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Income Taxes (Tables) | 9 Months Ended
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Sep. 30, 2020
Income Tax Disclosure [Abstract] |
Income (Loss) before Income Taxes from its Non-U.S. Subsidiaries and U.S. Subsidiaries | 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 |
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) |  | 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 |
Differences in Tax Provision for Financial Statement Purposes and Expected Tax Provision at Weighted Average 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 | %
|  | 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 | %

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- 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32639-109319 + Details
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- 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://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 740 -SubTopic 10 -Section 50 -Paragraph 12 -URI http://asc.fasb.org/extlink&oid=84230637&loc=d3e32687-109319 + Details
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