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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2022
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,
| 2022 |  | 2021 |  | 2020
Current expense (benefit): |  |  |  |  |
United States | $ | 195,588 |  |  | $ | 284,274 |  |  | $ | 181,571 |
Non-U.S. | 5,628 |  |  | 11,259 |  |  | 16,091 |
| 201,216 |  |  | 295,533 |  |  | 197,662 |
Deferred expense (benefit): |  |  |  |  |
United States | (96,599) |  |  | (123,261) |  |  | (89,170) |
Non-U.S. | (24,656) |  |  | (43,690) |  |  | 3,346 |
| (121,255) |  |  | (166,951) |  |  | (85,824) |
Income tax expense | $ | 79,961 |  |  | $ | 128,582 |  |  | $ | 111,838 |
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,
| 2022 |  | 2021 |  | 2020
Income (Loss) Before Income Taxes: |  |
Bermuda | $ | 985,828 |  |  | $ | 1,518,616 |  |  | $ | 1,114,117 |
United States | 400,865 |  |  | 643,239 |  |  | 409,893 |
Other | 175,691 |  |  | 206,187 |  |  | 53,539 |
Total | $ | 1,562,384 |  |  | $ | 2,368,042 |  |  | $ | 1,577,549 |
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,
| 2022 |  | 2021 |  | 2020
Expected income tax expense (benefit) computed on pre-tax income at weighted average income tax rate | $ | 110,337 |  |  | $ | 158,269 |  |  | $ | 111,947 |
Addition (reduction) in income tax expense (benefit) resulting from: |  |  |  |  |
Investment income | (12,762) |  |  | (23,572) |  |  | (1,824) |
State taxes, net of U.S. federal tax benefit | 10,650 |  |  | 20,978 |  |  | 5,027 |
Dividend withholding taxes | 10,559 |  |  | 12,211 |  |  | 7,105 |
Change in valuation allowance | (22,726) |  |  | (40,425) |  |  | 13,190 |
Base eroding tax | 7,694 |  |  | — |  |  | — |
Share based compensation | (9,159) |  |  | (5,339) |  |  | (2,533) |
Tax credits | (9,736) |  |  | — |  |  | — |
Intercompany loan write-off | (3,544) |  |  | — |  |  | (22,083) |
Other | (1,352) |  |  | 6,460 |  |  | 1,009 |
Income tax expense (benefit) | $ | 79,961 |  |  | $ | 128,582 |  |  | $ | 111,838 |
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,
| 2022 |  | 2021
Deferred income tax assets: |  |  |
Net operating loss | $ | 76,665 |  |  | $ | 87,960 |
Discounting of net loss reserves | 77,556 |  |  | 72,001 |
Net unearned premium reserve | 96,581 |  |  | 75,483 |
Compensation liabilities | 55,269 |  |  | 28,062 |
Foreign tax credit carryforward | 16,738 |  |  | 20,058 |
Bad debt reserves | 17,365 |  |  | 10,252 |
Depreciation and amortization | 141,409 |  |  | 115,041 |
Lease liability | 26,681 |  |  | 21,453 |
Net unrealized decline of investments | 192,949 |  |  | — |
Lloyds year of account deferral | 1,385 |  |  | — |
Other, net | 14,450 |  |  | 703 |
Deferred tax assets before valuation allowance | 717,048 |  |  | 431,013 |
Valuation allowance | (6,968) |  |  | (43,953) |
Deferred tax assets net of valuation allowance | 710,080 |  |  | 387,060 |
Deferred income tax liabilities: |  |  |
Deposit accounting liability | (2,658) |  |  | (1,578) |
Goodwill and intangibles | (38,905) |  |  | (70,549) |
Lloyds year of account deferral | — |  |  | (12,514) |
Contingency reserve | (43,870) |  |  | (49,486) |
Deferred policy acquisition costs | (63,708) |  |  | (25,612) |
Investment related | (9,225) |  |  | (7,492) |
Net unrealized appreciation of investments | — |  |  | (8,377) |
Right-of-use asset | (20,781) |  |  | (17,406) |
Total deferred tax liabilities | (179,147) |  |  | (193,014) |
Net deferred income tax assets | $ | 530,933 |  |  | $ | 194,046 |
Summary of operating loss carryforwards | At December 31, 2022, the Company’s net operating loss carryforwards and tax credits were as follows:
| Year Ended December 31,
| 2022 |  | Expiration
Operating Loss Carryforwards |  |  |
United Kingdom | $ | 198,571 |  |  | No expiration
Ireland | 61,685 |  |  | No expiration
Australia | 32,333 |  |  | No expiration
Hong Kong | 28,080 |  |  | No expiration
Netherlands | 60 |  |  | No expiration
United States (1) | 23,766 |  |  | 2029 - 2038
Tax Credits |  |  |
U.K. foreign tax credits | 13,907 |  |  | No expiration
U.S. foreign tax credits | 2,830 |  |  | 2029 - 2032
(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 $7.0 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, 2022, the Company’s net operating loss carryforwards and tax credits were as follows:
| Year Ended December 31,
| 2022 |  | Expiration
Operating Loss Carryforwards |  |  |
United Kingdom | $ | 198,571 |  |  | No expiration
Ireland | 61,685 |  |  | No expiration
Australia | 32,333 |  |  | No expiration
Hong Kong | 28,080 |  |  | No expiration
Netherlands | 60 |  |  | No expiration
United States (1) | 23,766 |  |  | 2029 - 2038
Tax Credits |  |  |
U.K. foreign tax credits | 13,907 |  |  | No expiration
U.S. foreign tax credits | 2,830 |  |  | 2029 - 2032
(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 $7.0 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,
| 2022 |  | 2021
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 |  | 2015-2022
United Kingdom |  | 2020-2022
Ireland |  | 2018-2022
Canada |  | 2018-2022
Switzerland |  | 2018-2022
Denmark |  | 2018-2022
Australia |  | 2018-2022

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