Leases

9 Months Ended

Sep. 30, 2021

The Company, acting as a lessee, has operating leases and finance leases primarily relating to office space, data centers and office equipment. The leases have remaining lease terms of 0.1 years to 17.9 years some of which include options to extend the leases in 1 to 10 year increments for up to 10 years. Renewal periods are included in the lease term only when renewal is reasonably certain, which is a high threshold and requires management to apply judgment to determine the appropriate lease term. Certain leases also include periods covered by an option to terminate the lease if the Company is reasonably certain not to exercise the termination option. The Company measures its lease payments by including fixed rental payments and, where relevant, variable rental payments tied to an index, such as the Consumer Price Index. Payments for leases in place before the date of adoption of ASC 842, Leases were determined based on previous leases guidance. The Company recognizes lease expense for its operating leases on a straight-line basis over the lease term, and variable lease expense not included in the lease payment measurement is recognized as incurred.

Pursuant to the accounting policy election, leases with an initial term of twelve months or less are not recognized on the balance sheet. The short-term lease expense over the period reasonably reflects the Company’s short-term lease commitments.

ASC 842, Leases requires the Company to make certain assumptions and judgments in applying the guidance, including determining whether an arrangement includes a lease, determining the term of a lease when the contract has renewal or cancelation provisions, and determining the discount rate.

The Company determines whether an arrangement is a lease or includes a lease at the contract inception by evaluating whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. If the Company has the right to obtain substantially all of the economic benefits from, and can direct the use of, the identified asset for a period of time, the Company accounts for the identified asset as a lease. The Company has elected the practical expedient to not separate lease and non-lease components for all leases other than real estate leases. The primary non-

lease component that is combined with a lease component represents operating expenses, such as utilities, maintenance or management fees.

As the rate implicit in the lease is not usually available, the Company used an incremental borrowing rate based on the information available at the adoption date of the new Leases standard in determining the present value of lease payments for existing leases. The Company has elected to use a portfolio approach for the incremental borrowing rate, applying corporate bond rates to the leases. The Company calculated the appropriate rates with reference to the lease term and lease currency. The Company uses information available at the lease commencement date to determine the discount rate for any new leases.

The Company subleases certain real estate to its affiliates and to third parties. The value of these commitments is not material to the Company’s unaudited condensed consolidated financial statements.

As of September 30, 2021, the Company did not have any leases that have not yet commenced but that create significant rights and obligations.

Supplemental information related to the Company’s operating leases is as follows (in thousands):


	Classification in Unaudited Condensed Consolidated Statements of Financial Condition	September 30, 20211		December 31, 2020
Assets
Operating lease ROU assets	Other assets	$	134,342	$	165,969
Finance lease ROU assets	Fixed assets, net	$	503	$	—
Liabilities
Operating lease liabilities	Accounts payable, accrued and other liabilities	$	163,887	$	190,207
Finance lease liabilities	Accounts payable, accrued and other liabilities	$	507	$	—

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1.The Company reclassified $7.3 million of operating lease ROU assets, and $7.4 million of operating lease liabilities as Assets held for sale and Liabilities held for sale, respectively.


	September 30, 2021		December 31, 2020
Weighted-average remaining lease term
Operating leases (years)	11.0		10.5
Finance leases (years)	4.6		—
Weighted-average discount rate
Operating leases	4.9	%	4.9	%
Finance leases	3.1	%	—	%

The components of lease expense are as follows (in thousands):


	Classification in Unaudited Condensed Consolidated Statements of Operations	Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020
Operating lease cost1	Occupancy and equipment	$	10,245	$	10,515	$	30,760	$	31,179
Finance lease cost
Amortization on ROU assets	Occupancy and equipment	$	27	$	—	$	45	$	—
Interest on lease liabilities	Interest expense	$	4	$	—	$	7	$	—

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1.The Company recorded operating lease costs related to the Insurance brokerage business of $0.9 million and $3.1 million for the three and nine months ended September 30, 2021.

Short-term lease expense is not material.

The following table shows the Company’s maturity analysis of its operating lease liabilities (in thousands):


	September 30, 2021
	Operating leases		Finance leases
2021 (excluding the nine months ended September 30, 2021)	$	8,688	$	30
2022	31,539		119
2023	26,442		119
2024	21,824		119
2025	17,367		119
Thereafter	113,500		40
Total	$	219,360	$	546
Interest	$	(55,473)	$	(39)
Total	$	163,887	$	507

The following table shows cash flow information related to lease liabilities (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Cash paid for obligations included in the measurement of operating lease liabilities1	$	9,681	$	8,913	$	26,604	$	28,937
Cash paid for obligations included in the measurement of finance lease liabilities	$	30	$	—	$	50	$	—

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1.The Company made payments for operating lease liabilities related to the Insurance brokerage business of $946 thousand and $3,225 thousand for the three and nine months ended September 30, 2021.