Income taxes (Tables)

12 Months Ended

Dec. 31, 2020

Income tax expense consists of the following:


	2020	2019	2018
	(in $ thousands)
Current income tax expense:
Federal	47,778	12,329	5,540
State	3,235	846	1,089
Foreign	7,567	4,851	6,622
	58,580	18,026	13,251
Deferred income tax expense (benefit):
Federal	(10,429)	6,631	43
State	388	150	(864)
Foreign	294	1,888	1,077
	(9,747)	8,669	256
Total income tax expense	48,833	26,695	13,507

Reconciliation of income tax expense (benefit) at federal statutory rate

The following reconciles income tax expense computed at the federal statutory rate with income tax expense as reported (in $ thousands, except for income tax rates):


	2020		2019		2018
Expected income tax expense at 21% (1)	42,785		22,116		12,816
State income tax expense (benefit) - net of Federal impact	2,944		818		(5)
Valuation allowance	2,427		1,326		1,741
Nondeductible expenses	2,399		3,249		1,872
Foreign income tax rate differential	1,465		138		297
Net expense (benefit) for the Canadian branch (2)	(1,478)		613		128
Research and development credits	(1,055)		(278)		(732)
Return-to-provision and true-up adjustments	(438)		(776)		(370)
2017 Act impact from the U.S. corporate tax rate change	—		—		(745)
2017 Act impact from deemed repatriation of deferred foreign income	—		—		(624)
Other – net	(216)		(511)		(871)
Income tax expense	48,833		26,695		13,507
Effective income tax rate (1)	24.0	%	25.3	%	22.1	%

(1) Calculated using income before taxes and after noncontrolling interests.

(2) For U.S. income tax purposes, the Company’s Canadian operation is a branch of Guaranty. As a result, the Canadian net deferred tax liability is offset in the U.S. as a deferred tax asset but not in an equal amount given differing tax rates in Canada and the U.S.

Schedule of deferred tax assets and liabilities

Deferred tax assets and liabilities as of December 31 are detailed below.


	2020	2019
	(in $ thousands)
Deferred tax assets:
Accrued expenses	18,747	18,290
Federal offset to Canadian deferred tax liability	8,299	7,961
Net operating loss (NOL) carryforwards	5,036	7,017
Tax credit carryforwards	4,596	2,230
Deferred payroll taxes	3,297	—
Net unrealized losses on investments in securities	2,719	621
Investments	1,529	424
Other intangibles	1,321	—
Title loss provisions	1,138	837
Allowance for uncollectible amounts	1,056	983
Foreign currency translation adjustments	959	1,765
Other	1,174	533
Deferred tax assets – gross	49,871	40,661
Valuation allowance	(6,471)	(4,056)
Deferred tax assets – net	43,400	36,605
Deferred tax liabilities:
Amortization – goodwill and other intangibles	(26,669)	(22,379)
Title loss provisions	(18,724)	(29,704)
Net unrealized gains on investments in securities	(7,684)	(4,218)
Fixed assets	(6,046)	(1,997)
Deferred compensation on life insurance policies	(2,296)	(2,202)
Investments	(1,193)	—
Other	(310)	(417)
Deferred tax liabilities – gross	(62,922)	(60,917)
Net deferred income tax liability	(19,522)	(24,312)