Goodwill, Intangible Assets and Deferred Charge

12 Months Ended

Dec. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill, Intangible Assets and Deferred Charge

GOODWILL, INTANGIBLE ASSETS AND DEFERRED CHARGE

The following tables present a reconciliation of the beginning and ending goodwill, intangible assets and deferred charge for the years ended December 31, 2015 and 2014:



2015	Goodwill		Intangible assets with a definite life - Other			Intangible assets with an indefinite life		Total			Intangible assets with a definite life - FVA			Other assets - Deferred Charge
Balance as at January 1, 2015	$	73,071	$	41,048		$	87,031	$	201,150		$	159,095		$	—
Acquired during the year	—		—			—		—			23,968			271,176
Amortization	—		(9,846		)	—		(9,846		)	(2,333		)	(15,265		)
Balance as at December 31, 2015	$	73,071	$	31,202		$	87,031	$	191,304		$	180,730		$	255,911



2014	Goodwill		Intangible assets with a definite life - Other			Intangible assets with an indefinite life		Total			Intangible assets with a definite life - FVA			Other assets - Deferred Charge
Balance as at January 1, 2014	$	60,071	$	27,000		$	63,000	$	150,071		$	223,947		$	—
Acquired during the year	13,000		20,000			24,031		57,031			(65,000		)	—
Amortization	—		(5,952		)	—		(5,952		)	148			—
Balance as at December 31, 2014	$	73,071	$	41,048		$	87,031	$	201,150		$	159,095		$	—

Goodwill as at December 31, 2015 and 2014, related to Non-life Run-off, Atrium and StarStone, was $21.2 million, $38.9 million and $13.0 million, respectively. For the year ended December 31, 2015, we completed our assessment for impairment of goodwill and concluded that there had been no impairment of our carried goodwill amount.

Intangible assets with a definite life - Other includes the distribution channel, Lloyd’s capacity, technology and brand related to our acquisitions of Atrium and StarStone. These assets are amortized on a straight-line basis over a period ranging from four to fifteen years. Intangible asset amortization for the years ended December 31, 2015, 2014 and 2013 was $12.2 million, $5.8 million and $21.2 million, respectively. Amortization for the year ended December 31, 2015 includes an impairment charge of $4.0 million for the Torus brand in relation to the StarStone rebranding exercise.

Intangible assets with an indefinite life includes assets associated with the Lloyd’s syndicate capacity for StarStone and Atrium, StarStone's U.S. insurance licenses, and Atrium’s management contract with Syndicate 609 in relation to underwriting, actuarial and support services it provides.

Intangible assets with a definite life - fair value adjustments ("FVA") relates to outstanding losses and LAE, policy benefits for life and annuity contracts, unearned premiums and reinsurance recoverables. These are included as a component of each balance sheet item. FVA are amortized in proportion to future premiums for policy benefits for life and annuity contracts over the estimated payout or recovery period for outstanding losses and LAE and reinsurance recoverables and as the unearned premiums expire for business in-force as of the acquisition date.

Other assets - deferred charge relates to retroactive reinsurance policies providing indemnification of losses and LAE with respect to past loss events. At the inception of a contract, a deferred charge asset is recorded for the excess, if any, of the estimated ultimate losses payable over the premiums received. These amounts relate to the transactions with Voya Financial and Sun Life, described in Note 4 - "Significant New Business".

The gross carrying value, accumulated amortization and net carrying value of intangible assets by type and deferred charge at December 31, 2015 and 2014 were as follows:



	2015									2014
	Gross Carrying Value			Accumulated Amortization			Net Carrying Value			Gross Carrying Value			Accumulated Amortization			Net Carrying Value
Intangible assets with a definite life:
Fair value adjustments:
Losses and LAE liabilities	$	456,110		$	(307,785	)	$	148,325		$	449,986		$	(299,413	)	$	150,573
Reinsurance balances recoverable	(175,774		)	154,619			(21,155		)	(193,617		)	140,667			(52,950		)
Policy benefits for life and annuity contracts	86,332			(32,772		)	53,560			86,332			(24,860		)	61,472
Total	$	366,668		$	(185,938	)	$	180,730		$	342,701		$	(183,606	)	$	159,095
Other:
Distribution channel	$	20,000		$	(2,777	)	$	17,223		$	20,000		$	(1,444	)	$	18,556
Technology	15,000			(6,561		)	8,439			15,000			(3,125		)	11,875
Brand	12,000			(6,460		)	5,540			12,000			(1,383		)	10,617
Total	$	47,000		$	(15,798	)	$	31,202		$	47,000		$	(5,952	)	$	41,048
Intangible assets with an indefinite life:
Lloyd’s syndicate capacity	$	37,031		$	—		$	37,031		$	37,031		$	—		$	37,031
Licenses	19,900			—			19,900			19,900			—			19,900
Management contract	30,100			—			30,100			30,100			—			30,100
Total	$	87,031		$	—		$	87,031		$	87,031		$	—		$	87,031

Deferred charge on retroactive reinsurance	$	271,176		$	(15,265	)	$	255,911		$	—		$	—		$	—

The estimated amortization expense for each of the five succeeding fiscal years related to our intangible assets with a definite life is as follows:



Year	Non-life Run-off		Atrium			StarStone			Life and Annuities		Total
2016	$	8,464	$	(1,193	)	$	2,682		$	7,878	$	17,831
2017	$	9,390	$	38		$	3,097		$	7,332	$	19,857
2018	$	9,128	$	749		$	539		$	6,552	$	16,968
2019	$	8,736	$	1,198		$	(231	)	$	6,318	$	16,021
2020	$	8,388	$	1,491		$	(132	)	$	6,084	$	15,831

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details