Taxation (Tables)

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Abstract]

Distribution of income (loss) before income tax, by jurisdiction

Income (loss) before income tax:
(U.S. dollars in thousands)	2012		2011		2010
U.S.	$	52,258	$	(99,309)	$	170,080
Non U.S.		712,158		(244,867)		636,038
Total	$	764,416	$	(344,176)	$	806,118

Components of income tax expense

(U.S. dollars in thousands)	2012		2011		2010
Current expense:
U.S.	$	13,105	$	9,138	$	40,413
Non U.S.		44,475		87,220		35,113
Total current expense	$	57,580	$	96,358	$	75,526
Deferred expense (benefit):
U.S.	$	(56,646)	$	(5,550)	$	18,225
Non U.S.		33,094		(31,101)		68,986
Total deferred expense (benefit)	$	(23,552)	$	(36,651)	$	87,211
Total tax expense	$	34,028	$	59,707	$	162,737

Reconciliation of effective tax rate

(U.S. dollars in thousands)		2012		2011		2010
Expected tax provision at weighted average rate		$	53,358	$	(66,493)	$	80,225
Permanent differences:
	Non-taxable investment income (loss)		(16,717)		(14,246)		(10,176)
	Non-taxable income (loss)		(25,711)		(3,265)		3,838
	Prior year adjustments		(622)		(9,206)		16,594
	Prior year adjustments on completion of IRS examinations		(19,192)		-		-
	State, local and foreign taxes		18,312		42,581		44,122
	Valuation allowance		(16,644)		24,990		1,346
	Allocated investment income		41,727		21,483		12,386
	Stock options		4,749		5,840		3,323
	Non-deductible expenses		16,145		12,901		11,079
	Realized capital loss carry-forward valuation allowance reduction		(24,473)		-		-
	Non-deductible goodwill impairment		-		57,069		-
	Non-taxable reserve release		3,096		(11,947)		-
Total tax expense		$	34,028	$	59,707	$	162,737

Components of net deferred tax assets

(U.S. dollars in thousands)	2012		2011
Deferred tax asset:
Net unpaid loss reserve discount	$	108,285	$	108,981
Net unearned premiums		70,071		62,162
Compensation liabilities		56,245		35,830
Net operating losses		83,061		263,600
Investment adjustments		12,927		12,861
Pension		11,976		9,753
Bad debt reserve		14,901		10,829
Amortizable goodwill		8,958		10,732
Net unrealized depreciation on investments		38,652		320
Stock options		13,035		13,842
Depreciation		1,910		4,072
Net realized capital losses		98,971		119,307
Deferred intercompany capital losses		97,566		117,892
Other		9,392		7,573
Deferred tax asset, gross of valuation allowance	$	625,950	$	777,754
Valuation allowance		297,637		497,236
Deferred tax asset, net of valuation allowance	$	328,313	$	280,518
Deferred tax liability:
Net unrealized appreciation on investments	$	106,520	$	96,797
Deferred acquisition costs		16,135		12,787
Currency translation adjustments		11,225		8,062
Regulatory reserves		146,101		125,249
Untaxed Lloyd's result		10,155		8,340
Other		13,838		4,786
Deferred tax liability	$	303,974	$	256,021
Net Deferred Tax Asset	$	24,339	$	24,497