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Income Taxes (Tables) | 12 Months Ended
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Dec. 31, 2023
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,
| 2023 |  | 2022 |  | 2021
Current expense (benefit): |  |  |  |  |
United States | $ | 251 |  |  | $ | 195 |  |  | $ | 284 |
Non-U.S. | 37 |  |  | 6 |  |  | 11 |
| 288 |  |  | 201 |  |  | 295 |
Deferred expense (benefit): |  |  |  |  |
United States | (20) |  |  | (96) |  |  | (123) |
Non-U.S. | (1,141) |  |  | (25) |  |  | (44) |
| (1,161) |  |  | (121) |  |  | (167) |
Income tax expense (benefit) | $ | (873) |  |  | $ | 80 |  |  | $ | 128 |
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,
| 2023 |  | 2022 |  | 2021
Income (Loss) Before Income Taxes: |  |
Bermuda | $ | 2,099 |  |  | $ | 986 |  |  | $ | 1,519 |
United States | 1,239 |  |  | 401 |  |  | 643 |
Other | 232 |  |  | 175 |  |  | 206 |
Total | $ | 3,570 |  |  | $ | 1,562 |  |  | $ | 2,368 |
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,
| 2023 |  | 2022 |  | 2021
Expected income tax expense (benefit) computed on pre-tax income at weighted average income tax rate | $ | 300 |  |  | $ | 110 |  |  | $ | 158 |
Addition (reduction) in income tax expense (benefit) resulting from: |  |  |  |  |
Investment income | (14) |  |  | (13) |  |  | (24) |
State taxes, net of U.S. federal tax benefit | 6 |  |  | 11 |  |  | 21 |
Dividend withholding taxes | 9 |  |  | 11 |  |  | 12 |
Change in valuation allowance | 4 |  |  | (23) |  |  | (40) |
Base eroding tax | 9 |  |  | 8 |  |  | — |
Share based compensation | (13) |  |  | (9) |  |  | (5) |
Tax credits | (3) |  |  | (10) |  |  | — |
Change in tax rate | (1,179) |  |  | (5) |  |  | — |
Other | 8 |  |  | — |  |  | 6 |
Income tax expense (benefit) | $ | (873) |  |  | $ | 80 |  |  | $ | 128 |
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,
| 2023 |  | 2022
Deferred income tax assets: |  |  |
Net operating loss | $ | 93 |  |  | $ | 77 |
Discounting of net loss reserves | 219 |  |  | 78 |
Net unearned premium reserve | 133 |  |  | 97 |
Compensation liabilities | 64 |  |  | 55 |
Foreign tax credit carryforward | 16 |  |  | 17 |
Goodwill and intangible assets | 1,020 |  |  | — |
Bad debt reserves | 16 |  |  | 17 |
Depreciation and amortization | 133 |  |  | 141 |
Lease liability | 31 |  |  | 27 |
Net unrealized decline of investments | 89 |  |  | 193 |
Lloyds year of account deferral | — |  |  | 1 |
Fair value adjustment to senior notes | 41 |  |  | — |
Other, net | 13 |  |  | 11 |
Deferred income tax assets before valuation allowance | 1,868 |  |  | 714 |
Valuation allowance | (15) |  |  | (7) |
Deferred income tax assets net of valuation allowance | 1,853 |  |  | 707 |
Deferred income tax liabilities: |  |  |
Goodwill and intangibles | — |  |  | (39) |
Lloyds year of account deferral | (13) |  |  | — |
Contingency reserve | (50) |  |  | (44) |
Deferred policy acquisition costs | (144) |  |  | (64) |
Investment related | (13) |  |  | (9) |
Right-of-use asset | (24) |  |  | (21) |
Total deferred income tax liabilities | (245) |  |  | (177) |
Net deferred income tax assets | $ | 1,608 |  |  | $ | 530 |
Summary of operating loss carryforwards | At December 31, 2023, the Company’s net operating loss carryforwards and tax credits were as follows:
| Year Ended December 31,
| 2023 |  | Expiration
Operating Loss Carryforwards |  |  |
United Kingdom | $ | 198 |  |  | No expiration
Ireland | 24 |  |  | No expiration
Australia | 47 |  |  | No expiration
Hong Kong | 32 |  |  | No expiration
Gibraltar | 24 |  |  | No expiration
Cyprus | 1 |  |  | No expiration
United States (1) | 78 |  |  | 2029 - 2038
Tax Credits |  |  |
U.K. foreign tax credits | 10 |  |  | No expiration
U.S. foreign tax credits | 6 |  |  | 2029 - 2033
(1) The Company’s U.S. operations have recorded $78 million of net operating loss (“NOL”) carryforwards that are subject to annual usage limitations under Section 382 of the Internal Revenue Code (“the Code”). The NOL limitations are related to acquisitions of the CMG entities in January 2014, Ventus Risk Management Inc. in August 2019, and Verifly Insurance Services, LLC, and Verifly USA Inc. in April 2023. In accordance with Section 382 of the Code, utilization of the acquired NOLs is limited to approximately $2 million per year through December 31, 2027, approximately $1 million through December 31, 2038, and $0.3 million thereafter.
Summary of tax credit carryforwards | At December 31, 2023, the Company’s net operating loss carryforwards and tax credits were as follows:
| Year Ended December 31,
| 2023 |  | Expiration
Operating Loss Carryforwards |  |  |
United Kingdom | $ | 198 |  |  | No expiration
Ireland | 24 |  |  | No expiration
Australia | 47 |  |  | No expiration
Hong Kong | 32 |  |  | No expiration
Gibraltar | 24 |  |  | No expiration
Cyprus | 1 |  |  | No expiration
United States (1) | 78 |  |  | 2029 - 2038
Tax Credits |  |  |
U.K. foreign tax credits | 10 |  |  | No expiration
U.S. foreign tax credits | 6 |  |  | 2029 - 2033
(1) The Company’s U.S. operations have recorded $78 million of net operating loss (“NOL”) carryforwards that are subject to annual usage limitations under Section 382 of the Internal Revenue Code (“the Code”). The NOL limitations are related to acquisitions of the CMG entities in January 2014, Ventus Risk Management Inc. in August 2019, and Verifly Insurance Services, LLC, and Verifly USA Inc. in April 2023. In accordance with Section 382 of the Code, utilization of the acquired NOLs is limited to approximately $2 million per year through December 31, 2027, approximately $1 million through December 31, 2038, and $0.3 million thereafter.
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,
| 2023 |  | 2022
Balance at beginning of year | $ | 2 |  |  | $ | 2 |
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 |  |  | $ | 2 |
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 |  | 2019-2023
United Kingdom |  | 2021-2023
Ireland |  | 2018-2023
Canada |  | 2019-2023
Switzerland |  | 2019-2023
Denmark |  | 2019-2023
Australia |  | 2019-2023

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