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Goodwill and Other Intangibles

12 Months Ended

Dec. 31, 2023

Goodwill and Other Intangible [Abstract]

10.

Goodwill and Other Intangibles

The following table presents the carrying amount of the Company’s goodwill and related impairment by segment:

	Year Ended December 31,
	2023								2022
	Non-standard Auto		Commercial			Total			Non-standard Auto		Commercial		Total
Goodwill, beginning of year	$	2,628	$	6,756		$	9,384		$	2,628	$	6,756	$	9,384
Impairment recognized during the period		—		(6,756	)		(6,756	)		—		—		—
Goodwill, end of year	$	2,628	$	—		$	2,628		$	2,628	$	6,756	$	9,384

Based on the qualitative analysis performed for the goodwill related to our non-standard auto segment as of the beginning of the fourth quarter of 2023, we concluded that goodwill was not impaired. We performed a quantitative assessment of the goodwill related to the Westminster acquisition during the fourth quarter of 2023, which is allocated to our commercial segment, and concluded that the goodwill was fully impaired as of December 31, 2023, resulting in a non-cash impairment charge of $6,756 in the current year. The determination of the fair value of the reporting unit was based on a combination of a market approach that considered benchmark company market multiples, and an income approach that utilized discounted cash flows. Under the income approach, we determined fair value based on the present value of the most recent cash flow projections for the reporting unit as of the date of the analysis and calculated a terminal value utilizing a terminal growth rate. The significant assumptions under this approach include, among others: income projections, new product introductions, customer behavior, competitor pricing, operating expenses, the discount rate, and the terminal growth rate. The cash flows used to determine fair value are dependent on a number of significant management assumptions such as our expectations of future performance and the expected future economic environment, which are partly based upon our historical experience. Our estimates are subject to change given the inherent uncertainty in predicting future results. Additionally, the discount rate and the terminal growth rate are based on our judgment of the rates that would be utilized by a hypothetical market participant.

We determined during our reviews that there were no impairments of goodwill for any reporting units during the years ended December 31, 2022 and 2021.

Other Intangible Assets

The following table presents the carrying amount of the Company’s other intangible assets:

December 31, 2023	Gross Carrying Amount		Accumulated Amortization		Net
Subject to amortization:
Trade names	$	748	$	448	$	300
Distribution network		6,700		1,489		5,211
Total subject to amortization		7,448		1,937		5,511

Not subject to amortization – state insurance licenses		1,900		—		1,900
Total	$	9,348	$	1,937	$	7,411

December 31, 2022	Gross Carrying Amount		Accumulated Amortization		Net
Subject to amortization:
Trade names	$	748	$	365	$	383
Distribution network		6,700		1,117		5,583
Total subject to amortization		7,448		1,482		5,966

Not subject to amortization – state insurance licenses		1,900		—		1,900
Total	$	9,348	$	1,482	$	7,866

We determined during our reviews that there were no impairments of other indefinite-lived intangible assets or finite-lived intangible assets during the years ended December 31, 2023, 2022, and 2021.

Amortization expense was $455, $472, and $472 during the years ended December 31, 2023, 2022, and 2021, respectively.

Other intangible assets that have finite lives, including trade names and distribution networks, are amortized over their useful lives. As of December 31, 2023, the estimated amortization of other intangible assets with finite lives for the next five years in the period ending December 31, 2028, and thereafter is as follows:

Year ending December 31,
2024	$	422
2025		422
2026		422
2027		422
2028		422
Thereafter		3,401
Total other intangible assets with finite lives	$	5,511