AXIS CAPITAL HOLDINGS LTDAXS
AXIS CAPITAL HOLDINGS LTD Income Taxes Disclosure
INCOME TAXES
On December 27, 2023, the Bermuda government enacted the Corporate Income Tax Act 2023 (the "Act") which applies a corporate income tax for fiscal years beginning on or after January 1, 2025. Under the Corporate Income Tax Act 2023 of Bermuda, any liability to the tax applies regardless of any assurances previously provided under the Exempted Undertakings Tax Protection Act 1966 of Bermuda. The Act includes a provision referred to as the economic transition adjustment ("Bermuda ETA"), which is intended to provide a fair and equitable transition into the tax regime. Pursuant to the Act and subsequently issued guidance, the Company recorded a net deferred tax asset of $177 million in 2024.
On December 11, 2025, the Bermuda government enacted the Corporate Income Tax Amendment (No. 2) Act 2025 (the "Amendment Act") which provided technical corrections to the Act. The Amendment Act includes a provision to allow for derecognition of deferred tax liabilities where a Bermuda tax group recognized both deferred tax assets and deferred tax liabilities under the Bermuda ETA. Pursuant to the Amendment Act, the Company released $19 million of deferred tax liabilities previously established under the Bermuda ETA in 2025.
AXIS Specialty Insurance Bermuda (refer to Note 1 'Organization'), a wholly owned subsidiary of AXIS Specialty U.S. Holdings, Inc, made an election to be treated as a U.S. taxpayer under section 953(d) of the Internal Revenue Code of 1986, as amended ("U.S. Internal Revenue Code"). AXIS Specialty Insurance Bermuda is subject to tax in the U.S. beginning tax year 2024 and in Bermuda beginning tax year 2025. Any U.S. tax incurred as a result of this election is eligible to be fully creditable against the Bermuda corporate income tax.
AXIS Capital's primary Bermuda subsidiary has an operating branch in Singapore, which is subject to the relevant taxes in that jurisdiction. The Company is currently in the process of winding down regulated operations in Singapore. The Singapore branch is not under examination in that tax jurisdiction but remains subject to examination for tax years 2022 through 2025.
AXIS Capital's U.S. subsidiaries are subject to federal, state and local corporate income taxes, and other taxes applicable to U.S. corporations. The provision for federal income taxes has been determined under the principles of the consolidated tax provisions of the U.S. Internal Revenue Code. Should the U.S. subsidiaries pay a dividend outside the U.S. tax group, withholding taxes will apply. The U.S. subsidiaries are subject to examination for tax years 2022 through 2025. An Internal Revenue Service ("IRS") examination of the U.S. group was completed in 2025 with respect to tax years 2019, 2021, and 2022 and was closed without material adjustments.
In Canada, AXIS Capital's U.S. reinsurance company operates through a branch and its U.S. service company has an unlimited liability company subsidiary based in Canada. The Canadian operations are subject to the relevant taxes in that jurisdiction and remain subject to examination for tax years 2021 through 2025.
AXIS Capital has subsidiaries in Ireland, the U.K., and Brazil with branches in the U.K., Switzerland, and Belgium. These subsidiaries and their branches are not under examination but remain subject to examination in all applicable jurisdictions for tax years 2021 through 2025.
In the U.K., the Company operates through a Lloyd’s syndicate whose income is subject to tax in the U.K., payable by its corporate members. The income from operations at Lloyd’s is also subject to taxes in other jurisdictions in which Lloyd's operates, including the U.S. Under a Closing Agreement between Lloyd’s and the IRS, Lloyd's corporate members pay U.S. income tax on U.S. connected income written by Lloyd’s syndicates. To the extent that the Lloyd’s syndicates incur taxes outside the U.K., they may claim a credit for foreign taxes incurred, limited to the U.K. equivalent tax on the same income.
The following table provides an analysis of income tax expense (benefit) and net tax assets:
| Year ended December 31, | 2025 | 2024 | 2023 | ||||||||||||||||||||
| Current income tax expense (benefit) | |||||||||||||||||||||||
| U.S. | $ | 95,565 | $ | 84,255 | $ | 12,021 | |||||||||||||||||
| Europe | 40,245 | 19,260 | 32,386 | ||||||||||||||||||||
| Bermuda | 42,464 | 3,425 | 291 | ||||||||||||||||||||
| Deferred income tax expense (benefit) | |||||||||||||||||||||||
| U.S. | (55,000) | 716 | (24,042) | ||||||||||||||||||||
| Europe | 47,017 | 7,290 | 18,932 | ||||||||||||||||||||
Bermuda(1) | 46,441 | (170,541) | (13,272) | ||||||||||||||||||||
| Total income tax expense (benefit) | $ | 216,732 | $ | (55,595) | $ | 26,316 | |||||||||||||||||
| Net current tax receivables (payables) | $ | (9,907) | $ | 42,991 | $ | 78,570 | |||||||||||||||||
| Net deferred tax assets (liabilities) | 176,726 | 278,474 | 72,850 | ||||||||||||||||||||
| Net tax assets | $ | 166,819 | $ | 321,465 | $ | 151,420 | |||||||||||||||||
(1) 2024 reflects the recognition of a tax benefit related to the Bermuda ETA, offset by a partial reversal of the 2023 tax benefit on unrealized investment losses included in other comprehensive income (loss) due to the enactment of corporate income tax, effective January 1, 2025. 2025 reflects Bermuda ETAs including the amortization of $19 million of deferred tax assets offset by the derecognition of $19 million of deferred tax liabilities pursuant to the Amendment Act.
The following table provides an analysis of income taxes paid disaggregated by jurisdiction, following the adoption of Accounting Standards Update ("ASU") 2023-09:
| Year ended December 31, | 2025 | ||||||||||
| Jurisdiction | Income taxes paid (net of refunds) | ||||||||||
| Federal (Bermuda) | $ | 1,000 | |||||||||
| Foreign | |||||||||||
| United States | 96,637 | ||||||||||
| United Kingdom | 12,685 | ||||||||||
| Canada | 8,093 | ||||||||||
| Ireland | 6,980 | ||||||||||
| Other foreign jurisdictions | 1,448 | ||||||||||
| Total income tax expense (benefit) | $ | 126,843 | |||||||||
Deferred income taxes reflect the tax impact of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes. The following table provides details of the significant components of deferred tax assets and liabilities:
| At December 31, | 2025 | 2024 | |||||||||||||||
| Deferred tax assets: | |||||||||||||||||
| Discounting of net reserves for losses and loss expenses | $ | 60,852 | $ | 66,338 | |||||||||||||
| Unearned premiums | 69,113 | 62,656 | |||||||||||||||
| Net unrealized investments losses | — | 36,536 | |||||||||||||||
| Operating and capital loss carryforwards | 54,923 | 75,864 | |||||||||||||||
| Accruals not currently deductible | 40,826 | 36,253 | |||||||||||||||
| Tax credits | 12,601 | 2,414 | |||||||||||||||
Bermuda economic transition adjustment(1) | 176,759 | 176,923 | |||||||||||||||
| Other deferred tax assets | 3,742 | 3,681 | |||||||||||||||
| Deferred tax assets before valuation allowance | 418,816 | 460,665 | |||||||||||||||
| Valuation allowance | (7,591) | (19,829) | |||||||||||||||
| Deferred tax assets net of valuation allowance | 411,225 | 440,836 | |||||||||||||||
| Deferred tax liabilities: | |||||||||||||||||
| Deferred acquisition costs | (50,832) | (35,401) | |||||||||||||||
| Net unrealized investments gains | (9,807) | — | |||||||||||||||
| Other investment adjustments and impairments | (6,104) | (7,933) | |||||||||||||||
| Intangible assets | (45,034) | (47,355) | |||||||||||||||
| Depreciation and amortization | (1,450) | (7,586) | |||||||||||||||
| Equalization reserves | (2,140) | (2,347) | |||||||||||||||
| Lloyd’s deferred year of account results | (114,124) | (51,770) | |||||||||||||||
| Other deferred tax liabilities | (5,008) | (9,970) | |||||||||||||||
| Deferred tax liabilities | (234,499) | (162,362) | |||||||||||||||
| Net deferred tax assets (liabilities) | $ | 176,726 | $ | 278,474 | |||||||||||||
(1) At December 31, 2025, the Bermuda ETA includes amortization of $19 million of deferred tax assets offset by the derecognition of $19 million of deferred tax liabilities pursuant to the Amendment Act.
The following table summarizes total operating and capital loss carryforwards and tax credits:
| At December 31, | 2025 | 2024 | |||||||||||||||
Operating and Capital Loss Carryforwards(1) | |||||||||||||||||
| Singapore operating loss carryforward | $ | 55,914 | $ | 91,924 | |||||||||||||
| U.K. operating loss carryforward | 182,348 | 216,928 | |||||||||||||||
| U.K. capital loss carryforward | 93 | 93 | |||||||||||||||
| Ireland operating loss carryforward | — | 27 | |||||||||||||||
| Ireland capital loss carryforward | 835 | 1,372 | |||||||||||||||
Switzerland operating loss carryforward(2) | — | 68,573 | |||||||||||||||
U.S. capital loss carryforward(3) | 16,932 | 59,434 | |||||||||||||||
Tax Credits(1) | |||||||||||||||||
| Ireland foreign tax credit | $ | — | $ | 333 | |||||||||||||
| U.K. foreign tax credit | 643 | 504 | |||||||||||||||
U.S. foreign tax credit(4) | 11,957 | 1,577 | |||||||||||||||
(1) At December 31, 2025, the Singapore, U.K., and Ireland operating and capital loss carryforwards and tax credits can be carried forward indefinitely.
(2) At December 31, 2025, the Swiss net operating losses were fully utilized.
(3) At December 31, 2025, the U.S. capital loss carryforwards expire in 2030.
(4) At December 31, 2025, the U.S. foreign tax credits expire in 2034.
The following table shows an analysis of the movement in the Company's valuation allowance:
| At December 31, | 2025 | 2024 | |||||||||||||||
| Income tax expense (benefit): | |||||||||||||||||
| Valuation allowance - beginning of year | $ | 17,221 | $ | 31,688 | |||||||||||||
| Operating loss carryforwards | (8,476) | (6,572) | |||||||||||||||
| Foreign tax credit | (333) | (6,589) | |||||||||||||||
| U.K. branch assets and other foreign rate differentials | 756 | (1,567) | |||||||||||||||
| Capital loss carryforwards and impaired investments | (111) | 261 | |||||||||||||||
| Valuation allowance - end of year | $ | 9,057 | $ | 17,221 | |||||||||||||
| Accumulated other comprehensive income (loss): | |||||||||||||||||
| Valuation allowance - beginning of year | $ | 2,608 | $ | 7,023 | |||||||||||||
| Change in investment - related items | (4,074) | (4,415) | |||||||||||||||
| Valuation allowance - end of year | (1,466) | 2,608 | |||||||||||||||
| Total valuation allowance - end of year | $ | 7,591 | $ | 19,829 | |||||||||||||
At December 31, 2025 and 2024, the Company had a full valuation allowance on operating loss carryforwards relating to operations in Singapore and Ireland and certain other deferred tax assets related to branch operations.
In 2025, the valuation allowance decreased by $12 million (2024: $19 million). In 2025, the net gain incurred by AXIS Re Europe, the Swiss branch of the Irish reinsurance company, resulted in the release of a valuation allowance of $8 million against the net deferred tax assets of which $4 million was released in net income (loss) and $4 million was released in other comprehensive income (loss).
In 2024, the net gain incurred by AXIS Re SE, the Irish reinsurance company, resulted in the release of a valuation allowance of $13 million against the net deferred tax assets of AXIS Re SE and AXIS Re Europe, the Swiss branch of the Irish reinsurance company, of which $8 million was released in net income (loss) and $5 million was released in other comprehensive income (loss). In 2025, the remaining $0.3 million valuation allowance was fully released against foreign tax credits held by AXIS Specialty Europe. In 2024, a valuation allowance of $7 million was released against foreign tax credits held by AXIS Specialty Europe
At December 31, 2025 and 2024, the Company's U.S. operations had a deferred tax asset of $1 million and $19 million, respectively, for the unrealized losses on its fixed maturities that were recorded in other comprehensive income (loss). The Company examined the need for a valuation allowance and after considering all positive and negative evidence concluded a valuation allowance against its net unrealized investment losses in the U.S was not required.
At December 31, 2025 and 2024, the Company’s Bermuda operations had a deferred tax liability of $11 million and a deferred tax asset of $17 million, respectively, for the unrealized gains (losses) on its fixed maturities that were recorded in other comprehensive income (loss). Due to the net unrealized investment gains in Bermuda, a valuation allowance was not required.
At December 31, 2025 and 2024, the Company’s Bermuda operations had a deferred tax asset of $177 million related to the Bermuda ETA. The Company examined the need for a valuation allowance and after considering all positive and negative evidence concluded a valuation allowance against this asset in Bermuda was not required.
Although realization is not assured, management believes it is more likely than not that the tax benefit of the recorded net deferred tax assets will be realized. In evaluating the Company's ability to recover these tax assets within the jurisdiction from which they arise, it considered all available positive and negative evidence, including historical results, operating loss carry-back potential and scheduled reversals of deferred tax liabilities. The Company believes its U.S. and U.K. operations will produce significant taxable income in future periods and have deferred tax liabilities that will reverse in future periods, such that the Company believes sufficient ordinary taxable income is available to utilize all remaining ordinary deferred tax assets.
A deferred tax liability has not been recorded on undistributed earnings as the U.S. group satisfies the indefinite reversal criteria.
At December 31, 2025 and 2024, there were no unrecognized tax benefits.
The following table presents the distribution of income before income taxes between domestic and foreign jurisdictions and a reconciliation of the actual income tax rate to the amount computed by applying the effective tax rate of 15% under Bermuda law to income before income taxes, following the adoption of ASU 2023-09:
| Year ended December 31, 2025 | Amount | Percent | |||||||||||||||
| Income (loss) before income taxes | |||||||||||||||||
| Bermuda (domestic) | $ | 586,113 | |||||||||||||||
| Foreign | 639,517 | ||||||||||||||||
| Total income before income taxes | $ | 1,225,630 | |||||||||||||||
| Bermuda Federal Statutory Rate | $ | 183,844 | 15.0 | % | |||||||||||||
| State and Local Income Taxes | — | 0.0 | % | ||||||||||||||
| Foreign Tax Effects | |||||||||||||||||
| United States | |||||||||||||||||
| Statutory tax rate difference between United States and Bermuda | 10,915 | 0.9 | % | ||||||||||||||
| U.S. tax on insurance income | 84,093 | 6.9 | % | ||||||||||||||
| Other | (1,791) | (0.1 | %) | ||||||||||||||
| United Kingdom | |||||||||||||||||
Statutory tax rate difference between United Kingdom and Bermuda | 31,401 | 2.5 | % | ||||||||||||||
| Other | (5,638) | (0.5 | %) | ||||||||||||||
| Other Foreign Jurisdictions | (7,794) | (0.6 | %) | ||||||||||||||
Effect of changes in tax laws or rates enacted in the current period (1) | (18,782) | (1.5 | %) | ||||||||||||||
| Effect of cross-border tax laws | — | 0.0 | % | ||||||||||||||
| Tax Credits | (68,281) | (5.6 | %) | ||||||||||||||
| Changes in valuation allowances | — | — | % | ||||||||||||||
| Nontaxable or nondeductible items | 1,943 | 0.2 | % | ||||||||||||||
| Changes in unrecognized tax benefits | — | 0.0 | % | ||||||||||||||
| Other Adjustments | 6,822 | 0.5 | % | ||||||||||||||
| Actual tax rate | 216,732 | 17.7 | % | ||||||||||||||
(1) At December 31, 2025, the effects of changes in tax laws or rates enacted in the current period reflects the release of $19 million of Bermuda ETA deferred tax liabilities pursuant to the Amendment Act.
The following table presents the distribution of income before income taxes between domestic and foreign jurisdictions and a reconciliation of the actual income tax rate to the amount computed by applying the effective tax rate of 0% under Bermuda law to income before income taxes prior to the adoption of issuance of ASU 2023-09:
| Year ended December 31, | 2024 | 2023 | |||||||||||||||
| Income (loss) before income taxes | |||||||||||||||||
| Bermuda (domestic) | $ | 323,688 | $ | 213,539 | |||||||||||||
| Foreign | 702,503 | 189,067 | |||||||||||||||
| Total income before income taxes | $ | 1,026,191 | $ | 402,606 | |||||||||||||
| Reconciliation of effective tax rate (% of income before income taxes) | |||||||||||||||||
| Expected tax rate | 0.0 | % | 0.0 | % | |||||||||||||
| Foreign taxes at local expected rates: | |||||||||||||||||
| U.S. | 8.4 | % | (2.5 | %) | |||||||||||||
| Europe | 6.0 | % | 11.9 | % | |||||||||||||
| Valuation allowance | (1.4 | %) | (2.0 | %) | |||||||||||||
| Prior year adjustments | (1.5) | % | 1.3 | % | |||||||||||||
| Incremental branch taxes | 1.1 | % | 0.9 | % | |||||||||||||
Change in enacted tax rate(1) | (1.9 | %) | (3.3 | %) | |||||||||||||
| Bermuda economic transition adjustment | (17.2) | % | — | % | |||||||||||||
| Change in unrealized investment gain/(loss) | 0.6 | % | — | % | |||||||||||||
| Withholding tax | 0.3 | % | — | % | |||||||||||||
| Other | 0.2 | % | 0.2 | % | |||||||||||||
| Actual tax rate | (5.4 | %) | 6.5 | % | |||||||||||||
(1) At December 31, 2024, the change in enacted tax rate represents the rate change related to deferred tax assets and deferred tax liabilities on acquisition adjustments no longer required. At December 31, 2023, the change in enacted tax rate represents the enactment of the Act related to unrealized investment losses included in other comprehensive income (loss).
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2022 | Feb 27, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2018 | Feb 26, 2019 | |
| 2017 | Feb 28, 2018 | |
| 2015 | Feb 25, 2016 | |
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.