Intangible Assets and Goodwill

The following table provides a summary of the Company’s intangible assets for the three and six months ended June 30, 2017 and 2016:



	Three Months Ended June 30, 2017									Three Months Ended June 30, 2016
	Beginning of the Period		Additions		Amortization			End of the Period		Beginning of the Period		Additions		Amortization			End of the Period
	($ in millions)									($ in millions)
Intangible Assets
Trade Mark	$	6.4	—		$	(0.1	)	$	6.3	$	5.5	$	—	$	(0.1	)	$	5.4
Insurance Licenses	16.7		—		—			16.7		16.6		—		—			16.6
Agency Relationships	25.8		—		(0.7		)	25.1		24.6		—		(0.4		)	24.2
Non-compete Agreements	3.1		—		(0.1		)	3.0		2.8		—		(0.2		)	2.6
Value of Business Acquired	—		—		—			—		1.8		—		(1.6		)	0.2
Consulting Relationships	0.9		—		(0.1		)	0.8		0.9		—		—			0.9
Goodwill	26.0		—		—			26.0		22.1		—		—			22.1
Renewal Rights	1.6		—		(0.1		)	1.5		—		—		—			—
Total	$	80.5	$	—	$	(1.1	)	$	79.4	$	74.3	$	—	$	(2.3	)	$	72.0



	Six Months Ended June 30, 2017									Six Months Ended June 30, 2016
	Beginning of the Period		Additions		Amortization			End of the Period		Beginning of the Period		Additions		Amortization			End of the Period
	($ in millions)									($ in millions)
Intangible Assets
Trade Mark	$	6.6	—		$	(0.3	)	$	6.3	$	1.6	$	4.0	$	(0.2	)	$	5.4
Insurance Licenses	16.7		—		—			16.7		16.6		—		—			16.6
Agency Relationships	26.2		—		(1.1		)	25.1		—		25.0		(0.8		)	24.2
Non-compete Agreements	3.3		—		(0.3		)	3.0		—		2.9		(0.3		)	2.6
Value of Business Acquired	—		—		—			—		—		1.8		(1.6		)	0.2
Consulting Relationships	0.9		—		(0.1		)	0.8		—		1.0		(0.1		)	0.9
Goodwill	24.2		1.8		—			26.0		—		22.1		—			22.1
Renewal Rights	1.7		—		(0.2		)	1.5		—		—		—			—
Total	$	79.6	$	1.8	$	(2.0	)	$	79.4	$	18.2	$	56.8	$	(3.0	)	$	72.0

AgriLogic

On January 19, 2016, Aspen U.S. Holdings acquired 100% of the equity voting interest of AgriLogic, a specialist U.S. crop managing general agency business with an integrated agricultural consultancy, for an initial purchase price of $53.0 million. In addition, the Company recognized $14.1 million of contingent consideration, with a total maximum payable of $22.8 million, subject to the future performance of the business and $2.0 million of ceding commission. The total consideration for the acquisition was $69.1 million.

A significant proportion of the acquired business was represented by intangible assets, specifically $25.0 million for agency relationships, $4.0 million for the right to use the AgriLogic trademark, $2.9 million for non-compete agreements, $1.8 million for the value of business acquired and $1.0 million for consultancy relationships. In addition, $12.0 million of software was acquired and is recognized in the balance sheet under office properties and equipment along with $0.3 million of residual net assets. The total net assets acquired of $47.0 million resulted in the Company recognizing a total of $22.1 million in goodwill for the acquisition of AgriLogic, $34.0 million of intangible assets and $21.0 million of goodwill are eligible for tax deduction over the next 15 years.

License to use the “AgriLogic” Trademark. The Company acquired the right to use the AgriLogic trademark in the United States. The Company valued the trademark at $4.0 million with an estimated economic useful life of 10 years. The Company will amortize the estimated value of the trademark over its estimated useful life.

Agency Relationships. The Company valued the agency relationships at $25.0 million with an estimated economic useful life of 15 years. The Company will amortize the estimated value of the agency relationships over their estimated useful life.

Non-compete Agreements. The Company valued the non-compete agreements at $2.9 million with an estimated economic useful life of 5 years. The Company will amortize the estimated value of the non-compete agreements over their estimated useful life.

Value of Business Acquired. The Company recognized a $1.8 million asset for value of business acquired (“VOBA”) consisting of the inforce unearned premium reserve and claims reserves at fair value. The Company will amortize the VOBA in line with the unwinding of the acquired unearned premium balances and loss reserves. Given the short tail nature of AgriLogic’s business, the VOBA was fully amortized in 2016.

Consulting Relationships. The Company valued the consulting relationships at $1.0 million with an estimated economic useful life of 10 years. The Company will amortize the estimated value of the consulting relationships over their estimated useful life.

Goodwill. The Company valued the goodwill at $22.1 million. The goodwill is deemed to have an indefinite useful life and will be assessed for impairment annually.

Blue Waters

On October 31, 2016, Acorn acquired 100% of the equity voting interest of Blue Waters, a specialist marine insurance agency. The total consideration for the acquisition was $8.0 million.

A significant proportion of the acquired business was represented by intangible assets, specifically $3.1 million for agency relationships, $1.5 million for the right to use the Blue Waters trademark, $1.0 million for non-compete agreements and $0.05 million for the value of trading licenses. In addition, $0.3 million of residual net assets were acquired. The total net assets acquired of $5.75 million resulted in the Company recognizing a total of $2.1 million in goodwill for the acquisition of Blue Waters.

Agency Relationships. The Company valued the agency relationships at $3.1 million with an estimated economic useful life of 5 years. The Company will amortize the estimated value of the agency relationships over their estimated useful life.

License to use the “Blue Waters” Trademark. The Company acquired the right to use the Blue Waters trademark in the United States. The Company valued the trademark at $1.5 million with an estimated economic useful life of 5 years. The Company will amortize the estimated value of the trademark over its estimated useful life.

Non-compete Agreements. The Company valued the non-compete agreements at $1.0 million with an estimated economic useful life of 5 years. The Company will amortize the estimated value of the non-compete agreements over their estimated useful life.

Insurance Licenses. The Company valued the insurance licenses at $0.05 million. The insurance licenses are considered to have an indefinite useful life and are not amortized. The licenses are tested annually for impairment.

Goodwill. The Company valued the goodwill at $2.1 million. The goodwill is deemed to have an indefinite useful life and will be assessed for impairment annually.

Other Intangible Assets

Renewal Rights. On September 22, 2016, the Company entered into a renewal rights agreement with Liberty Specialty Markets Limited (“LSML”). The Company valued the renewal rights at $1.9 million with an estimated economic useful life of 5 years. The Company will amortize the estimated value of the renewal rights over the estimated useful life.

In addition to the intangible assets and goodwill associated with the AgriLogic acquisition and the renewal rights agreement with LSML, the Company has the following intangible assets from prior transactions:

License to use the “Aspen” Trademark. On April 5, 2005, the Company entered into an agreement with Aspen (Actuaries and Pension Consultants) Plc to acquire the right to use the Aspen trademark in the United Kingdom. The consideration paid was approximately $1.6 million. As at June 30, 2017, the value of the license to use the Aspen trademark was $1.6 million (December 31, 2016 — $1.6 million). The trademark has an indefinite useful life and is tested for impairment annually or when events or changes in circumstances indicate that the asset might be impaired.

Insurance Licenses. The total value of the Company’s licenses as at June 30, 2017 was $16.6 million (December 31, 2016 — $16.6 million). This includes $10.0 million of acquired licenses held by AAIC, $4.5 million of acquired licenses held by Aspen Specialty and $2.1 million of acquired licenses held by Aspen U.K. The insurance licenses are considered to have an indefinite life and are not amortized. The licenses are tested for impairment annually or when events or changes in circumstances indicate that the asset might be impaired.

Goodwill. On January 1, 2017, the Company purchased through its wholly-owned subsidiary, Aspen U.S. Holdings, a 49% share of Digital Re. The Company valued the goodwill at $1.8 million. The goodwill is deemed to have an indefinite useful life and will be assessed for impairment annually under the provisions of ASC 323-10-35.