| Schedule of Components of Income Tax Expense (Benefit) |
The following table summarizes the provision for income taxes:
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Year Ended December 31, |
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2025 |
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2024 |
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2023 |
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Federal: |
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Current |
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$ |
21,289 |
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$ |
17,992 |
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|
$ |
11,798 |
|
Deferred |
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|
7,388 |
|
|
|
401 |
|
|
|
(2,908 |
) |
Provision for Federal income tax expense |
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|
28,677 |
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|
18,393 |
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|
8,890 |
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State: |
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Current |
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4,379 |
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4,446 |
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|
3,128 |
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Deferred |
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2,896 |
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|
957 |
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(2,562 |
) |
Provision for State income tax expense |
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|
7,275 |
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|
5,403 |
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|
|
566 |
|
Provision for income taxes |
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$ |
35,952 |
|
|
$ |
23,796 |
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|
$ |
9,456 |
|
Income tax expense is included in the financial statements as follows:
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Year Ended December 31, |
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2025 |
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2024 |
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2023 |
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Continuing operations |
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$ |
35,939 |
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$ |
25,340 |
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|
$ |
10,876 |
|
Discontinued operations |
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13 |
|
|
|
(1,544 |
) |
|
|
(1,420 |
) |
Reported income tax provision |
|
$ |
35,952 |
|
|
$ |
23,796 |
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|
$ |
9,456 |
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| Tax Expense Reconciliation |
The actual income tax expense attributable to continuing operations differs from the expected income tax expense attributable to continuing operations computed by applying the combined applicable effective federal and state tax rates to income before the provision for income taxes as follows:
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Year Ended December 31, |
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2025 |
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2024 |
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2023 |
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Amount |
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Percent |
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Amount |
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Percent |
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Amount |
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Percent |
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Pretax income |
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United States |
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$ |
104,127 |
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$ |
89,659 |
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$ |
77,220 |
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Foreign |
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38,607 |
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12,000 |
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18,860 |
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Total pretax income |
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142,734 |
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101,659 |
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96,080 |
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US federal statutory tax rate |
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29,974 |
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|
21.0 |
% |
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21,348 |
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21.0 |
% |
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20,176 |
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21.0 |
% |
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State and local income tax, net of federal income tax effect(1) |
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6,353 |
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4.5 |
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4,550 |
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4.5 |
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|
1,032 |
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1.1 |
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Foreign tax effects |
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Bermuda |
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Foreign tax statutory exemption |
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7 |
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— |
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(56 |
) |
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(0.1 |
) |
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(188 |
) |
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(0.2 |
) |
Cayman Islands |
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Foreign rate differential(2) |
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(8,114 |
) |
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(5.7 |
) |
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(2,464 |
) |
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(2.4 |
) |
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(3,773 |
) |
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(3.9 |
) |
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Effects of cross-border tax laws |
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US tax on foreign insurance income |
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8,107 |
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5.7 |
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2,520 |
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2.5 |
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3,961 |
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4.1 |
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Changes in valuation allowance |
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(17,810 |
) |
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(12.5 |
) |
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(8,881 |
) |
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(8.7 |
) |
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(10,678 |
) |
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(11.1 |
) |
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Nontaxable or nondeductible items |
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Unrealized gain on outside basis of subsidiary |
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16,819 |
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11.8 |
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8,970 |
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8.8 |
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— |
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— |
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Other items |
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603 |
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0.4 |
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(647 |
) |
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(0.7 |
) |
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346 |
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0.3 |
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Reported income tax expense |
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$ |
35,939 |
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25.2 |
% |
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$ |
25,340 |
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24.9 |
% |
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$ |
10,876 |
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11.3 |
% |
(1) For the years ended December 31, 2025 and 2023, the state of Florida makes up the majority (greater than 50%) of our state and local income tax effects. For the year ended December 31, 2024, the states of Florida and Louisiana make up the majority (greater than 50%) of our state and local income tax effects. (2) The foreign rate differential is calculated by taking pretax net income times the foreign tax rate less the US federal statutory rate. For the years ended December 31, 2025, 2024, and 2023, our foreign tax rate is 0% and the US federal statutory rate is 21%. For the years ended December 31, 2025, 2024 and 2023, our pretax income related to the Cayman Islands is $38,639,000, $11,732,000, and $17,966,000, respectively.
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| Schedule of Deferred Tax Assets and Liabilities |
The table below summarizes the significant components of our net deferred tax asset (liability):
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December 31, |
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|
2025 |
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|
2024 |
|
Deferred tax assets: |
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Unearned premiums |
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$ |
7,019 |
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$ |
6,985 |
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Unrealized loss |
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244 |
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3,575 |
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Tax-related discount on loss reserve |
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275 |
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|
620 |
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R&D tax credit carryforward |
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1,610 |
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|
1,610 |
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Investments |
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2,712 |
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|
2,592 |
|
Bad debt expense |
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328 |
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|
848 |
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Equity compensation |
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1,143 |
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|
797 |
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Dual consolidated loss carryforward |
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4,406 |
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|
4,737 |
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Net operating loss carryforward |
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1,702 |
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7,740 |
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Outside basis in subsidiary |
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12,360 |
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32,138 |
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Other |
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|
114 |
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|
1,205 |
|
Total pre-allowance deferred tax assets |
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31,913 |
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|
62,847 |
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Valuation allowance |
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(20,246 |
) |
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(43,212 |
) |
Total deferred tax assets |
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11,667 |
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|
19,635 |
|
Deferred tax liabilities: |
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Deferred acquisitions costs |
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(17,668 |
) |
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(14,108 |
) |
Intangible assets |
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(842 |
) |
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(1,616 |
) |
Prepaid expenses |
|
|
(487 |
) |
|
|
(472 |
) |
Investments |
|
|
(67 |
) |
|
|
(131 |
) |
Fixed assets |
|
|
(155 |
) |
|
|
(377 |
) |
Total deferred tax liabilities |
|
|
(19,219 |
) |
|
|
(16,704 |
) |
Net deferred tax asset (liability) |
|
$ |
(7,552 |
) |
|
$ |
2,931 |
|
Net deferred tax asset (liability) is included in the financial statements as follows:
|
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|
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|
|
|
|
|
|
Year Ended December 31, |
|
|
|
2025 |
|
|
2024 |
|
Continuing operations |
|
$ |
(7,552 |
) |
|
$ |
2,931 |
|
Discontinued operations |
|
|
— |
|
|
|
— |
|
Net deferred tax asset (liability) |
|
$ |
(7,552 |
) |
|
$ |
2,931 |
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|