Income Taxation (Tables)

12 Months Ended

Dec. 31, 2019

Income Tax Disclosure [Abstract]

Earnings before Income Taxes

The following table presents earnings (loss) before income taxes by jurisdiction from continuing operations, including earnings (loss) from equity method investments, for the years ended December 31, 2019, 2018 and 2017:

	2019		2018			2017
Domestic (Bermuda)	$	576,339	$	(232,743	)	$	167,263
Foreign	356,317		14,347			147,148
Total earnings (loss) before income tax on continuing operations	$	932,656	$	(218,396	)	$	314,411

Tax Expense for Income Taxes

The following table presents our current and deferred income tax expense (benefit) from continuing operations by jurisdiction for the years ended December 31, 2019, 2018 and 2017:

	2019			2018			2017
Current:
Domestic (Bermuda)	$	—		$	—		$	—
Foreign	18,433			(3,632		)	10,299
	18,433			(3,632		)	10,299
Deferred:
Domestic (Bermuda)	—			—			—
Foreign	(13,996		)	(2,492		)	(16,694		)
	(13,996		)	(2,492		)	(16,694		)
Total income tax expense (benefit) on continuing operations	$	4,437		$	(6,124	)	$	(6,395	)

Reconciliation of Earnings before Income Taxes Computed by Applying Effective Rate

The actual effective income tax rate differs from the statutory rate of 0% under Bermuda law to earnings (loss) from continuing operations before income taxes, including earnings (loss) from equity method investments for the years ended December 31, 2019, 2018 and 2017 as shown in the following reconciliation:

	2019			2018			2017
Earnings (loss) before income tax	$	932,656		$	(218,396	)	$	314,411
Bermuda income taxes at statutory rate	0.0		%	0.0		%	0.0		%
Foreign income tax rate differential	8.6		%	0.7		%	13.1		%
Change in valuation allowance	(8.2		)%	(0.3		)%	(34.9		)%
Effect of change in foreign (U.S.) tax rate	—		%	—		%	20.3		%
U.S. base erosion and anti-abuse tax	0.5		%	(0.6		)%	—		%
Other	(0.4		)%	3.0		%	(0.5		)%
Effective tax rate	0.5		%	2.8		%	(2.0		)%

Components of Deferred Tax Assets and Deferred Tax Liabilities

Significant components of the deferred tax assets and deferred tax liabilities as of December 31, 2019 and 2018 were as follows:

	2019			2018
Deferred tax assets:
Net operating loss carryforwards	$	159,436		$	183,633
Insurance reserves	14,104			18,677
Unearned premiums	7,131			11,314
Lloyd's underwriting losses taxable in future periods	—			6,201
Provisions for bad debt	6,172			2,594
Unrealized losses on investments	—			5,160
Defendant asbestos and environmental liabilities (1)	140,000			—
Other deferred tax assets	—			183
Gross deferred tax assets	326,843			227,762
Valuation allowance	(117,390		)	(212,113		)
Deferred tax assets	209,453			15,649
Deferred tax liabilities:
Unrealized gains on investments	(10,107		)	—
Lloyd's underwriting profit taxable in future periods	(8,852		)	—
Deferred policy acquisition cost	(8,267		)	—
Other deferred tax liabilities	(27,317		)	(16,067		)
Deferred tax liabilities	(54,543		)	(16,067		)
Net deferred tax asset (liability)	$	154,910		$	(418	)

⁽¹⁾ Relates to the Morse TEC acquisition as described in Note 3 - "Acquisitions".

Net Deferred Tax Asset (Liability) Balance by Major Jurisdiction:

	December 31,
	2019			2018
	Net Deferred Tax Asset			Net Deferred Tax Liability
United States	$	169,891		$	5,151
United Kingdom	(16,074		)	(8,377		)
Other	1,093			2,808
Total	$	154,910		$	(418	)

Summary of Operating Loss Carryforwards

As of December 31, 2019, we had net operating loss carryforwards that could be available to offset future taxable income, as follows:

Tax Jurisdiction	Loss Carryforwards		Tax effect		Expiration
Operating and Capital Loss Carryforwards:
United States - Net operating loss	$	513,476	$	107,830	2024-2038
United Kingdom	224,150		38,106		Indefinitely
Other	52,484		13,500		Various

Summary of Income Tax Examinations

Listed below are the tax years that remain subject to examination by a major tax jurisdiction as of December 31, 2019:

Major Tax Jurisdiction	Open Tax Years
United States	2016-2019
United Kingdom	2016-2019
Australia	2014-2019