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Income Taxes
 9 Months Ended
Sep. 30, 2024
Income Tax Disclosure [Abstract]  
Income Taxes
6.
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 September 30, 2024, the Company conducts business in the United States where the statutory income tax rate is 21% and in Ireland where the statutory income tax rate is 25% on non-trading income, 33% on capital gains, and 12.5% on trading income. 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 before income taxes is derived from its U.S. subsidiaries for the quarters and nine months ended September 30, 2024 and 2023.

 

The following table summarizes the components of income tax expense:

 

 

 

Quarters Ended September 30,

 

 

Nine Months Ended September 30,

 

(Dollars in thousands)

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Current income tax benefit:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Federal

 

$

—

 

 

$

(4

)

 

$

—

 

 

$

(4

)

Total current income tax benefit

 

$

—

 

 

$

(4

)

 

$

—

 

 

$

(4

)

Deferred income tax expense:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Federal

 

$

3,125

 

 

$

1,767

 

 

$

8,605

 

 

$

4,711

 

Total deferred income tax expense

 

 

3,125

 

 

 

1,767

 

 

 

8,605

 

 

 

4,711

 

Total income tax expense

 

$

3,125

 

 

$

1,763

 

 

$

8,605

 

 

$

4,707

 

 

The weighted average expected tax provision has been calculated using income before income taxes in each jurisdiction multiplied by that jurisdiction’s applicable statutory tax rate. The following tables summarize 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,

 

 

 

2024

 

 

2023

 

(Dollars in thousands)

 

Amount

 

 

% of Pre-
Tax Income

 

 

Amount

 

 

% of Pre-
Tax Income

 

Expected tax provision at weighted average tax rate

 

$

3,336

 

 

 

21.0

%

 

$

1,987

 

 

 

21.0

%

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Non-deductible executive compensation

 

 

105

 

 

 

0.7

 

 

 

53

 

 

 

0.6

 

Dividend exclusion

 

 

(16

)

 

 

(0.1

)

 

 

(16

)

 

 

(0.2

)

Parent income treated as partnership for tax

 

 

(324

)

 

 

(2.0

)

 

 

(326

)

 

 

(3.4

)

Meals & Entertainment

 

 

7

 

 

 

—

 

 

 

68

 

 

 

0.7

 

Other

 

 

17

 

 

 

0.1

 

 

 

(3

)

 

 

(0.1

)

Effective income tax expense

 

$

3,125

 

 

 

19.7

%

 

$

1,763

 

 

 

18.6

%

 

 

 

Nine Months Ended September 30,

 

 

 

2024

 

 

2023

 

(Dollars in thousands)

 

Amount

 

 

% of Pre-
Tax Income

 

 

Amount

 

 

% of Pre-
Tax Income

 

Expected tax provision at weighted average tax rate

 

$

8,993

 

 

 

21.0

%

 

$

5,090

 

 

 

21.0

%

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Non-deductible executive compensation

 

 

315

 

 

0.7

 

 

 

158

 

 

 

0.7

 

Dividend exclusion

 

 

(54

)

 

 

(0.1

)

 

 

(54

)

 

 

(0.2

)

Parent income treated as partnership for tax

 

 

(690

)

 

 

(1.6

)

 

 

(668

)

 

 

(2.8

)

Meals & Entertainment

 

 

44

 

 

0.1

 

 

 

197

 

 

0.8

 

Other

 

 

(3

)

 

 

—

 

 

 

(16

)

 

 

(0.1

)

Effective income tax expense

 

$

8,605

 

 

 

20.1

%

 

$

4,707

 

 

 

19.4

%

 

The Company has a net operating loss (“NOL”) carryforward of $51.5 million as of September 30, 2024, which begins to expire in 2038 based on when the original NOL was generated. The Company’s NOL carryforward as of December 31, 2023 was $78.8 million.