Income Taxes

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The following table presents the Company’s provision (benefit) for income taxes reflected as a component of income (loss):

	Three Months Ended June 30,								Six Months Ended June 30,
	2023				2022				2023				2022
Total income tax expense (benefit)	$	11,824			$	26,555			$	16,846			$	26,469
Effective tax rate (ETR)	50.0		%	(1)	552.4		%	(2)	52.9		%	(1)	686.9		%	(2)

(1) Higher than the U.S. federal statutory income tax rate of 21% primarily due to the impact of outside basis deferred taxes on Tiptree’s investment in Fortegra and other discrete items.

(2) Higher than the U.S. federal statutory income tax rate of 21% primarily due to the initial recording of deferred taxes on the outside basis of Tiptree’s investment in Fortegra.

Tiptree owns less than 80% of Fortegra and is required to record deferred taxes on the outside basis on its investment in Fortegra. This deferred tax liability represents the tax that would be due, before consideration of loss carryforwards, if Tiptree were to sell all of its Fortegra stock at its carrying value on Tiptree’s balance sheet.

For the three months ended June 30, 2023, the deferred tax liability relating to Fortegra increased by $2,232, of which $24 of benefit was recorded in OCI, $1,222 benefit was recorded directly in stockholders’ equity, and $3,478 expense was recorded as a provision for income taxes. For the three months ended June 30, 2022, the deferred tax liability increased by $34,874, of which $14,064 was recorded directly in stockholders’ equity and $20,810 was recorded as a provision for income taxes. Excluding the impact of these deferred taxes, the effective tax rates for the three months ended June 30, 2023 and 2022 were 35.3% and 23.4%, respectively.

For the six months ended June 30, 2023, this deferred tax liability relating to Fortegra was $46,346, which was an increase of $6,376 from the year ended December 31, 2022, of which $1,784 expense was recorded in OCI, $1,222 benefit was recorded directly in stockholders’ equity, and $5,814 expense was recorded as a provision for income taxes. For the six months ended June 30, 2022, this deferred tax liability was $34,874, which was an increase of $34,874 from the year ended December 31, 2021, of which $14,064 was recorded directly in stockholders’ equity and $20,810 was recorded as a provision for income taxes. Excluding the impact of these deferred taxes, the effective tax rates for the six months ended June 30, 2023 and 2022 were 34.6% and 24.4%, respectively.