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Income Taxes | 9 Months Ended
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Sep. 30, 2020
Income Tax Disclosure [Abstract] |
Income Taxes | 7.Income Taxes Effective August 28, 2020, the parent Company, Global Indemnity Group, LLC is a publicly traded partnership for U.S. federal income tax purposes and meets the qualifying income exception to maintain partnership status. As a publicly traded partnership, Global Indemnity Group, LLC is generally not subject to federal income tax and most state income taxes. However, income earned by the subsidiaries of Global Indemnity Group, LLC is subject to corporate tax in the United States and certain foreign jurisdictions. As of September 30, 2020, the statutory income tax rates of the countries where the Company conducts or conducted business are 21% in the United States, 0% in Bermuda, 0% in the Cayman Islands, 19% in the United Kingdom, and 25% on non-trading income, 33% on capital gains and 12.5% on trading income in the Republic of Ireland. The statutory income tax rate of each country is applied against the expected annual taxable income of the Company in each country to estimate the annual income tax expense. The Company’s income (loss) before income taxes from its non-U.S. subsidiaries and U.S. subsidiaries for the quarters and nine months ended September 30, 2020 and 2019 were as follows:
Quarter Ended September 30, 2020 (Dollars in thousands) |  | Non-U.S. Subsidiaries |  |  | U.S. Subsidiaries |  |  | Eliminations |  |  | Total |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Gross written premiums |  | $ | 13,085 |  |  | $ | 130,664 |  |  | $ | — |  |  | $ | 143,749 |
Net written premiums |  | $ | 13,085 |  |  | $ | 117,526 |  |  | $ | — |  |  | $ | 130,611 |
Net earned premiums |  | $ | 9,983 |  |  | $ | 130,319 |  |  | $ | — |  |  | $ | 140,302 |
Net investment income |  |  | 4,054 |  |  |  | 9,851 |  |  |  | (2,159 | ) |  |  | 11,746 |
Net realized investment gains |  |  | 1,511 |  |  |  | 5,812 |  |  |  | — |  |  |  | 7,323 |
Other income |  |  | 164 |  |  |  | 378 |  |  |  | — |  |  |  | 542 |
Total revenues |  |  | 15,712 |  |  |  | 146,360 |  |  |  | (2,159 | ) |  |  | 159,913 |
Losses and Expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net losses and loss adjustment expenses |  |  | 519 |  |  |  | 96,629 |  |  |  | — |  |  |  | 97,148 |
Acquisition costs and other underwriting expenses |  |  | 3,584 |  |  |  | 49,684 |  |  |  | — |  |  |  | 53,268 |
Corporate and other operating expenses |  |  | 17,283 |  |  |  | 3,913 |  |  |  | — |  |  |  | 21,196 |
Interest expense |  |  | 193 |  |  |  | 5,586 |  |  |  | (2,159 | ) |  |  | 3,620 |
Loss on extinguishment of debt |  |  | 3,060 |  |  |  | — |  |  |  | — |  |  |  | 3,060 |
Loss before income taxes |  | $ | (8,927 | ) |  | $ | (9,452 | ) |  | $ | — |  |  | $ | (18,379 | )
Quarter Ended September 30, 2019 (Dollars in thousands) |  | Non-U.S. Subsidiaries |  |  | U.S. Subsidiaries |  |  | Eliminations |  |  | Total |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Gross written premiums |  | $ | 19,980 |  |  | $ | 137,197 |  |  | $ | — |  |  | $ | 157,177 |
Net written premiums |  | $ | 19,990 |  |  | $ | 118,846 |  |  | $ | — |  |  | $ | 138,836 |
Net earned premiums |  | $ | 19,512 |  |  | $ | 113,800 |  |  | $ | — |  |  | $ | 133,312 |
Net investment income |  |  | 7,212 |  |  |  | 7,732 |  |  |  | (3,596 | ) |  |  | 11,348 |
Net realized investment gains (losses) |  |  | 375 |  |  |  | (3,065 | ) |  |  | — |  |  |  | (2,690 | )
Other income (loss) |  |  | (234 | ) |  |  | 498 |  |  |  | — |  |  |  | 264 |
Total revenues |  |  | 26,865 |  |  |  | 118,965 |  |  |  | (3,596 | ) |  |  | 142,234 |
Losses and Expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net losses and loss adjustment expenses |  |  | 7,628 |  |  |  | 65,955 |  |  |  | — |  |  |  | 73,583 |
Acquisition costs and other underwriting expenses |  |  | 6,201 |  |  |  | 47,165 |  |  |  | — |  |  |  | 53,366 |
Corporate and other operating expenses |  |  | 1,514 |  |  |  | 2,344 |  |  |  | — |  |  |  | 3,858 |
Interest expense |  |  | 351 |  |  |  | 8,268 |  |  |  | (3,596 | ) |  |  | 5,023 |
Income (loss) before income taxes |  | $ | 11,171 |  |  | $ | (4,767 | ) |  | $ | — |  |  | $ | 6,404 |
Nine Months Ended September 30, 2020 (Dollars in thousands) |  | Non-U.S. Subsidiaries |  |  | U.S. Subsidiaries |  |  | Eliminations |  |  | Total |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Gross written premiums |  | $ | 46,654 |  |  | $ | 417,368 |  |  | $ | — |  |  | $ | 464,022 |
Net written premiums |  | $ | 46,654 |  |  | $ | 370,333 |  |  | $ | — |  |  | $ | 416,987 |
Net earned premiums |  | $ | 53,384 |  |  | $ | 373,233 |  |  | $ | — |  |  | $ | 426,617 |
Net investment income |  |  | 17,336 |  |  |  | 11,324 |  |  |  | (9,144 | ) |  |  | 19,516 |
Net realized investment losses |  |  | (3,867 | ) |  |  | (18,465 | ) |  |  | — |  |  |  | (22,332 | )
Other income |  |  | 148 |  |  |  | 1,325 |  |  |  | — |  |  |  | 1,473 |
Total revenues |  |  | 67,001 |  |  |  | 367,417 |  |  |  | (9,144 | ) |  |  | 425,274 |
Losses and Expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net losses and loss adjustment expenses |  |  | 12,874 |  |  |  | 229,218 |  |  |  | — |  |  |  | 242,092 |
Acquisition costs and other underwriting expenses |  |  | 17,828 |  |  |  | 145,430 |  |  |  | — |  |  |  | 163,258 |
Corporate and other operating expenses |  |  | 23,357 |  |  |  | 10,680 |  |  |  | — |  |  |  | 34,037 |
Interest expense |  |  | 869 |  |  |  | 21,472 |  |  |  | (9,144 | ) |  |  | 13,197 |
Loss on extinguishment of debt |  |  | 3,060 |  |  |  | — |  |  |  | — |  |  |  | 3,060 |
Income (loss) before income taxes |  | $ | 9,013 |  |  | $ | (39,383 | ) |  | $ | — |  |  | $ | (30,370 | )
Nine Months Ended September 30, 2019 (Dollars in thousands) |  | Non-U.S. Subsidiaries |  |  | U.S. Subsidiaries |  |  | Eliminations |  |  | Total |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Gross written premiums |  | $ | 69,588 |  |  | $ | 409,111 |  |  | $ | — |  |  | $ | 478,699 |
Net written premiums |  | $ | 69,591 |  |  | $ | 351,730 |  |  | $ | — |  |  | $ | 421,321 |
Net earned premiums |  | $ | 52,798 |  |  | $ | 330,804 |  |  | $ | — |  |  | $ | 383,602 |
Net investment income |  |  | 22,254 |  |  |  | 20,824 |  |  |  | (10,685 | ) |  |  | 32,393 |
Net realized investment gains |  |  | 1,768 |  |  |  | 9,522 |  |  |  | — |  |  |  | 11,290 |
Other income (loss) |  |  | (256 | ) |  |  | 1,530 |  |  |  | — |  |  |  | 1,274 |
Total revenues |  |  | 76,564 |  |  |  | 362,680 |  |  |  | (10,685 | ) |  |  | 428,559 |
Losses and Expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net losses and loss adjustment expenses |  |  | 24,076 |  |  |  | 177,903 |  |  |  | — |  |  |  | 201,979 |
Acquisition costs and other underwriting expenses |  |  | 16,556 |  |  |  | 137,087 |  |  |  | — |  |  |  | 153,643 |
Corporate and other operating expenses |  |  | 4,822 |  |  |  | 6,880 |  |  |  | — |  |  |  | 11,702 |
Interest expense |  |  | 1,059 |  |  |  | 24,714 |  |  |  | (10,685 | ) |  |  | 15,088 |
Income before income taxes |  | $ | 30,051 |  |  | $ | 16,096 |  |  | $ | — |  |  | $ | 46,147 |
The following table summarizes the components of income tax expense (benefit):
|  | Quarters Ended September 30, |  |  | Nine Months Ended September 30, |
(Dollars in thousands) |  | 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |
Current income tax expense (benefit): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Foreign |  | $ | 130 |  |  | $ | (17 | ) |  | $ | 130 |  |  | $ | (35 | )
U.S. Federal |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total current income tax expense (benefit) |  |  | 130 |  |  |  | (17 | ) |  |  | 130 |  |  |  | (35 | )
Deferred income tax expense (benefit): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Federal |  |  | (3,339 | ) |  |  | (300 | ) |  |  | (8,303 | ) |  |  | 5,198 |
Total deferred income tax expense (benefit) |  |  | (3,339 | ) |  |  | (300 | ) |  |  | (8,303 | ) |  |  | 5,198 |
Total income tax expense (benefit) |  | $ | (3,209 | ) |  | $ | (317 | ) |  | $ | (8,173 | ) |  | $ | 5,163 |
The weighted average expected tax provision has been calculated using income (loss) before income taxes in each jurisdiction multiplied by that jurisdiction’s applicable statutory tax rate. The following table summarizes the differences between the tax provision for financial statement purposes and the expected tax provision at the weighted average tax rate:
|  | Quarters Ended September 30, |
|  | 2020 |  |  | 2019 |
(Dollars in thousands) |  | Amount |  |  | % of Pre- Tax Income |  |  | Amount |  |  | % of Pre- Tax Income |
Expected tax provision at weighted average tax rate |  | $ | (1,985 | ) |  |  | 10.8 | % |  | $ | (1,001 | ) |  |  | 15.6 | %
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Tax exempt interest |  |  | (1 | ) |  |  | — |  |  |  | — |  |  |  | — |
Dividend exclusion |  |  | (86 | ) |  |  | 0.5 |  |  |  | (33 | ) |  |  | 0.5 |
Non-deductible interest |  |  | 416 |  |  |  | (2.3 | ) |  |  | 695 |  |  |  | (10.8 | )
Change in tax status |  |  | (1,704 | ) |  |  | 9.3 |  |  |  | — |  |  |  | — |
Parent income treated as partnership for tax |  |  | (146 | ) |  |  | 0.8 |  |  |  | — |  |  |  | — |
Other |  |  | 297 |  |  |  | (1.6 | ) |  |  | 22 |  |  |  | (0.3 | )
Effective income tax benefit |  | $ | (3,209 | ) |  |  | 17.5 | % |  | $ | (317 | ) |  |  | 5.0 | %
The effective income tax benefit rate for the quarter ended September 30, 2020 was 17.5%, compared with an effective income tax benefit rate of 5.0% for the quarter ended September 30, 2019. The increase in income tax benefit for the quarter ended September 30, 2020 was primarily due to higher pre-tax loss for the Company’s U.S. subsidiaries for the quarter ended September 30, 2020 as compared to the same period in 2019 and the change in tax status which is the income tax benefit recognized on net insurance liabilities that were redomiciled from Bermuda at 0% tax rate to the United States at a 21% tax rate.
|  | Nine Months Ended September 30, |
|  | 2020 |  |  | 2019 |
(Dollars in thousands) |  | Amount |  |  | % of Pre- Tax Income |  |  | Amount |  |  | % of Pre- Tax Income |
Expected tax provision at weighted average tax rate |  | $ | (8,270 | ) |  |  | 27.2 | % |  | $ | 3,380 |  |  |  | 7.3 | %
Adjustments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Tax exempt interest |  |  | (2 | ) |  |  | — |  |  |  | (1 | ) |  |  | — |
Dividend exclusion |  |  | (198 | ) |  |  | 0.6 |  |  |  | (256 | ) |  |  | (0.6 | )
Non-deductible interest |  |  | 1,773 |  |  |  | (5.8 | ) |  |  | 2,063 |  |  |  | 4.5 |
Change in tax status |  |  | (1,704 | ) |  |  | 5.6 |  |  |  | — |  |  |  | — |
Parent income treated as partnership for tax |  |  | (146 | ) |  |  | 0.5 |  |  |  | — |  |  |  | — |
Other |  |  | 374 |  |  |  | (1.2 | ) |  |  | (23 | ) |  |  | — |
Effective income tax expense (benefit) |  | $ | (8,173 | ) |  |  | 26.9 | % |  | $ | 5,163 |  |  |  | 11.2 | %
The effective income tax benefit rate for the nine months ended September 30, 2020 was 26.9%, compared with an effective income tax expense rate of 11.2% for the nine months ended September 30, 2019. The increase in income tax benefit for the nine months ended September 30, 2020 was primarily due to a pre-tax loss for the Company’s U.S. subsidiaries for the nine months ended September 30, 2020 as compared to a gain in the same period in 2019 and the change in tax status which is the income tax benefit recognized on net insurance liabilities that were redomiciled from Bermuda at 0% tax rate to the United States at a 21% tax rate. The Company has a net operating loss (“NOL”) carryforward of $24.9 million as of September 30, 2020, which begins to expire in 2036 based on when the original NOL was generated. The Company’s NOL carryforward as of December 31, 2019 was $21.9 million. The Company has a Section 163(j) (“163(j)”) carryforward of $6.8 million and $9.0 million as of September 30, 2020 and December 31, 2019, respectively, which can be carried forward indefinitely. The 163(j) carryforward relates to the limitation on the deduction for business interest expense paid or accrued. The Company had an alternative minimum tax (“AMT”) credit carryforward of $11.0 million as of December 31, 2019. Under the provisions of the CARES Act, the Company filed a request for a full refund in 2020. The Company received $5.5 million and $11.0 million o f the AMT credit carryforward during the quarter and nine months ended September 30, 2020, respectively.

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- Definition The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32857-109319 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB Topic 11.C) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330215-122817 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 17 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32809-109319 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB TOPIC 6.I.5.Q1) -URI http://asc.fasb.org/extlink&oid=116825942&loc=d3e330036-122817 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 14 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32705-109319 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 270 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -URI http://asc.fasb.org/topic&trid=2144680 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 30 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331 + Details
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