Income Taxes

3 Months Ended

Mar. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company’s income tax provision on income before income taxes resulted in an effective tax rate of (46.0%) for the three months ended March 31, 2020, compared to an effective tax rate of 8.5% for the 2019 period. The Company’s effective tax rate in the current year differed from the prior year period primarily due to the significant proportion of realized losses generated in lower tax jurisdictions.

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 2020 by treating excess tax benefits in the U.S. that arise from the accounting for stock based compensation as a discrete item. The impact of the discrete item resulted in a benefit of 3.9% for the three months ended March 31, 2020.

The Company had a net deferred tax liability of $8.0 million at March 31, 2020, compared to a net deferred tax liability of $53.5 million at December 31, 2019. The change is primarily a result of the decline in the fair value of the Company’s fixed maturities from December 31, 2019 to March 31, 2020. In addition, the Company paid $7.4 million and recovered $32.7 million of income taxes for the three months ended March 31, 2020 and 2019, respectively.