XML 44 R23.htm IDEA: XBRL DOCUMENT v3.24.0.1
Income Taxes
 12 Months Ended
Dec. 31, 2023
Income Tax Disclosure [Abstract]  
Income Taxes
16.    INCOME TAXES
AFG files a consolidated Federal income tax return with its subsidiaries. AFG and its subsidiaries also file separate or combined income tax returns in various states, local and foreign jurisdictions. The following are the major jurisdictions in which Ambac and its subsidiaries operate and the earliest tax years subject to examination:
JurisdictionTax Year
United States2010
New York State2013
New York City2018
United Kingdom2020
Italy2019
Consolidated Pretax Income (Loss)
U.S. and foreign components of pre-tax income (loss) were as follows:
Year Ended December 31,202320222021
U.S.$(29)$511 $(32)
Foreign41 13 34 
Total$12 $525 $2 
Provision (Benefit) for Income Taxes
The components of the provision (benefit) for income taxes were as follows:
Year Ended December 31,202320222021
Current taxes
U.S. state and local$1 $— $2 
Foreign8 7 10 
Total current taxes8 6 12 
Deferred taxes
Domestic(2)— — 
Foreign1 (4)6 
Total deferred taxes$(1)$(4)$6 
Provision for income taxes$7 $2 $18 
The total effect of income taxes on net income and stockholders’ equity for the years ended December 31, 2023, 2022 and 2021 is as follows:
Year Ended December 31,202320222021
Total income taxes charged to net income$7 $2 $18 
Income taxes charged (credited) to stockholders’ equity:
Unrealized gains (losses) on investment securities, including foreign exchange12 (47)(3)
Change in retirement benefits(1)— — 
Credit Risk Changes to Fair Value Options— — — 
Valuation allowance to equity(9)41 1 
Total charged to stockholders’ equity:2 (6)(2)
Total effect of income taxes$9 $(4)$16 
Reconciliation of U.S. Federal Statutory Income Tax Rate to Actual Income Tax Rate
The tax provisions in the accompanying Consolidated Statements of Total Comprehensive Loss reflect effective tax rates differing from prevailing Federal corporate income tax rates. The following is a reconciliation of these differences:
Year Ended December 31,202320222021
Tax on income (loss) at statutory rate$3 21 %$110 21 %$— 21 %
Changes in expected tax resulting from:
Tax-exempt interest— — %(1)— %(2)(114)%
Foreign taxes9 70 %4 1 %8 448 %
State Income Taxes— (1)%(1)— %14 794 %
Return to Provision15 118 %— — %— — %
Variable Interest Entities(24)(197)%25 5 %— — %
Valuation allowance2 13 %(131)(25)%(4)(230)%
Other, net4 35 %(4)(1)%1 72 %
Tax expense on income (loss)$7 60 %$2 1 %$18 991 %
Unrecognized Tax Positions
The Company had no material unrecognized tax benefits at December 31, 2023 and 2022.
Deferred Income Taxes
The tax effects of temporary differences that give rise to significant portions of the deferred tax liabilities and deferred tax assets at December 31, 2023 and 2022, are presented below:
December 31,20232022
Deferred tax liabilities:
Insurance intangible$51 $56 
Unearned premiums and credit fees23 24 
Variable interest entities— 4 
Other3 1 
Total deferred tax liabilities77 85 
Deferred tax assets:
Net operating loss carryforward714 725 
Interest expense carryforward58 66 
Loss reserves42 38 
Debentures22 15 
State capital loss carryforward8 8 
Compensation5 6 
Investments— 6 
Other4 4 
Subtotal deferred tax assets853 867 
Valuation allowance795 796 
Total deferred tax assets58 70 
Net deferred tax liability$19 $15 
In accordance with the Income Tax Topic of the ASC, a valuation allowance is recognized if, based on the weight of available evidence, it is more-likely-than-not that some, or all, of the deferred tax asset will not be realized. As a result of the risks and uncertainties associated with future operating results, management believes it is more likely than not that the Company will not generate sufficient U.S. federal, state and/or local taxable income to recover the deferred tax operating assets and therefore maintains a full valuation allowance. The remaining net deferred tax liability of $19 is attributable to Ambac U.K. and is classified in other liabilities on the Consolidated Balance Sheet.
NOL & Investment Interest Carryforward
As of December 31, 2023, the Company has (i) $3,400 of NOLs, which if not utilized will begin expiring in 2030, and will fully expire in 2042, and (ii) $274 of interest expense tax deduction carryover, which has an indefinite carryforward period but is limited in any particular year based on certain provisions.
Schedule of Net Operating Loss And Tax Credit Carryovers As of December 31, 2023, the Company has (i) $3,400 of NOLs, which if not utilized will begin expiring in 2030, and will fully expire in 2042, and (ii) $274 of interest expense tax deduction carryover, which has an indefinite carryforward period but is limited in any particular year based on certain provisions.