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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

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,
			2021						2020						2019
Current expense (benefit):
United States			$	284,274					$	181,571					$	139,407
Non-U.S.			11,259						16,091						4,954
			295,533						197,662						144,361
Deferred expense (benefit):
United States			(123,261)						(89,170)						11,849
Non-U.S.			(43,690)						3,346						(400)
			(166,951)						(85,824)						11,449
Income tax expense			$	128,582					$	111,838					$	155,810

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,
			2021						2020						2019
Income (Loss) Before Income Taxes:
Bermuda			$	1,518,616					$	1,114,117					$	1,122,952
United States			643,239						409,893						701,480
Other			206,187						53,539						24,678
Total			$	2,368,042					$	1,577,549					$	1,849,110

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,
			2021						2020						2019
Expected income tax expense (benefit) computed on pre-tax income at weighted average income tax rate			$	158,269					$	111,947					$	149,799
Addition (reduction) in income tax expense (benefit) resulting from:
Tax-exempt investment income			(23,572)						(1,824)						(3,091)
Meals and entertainment			379						547						1,134
State taxes, net of U.S. federal tax benefit			20,978						5,027						3,314
Foreign branch taxes			1,998						2,094						1,231
Prior year adjustment			(1,432)						3,983						632
Foreign exchange gains & losses			1,190						(1,736)						436
Changes in applicable tax rate			447						—						—
Dividend withholding taxes			12,211						7,105						6,510
Change in valuation allowance			(40,425)						13,190						1,628
Contingent consideration			—						9						190
Share based compensation			(5,339)						(2,533)						(6,592)
Intercompany loan write-off			—						(22,083)						—
Other			3,878						(3,888)						619
Income tax expense (benefit)			$	128,582					$	111,838					$	155,810

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,
			2021						2020
Deferred income tax assets:
Net operating loss			$	87,960					$	67,142
Uncrystallized losses			—						2,926
Discounting of net loss reserves			72,001						74,247
Net unearned premium reserve			75,483						66,368
Compensation liabilities			28,062						27,351
Foreign tax credit carryforward			20,058						19,160
Interest expense			755						622
Goodwill and intangible assets			—						14,450
Bad debt reserves			10,252						10,842
Depreciation and amortization			115,041						—
Lease liability			21,453						23,604
Net unrealized foreign exchange gains			166						165
Other, net			—						2,318
Deferred tax assets before valuation allowance			431,231						309,195
Valuation allowance			(43,953)						(88,255)
Deferred tax assets net of valuation allowance			387,278						220,940
Deferred income tax liabilities:
Depreciation and amortization			—						(495)
Deposit accounting liability			(1,578)						(1,751)
Goodwill and intangibles			(70,549)						—
Lloyds year of account deferral			(12,514)						—
Contingency reserve			(49,486)						(64,593)
Deferred policy acquisition costs			(25,612)						(42,045)
Investment related			(7,492)						(9,571)
Net unrealized appreciation of investments			(8,377)						(66,681)
Right-of-use asset			(17,406)						(19,239)
Other, net			(218)						(843)
Total deferred tax liabilities			(193,232)						(205,218)
Net deferred income tax assets			$	194,046					$	15,722

Summary of operating loss carryforwards

At December 31, 2021, the Company’s net operating loss carryforwards and tax credits were as follows:

			Year Ended December 31,
			2021						Expiration
Operating Loss Carryforwards
United Kingdom			$	259,235					No expiration
Ireland			9,032						No expiration
Australia			39,981						No expiration
Hong Kong			23,203						No expiration
United States (1)			29,508						2029 - 2038
Tax Credits
U.K. foreign tax credits			20,058						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 $7.6 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, 2021, the Company’s net operating loss carryforwards and tax credits were as follows:

			Year Ended December 31,
			2021						Expiration
Operating Loss Carryforwards
United Kingdom			$	259,235					No expiration
Ireland			9,032						No expiration
Australia			39,981						No expiration
Hong Kong			23,203						No expiration
United States (1)			29,508						2029 - 2038
Tax Credits
U.K. foreign tax credits			20,058						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 $7.6 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,
			2021						2020
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						2015-2021
United Kingdom						2020-2021
Ireland						2017-2021
Canada						2017-2021
Switzerland						2018-2021
Denmark						2017-2021
Australia						2017-2021

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