Income Taxes |
3 Months Ended |
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Mar. 31, 2026 | |
| Income Tax Disclosure [Abstract] | |
| Income Taxes | INCOME TAXES The Company uses a full-year projected effective tax rate approach to calculate year-to-date taxes. The projected effective tax rate is the ratio of projected “Total income tax expense” divided by projected “Income before income taxes and equity in earnings of joint ventures and other operating entities.” In addition, certain items impacting total income tax expense are recorded in the periods in which they occur. In determining the year-to-date income tax provision, the Company considers the realizability of deferred tax assets, including those associated with unrealized investment losses, and has, where appropriate, reduced the deferred tax asset to that which is, more likely than not, expected to be realized. The Company has determined based upon the weight of available evidence that no valuation allowance is necessary related to unrealized investment losses. The interim period tax expense (or benefit) is the difference between the year-to-date income tax provision and the amounts reported for the previous interim periods of the fiscal year. Taxes attributable to joint ventures and other operating entities are recorded within “Equity in earnings of joint ventures and other operating entities, net of taxes.” The Company’s income tax provision, on a consolidated basis, amounted to an income tax expense of $129 million, or 17.6% of income (loss) before income taxes and equity in earnings of joint ventures and other operating entities, in the first three months of 2026, compared to an income tax expense of $207 million, or 22.5%, in the first three months of 2025. The Company’s current and prior effective tax rates differ from the U.S. statutory rate of 21% primarily due to non-taxable investment income, tax credits, foreign earnings taxed at higher rates than the U.S. statutory rate, and the items discussed below. Tax Law Change. In December 2023, the Government of Bermuda enacted a corporate income tax, which imposes a 15% income tax, less applicable foreign tax credits, on companies that are organized or operate within Bermuda that are within the scope of the Organization of Economic Cooperation and Development (“OECD”) Pillar Two rules. The Bermuda corporate income tax is effective for tax years beginning on January 1, 2025. The Company intends to make an election to exclude the income of a Bermuda entity that is a controlled foreign corporation within the meaning of the U.S. tax rules from the Bermuda corporate income tax for fiscal years ending prior to January 1, 2027. Certain changes enacted in 2025 to the Bermuda corporate income tax provide for both foreign tax credits for controlled foreign company regime taxes imposed in respect of the income of Bermuda entities which may be claimed against Bermuda income tax liability as well as certain other tax credits. There is no impact on full-year projected effective tax rate in 2026 and 2025. H.R.1, also referred to as the “One Big Beautiful Bill Act” (the “Tax Act of 2025”), was enacted into law on July 4, 2025. The legislation introduces changes to the U.S. international tax regime, including a reduction in the Section 250 deduction for Net Controlled Foreign Corporation Tested Income (“NCTI” previously referred to as “GILTI”) from 50% to 40% beginning in 2026, resulting in an increase to the corporate tax rate on NCTI from 10.5% to 12.6%. The legislation also reduces the foreign tax credit haircut related to NCTI from 20% to 10% and makes changes to the related expense allocation. In March 2025, Japan enacted a 4% Special Defense Corporation Tax, effective for tax years beginning on or after April 1, 2026, that raises the corporate income tax rate for the Company’s Japan insurance companies from 28.00% to 28.93%. As a result, a tax expense of approximately $36 million was reflected in the financial statements for the first quarter of 2025. NCTI. The NCTI provision applies a minimum U.S. tax to earnings of consolidated foreign subsidiaries by imposing the U.S. tax rate to 50% of earnings in 2025 and of earnings beginning in 2026 of such foreign affiliates and provides for a partial foreign tax credit for foreign income taxes. In years that the PFI consolidated federal income tax return reports a net operating loss or has a loss attributable to U.S. sources of operations, including as a result of loss carrybacks, the NCTI provision would limit the amount of deductions or credits permissible against NCTI. On July 20, 2020, the U.S. Treasury and the Internal Revenue Service issued Final Regulations (Treasury Decision 9902) pursuant to Internal Revenue Code Section 951A which allow an annual election to exclude from the U.S. tax return certain NCTI amounts when the taxes paid by a foreign affiliate exceed 18.9% (90% of U.S. statutory rate of 21%) of the NCTI amount for that foreign affiliate (the “high-tax exception”). These regulations are effective for the 2021 taxable year with an election to apply to any taxable year beginning after 2017. In many of the countries in which the Company operates, including Japan and Brazil, there are differences between local tax rules used to determine the tax base and the U.S. tax principles used to determine NCTI. Also, the Company’s Japan affiliates have a different tax year than the U.S. calendar tax year used to determine NCTI. Therefore, while many of the countries, including Japan and Brazil, have a statutory tax rate above the 18.9% threshold, separate affiliates may not meet the 18.9% threshold each year and, as such, may not qualify for this annual exclusion. The Company made the high-tax exception election for the 2025 tax year and anticipates to not make the high-tax exception election for the 2026 tax year.
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