Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

The following table presents the components of income tax provision (benefit) included in the amounts reported in our consolidated financial statements:


	For the Years Ended December 31,
(in millions)	2021		2020			2019
Current income tax provision (benefit) related to:
United States (Federal)	$	35.4	$	28.0		$	37.3
United States (State)	$	2.4	$	1.4		$	1.7
United Kingdom	(2.2)		(0.1)			(1.5)
Other jurisdictions	1.6		—		(1)	0.1
Total current income tax provision	37.2		29.3			37.6
Deferred income tax provision (benefit) related to:
United States	(26.3)		(5.1)			(17.7)
United Kingdom	(12.3)		(16.6)			(5.8)
Other jurisdictions	—		0.1			—
Total deferred income tax (benefit)	(38.6)		(21.6)			(23.5)
Income tax provision (benefit)	$	(1.4)	$	7.7		$	14.1

(1) Tax expense for the respective year was less than $0.1 million.

Schedule of Earned Premiums by Geographic Location

For the years ended December 31, 2021, 2020 and 2019, pre-tax income (loss) attributable to our operations and the operations’ effective tax rates were as follows:


(in millions)	2021					2020					2019
	Pre-Tax Income (Loss)			Effective Tax Rate		Pre-Tax Income (Loss)			Effective Tax Rate		Pre-Tax Income (Loss)			Effective Tax Rate
Bermuda	$	(18.0)		—	%	$	(56.2)		—	%	$	(34.7)		—	%
United States	65.6			18.1	%	103.3			22.7	%	84.7			24.6	%
United Kingdom	(61.1)			24.4	%	(100.6)			15.7	%	(45.9)			14.9	%
Barbados	—		(1)	—	%	—		(1)	—	%	—		(1)	—	%
Belgium	—			—	%	0.2			30.7	%	—		(1)	15.8	%
Brazil	15.3			10.4	%	3.9			—	%	5.2			—	%
United Arab Emirates	1.4			—	%	2.1			—	%	0.4			—	%
Ireland	(0.2)			—	%	1.8			—	%	(0.1)			—	%
Italy	1.4			—	%	0.6			—	%	(7.4)			—	%
Malta	0.9			—	%	(1.4)			—	%	(2.0)			—	%
Switzerland	—		(1)	—	%	(0.1)			—	%	(0.2)			(0.2)	%
Pre-tax income (loss)	$	5.3		(26.4)	%	$	(46.4)		(16.6)	%	$	—		—	%	(2)

(1) Pre-tax income for the respective year was less than $0.1 million.

(2) Not meaningful.

Reconciliation of Difference Between Provision for Income Taxes and Expected Tax Provision at Weighted Average Tax Rate

A reconciliation of the difference between the provision for income taxes and the expected tax provision (benefit) at the weighted average tax rate is as follows:


	For the Years Ended December 31,
(in millions)	2021		2020		2019
Income tax provision (benefit) at expected rate	$	9.8	$	4.0	$	8.9
Tax effect of:
Nontaxable investment income	(0.5)		(0.7)		(1.2)
Foreign exchange adjustments	(0.7)		1.6		(0.1)
Impairment of goodwill	8.2		1.0		2.9
Withholding taxes	0.1		0.1		0.2
Change in uncertain tax position liability	(4.5)		0.7		1.4
Change in valuation allowance	(0.7)		0.5		(1.8)
Impact of change in tax rate related to Finance Act 2021	(8.3)		—		—
Brazil Premiums and Underwriting	(5.3)		—		—
Other	0.5		0.5		3.8
Income tax provision (benefit)	$	(1.4)	$	7.7	$	14.1

Schedule of Net Deferred Tax Liability Comprises Tax Effect Related to Assets and Liabilities

The net deferred tax asset (liability) comprises the tax effects of temporary differences related to the following assets and liabilities:


	December 31,
(in millions)	2021		2020
Deferred tax assets:
Losses and loss adjustment expense reserve discounting	$	35.4	$	29.2
Unearned premiums	27.0		25.9
Net operating loss carryforwards	31.6		27.9
Investment in limited partnership interests	21.1		7.8
Unrealized losses on equity securities	8.6		—
Investments	—		2.0
Right of use assets	13.5		12.7
Accrued bonus	5.8		6.3
Stock option expense	1.1		0.7
United Kingdom underwriting results	28.1		21.9
Other	10.6		9.6
Deferred tax assets, gross	182.8		144.0
Deferred tax liabilities:
Unrealized gains on equity securities	—		(5.7)
Unrealized gains on fixed maturities and other investment securities	(4.8)		(22.3)
Unrealized gains on limited partnership interests	(26.3)		(14.7)
Investments	(5.1)		—
Depreciable fixed assets	(7.9)		(20.5)
Deferred acquisition costs	(21.3)		(20.4)
Lease liability	(12.2)		(11.7)
TCJA reserve transitional liability	(2.1)		(2.7)
Other	(1.6)		(0.7)
Deferred tax liabilities, gross	(81.3)		(98.7)
Deferred tax assets, net before valuation allowance	$	101.5	$	45.3
Valuation allowance	(27.9)		(28.6)
Deferred tax asset (liabilities), net	$	73.6	$	16.7
Net deferred tax assets (liabilities) - Other jurisdictions	$	35.0	$	21.4
Net deferred tax assets (liabilities) - United States	38.6		(4.7)
Deferred tax asset (liabilities), net	$	73.6	$	16.7

Schedule of Net Operating Loss Carryforwards Amounts by Jurisdiction and Year of Expiration

The NOL amounts by jurisdiction and year of expiration are as follows:


(in millions)	December 31, 2021	Expiration
Net operating loss carryforwards by jurisdiction:
Brazil	6.6	Indefinite
Italy	48.4	Indefinite
Malta	13.7	Indefinite
United Kingdom	17.2	Indefinite
United States	40.6	2025 - 2037

Schedule of Unrecognized Tax Benefits

The following is a reconciliation of the beginning and ending amount of unrecognized tax benefits for the years ended December 31, 2021 and 2020:


(in millions)	2021		2020
Balance at January 1	$	8.2	$	7.5
Additions for tax positions of prior years	$	—	—
Reductions for tax positions of prior years	(0.3)		—
Additions based on tax positions related to current year	$	—	0.7
Reductions based on tax positions related to current year	—		—
Reductions based on settlements with taxing authorities	(2.8)		—
Expiration of statute of limitations	(1.5)		—
Balance at December 31	$	3.6	$	8.2