Income Taxes

9 Months Ended

Sep. 30, 2019

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company’s income tax provision on income before income taxes resulted in an expense of 8.5% for the nine months ended September 30, 2019, compared to an expense of 10.5% for the 2018 period. The Company’s effective tax rate, which is based upon the expected annual effective tax rate, may fluctuate from period to period based on the relative mix of income or loss reported by jurisdiction and the varying tax rates in each jurisdiction. For interim reporting purposes, the Company has calculated its annual effective tax rate for the full year of 2019 by treating excess tax benefits in the U.S. that arise from the accounting for stock based compensation as a discrete item. As such, this amount is not included when projecting the Company’s full year annual effective tax rate but rather is accounted for at the U.S. Federal statutory rate of 21% after applying the projected full year annual effective tax rate to actual nine months results before the discrete item. The impact of the discrete item resulted in a benefit of 0.4% for the nine months ended September 30, 2019.

The Company had a net deferred tax liability of $55.9 million at September 30, 2019, compared to a net deferred tax asset of $22.5 million at December 31, 2018. The change is primarily a result of the appreciation of the Company’s fixed maturities from December 31, 2018 to September 30, 2019. In addition, the Company paid $47.1 million and recovered $34.0 million of income taxes for the nine months ended September 30, 2019 and 2018, respectively.