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Fair Value Measurements

9 Months Ended

Sep. 30, 2020

The following table summarizes the Company’s assets and liabilities that are measured at fair value on a recurring basis at September 30, 2020 (in millions):


	Quoted prices in active markets (Level I)		Significant other observable inputs (Level II)		Significant unobservable inputs (Level III)		Uncategorized		Total value, September 30, 2020
Assets of BSIG, consolidated Funds and assets held for sale(1)









Investments in separate accounts(2)	16.5		13.0		—		—		29.5
Investments related to long-term incentive compensation plans(3)	66.1		—		—		—		66.1
Investments in unconsolidated Funds(4)	—		—		2.7		16.4		19.1
BSIG total	82.6		13.0		2.7		16.4		114.7

Investments related to long-term incentive compensation plans(5)	27.0		—		—		—		27.0

Investments of Affiliate held for sale total (Note 3)	27.0		—		—		—		27.0
Common and preferred stock	5.9		—		—		—		5.9
Short-term investment funds	0.5		—		—		—		0.5
Bank loans	—		106.5		—		—		106.5
Investments of consolidated Funds held for sale total (Note 3)	6.4		106.5		—		—		112.9
Total fair value assets	$	116.0	$	119.5	$	2.7	$	16.4	$	254.6

The following table summarizes the Company’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 2019 (in millions):


	Quoted prices in active markets (Level I)		Significant other observable inputs (Level II)		Significant unobservable inputs (Level III)		Uncategorized		Total value December 31, 2019
Assets of BSIG and consolidated Funds(1)
Common and preferred stock	$	9.8	$	—	$	—	$	—	$	9.8
Short-term investment funds	0.1		—		—		—		0.1
Bank loans	—		109.0		—		—		109.0

Derivatives	0.5		0.1		—		—		0.6
Consolidated Funds total	10.4		109.1		—		—		119.5
Investments in separate accounts(2)	33.2		11.1		—		—		44.3
Investments related to long-term incentive compensation plans(3)	88.8		—		—		—		88.8
Investments in unconsolidated Funds(4)	—		—		3.0		48.2		51.2
BSIG total	122.0		11.1		3.0		48.2		184.3
Total fair value assets	$	132.4	$	120.2	$	3.0	$	48.2	$	303.8

Liabilities of consolidated Funds(1)
Common stock	$	(0.5)	$	—	$	—	$	—	$	(0.5)
Derivatives	(0.1)		(0.3)		—		—		(0.4)
Consolidated Funds total	(0.6)		(0.3)		—		—		(0.9)


Total fair value liabilities	$	(0.6)	$	(0.3)	$	—	$	—	$	(0.9)

(1)Assets and liabilities measured at fair value are comprised of financial investments managed by the Company's Affiliates.

Equity securities, including common and preferred stock, short-term investment funds, other investments and derivatives which are traded on a national securities exchange are stated at the last reported sales price on the day of valuation. To the extent these securities are actively traded and valuation adjustments are not applied, they are classified as Level I. The securities that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs obtained by the Company from independent pricing services are classified as Level II.

The Company obtains prices from independent pricing services that may utilize broker quotes, but generally the independent pricing services will use various other pricing techniques which take into account appropriate factors such as yield, quality, coupon rate, maturity, type of issue, trading characteristics and other data. The Company has not made adjustments to the prices provided. Assets of consolidated Funds also include investments in bank loans. Interests in senior floating-rate loans for which reliable market participant quotations are readily available are valued at the average mid-point of bid and ask quotations obtained from a third party pricing service. These assets are classified as Level II.

If the pricing services are only able to (a) obtain a single broker quote or (b) utilize a pricing model, such securities are classified as Level III. If the pricing services are unable to provide prices, the Company attempts to obtain one or more broker quotes directly from a dealer or values such securities at the last bid price obtained. In either case, such securities are classified as Level III. The Company performs due diligence procedures over third party pricing vendors to understand their methodology and controls to support their use in the valuation process to ensure compliance with required accounting disclosures.

(2)Investments in separate accounts of $29.5 million at September 30, 2020 consist of approximately 2% of cash equivalents and 98% of equity securities, fixed income securities, and other investments. Investments in separate accounts of $44.3 million at December 31, 2019 consist of approximately 3% of cash equivalents and 97% of equity securities, fixed income securities, and other investments. The Company values these using the published price of the underlying securities (classified as Level I) or quoted price supported by observable inputs as of the measurement date (classified as Level II).

(3)Investments related to long-term incentive compensation plans of $66.1 million and $88.8 million at September 30, 2020 and December 31, 2019, respectively, were investments in publicly registered daily redeemable funds (some managed by Affiliates), which the Company has classified as trading securities and valued using the published price as of the measurement dates. Accordingly, the Company has classified these investments as Level I.

(4)The uncategorized amounts of $16.4 million and $48.2 million at September 30, 2020 and December 31, 2019, respectively, relate to investments in unconsolidated Funds which consist primarily of investments in Funds advised by Affiliates and are valued using NAV which the Company relies on to determine their fair value as a practical expedient and has therefore not classified these investments in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to amounts presented in the Condensed Consolidated Balance Sheets. These unconsolidated Funds consist primarily of real estate investment Funds, UCITS and other investment vehicles. The NAVs that have been provided by investees have been derived from the fair values of the underlying investments as of the measurement dates. UCITS and other investment vehicles are not subject to redemption restrictions.

The real estate investment Funds of $5.9 million and $6.4 million at September 30, 2020 and December 31, 2019, respectively, are subject to longer than quarterly redemption restrictions, and due to their nature, distributions are received only as cash flows are generated from underlying assets over the life of the Funds. The range of time over which the underlying assets are expected to be liquidated by the investees is approximately one year to eleven years from September 30, 2020. The valuation process for the underlying real estate investments held by the real estate investment Funds begins with each property or loan being valued by the investment teams. The valuations are then reviewed and approved by the valuation committee, which consists of senior members of the portfolio management, acquisitions, and research teams. For certain properties and loans, the valuation process may also include a valuation by independent appraisers. In connection with this process, changes in fair value measurements from period to period are evaluated for reasonableness, considering items such as market rents, capitalization and discount rates, and general economic and market conditions.

Investments in unconsolidated Funds categorized as Level III of $2.7 million and $3.0 million at September 30, 2020 and December 31, 2019, respectively, related to investments in Forestry Funds advised by Affiliates and are valued by the general partner of those Funds. Determination of estimated fair value involves subjective judgment because the actual fair value can be determined only through negotiation between parties in a sale transaction, and amounts ultimately realized may vary significantly from the fair value presented.

(5)Affiliate investments held for sale is comprised of Investments related to long-term incentive compensation plans of $27.0 million at September 30, 2020. These were investments in publicly registered daily redeemable funds, which the Company has classified as trading securities and valued using the published price as of the measurement dates. Accordingly, the Company has classified these investments as Level I.

The following table reconciles the opening balances of Level III financial assets to closing balances at the end of the period (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,
Investments in unconsolidated Funds	2020		2019		2020		2019
Level III financial assets
At beginning of the period	$	3.0	$	3.0	$	3.0	$	3.0
Additions (redemptions)	(0.3)		0.1		(0.3)		0.1
Transfers in (out) of Level III	—		—		—		—


Total net fair value gains/losses recognized in net income	—		(0.1)		—		(0.1)
Total Level III financial assets	$	2.7	$	3.0	$	2.7	$	3.0

There were no significant transfers of financial assets or liabilities between Levels II or III during the three and nine months ended September 30, 2020.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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