Acquisitions, Goodwill and Indefinite-Lived Intangible Assets

12 Months Ended

Dec. 31, 2021

Acquisitions, Goodwill and Indefinite-Lived Intangible Assets [Abstract]

Acquisitions, Goodwill and Indefinite-Lived Intangible Assets

4. Acquisitions, Goodwill and Intangible Assets:

Goodwill is tested for impairment at the reporting unit level (business unit or one level below a business unit) on an annual basis (October 1) and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. For purposes of evaluating goodwill for impairment, we have determined that our reporting units are the same as our business units except for the E&S Casualty and Aerospace & Programs business units for which reporting units are at the component level (“one level below”). Our consolidated balance sheet as of December 31, 2019 included goodwill of acquired businesses of $44.7 million that was assigned to our business units as follows: Commercial Accounts business unit - $2.1 million; Commercial Auto business units - $21.3 million; E&S Casualty business unit - $6.3 million (comprised of $2.6 million for the primary/excess liability and public entity component and $3.7 million for the E&S package component); Aerospace & Programs business unit- $9.7 million (comprised entirely of the general aviation component); and Specialty Personal Lines business unit - $5.3 million. This amount had been recorded as a result of prior business acquisitions accounted for under the acquisition method of accounting. Under ASC 350, “Intangibles- Goodwill and Other,” goodwill is tested for impairment annually.  In connection with our normal process for evaluating impairment triggering events, during the first quarter of 2020 we determined that a significant decline in  our market capitalization below our stockholders’ equity indicated the impairment of goodwill and indefinite-lived intangible assets included in our balance sheet.  As a result, we took a $44.7 million charge to goodwill and a $1.3 million charge to indefinite-lived intangible assets during the first quarter of 2020.  As a result, as of December 31, 2021 there was no goodwill or indefinite-lived intangibles reported on our consolidated balance sheets.

We have obtained various intangible assets from several acquisitions. The table below details the gross and net carrying amounts of these assets by major category (in thousands):

	December 31
	2021		2020
Gross Carrying Amount:
Customer/agent relationships	$	32,177	$	32,177
Tradename		3,440		3,440
Management agreement		3,232		3,232
Non-compete & employment agreements		4,235		4,235
Insurance licenses		—		—
Total gross carrying amount		43,084		43,084
Accumulated Amortization:
Customer/agent relationships		(31,443)		(30,990)
Tradename		(3,355)		(3,305)
Management agreement		(3,232)		(3,232)
Non-compete & employment agreements		(4,235)		(4,235)
Total accumulated amortization		(42,265)		(41,762)
Total net carrying amount	$	819	$	1,322

We amortize definite-lived intangible assets straight line over their respective lives. The estimated aggregate amortization expense for definite-lived intangible assets for the next five years is as follows (in thousands):

2022	$	501
2023	$	318
2024	$	—
2025	$	—
2026	$	—

The weighted average amortization period for definite-lived intangible assets by major class is as follows:

	Years
Tradename	15
Customer/ agent relationships	15
Management agreement	4
Non-compete agreements	5

The aggregate weighted average period to amortize these assets is approximately 13 years.