Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2021

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 2021 and 2020:


	Goodwill										Intangible Assets
	Alleghany Capital Segment		Insurance Segment			Reinsurance Segment		Total			Alleghany Capital Segment			Insurance Segment			Reinsurance Segment			Total
	($ in millions)
Balance as of December 31, 2019	$	465.2	$	49.0		$	8.8	$	523.0		$	542.4		$	65.4		$	78.2		$	686.0
Acquired (1)		92.1		—			—		92.1			147.0			—			—			147.0
Amortization (2)	n/a		n/a			n/a		n/a				(43.4	)		(1.0	)		0.2			(44.2	)
Other increase (decrease)		—		(0.9	)		—		(0.9	)		—			(1.3	)		—			(1.3	)
Balance as of December 31, 2020		557.3		48.1			8.8		614.2			646.0			63.1			78.4			787.5
Acquired (1)		139.4		—			—		139.4			189.4			—			—			189.4
Amortization (2)	n/a		n/a			n/a		n/a				(48.1	)		(0.7	)		(1.1	)		(49.9	)
Other increase (decrease)		—		—			—		—			—			(1.3	)		(1.3	)		(2.6	)
Balance as of December 31, 2021	$	696.7	$	48.1		$	8.8	$	753.6		$	787.3		$	61.1		$	76.0		$	924.4

(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 October 14, 2021, IPS acquired the outstanding equity of Anchorbuoy Limited (with its subsidiaries, referred to as "Linesight"), for approximately $262.5 million U.S. dollar-equivalent, consisting of: (i) $98.6 million of cash from IPS (which includes a $97.4 million contribution from Alleghany); (ii) the issuance of certain noncontrolling interests in IPS, which were valued at $38.8 million and which increased the aggregate noncontrolling interests in IPS from approximately 15 percent to approximately 18 percent; and (iii) $125.1 million of U.S. dollar-equivalent incremental debt, which is denominated in Euro. Headquartered in Dublin, Ireland, Linesight is a global consultancy firm providing cost and project management, project controls, risk, scheduling, and procurement services for clients in the data center, technology and life sciences sectors, as well as other industries. In connection with the acquisition, Alleghany recorded $102.1 million of goodwill, $124.7 million of finite-lived intangible assets related to customer relationships and $15.5 million of indefinite-lived intangible assets related to trade names and trademarks. The acquisition-date consideration transferred and purchase price allocation to the acquired assets and liabilities of Linesight were based on estimated fair values that have not been finalized. As a result, the fair value recorded for these items is a provisional estimate and may be subject to adjustment. Once completed, any adjustment resulting from the valuations may impact the individual amounts recorded for assets acquired and liabilities assumed, as well as the residual goodwill. The acquisition accounting for Linesight is expected to be finalized later in 2022.

On May 10, 2021, Piedmont acquired all outstanding equity in WPS for $93.4 million, consisting of $60.4 million in cash and $33.0 million of incremental debt. In connection with the acquisition, Alleghany completed the process of determining the fair value of acquired assets and liabilities in the third quarter of 2021, and recorded $17.7 million and $36.3 million of goodwill and finite-lived intangible assets, respectively. Finite-lived intangible assets relate primarily to customer relationships. The customer relationship asset is estimated to have a useful life of 18.5 years.

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.

In addition to IPS's acquisition of Linesight and Jazwares’ acquisition of WCT, several subsidiaries of Alleghany Capital have made other recent acquisitions, including:

•

Acquisition made by Kentucky Trailer in 2019 of a controlling interest in a manufacturer of aluminum feed transportation equipment. Specifically, Kentucky Trailer acquired a company based in Birmingham, Alabama in July 2019;

•

Acquisition made by Jazwares in April 2020 of a controlling interest in a plush toy manufacturer based in Los Angeles, California (“Kelly Toy”);

•

Acquisitions made by PCT of a manufacturer of a provider of high-performance solid carbide end mills in June 2019 and a manufacturer of high-performance carbide end mills in March 2020;

•

An acquisition made by IPS in May 2019; and

•

Several acquisitions made by Wilbert in 2020 and 2021.

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, 2021 and 2020:


	December 31, 2021									December 31, 2020
	Gross Carrying Value			Accumulated Amortization			Net Carrying Value(1)			Gross Carrying Value			Accumulated Amortization			Net Carrying Value(1)
	($ in millions)
Alleghany Capital(2)(3) - Goodwill	$	696.7		$	—		$	696.7		$	557.3		$	—		$	557.3
Alleghany Capital(3) - Intangible assets:
Trade name		245.3			5.2			240.1			218.2			2.7			215.5
License agreements		167.1			63.3			103.8			167.1			48.1			119.0
Customer relationships		520.1			100.9			419.2			357.8			72.4			285.4
Other		50.0			25.8			24.2			50.0			23.9			26.1
Total Alleghany Capital intangibles		982.5			195.2			787.3			793.1			147.1			646.0
Total Alleghany Capital goodwill and other intangibles	$	1,679.2		$	195.2		$	1,484.0		$	1,350.4		$	147.1		$	1,203.3

Insurance Segment(2) - Goodwill	$	48.1		$	—		$	48.1		$	48.1		$	—		$	48.1
Insurance Segment - Intangible assets:
Agency relationships		12.5			12.1			0.4			13.8			11.6			2.2
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			24.8			0.1			24.9			24.6			0.3
Other		4.1			4.1			—			4.1			4.1			—
Total insurance segment intangibles		135.9			74.8			61.1			137.2			74.1			63.1
Total insurance segment goodwill and other intangibles	$	184.0		$	74.8		$	109.2		$	185.3		$	74.1		$	111.2

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	)		(90.9	)		(7.9	)		(98.8	)		(88.6	)		(10.2	)
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		51.8			40.4			11.4			53.0			35.2			17.8
Leases		(25.8	)		(25.8	)		—			(25.8	)		(23.7	)		(2.1	)
Other		15.1			11.6			3.5			15.1			11.2			3.9
Total reinsurance segment intangibles		302.7			226.7			76.0			303.9			225.5			78.4
Total reinsurance segment goodwill and other intangibles	$	311.5		$	226.7		$	84.8		$	312.7		$	225.5		$	87.2

Alleghany consolidated:
Goodwill	$	753.6		$	—		$	753.6		$	614.2		$	—		$	614.2
Intangible assets		1,421.1			496.7			924.4			1,234.2			446.7			787.5
Goodwill and other intangibles assets	$	2,174.7		$	496.7		$	1,678.0		$	1,848.4		$	446.7		$	1,401.7

(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 acquisitions; (vi) Kentucky Trailer on August 30, 2013 and its subsequent acquisitions; (vii) Wilbert on April 1, 2020 and its subsequent acquisitions; and (viii) WPS on May 10, 2021.

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 18.5 years.