Income Taxes

3 Months Ended

Mar. 31, 2022

Income Tax Disclosure [Abstract]

Income Taxes

6. Income Taxes

Global Indemnity Group, LLC is a publicly traded partnership for U.S. federal income tax purposes and meets the qualifying income exception to maintain partnership status. As a publicly traded partnership, Global Indemnity Group, LLC is generally not subject to federal income tax and most state income taxes. However, income earned by the subsidiaries of Global Indemnity Group, LLC is subject to corporate tax in the United States and certain foreign jurisdictions.

As of March 31, 2022, the statutory income tax rates of the countries where the Company conducts or conducted business are 21% in the United States, 0% in Bermuda, and 25% on non-trading income, 33% on capital gains and 12.5% on trading income in the Republic of Ireland. The statutory income tax rate of each country is applied against the expected annual taxable income of the Company in each country to estimate the annual income tax expense.

The Company’s income (loss) before income taxes is derived from its U.S. subsidiaries for the quarters ended March 31, 2022 and 2021.

The following table summarizes the components of income tax benefit:

	Quarters Ended March 31,
(Dollars in thousands)	2022			2021
Deferred income tax benefit:
U.S. Federal	$	(3,413	)	$	(203	)
Total deferred income tax benefit		(3,413	)		(203	)
Total income tax expense benefit	$	(3,413	)	$	(203	)

The weighted average expected tax provision has been calculated using income (loss) before income taxes in each jurisdiction multiplied by that jurisdiction’s applicable statutory tax rate.  

The following table summarizes the differences between the tax provision for financial statement purposes and the expected tax provision at the weighted average tax rate:

	Quarters Ended March 31,
	2022						2021
(Dollars in thousands)	Amount			% of Pre- Tax Income			Amount			% of Pre- Tax Income
Expected tax provision at weighted average tax rate	$	(3,819	)		21.0	%	$	1,116			21.0	%
Adjustments:
Dividend exclusion		(22	)		0.1			(17	)		(0.3	)
Parent income treated as partnership for tax		243			(1.3	)		(1,367	)		(25.7	)
Other		185			(1.0	)		65			1.2
Effective income tax benefit	$	(3,413	)		18.8	%	$	(203	)		(3.8	%)

The effective income tax benefit rate for the quarter ended March 31, 2022 was 18.8% compared to an effective income tax benefit rate of 3.8% for the quarter ended March 31, 2021. The difference between 2022 and 2021 is due to a decline in net income at Global Indemnity Group, LLC which is treated as a partnership for tax.   

The Company has a net operating loss (“NOL”) carryforward of $21.8 million as of March 31, 2022, which begins to expire in 2036 based on when the original NOL was generated.  The Company’s NOL carryforward as of December 31, 2021 was $28.6 million.