American Integrity Insurance Group, Inc.AII
American Integrity Insurance Group, Inc. Income Taxes Disclosure
Income Taxes
The Company’s income before provision for income taxes consisted of the following:
Year Ended December 31, | |||
2025 | 2024 | ||
U.S. | $87,954 | $46,505 | |
Foreign | 27,103 | 4,534 | |
Income before provision for income taxes | $115,057 | $51,039 | |
The following table summarizes the provision for income taxes:
Year Ended December 31, | |||
2025 | 2024 | ||
Current: | |||
Federal | $17,228 | $9,757 | |
State | 4,306 | 2,931 | |
Foreign | 4,427 | 952 | |
Total current tax expense | 25,961 | 13,640 | |
Deferred: | |||
Federal | (8,267) | (1,943) | |
State | (2,258) | (400) | |
Foreign | — | — | |
Total deferred income tax expense | $(10,525) | $(2,343) | |
Total income tax expense | $15,436 | $11,297 | |
Effective tax rate | 13.4% | 22.1% | |
The Company adopted ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures on a
prospective basis beginning with the year ended December 31, 2025. The following table presents required
disclosure pursuant to ASU 2023-09 and reconciles the statutory federal income tax amount and rate to our global
effective tax amount and rate for the year ended December 31, 2025:
Year Ended December 31, 2025 | |||
Amount | Rate | ||
Income tax expense computed at U.S. federal statutory rates | $24,162 | 21.0% | |
State income tax expense(1) | 4,191 | 3.6 | |
Foreign tax effects: | |||
Bermuda | (4,427) | (3.8) | |
Other foreign jurisdictions | — | — | |
Effects of cross-border tax laws: | |||
Subpart F income inclusion | 4,427 | 3.8 | |
Foreign tax credit | — | — | |
Other | — | — | |
Tax credits: | |||
Research and development credit | — | — | |
Changes in valuation allowances | — | — | |
Nontaxable or nondeductible items: | |||
IRC Section 162(m) executive compensation | 2,061 | 1.8 | |
Tax status change of nontaxable entity | (9,722) | (8.4) | |
Nontaxable entity activity | (5,791) | (5.0) | |
Other | 323 | 0.3 | |
Changes in unrecognized tax benefits | — | — | |
Other adjustments | 212 | 0.2 | |
Income tax expense at global effective rate | $15,436 | 13.4% | |
(1)The state that contributes to the majority (greater than 50%) of the tax effect in this category is Florida.
The following table presents the required disclosures prior to our adoption of ASU 2023-09 and reconciles the
statutory federal income tax rate to the actual global effective tax rate for the year ended December 31, 2024:
Year Ended December 31, 2024 | |||
Amount | Rate | ||
Income tax expense computed at U.S. federal statutory rates | $10,718 | 21.0% | |
State income tax expense | 1,840 | 3.6 | |
Loss of partnerships and other pass-through entities | (1,851) | (3.6) | |
Nondeductible items | 37 | 0.1 | |
Other | 553 | 1.1 | |
Income tax expense at effective rate | $11,297 | 22.1% | |
On July 4, 2025, the One Big Beautiful Bill Act (the “Act”) was signed into law. The Act made permanent key
elements of the Tax Cuts and Jobs Act, including 100 percent bonus depreciation, domestic research cost expensing,
increases the Advanced Manufacturing Investment Credit to 35 percent from 25 percent and modified to the
international tax framework. The Act includes multiple effective dates, with certain provisions effective in 2025 and
others phased in through 2027. We continue to evaluate the impact of the Act’s provisions that take effect in future
years.
In connection with the IPO in calendar year 2025, the Company converted its partnership structure into a corporate
structure for income tax reporting purposes. For 2025, the Company plans to file two separate stand-alone federal
income tax returns, one for the insurance subsidiary and one for the new parent and other single-member limited
liability companies.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and
liabilities for financial reporting purposes and the amounts for income tax purposes. The significant components of
the Company’s deferred tax assets and liabilities were as follows:
December 31, | |||
2025 | 2024 | ||
Deferred tax assets | |||
Unpaid losses and loss adjustment expense | $900 | $671 | |
Unearned premiums | 9,936 | 7,772 | |
Net unrealized losses on investments | — | 118 | |
Unearned revenue | 25,688 | — | |
Capital loss carryforward | — | 1 | |
Change in ROU liabilities | 115 | — | |
Other | 203 | 12 | |
Total deferred tax assets | 36,842 | 8,574 | |
Valuation allowance | — | — | |
Net deferred tax assets | 36,842 | 8,574 | |
Deferred tax liabilities: | |||
Deferred policy acquisition costs | (22,399) | (5,272) | |
Fixed assets | (1,408) | — | |
Excess ceding commission | (2,575) | (3,971) | |
Prepaid expenses | (472) | — | |
Policy acquisition costs | (592) | — | |
Net unrealized gains on investments | (649) | — | |
Accrued expenses | 51 | — | |
Change in ROU assets | (113) | — | |
Other | (49) | (453) | |
Total deferred tax liabilities | (28,206) | (9,696) | |
Net deferred tax liabilities | $8,636 | $(1,122) | |
At each balance sheet date, management assesses the need to establish a valuation allowance that reduces deferred
income tax assets when it is more likely than not that all, or some portion, of the deferred income taxes will not be
realized. A valuation allowance would be based on all available information including the Company’s assessment of
uncertain tax positions and projections of future taxable income and capital gain from each tax-paying component in
each jurisdiction, principally derived from business plans and available tax planning strategies.
Management has reviewed all available evidence, both positive and negative, in determining the need for a valuation
allowance with respect to the gross deferred tax assets. In determining the manner in which available evidence
should be weighted, management has determined that the need for a valuation allowance is not warranted at this
time.
As of December 31, 2025 and December 31, 2024, the Company had no net operating loss carryforwards for tax
purposes.
Deferred tax assets are included within other long-term assets on the consolidated balance sheets. Deferred tax
liabilities are included within other long-term liabilities on the consolidated balance sheets.
Current income taxes payable of $2.5 million and $11.9 million are included in other current liabilities as of
December 31, 2025 and December 31, 2024, respectively.
The Company’s policy is to record interest and penalties associated with unrecognized tax benefits as expenses in
the accompanying consolidated statements of operations and comprehensive income. Accrued interest and penalties
are included on the related tax liability line on the consolidated balance sheets. As of December 31, 2024, the
Company had no unrecognized tax benefits. There were no changes in the Company’s unrecognized tax benefits
during the years ended December 31, 2025 or December 31, 2024. The Company recorded accrued interest and
penalties of $142 related to amended income tax return filings during calendar year 2025, and did not recognize any
interest or penalties during the calendar year 2024 related to unrecognized tax benefits.
The Company files income tax returns in U.S. federal and various state jurisdictions. With few exceptions, the
Company is not subject to examinations by major tax jurisdictions for years ended December 31, 2022, and prior.
Cash Taxes Paid
The Company adopted ASU 2023-09 on a prospective basis for the year ended December 31, 2025, and has included
the following table as a result of adoption, which presents income taxes paid (net of refunds received) for the year
ended December 31, 2025:
Year Ended December 31, 2025 | |
Federal | $27,685 |
State: | |
Florida(1) | 7,615 |
Other states | 35 |
Foreign taxes: | |
Bermuda | — |
Total cash paid for income taxes | $35,335 |
(1)Florida is the only state that represents taxes paid that were greater than 5% of total taxes paid.
The following table summarizes the income taxes paid for the year ended December 31,2024:
Year Ended December 31, 2024 | |
Cash paid during the year for: | |
Income taxes, net of refunds | $1,000 |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.