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Income Taxes (Tables)

9 Months Ended

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

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 9
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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

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 12
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Tabular disclosure of income before income tax between domestic and foreign jurisdictions.

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-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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