealized net gain on available-for-sale securities

     (1,659      —     

Basis difference related to convertible senior notes

     (2,519      (4,052

Prepaid expenses

     (412      (347

Other

     (416      (339
  

 

 

    

 

 

 

Total deferred tax liabilities

     (15,289      (13,546
  

 

 

    

 

 

 

Net deferred tax assets

   $ 250       $ 3,189   
  

 

 

    

 

 

 

A valuation allowance is established if, based upon the relevant facts and circumstances, management believes any portion of the deferred tax assets will not be realized. Although realization of deferred income tax assets is not certain, management believes it is more likely than not that deferred tax assets will be realized. Thus, the Company did not have a valuation allowance established as of December 31, 2016 or 2015.

A provision for income taxes has not been recorded for U.S. or additional foreign earnings related to the Company’s foreign affiliates as these earnings were and are expected to continue to be permanently reinvested. The aggregate undistributed earnings of the Company’s foreign subsidiaries for which no deferred tax liability has been recorded was $623 as of December 31, 2016. The estimated unrecognized deferred tax liability related to these undistributed earnings is approximately $242 as of December 31, 2016. If the Company identifies an exception to its reinvestment policy of undistributed earnings, additional tax liabilities will be recorded.