Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2020

Goodwill And Intangible Assets Disclosure [Abstract]

2. Goodwill and Intangible Assets

The following table presents a rollforward of Alleghany’s goodwill and intangible assets by segment during 2020 and 2019:

	Goodwill										Intangible Assets
	Insurance Segment			Reinsurance Segment		Alleghany Capital Segment		Total			Insurance Segment			Reinsurance Segment		Alleghany Capital Segment			Total
	($ in millions)
Balance as of December 31, 2018	$	49.0		$	8.8	$	397.3	$	455.1		$	68.6		$	74.3	$	410.2		$	553.1
Acquired ⁽¹⁾		—			—		67.9		67.9			—			1.5		164.7			166.2
Amortization ⁽²⁾	n/a			n/a		n/a		n/a				(1.4	)		0.1		(32.5	)		(33.8	)
Other increase (decrease)		—			—		—		—			(1.8	)		2.3		—			0.5
Balance as of December 31, 2019		49.0			8.8		465.2		523.0			65.4			78.2		542.4			686.0
Acquired ⁽¹⁾		—			—		92.1		92.1			—			—		147.0			147.0
Amortization ⁽²⁾	n/a			n/a		n/a		n/a				(1.0	)		0.2		(43.4	)		(44.2	)
Other increase (decrease)		(0.9	)		—		—		(0.9	)		(1.3	)		—		—			(1.3	)
Balance as of December 31, 2020	$	48.1		$	8.8	$	557.3	$	614.2		$	63.1		$	78.4	$	646.0		$	787.5

(1)	See description below for a summary of recent material acquisitions impacting goodwill and intangible assets.

(2)	See table below for additional information regarding amortization and useful lives by major class of intangible asset.

On April 1, 2020, Alleghany Capital acquired an additional approximately 55 percent of Wilbert it previously did not own, bringing its equity interest in Wilbert to approximately 100 percent, for $121.3 million, consisting of $46.3 million in cash and $75.0 million of incremental debt. In connection with the acquisition, Alleghany recorded $62.9 million of goodwill, $21.5 million of finite-lived customer relationship intangible assets, $14.9 million of finite-lived license agreements intangible assets and $26.2 million of indefinite-lived trade name intangible assets. In connection with the acquisition accounting, Alleghany Capital recorded a $16.3 million gain on the remeasurement of its pre-existing approximately 45 percent equity ownership to estimated fair value (the “Wilbert Remeasurement Gain”). See Note 4(e) for information on the Wilbert Remeasurement Gain.

On October 1, 2019, Jazwares acquired the outstanding equity of Wicked Cool Toys, LLC (“WCT”), a global toy company based in Bristol, Pennsylvania, for $159.0 million. Jazwares funded the acquisition with $135.5 million of incremental debt and the issuance of certain noncontrolling interests in Jazwares, which were valued at $23.5 million and which increased the aggregate noncontrolling interests in Jazwares from approximately 23 percent to approximately 25 percent. In connection with the acquisition, Alleghany recorded $39.1 million of goodwill, $83.9 million of finite-lived intangible assets related to license agreements and $24.9 million of other finite-lived intangible assets related primarily to customer relationships.

On October 1, 2018, Alleghany Capital acquired approximately 85 percent of the equity in Concord for $136.6 million, consisting of $68.6 million in cash paid upon consummation of the transaction, $38.2 million of potential contingent consideration based on future profitability and $29.8 million of incremental debt. In connection with the acquisition, Alleghany recorded $83.0 million of goodwill and $70.8 million of finite-lived intangible assets related primarily to customer relationships.

On February 7, 2018, W&W|AFCO Steel acquired the outstanding equity of Hirschfeld Holdings, LP (“Hirschfeld”), a fabricator of steel bridges and structural steel for stadiums, airports and other large commercial and industrial projects, for $109.1 million, consisting of $94.4 million in cash and $14.7 million of incremental debt. The $94.4 million paid by W&W|AFCO Steel was funded by capital contributions from Alleghany and noncontrolling interests of $75.5 million and $18.9 million, respectively. In connection with the acquisition, Alleghany recorded $3.0 million of goodwill and $9.4 million of finite-lived intangible assets related primarily to customer relationships.

In addition to W&W|AFCO Steel’s acquisition of Hirschfeld and Jazwares’ acquisition of WCT, several other subsidiaries of Alleghany Capital have made other acquisitions, including:

•

Acquisitions made by Kentucky Trailer in 2014, 2015, 2018 and 2019, including two acquisitions of controlling interests in manufacturers of aluminum feed transportation equipment. Specifically, Kentucky Trailer acquired a company based in Cedar Rapids, Iowa in December 2018 and a company based in Birmingham, Alabama in July 2019;

•

Acquisitions made by Jazwares in April 2020 of a controlling interest in a plush toy manufacturer based in Los Angeles, California (“Kelly Toy”), as well as other, smaller acquisitions in 2016 and 2018;

•

Acquisitions made by PCT of a manufacturer of waterjet orifices and nozzles and a provider of related services in October 2016, a provider of high-performance solid carbide end mills in June 2019 and a manufacturer of high-performance carbide end mills in March 2020; and

•

An acquisition made by IPS in May 2019.

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, 2020 and 2019:

	December 31, 2020									December 31, 2019
	Gross Carrying Value			Accumulated Amortization			Net Carrying Value⁽¹⁾			Gross Carrying Value			Accumulated Amortization			Net Carrying Value⁽¹⁾
	($ in millions)
Insurance Segment⁽²⁾ - Goodwill	$	48.1		$	—		$	48.1		$	49.0		$	—		$	49.0
Insurance Segment - Intangible assets:
Agency relationships		13.8			11.6			2.2			16.6			12.4			4.2
State insurance licenses		25.1			—			25.1			25.1			—			25.1
Trade name		35.5			—			35.5			35.5			—			35.5
Brokerage and reinsurance relationships		33.8			33.8			—			33.8			33.8			—
Renewal rights		24.9			24.6			0.3			25.1			24.5			0.6
Other		4.1			4.1			—			4.1			4.1			—
Total insurance segment intangibles		137.2			74.1			63.1			140.2			74.8			65.4
Total insurance segment goodwill and other intangibles	$	185.3		$	74.1		$	111.2		$	189.2		$	74.8		$	114.4

Reinsurance Segment⁽²⁾ - Goodwill	$	8.8		$	—		$	8.8		$	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	)		(88.6	)		(10.2	)		(98.8	)		(85.7	)		(13.1	)
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		53.0			35.2			17.8			53.0			30.7			22.3
Leases		(25.8	)		(23.7	)		(2.1	)		(25.8	)		(21.6	)		(4.2	)
Other		15.1			11.2			3.9			15.1			10.9			4.2
Total reinsurance segment intangibles		303.9			225.5			78.4			303.9			225.7			78.2
Total reinsurance segment goodwill and other intangibles	$	312.7		$	225.5		$	87.2		$	312.7		$	225.7		$	87.0

Alleghany Capital⁽²⁾⁽³⁾ - Goodwill	$	557.3		$	—		$	557.3		$	465.2		$	—		$	465.2
Alleghany Capital⁽³⁾ - Intangible assets:
Trade name		218.2			2.7			215.5			171.8			0.6			171.2
License agreements		167.1			48.1			119.0			152.1			32.6			119.5
Customer relationships		357.8			72.4			285.4			296.4			47.5			248.9
Other		50.0			23.9			26.1			25.8			23.0			2.8
Total Alleghany Capital intangibles		793.1			147.1			646.0			646.1			103.7			542.4
Total Alleghany Capital goodwill and other intangibles	$	1,350.4		$	147.1		$	1,203.3		$	1,111.3		$	103.7		$	1,007.6

Alleghany consolidated:
Goodwill	$	614.2		$	—		$	614.2		$	523.0		$	—		$	523.0
Intangible assets		1,234.2			446.7			787.5			1,090.2			404.2			686.0
Goodwill and other intangibles assets	$	1,848.4		$	446.7		$	1,401.7		$	1,613.2		$	404.2		$	1,209.0

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

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

(3)

Represents goodwill and other intangible assets related to the acquisition of: (i) Jazwares on April 15, 2016 and its subsequent acquisitions; (ii) W&W|AFCO Steel on April 28, 2017 and its subsequent acquisition; (iii) Concord on October 1, 2018; (iv) PCT on April 26, 2012 and its subsequent acquisitions; (v) IPS on October 31, 2015 and its subsequent acquisition; (vi) Kentucky Trailer on August 30, 2013 and its subsequent acquisitions; and (vii) Wilbert on April 1, 2020. Balances as of December 31, 2020 also reflect the finalization of certain provisional estimates that existed as of December 31, 2019.

In most instances, trade names and state and foreign insurance licenses generally have an indefinite useful life. The economic useful lives of significant intangible assets are as follows: agency relationships — 15 years; brokerage and reinsurance relationships — 15 years; renewal rights — between 3 and 14 years; loss and LAE reserves — 15 years; leases — 10 years; license agreements — 8 years; and of customer relationships — between 5 and 10 years.