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Income Taxes
 6 Months Ended
Jun. 30, 2023
Income Tax Disclosure [Abstract]  
Income Taxes
7.
Income Taxes

 

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 June 30, 2023, the statutory income tax rates of the countries where the Company conducts business are 21% in the United States, 0% in Bermuda, 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 is derived from its U.S. subsidiaries for the quarters and six months ended June 30, 2023 and 2022.

 

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

 

 

 

Quarters Ended June 30,

 

 

Six Months Ended June 30,

 

(Dollars in thousands)

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Deferred income tax expense (benefit):

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Federal

 

$

2,371

 

 

$

(626

)

 

$

2,944

 

 

$

(4,039

)

Total deferred income tax expense (benefit)

 

 

2,371

 

 

 

(626

)

 

 

2,944

 

 

 

(4,039

)

Total income tax expense (benefit)

 

$

2,371

 

 

$

(626

)

 

$

2,944

 

 

$

(4,039

)

 

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 June 30,

 

 

 

2023

 

 

2022

 

(Dollars in thousands)

 

Amount

 

 

% of Pre-
Tax Income

 

 

Amount

 

 

% of Pre-
Tax Income

 

Expected tax provision at weighted average tax rate

 

$

2,459

 

 

 

21.0

%

 

$

(2,686

)

 

 

21.0

%

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Dividend exclusion

 

 

(21

)

 

 

(0.2

)

 

 

(24

)

 

 

0.2

 

Parent income treated as partnership for tax

 

 

(146

)

 

 

(1.2

)

 

 

1,827

 

 

 

(14.3

)

Other

 

 

79

 

 

 

0.7

 

 

 

257

 

 

 

(2.0

)

Effective income tax expense (benefit)

 

$

2,371

 

 

 

20.3

%

 

$

(626

)

 

 

4.9

%

 

The effective income tax expense rate for the quarter ended June 30, 2023 was 20.3% compared to an effective income tax benefit rate of 4.9% for the quarter ended June 30, 2022. The difference between 2023 and 2022 is primarily due to a change in income or loss at the parent company which is treated as a partnership for tax.

 

 

 

Six Months Ended June 30,

 

 

 

2023

 

 

2022

 

(Dollars in thousands)

 

Amount

 

 

% of Pre-
Tax Income

 

 

Amount

 

 

% of Pre-
Tax Income

 

Expected tax provision at weighted average tax rate

 

$

3,103

 

 

 

21.0

%

 

$

(6,505

)

 

 

21.0

%

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Dividend exclusion

 

 

(38

)

 

 

(0.3

)

 

 

(46

)

 

 

0.1

 

Parent (income) loss treated as partnership for tax

 

 

(342

)

 

 

(2.3

)

 

 

2,070

 

 

 

(6.7

)

Other

 

 

221

 

 

 

1.5

 

 

 

442

 

 

 

(1.4

)

Effective income tax expense (benefit)

 

$

2,944

 

 

 

19.9

%

 

$

(4,039

)

 

 

13.0

%

 

The effective income tax expense rate for the six months ended June 30, 2023 was 19.9% compared to an effective income tax benefit rate of 13.0% for the six months ended June 30, 2022. The difference between 2023 and 2022 is primarily due to a change in income or loss at the parent company which is treated as a partnership for tax.

 

The Company has a net operating loss (“NOL”) carryforward of $98.1 million as of June 30, 2023, which begins to expire in 2036 based on when the original NOL was generated. The Company’s NOL carryforward as of December 31, 2022 was $116.4 million.

 

The Company did not have any Section 163(j) ("163(j)") carryforward as of June 30, 2023 or December 31, 2022. The 163(j) carryforward relates to the limitation on the deduction for business interest expense paid or accrued.