Under current Bermuda law, AXIS Capital's Bermuda domiciled subsidiaries are not required to pay any taxes in Bermuda on income or capital gains. The Company has received an assurance from the Minister of Finance in Bermuda that, in the event of any taxes being imposed, it will be exempt from taxation in Bermuda until March 2035. The Company's primary Bermuda subsidiary has an operating branch in Singapore, which is subject to the relevant taxes in that jurisdiction. The Singapore branch is not under examination in that tax jurisdiction but remains subject to examination for tax years 2017 through 2020.

AXIS Capital's U.S. subsidiaries are subject to federal, state and local corporate income taxes, and other taxes applicable to U.S. corporations. The provision for federal income taxes has been determined under the principles of the consolidated tax provisions of the U.S. Internal Revenue Code and regulations. Should the U.S. subsidiaries pay a dividend outside the U.S. group, withholding taxes will apply. The Company's U.S. subsidiaries are not under examination but remain subject to examination for tax years 2017 through 2020.

In Canada, AXIS Capital's U.S. reinsurance company operates through a branch and its U.S. service company has an unlimited liability company subsidiary based in Canada. The Canadian operations are subject to the relevant taxes in that jurisdiction and remain subject to examination for tax years 2016 through 2020.

AXIS Capital had subsidiaries in Ireland, the U.K., Belgium, Luxembourg, Brazil, and Dubai in 2018. Effective January 1, 2019, AXIS Capital's subsidiary in Belgium was merged into AXIS Specialty Europe. In addition, the Company ceased operations in Luxembourg in December 2019. Consequently, AXIS Capital had subsidiaries in Ireland, the U.K., Brazil, and Dubai in 2020. AXIS Capital's Irish operations had branches in the U.K. and Switzerland in 2018. Effective January 1, 2019, following the merger of AXIS Specialty Europe and Aviabel SA., AXIS Capital's Irish operations also has branches in Belgium and the Netherlands. There are ongoing audits in Ireland, with respect to 2016 and 2017 tax years, and Belgium, with respect to 2017 and 2018 tax years. There are no other ongoing audits of AXIS Capital's subsidiaries or branches, but they remain subject to examination in all applicable jurisdictions for tax years 2016 through 2020.

In the U.K., the Company operates through Lloyd’s syndicates whose income is subject to tax in the U.K., payable by its corporate members. The income from operations at Lloyd’s is also subject to taxes in other jurisdictions in which Lloyd's operates, including the U.S. Under a Closing Agreement between Lloyd’s and the IRS, Lloyd's corporate members pay U.S. income tax on U.S. connected income written by Lloyd’s syndicates. To the extent that the Lloyd’s syndicates suffer taxes outside the U.K., they may claim a credit for foreign taxes suffered, limited to the U.K. equivalent tax on the same income.



Year ended December 31,	2020		2019		2018

Current income tax expense (benefit)
U.S.	$	(1,122)	$	12,601	$	(5,401)
Europe	365		22,425		10,409
Other	—		469		51
Deferred income tax expense (benefit)
U.S.	(3,098)		17,665		15,288
Europe	(8,466)		(29,468)		(49,833)

Total income tax expense (benefit)	$	(12,321)	$	23,692	$	(29,486)

Net current tax receivables (payables)	$	12,205	$	13,130	$	9,683
Net deferred tax assets (liabilities)	(1,625)		18,621		39,775

Net tax assets	$	10,580	$	31,751	$	49,458

Deferred income taxes reflect the tax impact of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes. The following table provides details of the significant components of deferred tax assets and liabilities:



At December 31,	2020		2019

Deferred tax assets:
Discounting of net reserves for losses and loss expenses	$	47,912	$	40,523
Unearned premiums	46,049		42,709

Operating and capital loss carryforwards(1)	80,008		85,901
Accruals not currently deductible	28,096		29,705

Tax credits	11,142		2,956


Other deferred tax assets	24,266		14,355
Deferred tax assets before valuation allowance	237,473		216,149
Valuation allowance	(20,778)		(18,560)
Deferred tax assets net of valuation allowance	216,695		197,589

Deferred tax liabilities:
Deferred acquisition costs	(33,550)		(38,320)
Net unrealized investments gains	(62,921)		(30,434)
Intangible assets	(46,132)		(44,199)

Equalization reserves	(2,825)		(2,825)
Other deferred tax liabilities	(72,892)		(63,190)
Deferred tax liabilities	(218,320)		(178,968)
Net deferred tax assets	$	(1,625)	$	18,621



At December 31,	2020		2019

Operating and Capital Loss Carryforwards(1)
Singapore (branch) operating loss carryforward	$	110,504	$	103,899
U.K. operating loss carryforward(2)	357,226		431,374

Ireland operating loss carryforward	404		9,064

Ireland capital loss carryforward	716		716
Belgian operating loss carryforward	1,850		—

Tax Credits(1)
Ireland foreign tax credit	$	2,386	$	2,092

U.K. tax credit	8,756		864



At December 31,	2020		2019

Income tax expense:
Valuation allowance - beginning of year	$	18,560	$	13,891
Operating loss carryforwards	661		2,445

Foreign tax credit	293		(114)
U.K. branch assets and other foreign rate differentials	1,264		2,338

Valuation allowance - end of year	$	20,778	$	18,560

Accumulated other comprehensive income:
Valuation allowance - beginning of year	—		5,064
Change in investment - related items	—		(5,064)
Valuation allowance - end of year	—		—

Total valuation allowance - end of year	$	20,778	$	18,560

At December 31, 2020 and 2019, the Company established a full valuation allowance on: (1) operating loss carryforwards relating to operations in Singapore; (2) un-utilized foreign tax credits available in Ireland and (3) certain other deferred tax assets related to branch operations. At December 31, 2019, the valuation allowance on certain unrealized investment losses was released as the Company was in an unrealized investment gain position.

Although realization is not assured, management believes it is more likely than not that the tax benefit of the recorded net deferred tax assets will be realized. In evaluating the Company's ability to recover these tax assets within the jurisdiction from which they arise, it considered all available positive and negative evidence, including historical results, operating loss carry-back potential and scheduled reversals of deferred tax liabilities. The Company believes its U.S. and U.K. operations will produce significant taxable income in future periods and have deferred tax liabilities that will reverse in future periods, such that the Company believes sufficient ordinary taxable income is available to utilize all remaining ordinary deferred tax assets.

The following table presents the distribution of income before income taxes between domestic and foreign jurisdictions as well as a reconciliation of the actual income tax rate to the amount computed by applying the effective tax rate of 0% under Bermuda law to income before income taxes:



Year ended December 31,	2020			2019			2018

Income (loss) before income taxes
Bermuda (domestic)	$	(45,951)		$	179,418		$	181,597
Foreign	(86,794)			167,747			(168,062)
Total income (loss) before income taxes	$	(132,745)		$	347,165		$	13,535

Reconciliation of effective tax rate (% of income before income taxes)
Expected tax rate	0.0		%	0.0		%	0.0		%
Foreign taxes at local expected rates:
U.S.	5.6		%	8.1		%	65.7		%
Europe	9.2		%	0.4		%	(289.7)		%

Valuation allowance	(1.7)		%	1.3		%	(13.4)		%
Net tax exempt income	—		%	—		%	(3.3)		%

Change in European enacted tax rate	(1.7)		%	—		%	16.9		%
Other	(2.1)		%	(3.0)		%	5.9		%
Actual tax rate	9.3		%	6.8		%	(217.9)		%