Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Goodwill and Intangible Assets

Acquisition of Aegis Surety

In January 2021, the Company closed on an agreement to purchase the surety business of Aegis Surety Bonds and Insurance Services, LLC (“Aegis”) in exchange for $10.0 million in cash and the disposal of the Company’s Exterminator Pro business. The Aegis acquisition increased the Company’s scale in surety positioning the business line for profitable growth. The implied fair value of the Aegis surety underwriting business was $15.3 million and the Company recognized a gain of $3.5 million on disposal of the assets related to its Exterminator Pro underwriting business. The Company determined that the remaining goodwill of $0.9 million associated with its Exterminator Pro business was fully impaired after the disposal.

The Company recorded the assets from Aegis using the acquisition method of accounting. The purchase price was allocated to the identifiable assets based on their estimated fair values on the acquisition date. The final purchase price was an $8.3 million intangible asset for agent relationships with a 15-year useful life and $6.9 million of goodwill.

Compass

During the second quarter of 2021, the Company elected to exit a book of errors & omissions business generated from its acquisition of Compass Group Partners, LLC (“Compass”). As a result of this decision, the Company determined the fair value of the goodwill and agent relationships was zero, resulting in an impairment of $1.9 million and $0.1 million, respectively.

Sale of Boston Indemnity Company

During June of 2021, the Company signed a Purchase Agreement with an unrelated third party for the sale of all the issued and outstanding capital stock of Boston Indemnity Company (BIC). The transaction was completed on October 4, 2021. The Company recorded $8.2 million in net proceeds related to the sale and recognized $1.8 million of gain on sale of business.

The carrying amount and changes in the balance of goodwill by reporting unit is as follows:

($ in thousands)	Accident and Health		Surety		Energy		Other		Total
Goodwill
Gross balance at December 31, 2021	$	91,577	$	6,781	$	10,052	$	4,031	$	112,441
Accumulated impairment at December 31, 2021	(44,821)		—		—		(1,886)		(46,707)
Net balance at December 31, 2022	$	46,756	$	6,781	$	10,052	$	2,145	$	65,734

($ in thousands)	Accident and Health		Surety		Energy		Exterminator Pro		Other		Total
Goodwill
Gross balance at December 31, 2020	$	91,577	$	—	$	10,052	$	11,810	$	4,681	$	118,120
Accumulated impairment at December 31, 2020	(44,821)		—		—		(9,248)		—		(54,069)
Additions	—		6,956		—		—		—		6,956
Disposals	—		(175)		—		(1,680)		(650)		(2,505)
Impairment	—		—		—		(882)		(1,886)		(2,768)
Net balance at December 31, 2021	$	46,756	$	6,781	$	10,052	$	—	$	2,145	$	65,734

The carrying amount and changes in the balance of other intangible assets are as follows:

($ in thousands)	Agent Relationships		Non-competes		Trademarks		Licenses		Total
Other Intangible Assets
Gross balance at December 31, 2021	$	24,558	$	1,117	$	999	$	14,019	$	40,693
Accumulated amortization at December 31, 2021	(14,421)		(670)		—		—		(15,091)
Amortization	(1,243)		(223)		—		—		(1,466)
Net balance at December 31, 2022	$	8,894	$	224	$	999	$	14,019	$	24,136

($ in thousands)	Agent Relationships		Non-competes		Trademarks		Licenses		Total
Other Intangible Assets
Gross balance at December 31, 2020	$	16,355	$	1,117	$	1,122	$	15,019	$	33,613
Accumulated amortization at December 31, 2020	(13,203)		(447)		—		—		(13,650)
Additions	8,300		—		—		—		8,300
Disposals	(45)		—		(123)		(1,000)		(1,168)
Impairment	(52)		—		—		—		(52)
Amortization	(1,218)		(223)		—		—		(1,441)
Net balance at December 31, 2021	$	10,137	$	447	$	999	$	14,019	$	25,602

The Company’s indefinite lived intangible assets relate to insurance licenses and trademarks. Its finite lived intangible assets, which relate to policy renewals, agency relationships, within agent relationships, and non-compete/exclusivity agreements, within non-competes, have a weighted average useful life of approximately 14 years as of December 31, 2022.

The Company’s recognized amortization expense for the years ended December 31, 2022 and 2021 is as follows:

($ in thousands)	2022		2021
Amortization expense	$	1,466	$	1,441

Estimated future net amortization expense of intangible assets for the next five years is as follows:

Years Ending December 31,	Amount (in thousands)
2023	$	1,466
2024	1,074
2025	998
2026	553
2027	553