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Income Taxes (Tables)

9 Months Ended

Sep. 30, 2014

Income Before Income Taxes From its Non-U.S. Subsidiaries and U.S. Subsidiaries

The Company’s income before income taxes from its non-U.S. subsidiaries and U.S. subsidiaries, including the results of the quota share and stop-loss agreements between Global Indemnity Reinsurance and the Insurance Operations, for the quarters and nine months ended September 30, 2014 and 2013 were as follows:

Quarter Ended September 30, 2014: (Dollars in thousands)		Non-U.S. Subsidiaries				U.S. Subsidiaries				Eliminations				Total
Revenues:
Gross premiums written		$	38,387			$	56,491			$	(27,780	)		$	67,098
Net premiums written		$	38,366			$	24,896			$	—			$	63,262
Net premiums earned		$	43,238			$	24,790			$	—			$	68,028
Net investment income			7,713				3,655				(4,841	)			6,527
Net realized investment gains (losses)			(10	)			1,168				—				1,158
Other income (loss)			(38	)			164				—				126
Total revenues			50,903				29,777				(4,841	)			75,839
Losses and Expenses:
Net losses and loss adjustment expenses			18,939				17,715				—				36,654
Acquisition costs and other underwriting expenses			17,762				9,696				—				27,458
Corporate and other operating expenses			1,156				2,325				—				3,481
Interest expense			193				4,766				(4,841	)			118
Income (loss) before income taxes		$	12,853			$	(4,725	)		$	—			$	8,128

Quarter Ended September 30, 2013: (Dollars in thousands)		Non-U.S. Subsidiaries				U.S. Subsidiaries				Eliminations				Total
Revenues:
Gross premiums written		$	37,676			$	59,746			$	(28,637	)		$	68,785
Net premiums written		$	37,673			$	26,357			$	—			$	64,030
Net premiums earned		$	40,282			$	24,187			$	—			$	64,469
Net investment income			8,443				4,983				(4,940	)			8,486
Net realized investment gains (losses)			(180	)			1,821				—				1,641
Other income			21				162				—				183
Total revenues			48,566				31,153				(4,940	)			74,779
Losses and Expenses:
Net losses and loss adjustment expenses			18,300				17,183				—				35,483
Acquisition costs and other underwriting expenses			17,009				11,019				—				28,028
Corporate and other operating expenses			663				1,964				—				2,627
Interest expense			292				8,233				(4,940	)			3,585
Income (loss) before income taxes		$	12,302			$	(7,246	)		$	—			$	5,056

Nine Months Ended September 30, 2014: (Dollars in thousands)		Non-U.S. Subsidiaries				U.S. Subsidiaries				Eliminations				Total
Revenues:
Gross premiums written		$	139,714			$	170,038			$	(82,552	)		$	227,200
Net premiums written		$	138,677			$	73,818			$	—			$	212,495
Net premiums earned		$	126,551			$	75,038			$	—			$	201,589
Net investment income			22,947				13,980				(14,439	)			22,488
Net realized investment gains			1,017				39,209				—				40,226
Other income (loss)			(41	)			490				—				449
Total revenues			150,474				128,717				(14,439	)			264,752
Losses and Expenses:
Net losses and loss adjustment expenses			51,818				61,678				—				113,496
Acquisition costs and other underwriting expenses			52,637				28,477				—				81,114
Corporate and other operating expenses			4,034				5,580				—				9,614
Interest expense			647				14,420				(14,439	)			628
Income before income taxes		$	41,338			$	18,562			$	—			$	59,900

Nine Months Ended September 30, 2013: (Dollars in thousands)		Non-U.S. Subsidiaries				U.S. Subsidiaries				Eliminations				Total
Revenues:
Gross premiums written		$	137,974			$	172,713			$	(82,718	)		$	227,969
Net premiums written		$	137,563			$	76,291			$	—			$	213,854
Net premiums earned		$	110,944			$	68,192			$	—			$	179,136
Net investment income			27,217				15,778				(14,710	)			28,285
Net realized investment gains			66				10,138				—				10,204
Other income (loss)			(7	)			491				—				484
Total revenues			138,220				94,599				(14,710	)			218,109
Losses and Expenses:
Net losses and loss adjustment expenses			51,709				50,486				—				102,195
Acquisition costs and other underwriting expenses			46,600				30,377				—				76,977
Corporate and other operating expenses			3,268				4,176				—				7,444
Interest expense			918				19,731				(14,710	)			5,939
Income (loss) before income taxes		$	35,725			$	(10,171	)		$	—			$	25,554

Components of Income Tax Expense (Benefit)

The following table summarizes the components of income tax expense (benefit):

		Quarters Ended September 30,								Nine Months Ended September 30,
(Dollars in thousands)		2014				2013				2014				2013
Current income tax expense (benefit):
Foreign		$	39			$	51			$	164			$	125
U.S. Federal			(1,571	)			(2,461	)			5,980				(851	)
Total current income tax expense (benefit)			(1,532	)			(2,410	)			6,144				(726	)
Deferred income tax expense (benefit):
U.S. Federal			(101	)			518				1,964				(1,697	)
Total deferred income tax expense (benefit)			(101	)			518				1,964				(1,697	)
Total income tax expense (benefit)		$	(1,633	)		$	(1,892	)		$	8,108			$	(2,423	)

Differences in Tax and Estimated Tax Provisions at Weighted Average Tax Rate

The following tables summarize the differences between the effective income tax provisions under accounting guidance applicable to interim financial statement periods and the expected tax provision at the weighted average tax rate:

		Quarters Ended September 30,
		2014								2013
(Dollars in thousands)		Amount				% of Pre- Tax Income				Amount				% of Pre- Tax Income
Expected tax provision at weighted average rate		$	(1,614	)			(19.9	%)		$	(2,500	)			(49.5	%)
Adjustments:
Tax exempt interest			(120	)			(1.5	)			(248	)			(4.9	)
Dividend exclusion			(229	)			(2.8	)			(292	)			(5.8	)
Effective tax rate adjustment			288				3.5				1,033				20.4
Other			42				0.6				115				2.4
Effective income tax benefit		$	(1,633	)			(20.1	%)		$	(1,892	)			(37.4	%)

		Nine Months Ended September 30,
		2014								2013
(Dollars in thousands)		Amount				% of Pre- Tax Income				Amount				% of Pre- Tax Income
Expected tax provision at weighted average rate		$	6,649				11.1	%		$	(3,450	)			(13.5	%)
Adjustments:
Tax exempt interest			(490	)			(0.8	)			(804	)			(3.1	)
Dividend exclusion			(1,186	)			(2.0	)			(880	)			(3.4	)
Effective tax rate adjustment			2,600				4.3				2,565				10.0
Other			535				0.9				146				0.5
Effective income tax expense (benefit)		$	8,108				13.5	%		$	(2,423	)			(9.5	%)

X

- Definition

Tabular disclosure of the components of income tax expense attributable to continuing operations for each year presented including, but not limited to: current tax expense (benefit), deferred tax expense (benefit), investment tax credits, government grants, the benefits of operating loss carryforwards, tax expense that results from allocating certain tax benefits either directly to contributed capital or to reduce goodwill or other noncurrent intangible assets of an acquired entity, adjustments of a deferred tax liability or asset for enacted changes in tax laws or rates or a change in the tax status of the entity, and adjustments of the beginning-of-the-year balances of a valuation allowance because of a change in circumstances that causes a change in judgment about the realizability of the related deferred tax asset in future years.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 740

-SubTopic 10

-Section 50

-Paragraph 9

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X

- Definition

Tabular disclosure of the reconciliation using percentage or dollar amounts of the reported amount of income tax expense attributable to continuing operations for the year to the amount of income tax expense that would result from applying domestic federal statutory tax rates to pretax income from continuing operations.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 740

-SubTopic 10

-Section 50

-Paragraph 12

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- Definition

Tabular disclosure of income before income tax between domestic and foreign jurisdictions.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 235

-SubTopic 10

-Section S99

-Paragraph 1

-Subparagraph (SX 210.4-08.(h)(1)(i))

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