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Leases

12 Months Ended

Dec. 31, 2021

The Company has operating leases for office space for insurance operations and administrative functions, automobiles for certain employees and general uses, and office equipment such as printers and computers. In addition, the Company has finance leases for electronic data processing ("EDP") equipment. As of December 31, 2021, the Company's leases had remaining terms ranging from less than one year to approximately six years. These leases may contain provisions for periodic adjustments to rates and charges applicable under such lease agreements. These rates and charges also may vary with the Company's level of use. Certain of these leases include one or more options to renew or early terminate, and the exercise of these options is at the Company's sole discretion. Certain leases also include options to purchase the leased property. The Company's lease agreements do not contain any residual value guarantees.

The Company adopted ASU 2016-02, "Leases (Topic 842)," on January 1, 2019, using a modified retrospective transition method. Under this transition method, its financial results reported in periods prior to 2019 were unchanged.

The Company determines if an arrangement is a lease at inception. Right-of-use ("ROU") assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Lease assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.

The Company uses its estimated incremental borrowing rate for leases for office space, office equipment and EDP equipment, which is derived from information available at the lease commencement date, in determining the present value of lease payments, as the rate implicit in the lease is not readily available for such leases. The Company gives consideration to its recent debt issuances as well as publicly available data for instruments with similar characteristics when calculating its incremental borrowing rates. For automobile leases, the Company uses the rate implicit in the lease at the lease commencement date in determining the present value of lease payments, as the readily-determinable implicit rate is provided in such leases.

The Company's lease terms include options to extend or terminate the lease when it is reasonably certain that it will exercise that option. The Company does not use the short-term lease exemption practical expedient and records all leases on the balance sheets, including leases with a term of twelve months or less. The Company accounts for the lease and non-lease components as a single lease component for leases for office space, automobiles, and office equipment, while it accounts for the lease components separately from the non-lease components for EDP equipment leases.

The components of lease cost along with its classification on the Company's consolidated statements of operations were as follows:


		Year Ended December 31,
Lease Cost	Classification	2021		2020		2019
		(Amounts in thousands)
Operating lease cost (1)	Other operating expenses	$	15,846	$	15,814	$	15,146
Finance lease cost:
Amortization of assets	Other operating expenses	719		338		—
Interest on lease liabilities	Interest expense	25		13		—
Variable lease cost (1)	Other operating expenses	1,500		1,697		2,196
Sublease income (2)	Other revenue	(11)		—		—
Net lease cost		18,079		17,862		17,342

__________

(1) Includes short-term leases, which are immaterial.

(2) The Company subleased certain leased office space to third parties in 2021.

The components of lease assets and liabilities along with their classification on the Company's consolidated balance sheets were as follows:


		December 31,
Lease Assets and Liabilities	Classification	2021		2020
		(Amounts in thousands)
Operating lease assets	Operating lease right-of-use assets	$	31,967	$	40,554
Operating lease liabilities	Operating lease liabilities	34,577		43,825
Finance lease assets	Other assets	3,503		3,107
Finance lease liabilities	Other liabilities	3,126		2,836

Weighted-average lease term and discount rate were as follows:


	December 31,
	2021	2020
Weighted-average remaining lease term (in years):
Operating leases	3.2	3.8
Finance leases	4.2	5.1


Weighted-average discount rate:
Operating leases	2.78	%	2.82	%
Finance leases	0.97	%	0.82	%

Supplemental cash flow and other information related to leases was as follows:


	Year Ended December 31,
	2021		2020		2019
	(Amounts in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	16,158	$	15,539	$	14,289
Operating cash flows from finance leases	25		13		—
Financing cash flows from finance leases	825		609		—

ROU assets obtained in exchange for lease liabilities:
Operating leases	4,904		8,673		15,372
Finance leases	1,115		3,047		—

Maturities of lease liabilities as of December 31, 2021 were as follows:


Year	Operating Leases		Finance Leases
	(Amounts in thousands)
2022	14,846		850
2023	9,795		850
2024	5,615		850
2025	3,161		627
2026	1,794		—
2027 and thereafter	$	1,190	$	—
Total lease payments	$	36,401	$	3,177
Less: Imputed interest	1,824		51
Total lease obligations	$	34,577	$	3,126

As of December 31, 2021, the Company had additional lease commitments that have not yet commenced of

approximately $6 million with each lease term ranging from four years to five years. These leases will commence in 2022.

Lessee, Finance Leases

Leases