Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

On December 11, 2007, the Company completed an acquisition of James River Group by acquiring 100% of the outstanding shares of James River Group common stock, referred to herein as the “Merger”. The transaction was accounted for under the purchase method of accounting, and goodwill and intangible assets were recognized by the Company as a result of the transaction.

All of the Company’s goodwill is an asset of the Excess and Surplus Lines segment. The Company’s annual testing performed in the fourth quarter of 2019, 2018 and 2017 indicated that no impairment of goodwill had occurred. The carrying amount of goodwill at December 31, 2019 and 2018 was $181.8 million. Accumulated goodwill impairment losses were $99.6 million at December 31, 2019 and 2018. The most recent goodwill impairment losses occurred in 2010.

Specifically identifiable intangible assets were acquired in the Merger. During the fourth quarters of 2019, 2018 and 2017, the indefinite-lived intangible assets for trademarks and insurance licenses and authorities were tested for impairment. Intangible assets for broker relationships that have specific lives and are subject to amortization were also reviewed for impairment. In the Specialty Admitted Insurance segment, Falls Lake General Insurance Company was merged into Falls Lake National in the fourth quarter of 2018. In connection with this merger, Falls Lake General Insurance Company surrendered its licenses to the various state insurance departments and reduced the carrying value of its intangible asset for "State Licenses" to $0. This caused a $200,000 impairment in 2018 in the Specialty Admitted Insurance segment. There were no impairments recognized in 2019 or 2017.

The gross carrying amounts and accumulated amortization for each major specifically identifiable intangible asset class were as follows:



		December 31,
		2019				2018
	Weighted- Average Life (Years)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
		(in thousands)
Trademarks	Indefinite	$	22,200	$	—	$	22,200	$	—
Insurance licenses and authorities	Indefinite	8,964		—		8,964		—
Identifiable intangibles not subject to amortization		31,164		—		31,164		—
Broker relationships	24.6	11,611		5,835		11,611		5,238
Identifiable intangible assets subject to amortization		11,611		5,835		11,611		5,238
		$	42,775	$	5,835	$	42,775	$	5,238

Future estimated amortization of specifically identifiable intangible assets as of December 31, 2019 is as follows (in thousands):



2020	$	538
2021	363
2022	363
2023	363
2024	363
Thereafter	3,786
Total	$	5,776

The table below summarizes the changes in the net carrying values of intangible assets by segment for 2019:



	December 31, 2018							December 31, 2019
	Net Carrying Value		Amortization			Impairment Losses		Net Carrying Value
	(in thousands)
Excess and Surplus Lines
Trademarks	$	19,700	$	—		$	—	$	19,700
Insurance licenses and authorities	4,900		—			—		4,900
Broker relationships	5,965		(362		)	—		5,603
	30,565		(362		)	—		30,203
Specialty Admitted Insurance
Trademarks	2,500		—			—		2,500
Insurance licenses and authorities	4,065		—			—		4,065
Broker relationships	407		(235		)	—		172
	6,972		(235		)	—		6,737
Total identifiable intangible assets	$	37,537	$	(597	)	$	—	$	36,940

The table below summarizes the changes in the net carrying values of intangible assets by segment for 2018:



	December 31, 2017								December 31, 2018
	Net Carrying Value		Amortization			Impairment Losses			Net Carrying Value
	(in thousands)
Excess and Surplus Lines
Trademarks	$	19,700	$	—		$	—		$	19,700
Insurance licenses and authorities	4,900		—			—			4,900
Broker relationships	6,327		(362		)	—			5,965
	30,927		(362		)	—			30,565
Specialty Admitted Insurance
Trademarks	2,500		—			—			2,500
Insurance licenses and authorities	4,265		—			(200		)	4,065
Broker relationships	642		(235		)	—			407
	7,407		(235		)	(200		)	6,972
Total identifiable intangible assets	$	38,334	$	(597	)	$	(200	)	$	37,537

Amortization of intangible assets was $362,000 for the Excess and Surplus Lines segment and $235,000 for the Specialty Admitted Insurance segment for the year ended December 31, 2017.