Lazarus, the asset 'Goodwill' is only created when one company acquires another and by definition is the difference between the acquisition price and the book value of the company being acquired. HRTG had to record $47,256,000 in Goodwill since the purchase price was $47,256,000 greater than Zephyr's book value. There's nothing fishy about it.....its just a feature of double entry accounting.
In essence, Goodwill is an intangible 'filler account'. In double entry accounting, HRTG records the total amount paid for Zephyr on one side. The other side would be the book value of Company B, and a new filler account called Goodwill, for $47.256 million. Thus, both sides would record equal amounts (as is required in double entry accounting). If a company acquires another for below its book value, negative Goodwill is created.
There are some accounting tests that HRTG is required to make during the years after the acquisition to see if the goodwill is required to be written down. But those 'accounting tests' have little to do with how the business is doing, and much more to do with how the shareprice has changed since the acquisition.
BTW, I've said in the past HRTG management is funky...but goodwill has nuttin to do with that.
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