2. Goodwill and Intangible Assets

On April 28, 2017, Alleghany Capital acquired approximately 80 percent of the equity in W&W|AFCO Steel for $164.5 million, including $163.9 million in cash paid on May 1, 2017 and $0.6 million of estimated purchase price adjustments. In connection with the acquisition, Alleghany recorded $41.1 million, $25.3 million and $70.0 million of goodwill, indefinite-lived intangible assets and finite-lived intangible assets, respectively. Indefinite-lived intangible assets relate to trade name and finite-lived intangible assets relate to customer relationships.

On April 15, 2016, Alleghany Capital acquired an additional 50 percent of Jazwares’ outstanding equity for $162.8 million, bringing its equity ownership interest to 80 percent and, as of that date, the results of Jazwares have been included in Alleghany’s consolidated results. Prior to April 15, 2016, Jazwares was accounted for under the equity method of accounting. The $162.8 million purchase price includes $122.1 million in cash paid on April 18, 2016 and $40.7 million of potential contingent consideration based on future profitability. In connection with the acquisition, $130.0 million, $52.4 million and $89.7 million of goodwill, indefinite-lived intangible assets and finite-lived intangible assets, respectively, were recorded. Indefinite-lived intangible assets relate to trade name and finite-lived intangible assets relate to license agreements, customer relationships and owned content.

On October 31, 2015, Alleghany Capital acquired approximately 84 percent of the equity in IPS for $106.3 million, including $89.9 million in cash paid on November 2, 2015, $12.5 million of potential contingent consideration based on future profitability and $3.9 million of estimated purchase price adjustments. In connection with the acquisition, $23.5 million, $27.9 million and $49.3 million of goodwill, indefinite-lived intangible assets and finite-lived intangible assets, respectively, were recorded. Indefinite-lived intangible assets relate to trade name, and finite-lived intangible assets relate to customer relationships, back-log and covenants not-to-compete.

The following table presents the amount of goodwill and intangible assets, net of accumulated amortization expense, reported on Alleghany’s consolidated balance sheets as of December 31, 2017 and 2016:


	December 31, 2017						December 31, 2016
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value⁽¹⁾		Gross Carrying Value		Accumulated Amortization		Net Carrying Value⁽¹⁾
	($ in millions)
Insurance Segment⁽²⁾ - Goodwill	$	49.0	$	-	$	49.0	$	49.0	$	-	$	49.0

Insurance Segment - Intangible assets:
Agency relationships		17.9		10.6		7.3		17.9		9.8		8.1
State insurance licenses		25.1		-		25.1		25.8		-		25.8
Trade name		35.5		-		35.5		35.5		-		35.5
Brokerage and reinsurance relationships		33.8		32.7		1.1		33.8		30.4		3.4
Renewal rights		24.2		24.1		0.1		24.2		24.1		0.1
Other		4.1		4.1		-		4.1		4.1		-

Total insurance segment intangibles		140.6		71.5		69.1		141.3		68.4		72.9

Total insurance segment goodwill and other intangibles	$	189.6	$	71.5	$	118.1	$	190.3	$	68.4	$	121.9


Reinsurance Segment⁽²⁾ - Goodwill	$	8.8	$	-	$	8.8	$	-	$	-	$	-

Reinsurance Segment - Intangible assets:
Value of business in-force		291.4		291.4		-		291.4		291.4		-
Loss and LAE reserves		(98.8)		(78.6)		(20.2)		(98.8)		(72.7)		(26.1)
State and foreign insurance licenses		19.0		-		19.0		19.0		-		19.0
Trade name		50.0		-		50.0		50.0		-		50.0
Renewal rights		44.0		21.8		22.2		44.0		17.8		26.2
Leases		(28.1)		(16.7)		(11.4)		(28.1)		(13.8)		(14.3)
Other		15.1		10.2		4.9		10.0		10.0		-

Total reinsurance segment intangibles		292.6		228.1		64.5		287.5		232.7		54.8

Total reinsurance segment goodwill and other intangibles	$	301.4	$	228.1	$	73.3	$	287.5	$	232.7	$	54.8


Other Activities⁽²⁾⁽³⁾ - Goodwill	$	277.1	$	-	$	277.1	$	236.0	$	-	$	236.0

Other Activities⁽³⁾ - Intangible assets:
Trade name		151.9		-		151.9		126.6		-		126.6
License agreements		66.2		14.1		52.1		66.2		5.9		60.3
Customer relationships		133.2		20.5		112.7		63.2		4.6		58.6
Other		20.8		12.1		8.7		20.8		15.3		5.5

Total other activities intangibles		372.1		46.7		325.4		276.8		25.8		251.0

Total other activities goodwill and other intangibles	$	649.2	$	46.7	$	602.5	$	512.8	$	25.8	$	487.0


Alleghany consolidated:
Goodwill	$	334.9	$	-	$	334.9	$	285.0	$	-	$	285.0
Intangible assets		805.3		346.3		459.0		705.6		326.9		378.7

Goodwill and other intangibles assets	$	1,140.2	$	346.3	$	793.9	$	990.6	$	326.9	$	663.7

(1)	Goodwill and intangible assets have been reduced by amounts written-down in prior periods.

(2)	See Note 13 for additional information on Alleghany’s segments of business.

(3)

Primarily represents goodwill and other intangible assets related to the acquisition of: (i) W&W|AFCO Steel on April 28, 2017; (ii) Jazwares on April 15, 2016; (iii) IPS on October 31, 2015; (iv) Bourn & Koch on April 26, 2012; and (v) a controlling equity interest in Kentucky Trailer on August 30, 2013. Also reflects minor acquisitions made by Jazwares and Bourn & Koch in 2016 and Kentucky Trailer in 2015 and 2014.

Trade names and state and foreign insurance licenses have an indefinite useful life. The economic useful lives of significant intangible assets in the reinsurance and insurance segments are as follows: agency relationships — 15 years; brokerage and reinsurance relationships — 15 years; renewal rights — between 5 and 14 years; loss and LAE reserves — 15 years; and leases — 10 years. The economic useful life of license agreements is 8 years and of customer relationships is between 5 and 10 years.