Maiden Holdings, Ltd.MHLA
Maiden Holdings, Ltd. Income Taxes Disclosure
Income Taxes
Maiden Holdings believes that they operate in a manner such that they will not be considered to be engaged in a trade or business in the U.S. Accordingly, Maiden Holdings has not recorded any provision for U.S. taxation.
Bermuda enacted the Corporate Income Tax Act 2023 on December 27, 2023 (the “CIT Act”). Entities subject to tax under the CIT Act are the Bermuda constituent entities of multi-national groups. A multi-national group is defined under the CIT Act as a group with entities in more than one jurisdiction with consolidated revenues of at least €750 million for two of the four previous fiscal years. If Bermuda constituent entities of a multi-national group are subject to tax under the CIT Act, such tax is charged at a rate of 15% of the net income of such constituent entities (as determined in accordance with the CIT Act, including after adjusting for any relevant foreign tax credits applicable to the Bermuda constituent entities). No tax is chargeable under the CIT Act until tax years starting on or after January 1, 2025. The Company's consolidated revenues do not presently meet the minimum amounts for taxation under the CIT Act. Should the Company become eligible to be taxed under the CIT Act, there would be an adverse effect on the Company's results of operation.
Pillar Two addresses the Base Erosion and Profit Shifting ("BEPS") risk of profit shifting to entities in low tax jurisdictions by introducing a global minimum tax and a proposed tax on base eroding payments, which would operate through a denial of a deduction or imposition of source-based taxation (including withholding tax) on certain payments. In December 2021, the OECD issued Pillar Two model rules for domestic implementation of the global minimum tax and shortly thereafter the European Commission proposed a Directive to implement the Pillar Two rules into EU law, which required EU member states to transpose the rules into their national laws by December 31, 2023 with certain measures initially being effective from January 1, 2024. In 2023, a number of jurisdictions (including Sweden and the UK) passed legislation to implement the OECD/G20's model rules into domestic law with effect from January 1, 2024. The proposals, in particular in relation to Pillar Two, are broad in scope and include a number of exemptions which are available to the Company therefore no impact on our results of operation are expected at this time.
Maiden NA files a consolidated federal income tax return for the Company’s U.S. based subsidiaries, including Maiden Reinsurance, which re-domesticated to Vermont on March 16, 2020 and, as a result, became subject to U.S. taxes. Maiden NA has Net Operating Loss carry-forwards ("NOL") and other Deferred Tax Assets (“DTA”) and Deferred Tax Liabilities (“DTL”) that are not presently recognized as a net DTA because a full valuation allowance is currently carried against them. Our 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 was determined under the principles of the consolidated tax provisions of the U.S. Internal Revenue Code and Regulations. Should our U.S. subsidiaries pay a dividend outside the U.S. group, withholding taxes will apply. Tax years 2021 to 2023 are subject to examination in the U.S by the Internal Revenue Service. The Inflation Reduction Act was signed into law in August 2022 and is effective for tax years beginning after December 31, 2022. The minimum tax provisions under the act are not currently applicable to the Company as we do not meet the taxable income thresholds.
The Company has subsidiary operations in various other locations around the world, including Canada, Ireland, Sweden and the United Kingdom, that are subject to relevant taxes in those jurisdictions. These subsidiaries are not under examination but generally remain subject to examination in all applicable jurisdictions for tax years from 2020 through 2024. Deferred income taxes have not been accrued with respect to certain undistributed earnings of foreign subsidiaries as it is the intention that such earnings will remain reinvested or will not be taxable. If the earnings were to be distributed, as dividends or otherwise, such amounts may be subject to withholding tax in the country of the paying entity. Currently, however, no withholding taxes have been accrued.
There were no unrecognized tax benefits at December 31, 2024 and 2023. Total loss before income taxes and total income tax expense for the years ended December 31, 2024 and 2023 are as follows:
| For the Year Ended December 31, | 2024 | 2023 | ||||||||||||
| Loss before income taxes – Domestic (Bermuda) | $ | (41,638) | $ | (32,456) | ||||||||||
| Loss before income taxes – Foreign (U.S. and others) | (158,276) | (5,917) | ||||||||||||
| Total loss before income taxes | $ | (199,914) | $ | (38,373) | ||||||||||
Current tax expense – Domestic (Bermuda) | $ | — | $ | — | ||||||||||
| Current tax benefit – Foreign (U.S. and others) | (171) | (146) | ||||||||||||
| Total current tax benefit | (171) | (146) | ||||||||||||
Deferred tax expense – Domestic (Bermuda) | — | — | ||||||||||||
| Deferred tax expense – Foreign (U.S. and others) | 1,226 | 342 | ||||||||||||
| Total deferred tax expense | 1,226 | 342 | ||||||||||||
Total income tax expense | $ | 1,055 | $ | 196 | ||||||||||
13. Income Taxes (continued)
The following table is a reconciliation of the actual income tax rate for the years ended December 31, 2024 and 2023 to the amount computed by applying the effective tax rate of 0.0% under Bermuda law to the Company's loss before income taxes:
| For the Year Ended December 31, | 2024 | 2023 | ||||||||||||
| Loss before income taxes | $ | (199,914) | $ | (38,373) | ||||||||||
Less: income tax expense | 1,055 | 196 | ||||||||||||
Net loss | $ | (200,969) | $ | (38,569) | ||||||||||
Reconciliation of effective tax rate (% of income before income taxes) | ||||||||||||||
Bermuda tax rate | — | % | — | % | ||||||||||
U.S. taxes at statutory rates | 19.4 | % | (2.0) | % | ||||||||||
Valuation allowance in respect of U.S. taxes | (19.4) | % | 2.0 | % | ||||||||||
Other jurisdictions | (0.5) | % | (0.5) | % | ||||||||||
Actual tax rate | (0.5) | % | (0.5) | % | ||||||||||
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 significant components of the Company's deferred tax assets and liabilities at December 31, 2024 and 2023 were as follows:
| December 31, | 2024 | 2023 | ||||||||||||
Deferred tax assets: | ||||||||||||||
Net operating losses | $ | 96,517 | $ | 70,858 | ||||||||||
Unearned premiums | 1,228 | 1,929 | ||||||||||||
Capital loss carry-forward | 324 | 2,909 | ||||||||||||
Net unrealized losses on investments | 24,959 | 17,223 | ||||||||||||
| Discounting of net loss and LAE reserves | 13,345 | 14,542 | ||||||||||||
| Deferred gain on retroactive reinsurance | 22,041 | 14,892 | ||||||||||||
Others | 2,763 | 2,373 | ||||||||||||
Deferred tax assets before valuation allowance | 161,177 | 124,726 | ||||||||||||
Valuation allowance | 159,231 | 119,742 | ||||||||||||
Deferred tax assets, net | 1,946 | 4,984 | ||||||||||||
Deferred tax liabilities: | ||||||||||||||
Deferred commission and other acquisition expenses | 1,946 | 4,195 | ||||||||||||
Deferred tax liabilities | 1,946 | 4,195 | ||||||||||||
Net deferred tax asset | $ | — | $ | 789 | ||||||||||
The net deferred tax asset at December 31, 2024 was $0 (2023 - $789). A valuation allowance has been established against the net U.S. and International deferred tax assets which is primarily attributable to net operating losses and capital losses in the respective regions. At this time, the Company believes it is necessary to establish a valuation allowance against the U.S. and International net deferred tax assets as more evidence is needed regarding the utilization of these losses. During 2024, the Company recorded an increase in the valuation allowance of $39,489 (2023 - increase of $3,505).
At December 31, 2024, the Company has available net operating loss carry-forwards of $459,604 (2023 - $337,420) for income tax purposes. Approximately $379,855 (2023 - $186,203) of the net operating loss carryforwards expire in various years beginning in 2029. As of December 31, 2024, approximately $79,749 or 17.4% of the Company's NOL carryforwards have no expiry date under the relevant U.S. tax law. At December 31, 2024, the Company has remaining capital loss carry-forwards of $1,542 (2023 - $13,853) which will expire beginning in 2027. Capital loss carry-forwards of $9,787 expired during the year ended December 31, 2024.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Mar 10, 2025 | Showing above |
| 2023 | Mar 12, 2024 | |
| 2022 | Mar 15, 2023 | |
| 2021 | Mar 14, 2022 | |
| 2018 | Mar 15, 2019 | |
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.