Taxation (Tables)

12 Months Ended

Dec. 31, 2015

Income Tax Disclosure [Abstract]

Earnings before Income Taxes

The following table presents earnings before income taxes by jurisdiction:

	2015		2014		2013
Domestic (Bermuda)	$	61,695	$	154,453	$	193,063
Foreign	166,464		83,925		66,378
Total	$	228,159	$	238,378	$	259,441

Tax Expense for Income Taxes

The following table presents our current and deferred income tax expense (benefit) by jurisdiction:  

	2015			2014			2013
Current:
Domestic (Bermuda)	$	—		$	—		$	—
Foreign	39,396			39,455			30,787
	39,396			39,455			30,787
Deferred:
Domestic (Bermuda)	—			—			—
Foreign	(21,578		)	(28,313		)	4,832
	(21,578		)	(28,313		)	4,832
Total tax expense	$	17,818		$	11,142		$	35,619

Reconciliation of Earnings before Income Taxes Computed by Applying Effective Rate

The actual income tax rate differs from the amount computed by applying the effective rate of 0% under Bermuda law to earnings before income taxes as shown in the following reconciliation:

	2015			2014			2013
Earnings before income tax	$	228,159		$	238,378		$	259,441
Bermuda income taxes at statutory rate	0.0		%	0.0		%	0.0		%
Foreign income tax rate differential	18.0		%	12.3		%	5.1		%
Change in unrecognized tax benefits	—		%	(0.9		)%	(1.0		)%
Benefit of loss carryovers	—		%	(1.2		)%	—		%
Change in valuation allowance	(8.3		)%	(12.6		)%	7.2		%
Investment write-off	—		%	2.3		%	—		%
Foreign currency translation	(0.3		)%	0.8		%	(0.3		)%
Other	(1.6		)%	4.0		%	2.7		%
Effective tax rate	7.8		%	4.7		%	13.7		%

Components of Deferred Tax Assets and Deferred Tax Liabilities

Deferred tax assets and liabilities reflect the tax effect of the differences between the financial reporting and income tax bases of assets and liabilities. Significant components of the deferred tax assets and deferred tax liabilities were as follows:

	As of December 31,
	2015			2014
Deferred tax assets:
Net operating loss carryforwards	$	259,851		$	255,151
Tax credits and other carryforwards	6,354			6,363
Insurance reserves	160,554			167,338
Lloyd's underwriting losses taxable in future periods	17,768			19,193
Provisions for bad debt	17,694			22,102
Other deferred tax assets	26,805			25,855
Gross deferred tax assets	489,026			496,002
Valuation allowance	(367,991		)	(408,394		)
Deferred tax assets	121,035			87,608
Deferred tax liabilities:
Unrealized gains on investments	(49,649		)	(63,060		)
Intangible assets	(20,895		)	(18,000		)
Other deferred tax liabilities	(22,044		)	—
Deferred tax liabilities	(92,588		)	(81,060		)
Net deferred tax assets	$	28,447		$	6,548

Summary of Operating Loss Carryforwards

As of December 31, 2015, we had net operating loss carry forwards that could be available to offset future taxable income, as follows:

Tax Jurisdiction	Loss Carryforwards		Tax effect		Expiration
United States	$	522,366	$	182,727	2022-2035
United Kingdom	333,814		66,763		None
Other	30,803		10,361		None

Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows: 

	2015		2014			2013
Balance, beginning of year	$	—	$	2,249		$	5,821
Gross increases — tax positions related to prior years	—		—			114
Gross decreases — tax positions related to prior years	—		—			(3,346		)
Lapse of statute of limitations	—		(2,249		)	(340		)
Balance, end of year	$	—	$	—		$	2,249

Summary of Income Tax Examinations

Listed below are the tax years that remain subject to examination by major tax jurisdiction as of December 31, 2015:

Major Tax Jurisdiction	Open Tax Years
United States	2012-2014
United Kingdom	2012-2014
Australia	2009-2014