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Item 8. Financial Statements and Supplementary Data

2022-02-18 compared with 2021-02-19 · 384 added, 300 removed, 1000 unchanged (41% of the section changed)

9 unchanged sentences

Based on this assessment, management has determined that the Company’s internal control over financial reporting as of December 31, 2021 was effective.

As of December 31, 2021, management excluded Parnassus Investments ("Parnassus") and Abacus Capital Group LLC (“Abacus”) from its assessment of internal control over financial reporting because it completed majority investments that were accounted for as business combinations in 2021.

Parnassus and Abacus' total assets and total revenues collectively represent approximately 0.8% and 3.6%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2021.

The Company’s internal control over financial reporting as of December 31, 2021 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report appearing in “Report of Independent Registered Public Accounting Firm,” which expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021.

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID 238 )

To the Board of Directors and Stockholders of Affiliated Managers Group, Inc.

18 unchanged sentences

We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Report on Internal Control Over Financial Reporting, management has excluded Parnassus Investments (“Parnassus”) and Abacus Capital Group, LLC (“Abacus”) from its assessment of internal control over financial reporting as of December 31, 2021 because the Company completed majority investments that were accounted for as business combinations during 2021.

We have also excluded Parnassus and Abacus from our audit of internal control over financial reporting.

Parnassus and Abacus’ total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting collectively represent approximately 0.8% and 3.6%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2021.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

dispositions of the assets of the company, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

1 unchanged sentence

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Acquisition of Parnassus - Acquired Client Relationships

As described in Note 9 to the consolidated financial statements, the Company completed a majority investment in Parnassus on October 1, 2021.

As disclosed by management, the Company determined the fair value of certain assets (including acquired client relationships, an intangible asset), liabilities, and equity interests when allocating the purchase price of Parnassus by using a discounted cash flow analysis that included projected growth rates of assets under management and discount rate assumptions.

The fair value of the acquired client relationships in 2021 were $957.0 million, the majority of which were from the acquisition of Parnassus.

The principal considerations for our determination that performing procedures relating to the acquisition of Parnassus - acquired client relationships is a critical audit matter are (i) the significant judgment by management when determining the fair value, (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions related to the projected growth rates of assets under management and the discount rate, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of the acquired client relationships and the development of significant assumptions related to the projected growth rates of assets under management and the discount rate.

These procedures also included, among others, (i) reading the purchase agreement and (ii) testing management’s process for determining the fair value of the acquired client relationships.

Testing management’s process included evaluating the appropriateness of the discounted cash flow analysis, testing the completeness and accuracy of data used by management in the discounted cash flow analysis, and evaluating the reasonableness of significant assumptions related to the projected growth rates of assets under management and the discount rate.

Evaluating the reasonableness of the projected growth rates of assets under management involved considering (i) the consistency with external market and industry data, (ii) the consistency with past performance of Parnassus, and (iii) whether the projected growth rates were consistent with evidence obtained in other areas of the audit.

The reasonableness of the discount rate assumption was evaluated by considering the cost of capital of comparable businesses and other industry factors.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s discounted cash flow analysis and the discount rate assumption.

Impairment Evaluation for Equity Method Investments in Affiliates

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Management periodically evaluates its equity method investments in affiliates for impairment by performing assessments to determine if fair value may have declined below related carrying value for a period that they consider to be other-than-temporary.

In the first and fourth quarters of 2020, management concluded that due to declines in assets under management and reductions in projected growth that there were $140.0 million and $45.0 million impairments, respectively, to reduce the carrying value of an affiliate to fair value.

The fair value of the investment was determined using probability-weighted discounted cash flow analyses that require assumptions such as growth rates of assets under management, client attrition, asset and performance based fee rates, expenses, tax benefits, tax rates and discount rates.

The principal considerations for our determination that performing procedures relating to the impairment evaluation for equity method investments in affiliates is a critical audit matter are;

(i) the significant judgment by management to evaluate the significant assumptions used in the discounted cash flow analyses to determine the fair value of the investment which was used to determine the amount that fair value had declined below its related carrying value for a period considered to be other-than-temporary, which in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures related to the growth rates of assets under management and discount rates used in the impairment evaluation, and (ii) the audit effort involved the use of professionals with specialized skill and knowledge to assist in evaluating the audit evidence obtained from these procedures.

In the fourth quarter of 2021, management concluded that due to declines in assets under management and reductions in projected growth that there was a $52.0 million impairment to reduce the carrying value of an affiliate to fair value.

The fair value of the investment was determined using probability-weighted discounted cash flow analyses that require assumptions such as growth rates of assets under management and discount rates.

The principal considerations for our determination that performing procedures relating to the impairment evaluation for equity method investments in affiliates is a critical audit matter are (i) the significant judgment by management to evaluate the significant assumptions used in the discounted cash flow analyses to determine the fair value of the investment, which was used to determine the amount that fair value had declined below its related carrying value for a period considered to be other-than-temporary, (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions related to the growth rates of assets under management and discount rates used in the impairment evaluation, and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s impairment evaluation for equity method investments in affiliates, including controls over the discounted cash flow analysis and significant assumptions used to determine the fair value of equity method investments in affiliates.

These procedures also included, among others, testing management’s process for determining the fair value of its equity method investments in affiliates, including evaluating the appropriateness of the discounted cash flow analysis, testing the completeness and accuracy of the underlying data used in the discounted cash flow analysis, and evaluating the reasonableness of the significant assumptions used by management in developing the fair value measurement, related to the growth rates of assets under management and discount rate s.

These procedures included testing the effectiveness of controls relating to management’s impairment evaluation for equity method investments in affiliates, including controls over the discounted cash flow analyses and significant assumptions used to determine the fair value of equity method investments in affiliates.

These procedures also included, among others, testing management’s process for determining the fair value of its equity method investments in affiliates, including evaluating the appropriateness of the discounted cash flow analyses, testing the completeness and accuracy of the underlying data used in the discounted cash flow analyses, and evaluating the reasonableness of the significant assumptions used by management in developing the fair value measurement related to the growth rates of assets under management and discount rates.

Evaluating the reasonableness of the growth rates of assets under management involved considering (i) the consistency with external market and industry data, (ii) the consistency with past performance of the affiliate, and (iii) whether the growth rates were consistent with evidence obtained in other areas of the audit.

The reasonableness of the discount rate assumption was evaluated by considering the cost of capital of comparable businesses and other industry factors.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the discount rates used to determine whether the fair value of the equity method investment had declined below its carrying value for a period considered to be other-than-temporary.

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Total consolidated expenses 1,618.8 1,509.8 1,631.4

Equity method loss (net) ( 0.2 ) ( 338.0 ) ( 43.4 )

Equity method income (loss) (net) ( 338.0 ) ( 43.4 ) 242.5

Investment and other income 25.2 34.1 117.6

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Other comprehensive income (loss), net of tax:

Foreign currency translation gain (loss) ( 102.1 ) 10.9 15.2

Foreign currency translation gain 10.9 15.2 6.8

Change in net realized and unrealized gain (loss) on derivative financial instruments 1.7 ( 1.5 ) 0.4

Other comprehensive income (loss), net of tax ( 102.2 ) 12.6 13.7

Other comprehensive income, net of tax 12.6 13.7 7.2

Comprehensive income 317.7 440.7 897.3

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Common stock ($ 0.01 par value, 153.0 shares authorized;

58.5 shares outstanding in 2019 and 2020)

58.5 shares issued in 2020 and 2021)

Additional paid-in capital 728.9 651.6

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December 31, 2018 $ 0.6 $ 835.6 $ ( 109.0 ) $ 3,876.8 $ ( 1,146.6 ) $ 677.5 $ 4,134.9

Impact of adoption of new accounting standard (ASU 2018-02) — — — ( 6.6 ) — — ( 6.6 )

Net income — — — 15.7 — 289.4 305.1

Other comprehensive loss, net of tax — — ( 87.2 ) — — ( 15.0 ) ( 102.2 )

Other comprehensive income, net of tax — — 0.2 — — 12.4 12.6

Share-based compensation — 49.9 — — — — 49.9

Common stock issued under share-based incentive plans — ( 34.0 ) — — 28.6 — ( 5.4 )

Shares repurchases — — — — ( 489.5 ) — ( 489.5 )

Share repurchases — 2.5 — — ( 363.3 ) — ( 360.8 )

Dividends ($ 1.28 per share)

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Issuances — ( 3.7 ) — — — 14.9 11.2

Repurchases — 15.3 — — — ( 9.0 ) 6.3

Purchases — 13.2 — — — ( 10.3 ) 2.9

Changes in redemption value of Redeemable non-controlling interests — ( 166.0 ) — — — — ( 166.0 )

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December 31, 2019 $ 0.6 $ 707.2 $ ( 108.8 ) $ 3,819.8 $ ( 1,481.3 ) $ 561.6 $ 3,499.1

Impact of adoption of new accounting standard (ASU 2018-02) — — — ( 6.6 ) — — ( 6.6 )

Net income — — — 202.2 — 224.8 427.0

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Common stock issued under share-based incentive plans — ( 40.9 ) — — 34.4 — ( 6.5 )

Shares repurchases — 2.5 — — ( 363.3 ) — ( 360.8 )

Share repurchases — ( 19.9 ) — — ( 410.1 ) — ( 430.0 )

Dividends ($ 0.35 per share)

— — — ( 16.5 ) — — ( 16.5 )

Issuance costs and other — 0.1 — — — — 0.1

Affiliate equity activity:

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Issuances — ( 5.1 ) — — — 25.2 20.1

Repurchases — 13.2 — — — ( 10.3 ) 2.9

Purchases — 58.7 — — — ( 14.5 ) 44.2

Changes in redemption value of Redeemable non-controlling interests — ( 59.4 ) — — — — ( 59.4 )

4 unchanged sentences

Net income — — — 565.7 — 324.4 890.1

Other comprehensive income, net of tax — — 10.5 — — 3.2 13.7

Other comprehensive income (loss), net of tax — — 10.4 — — ( 3.2 ) 7.2

Share-based compensation — 63.4 — — — — 63.4

Common stock issued under share-based incentive plans — ( 53.5 ) — — 36.8 — ( 16.7 )

Shares repurchases — ( 19.9 ) — — ( 410.1 ) — ( 430.0 )

Repurchases of junior convertible securities — ( 7.1 ) — — — — ( 7.1 )

Share repurchases — 17.3 — — ( 527.2 ) — ( 509.9 )

Dividends ($ 0.04 per share)

— — — ( 1.7 ) — — ( 1.7 )

Issuance costs and other — — — — — — —

Investments in Affiliates — — — — — 247.0 247.0

Affiliate equity activity:

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Issuances — ( 16.7 ) — — — 120.6 103.9

Repurchases — 58.7 — — — ( 14.5 ) 44.2

Purchases — 23.9 — — — ( 21.1 ) 2.8

Changes in redemption value of Redeemable non-controlling interests — ( 121.6 ) — — — — ( 121.6 )

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Depreciation and other amortization 21.3 19.1 16.6

Deferred income tax expense (benefit) 51.9 ( 55.8 ) 26.8

Equity method loss (net) 0.2 338.0 43.4

Deferred income tax (benefit) expense ( 55.8 ) 26.8 91.2

Equity method loss (income) (net) 338.0 43.4 ( 242.5 )

Distributions of earnings received from equity method investments 252.4 236.8 337.5

Share-based compensation and Affiliate equity expense 90.4 119.2 126.7

Net realized and unrealized gains on investment securities ( 21.4 ) ( 19.5 ) ( 108.7 )

Other non-cash items 3.7 16.5 44.2

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Sales of securities by consolidated Affiliate sponsored investment products 16.5 99.6 58.0

Decrease (increase) in receivables 14.4 ( 15.8 ) 1.1

(Increase) decrease in receivables ( 15.8 ) 1.1 31.7

(Increase) decrease in other assets ( 51.4 ) 73.1 23.8

Decrease in payables, accrued liabilities and other liabilities ( 6.8 ) ( 56.1 ) ( 64.2 )

(Decrease) increase in payables, accrued liabilities and other liabilities ( 56.1 ) ( 64.2 ) 64.5

Cash flow from operating activities 929.1 1,009.3 1,259.2

Cash flow from (used in) investing activities:

Investments in Affiliates ( 7.3 ) ( 162.3 ) ( 44.5 )

Divestments of Affiliates — 117.7 —

Investments in Affiliates, net of cash acquired ( 162.3 ) ( 44.5 ) ( 562.6 )

Divestments of Affiliates and return of capital from equity method investments 117.7 — 4.4

Purchase of fixed assets ( 9.6 ) ( 8.5 ) ( 8.4 )

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Borrowings of senior bank debt, senior notes, and junior subordinated notes 470.7 874.8 200.0

Repayments of senior bank debt ( 1,180.6 ) ( 510.0 ) ( 350.0 )

Repayments of senior bank debt and junior convertible securities ( 510.0 ) ( 350.0 ) ( 33.0 )

Repurchase of common stock (net) ( 356.1 ) ( 335.1 ) ( 595.3 )

1 unchanged sentence

Distributions to non-controlling interests ( 347.9 ) ( 306.3 ) ( 334.3 )

Affiliate equity (repurchases) / issuances (net) ( 113.7 ) ( 135.5 ) ( 294.9 )

Affiliate equity purchases ( 146.0 ) ( 315.1 ) ( 150.5 )

Affiliate equity issuances 10.5 20.2 117.7

Subscriptions to consolidated Affiliate sponsored investment products, net of redemptions 19.0 12.9 40.9

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Effect of foreign currency exchange rate changes on cash and cash equivalents 8.7 2.1 ( 0.8 )

Net increase (decrease) in cash and cash equivalents 129.2 ( 21.3 ) 502.3

Net (decrease) increase in cash and cash equivalents ( 21.3 ) 502.3 ( 123.6 )

Cash and cash equivalents at beginning of period 565.5 539.6 1,039.7

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Supplemental disclosure of non-cash investing and financing activities:

Payables recorded for Affiliate equity repurchases 36.2 19.8 22.0

Payables recorded for share repurchases 6.9 10.6 105.6

Payables recorded for contingent payment arrangements — — 40.0

Payables recorded for investments in Affiliates — — 69.2

Stock issued upon vesting of restricted stock units 4.7 32.7 35.6

Stock received for tax withholdings on share-based payments 14.7 6.4 6.7

Payables recorded for investments in Affiliates and contingent payment obligations — 109.2 287.8

Stock issued upon vesting of restricted stock units and exercise of stock options 32.7 35.6 82.6

Right-of-use assets obtained in exchange for new operating leases 189.7 24.4 26.3

Stock received for tax withholdings on share-based payments 6.4 6.7 19.9

Payables recorded for share repurchases 10.6 105.6 16.7

Payables recorded for Affiliate equity purchases 19.8 22.0 11.0

The accompanying notes are an integral part of the Consolidated Financial Statements.

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(the “Company”) is a leading partner to independent active investment management firms globally.

AMG’s strategy is to generate long-term value by investing in a diverse array of partner-owned investment firms, referred to as “Affiliates.” The Company’s Affiliates provide a comprehensive and diverse range of active, return-oriented strategies designed to assist institutional, retail, and high net worth clients worldwide in achieving their investment objectives.

AMG’s strategy is to generate long-term value by investing in a diverse array of high-quality partner-owned investment firms, referred to as “Affiliates.” The Company’s Affiliates provide a comprehensive and diverse range of return-oriented strategies designed to assist institutional, retail, and high net worth clients worldwide in achieving their investment objectives.

The Company operates in one segment, global asset management.

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When the Company lacks such control, but is deemed to have significant influence, the Company accounts for the VRE under the equity method.

Other investments in which the Company does not have rights to exercise significant influence are recorded at fair value on the Consolidated Balance Sheets, with changes in fair value included in Investment and other income on the Consolidated Statements of Income.

Investments with readily determinable fair values in which the Company does not have rights to exercise significant influence are recorded at fair value on the Consolidated Balance Sheets, with changes in fair value included in Investment and other income on the Consolidated Statements of Income.

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company consolidates VIEs when it is the primary beneficiary of the entity, which is defined as having the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to the VIE.

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A limited number of the Company’s Affiliates are considered VREs and most of these are accounted for under the equity method.

When an Affiliate is consolidated, the portion of the earnings attributable to Affiliate management’s equity ownership is included in Net income (non-controlling interests) in the Consolidated Statements of Income.

Undistributed earnings attributable to Affiliate managements’ equity ownership, along with their share of any tangible or intangible net assets, are presented within Non-controlling interests on the Consolidated Balance Sheets.

Affiliate equity interests where the holder has certain rights to demand settlement are presented, at their current redemption values, as Redeemable non-controlling interests on the Consolidated Balance Sheets.

The Company periodically issues, sells, and repurchases the equity of its consolidated Affiliates.

When an Affiliate is consolidated, the portion of the earnings attributable to Affiliate management’s and any co-investor’s equity ownership is included in Net income (non-controlling interests) in the Consolidated Statements of Income.

Undistributed earnings attributable to Affiliate management’s and any co-investor’s equity ownership, along with their share of any tangible or intangible net assets, are presented within Non-controlling interests on the Consolidated Balance Sheets.

The Company periodically issues, sells, and purchases the equity of its consolidated Affiliates.

Because these transactions take place between entities under common control, any gains or losses attributable to these transactions are required to be included in Additional paid-in capital on the Consolidated Balance Sheets, net of any related income tax effects in the period the transaction occurs.

When an Affiliate is accounted for under the equity method, the Company’s share of an Affiliate’s earnings or losses, net of amortization and impairments, is included in Equity method loss (net) in the Consolidated Statements of Income and the carrying value of the Affiliate is reported in Equity method investments in Affiliates (net) in the Consolidated Balance Sheets.

When an Affiliate is accounted for under the equity method, the Company’s share of an Affiliate’s earnings or losses, net of amortization and impairments, is included in Equity method income (loss) (net) in the Consolidated Statements of Income and the carrying value of the Affiliate is reported in Equity method investments in Affiliates (net) in the Consolidated Balance Sheets.

Deferred taxes recorded on intangible assets upon acquisition of an Affiliate accounted for under the equity method are presented on a gross basis within Equity method investments in Affiliates (net) and Deferred income tax liability (net) in the Consolidated Balance Sheets.

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Where the Company believes that such declines may have occurred, the Company determines the amount of impairment using valuation methods, such as discounted cash flow analyses.

Impairments are recorded as an expense in Equity method loss (net) to reduce the carrying value of the Affiliate to its fair value.

Impairments are recorded as an expense in Equity method income (loss) (net) to reduce the carrying value of the Affiliate to its fair value.

Affiliate Sponsored Investment Products

The Company’s Affiliates sponsor various investment products where they also act as the investment adviser.

The Company’s Affiliates sponsor various investment products where the Affiliate also acts as the investment adviser.

These investment products are typically owned primarily by third-party investors;

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Third-party investors in Affiliate sponsored investment products are generally entitled to substantially all of the economics of these products, except for the asset- and performance-based fees earned by the Company’s Affiliates or any gains or losses attributable to the Company’s or its Affiliates’ investments in these products.

As a result, the Company does not generally consolidate these products unless the Company’s or its consolidated Affiliates’ interest in the product is considered substantial.

When the Company’s or its consolidated Affiliates’ interests are considered substantial and the products are consolidated, the Company retains the specialized investment company accounting principles of the underlying products, and all of the underlying investments are carried at fair value in Investments in marketable securities in the Consolidated Balance Sheets, with corresponding changes in the investments’ fair values included in Investment and other income.

Purchases and sales of securities are presented within purchases and sales by consolidated Affiliate sponsored investment products in the Consolidated Statements of Cash Flows and the third-party investors’ interest is recorded in Redeemable non-controlling interests.

As a result, the Company generally does not consolidate these products.

However, for certain products, the Company’s consolidated Affiliates, as the investment manager, have the power to direct the activities of the investment product and have an exposure to the economics of the VIE that is more than insignificant, though generally only for a short period while the product is established and has yet to attract significant other investors.

When the products are consolidated, the Company retains the specialized investment company accounting principles of the underlying products, and all of the underlying investments are carried at fair value in Investments in marketable securities in the Consolidated Balance Sheets, with corresponding changes in the investments’ fair values included in Investment and other income.

Purchases and sales of securities are presented within purchases and sales by consolidated Affiliate sponsored investment products in the Consolidated Statements of Cash Flows, respectively, and the third-party investors’ interests are recorded in Redeemable non-controlling interests.

When the Company or its consolidated Affiliates no longer control these products, due to a reduction in ownership or other reasons, the products are deconsolidated with only the Company’s or its consolidated Affiliate’s investment in the product reported from the date of deconsolidation.

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In these valuation models, the Company is required to make judgments about growth rates of assets under management, client attrition, asset- and performance-based fee rates, and expenses.

These valuation models also require judgments about tax benefits, credit risk, interest rates, tax rates, discount rates, and discounts for lack of marketability.

These valuation models also require judgments about tax benefits, credit risk, interest rates, tax rates, discount rates, volatility, and discounts for lack of marketability.

These inputs require significant management judgment and reflect the Company’s assumptions that the Company believes market participants would use in pricing the asset or liability.

57 unchanged sentences

Issuance costs associated with the revolver are included in Other assets.

Issuance costs associated with the term loan are included as a reduction of the related debt balance.

Issuance costs associated with the Company’s senior notes, junior subordinated notes and junior convertible securities are amortized over the expected term of the security, and are included as a reduction of Debt in the Consolidated Balance Sheets.

Issuance costs associated with the term loan, and those associated with the Company’s senior notes, junior subordinated notes, and junior convertible securities, which are amortized over the expected term of the security, are included as a reduction of Debt in the Consolidated Balance Sheets.

The expense resulting from the amortization of these issuance costs is reported in Interest expense in the Consolidated Statements of Income.

2 unchanged sentences

The Company records derivatives in the Consolidated Balance Sheets at fair value.

If the Company’s or its Affiliates’ derivative financial instruments do not qualify as cash flow, net investment or fair value hedges, changes in the fair value of the derivatives are recorded as a gain or loss in Investment and other income.

If the Company’s or its Affiliates’ derivative financial instruments qualify as cash flow or net investment hedges, the effective portion of the unrealized gain or loss is recorded in Other comprehensive income (loss) as a separate component of stockholders’ equity and reclassified to earnings with the hedged item.

The Company assesses hedge effectiveness on a quarterly basis.

For interest rate swaps designated as cash flow hedges, we use a qualitative method of assessing hedge effectiveness by comparing the notional amount, timing of payments, and interest rates of the swap to the interest payments hedged.

If the qualitative assessment indicates ineffectiveness, then we perform a quantitative assessment which is generally measured by comparing the present value of the cumulative change in the expected future cash flows of the hedged contract with the present value of the cumulative change in the expected future cash flows of the hedged item.

For net investment hedges, hedge effectiveness is measured using the spot rate method.

For fair value hedges, the entire change in the fair value of the hedging instrument is presented within earnings with the hedged item, unless the changes in fair value are not equal, which would result in hedge ineffectiveness which is presented within Investment and other income.

The Company assesses hedge effectiveness at derivative inception and on a quarterly basis.

Changes in fair value of a hedging instrument that are excluded from the assessment of hedge effectiveness, also known as excluded components, are recorded in earnings on a straight-line basis over the respective period of the contracts as a reduction to Interest expense.

For derivative financial instruments designated as cash flow hedges, the Company uses a qualitative method of assessing hedge effectiveness by comparing the notional amounts, timing of payments, currencies (for the forward foreign currency contracts), and interest rates (for the interest rate swap).

The effective portion of the unrealized gain or loss is recorded in Other comprehensive income (loss) as a separate component of stockholders’ equity and reclassified to earnings with the hedged item.

If the qualitative assessment indicates ineffectiveness, then the Company performs a quantitative assessment which is generally measured by comparing the present value of the cumulative change in the expected future cash flows of the hedged contract with the present value of the cumulative change in the expected future cash flows of the hedged item.

Upon termination of these instruments or the repayment of the Company’s outstanding LIBOR-based borrowings, any gain or loss recorded in Accumulated other comprehensive loss in the Consolidated Balance Sheets will be reclassified into earnings.

Changes in the fair values of cash flow hedges are reported in Change in net realized and unrealized gain (loss) on derivative financial instruments in the Consolidated Statements of Comprehensive Income.

Upon termination of cash flow hedges, any gain or loss recognized will be reclassified into earnings.

For net investment hedges, hedge effectiveness is measured using the spot rate method.

Changes in the fair values of the effective net investment hedges are reported in Foreign currency translation gain (loss) in the Consolidated Statements of Comprehensive Income.

Upon the sale or liquidation of the underlying investment, any gain or loss remaining in Accumulated other comprehensive loss will be reclassified to earnings.

Changes in fair value of a hedging instrument that are excluded from the assessment of hedge effectiveness, also known as excluded components, are recorded in earnings and amortized on a straight-line basis over the respective period of the contracts as a reduction to Interest expense.

If the Company’s or its Affiliates’ derivative financial instruments do not qualify as effective hedges, changes in the fair value of the derivatives are recorded as a gain or loss in Investment and other income.

(m) Revenue Recognition

1 unchanged sentence

Substantially all of the Company’s and its Affiliates’ contracts contain a single performance obligation, which is the provision of investment management services.

Investment management, broker-dealer, and administrative services are performed and consumed simultaneously and, therefore, the Company recognizes these asset based fees ratably over time.

Substantially all the Company’s asset based fees for services are based on the value of client assets over time, which are typically determined using observable market data.

Services may be invoiced in advance or in arrears and are

Investment management, broker-dealer, and administrative services are performed and consumed simultaneously and, therefore, the Company recognizes these asset-based

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

payable upon receipt.

fees ratably over time.

Substantially all the Company’s asset-based fees for services are based on the value of client assets over time, which are typically determined using observable market data.

Services may be invoiced in advance or in arrears and are payable upon receipt.

Any asset-based fees collected in advance are deferred and recognized as the services are performed and consumed.

Consolidated revenue recognized by the Company is adjusted for any expense reimbursement arrangements.

Performance based fees, including carried interests, are recognized only upon the satisfaction of performance obligations, the resolution of any constraints, which include exceeding performance benchmarks or hurdle rates that may extend over one or more reporting periods, and when it is improbable that there will be a significant reversal in the amount of revenue recognized.

The Company’s Affiliates may periodically either waive or reduce fees in order to attract or retain client assets or for other reasons.

Fee waivers or reductions are presented as a reduction to Consolidated revenue.

Performance-based fees, including carried interests, are recognized upon the satisfaction of performance obligations, the resolution of any constraints, which include exceeding performance benchmarks or hurdle rates that may extend over one or more reporting periods, and when it is improbable that there will be a significant reversal in the amount of revenue recognized.

As a result, any performance-based fees or carried interest recognized in the current reporting period may relate to performance obligations satisfied in a previous reporting period.

6 unchanged sentences

Any expenses paid in advance are capitalized and amortized on a systematic basis, consistent with the transfer of services, which is the equivalent of recognizing the costs as incurred.

(n) Contingent Payment Arrangements

The Company periodically enters into contingent payment arrangements in connection with its investments in Affiliates.

In these arrangements, the Company agrees to pay additional consideration to the sellers to the extent that certain specified financial targets are achieved.

(n) Contingent Payment Obligations

The Company periodically enters into contingent payment obligations in connection with its investments in Affiliates.

In these obligations, the Company agrees to pay additional consideration to the sellers to the extent that certain specified financial targets are achieved.

For consolidated Affiliates, the Company estimates the fair value of these potential future obligations at the time the investment in an Affiliate is consummated and records a liability in Other liabilities.

2 unchanged sentences

Gains and losses resulting from changes to expected payments are included in Other expenses (net) and the accretion of these obligations to their expected payment amounts are included in Interest expense.

For Affiliates accounted for under the equity method of accounting, the Company records a liability in Payables and accrued liabilities when a payment becomes probable, with a corresponding increase to the carrying value of the Affiliate in Equity method investments in Affiliates (net).

For Affiliates accounted for under the equity method of accounting, the Company records a liability in Other liabilities when a payment becomes probable, with a corresponding increase to the carrying value of the Affiliate in Equity method investments in Affiliates (net).

(o) Income Taxes

8 unchanged sentences

Interest and penalties related to unrecognized tax benefits are also recorded in Income tax expense.

The Company has elected to treat taxes due on U.S.

inclusions in taxable income related to Global Intangible Low Taxed Income (“GILTI”) as a current period expense when incurred (the “period cost method”).

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company has elected to treat taxes due on U.S.

inclusions in taxable income related to Global Intangible Low Taxed Income (“GILTI”) as a current period expense when incurred (the “period cost method”).

(p) Foreign Currency Translation

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(t) Recent Accounting Developments

Effective January 1, 2020, the Company adopted ASU 2016-13, Measurement of Credit Losses on Financial Instruments issued by the Financial Accounting Standards Board (“FASB”).

Effective January 1, 2021, the Company adopted ASU 2019-12, Simplifying the Accounting for Income Taxes.

The adoption of this standard did not have a significant impact on the Company’s Consolidated Financial Statements.

In August 2020, the FASB issued ASU 2020-06, Debt with Conversion and Other Options and Derivatives and Hedging - Contracts in Entity’s Own Equity.

In August 2020, the Financial Accounting Standards Board issued ASU 2020-06, Debt with Conversion and Other Options and Derivatives and Hedging - Contracts in Entity’s Own Equity, which simplifies the accounting for convertible instruments and also modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted earnings per share calculation.

The standard is effective for interim and annual periods beginning after December 15, 2021 for the Company and its consolidated Affiliates, and is effective for interim and annual periods beginning after December 15, 2023 for the Company’s Affiliates accounted for under the equity method.

This standard requires use of the if-converted method for convertible instruments and the inclusion of instruments where the Company has an option to settle in cash or shares in its calculation of Earnings per share (diluted).

The Company is evaluating the impact of this standard on its Consolidated Financial Statements.

The Company’s adoption of ASU 2020-06 will

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In June 2020, the FASB extended the effective date of ASU 2016-02, Leases for the Company’s Affiliates accounted for under the equity method.

After the extension, ASU 2016-02 is effective for annual periods beginning after December 15, 2021 and interim periods beginning after December 15, 2022.

The Company does not expect the adoption of this standard by its equity method investments to have a significant impact on its Consolidated Financial Statements.

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes.

The standard is effective for interim and annual periods beginning after December 15, 2020 for the Company and its consolidated Affiliates, and is effective for annual periods beginning after December 15, 2021 and interim periods beginning after December 15, 2022 for the Company’s Affiliates accounted for under the equity method.

The Company does not expect the adoption of this standard to have a significant impact on its Consolidated Financial Statements.

result in the Company accounting for its convertible debt instrument as a single liability measured at amortized cost and will modify how certain equity instruments that may be settled in cash or shares, at the Company’s option, impact the calculation of Earnings per share (diluted).

The Company plans to adopt the standard using a modified retrospective method.

The adoption of this standard will result in increases in Debt and beginning Retained Earnings of $ 101.5 million and $ 4.5 million, respectively, and decreases in Additional paid-in-capital and Deferred income tax liability (net) of $ 80.6 million and $ 25.4 million, respectively.

The potential dilution to the calculation of Earnings per share (diluted) could be material and depends upon a number of factors, such as current share price, number of convertible shares, and conversion price.

If the standard had been adopted on January 1, 2021, Earnings per share (diluted) would have been $ 13.04 for the year ended December 31, 2021.

Investments in Marketable Securities

The following is a summary of the cost, gross unrealized gains, unrealized losses, and fair value of Investments in marketable securities:

The following is a summary of the cost, gross unrealized gains, gross unrealized losses, and fair value of Investments in marketable securities:

Cost $ 69.4 $ 73.2

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Other Investments

Other investments consist of investments in funds advised by the Company’s Affiliates that are carried at NAV as a practical expedient and investments without readily determinable fair values.

The income or loss related to these investments is recorded in Investment and other income.

Other investments consist of investments in funds advised by the Company’s Affiliates that are carried at NAV as a practical expedient and other investments without readily determinable fair values.

Any gain or loss related to these investments is recorded in Investment and other income.

Investments Measured at NAV as a Practical Expedient

The Company’s Affiliates sponsor investment products in which the Company and its consolidated Affiliates may make general partner and seed capital investments.

The Company uses the NAV of these investments as a practical expedient for their fair values.

The Company’s Affiliates sponsor funds in which the Company and its consolidated Affiliates may make general partner and seed capital investments.

These funds operate in partnership form and apply the specialized fair value accounting for investment companies.

The Company accounts for its interests in these funds using the equity method of accounting and is required to retain the specialized accounting of the investment companies.

Because the funds’ investments do not have readily determinable fair values, the Company uses the NAV of these investments as a practical expedient for their fair values.

The following table summarizes the fair values of these investments and any related unfunded commitments:

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__________________________

(1) The Company accounts for its interests in private equity funds under the equity method of accounting and, therefore, uses NAV as a practical expedient, one quarter in arrears (adjusted for current period calls and distributions) to determine the fair value.

(1) The Company accounts for the majority of its interests in private equity funds one quarter in arrears (adjusted for current period calls and distributions).

These funds primarily invest in a broad range of third-party funds and direct investments.

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(3) Fair value attributable to the controlling interest was $ 164.4 million and $ 224.4 million as of December 31, 2020 and 2021, respectively.

As of December 31, 2019 and 2020, the Company held investments without readily determinable fair values of zero and $ 13.8 million, respectively.

The carrying value of these investments included an upward adjustment of $ 5.3 million based on an observable price change during the fourth quarter of 2020.

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Investments Without Readily Determinable Fair Values

The Company made an investment in a private corporation where it does not exercise significant influence.

Because this investment does not have a readily determinable fair value, the Company has elected to measure this investment at its cost minus impairments, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments in the private corporation.

The following table summarizes the cost, cumulative unrealized gains, and carrying amount of investments without readily determinable fair values:

Cost $ 8.5 $ 8.5

Cumulative unrealized gains 5.3 41.9

Carrying amount $ 13.8 $ 50.4

During the year ended December 31, 2021, the Company recorded unrealized gains of $ 36.6 million based on observable price changes in the underlying investment.

The following table presents the changes in Other investments:

For the Years Ended December 31,

Measured at NAV as a Practical Expedient Without Readily Determinable Fair Values Total Measured at NAV as a Practical Expedient Without Readily Determinable Fair Values Total

Balance, beginning of period $ 211.8 $ — $ 211.8 $ 243.4 $ 13.8 $ 257.2

Net realized and unrealized gains (1)

18.0 5.3 23.3 79.5 36.6 116.1

Purchases and commitments 36.3 8.5 44.8 60.3 — 60.3

Sales and distributions ( 22.7 ) — ( 22.7 ) ( 58.4 ) — ( 58.4 )

Balance, end of period $ 243.4 $ 13.8 $ 257.2 $ 324.8 $ 50.4 $ 375.2

__________________________

(1) Recognized in Investment and other income.

Fair Value Measurements

The following tables summarize the Company’s financial assets and liabilities that are measured at fair value on a recurring basis:

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fair Value Measurements

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Financial Liabilities (2)

Affiliate equity repurchase obligations $ 19.8 $ — $ — $ 19.8

Affiliate equity purchase obligations $ 22.0 $ — $ — $ 22.0

Derivative financial instruments 4.2 — 4.2 —

6 unchanged sentences

Financial Liabilities (2)

Affiliate equity repurchase obligations $ 22.0 $ — $ — $ 22.0

Contingent payment obligations $ 40.3 $ — $ — $ 40.3

Affiliate equity purchase obligations 12.6 — — 12.6

Derivative financial instruments ( 0.8 ) — ( 0.8 ) —

2 unchanged sentences

(2) Amounts are presented within Other liabilities.

Level 3 Financial Assets and Liabilities

The following table presents the changes in level 3 assets and liabilities for Affiliate equity repurchase obligations:

Level 3 Financial Liabilities

The following table presents the changes in level 3 liabilities:

For the Years Ended December 31,

Contingent Payment Obligations Affiliate

Equity Purchase Obligations Contingent Payment Obligations Affiliate

Equity Purchase Obligations

Balance, beginning of period $ — $ 19.8 $ — $ 22.0

Net realized and unrealized (gains) losses (1)

— ( 4.3 ) 16.6 ( 1.4 )

Purchases and issuances (2)

— 310.6 23.7 112.7

Settlements and reductions — ( 304.1 ) — ( 120.7 )

2 unchanged sentences

__________________________

(1) Accretion expense for these arrangements and obligations is recorded in Interest expense.

(2) Includes transfers from Redeemable non-controlling interests.

(1) Gains and losses resulting from changes to expected payments are included in Other expenses (net) and the accretion of these obligations is included in Interest expense.

(2) Affiliate equity purchase obligation activity includes transfers from Redeemable non-controlling interests.

The following table presents certain quantitative information about the significant unobservable inputs used in valuing the Company’s recurring level 3 fair value measurements:

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Quantitative Information About Level 3 Fair Value Measurements

2 unchanged sentences

Fair Value Range Weighted Average (1)

Affiliate equity repurchase obligations Discounted cash flow Growth rates (2)

Contingent payment obligations Monte Carlo simulation Volatility $ — — — $ 40.3 13 % - 25 %

Discount rates — — 1 % - 2 %

Affiliate equity purchase obligations Discounted cash flow Growth rates (2)

$ 22.0 ( 5 )% - 8 %

5 unchanged sentences

(2) Represents growth rates of asset- and performance-based fees.

Affiliate equity repurchase obligations include agreements to repurchase Affiliate equity.

As of December 31, 2020, there were no changes to growth or discount rates that had a significant impact to Affiliate equity repurchase obligations recorded in prior periods.

Contingent payment obligations represent the present value of the expected future settlement amounts related to the Company’s investments in its consolidated Affiliates.

Affiliate equity purchase obligations include agreements to repurchase Affiliate equity.

As of December 31, 2021, there were no changes to growth or discount rates that had a significant impact to Affiliate equity purchase obligations recorded in prior periods.

Other Financial Assets and Liabilities Not Carried at Fair Value

The Company has other financial assets and liabilities, which are not required to be carried at fair value, but the Company is required to disclose their fair values.

The Company has other financial assets and liabilities that are not required to be carried at fair value, but are required to be disclosed at fair value.

The carrying amount of Cash and cash equivalents, Receivables, and Payables and accrued liabilities approximates fair value because of the short-term nature of these instruments.

5 unchanged sentences

Senior notes $ 1,097.3 $ 1,206.6 $ 1,098.0 $ 1,165.6 Level 2

Junior convertible securities 315.4 415.7 318.4 427.6 Level 2

Junior subordinated notes 565.7 623.1 765.8 809.1 Level 2

Junior convertible securities 318.4 427.6 299.5 461.4 Level 2

Investments in Affiliates and Affiliate Sponsored Investment Products

11 unchanged sentences

Affiliates accounted for under the equity method $ 1,384.2 $ 1,962.1 $ 1,864.7 $ 2,023.0

As of December 31, 2019 and 2020, the carrying value and maximum exposure to loss for all of the Company’s Affiliates accounted for under the equity method was $ 2,195.6 million and $ 2,074.8 million, respectively, including Affiliates accounted for under the equity method considered VREs of $ 352.6 million and $ 112.7 million, respectively.

Affiliate Sponsored Investment Products

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company’s carrying value, and maximum exposure to loss from unconsolidated Affiliate sponsored investment products is its, or its consolidated Affiliates’, interest in the unconsolidated net assets of the respective products.

As of December 31, 2020 and 2021, the carrying value and maximum exposure to loss for all of the Company’s Affiliates accounted for under the equity method was $ 2,074.8 million and $ 2,134.4 million, respectively, including Affiliates accounted for under the equity method considered VREs of $ 112.7 million and $ 111.4 million, respectively.

Affiliate Sponsored Investment Products

The Company’s carrying value, and maximum exposure to loss from unconsolidated Affiliate sponsored investment products, is its or its consolidated Affiliates’ interests in the unconsolidated net assets of the respective products.

The net assets of unconsolidated VIEs attributable to Affiliate sponsored investment products, and the Company’s carrying value and maximum exposure to loss, were as follows:

10 unchanged sentences

Senior notes 1,091.9 1,093.5

Junior convertible securities 310.6 314.0

Junior subordinated notes 556.4 751.4

Junior convertible securities 314.0 295.6

Debt $ 2,312.1 $ 2,490.4

The Company’s senior notes, junior convertible securities, and junior subordinated notes are carried at amortized cost.

The Company’s senior notes, junior subordinated notes, and junior convertible securities are carried at amortized cost.

Unamortized discounts and debt issuance costs are presented within the Consolidated Balance Sheets as an adjustment to the carrying value of the associated debt.

As of December 31, 2020, Debt with a par value of $ 400.0 million and $ 350.0 million matures in 2024 and 2025, respectively.

Senior Bank Debt

The Company has a $ 1.25 billion senior unsecured multicurrency revolving credit facility and a $ 350.0 million senior unsecured term loan facility.

The revolver matures on January 18, 2024, and the term loan, as amended, matures on January 18, 2026.

The Company amended and restated the revolver in October 2021, extending the maturity from January 18, 2024 to October 23, 2026, and amended the term loan in January 2021 and June 2021, and further amended and restated the term loan in October 2021, extending the maturity from January 18, 2023 to October 23, 2026.

Through these amendments, the Company also reduced applicable rates for the revolver and the term loan, and provided for customary LIBOR succession provisions.

Subject to certain conditions, the Company may increase the commitments under the revolver by up to an additional $ 500.0 million and may borrow up to an additional $ 75.0 million under the term loan.

The Company pays interest on any outstanding obligations under the credit facilities at specified rates, based either on an applicable LIBOR or prime rate, plus a marginal rate determined based on its credit rating.

The Company pays interest on any outstanding obligations under the credit facilities at specified rates, currently based either on an applicable LIBOR or prime rate, plus a marginal rate determined based on its credit rating.

As of December 31, 2021, the interest rate for the Company’s outstanding borrowings under the credit facilities was LIBOR plus 0.85 %.

1 unchanged sentence

As of December 31, 2020 and 2021, the Company had no outstanding borrowings under the revolver.

As of December 31, 2019 and 2020, the Company had outstanding borrowings under the term loan of $ 450.0 million and $ 350.0 million, respectively, and the weighted-average interest rate on outstanding borrowings was 2.66 % and 1.02 %, respectively.

As of December 31, 2020 and 2021, the Company had outstanding borrowings under the term loan of $ 350.0 million, and the weighted average interest rate on outstanding borrowings was 1.02 % and 0.95 %, respectively.

The Company pays commitment fees on the unused portion of its revolver.

For the years ended December 31, 2020 and 2021, these fees amounted to $ 1.5 million.

On January 8, 2021, the Company amended and refinanced the term loan to adjust the marginal rate by 0.075 % to 0.950 % and to extend the maturity by three years from January 18, 2023 to January 18, 2026.

The commercial terms of the term loan otherwise remained the same.

Senior Notes and Junior Subordinated Notes

As of December 31, 2020, the Company had senior notes and junior subordinated notes outstanding.

The carrying value of the senior notes and junior subordinated notes is accreted to the principal amount at maturity over the remaining life of the underlying instrument.

The principal terms of the senior notes and junior subordinated notes were as follows:

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Senior Notes 2025

As of December 31, 2021, the Company had senior notes outstanding.

The carrying value of the senior notes is accreted to the principal amount at maturity over the remaining life of the underlying instrument.

The principal terms of the senior notes outstanding as of December 31, 2021 were as follows:

Senior Notes 2025

Senior Notes 2030

Junior Subordinated Notes 2060

Junior Subordinated Notes

Issue date February 2014 February 2015 June 2020 March 2019 September 2020

Maturity date February 2024 August 2025 June 2030 March 2059 September 2060

Issue date February 2014 February 2015 June 2020

Maturity date February 2024 August 2025 June 2030

Par value (in millions) $ 400.0 $ 350.0 $ 350.0

Stated coupon 4.25 % 3.50 % 3.30 %

Coupon frequency Semi-annually Semi-annually Semi-annually Quarterly (3)

Quarterly (3)

Potential call date Any time (1)

March 2024 (2)

September 2025 (2)

Call price As defined (1)

As defined (1)

As defined (2)

__________________________

(1) The 2024, 2025 and 2030 senior notes may be redeemed, in whole or in part, at any time, in the case of the 2024 and 2025 senior notes, and at any time prior to March 15, 2030, in the case of the 2030 senior notes.

Coupon frequency Semi-annually Semi-annually Semi-annually

Potential call date Any time Any time Any time

Call price As defined As defined As defined

The senior notes may be redeemed, in whole or in part, at any time, in the case of the 2024 and 2025 senior notes, and at any time prior to March 15, 2030, in the case of the 2030 senior notes.

In each case, the senior notes may be redeemed at a make-whole redemption price, plus accrued and unpaid interest.

The make-whole redemption price, in each case, is equal to the greater of 100 % of the principal amount of the notes to be redeemed and the remaining principal and interest payments on the notes being redeemed (excluding accrued but unpaid interest to, but not including, the redemption date) discounted to their present value as of the redemption date at the applicable treasury rate plus 0.25 %, in the case of the 2024 and the 2025 senior notes, and to their present value as of the redemption date on a semi-annual basis at the applicable treasury rate plus 0.40 %, in the case of the 2030 senior notes.

(2) The 2059 and 2060 junior subordinated notes may be redeemed at any time, in whole or in part, on or after March 30, 2024, in the case of the 2059 junior subordinated notes, and on or after September 30, 2025, in the case of the 2060 junior subordinated notes.

Junior Subordinated Notes

As of December 31, 2021, the Company had junior subordinated notes outstanding.

The carrying value of the junior subordinated notes is accreted to the principal amount at maturity over the remaining life of the underlying instrument.

The principal terms of the junior subordinated notes outstanding as of December 31, 2021 were as follows:

Junior Subordinated Notes 2060

Junior Subordinated Notes 2061

Junior Subordinated Notes

Issue date March 2019 September 2020 July 2021

Maturity date March 2059 September 2060 September 2061

Par value (in millions) $ 300.0 $ 275.0 $ 200.0

Stated coupon 5.875 % 4.75 % 4.20 %

Coupon frequency Quarterly Quarterly Quarterly

Potential call date March 2024 September 2025 September 2026

Call price As defined As defined As defined

Listing NYSE NYSE NYSE

The junior subordinated notes may be redeemed at any time, in whole or in part, on or after March 30, 2024, in the case of the 2059 junior subordinated notes, on or after September 30, 2025, in the case of the 2060 junior subordinated notes, and on or after September 30, 2026, in the case of the 2061 junior subordinated notes.

In each case, the junior subordinated notes may be redeemed at 100 % of the principal amount of the notes being redeemed, plus any accrued and unpaid interest thereon.

2 unchanged sentences

The Company may, at its option, and subject to certain conditions and restrictions, defer interest payments subject to the terms of the junior subordinated notes.

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of December 31, 2021, the effective interest rates of the 2024, the 2025, and the 2030 senior notes were 4.43 %, 3.67 %, and 3.39 %, respectively.

As of December 31, 2020, the effective interest rates of the 2059 and the 2060 junior subordinated notes were 5.90 % and 4.83 %, respectively.

As of December 31, 2021, the effective interest rates of the 2059, the 2060, and the 2061 junior subordinated notes were 5.90 %, 4.78 %, and 4.21 %, respectively.

Junior Convertible Securities

11 unchanged sentences

Holders of the junior convertible securities have no rights to put these securities to the Company.

Upon conversion, holders will receive cash or shares of common stock, or a combination thereof, at the Company’s election.

The Company may redeem the junior convertible securities, subject to the stock trading at or above certain specified levels over specified times periods, and may also

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

repurchase junior subordinated notes in the open market or in privately negotiated transactions from time to time at management’s discretion.

Upon conversion, holders will receive cash or shares of the Company’s common stock, or a combination thereof, at the Company’s election.

The Company may redeem the junior convertible securities, subject to its stock trading at or above certain specified levels over specified times periods, and may also repurchase junior subordinated notes in the open market or in privately negotiated transactions from time to time at management’s discretion.

The junior convertible securities are considered contingent payment debt instruments under federal income tax regulations, which require the Company to deduct interest in an amount greater than its reported interest expense.

The Company estimates that these deductions will generate annual deferred tax liabilities of approximately $ 9 million.

Assuming no redemptions or repurchases, these deferred tax liabilities will be reclassified directly to stockholders’ equity if the Company’s common stock is trading above certain thresholds at the time of the conversion of the securities.

If the Company redeems the securities or repurchases the notes at a price below such thresholds, all or a portion of these deferred tax liabilities may be reclassified to income taxes payable which is presented within Other liabilities.

In August 2019, in accordance with the convertible securities indenture, the Company adjusted the conversion rate of the junior convertible securities to 0.2558 shares of common stock per $ 50.00 junior convertible security, equivalent to an adjusted conversion price of $ 195.47 per share of common stock.

The adjustment was the result of the Company’s cumulative declared dividends on its common stock since the prior adjustment.

The Company may redeem the junior convertible securities if the closing price of its common stock exceeds $ 254.10 per share for 20 trading days in a period of 30 consecutive trading days.

During the year ended December 31, 2021, the Company paid $ 33.0 million to repurchase a portion of our junior convertible securities, resulting in reductions of $ 29.9 million and $ 7.1 million in Debt and Additional paid-in capital, respectively.

As a result of these repurchases, the Company also reduced our Deferred income tax liability (net) by $ 7.0 million.

Derivative Financial Instruments

In 2018, the Company entered into two separate pound sterling-denominated forward foreign currency contracts (the “forward contracts”) with a large financial institution (the “counterparty”).

Concurrent to entering into each of the forward contracts, the Company also entered into two separate collar contracts (the “collar contracts”) with the same counterparty for the same notional amounts and expiration dates as each of the forward contracts.

The combinations of the forward contracts and the collar contracts were designated as net investment hedges against fluctuations in foreign currency exchange rates on certain of the Company’s investments in Affiliates with the pound sterling as their functional currency.

In the first quarter of 2020, the Company terminated the forward contracts and the corresponding collar contracts, and upon settlement received net proceeds of $ 24.9 million.

In the first quarter of 2020, the Company terminated its pound sterling-denominated forward foreign currency contracts and its corresponding collar contracts, which were designated as net investment hedges, and upon settlement, the Company received net proceeds of $ 24.9 million.

The net proceeds from the termination of the contracts are presented within sale of investment securities in the Consolidated Statements of Cash Flows.

The Company’s forward contracts and collar contracts with the counterparty were governed by an International Swaps and Derivative Association Master Agreement, which provided for legally enforceable rights to set-off.

The terms of the contracts also required the Company and the counterparty to post cash collateral in certain circumstances throughout the duration of the contracts.

As of December 31, 2019, the Company held $ 8.7 million of cash collateral from the counterparty, and the counterparty held no cash collateral from the Company.

In the first quarter of 2020, the Company entered into an interest rate swap contract (the “interest rate swap”) with a large financial institution (the “swap counterparty”), which will expire in March 2023.

The interest rate swap, which is designated as a cash flow hedge, is used to exchange a portion of the Company’s LIBOR-based interest payments for fixed rate interest payments.

Under the contract, the Company receives payments based on one month LIBOR and makes payments based on an annual fixed rate of 0.5135 % on a notional amount of $ 250.0 million.

The terms of the contract also require the Company and the swap counterparty to post cash collateral in certain circumstances throughout the duration of the contract.

As of December 31, 2020, the Company held no cash collateral from the swap counterparty, and the swap counterparty held $ 2.2 million of cash collateral from the Company.

Certain of the Company’s Affiliates use forward foreign currency contracts to hedge the risk of foreign currency exchange rate movements, which were not significant.

During the fourth quarter of 2021, the Company terminated its interest rate swap contract (the “interest rate swap”) with a large financial institution (the “swap counterparty”), and upon settlement paid $ 0.4 million.

The interest rate swap was designated as a cash flow hedge and was used to exchange a portion of the Company’s LIBOR-based interest payments for fixed rate interest payments.

Under the contract, the Company received payments based on one-month LIBOR and made payments based on an annual fixed rate of 0.5135 % on a notional amount of $ 250.0 million.

The terms of the contract also required the Company and the swap counterparty to post cash collateral in certain circumstances throughout the duration of the contract.

As of December 31, 2021, the Company held no cash collateral from the swap counterparty, and the swap counterparty held no cash collateral from the Company.

Certain of the Company’s Affiliates use forward foreign currency contracts to hedge the risk of foreign exchange rate movements, which are designated as cash flow hedges.

The following table summarizes the Company’s and its Affiliates’ derivative financial instruments measured at fair value on a recurring basis:

1 unchanged sentence

Assets Liabilities Assets Liabilities

Forward contracts $ 23.8 $ ( 1.0 ) $ 3.5 $ ( 2.3 )

Put options — ( 31.0 ) — —

Call options 15.1 — — —

Forward foreign currency contracts $ 3.5 $ ( 2.3 ) $ 0.9 $ ( 0.8 )

Interest rate swap — ( 1.9 ) — —

Total $ 3.5 $ ( 4.2 ) $ 0.9 $ ( 0.8 )

The forward and collar contracts entered into in 2018 included a set-off right and were therefore, presented on a net basis in Other assets;

they were $ 5.7 million as of December 31, 2019.

The Company and certain of its consolidated Affiliates have also entered into contracts that do not include set-off rights and are, therefore, presented on a gross basis in Other assets and

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Other liabilities;

The Company and certain of its consolidated Affiliates have entered into contracts that do not include set-off rights and are therefore presented on a gross basis in Other assets and Other liabilities;

they were $ 3.5 million and $ 4.2 million, respectively, as of December 31, 2020, and $ 0.9 million and $ 0.8 million, respectively, as of December 31, 2021.

The following table summarizes the effect of the derivative financial instruments on the Consolidated Statements of Comprehensive Income and the Consolidated Statements of Income:

The following table summarizes the effects of the derivative financial instruments on the Consolidated Statements of Comprehensive Income and the Consolidated Statements of Income:

For the Years Ended December 31,

Gain (Loss) Recorded in Other Comprehensive Income Gain Reclassified from Accumulated Other Comprehensive Income into Earnings Gain Recorded in Earnings from Excluded Components (1)

Gain (Loss) Recorded in Other Comprehensive Income (loss) Gain Reclassified from Accumulated Other Comprehensive Loss into Earnings Gain Recorded in Earnings from Excluded Components (1)

Forward contracts $ ( 21.7 ) $ 0.5 $ 13.9 $ 65.4 $ 0.6 $ 2.8

Gain (Loss) Recorded in Other Comprehensive Income (Loss) Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings Gain (loss) Recorded in Earnings from Excluded Components (1)

Forward foreign currency contracts $ 65.4 $ 0.6 $ 2.8 $ ( 1.0 ) $ 1.0 $ —

Put options ( 47.7 ) — — — — —

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(1) The excluded components of the forward contracts were recognized in earnings on a straight-line basis over the respective period of the contracts as a reduction to Interest expense.

(1) The excluded components of the forward foreign currency contracts were recognized in earnings on a straight-line basis over the respective period of the contracts as a reduction to Interest expense.

Commitments and Contingencies

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As of December 31, 2021, these unfunded commitments were $ 156.3 million and may be called in future periods.

In addition, as of December 31, 2020, the Company was contingently liable to make payments related to the achievement of specified financial targets by certain of its Affiliates accounted for under the equity method, of which, $ 37.5 million may become payable in 2022 and $ 77.5 million from 2023 through 2025.

As of December 31, 2021, the Company was contingently liable to make payments of $ 185.0 million related to the achievement of specified financial targets by certain of its Affiliates accounted for under the equity method, of which, $ 37.5 million may become payable in 2022 and $ 147.5 million may become payable from 2023 through 2029.

As of December 31, 2021, the Company expected to make payments of approximately $ 13 million.

1 unchanged sentence

Affiliate equity interests provide holders at consolidated Affiliates with a conditional right to put their interests to the Company over time.

In connection with one of the Company’s investments in an Affiliate accounted for under the equity method, a minority owner has the right to elect to sell a portion of its ownership interest in the Affiliate to the Company annually.

As of December 31, 2020, the minority owner maintains a 14 % ownership interest in the Affiliate.

In the fourth quarter of 2020, the Company was notified by the minority owner that it may, after determining the fair market value of its interest, elect to sell a 5 % ownership interest in the Affiliate to the Company.

If the minority owner elects to sell this interest, the transaction is expected to close in the first half of 2021;

however, the Company cannot currently predict the amount that may be paid to settle this commitment.

If the minority owners sells its interest to the Company, then the Company will continue to account for the Affiliate under the equity method.

In connection with one of the Company’s investments in an Affiliate accounted for under the equity method, a minority owner had the right to elect to sell a portion of its ownership interest in the Affiliate to the Company annually.

As of December 31, 2021, the minority owner maintained a 14 % ownership interest in the Affiliate.

The minority owner sold its interest on January 14, 2022.

As of December 31, 2021, the Company was contingently liable to make payments in connection with its investments in consolidated Affiliates.

The Company and certain of its consolidated Affiliates operate under regulatory authorities that require the maintenance of minimum financial or capital requirements.

Management is not aware of any significant violations of such requirements.

Goodwill and Acquired Client Relationships

The Company’s management is not aware of any significant violations of such requirements.

Business Combinations

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On October 1, 2021, the Company, along with a co-investor, completed a majority investment in Parnassus Investments (“Parnassus”), a leading independent ESG-dedicated fund manager.

The Company’s provisional purchase price allocation was measured using a discounted cash flow analysis that included a projected growth rate of 2.9 % for assets under management, discount rate of 17.5 % for asset-based fees, a market participant tax rate of 25 %, and discounts for lack of marketability of 20 % for non-controlling interests.

The associated provisional amounts may be revised upon completion of the final valuation.

At this time, the Company does not expect material changes.

The consideration paid (less net tangible assets acquired) will be deductible for U.S.

tax purposes over a 15-year life.

In addition, on December 29, 2021, the Company completed a majority investment in Abacus Capital Group LLC (“Abacus”), a high-quality real estate investment firm focused on the U.S.

multi-family sector.

The Company’s provisional purchase price allocation was measured using a discounted cash flow analysis that included a projected growth rate of 8.2 % for assets under management, discount rates of 13.7 % and 30 % for asset- and performance-based fees, respectively, a market participant tax rate of 25 %, and discounts for lack of marketability of 30 % for non-controlling interests.

The associated provisional amounts may be revised upon completion of the final valuation.

At this time, the Company does not expect material changes.

The consideration paid (less net tangible assets acquired) will be deductible for U.S.

tax purposes over a 15-year life.

The purchase price allocation for these investments is as follows:

Consideration paid (1)

Deferred payment obligations (2)

Contingent payment obligations (3)

Retained equity interests 247.0

Enterprise value $ 994.4

Acquired client relationships $ 957.0

Trade name 5.0

Lease contract ( 0.8 )

Tangible assets, net 2.7

Goodwill 30.5

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(1) The Company funded $ 363.0 million.

(2) The Company’s portion of the deferred payment obligations is $ 211.6 million.

(3) The Company’s portion of the contingent payment obligations is $ 18.1 million.

The excess of the enterprise value over the separately identifiable net assets acquired was recorded as goodwill and allocated to our reporting unit.

Acquisition-related costs incurred in connection with these investments were $ 9.2 million for the year ended December 31, 2021.

These costs were primarily related to professional fees and recorded in Selling, general and administrative expenses.

Unaudited pro forma financial results are set forth in the table below, assuming these investments occurred on January 1, 2020 and the Company’s structured partnership interests had been in effect for the entire period.

These results include adjustments to intangible amortization, acquisition-related costs, accretion expense related to deferred and contingent payments, and interest expense related to assumed borrowings to complete the purchases.

These results do not include the impact of gains or losses resulting from changes to expected payments related to the contingent payment obligations that did not occur, or the benefits that may be expected to result from these investments.

These results are not necessarily indicative of the financial results had the investment been consummated at the beginning of the periods presented, nor are they necessarily indicative of the financial results expected in future periods.

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Years Ended December 31,

2020 (Unaudited) 2021 (Unaudited)

Revenue $ 2,236.5 $ 2,642.6

Net income (controlling interest) 226.6 610.3

The Company’s new investments in Parnassus and Abacus contributed $ 85.8 million and $ 16.2 million to the Company’s Revenue and Net income (controlling interest), respectively, during 2021.

In connection with these investments, as of December 31, 2021, the Company was obligated to make deferred payments and was contingently liable to make payments as follows:

Earliest Payable

Controlling Interest Co-Investor Total 2022 2023 2024 2025

Deferred payment obligations $ 215.2 $ 49.8 $ 265.0 $ 200.0 $ 21.7 $ 43.3 $ —

Contingent payment obligations (1)

30.6 9.7 40.3 — — 38.9 1.4

__________________________

(1) Fair value as of December 31, 2021.

The Company is contingently liable to make maximum contingent payments of up to $ 110.0 million ($ 24.9 million attributable to the co-investor), of which $ 100.0 million and $ 10.0 million may become payable in 2024 and 2025, respectively.

Parnassus and Abacus are limited liability companies with structured interests that define how the Company will participate in Affiliate earnings, based upon a fixed percentage of revenue.

The limited liability company agreements do not define a fixed percentage for the Company’s ownership of the equity of the Affiliates.

These percentages would be subject to a separate future negotiation if the Affiliates were to be sold or liquidated.

Goodwill and Acquired Client Relationships

The following tables present the changes in the Company’s consolidated Affiliates’ Goodwill and components of Acquired client relationships (net):

Balance, beginning of period $ 2,651.7 $ 2,661.4

New investments — 30.5

Foreign currency translation 11.6 ( 1.1 )

1 unchanged sentence

Balance, end of period $ 2,661.4 $ 2,689.2

As of September 30, 2020, the Company completed its impairment assessment on goodwill and no impairment was indicated.

As of September 30, 2021, the Company completed its annual impairment assessment on goodwill and no impairment was indicated.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Acquired Client Relationships (Net)

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Balance, as of December 31, 2020 $ 1,166.6 $ ( 1,026.8 ) $ 139.8 $ 909.0 $ 1,048.8

New investments 232.0 — 232.0 725.0 957.0

Intangible amortization and impairments — ( 35.7 ) ( 35.7 ) — ( 35.7 )

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The Company recorded amortization expense in Intangible amortization and impairments for these relationships of $ 93.4 million, $ 55.3 million, and $ 35.7 million for the years ended December 31, 2019, 2020, and 2021, respectively.

Based on relationships existing as of December 31, 2020, the Company estimates that its consolidated amortization expense will be approximately $ 30 million in each of 2021, 2022, and 2023, approximately $ 20 million in 2024 and approximately $ 10 million in 2025.

In the fourth quarter of 2019, the Company completed an impairment assessment of the indefinite-lived acquired client relationships at one of its Affiliates, and determined that the fair value of the asset had declined below its carrying value.

Accordingly, the Company recorded an expense in Intangible amortization and impairments of $ 31.2 million attributable to the controlling interest ($ 35.0 million in aggregate) to reduce the carrying value of the asset to fair value.

The decline in the fair value was a result of a projected decline in assets under management that decreased the forecasted revenue associated with the asset.

The fair value of the asset was determined using a probability-weighted discounted cash flow analysis, a level 3 fair value measurement that included a projected growth rate of ( 9 )% for assets under management, discount rate of 14.5 % for asset based fees, and a market participant tax rate of 25 %.

No other impairments of indefinite-lived acquired client relationships were indicated.

In addition, in the fourth quarter of 2019, the Company recorded an expense in Intangible amortization and impairments of $ 16.1 million attributable to the controlling interest and in aggregate to reduce the carrying value of an indefinite-lived acquired client relationship to zero due to the closure of certain retail investment products on its U.S.

retail distribution platform.

Based on relationships existing as of December 31, 2021, the Company estimates that its consolidated amortization expense will be approximately $ 50 million in each of 2022 and 2023, approximately $ 35 million in 2024, and approximately $ 30 million in each of 2025 and 2026.

As of December 31, 2021, no impairments of definite-lived acquired client relationships were indicated.

In the second quarter of 2020, the Company agreed with a consolidated Affiliate to strategically reposition their business and to sell its equity interest in the Affiliate.

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In the third quarter of 2020, the Company sold its interest in the Affiliate and the Company recorded no significant gain or loss on the transaction.

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In the third quarter of 2020, the Company completed an impairment assessment of the indefinite-lived acquired client relationships at one of its Affiliates, and determined that the fair value of the asset had declined below its carrying value.

1 unchanged sentence

The decline in the fair value was a result of a projected decline in assets under management that decreased the forecasted revenue associated with the asset.

The fair value of the asset was determined using a probability-weighted discounted cash flow analysis, a level 3 fair value measurement that included a projected growth rate of ( 14 )% for assets under management, discount rate of 15 % for asset based fees, and a market participant tax rate of 25 %.

The fair value of the asset was determined using a discounted cash flow analysis, a level 3 fair value measurement that included a projected growth rate of ( 14 )% for assets under management, a discount rate of 15 % for asset-based fees, and a market participant tax rate of 25 %.

In addition, in the third quarter of 2020, the Company recorded an expense in Intangible amortization and impairments of $ 7.4 million attributable to the controlling interest ($ 10.9 million in aggregate) to reduce the carrying value of an indefinite-lived acquired client relationship to zero due to the closure of one of its Affiliate’s retail investment products.

As of December 31, 2020, no other impairments of indefinite-lived acquired client relationships were indicated.

As of December 31, 2021, no impairments of indefinite-lived acquired client relationships were indicated.

If financial markets become depressed for a prolonged period as a result of the novel coronavirus global pandemic (“COVID-19”) or other factors, the fair values of these assets could drop below their carrying values resulting in future impairments.

Equity Method Investments in Affiliates

In the first, third and fourth quarters of 2020, the Company completed minority investments in Comvest Partners, Inclusive Capital Partners LP and Jackson Square Partners LLC (“Jackson Square”), respectively.

The majority of the consideration paid for Jackson Square is deductible for U.S.

In the first and second quarters of 2021, the Company completed minority investments in Boston Common Asset Management LLC (“Boston Common”), a pioneer in global sustainable and impact investing, and OCP Asia Limited (“OCP Asia”), a leading alternative manager in private markets, providing customized secured lending solutions across the Asia-Pacific region, respectively.

The majority of the consideration paid for both Boston Common and OCP Asia is deductible for U.S.

tax purposes over a 15-year life.

The Company’s purchase price allocation for each investment was measured using financial models that included assumptions of expected market performance, net client cash flows, and discount rates.

The Company’s purchase price allocation for each investment was measured using

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

discounted cash flow analyses that included assumptions of expected market performance, net client cash flows, and discount rates.

The financial results of certain Affiliates accounted for under the equity method are recognized in the Consolidated Financial Statements one quarter in arrears.

Equity method investments in Affiliates (net) consisted of the following:

Goodwill $ 1,251.6 $ 1,264.4

Definite-lived acquired client relationships (net) 479.5 470.1

Indefinite-lived acquired client relationships (net) 173.1 174.4

Undistributed earnings and tangible capital 170.6 225.5

Equity method investments in Affiliates (net) $ 2,074.8 $ 2,134.4

The following table presents the change in Equity method investments in Affiliates (net):

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Balance, beginning of period $ 2,195.6 $ 2,074.8

Investments in Affiliates 128.7 147.3

Earnings 288.6 417.5

1 unchanged sentence

Distributions of earnings ( 236.8 ) ( 337.5 )

Return of capital — ( 4.4 )

Foreign currency translation 5.1 12.5

Investments in Affiliates 162.3 128.7

Divestments of Affiliates ( 117.7 ) —

Other 25.6 ( 0.8 )

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The Company recorded amortization expense for these relationships of $ 142.4 million, $ 147.0 million, and $ 123.0 million for the years ended December 31, 2019, 2020, and 2021, respectively.

Based on relationships existing as of December 31, 2020, the Company estimates the annual amortization expense attributable to its Affiliates will be approximately $ 120 million in 2021 and approximately $ 50 million in each of 2022, 2023, 2024 and 2025.

In the first quarter of 2019, the Company recorded a $ 415.0 million expense to reduce the carrying value of an Affiliate to fair value.

In March 2019, the Company concluded that the growth expectations of the Affiliate had declined and determined that the estimated fair value of the Affiliate had also declined meaningfully.

Therefore, the Company performed a valuation to determine whether the fair value of the Affiliate had declined below its carrying value.

The fair value of the investment was determined using a probability-weighted discounted cash flow analysis, a level 3 fair value measurement, that included a projected compounded asset based fee growth over the first five years of ( 13 )%, discount rates of 11 % and 20 % for asset and performance based fees, respectively, and a market participant tax rate of 25 %.

Based on the probability-weighted discounted

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

cash flow analysis, the Company concluded that the fair value of its investment had declined below its carrying value and that the decline was other-than-temporary.

In October 2019, the Company sold its interest in the Affiliate.

In the third quarter of 2019, the Company recorded a $ 10.0 million expense to reduce the carrying value of an Affiliate to fair value.

The fair value of the investment was determined using a probability-weighted discounted cash flow analysis, a level 3 fair value measurement, that included a projected growth rate of ( 20 )%, discount rates of 11 % and 20 % for asset and performance based fees, respectively, and a market participant tax rate of 25 %.

Based on the discounted cash flow analysis, the Company concluded that the fair value of its investment had declined below its carrying value and that the decline was other-than-temporary.

In the fourth quarter of 2019, the Company recorded a $ 60.0 million expense to reduce the carrying value of an Affiliate to fair value.

The decline in the fair value was a result of a decline in assets under management and a reduction in projected growth, which decreased the forecasted revenue associated with the investment.

The fair value of the investment was determined using a discounted cash flow analysis, a level 3 fair value measurement that included a projected growth rate of 9 % for assets under management, discount rates of 11 % and 20 % for asset and performance based fees, respectively, and a market participant tax rate of 25 %.

Based on the discounted cash flow analysis, the Company concluded that the fair value of its investment had declined below its carrying value and that the decline was other-than-temporary.

Based on relationships existing as of December 31, 2021, the Company estimates the amortization expense attributable to its Affiliates will be approximately $ 80 million in 2022 and 2023, and approximately $ 50 million in each of 2024, 2025, and 2026.

In the first and fourth quarters of 2020, the Company recorded expenses of $ 140.0 million and $ 45.0 million, respectively, to reduce the carrying value of an Affiliate to fair value.

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Based on the discounted cash flow analyses, the Company concluded that the fair value of its investment had declined below its carrying value at each of the respective measurement dates and that the decline was other-than-temporary.

In the fourth quarter of 2021, the Company recorded a $ 52.0 million expense to reduce the carrying value of an Affiliate to fair value.

The decline in the fair value was a result of a decline in assets under management and a reduction in projected growth, which decreased the forecasted revenue associated with the investment.

The fair value of the investment was determined using a probability-weighted discounted cash flow analysis, a level 3 fair value measurement that included a projected compounded growth in assets under management over the first five years of 0.3 %, discount rates of 11 % and 20 % for asset- and performance-based fees, respectively, and a market participant tax rate of 25 %.

Based on the discounted cash flow

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

analysis, the Company concluded that the fair value of its investment had declined below its carrying value and that the decline was other-than-temporary.

For the year ended December 31, 2021, the Company completed its annual assessme nt of its investments in Affiliates accounted for under the equity method and no other impairments were indicated.

If financial markets become depressed for a prolonged period as a result of COVID-19 or other factors, or the financial performance of an Affiliate worsens as a result of net client cash outflows or performance, regardless of the performance of financial markets, the fair values of these assets could drop below their carrying values for periods considered other-than-temporary, resulting in future impairments.

In connection with one of the Company’s investments in an Affiliate, a minority owner has the right to elect to sell a portion of its ownership interest in the Affiliate to the Company annually.

In the second quarter of 2019, the minority owner sold a 5 % ownership interest in the Affiliate to the Company for $ 25.7 million.

In the fourth quarter of 2020, the Company recorded a liability in Other liabilities of $ 40.0 million, with a corresponding increase to the carrying value of the Affiliate in Equity method investments in Affiliates (net), related to the achievement of specified financial targets by the Affiliate.

This payment is expected to settle in 2022.

As of December 31, 2020, the Company was obligated to make payments related to an investment in an Affiliate accounted for under the equity method.

The maximum the company is obligated to pay is $ 35.0 million in 2021 and $ 37.5 million in 2022.

The Company had liabilities for deferred and contingent payment obligations related to certain of its investments in Affiliates accounted for under the equity method.

As of December 31, 2021, the Company was obligated to make deferred payments of up to $ 50.8 million, all of which is payable in 2022.

As of December 31, 2021, the Company has recorded liabilities of $ 43.0 million related to the achievement of specified financial targets, which are expected to settle in 2022.

Liabilities for deferred and contingent payments are included in Other liabilities.

The Company had 18 and 21 Affiliates accounted for under the equity method as of December 31, 2020 and 2021, respectively.

The majority of these Affiliates are partnerships with structured interests that define how the Company will participate in Affiliate earnings, typically based upon a fixed percentage of revenue reduced by, in some cases, certain agreed-upon expenses.

The partnership agreements do not define a fixed percentage for the Company’s ownership of the equity of the Affiliate.

These percentages would be subject to a separate future negotiation if an Affiliate were to be sold or liquidated.

The following table presents summarized financial information for Affiliates accounted for under the equity method:

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AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(1) Revenue and net income include asset- and performance-based fees, the impact of consolidated sponsored investment products and investments in new Affiliates for the full-year, regardless of the date of the Company’s investment.

The Company’s share of undistributed earnings from equity method investments is recorded in Equity method investments in Affiliates (net) and was $ 170.6 million as of December 31, 2020.

On January 14, 2022, the Company completed an additional investment in Systematica Investments (“Systematica”), an innovative technology-driven systematic manager.

Following the close of the transaction, the investment continues to be accounted for under the equity method of accounting and Systematica partners continue to hold a majority of the equity of the business and direct its day-to-day operations.

Lease Commitments

The Company and its Affiliates currently lease office space and equipment under various operating leasing arrangements.

For the year ended December 31, 2018, consolidated lease costs were $ 40.5 million.

The following table presents total lease costs (net) for 2019, 2020, and 2021:

For the Years Ended December 31,

2019 2020 2021

Operating lease costs $ 41.7 $ 37.6 $ 33.8

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Total lease costs (net) $ 39.5 $ 33.4 $ 26.7

For the years ended December 31, 2019 and 2020, new right-of-use assets obtained in exchange for lease liabilities were $ 26.1 million and $ 24.4 million, respectively.

As of December 31, 2019 and 2020, the Company’s and its Affiliates’ weighted average operating lease term was eight years and seven years , respectively, and the weighted average operating lease discount rate was 4 % as of both December 31, 2019 and 2020.

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of December 31, 2020 and 2021, the Company’s and its Affiliates’ weighted average operating lease term was seven years , and the weighted average operating lease discount rate was 4 % and 3 %, respectively.

As of December 31, 2021, the maturities of lease liabilities were as follows:

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Both amounts exclude leases with initial terms of 12 months or less and leases that have not yet commenced.

In the fourth quarter of 2019, the Company recorded an $ 8.1 million expense to reduce the carrying value to fair value of certain of the Company’s right-of-use assets related to a reduction in leased office space.

The fair values of the right-of-use assets were determined using a discounted cash flow analysis, a Level 3 fair value measurement that included market rental rates ranging from $ 13 to $ 68 per square foot (a weighted-average of $ 46 per square foot), weighted-average discount rates ranging from 3.3 % to 5.5 % and a market participant tax rate of 25 %.

In 2020, no impairments of right-of-use assets were indicated.

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fixed assets (net) consisted of the following:

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The Company may invest from time to time in funds or products advised by its Affiliates.

The Company’s executive officers and directors may invest from time to time in funds advised or products offered by its Affiliates on substantially the same terms as other investors.

In addition, the Company and its Affiliates earn asset and performance based fees and incur distribution and other expenses for services provided to Affiliate sponsored investment products.

The Company’s executive officers and directors may invest from time to time in funds advised or products offered by its Affiliates, or receive other investment services provided by its Affiliates, on substantially the same terms as other investors.

In addition, the Company and

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

its Affiliates earn asset- and performance-based fees and incur distribution and other expenses for services provided to Affiliate sponsored investment products.

Affiliate management owners and the Company’s officers may serve as trustees or directors of certain investment vehicles from which the Company or an Affiliate earns fees.

The Company has related party transactions in association with its contingent payment arrangements and Affiliate equity transactions, as more fully described in Notes 8, 10, 17 and 18.

The Company has related party transactions in association with its deferred and contingent payment obligations, and Affiliate equity transactions, as more fully described in Notes 8, 9, 11, 18, and 19.

Stockholders’ Equity

The Company is authorized to issue up to 150.0 million shares of voting common stock and 3.0 million shares of class B non-voting common stock.

The Company’s Board of Directors authorized share repurchase programs in October 2019 and January 2019 to repurchase up to 6.0 million and 3.3 million shares of its common stock, respectively, and these authorizations have no expiry.

The Company’s Board of Directors authorized share repurchase programs in January 2021 and October 2019 to repurchase up to 5.0 million and 6.0 million shares of its common stock, respectively, and these authorizations have no expiry.

Purchases may be made from time to time, at management’s discretion, in the open market or in privately negotiated transactions, including through the use of trading plans, as well as pursuant to accelerated share repurchase programs or other share repurchase strategies that may include derivative financial instruments.

As of December 31, 2020, the Company had repurchased all of the shares of the January 2019 program, and there were a total of 1.9 million shares available for repurchase under the Company’s October 2019 share repurchase program.

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of December 31, 2021, the Company had repurchased all of the shares of the October 2019 authorized amount, and there were a total of 3.4 million shares available for repurchase under the Company’s January 2021 share repurchase program.

The following is a summary of the Company’s share repurchase activity:

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2021 3.5 146.54

Between January 1 and February 18, 2021, the Company repurchased 1.2 million shares of its common stock for $ 151.9 million, including shares repurchased in the open market, through a 10b5-1 trading plan, and pursuant to an accelerated share repurchase program.

Between January 1, 2022 and February 16, 2022, the Company repurchased 0.8 million shares of its common stock in the open market for approximately $ 110 million.

Equity Distribution Program

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The Company may also grant cash awards that can be notionally invested in one or more specified measurement funds, including the Company’s common stock.

Awards granted under the Company’s share-based incentive plans typically participate in any dividends declared, but such amounts are deferred until delivery of the shares and are forfeitable if the requisite service is not satisfied.

Awards granted under the Company’s share-based incentive plans typically participate in any dividends declared, but such amounts are deferred until delivery of the shares

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

and are forfeitable if the requisite service is not satisfied.

Dividends may accrue in cash or may be reinvested in the Company’s common stock.

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2021 63.4 8.0

The excess tax benefit (deficiency) recognized from share-based incentive plans was $ 0.7 million, $( 3.2 ) million, and $( 3.9 ) million, for the years ended December 31, 2018, 2019, and 2020, respectively.

The excess tax deficiency recognized from share-based incentive plans was $ 3.2 million, $ 3.9 million, and $ 0.2 million, for the years ended December 31, 2019, 2020, and 2021, respectively.

As of December 31, 2020, the Company had unrecognized share-based compensation expense of $ 86.2 million.

As of December 31, 2020, the Company had $ 86.2 million of unrecognized share-based compensation, which will be recognized over a weighted average period of approximately three years (assuming no forfeitures).

As of December 31, 2021, the Company had unrecognized share-based compensation of $ 70.9 million, which will be recognized over a weighted average period of approximately two years (assuming no forfeitures).

Restricted Stock

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes transactions in the Company’s restricted stock units:

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Unvested units—December 31, 2021 1.1 95.03

The Company granted restricted stock unit awards with fair values of $ 37.7 million, $ 59.7 million, and $ 31.8 million for the years ended December 31, 2018, 2019, and 2020, respectively.

The Company granted restricted stock units with fair values of $ 59.7 million, $ 31.8 million, and $ 32.3 million for the years ended December 31, 2019, 2020, and 2021, respectively.

These restricted stock units were valued based on the closing price of the Company’s common stock on the grant date and the number of shares expected to vest.

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Stock Options

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes transactions in the Company’s stock options:

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The total intrinsic value of stock options exercised during the years ended December 31, 2019, 2020, and 2021 was $ 0.2 million, $ 0.0 million , and $ 13.4 million, respectively.

The cash received for stock options exercised was $ 9.7 million, $ 0.9 million, and zero during the years ended December 31, 2018, 2019, and 2020, respectively.

The cash received for stock options exercised was $ 0.9 million, zero , and $ 3.6 million during the years ended December 31, 2019, 2020, and 2021, respectively.

As of December 31, 2021, the intrinsic value of exercisable stock options outstanding was $ 3.4 million, and 1.1 million options were available for grant under the Company’s option plans.

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Affiliate equity holders generally have a conditional right to put their interests to the Company at certain intervals (between five years and 15 years from the date the equity interest is received by the Affiliate equity holder or on an annual basis following an Affiliate equity holder’s departure).

Prior to becoming redeemable, the value of the Company’s Affiliate equity is presented within Non-controlling interests.

Upon becoming redeemable, the value of these interests is reclassified and the current redemption value of these interests is presented as Redeemable non-controlling interests.

Prior to becoming redeemable, the Company’s Affiliate equity is presented within Non-controlling interests.

Upon becoming redeemable, these interests are reclassified to Redeemable non-controlling interests at their current redemption values.

Changes in the current redemption value are recorded to Additional paid-in capital.

When the Company receives a put notice, and, therefore, has an unconditional obligation to repurchase Affiliate equity interests, they are reclassified to Other liabilities.

When the Company has an unconditional obligation

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

to repurchase Affiliate equity interests, the interests are reclassified from Redeemable non-controlling interest to Other liabilities at current fair value.

Changes in fair value are recorded to Other expenses (net).

The following table presents the changes in Redeemable non-controlling interests:

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$ 916.7 $ 671.5

(Decreases) increases attributable to consolidated Affiliate sponsored investment products ( 69.4 ) 13.8

Increase (decrease) attributable to consolidated Affiliate sponsored investment products 13.8 ( 10.4 )

Transfers to Other liabilities ( 310.6 ) ( 112.7 )

Transfers from (to) Non-controlling interests 105.0 ( 7.8 )

Transfers (to) from Non-controlling interests ( 7.8 ) 3.9

Changes in redemption value 59.4 121.6

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The Company’s Affiliates generally pay quarterly distributions to Affiliate equity holders.

Distributions paid to Affiliate equity holders (non-controlling interests) were $ 370.5 million, $ 347.9 million, and $ 306.3 million for the years ended December 31, 2018, 2019, and 2020, respectively.

Affiliate equity interests provide the Company a conditional right to call (on an annual basis following an Affiliate equity holder’s departure) and Affiliate equity holders have a conditional right to put their interests at certain intervals (between five years and 15 years from the date the equity interest is received by the Affiliate equity holder or on an annual basis following an Affiliate equity holder’s departure).

For Affiliates accounted for under the equity method, we do not typically have such put and call arrangements.

Distributions paid to non-controlling interest Affiliate equity holders were $ 347.9 million, $ 306.3 million, and $ 334.3 million for the years ended December 31, 2019, 2020, and 2021, respectively.

Affiliate equity interests provide the Company a conditional right to call (following an Affiliate equity holder’s departure) and Affiliate equity holders have a conditional right to put their interests at certain intervals (including on an annual basis following an Affiliate equity holder’s departure).

For Affiliates accounted for under the equity method, the Company does not typically have such put and call arrangements.

The purchase price of these conditional purchases are generally calculated based upon a multiple of cash flow distributions, which is intended to represent fair value.

Affiliate equity holders are also permitted to sell their equity interests to other individuals or entities in certain cases, subject to the Company's approval or other restrictions.

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

at its option, may pay for Affiliate equity purchases in cash, shares of its common stock or other forms of consideration, and can consent to the transfer of these interests to other individuals or entities.

The Company periodically repurchases Affiliate equity from and issues Affiliate equity to the Company’s consolidated Affiliate partners and its officers.

The amount of cash paid for repurchases was $ 120.0 million, $ 146.0 million, and $ 315.1 million for the years ended December 31, 2018, 2019, and 2020, respectively.

The total amount of cash received for issuances was $ 6.3 million, $ 10.5 million, and $ 20.2 million for the years ended December 31, 2018, 2019, and 2020, respectively.

Sales and repurchases of Affiliate equity generally occur at fair value;

however, the Company also grants Affiliate equity to its consolidated Affiliate partners and its officers as a form of compensation.

If the equity is issued for consideration below the fair value of the equity, or repurchased for consideration above the fair value of the equity, the difference is recorded as compensation expense in Compensation and related expenses in the Consolidated Statements of Income over the requisite service period.

The Company, at its option, may pay for Affiliate equity purchases in cash, shares of its common stock, or other forms of consideration, and can consent to the transfer of these interests to other individuals or entities.

The Company periodically purchases Affiliate equity from and issues Affiliate equity to the Company’s consolidated Affiliate partners and other parties.

The amount of cash paid for purchases was $ 146.0 million, $ 315.1 million, and $ 150.5 million for the years ended December 31, 2019, 2020, and 2021, respectively.

The total amount of cash received for issuances was $ 10.5 million, $ 20.2 million, and $ 117.7 million (including $ 99.6 million from a co-investor) for the years ended December 31, 2019, 2020, and 2021, respectively.

Sales and purchases of Affiliate equity generally occur at fair value;

however, the Company also grants Affiliate equity to its consolidated Affiliate partners and other parties as a form of compensation.

If the equity is issued for consideration below the fair value of the equity, or purchased for consideration above the fair value of the equity, the difference is recorded as compensation expense in Compensation and related expenses in the Consolidated Statements of Income over the requisite service period.

The following table presents Affiliate equity compensation expense:

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The following table presents unrecognized Affiliate equity compensation expense:

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Year Controlling Interest Remaining Life Non-controlling Interests Remaining Life

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2021 41.9 6 years 294.1 7 years

The Company records amounts receivable from, and payable to, Affiliate equity holders in connection with the transfer of Affiliate equity interests that have not settled at the end of the period and other related transactions.

The Company records amounts receivable from, and payable to, Affiliate equity holders in connection with the transfer of Affiliate equity interests that have not settled at the end of the period.

The total receivable was $ 9.6 million and $ 9.0 million as of December 31, 2020 and 2021, respectively, and was included in Other assets.

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Because these transactions do not result in a change of control, any gain or loss related to these transactions is recorded to Additional paid-in capital, which increases or decreases the controlling interest’s equity.

No gain or loss related to these transactions is recorded in the Consolidated Statements of Income or the Consolidated Statements of Comprehensive Income.

No gain or loss related to these transactions is recognized in the Consolidated Statements of Income or the Consolidated Statements of Comprehensive Income.

While the Company presents the current redemption value of Affiliate equity within Redeemable non-controlling interests, with changes in the current redemption value increasing or decreasing the controlling interest’s equity over time, the following table presents the cumulative effect that ownership changes had on the controlling interest’s equity related only to Affiliate equity transactions that settled during the applicable periods:

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(Decrease) increase in controlling interest paid-in capital from Affiliate equity issuances ( 3.1 ) 1.1 ( 17.5 )

Decrease in controlling interest paid-in capital from Affiliate equity repurchases ( 67.9 ) ( 50.8 ) ( 239.1 )

Decrease in controlling interest paid-in capital from Affiliate equity purchases ( 50.8 ) ( 239.1 ) ( 63.2 )

Net income (loss) (controlling interest) including the net impact of Affiliate equity transactions $ ( 38.2 ) $ ( 35.8 ) $ 485.0

Benefit Plans

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company has a defined contribution plan that is a qualified employee profit-sharing plan, covering substantially all of its employees.

Under this plan, the Company is able to make discretionary contributions for the benefit of its employees that are qualified plan participants, up to Internal Revenue Service limits.

Under this plan, the Company is able to make discretionary contributions for the benefit of its employees that are qualified plan participants, up to Internal Revenue Service (“IRS”) limits.

The Company’s consolidated Affiliates generally have their own qualified defined contribution retirement plans covering their respective employees or, for several Affiliates, have their employees covered under the Company’s plan.

In each case, the relevant Affiliate is able to make discretionary contributions for the benefit of its employees, as applicable, that are qualified plan participants, up to Internal Revenue Service limits.

In each case, the relevant Affiliate is able to make discretionary contributions for the benefit of its employees, as applicable, that are qualified plan participants, up to IRS limits.

Consolidated expenses related to these plans were $ 19.4 million, $ 17.6 million, and $ 19.1 million for the years ended December 31, 2019, 2020, and 2021, respectively.

The controlling interest’s portion of expenses related to these plans were $ 3.6 million, $ 3.0 million, and $ 3.0 million for the years ended December 31, 2019, 2020, and 2021, respectively.

The Company’s consolidated income tax provision includes taxes attributable to the controlling interest and, to a lesser extent, taxes attributable to non-controlling interests.

The Company’s consolidated income tax provision includes taxes attributable to the controlling interest and, to a lesser extent, taxes attributable to the non-controlling interests.

The following table presents the consolidated provision for income taxes:

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Years Ended December 31,

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For financial reporting purposes, Income before income taxes consisted of the following:

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Years Ended December 31,

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federal statutory tax rate to the Company’s effective tax rate:

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

For the Years Ended December 31,

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Affiliate divestments ( 120.4 ) ( 6.2 ) —

Reduction in carrying value of Affiliates 13.0 — —

Changes in U.S.

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Effective tax rate 0.9 % 16.0 % 22.0 %

The Company’s effective tax rate (controlling interest) in 2018 is higher than the marginal tax rate primarily due to a $ 240.0 million expense recorded to reduce the carrying value of one of the Company’s Affiliates to fair value for which the Company did not recognize an income tax benefit.

The effective tax rate (controlling interest) in 2019 is lower than the marginal tax rate primarily due to lower Income before income taxes, as a result of increased Intangible amortization and impairments expense, and tax benefits related to an Affiliate divestment.

The Company’s effective tax rate (controlling interest) in 2019 is lower than the marginal tax rate, primarily due to lower Income before income taxes, as a result of increased Intangible amortization and impairments expense, and tax benefits related to an Affiliate divestment.

The effective tax rate (controlling interest) in 2020 is not significantly different from the marginal tax rate.

The effective tax rate (controlling interest) in 2021 is higher than the marginal tax rate, primarily due to non-deductible compensation expense and an increase in deferred tax expense resulting from the revaluation of certain deferred tax liabilities due to an increase in the UK tax rate enacted during 2021.

Deferred income tax liability (net) reflects the expected future tax consequences of temporary differences between the financial reporting bases and tax bases of the Company’s assets and liabilities.

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Tax benefit of uncertain tax positions 26.3 17.4

Deferred income 3.0 —

Lease liabilities 10.0 7.6

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__________________________

(1) As of December 31, 2019 and 2020, foreign loss carryforwards of $ 17.7 million and $ 19.7 million, respectively, net of a $ 2.3 million and a $ 13.3 million valuation allowance, respectively, are presented within Other assets as they represent a net deferred tax asset in a foreign jurisdiction.

As of December 31, 2020, the Company had available state net operating loss carryforwards of $ 243.7 million, a majority of which will expire over ten years to 15 years.

As of December 31, 2020, the Company had foreign loss carryforwards of $ 74.2 million, of which $ 64.6 million will expire over 11 years to 19 years and $ 9.6 million will carry forward indefinitely.

As of December 31, 2020, the Company had foreign tax credit carryforwards of $ 8.2 million which will expire over eight years to ten years .

(1) As of December 31, 2020 and 2021, foreign loss carryforwards of $ 19.7 million (net of a $ 13.3 million valuation allowance) and $ 22.2 million (net of a $ 20.3 million valuation allowance), respectively, are presented within Other assets as they represent a net deferred tax asset in a foreign jurisdiction.

As of December 31, 2021, the Company had available state net operating loss carryforwards of $ 242.4 million, a majority of which will expire over nine years to 12 years.

As of December 31, 2021, the Company had foreign loss carryforwards of $ 83.9 million, of which $ 65.8 million will expire over ten years to 18 years and $ 18.1 million will carry forward indefinitely.

As of December 31, 2021, the Company had foreign tax credit carryforwards of $ 8.7 million which will expire over seven years to ten years .

The Company believed it was more-likely-than-not that the benefit from certain state and foreign loss carryforwards and foreign tax credit carryforwards would not be fully realized, and, as of December 31, 2021, had valuation allowances of $ 14.9 million, $ 20.3 million, and $ 8.7 million on the state and foreign loss carryforwards and the foreign tax credit carryforwards, respectively.

For the years ended December 31, 2019 and 2020, there was a $ 7.2 million reduction and an $ 18.7 million increase in the valuation allowances, respectively.

For the years ended December 31, 2020 and 2021, the Company increased its valuation allowance $ 18.7 million and $ 8.3 million, respectively.

The Company’s estimates and assumptions regarding the realization of its state and foreign loss carryforwards do not contemplate certain changes in ownership of the Company’s stock which could limit the utilization of these carryforwards.

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For the years ended December 31, 2019, 2020, and 2021, interest and penalties related to unrecognized tax benefits were $ 8.4 million, $ 0.8 million, and $( 0.4 ) million, respectively.

As of December 31, 2019 and 2020, the Company had accrued interest and penalties related to unrecognized tax benefits of $ 10.5 million and $ 11.4 million, respectively.

As of December 31, 2020 and 2021, the Company accrued interest and penalties related to unrecognized tax benefits of $ 11.4 million and $ 11.0 million, respectively.

The Company is subject to U.S.

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For the Year Ended December 31, 2019

Pre-Tax Tax Expense Net of Tax

Foreign currency translation loss $ ( 87.0 ) $ ( 15.1 ) $ ( 102.1 )

Change in net realized and unrealized loss on derivative financial instruments ( 0.1 ) — ( 0.1 )

Other comprehensive loss $ ( 87.1 ) $ ( 15.1 ) $ ( 102.2 )

For the Year Ended December 31, 2019

Pre-Tax Tax Benefit Net of Tax

7 unchanged sentences

Other comprehensive income (loss) $ 23.6 $ ( 9.9 ) $ 13.7

For the Year Ended December 31, 2021

Pre-Tax Tax Expense Net of Tax

Foreign currency translation gain (loss) $ 10.3 $ ( 3.5 ) $ 6.8

Change in net realized and unrealized loss on derivative financial instruments 0.9 ( 0.5 ) 0.4

Other comprehensive income (loss) $ 11.2 $ ( 4.0 ) $ 7.2

The components of accumulated other comprehensive income (loss), net of taxes, were as follows:

1 unchanged sentence

Balance, as of December 31, 2019 $ ( 177.1 ) $ 1.2 $ ( 175.9 )

Other comprehensive income before reclassifications 10.9 2.2 13.1

Other comprehensive income (loss) before reclassifications 15.2 ( 0.9 ) 14.3

Amounts reclassified — ( 0.6 ) ( 0.6 )

Net other comprehensive income 10.9 1.7 12.6

Net other comprehensive income (loss) 15.2 ( 1.5 ) 13.7

Balance, as of December 31, 2020 $ ( 161.9 ) $ ( 0.3 ) $ ( 162.2 )

1 unchanged sentence

Amounts reclassified — 0.6 0.6

Net other comprehensive income (loss) 15.2 ( 1.5 ) 13.7

Net other comprehensive income 6.8 0.4 7.2

Balance, as of December 31, 2021 $ ( 155.1 ) $ 0.1 $ ( 155.0 )

In connection with the adoption of ASU 2018-02 in 2019, the Company elected to reclassify to Retained earnings $ 6.6 million of tax effects stranded in Accumulated other comprehensive loss as a result of the enactment of the Tax Cuts and Jobs Act on December 22, 2017.

Geographic Information

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table presents Consolidated revenue and Fixed assets (net) of the Company by geographic location.

34 unchanged sentences

Deductions represented the reversal of such reserves upon collection of the amounts due.

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data