Leases

We have various operating leases for office space, equipment, and fleet vehicles. In addition, we have various finance leases for computer hardware. Such lease agreements, which expire at various dates through 2030, are generally renewed or replaced by similar leases.

We determine if an arrangement is a lease on the commencement date of the contract. Lease assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. The lease asset and liability are measured by the present value of the future minimum lease payments over the lease term. Our fleet vehicle leases include a residual value guarantee; however, it is not probable of being owed. Therefore, there is no impact to the lease liability or lease asset. To measure the present value, the discount rate available in the contract is used. If the discount rate is not readily determinable, our incremental borrowing rate is used. The lease asset is then adjusted to exclude lease incentives. We recognize variable lease payments in the period in which the obligation for those payments is incurred. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense is calculated using the straight-line method.

Upon adoption of ASU 2016-02 on January 1, 2019, we recorded operating lease right-of-use assets of $20.7 million with related lease liabilities of $21.0 million. The differential of $0.3 million was recognized, on an after-tax basis, as a cumulative-effect adjustment to the opening balance of retained earnings as of January 1, 2019. Financing lease right-of-use assets and the related lease liabilities were $0.9 million as of January 1, 2019. See Note 2. "Adoption of Accounting Pronouncements" in this Form 10-Q for additional information regarding ASU 2016-02 and accounting policy elections made.

The components of lease expense in First Quarter 2019 were as follows:



($ in thousands)	Quarter ended March 31, 2019
Operating lease cost, included in Other insurance expenses on the Consolidated Statements of Income	$	2,152
Finance lease cost:
Amortization of assets, included in Other insurance expenses on the Consolidated Statements of Income	284
Interest on lease liabilities, included in Interest expense on the Consolidated Statements of Income	—
Total finance lease cost	284

Variable lease cost, included in Other insurance expenses on the Consolidated Statements of Income	788

Short-term lease cost, included in Other insurance expenses on the Consolidated Statements of Income	739

The following table provides supplemental information regarding our operating and finance leases.



	March 31, 2019
Weighted-average remaining lease term
Operating leases	5	years
Finance leases	1
Weighted-average discount rate
Operating leases	3.3	%
Finance leases¹	—

¹Prior to adoption of ASU 2016-02, our historical capital lease liability and asset were measured using an un-discounted cash flow stream due to immateriality of the capital lease population. As we have elected the practical expedient that does not require us to reassess our population of capital leases upon adoption of ASU 2016-02, our existing finance leases do not have a weighted-average discount rate.

Operating and finance lease asset and liability balances are included within the following line items on the Consolidated Balance Sheets:



($ in thousands)	March 31, 2019
Operating leases
Other assets	$	24,946
Other liabilities	25,415
Finance leases
Property and equipment - at cost, net of accumulated depreciation and amortization	607
Long-term debt	607

At March 31, 2019, the maturities of our lease liabilities were as follows:



($ in thousands)	Finance Leases		Operating Leases	Total
Year ended December 31,
2019 (excluding the three months ended March 31, 2019)	$	444	5,779	6,223
2020	141		7,355	7,496
2021	22		5,083	5,105
2022	—		3,641	3,641
2023	—		2,900	2,900
Thereafter	—		9,698	9,698
Total lease payments	607		34,456	35,063
Less: imputed interest	—		3,610	3,610
Less: leases that have not yet commenced	—		5,431	5,431
Total lease liabilities	$	607	25,415	26,022

At December 31, 2018, the maturities of our lease liabilities for capital and operating leases were as follows:



($ in thousands)	Capital Leases		Operating Leases	Total
2019	$	728	7,762	8,490
2020	141		7,355	7,496
2021	22		5,083	5,105
2022	—		3,641	3,641
2023	—		2,900	2,900
Thereafter	—		9,698	9,698
Total minimum payment required	$	891	36,439	37,330

Refer to Note. 3 "Statements of Cash Flows" in this Form 10-Q for supplemental cash and non-cash transactions included in the measurement of operating and finance lease liabilities.