FAIR VALUE OF ASSETS AND LIABILITIES

3 Months Ended

Mar. 31, 2024

The fair value of financial instruments is presented in the below summary table. The fair value of financial instruments held by CIP are presented in Note 11, "Consolidated Investment Products." See the company’s most recently filed Form 10-K for additional disclosures on valuation methodology and fair value.


	March 31, 2024		December 31, 2023
(in millions)	Fair Value		Fair Value
Cash and cash equivalents	$	895.7	$	1,469.2

Equity investments	297.2		272.4


Assets held for policyholders	—		393.9
Policyholder payables (1)	—		(393.9)
Total return swap related to deferred compensation plans	8.1		4.9

____________

(1) These financial instruments are not measured at fair value on a recurring basis. Policyholder payables were indexed to the value of the assets held for policyholders and changes in fair value were recorded and offset to zero in other operating revenues. In January 2024, all funds were distributed to customers.

The following table presents, by hierarchy levels, 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 Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023, respectively:


	As of March 31, 2024
(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)	$	434.7	$	434.7	$	—	$	—
Investments: (2)
Equity investments:
Seed capital	86.0		86.0		—		—
Investments related to deferred compensation plans	211.2		211.2		—		—






Total return swap related to deferred compensation plans	8.1		—		8.1		—
Total	$	740.0	$	731.9	$	8.1	$	—
Liabilities:

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


	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)

____________

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

(2) Equity method and other investments of $651.4 million and $14.9 million, respectively, are excluded from this table (December 31, 2023: $631.8 million and $14.9 million, respectively). These investments are not measured at fair value, in accordance with applicable accounting standards.

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

Total Return Swap (TRS)

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 March 31, 2024 was $424.4 million, and the fair value of the TRS was an asset of $8.1 million (December 31, 2023 notional value was $393.0 million and the fair value was an asset of $4.9 million). During the three months ended March 31, 2024, market valuation gains related to the TRS were $18.0 million (three months ended March 31, 2023: $13.1 million net gain).

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.

- 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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