Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2016

8.	Goodwill and Intangible Assets

Goodwill

As a result of acquisitions in 2015 and 2010, the Company has goodwill of $6.5 million as of December 31, 2016 and 2015, which represents the excess purchase price over the Company’s best estimate of the fair value of the assets acquired. Impairment testing performed in 2016 and 2015 did not result in impairment of the goodwill acquired.

The changes in the carrying amount of goodwill, by segment, for the years ended December 31, 2016 and 2015 are as follows:


(Dollars in thousands)	Commercial Lines		Personal Lines		Total
Balance at December 31, 2014	$	4,820	$	—	$	4,820
Acquisition of American Reliable on January 1, 2015		—		1,701		1,701

Balance at December 31, 2015 and 2016	$	4,820	$	1,701	$	6,521

Intangible assets

The following table presents details of the Company’s intangible assets as of December 31, 2016:


(Dollars in thousands) Description	Useful Life		Cost		Accumulated Amortization		Net Value
Trademarks		Indefinite	$	4,800	$	—	$	4,800
Tradenames		Indefinite		4,200		—		4,200
State insurance licenses		Indefinite		10,000		—		10,000
Customer relationships		15 years		5,300		2,369		2,931
Agent relationships		10 years		900		179		721
Trade names		7 years		600		173		427

			$	25,800	$	2,721	$	23,079

The following table presents details of the Company’s intangible assets as of December 31, 2015:


(Dollars in thousands) Description	Useful Life		Cost		Accumulated Amortization		Net Value
Trademarks		Indefinite	$	4,800	$	—	$	4,800
Tradenames		Indefinite		4,200		—		4,200
State insurance licenses		Indefinite		10,000		—		10,000
Customer relationships		15 years		5,300		2,017		3,283
Agent relationships		10 years		900		90		810
Trade names		7 years		600		86		514
Value of business added (“VOBA”)		< 1 year		25,500		25,500		—

			$	51,300	$	27,693	$	23,607

Amortization related to the Company’s definite lived intangible assets, other than VOBA, was $0.5 million, $0.5 million, and $0.4 million for the years ended December 31, 2016, 2015 and 2014, respectively. Amortization related to VOBA was $25.5 million for the year ended December 31, 2015. The Company did not have any amortization related to VOBA during the years ended December 31, 2016 or 2014.

The Company expects that amortization expense for the next five years will be as follows:


(Dollars in thousands)
2017	$	529
2018		529
2019		529
2020		529
2021		529

Intangible assets with indefinite lives

As of December 31, 2016 and 2015, indefinite lived intangible assets, which are comprised of tradenames, trademarks, and state insurance licenses, were $19.0 million. The Company reviewed internal business unit results, the growth of competitors and the overall property and casualty insurance market for indicators of impairment of its indefinite lived intangible assets. Impairment testing performed in 2016 and 2015 indicated that there was no impairment of these assets.

Intangible assets with definite lives

As of December 31, 2016 and 2015, definite lived intangible assets, net of accumulated amortization, were $4.1 million and $4.6 million, respectively, and were comprised of customer relationships, agent relationships, and tradenames. VOBA of $25.5 million, which was related to the American Reliable acquisition, was fully amortized in 2015. The Company reviewed internal business unit results, the growth of competitors and the overall property and casualty insurance market for indicators of impairment of its definite lived intangible assets. There was no impairment of these assets in 2016 or 2015.

- 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.

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