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Note 6. Goodwill and Other Intangible Assets
12 Months Ended
Dec. 31, 2013
Notes  
Note 6. Goodwill and Other Intangible Assets

Note 6.                        Goodwill and Other Intangible Assets

 

            The carrying amount of goodwill was $50,318,000 at December 31, 2013 and 2012. See Note 16 for goodwill carrying amounts by segment.

 

At December 31, 2013, the Company’s market capitalization was less than its book value indicating a potential impairment of goodwill.  As a result, the Company assessed the factors contributing to the performance of IHC stock in 2013, and concluded that the market capitalization does not represent the fair value of the Company.  The Company noted several factors that have led to a difference between the market capitalization and the fair value of the Company, including (i) the Company’s stock is thinly traded and a sale of even a small number of shares can have a large percentage impact on the price of the stock, (ii) Geneve Corporation and insiders own approximately 56% of the outstanding shares, which has had a significant adverse impact on the number of shares available for sale and therefore the trading potential of IHC stock, and (iii) lack of analyst coverage of the Company. If we experience a sustained decline in our results of operations and cash flows, or other indicators of impairment exist, we may incur a material non-cash charge to earnings relating to impairment of our goodwill, which could have a material adverse effect on our results.

 

The Company has net other intangible assets of $14,767,000 and $18,271,000 at December 31, 2013 and 2012, respectively, which are included in other assets in the Consolidated Balance Sheets. These intangible assets consist of: (i) finite-lived intangible assets, principally the fair value of acquired agent and broker relationships, which are subject to amortization; and (ii) indefinite-lived intangible assets which consist of the estimated fair value of insurance licenses that are not subject to amortization. The gross carrying amounts of these other intangible assets are as follows for the periods indicated (in thousands):

 

 

 

December 31, 2013

 

December 31, 2012

 

 

Gross

 

 

 

Gross

 

 

 

 

Carrying

 

Accumulated

 

Carrying

 

Accumulated

 

 

Amount

 

Amortization

 

Amount

 

Amortization

 

 

 

 

 

 

 

 

 

Finite-lived Intangible Assets:

 

 

 

 

 

 

 

 

   Agent and broker relationships

$

       22,725

$

           15,935

$

       23,457

$

           13,163

       Total finite-lived

$

       22,725

$

           15,935

$

       23,457

$

           13,163

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

 

 

 

 

2013

 

2012

Indefinite-lived Intangible Assets:

 

 

 

 

 

 

 

 

    Insurance licenses

 

 

 

 

$

          7,977

$

          7,977

        Total indefinite-lived

 

 

 

 

$

          7,977

$

          7,977

 

Amortization expense was $3,220,000, $2,840,000 and $2,261,000 for the years ended December 31, 2013, 2012 and 2011, respectively. Estimated amortization expense for each of the next five years is as follows (in thousands):

 

 

 

 

Amortization

Year

 

 

Expense

 

 

 

 

2014

 

$

2,632

2015

 

 

1,560

2016

 

 

1,119

2017

 

 

749

2018

 

 

494