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Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
On November 7, 2025, James River Group Holdings, Ltd. changed its jurisdiction of incorporation from Bermuda to Delaware, and we refer to this change as the “Domestication”. On the effective date of the Domestication, our common shares issued and outstanding immediately prior to the effective time of the Domestication automatically converted by operation of law into an equivalent number of shares of common stock of James River Group Holdings, Inc., a Delaware corporation. Subsequent to the Domestication, the Company, along with its U.S. subsidiaries, are subject to federal, state and local corporate income taxes, and other taxes applicable to U.S. corporations. Beginning in 2025, the Company will file a consolidated U.S. federal income tax return with its U.S.-domiciled subsidiaries.
Prior to the Domestication, James River Group Holdings, Ltd. was not (and its former Bermuda-based subsidiary, JRG Re, prior to its disposition was not) subject to income or capital tax. Effective for tax years beginning on or after January 1, 2025, Bermuda introduced the Corporate Income Tax Act 2023 ("CIT Act") where a Bermuda Constituent Entity group (BCE) that is part of an “in scope Multi-National Enterprise group” (MNE) will be subject to a 15% corporate income tax.
A MNE group with a limited international footprint is not an in scope MNE, thus not subject to CIT. The limited international footprint exception is a year-by-year test and expires after tax year 2029. James River Group Holdings, Ltd. meets the criteria of the limited international footprint exception, and as such is not subject to tax under the CIT act.
Distributions from the Company’s U.S. subsidiaries to its previous U.K. intermediate holding company, James River UK, were generally subject to a 5% dividend withholding tax. No distributions occurred in 2025, 2024 or 2023.
The Company’s U.S.-based subsidiaries are generally no longer subject to income tax examination by U.S. income tax authorities for the tax years ending before January 1, 2022.
During 2018, the IRS published factors that allowed the Company to adjust its current and deferred tax liabilities based on the provisions of the Tax Act. The Tax Act has specific transition provisions associated with reserve discounting. The initial impact of the proposed regulations in 2018 was an increase to our deferred tax asset for the additional discount as of December 31, 2017 of $8.8 million offset by an increase to our deferred tax liability of $8.8 million representing the 8 year transition provision required by the Tax Act. During 2018, $1.1 million of this transition provision was recognized in our current provision and adjusted out of our deferred tax liability. The regulations were finalized in 2019, and the remaining reserve adjustment at December 31, 2019 based on these final regulations was $5.7 million recognized over the six years 2020 - 2025 at $950,000 per year.
In 2025, the Company recognized a one-time deferred tax benefit of $14.1 million associated with the effects of Domestication on the business interest expense deduction. The one-time tax benefit lowered the effective tax rate in 2025 and is expected to be utilized in future tax years. The carryforward period for this tax benefit is unlimited and does not expire.
The expected income tax provision computed from pre-tax income has been calculated as the sum of the pre-tax income in each jurisdiction multiplied by the applicable U.S. Federal statutory tax rate of 21%. The U.S. income (loss) before income taxes was $64.8 million, $(40.0) million, and $119.9 million for the years ending December 31, 2025, 2024, and 2023, respectively. The total income tax provision included U.S. federal income taxes of $44,000, $(7.7) million, and $25.3 million and state income taxes of $679,000, $145,000, and $400,000 for the years ending December 31, 2025, 2024, and 2023, respectively. Foreign income (loss) before income taxes was $(14.3) million, $(31.1) million and $(33.0) million in 2025, 2024 and 2023, respectively. The Company was not subject to tax on its foreign sourced income and no tax was included in the total income tax provision.
A reconciliation of the difference between the Company’s total income tax provision and the expected tax provision using the U.S. Federal statutory tax rate of 21% is as follows:
Year Ended December 31,
202520242023
(Amounts in thousands)Amount%Amount%Amount%
Federal income tax expense (benefit) at statutory rate$10,614 21.0 %$(14,935)21.0 %$18,252 21.0 %
Net U.S. state and local income tax expense536 1.1 %115 (0.2)%316 0.4 %
Bermuda and U.S. statutory tax rate difference3,004 5.9 %6,531 (9.2)%6,923 8.0 %
Research and development tax credits(272)(0.5)%(267)0.4 %(936)(1.1)%
Tax-exempt investment income(218)(0.4)%(216)0.3 %(230)(0.3)%
Dividends received deduction(325)(0.6)%(461)0.7 %(386)(0.4)%
Excess tax expense on share based compensation984 1.9 %740 (1.0)%449 0.5 %
Provision to return and amended tax returns21 — %393 (0.6)%725 0.8 %
Excess §162(m) compensation312 0.6 %399 (0.6)%522 0.6 %
Business interest expense from Domestication(14,078)(27.9)%— — %— — %
Other145 0.3 %67 (0.1)%70 0.1 %
Total income tax expense (benefit)$723 1.4 %$(7,634)10.7 %$25,705 29.6 %
State taxes in Virginia make up greater than 50 percent of the tax effect in the net U.S. state and local income tax expense reconciliation difference.
The significant components of net deferred tax assets at the corporate income tax rate of 21% for the years ended December 31, 2025 and 2024 are summarized as follows:
December 31,
20252024
(in thousands)
Deferred tax assets:
Accrued compensation expenses$3,838 $3,696 
Reserve for losses and loss adjustment expenses39,211 32,823 
Unearned premiums10,257 11,580 
Share based compensation1,042 1,543 
Allowance for credit losses4,731 4,496 
Invested assets— 1,124 
Business interest expense14,078 — 
Net unrealized losses8,806 18,595 
Other907 4,466 
Total deferred tax assets82,870 78,323 
Deferred tax liabilities:
Intangible assets6,686 6,709 
Deferred policy acquisition costs6,570 6,337 
Invested assets489 — 
Equity method investments2,813 2,792 
Other1,416 1,315 
Total deferred tax liabilities17,974 17,153 
Net deferred tax assets$64,896 $61,170 
The Company is considered a mixed company for net operating loss carryforward rules. A 20-year carryforward without an annual income limitation is applicable for insurance companies. The carryforward period for non-insurance companies is unlimited but limited to 80% of the current year taxable income. At December 31, 2025, the Company has no net operating loss carryforwards.
The Company had no reserve for future tax contingencies or liabilities (“unrecognized tax benefits”) at December 31, 2025 or 2024.
The U.S. imposes a 1% excise tax on reinsurance premiums paid to non-U.S. reinsurers with respect to risks located in the U.S. The rates of tax are established based on the nature of the risk, unless reduced by an applicable U.S. tax treaty. The Company paid excise taxes of $714,000, $204,000, and $194,000 for the years ended December 31, 2025, 2024, and 2023, respectively, on written premiums assumed from third-party insurers with respect to risks located in the U.S. These excise taxes are reflected as “other operating expenses” in the Company’s Consolidated Statements of Income (Loss) and Comprehensive Income (Loss).