Quarterly report pursuant to Section 13 or 15(d)

Intangible Assets, Net

v3.22.2.2
Intangible Assets, Net
 9 Months Ended
Sep. 30, 2022
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets, Net
13. Intangible Assets, Net
Intangible assets, net, consisted of the following (in thousands):
September 30, 2022 Amortization Period (Years) Cost Accumulated Amortization Impairment Net
Non-amortizing intangibles
Trade name
N/A
 $ 91,600  $ —  $ (51,200) $ 40,400 
Total non-amortizing intangibles $ 91,600  $ —  $ (51,200) $ 40,400 
Amortizing intangibles
Broker/customer relationships
8 - 15
 $ 541,100  $ (80,736) $ (70,464) $ 389,900 
Trade names and other
5 - 10
 10,937  (1,425) (1,512) 8,000 
Total amortizing intangibles $ 552,037  $ (82,161) $ (71,976) $ 397,900 
Total intangibles $ 643,637  $ (82,161) $ (123,176) $ 438,300 
December 31, 2021 Amortization Period (Years) Cost Accumulated Amortization Impairment Net
Non-amortizing intangibles
Trade name
N/A
 $ 178,000  $ —  $ (86,400) $ 91,600 
Total non-amortizing intangibles $ 178,000  $ —  $ (86,400) $ 91,600 
Amortizing intangibles
Broker/customer relationships
8 - 15
 $ 541,100  $ (39,711) $ —  $ 501,389 
Trade names and other
5 - 10
 10,937  (1,026) —  9,911 
Total amortizing intangibles $ 552,037  $ (40,737) $ —  $ 511,300 
Total intangibles $ 730,037  $ (40,737) $ (86,400) $ 602,900 
Intangible assets deemed to have an indefinite life are not amortized but are instead reviewed annually for impairment of value or when indicators of a potential impairment are present. The Company performs its annual impairment testing as of October 1 and monitors for interim triggering events on an ongoing basis as events occur or circumstances change. The Company estimated the fair value of the indefinite life intangibles for all the reporting units utilizing a relief from royalty approach and the significant assumptions used to measure fair value include discount rate, terminal factors, and royalty rate. This valuation resulted in a Level 3 nonrecurring fair value measurement. During the first half of 2022, the Company observed that inflationary measures began to rise, reducing the demand for mortgage products from its Mortgage Originations segment and responded by implementing cost cutting measures. As the length and magnitude of the downturn in mortgage demand continued during the third quarter of 2022, including increasingly compressed margins and longer expected duration of such market pressures, an interim impairment analysis was triggered as of September 30, 2022. Based on the analysis, the Company recognized an indefinite lived intangible asset impairment of $51.2 million in the third quarter of 2022. The impairment was recognized in impairment of intangibles and other assets in the Condensed Consolidated Statements of Operations. The impairment of these intangible assets for each reporting unit is as follows: $41.9 million at the Mortgage Originations reporting unit, $5.5 million at the Commercial Originations reporting unit, and $3.8 million at the Portfolio Management reporting unit. The Company recognized an indefinite lived intangible asset impairment of $86.4 million for the year ended December 31, 2021.
The Company’s definite lived intangible assets comprise various customer/broker relationships, certain technological assets and definite lived trade names acquired through various acquisitions. These assets are amortized on a straight-line basis over their useful lives and are subject to recoverability testing whenever events or changes in circumstances indicate that its carrying amount may not be recoverable, in accordance with ASC 360. During the third quarter of 2022, the Company observed that the length and magnitude of the downturn in mortgage demand had significantly increased compared to prior periods. As a result, our Mortgage Origination reporting unit's current and expected future operating losses indicated that the definite lived intangible assets included in the reporting unit may not be recoverable, and an impairment analysis was performed as of September 30, 2022. Based on the analysis, the Company wrote off and recognized a definite lived intangible asset impairment of $72.0 million for the Mortgage Originations reporting unit in the third quarter of 2022. The impairment was recognized in impairment of intangibles and other assets in the Condensed Consolidated Statements of Operations.
Amortization expense was $13.8 million and $41.4 million for the three and nine months ended September 30, 2022, respectively. Amortization expense was $13.5 million and $26.9 million for the Successor three and six months ended September 30, 2021, respectively, and $0.6 million for the Predecessor three months ended March 31, 2021.
The estimated amortization expense for each of the five succeeding fiscal years and thereafter as of September 30, 2022 is as follows (in thousands):
Year Ending December 31, Amount
Remainder of 2022 $ 11,862 
2023 47,446 
2024 47,446 
2025 47,446 
2026 47,433 
Thereafter 196,267 
Total future amortization expense $ 397,900