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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Components of income taxes attributable to operations

The components of income taxes attributable to operations were as follows:

			Year Ended December 31,
			2020						2019						2018
Current expense (benefit):
United States			$	181,571					$	139,407					$	73,078
Non-U.S.			16,091						4,954						12,785
			197,662						144,361						85,863
Deferred expense (benefit):
United States			(89,170)						11,849						19,544
Non-U.S.			3,346						(400)						8,544
			(85,824)						11,449						28,088
Income tax expense			$	111,838					$	155,810					$	113,951

Schedule of income or loss before income taxes by jurisdiction

The Company’s income or loss before income taxes was earned in the following jurisdictions:

			Year Ended December 31,
			2020						2019						2018
Income (Loss) Before Income Taxes:
Bermuda			$	1,114,117					$	1,122,952					$	388,492
United States			409,893						701,480						440,823
Other			53,539						24,678						12,457
Total			$	1,577,549					$	1,849,110					$	841,772

Reconciliation of the differences between the provision for income taxes and the expected tax provision at the weighted average tax rate

A reconciliation of the difference between the provision for income taxes and the expected tax provision at the weighted average tax rate follows:

			Year Ended December 31,
			2020						2019						2018
Expected income tax expense (benefit) computed on pre-tax income at weighted average income tax rate			$	111,947					$	149,799					$	91,529
Addition (reduction) in income tax expense (benefit) resulting from:
Tax-exempt investment income			(1,824)						(3,091)						(4,790)
Meals and entertainment			547						1,134						1,060
State taxes, net of U.S. federal tax benefit			5,027						3,314						2,086
Foreign branch taxes			2,094						1,231						5,428
Prior year adjustment			3,983						632						(2,522)
Foreign exchange gains & losses			(1,736)						436						1,293
Changes in applicable tax rate			—						—						(128)
Dividend withholding taxes			7,105						6,510						6,594
Change in valuation allowance			13,190						1,628						18,396
Contingent consideration			9						190						740
Share based compensation			(2,533)						(6,592)						(5,356)
Intercompany loan write-off			(22,083)						—						—
Other			(3,888)						619						(379)
Income tax expense (benefit)			$	111,838					$	155,810					$	113,951

Significant components of deferred income tax assets and liabilities

Significant components of the Company’s deferred income tax assets and liabilities were as follows:

			December 31,
			2020						2019
Deferred income tax assets:
Net operating loss			$	67,142					$	30,836
Uncrystallized losses			2,926						1,565
AMT credit carryforward			—						1,323
Discounting of net loss reserves			74,247						52,582
Net unearned premium reserve			66,368						64,269
Compensation liabilities			27,351						21,693
Foreign tax credit carryforward			19,160						9,521
Interest expense			622						—
Goodwill and intangible assets			14,450						11,644
Bad debt reserves			1,864						5,983
Lease liability			23,604						26,438
Net unrealized foreign exchange gains			165						598
Other, net			1,725						206
Deferred tax assets before valuation allowance			299,624						226,658
Valuation allowance			(88,255)						(48,219)
Deferred tax assets net of valuation allowance			211,369						178,439
Deferred income tax liabilities:
Depreciation and amortization			(495)						(1,215)
Deposit accounting liability			(1,751)						(2,169)
Contingency reserve			(64,593)						(132,831)
Deferred policy acquisition costs			(42,045)						(29,847)
Net unrealized appreciation of investments			(66,681)						(38,764)
Right-of-use asset			(19,239)						(23,416)
Other, net			(843)						(3,680)
Total deferred tax liabilities			(195,647)						(231,922)
Net deferred income tax assets (liabilities)			$	15,722					$	(53,483)

Summary of operating loss carryforwards

At December 31, 2020, the Company’s net operating loss carryforwards and tax credits were as follows:

			Year Ended December 31,
			2020						Expiration
Operating Loss Carryforwards
United Kingdom			$	237,277					No expiration
Ireland			11,336						No expiration
Australia			37,995						No expiration
Hong Kong			21,094						No expiration
Denmark			23						No expiration
United States (1)			27,425						2029 - 2038
Tax Credits
U.K. foreign tax credits			19,160						No expiration
U.S. refundable AMT credits			0						No expiration

(1) On January 30, 2014, the Company’s U.S. mortgage operations underwent an ownership change for U.S. federal income tax purposes as a result of the Company’s acquisition of the CMG Entities. As a result of this ownership change, a limitation has been imposed upon the utilization of approximately $8.3 million of the Company’s existing U.S. net operating loss carryforwards. Utilization is limited to approximately $0.6 million per year in accordance with Section 382 of the Internal Revenue Code of 1986 as amended (“the Code”).

Summary of tax credit carryforwards

At December 31, 2020, the Company’s net operating loss carryforwards and tax credits were as follows:

			Year Ended December 31,
			2020						Expiration
Operating Loss Carryforwards
United Kingdom			$	237,277					No expiration
Ireland			11,336						No expiration
Australia			37,995						No expiration
Hong Kong			21,094						No expiration
Denmark			23						No expiration
United States (1)			27,425						2029 - 2038
Tax Credits
U.K. foreign tax credits			19,160						No expiration
U.S. refundable AMT credits			0						No expiration

(1) On January 30, 2014, the Company’s U.S. mortgage operations underwent an ownership change for U.S. federal income tax purposes as a result of the Company’s acquisition of the CMG Entities. As a result of this ownership change, a limitation has been imposed upon the utilization of approximately $8.3 million of the Company’s existing U.S. net operating loss carryforwards. Utilization is limited to approximately $0.6 million per year in accordance with Section 382 of the Internal Revenue Code of 1986 as amended (“the Code”).

Reconciliation of the beginning and ending amount of unrecognized tax benefits

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

			December 31,
			2020						2019
Balance at beginning of year			$	2,008					$	2,008
Additions based on tax positions related to the current year			—						—
Additions for tax positions of prior years			—						—
Reductions for tax positions of prior years			—						—
Settlements			—						—
Balance at end of year			$	2,008					$	2,008

Summary of open tax years potentially subject to examination, by jurisdiction

The following table details open tax years that are potentially subject to examination by local tax authorities, in the following major jurisdictions:

Jurisdiction						Tax Years
United States						2015-2020
United Kingdom						2019-2020
Ireland						2016-2020
Canada						2016-2020
Switzerland						2017-2020
Denmark						2016-2020
Australia						2016-2020

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