The Company and its Bermuda domiciled subsidiaries are not subject to Bermuda income or capital gains tax under current Bermuda law. In the event that there is a change in current law such that taxes on income or capital gains are imposed, the Company and its Bermuda domiciled subsidiaries would be exempt from such tax until March 2035 pursuant to the Bermuda Exempted Undertakings Tax Protection Act of 1966.

The Company has subsidiaries and branches that operate in various other jurisdictions around the world that are subject to tax in the jurisdictions in which they operate. The significant jurisdictions in which the Company's subsidiaries and branches are subject to tax are Canada, France, Ireland, Singapore, Switzerland and the United States.

Income tax returns are open for examination for the tax years 2008-2013 in Canada and Switzerland, 2009-2013 in Ireland, 2010-2013 in the United States, 2011-2013 in France and 2012-2013 in Singapore. As a global organization, the Company may be subject to a variety of transfer pricing or permanent establishment challenges by taxing authorities in various jurisdictions. While management believes that adequate provision has been made in the Consolidated Financial Statements for any potential assessments that may result from tax examinations for all open tax years, the completion of tax examinations for open years may result in changes to the amounts recognized in the Consolidated Financial Statements.

Income tax expense for the years ended December 31, 2013, 2012 and 2011 was as follows (in thousands of U.S. dollars):

		2013		2012		2011

Current income tax expense
U.S.	$	55,993	$	29,196	$	82,065
Non U.S.		73,599		115,669		72,268

Total current income tax expense	$	129,592	$	144,865	$	154,333

Deferred income tax (benefit) expense
U.S.	$	(13,693)	$	48,740	$	(36,780)
Non U.S.		(70,886)		6,717		(8,112)

Total deferred income tax (benefit) expense	$	(84,579)	$	55,457	$	(44,892)

Unrecognized tax expense (benefit)
U.S.	$	(335)	$	(623)	$	81
Non U.S.		3,738		4,585		(40,550)

Total unrecognized tax expense (benefit)	$	3,403	$	3,962	$	(40,469)

Total income tax expense
U.S.	$	41,965	$	77,313	$	45,366
Non U.S.		6,451		126,971		23,606

Total income tax expense	$	48,416	$	204,284	$	68,972

Income (loss) before taxes attributable to the Company's domestic and foreign operations and a reconciliation of the actual income tax rate to the amount computed by applying the effective tax rate of 0% under Bermuda (the Company's domicile) law to income (loss) before taxes was as follows for the years ended December 31, 2013, 2012 and 2011 (in thousands of U.S. dollars):

		2013		2012		2011

Domestic (Bermuda)	$	611,900	$	661,648	$	(634,310)
Foreign		109,958		677,150		182,991

Income (loss) before taxes	$	721,858	$	1,338,798	$	(451,319)


Reconciliation of effective tax rate (% of income (loss) before taxes)
Expected tax rate	0.0	%	0.0	%	0.0	%
Foreign taxes at local expected tax rates	5.1		14.6		(7.2)
Impact of foreign exchange (losses) gains	(1.1)		(0.4)		0.4
Unrecognized tax benefit	0.5		0.3		9.0
Tax-exempt income and expenses not deductible	(0.9)		(0.3)		(11.6)
Impact of enacted changes in tax laws	1.8		0.7		0.0
Foreign branch tax	(1.4)		(0.7)		(5.7)
Valuation allowance	1.3		1.2		(1.9)
Other	1.4		(0.1)		1.7

Actual tax rate	6.7	%	15.3	%	(15.3)	%

Deferred tax assets and liabilities reflect the tax impact of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes. Significant components of the net deferred tax assets and liabilities at December 31, 2013 and 2012 were as follows (in thousands of U.S. dollars):

		2013		2012

Deferred tax assets
Discounting of loss reserves and adjustment to life policy reserves	$	78,999	$	50,341
Foreign tax credit carryforwards		42,620		37,569
Tax loss carryforwards		23,940		47,373
Unearned premiums		23,022		17,856
Other deferred tax assets		33,648		36,424
		202,229		189,563
Valuation allowance		(46,111)		(47,412)

Deferred tax assets		156,118		142,151

Deferred tax liabilities
Deferred acquisition costs		52,165		46,311
Goodwill and other intangibles		102,619		106,445
Equalization reserves		128,132		122,930
Unrealized appreciation and timing differences on investments		72,769		141,856
Other deferred tax liabilities		23,866		24,968

Deferred tax liabilities		379,551		442,510

Net deferred tax liabilities	$	(223,433)	$	(300,359)

The components of net tax assets and liabilities at December 31, 2013 and 2012 were as follows (in thousands of U.S. dollars):

		2013		2012

Net tax assets	$	14,133	$	25,098
Net tax liabilities		(284,442)		(387,647)

Net tax liabilities	$	(270,309)	$	(362,549)

		2013		2012

Net current tax liabilities	$	(26,308)	$	(45,606)
Net deferred tax liabilities		(223,433)		(300,359)
Net unrecognized tax benefit		(20,568)		(16,584)

Net tax liabilities	$	(270,309)	$	(362,549)

Realization of the deferred tax assets is dependent on generating sufficient taxable income in future periods. Although realization is not assured, Management believes that it is more likely than not that the deferred tax assets will be realized. The valuation allowance recorded at December 31, 2013 related to a foreign tax credit carryforward of $24.7 million in Ireland and to a tax loss carryforward of $21.4 million in Singapore. The valuation allowance recorded at December 31, 2012 related to a tax loss carryforward of $34.2 million in Singapore and to a foreign tax credit carryforward of $13.2 million in Ireland.

At December 31, 2013, the deferred tax assets (after valuation allowance) included foreign tax credit carryforwards of $14.4 million in Ireland, which can be carried forward for an unlimited period of time, and $3.6 million in the United States, which can be carried forward for 10 years. At December 31, 2012, the deferred tax assets (after valuation allowance) included foreign tax credit carryforwards of $14.6 million in Ireland, which can be carried forward for an unlimited period of time, and $9.7 million in the United States, which can be carried forward for 10 years, and tax loss carryforwards of $9.9 million in Canada, which can be carried forward for 20 years.

The total amount of unrecognized tax benefits for the years ended December 31, 2013, 2012 and 2011 was as follows (in thousands of U.S. dollars):

				Changes in tax		Tax positions		Change as a		Impact of the
				positions taken		taken		result of a lapse		change in
		January 1,		during a prior		during the		of the statute		foreign currency		December 31,
		2013		period		current period		of limitations		exchange rates		2013

Unrecognized tax benefits
	that, if recognized, would impact
	the effective tax rate	$	15,784	$	(5,038)	$	10,164	$	(2,102)	$	545	$	19,353
Interest and penalties recognized
	on the above		800		507		51		(179)		36		1,215

Total unrecognized tax benefits, including
	interest and penalties	$	16,584	$	(4,531)	$	10,215	$	(2,281)	$	581	$	20,568

				Changes in tax		Tax positions		Change as a		Impact of the
				positions taken		taken		result of a lapse		change in
		January 1,		during a prior		during the		of the statute		foreign currency		December 31,
		2012		period		current period		of limitations		exchange rates		2012

Unrecognized tax benefits
	that, if recognized, would impact
	the effective tax rate	$	11,879	$	1,571	$	3,080	$	(1,057)	$	311	$	15,784
Interest and penalties recognized
	on the above		411		504		8		(144)		21		800

Total unrecognized tax benefits, including
	interest and penalties	$	12,290	$	2,075	$	3,088	$	(1,201)	$	332	$	16,584



				Changes in tax		Tax positions		Change as a		Impact of the
				positions taken		taken		result of a lapse		change in
		January 1,		during a prior		during the		of the statute		foreign currency		December 31,
		2011		period		current period		of limitations		exchange rates		2011

Unrecognized tax benefits
	that, if recognized, would impact
	the effective tax rate	$	51,529	$	3,194	$	3,788	$	(47,886)	$	1,254	$	11,879
Interest and penalties recognized
	on the above		0		435		0		0		(24)		411

Total unrecognized tax benefits, including
	interest and penalties	$	51,529	$	3,629	$	3,788	$	(47,886)	$	1,230	$	12,290

For the years ended December 31, 2013, 2012 and 2011, there were no unrecognized tax benefits that, if recognized, would create a temporary difference between the reported amount of an item in the Company's Consolidated Balance Sheets and its tax basis. The Company recognizes interest and penalties as income tax expense in its Consolidated Statements of Operations.

At December 31, 2013, the total amount of unrecognized tax benefits for which it is reasonably possible to change within twelve months was $7.3 million, which primarily relates to the expected expiration of the statute of limitations related to certain tax positions.