XML 35 R11.htm IDEA: XBRL DOCUMENT

FAIR VALUE OF ASSETS AND LIABILITIES

12 Months Ended

Dec. 31, 2023

The fair value of financial instruments are presented in the below summary table. The fair value of financial instruments held by CIP are presented in Note 19, "Consolidated Investment Products."


	December 31, 2023		December 31, 2022
(in millions)	Fair Value		Fair Value
Cash and cash equivalents	$	1,469.2	$	1,234.7

Equity investments	272.4		325.0

Foreign time deposits (1)	—		25.7
Assets held for policyholders	393.9		668.7
Policyholder payables (1)	(393.9)		(668.7)
Total return swap related to deferred compensation plans	4.9		(1.6)

____________

(1)These financial instruments are not measured at fair value on a recurring basis. Foreign time deposits are measured at cost plus accrued interest, which approximates fair value, and are accordingly classified as Level 2 securities. Policyholder payables are indexed to the value of the assets held for policyholders and changes in fair value are recorded and offset to zero in other operating revenues.

A three-level valuation hierarchy exists for disclosure of fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:

•Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

•Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

•Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement.

An asset or liability's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The following table presents, for each of the hierarchy levels described above, the carrying value of the company's assets and liabilities, including major security type for equity and debt securities, which are measured at fair value on the company's Consolidated Balance Sheets as of December 31, 2023 and December 31, 2022, respectively:


	As of December 31, 2023
(in millions)	Fair Value Measurements		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents:
Money market funds (1)	$	927.8	$	927.8	$	—	$	—
Investments: (2)
Equity investments:
Seed capital	75.7		75.7		—		—
Investments related to deferred compensation plans	196.7		196.7		—		—




Assets held for policyholders (3)	393.9		393.9		—		—
Total return swap related to deferred compensation plans	$	4.9	$	—	$	4.9	$	—
Total	$	1,599.0	$	1,594.1	$	4.9	$	—
Liabilities:

Contingent consideration liability	$	(1.3)	$	—	$	—	$	(1.3)
Total	$	(1.3)	$	—	$	—	$	(1.3)


	As of December 31, 2022
(in millions)	Fair Value Measurements		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents:
Money market funds (1)	$	760.8	$	760.8	$	—	$	—
Investments: (2)
Equity investments:
Seed capital	177.9		177.9		—		—
Investments related to deferred compensation plans	146.1		146.1		—		—
Other equity securities	1.0		1.0		—		—
Assets held for policyholders (3)	668.7		668.7		—		—

Total	$	1,754.5	$	1,754.5	$	—	$	—
Liabilities:
Total return swap related to deferred compensation plans	(1.6)		—		(1.6)		—
Contingent consideration liability	$	(1.3)	$	—	$	—	$	(1.3)
Total	$	(2.9)	$	—	$	(1.6)	$	(1.3)

____________

(1)The balance primarily represents cash held in affiliated money market funds.

(2)Equity method and other investments of $631.8 million and $14.9 million, respectively, as of December 31, 2023 (December 31, 2022: $621.2 million and $24.7 million, respectively) are also excluded from this table. These investments are not measured at fair value, in accordance with applicable accounting standards.

(3)The majority of Assets held for policyholders are held in affiliated funds.

Total Return Swap

In addition to holding equity investments, the company has a TRS to hedge economically certain deferred compensation liabilities. The notional value of the TRS at December 31, 2023 was $393.0 million, and the fair value of the TRS was an asset of $4.9 million (December 31, 2022 notional value was $326.6 million and the fair value was a liability of $1.6 million). The company’s net collateral paid balance related to the TRS was $25.9 million at December 31, 2023 (December 31, 2022: $0.0 million). During the year ended December 31, 2023, market valuation gains related to the TRS were $30.1 million (December 31, 2022: $74.3 million of net losses).

The fair value of the TRS was determined under the market approach using quoted prices of the underlying investments and, as such, is classified as level 2 of the valuation hierarchy. The TRS is not designated for hedge accounting.

Nonrecurring Fair Value Measurements

Certain of the company's assets and liabilities are required to be recorded at fair value on a nonrecurring basis, typically upon identification of impairment indicators. We measured the fair value of indefinite-lived intangible assets related to acquired management contracts of U.S. retail mutual funds during our annual impairment assessment completed as of October 1, 2023. The fair value of these assets was determined using an income approach and is classified as level 3 of the valuation hierarchy. The most sensitive assumptions used in the income approach are the revenue forecast, the long-term growth rate and the discount rate applied to the cash flow forecast to determine present value. The revenue projections used are within a range of (5)% to 1% over the forecast period. The long-term growth rate used in the fair-value measurement was 2.5%. The discount rate used in the fair-value measurement was 13.05%

- 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.

+ References + Details