Asset Management Fees

12 Months Ended

Dec. 31, 2019

Revenue from Contract with Customer [Abstract]

Accounting Policy

In connection with the BlueMountain Acquisition, the FASB's new revenue recognition guidance, Topic 606 Revenue from Contracts with Customers (ASC 606), is applicable to the Company. Management, CLO and performance fees earned by Assured Investment Management are accounted for as contracts with customers. Under the guidance for contracts with customers, an entity is required to (a) identify the contract(s) with a customer, (b) identify the performance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance obligations in the contract, and (e) recognize revenue when (or as) the entity satisfies a performance obligation. In determining the transaction price, an entity may include variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved.

Management and CLO fees are derived from providing professional services to manage investment funds and CLOs. Investment management services are satisfied over time as the services are provided and are typically based on a percentage of the value of the client’s assets under management. Performance fee revenue will fluctuate from period to period and may not correlate with general market changes, since most of these fees are driven by absolute performance. Performance fee revenues are generated on certain management contracts when performance hurdles are achieved. Such fee revenues are recorded when the contractual performance criteria have been met and when it is probable that a significant reversal of revenue recognized will not occur in future reporting periods. Given the uniqueness of each fee arrangement, performance fee contracts are evaluated on an individual basis to determine the timing of revenue recognition.

Asset Management Fees

Management and CLO Fees

The Company receives a management fee in exchange for providing investment advisory and management services. These annual management fees are generally as follows.


•	Fees range from 0.70% to 2.00% per annum calculated on either the beginning of the month or quarter, or month-end NAV of the respective funds.

•

For the Company's management or servicing of the Assured Investment Management CLOs the Company receives, generally 0.35% to 0.50% (combined senior investment management fee and subordinated investment management fee) per annum based on NAV, and 20% per annum of the remaining interest proceeds and principal proceeds after the incentive management fee threshold has been satisfied. The portion of these fees that pertains to the investment by Assured Investment Management funds is typically rebated to the Assured Investment Management funds.

The Company may waive some or the entire management fee with respect to any investor. Certain current and former employees of the Company who have investments in the Assured Investment Management funds are not charged any management fees.

Performance Fees

In accordance with the investment management agreements, and by serving as the general partner, managing member or managing general partner, the Company also receives performance fees. Annual performance fee rates are generally as follows:


•	Range from 10% to 20% of the net profits in excess of the high-water mark for the respective fund, or


•	Range from 18% to 30% of the total cash received by investors in excess of certain benchmarks, or


•	30% of the net profits in excess of the high-water mark and a credit for management fees

Performance fees related to certain Assured Investment Management funds may be subject to future clawback and repayment. Determining the amount of performance fees to record is subject to qualitative and quantitative factors including where the fund is in its life-cycle, whether the Company has received or is entitled to receive performance fees and potential sales of fund investments. To the extent that performance fees have been received, but not earned, the company will recognize a liability for unearned revenue in the consolidated balance sheets. The general partner has the right, in its sole discretion, to

require certain Assured Investment Management funds to distribute to the general partner an amount equal to its presumed tax liability attributable to the allocated taxable income relating to performance fees with respect to such fiscal year and are contractually not subject to clawback. There were no tax distributions recorded during 2019.

The Company may waive some or all of the performance fees with respect to any investor. Certain current and former employees of the Company who have investments in the Assured Investment Management funds are not charged any performance fees.

The following table presents the sources of asset management fees since the BlueMountain Acquisition Date:

Asset Management Fees



	Year Ended December 31, 2019
	(in millions)
Management fees:
CLOs (1)	$	3
Opportunity funds	2
Wind-down funds	13
Total management fees	18
Performance fees	4
Total asset management fees	$	22

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(1)	Gross management fees from CLOs, before rebates were $11 million.

The Company had management and performance fees receivable, which are included in other assets on the consolidated balance sheets, of $9 million as of December 31, 2019. The Company had no unearned revenues as of December 31, 2019.