Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

Schedule of income before income tax by jurisdiction

The following is a summary of the Company’s income before income tax (expense) benefit by jurisdiction for the years ended December 31, 2021, 2020 and 2019:


	2021		2020		2019
Bermuda	$	178.5	$	113.6	$	198.0
U.S.	21.8		38.1		3.2
U.K.	1.9		0.2		0.1
Sweden	(138.1)		—		—
Luxembourg	(20.5)		—		—
Other	1.5		—		—
Income before income tax (expense) benefit	$	45.1	$	151.9	$	201.3

Schedule of components of income tax expense

For the years ended December 31, 2021, 2020 and 2019, income tax (expense) benefit consisted of the following:


	2021		2020		2019
Current tax expense:
U.S. Federal	$	(3.5)	$	(0.1)	$	(0.1)
State	(1.8)		—		—
Non-U.S.	(18.2)		—		—
Total current tax expense	(23.5)		(0.1)		(0.1)
Deferred tax (expense) benefit:
U.S. Federal	(13.1)		(8.0)		(0.6)
State	(4.8)		—		—
Non-U.S.	52.1		—		—
Total deferred tax (expense)	34.2		(8.0)		(0.6)
Total income tax (expense) benefit	$	10.7	$	(8.1)	$	(0.7)

Reconciliation of taxes at the statutory rate to income tax (benefit) on pre-tax income

The following table presents a reconciliation of expected income taxes to income tax (expense) benefit for the years ended December 31, 2021, 2020 and 2019:


	2021		2020		2019
Tax (expense) benefit at the 0% Bermuda statutory rate	$	—	$	—	$	—
Differences in taxes resulting from:
Non-Bermuda earnings	17.6		(8.0)		(0.7)
Foreign currency effects	(19.0)		—		—
Change in valuation allowance	10.5		—		—
Change in uncertain tax positions	(8.0)		(0.1)		—
Non-taxable/deductible income	7.2		—		—
Tax rate change	4.3		—		—
Tax on Safety Reserve	(1.0)		—		—
State taxes expense	(0.9)		—		—
Provision-to-return true up	(0.5)		—		—
Other, net	0.5		—		—


Total income tax (expense) benefit	$	10.7	$	(8.1)	$	(0.7)

Schedule of deferred tax assets and liabilities

The following table presents the tax effects of temporary differences that give rise to the deferred tax assets and deferred tax liabilities as of December 31, 2021, 2020 and 2019:


	2021		2020		2019
Deferred tax assets:
Non-U.S. net operating loss carryforwards	$	273.3	$	—	$	—
Tax credit carryforwards	26.2		—		—
U.S. federal net operating loss and capital carryforwards	19.4		10.1		9.3
Purchase accounting	17.8		—		—
Unearned premiums	13.4		5.5		1.8
Discounting of loss and loss adjustment expense reserves	7.6		1.0		0.8
Investment basis differences	5.9		—		—
Deferred interest	3.9		—		—
Incentive compensation and benefit accruals	5.7		2.6		1.2
Allowance for doubtful accounts	2.9		—		—
Other items	5.2		—		—
Total gross deferred tax assets	381.3		19.2		13.1
Valuation allowance	(113.3)		—		—
Total adjusted deferred tax asset	$	268.0	$	19.2	$	13.1

Deferred tax liabilities:
Safety reserve	$	150.1	$	—	$	—
Intangible assets	14.3		—		—
Deferred acquisition costs	6.7		8.3		1.4
Unrealized gains on investments	3.8		10.5		3.4
Foreign currency translation on investments	1.7		—		—
Other Items	4.8		—		—
Total deferred tax liabilities	181.4		18.8		4.8
Net deferred tax assets	$	86.6	$	0.4	$	8.3

Schedule of operating loss and capital loss carryforwards

Net operating loss and capital loss carryforwards as of December 31, 2021, the expiration dates and the deferred tax assets thereon are as follows:


	2021
	United States		Luxembourg		Sweden		U.K.		Total
2022-2026	$	4.7	$	—	$	—	$	—	$	4.7
2027-2041	107.8		43.3		—		—		151.1
No expiration date	21.1		724.1		217.4		148.0		1,110.6
Total	133.6		767.4		217.4		148.0		1,266.4
Gross deferred tax asset	19.4		191.4		44.8		37.0		292.6
Valuation allowance	—		(62.1)		—		(37.0)		(99.1)
Net deferred tax asset	$	19.4	$	129.3	$	44.8	$	—	$	193.5

Reconciliation of unrecognized tax benefits

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


	Permanent differences (1)		Temporary differences (2)		Interest and penalties (3)		Total





Balance as of January 1, 2020	$	1.0	$	—	$	0.5	$	1.5
Changes in prior year tax positions	0.1		—		—		0.1



Balance as of December 31, 2020	1.1		—		0.5		1.6
Acquisition of Sirius Group	0.7		0.1		0.1		0.9
Changes in prior year tax positions	(0.1)		(0.1)		0.1		(0.1)
Tax positions taken during the current year	8.0		0.3		—		8.3


Balance as of December 31, 2021	$	9.7	$	0.3	$	0.7	$	10.7

(1)Represents the amount of unrecognized tax benefits that, if recognized, would impact the effective tax rate.

(2)Represents the amount of unrecognized tax benefits that, if recognized, would create a temporary difference between the reported amount of an item in the consolidated balance sheets and its tax basis.

(3)Net of tax benefit.