Ategrity Specialty Insurance Co HoldingsASIC

Ategrity Specialty Insurance Co Holdings Income Taxes Disclosure

10-KFiled Mar 6, 20264 min read
Income Taxes
The components of net income (loss) before income tax expense for the years ended December 31, 2025 and 2024 are as follows:
Year Ended December 31,
20252024
(in thousands)
Domestic
$95,914 $66,264 
Foreign
— — 
Income before income taxes$95,914 $66,264 

The components of income taxes expense for the years ended December 31, 2025 and 2024 are as follows:
Year Ended December 31,
20252024
(in thousands)
Current expense:
Federal
$24,522 $16,728 
State
546 — 
Foreign
— — 
Total current expense (benefit)
25,068 16,728 
Deferred expense:
Federal
(4,929)(4,412)
State
(354)— 
Foreign
— — 
Total deferred expense (benefit)
(5,283)(4,412)
Total income tax expense$19,785 $12,316 
The prevailing federal income tax rate was 21% for both the years ended December 31, 2025 and 2024, respectively. The Company’s effective tax rate on income before income taxes differs from the prevailing federal income tax rate of 21% and is summarized as follows:
Year Ended, December 31,
20252024
AmountPercentageAmountPercentage
(in thousands)(in thousands)
Income tax expense at federal income tax rate$20,142 21.0 %$13,915 21.0 %
State and local income taxes192 0.2 %— — %
Nontaxable or nondeductible items:
Non-controlling interest(447)(0.5)%(1,227)(1.8)%
Other(102)(0.1)%(372)(0.6)%
Income tax expense$19,785 20.6 %$12,316 18.6 %
Cash paid for income taxes, net of refunds, during the year ended December 31, 2025 was as follow:
Year Ended December 31,
2025
(in thousands)
Federal
$35,000 
State
281 
Foreign
— 
Income before income taxes$35,281 
The Company received $0.9 million in net income taxes refunds during the year ended December 31, 2024.
The significant components of the net deferred tax assets at the corporate income tax rate of 21% are as follows:
Year Ended December 31,
20252024
(in thousands)
Deferred tax assets:
Unearned premiums$8,799 $6,074 
Reserves for unpaid losses and loss adjustment expenses6,404 4,709 
Accrued expenses1,172 747 
Contingent commissions3,708 3,305 
Allowance for credit losses1,913 1,240 
Other899 822 
Total deferred tax assets22,895 16,897 
Deferred tax liabilities:
Deferred policy acquisition costs, net of ceding commissions(6,396)(4,526)
Unrealized gains fixed-maturity securities(2,430)(582)
Property and equipment(591)(137)
Deferred intercompany gain(21)(208)
Pass through entities17 (1,553)
Accrued market discount(185)(221)
Total deferred tax liabilities(9,606)(7,227)
Net deferred tax assets$13,289 $9,670 
The Company is subject to federal, state and local corporate income taxes and other taxes applicable to U.S. corporations.
The Company assessed the realizability of its deferred tax assets on a stand-alone basis. As of December 31, 2025, the Company had no federal and state net operating loss (“NOLs”) being carried forward. As of December 31, 2025, the Company’s stand-alone net deferred tax assets amounted to $13.3 million. The Company believes that it is more likely than not that the deferred tax assets will be realized given the reversal of existing temporary differences and future taxable income.
The Company had no reserve for future tax contingencies or liabilities (unrecognized tax benefits). The Company classifies all interest and penalties related to uncertain tax positions as income tax expense. The Company did not incur any interest or penalties related to uncertain tax positions for the years ended December 31, 2025 and 2024.
Tax years 2022 and subsequent are open and subject to examination by the IRS.
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted into law. Among other provisions, the OBBBA modifies the timing of deductions for depreciation and certain other capitalized costs for tax purposes. The Company evaluated the provisions of the OBBBA and determined that, while the changes will affect the timing of certain tax deductions, the overall impact of the legislation is not material to the Company’s consolidated financial statements.
Tax Allocation Agreement
The Company is included in ZFSG’s consolidated Federal income tax return and in various combined state income tax returns. The Company entered into a Tax Allocation Agreement with ZFSG (the “Tax Agreement”) which governs the allocation of consolidated tax liability among the parties to the agreement, the reimbursement of ZFSG for payments of such liabilities, the compensation of affiliated companies of ZFSG for the use of its tax attributes and the allocation of refunds or subsequent adjustments to tax liabilities. Under the Tax Agreement, the Company paid to ZFSG $42.9 million in the year ended December 31, 2025. $7.9 million was settled through the transfer of the Company’s investment interest in the Absolute Return Utility and Infrastructure Fund to ZFSG rather than through the payment of cash. The Company received $0.9 million during the year ended December 31, 2024 from ZFSG pursuant to the Tax Agreement. As of December 31, 2025, $8.1 million was due to ZFSG under this agreement and is included in income tax payable in the consolidated balance sheets.
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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.

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