Leases

12 Months Ended

Dec. 31, 2022

The Company's leases consist of operating leases for office space and equipment. The Company determines if an arrangement is a lease at inception. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets. Right-of-use assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease right-of-use assets are recognized at commencement date based on the present value of lease payments over the lease term. As the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company has elected, as a practical expedient, to account for lease components and any non-lease components within a contract as a single lease component, and therefore allocates all of the expected lease payments to the lease component. Some of the Company's leases include options to extend the term, which is only included in the lease liability and right-of-use assets calculation when it is reasonably certain the Company will exercise that option. Our leases have remaining terms ranging from one month to 54 months, some of which have options to extend the lease for up to 5 years. As of December 31, 2022, the lease liability and right-of-use assets did not include the impact of any lease extension options as it is not reasonably certain that the Company will exercise the extension options.

Total lease expense for the years ended December 31, 2022, 2021 and 2020 was $2,458, $2,459 and $2,501, inclusive of $93, $25 and $362 in variable lease expense, respectively. The Company also sublets some of its leased office space and recorded $98, $100 and $84 of sublease income for the years ended December 31, 2022, 2021 and 2020, respectively, which is included in other income on the consolidated statements of operations.

Supplemental balance sheet information, the weighted average remaining lease term and weighted average discount rate related to leases were as follows:


	December 31,			December 31,
(dollars in thousands)	2022			2021
Right of use asset	$	2,764		$	4,530
Lease liability	$	3,063		$	4,976
Weighted average remaining lease term	1.79 years			2.42 years
Weighted average discount rate	6.07		%	6.33		%

Future maturities of lease liabilities as of December 31, 2022 are as follows:


	Operating Leases
2023	$	1,940
2024	1,064
2025	164
2026	44
2027	2

Total lease payments	3,214
Less: imputed interest	(151)
Total lease liabilities	$	3,063

Trean Insurance Group, Inc. 10-K