Leases

The Company adopted ASU 2016-02, "Leases (Topic 842)," which supersedes the guidance in Accounting Standards Codification ("ASC") 840, "Leases," on January 1, 2019, using a modified retrospective transition, with the cumulative-effect adjustment to the opening balance of retained earnings as of the effective date (the "effective date method"). Under the effective date method, financial results reported in periods prior to 2019 are unchanged. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which allowed the Company not to reassess (a) whether arrangements contain leases, (b) lease classification and (c) initial direct costs. Adoption of the new standard resulted in the recognition of operating lease right-of-use ("ROU") assets and operating lease liabilities of approximately $41 million and $43 million, respectively, at the adoption date for the Company's operating leases. The difference of approximately $2 million between the operating lease ROU assets and operating lease liabilities represents reclassification of deferred rent liability (the difference between the straight-line rent expenses and paid rent amounts under the leases) to operating lease ROU assets from other liabilities at the adoption date. The Company did not have any cumulative-effect adjustment as a result of the adoption.

The Company has operating leases for office space for insurance operations and administrative functions, automobiles for general uses and certain employees, and office equipment such as printers and computers. As of March 31, 2019, the Company's leases had remaining terms ranging from less than one year to approximately 7 years. These leases may contain provisions for periodic adjustments to rates and charges applicable under such lease agreements. These rates and charges also may vary with the Company's level of uses. Certain of these leases include one or more options to renew or early terminate, and the exercise of these options is at our sole discretion. Certain leases also include options to purchase the leased property. The Company's lease agreements do not contain any residual value guarantees.

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease ROU assets and operating lease liabilities in the Company's consolidated balance sheets. ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.

The Company uses its estimated incremental borrowing rate for office space and office equipment leases, which is derived from information available at the lease commencement date, in determining the present value of lease payments, as the implicit rate is not readily available for such leases. The Company gives consideration to its recent debt issuances as well as publicly available data for instruments with similar characteristics when calculating its incremental borrowing rates. For automobile leases, the Company uses a rate implicit in the lease at the lease commencement date in determining the present value of lease payments, as the readily-determinable implicit rate is provided in such leases. The Company's lease terms include options to extend or terminate the lease when it is reasonably certain that it will exercise that option. The Company does not use the short-term lease exemption practical expedient and records all leases on the balance sheets, including leases with a term of twelve months or less. The Company accounts for the lease and non-lease components as a single lease component for all of its leases. Lease expense for scheduled lease payments is recognized on a straight-line basis over the lease term.

The components of lease expense were as follows:



		Three Months Ended March 31, 2019
Lease Cost	Classification	Three Months Ended March 31, 2019
		(Amounts in thousands)
Operating lease cost ⁽¹⁾	Other operating expenses	$	3,190
Variable lease cost ⁽¹⁾	Other operating expenses	739
Total lease cost		3,929

__________

⁽¹⁾ Includes short-term leases, which are immaterial.

Supplemental balance sheet information related to leases was as follows:



	March 31, 2019
	(Amounts in thousands)
Operating lease ROU assets	$	41,275
Operating lease liabilities	43,439

Weighted-average lease term and discount rate were as follows:



	March 31, 2019
Weighted-average remaining lease term (in years):
Operating leases	3.9

Weighted-average discount rate:
Operating leases	3.29	%

Supplemental cash flow and other information related to leases was as follows:



	Three Months Ended March 31, 2019
	Three Months Ended March 31, 2019
	(Amounts in thousands)
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	3,316

ROU assets obtained in exchange for lease liabilities:
Operating leases	1,892

Maturities of lease liabilities as of March 31, 2019 were as follows:



Year	Operating Leases
	(Amounts in thousands)
Remainder of 2019	$	10,171
2020	12,455
2021	9,699
2022	7,573
2023	4,130
2024 and thereafter	2,446
Total lease payments	46,474
Less: Imputed interest	3,035
Total lease obligations	43,439

As of March 31, 2019, the Company had additional operating lease commitments that have not yet commenced of approximately $6.5 million with each lease term ranging from approximately 1 year to 8 years. These operating leases will commence in 2019.

Disclosures related to periods prior to adoption of ASC Topic 842

Total rent expense recognized under the Company's various lease agreements was $3.6 million for the three months ended March 31, 2018. The following table presents future minimum commitments for operating leases as of December 31, 2018:



Year Ending December 31,	Operating Leases
	(Amounts in thousands)
2019	$	12,812
2020	11,547
2021	8,732
2022	6,972
2023	3,659
Thereafter	1,966