BERKLEY W R CORPWRB

BERKLEY W R CORP Income Taxes Disclosure

10-KFiled Feb 27, 20263 min read
Income Taxes
Income tax expense (benefit) consists of:
(In thousands)Current
Expense		Deferred Expense (Benefit)Total
December 31, 2025   
U.S. Federal$399,800 $(16,709)$383,091 
State & Local13,597 (561)13,036 
Foreign96,856 2,781 99,637 
Total expense (benefit)$510,253 $(14,489)$495,764 
December 31, 2024   
Domestic$344,210 $51,754 $395,964 
Foreign69,312 44,640 113,952 
Total expense$413,522 $96,394 $509,916 
December 31, 2023   
Domestic$352,891 $(43,456)$309,435 
Foreign44,372 16,750 61,122 
Total expense (benefit)$397,263 $(26,706)$370,557 
        

Income before income taxes from domestic operations was $1,881 million, $1,840 million and $1,430 million for the years ended December 31, 2025, 2024 and 2023, respectively. Income before income taxes from foreign operations was $400 million, $424 million and $324 million for the years ended December 31, 2025, 2024 and 2023, respectively.
A reconciliation of the income tax expense and the amounts computed by applying the Federal and foreign income tax rate of 21% for 2025, 2024 and 2023 to pre-tax income are as follows:
(In thousands)2025%20242023
U.S. Federal Statutory Tax Rate$478,914 21.0 %$475,543 $368,425 
State and Local Taxes, Net of Federal Benefit (1)10,299 0.4 %12,329 12,271 
Foreign Tax Effects11,635 0.5 %19,317 (1,896)
Effect of Cross-Border Tax Laws(14,727)(0.7)%— — 
Changes in Valuation Allowances19,726 0.9 %(220)(10,883)
Nontaxable or Nondeductible Items(10,083)(0.4)%2,947 2,640 
Total $495,764 21.7 %$509,916 $370,557 
(1) State income taxes in Florida and Illinois made up the majority (greater than 50%) of the tax effect in this category.
At December 31, 2025 and 2024, the tax effects of differences that give rise to significant portions of the deferred tax asset and deferred tax liability are as follows:
(In thousands)20252024
Deferred tax asset:  
Loss reserve discounting$253,980 $218,222 
Unearned premiums228,752 216,721 
Unrealized investment losses— 58,701 
Net operating losses & foreign tax credits77,810 62,159 
Other-than-temporary impairments5,006 7,149 
Employee compensation plans83,034 70,529 
Other82,948 81,915 
Gross deferred tax asset731,530 715,396 
Less valuation allowance(55,789)(36,063)
Deferred tax asset675,741 679,333 
Deferred tax liability:  
Amortization of intangibles15,541 15,124 
Unrealized investment gains41,641 — 
Deferred policy acquisition costs204,979 195,150 
Property, furniture and equipment61,479 45,276 
Investment funds229,694 184,899 
Other80,784 83,818 
Deferred tax liability634,118 524,267 
Net deferred tax asset$41,623 $155,066 
The Company had a net current tax payable of $81 million and $14 million at December 31, 2025 and 2024, respectively. At December 31, 2025, the Company had foreign net operating loss carryforwards of $179 million that have no expiration date. At December 31, 2025, the Company had a valuation allowance of $56 million. The Company has provided a valuation allowance against the utilization of $33 million of foreign tax credits and the future net operating loss carryforward benefits of $23 million for certain foreign operations. The statute of limitations for the Company’s U.S. Federal income tax returns has closed for all years through December 31, 2021.
The realization of the deferred tax asset is dependent upon the Company’s ability to generate sufficient taxable income in future periods. Based on historical results and the prospects for future current operations, management anticipates that it is more likely than not that future taxable income will be sufficient for the realization of this asset.
The Company has not provided U.S. deferred income taxes on the undistributed earnings of approximately $585 million of its non-U.S. subsidiaries since these earnings are intended to be permanently reinvested in the non-U.S. subsidiaries. In the future, if such earnings were distributed the Company projects that the incremental tax, if any, will be immaterial.
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Historical Timeline

Fiscal YearFiled
2025Feb 27, 2026Showing above
2024Feb 24, 2025
2023Feb 23, 2024
2022Feb 24, 2023
2021Feb 24, 2022

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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