What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-07 compared with 2024-08-02 · 319 added, 277 removed, 484 unchanged (55% of the section changed)

40 unchanged sentences

growth capital, product strategy and development, capital formation, and incentive alignment and succession planning.

June 30, 2024 , our aggregate assets under management were approximately $701 billion across a diverse range of private

markets, liquid alternatives, and differentiated long-only investment strategi e s.

September 30, 2024 , our aggregate assets under management were approximately $728 billion across a diverse range of

private markets, liquid alternatives, and differentiated long-only investment strategies.

In the second quarter of 2024, we completed our minority investment in Suma Capital (“Suma”), a pan-European private

markets firm that invests in the transition to a lower carbon economy.

Following the close of the transaction, Suma partners

continue to hold a significant majority of the equity of the firm and direct its day-to-day operations.

Operating Performance Measures

10 unchanged sentences

The following table presents our key aggregate operating performance measures:

As of and for the Three

Months Ended June 30,

As of and for the Six

Months Ended June 30,

As of and for the

Three Months Ended

September 30,

As of and for the

Nine Months Ended

September 30,

(in billions, except as noted)

19 unchanged sentences

Our Affiliates provide a diverse range of differentiated return streams through their specialized investment processes.

continue to see client demand for alternative strategies, as evidenced by our net inflows in this category for the three and six

months ended June 30, 2024 .

At the same time, our equity strategies saw outflows in line with client cash flow trends across

the industry.

We continue to invest in areas of long-term client demand — including private markets, liquid alternatives,

sustainable investment strategies, wealth management, and Asia — through new and existing Affiliates, to better position AMG

to benefit from industry growth trends.

We also anticipate that independent investment firms will continue to seek access to an

evolving range of partnership solutions, and that we have a significant opportunity to invest in additional high-quality firms

across the global investment management industry.

continue to see client demand for alternative strategies, as evidenced by our net inflows in this category for the three and nine

months ended September 30, 2024 .

At the same time, our equity strategies saw outflows in line with client cash flow trends

across the industry.

We continue to invest our capital and resources in areas aligned with long-term client demand trends, most

notably in private markets and liquid alternatives .

As we continue to invest in new and existing Affiliates, we expect to further

evolve our business mix and better position AMG to benefit from industry growth trends.

We also anticipate that independent

investment firms will continue to seek access to an evolving range of partnership solutions, and that we have a significant

opportunity to invest in additional high-quality firms across the global investment management industry.

The following charts present information regarding the composition of our assets under management by strategy and client

type as of June 30, 2024 :

type as of September 30, 2024 :

Assets Under Management

___________________________

(1) Alternatives include private markets strategies, which accounted for 18% of our assets under management as of June 30,

The following tables present changes in our assets under management by strategy and client type for the three and six

months ended June 30, 2024 :

(1) Alternatives include private markets strategies, which accounted for 18% of our assets under management as of

September 30, 2024 .

The following tables present changes in our assets under management by strategy and client type for the three and nine

months ended September 30, 2024 :

By Strategy - Quarter to Date

1 unchanged sentence

Multi-Asset &

March 31, 2024

June 30, 2024

Client cash inflows and commitments

5 unchanged sentences

Realizations and distributions (net)

June 30, 2024

September 30, 2024

By Client Type - Quarter to Date

1 unchanged sentence

Institutional

March 31, 2024

June 30, 2024

Client cash inflows and commitments

5 unchanged sentences

Realizations and distributions (net)

June 30, 2024

September 30, 2024

By Strategy - Year to Date

8 unchanged sentences

Realizations and distributions (net)

June 30, 2024

September 30, 2024

By Client Type - Year to Date

8 unchanged sentences

Realizations and distributions (net)

June 30, 2024

September 30, 2024

___________________________

(1) Includes assets under management related to a new investment made by an existing Affiliate.

(2) Foreign exchange reflects the impact of translating the assets under management of our Affiliates whose functional

14 unchanged sentences

(1) Past performance is not indicative of future results.

Performance and AUM information is as of June 30, 2024 and is based

on data available at the time of calculation.

Performance and AUM information is as of September 30, 2024 and is

based on data available at the time of calculation.

Product returns are sourced from Affiliates while benchmark returns are

44 unchanged sentences

period because they inherently depend on investment performance.

As of June 30, 2024 , approximately 27% of our total assets

under management could potentially earn performance-based fees.

These percentages were approximately 12% and 47% of our

assets under management for our consolidated Affiliates and Affiliates accounted for under the equity method, respectively.

As of September 30, 2024 , approximately 27% of our total

assets under management could potentially earn performance-based fees.

These percentages were approximately 12% and 46%

of our assets under management for our consolidated Affiliates and Affiliates accounted for under the equity method,

respectively.

We anticipate performance-based fees will be a recurring component of our aggregate fees;

however we do not anticipate these

fees to be a significant component of our Consolidated revenue as these fees are predominately earned by our Affiliates

accounted for under the equity method.

Aggre gate fees were $1,098.1 million for the three months ended June 30, 2024 , an increase of $95.0 million or 9% as

compared to the three months ended June 30, 2023 .

The increase in our aggregate fees was due to a $73.9 million or 7%

increase from asset-based fees and a $21.1 million or 2% increase from performance-based fees, primarily in our liquid

however we do not

anticipate these fees to be a significant component of our Consolidated revenue as these fees are predominately earned by our

Affiliates accounted for under the equity method.

Aggregate fees were $1,157.1 million for the three months ended September 30, 2024 , an increase of $159.6 million or

16% as compared to the three months ended September 30, 2023 .

The increase in our aggregate fees was due to a $97.2 million

or 10% increase from asset-based fees and a $62.4 million or 6% increase from performance-based fees, primarily in our liquid

alternatives strategies.

The increase in asset-based fees was due to an increase in our average assets under management,

primarily in our alternatives strategies, and changes in the composition of our assets under management primarily driven by

investments in new Affiliates.

Aggregate fees were $2,569.7 million for the six months ended June 30, 2024 , an increase of $61.5 million or 2% as

compared to the six months ended June 30, 2023 .

The increase in asset-based fees was principally due to an increase in our average assets under

management, primarily in our alternatives strategies, and changes in the composition of our assets under management primarily

driven by investments in new Affiliates.

Aggregate fees were $3,726.8 million for the nine months ended September 30, 2024 , an increase of $221.1 million or 6%

as compared to the nine months ended September 30, 2023 .

The increase in our aggregate fees was due to a $245.7 million or

increase from asset-based fees, offset by an $87.0 million or 3% decrease from performance-based fees, primarily in our liquid

alternatives strategies.

The increase in asset-based fees was due to an increase in our average assets under management,

primarily in our alternatives strategies, and changes in the composition of our assets under management primarily driven by

investments in new Affiliates.

7% increase from asset-based fees, offset by a $24.6 million or 1% decrease from performance-based fees, primarily in our

liquid alternatives strategies.

The increase in asset-based fees was principally due to an increase in our average assets under

management, primarily in our alternatives strategies, and changes in the composition of our assets under management primarily

driven by investments in new Affiliates.

Financial and Supplemental Financial Performance Measures

1 unchanged sentence

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

(in millions)

6 unchanged sentences

Adjusted EBITDA (controlling interest) is an important supplemental financial performance measure for management.

Our Adjusted EBITDA (controlling interest) increased $3.2 million or 1% in the three months ended June 30, 2024 primarily

due to a $95.0 million or 9% increase in aggregate fees.

Adjusted EBITDA increased less than aggregate fees on a percentage

basis primarily due to the recognition of performance-based fees earned by Affiliates in which we hold a lesser economic

For the six months ended June 30, 2024 , our Adjusted EBITDA (controlling interest) increased $46.2 million or 11% ,

primarily from investments in new Affiliates and the recognition of performance-based fees earned by Affiliates in which we

hold a greater economic interest.

For the three months ended June 30, 2024 , our Net income (controlling interest) decreased $49.3 million or 39% .

decrease was primarily due to a $37.7 million decrease in Equity method income (net) and a $9.3 million increase in Income tax

expense attributable to the controlling interest.

For the six months ended June 30, 2024 , our Net income (controlling interest) decreased $34.0 million or 13% .

decrease was primarily due to a $22.8 million decrease in Investment and other income attributable to the controlling interest

and a $20.1 million increase in Income tax expense attributable to the controlling interest.

These decreases were partially offset

by a $21.2 million increase in Equity method income (net).

Our Adjusted EBITDA (controlling interest) increased $5.7 million or 3% in the three months ended September 30, 2024

primarily due to a $159.6 million or 16% increase in aggregate fees.

Adjusted EBITDA increased less than aggregate fees on a

percentage basis primarily due to the recognition of performance-based fees earned by Affiliates in which we hold a lesser

economic interest.

For the nine months ended September 30, 2024 , our Adjusted EBITDA (controlling interest) increased $51.8 million or

8% , primarily from investments in new Affiliates and the recognition of performance-based fees earned by Affiliates in which

we hold a greater economic interest.

For the three months ended September 30, 2024 , our Net income (controlling interest) decreased $93.4 million or 43% .

This decrease was primarily due to the recognition of a $133.1 million pre-tax gain associated with the sale of our equity

interest in Veritable, LP (“Veritable”) in the third quarter of 2023 (the “ Veritable Transaction”), partially offset by a $46.4

million decrease in Income tax expense attributable to the controlling interest.

For the nine months ended September 30, 2024 , our Net income (controlling interest) decreased $127.3 million or 27% .

This decrease was primarily due to the recognition of a $133.1 million pre-tax gain associated with the Veritable Transaction in

the third quarter of 2023 and a $30.4 million decrease in Investment and other income attributable to the controlling interest.

These decreases were partially offset by a $26.2 million decrease in Income tax expense attributable to the controlling interest.

We believe Economic net income (controlling interest) is an important supplemental financial performance measure

1 unchanged sentence

improves comparability of performance between periods.

For the three months ended June 30, 2024 , our Economic net income

(controlling interest) decreased $11.4 million or 7% , primarily due to an $11.0 million increase in current and other deferred

For the six months ended June 30, 2024 , our Economic net income (controlling interest) increased $17.2 million or 5% ,

primarily due to a $46.2 million increase in Adjusted EBITDA (controlling interest), partially offset by a $24.5 million increase

in current and other deferred taxes.

For the three months ended September 30, 2024 , our Economic net

income (controlling interest) increased $3.7 million or 2% , primarily due to a $5.7 million increase in Adjusted EBITDA

(controlling interest), partially offset by a $3.6 million increase in Interest expense attributable to the controlling interest.

For the nine months ended September 30, 2024 , our Economic net income (controlling interest) increased $20.9 million or

4% , primarily due to a $51.8 million increase in Adjusted EBITDA (controlling interest).

This increase was partially offset by

a $26.2 million increase in current and other deferred taxes attributable to the controlling interest and a $5.7 million increase in

Interest expense attributable to the controlling interest.

Results of Operations

7 unchanged sentences

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

(in millions, except as noted)

2 unchanged sentences

Consolidated revenue

Our Consolidated revenue decreased $12.2 million or 2% for the three months ended June 30, 2024 , due to an $8.8 million

or 1% decrease from asset-based fees and a $3.4 million or 1% decrease from performance-based fees, primarily in our private

markets strategies.

The decrease in asset-based fees was principally due to a decrease in consolidated Affiliate average assets

under management, primarily in our global equity strategies.

Our Consolidated revenue decreased $29.6 million or 3% for the six months ended June 30, 2024 , due to a $27.1 million or

3% decrease from asset-based fees and a $2.5 million decrease from performance-based fees, primarily in our private markets

The decrease in asset-based fees was principally due to a decrease in consolidated Affiliate average assets under

management, primarily in our global equity strategies.

Our Consolidated revenue decreased $8.8 million or 2% for the three months ended September 30, 2024 , due to an $11.9

million or 2% decrease from asset-based fees, offset by a $3.1 million increase from performance-based fees, primarily in our

private markets strategies.

The decrease in asset-based fees was principally due to changes in the composition of our assets

under management driven by the Veritable Transaction, offset by an increase in our consolidated Affiliate average assets under

management, primarily in our alternative s strategies.

Our Consolidated revenue decreased $38.6 million or 2% for the nine months ended September 30, 2024 , primarily due to

a $39.2 million or 2% decrease from asset-based fees.

The decrease in asset-based fees was principally due to changes in the

composition of our assets under management driven by the Veritable Transaction and a decrease in our consolidated Affiliate

average assets under management, primarily in our global equity strategies.

Consolidated Expenses

2 unchanged sentences

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

(in millions)

6 unchanged sentences

Total consolidated expenses

Compensation and related expenses decreased $13.6 million or 6% for the three months ended June 30, 2024 , primarily due

to a $9.0 million decrease in compensation correlated to the decrease in Consolidated revenue and a $3.9 million decrease in

share-based compensation expense.

Compensation and related expenses increased $4.5 million or 1% for the six months ended June 30, 2024 , primarily due to

a $6.4 million increase in Affiliate equity compensation expense and a $2.5 million increase in share-based compensation

These increases were partially offset by a $4.4 million decrease in compensation correlated to the decrease in

Consolidated revenue.

S elling, general and administrative expenses increased $4.2 million or 5% for the three months ended June 30, 2024 ,

Compensation and related expenses increased $9.0 million or 4% for the three months ended September 30, 2024 ,

primarily due to a $13.6 million increase in compensation accruals at Affiliates, partially offset by a decrease in compensation

and related expenses due to the Veritable Transaction.

Compensation and related expenses increased $13.5 million or 2% for the nine months ended September 30, 2024 ,

primarily due to a $21.9 million increase in compensation accruals primarily at Affiliates and a $7.0 million increase in Affiliate

equity compensation expense.

These increases were partially offset by a decrease in compensation and related expenses due to

the Veritable Transaction.

Selling, general and administrative expenses increased $5.9 million or 6% for the three months ended September 30, 2024 ,

primarily due to a $3.3 million increase in professional fees and a $2.4 million increase in distribution and investment-related

expenses, principally as a result of the increase in average assets under management on which these expenses are incurred.

Selling, general and administrative expenses increased $4.7 million or 2% for the nine months ended September 30, 2024 ,

primarily due to a $7.3 million increase in distribution and investment-related expenses, principally as a result of the increase in

1 unchanged sentence

This increase was partially offset by a $1.3 million

decrease in professional fees.

Selling, general and administrative expenses decreased $1.2 million or 1% for the six months ended June 30, 2024 ,

primarily due to a $3.2 million decrease in professional fees.

Intangible amortization and impairments decreased $5.2 million or 42% for the three months ended June 30, 2024 ,

decrease in non-income based and other taxes.

Intangible amortization and impairments decreased $5.2 million or 42% for the three months ended September 30, 2024 ,

primarily due to a $3.6 million decrease in amortization expense related to certain definite-lived assets being fully amortized

and a $1.7 million decrease due to the sale of our equity interest in Veritable, LP in the third quarter of 2023, (the “Veritable

Transaction).

Intangible amortization and impairments decreased $10.5 million or 42% for the six months ended June 30, 2024 , primarily

due to a $7.0 million decrease from a change in expected future economic benefit related to certain definite-lived assets and a

$3.3 million decrease due to the Veritable Transaction.

Interest expense increased $2.6 million or 8% for the three months ended June 30, 2024 , primarily due to a $7.6 million

increase from our 6.75% junior subordinated notes issued in March 2024 (the “2064 junior subordinated notes”).

and a $1.7 million decrease due to the Veritable Transaction.

Intangible amortization and impairments decreased $15.7 million or 42% for the nine months ended September 30, 2024 ,

primarily due to a $10.6 million decrease in amortization expense related to certain definite-lived assets being fully amortized

and a $5.0 million decrease due to the Veritable Transaction.

Interest expense increased $3.6 million or 12% for the three months ended September 30, 2024 , primarily due to a $7.6

million increase from our 6.75% junior subordinated notes issued in March 2024 (the “2064 junior subordinated notes”) and a

$2.5 million increase from our 5.50% senior unsecured notes issued in August 2024 (the “2034 senior notes”).

This increase

was partially offset by a $4.4 million decrease due to the maturity of our 4.25% senior notes in February 2024 (the “2024 senior

Interest expense increased $2.1 million or 3% for the six months ended June 30, 2024 , primarily due to an $8.6 million

increase from our 2064 junior subordinated notes.

This increase was partially offset by a $6.7 million decrease due to the

maturity of our 2024 senior notes in February 2024.

There were no significant changes to Depreciation and other amortization for the three and six months ended June 30,

Other expenses (net) decreased $3.0 million or 22% for the three months ended June 30, 2024 , primarily due to a $2.2

notes”) and a $2.8 million decrease due to the repayment of our senior unsecured term loan facility (the “term loan”) .

Interest expense increased $5.7 million or 6% for the nine months ended September 30, 2024 , primarily due to a $16.1

million increase from our 2064 junior subordinated notes and a $2.5 million increase from our 2034 senior notes.

This increase

was partially offset by an $11.1 million decrease due to the maturity of our 2024 senior notes in February 2024 and a $2.5

million decrease primarily due to the repayment of our term loan.

There were no significant changes to Depreciation and other amortization for the three and nine months ended

September 30, 2024 .

Other expenses (net) increased $3.7 million or 47% for the three months ended September 30, 2024 , primarily due to a $3.8

million increase in expenses related to changes in the values of contingent payment obligations.

Other expenses (net) decreased $4.7 million or 13% for the nine months ended September 30, 2024 , primarily due to a $5.4

million decrease in expenses related to changes in the values of contingent payment obligations.

Other expenses (net) decreased $8.4 million or 30% for the six months ended June 30, 2024 , primarily due to a $9.2 million

decrease in expenses related to changes in the values of contingent payment obligations.

Equity Method Income (Net)

10 unchanged sentences

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

(in millions, except as noted)

10 unchanged sentences

(1) Percentage change is not meaningful.

Our equity method revenue increased $107.2 million or 22% for the three months ended June 30, 2024 , due to an $82.7

million or 17% increase from asset-based fees and a $24.5 million or 5% increase from performance-based fees, primarily in

our liquid alternatives strategies.

The increase in asset-based fees was due to an increase in our equity method Affiliate average

assets under management, primarily in our alternatives strategies, and changes in the composition of our assets under

management primarily driven by investments in new Affiliates.

For the three months ended June 30, 2024 , equity method earnings increased $2.2 million or 3% , primarily due to a $107.2

million or 22% increase in equity method revenue.

Equity method earnings increased less than equity method revenue on a

percentage basis primarily due to the recognition of performance-based fees earned by Affiliates in which we hold a lesser

economic interest, partially offset by the contribution from investments in new Affiliates.

While equity method intangible amortization did not change for the three months ended June 30, 2024 , it reflects an $8.3

million decrease in amortization expense related to certain definite-lived assets being fully amortized, partially offset by a $5.3

million increase in amortization expense due to investments in new Affiliates and a $2.7 million increase in amortization

expense due to an increase in actual and expected client attrition for certain definite-lived acquired client relationships.

Equity method intangible impairments increased $39.9 million for the three months ended June 30, 2024 .

See Note 10 of

our Consolidated Financial Statements.

Our equity method revenue increased $91.1 million or 6% for the six months ended June 30, 2024 , due to a $175.6 million

or 12% increase from asset-based fees offset by an $84.5 million or 6% decrease from performance-based fees, primarily in our

liquid alternatives strategies.

The increase in asset-based fees was due to an increase in our equity method Affiliate average

assets under management, primarily in our alternatives strategies, and changes in the composition of our assets under

management primarily driven by investments in new Affiliates.

For the six months ended June 30, 2024 , equity method earnings increased $61.0 million or 39% , primarily due to a $91.1

Our equity method revenue increased $168.4 million or 36% for the three months ended September 30, 2024 , due to a

$109.1 million or 23% increase from asset-based fees and a $59.3 million or 13% increase from performance-based fees,

primarily in our liquid alternatives strategies.

The increase in asset-based fees was principally due to an increase in our equity

method Affiliate average assets under management, primarily in our alternatives strategies, and changes in the composition of

our assets under management primarily driven by investments in new Affiliates.

For the three months ended September 30, 2024 , equity method earnings increased $14.3 million or 23% , primarily due to

a $168.4 million or 36% increase in equity method revenue.

Equity method earnings increased less than equity method revenue

on a percentage basis primarily due to the recognition of performance-based fees earned by Affiliates in which we hold a lesser

economic interest and an increase in revenue at certain Affiliates in which we share in revenue less agreed-upon expenses .

Equity method intangible amortization increased $1.5 million or 7% for the three months ended September 30, 2024 ,

primarily due to a $5.3 million increase in amortization expense due to investments in new Affiliates and a $4.5 million

increase in amortization expense due to an increase in actual and expected client attrition for certain definite-lived acquired

client relationships.

These increases were partially offset by an $8.3 million decrease in amortization expense related to certain

definite-lived assets being fully amortized.

Our equity method revenue increased $259.7 million or 13% for the nine months ended September 30, 2024 , due to a

$284.9 million or 14% increase from asset-based fees, offset by a $25.2 million or 1% decrease from performance-based fees,

primarily in our liquid alternatives strategies.

The increase in asset-based fees was principally due to an increase in our equity

method Affiliate average assets under management, primarily in our alternatives strategies, and changes in the composition of

our assets under management primarily driven by investments in new Affiliates.

For the nine months ended September 30, 2024 , equity method earnings increased $75.3 million or 35% , primarily due to a

$259.7 million or 13% increase in equity method revenue.

Equity method earnings increased more than equity method revenue on a

percentage basis primarily due to the contribution from investments in new Affiliates and the recognition of performance-based

fees earned by Affiliates in which we hold a greater economic interest.

Equity method intangible amortization decreased $0.1 million for the six months ended June 30, 2024 , primarily due to a

$16.6 million decrease in amortization expense related to certain definite-lived assets being fully amortized, partially offset by a

$10.5 million increase in amortization expense due to investments in new Affiliates and a $5.4 million increase in amortization

expense due to an increase in actual and expected client attrition for certain definite-lived acquired client relationships.

Equity method intangible impairments increased $39.9 million for the six months ended June 30, 2024 .

See Note 10 of our

Consolidated Financial Statements.

Equity method earnings increased more than equity method revenue

on a percentage basis primarily due to an increase in earnings at certain Affiliates in which we share in revenue less agreed-

upon expenses and the recognition of performance-based fees earned by Affiliates in which we hold a greater economic interest.

Equity method intangible amortization increased $1.4 million or 2% for the nine months ended September 30, 2024 ,

primarily due to a $15.8 million increase in amortization expense due to investments in new Affiliates and a $10.5 million

increase in amortization expense due to an increase in actual and expected client attrition for certain definite-lived acquired

client relationships.

These increases were partially offset by a $24.9 million decrease in amortization expense related to certain

definite-lived assets being fully amortized.

Equity method intangible impairments increased $39.9 million for the nine months ended September 30, 2024 .

10 of our Consolidated Financial Statements.

Affiliate Transaction Gain

For the three and nine months ended September 30, 2023, we recorded a $133.1 million pre-tax gain on the Veritable

See Note 9 of our Consolidated Financial Statements.

Investment and Other Income

1 unchanged sentence

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

(in millions)

Investment and other income

Investment and other income decreased $7.2 million or 27% for the three months ended June 30, 2024 , primarily due to a

$6.4 million decrease in net unrealized gains on Other investments.

Investment and other income decreased $27.1 million or 42% for the six months ended June 30, 2024 , primarily due to

decreases in net realized and unrealized gains on Investments in marketable securities and Other investments of $20.7 million

and $7.1 million, respectively.

Investment and other income decreased $0.2 million or 1% for the three months ended September 30, 2024 , primarily due

to a $9.9 million decrease in realized gains on Investments in marketable securities, offset by an $8.4 million increase in

unrealized gains on Other investments.

Investment and other income decreased $27.2 million or 31% for the nine months ended September 30, 2024 , primarily due

to a $30.6 million decrease in net realized and unrealized gains on Investments in marketable securities.

Income Tax Expense

1 unchanged sentence

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

(in millions)

2 unchanged sentences

attributable to the non-controlling interests.

Income tax expense increased $10.5 million or 32% for the three months ended June 30, 2024 .

Income tax expense decreased $46.4 million or 60% for the three months ended September 30, 2024 .

Our effective tax rate

(controlling interest) for the three months ended June 30, 2024 was 35.0% as compared to 20.1% for the three months ended

June 30, 2023 .

The increase in the tax rate (controlling interest) was primarily due to a decrease in estimated foreign tax

expense in the three months ended June 30, 2023 , and an expense to reduce the carrying value of an Affiliate to fair value in the

three months ended June 30, 2024 for which no tax benefit was recorded.

See Note 15 of our Consolidated Financial

Income tax expense increased $21.0 million or 27% for the six months ended June 30, 2024 .

Our effective rate (controlling

interest) for the six months ended June 30, 2024 was 29.4% as compared to 22.2% for the six months ended June 30, 2023 .

increase in the tax rate (controlling interest) was primarily due to a decrease in estimated foreign tax expense and tax windfalls

attributable to share-based compensation in the six months ended June 30, 2023 , and an expense to reduce the carrying value of

an Affiliate to fair value in the six months ended June 30, 2024 for which no tax benefit was recorded.

See Note 15 of our

Consolidated Financial Statements.

(controlling interest) for the three months ended September 30, 2024 was 19.3% as compared to 25.9% for the three months

ended September 30, 2023 .

The decrease in the tax rate (controlling interest) was primarily due to tax windfalls attributable to

share-based compensation in the three months ended September 30, 2024 .

Income tax expense decreased $25.4 million or 16% for the nine months ended September 30, 2024 .

Our effective rate

(controlling interest) for the nine months ended September 30, 2024 was 26.1% as compared to 23.9% for the nine months

ended September 30, 2023 .

The increase in the tax rate (controlling interest) was primarily due to discrete foreign tax benefits

and tax windfalls attributable to share-based compensation in the nine months ended September 30, 2023 , and an expense to

reduce the carrying value of an Affiliate to fair value for which no tax benefit was recorded, partially offset by higher tax

windfalls attributable to share-based compensation in the nine months ended September 30, 2024 .

The following table presents Net income, Net income (non-controlling interests), and Net income (controlling interest):

For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

(in millions)

1 unchanged sentence

Net income (controlling interest)

Net income (controlling interest) decreased $49.3 million or 39% for the three months ended June 30, 2024 , primarily due

to a decrease in Equity method income (net) and an increase in Income tax expense attributable to the controlling interest.

Net income (controlling interest) decreased $34.0 million or 13% for the six months ended June 30, 2024 , primarily due to

a decrease in Investment and other income attributable to the controlling interest and an increase in Income tax expense

attributable to the controlling interest, partially offset by an increase in Equity method income (net).

Net income (controlling interest) decreased $93.4 million or 43% for the three months ended September 30, 2024 ,

primarily due to the recognition of a pre-tax gain associated with the Veritable Transaction in the third quarter of 2023, partially

offset by a decrease in Income tax expense attributable to the controlling interest.

Net income (controlling interest) decreased $127.3 million or 27% for the nine months ended September 30, 2024 ,

primarily due to the recognition of a pre-tax gain associated with the Veritable Transaction in the third quarter of 2023 and a

decrease in Investment and other income attributable to the controlling interest.

These decreases were partially offset by a

decrease in Income tax expense attributable to the controlling interest.

Supplemental Financial Performance Measures

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Economic net income (controlling interest) and Economic earnings per share are used by

management and our B oard of Directors as our principal performance benchmarks , including as one of the measures for

management and our Board of Directors as our principal performance benchmarks, including as one of the measures for

determining executive compensation.

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For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

(in millions)

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For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

(in millions)

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Equity method intangible amortization and impairments

(2) The three and six months ended June 30, 2023 include gains on ordinary shares of EQT AB (“EQT”), a public company

listed on Nasdaq Stockholm (EQT.ST).

We received the EQT shares through the sale of our equity interest in Baring

Private Equity Asia (“BPEA”), in connection with the strategic combination of BPEA and EQT, which was completed in

the fourth quarter of 2022.

(2) The three and nine months ended September 30, 2023 includes Veritable Transaction gain of $133.1 million and gains of

$6.5 million and $29.6 million on ordinary shares of EQT AB (“EQT”), a public company listed on Nasdaq Stockholm

(EQT.ST), respectively.

We received the EQT shares through the sale of our equity interest in Baring Private Equity Asia

(“BPEA”), in connection with the strategic combination of BPEA and EQT, which was completed in the fourth quarter of

(3) Other items include certain non-income based taxes, depreciation, and non-cash items such as certain Affiliate equity

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For the Three Months

Ended June 30,

For the Six Months

Ended June 30,

Ended September 30,

For the Nine Months

Ended September 30,

(in millions, except per share data)

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(1) See note (1) to the table in “Adjusted EBITDA (controlling interest).”

(2) The three and six months ended June 30, 2023 include gains on EQT shares, net of $0.4 million and $5.6 million of income

tax expense, respectively.

(2) For the three and nine months ended September 30, 2023 , intangible-related deferred taxes were adjusted to eliminate a

$28.9 million benefit related to the Veritable Transaction.

(3) The three and nine months ended September 30, 2023 includes Veritable Transaction gain of $133.1 million and gains on

EQT shares of $6.5 million and $29.6 million, net of $34.9 million and $40.6 million of income tax expense, respectively.

(4) Other economic items include certain Affiliate equity activity, gains and losses related to contingent payment obligations,

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Other economic items were net of income tax expense of

$2.6 million and $1.2 million for the three months ended June 30, 2023 and 2024 , respectively, and $4.4 million and

$1.1 million for the six months ended June 30, 2023 and 2024 , respectively.

$0.3 million and $1.7 million for the three months ended September 30, 2023 and 2024 , respectively, and $4.7 million and

$2.8 million for the nine months ended September 30, 2023 and 2024 , respectively.

Liquidity and Capital Resources

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Global Ratings.

C ash and cash equivalents were $865.5 million as of June 30, 2024 and were attributable to both our controlling and the

non-controlling interests.

In the six months ended June 30, 2024 , we met our cash requirements primarily through cash

generated by operating activities.

Our principal uses of cash in the six months ended June 30, 2024 were for the return of

excess capital through share repurchases, repayment of debt, purchases of investment securities, and distributions to Affiliate

equity holders.

Cash and cash equivalents were $1,010.7 million as of September 30, 2024 and were attributable to both our controlling

and the non-controlling interests.

In the nine months ended September 30, 2024 , we met our cash requirements primarily

through cash generated by operating activities.

Our principal uses of cash in the nine months ended September 30, 2024 were

for the return of excess capital through share repurchases, repayment of debt, purchases of investment securities, and

distributions to Affiliate equity holders.

We expect investments in new Affiliates, investments in existing Affiliates, primarily through purchases of Affiliate equity

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The following table presents operating, investing, and financing cash flow activities:

For the Six Months

Ended June 30,

For the Nine Months

Ended September 30,

(in millions)

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cash items, and timing differences in the cash settlement of assets and liabilities.

For the six months ended June 30, 2024 , Cash flows from operating activities were $454.4 million , primarily from Net

income of $333.8 million and distributions of earnings received from equity method investments of $289.0 million .

For the nine months ended September 30, 2024 , Cash flows from operating activities were $719.6 million , primarily from

Net income of $519.5 million and distributions of earnings received from equity method investments of $357.3 million .

items were partially offset by timing differences in the cash settlement of receivables, other assets, and payables, accrued

liabilities, and other liabilities of $100.0 million .

For the six months ended June 30, 2024 , operating cash flows were primarily

attributable to the controlling interest.

For the nine months ended September 30, 2024 , operating cash flows were

primarily attributable to the controlling interest.

Investing Cash Flow

For the six months ended June 30, 2024 , Cash flows from investing activities were $314.8 million , primarily due to $754.4

million of maturities and sales of investment securities, partially offset by $432.3 million of purchases of investment securities.

For the six months ended June 30, 2024 , investing cash flows were primarily attributable to the controlling interest.

For the nine months ended September 30, 2024 , Cash flows from investing activities were $370.6 million , primarily due to

$875.2 million of maturities and sales of investment securities, partially offset by $496.4 million of purchases of investment

For the nine months ended September 30, 2024 , investing cash flows were primarily attributable to the controlling

Financing Cash Flow

For the six months ended June 30, 2024 , Cash flows used in financing activities were $716.1 million , primarily due to

$484.6 million of repurchases of common stock (net), repayment of senior notes and senior bank debt of $400.0 million and

For the nine months ended September 30, 2024 , Cash flows used in financing activities were $904.1 million , primarily due

to $589.5 million of repurchases of common stock (net), repayment of senior notes and senior bank debt of $400.0 million and

$350.0 million , respectively, $206.5 million of distributions to non-controlling interests, and $54.1 million of Affiliate equity

purchases, net of issuances.

These items were partially offset by the issuance of $450.0 million of junior subordinated notes.

These items were partially offset by the issuance of junior subordinated notes and senior notes of

$450.0 million and $397.6 million, respectively.

Affiliate Equity

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interests to other individuals or entities in certain cases, subject to our approval or other restrictions.

As of June 30, 2024 , the current redemption value of Affiliate equity interests was $444.9 million , of which $391.0 million

was presented as Redeemable non-controlling interests (including $10.7 million of consolidated Affiliate sponsored investment

products primarily attributable to third-party investors), and $53.9 million was included in Other liabilities.

timing and amounts of these purchases are difficult to predict, we paid $55.4 million for Affiliate equity purchases and received

$6.3 million for Affiliate equity issuances during the six months ended June 30, 2024 , and we expect net purchases of

approximately $75 million of Affiliate equity during the remainder of 2024 .

In the event of a purchase, we become the owner

of the cash flow associated with the purchased equity.

See Notes 13 and 14 of our Consolidated Financial Statements.

As of September 30, 2024 , the current redemption value of Affiliate equity interests was $456.0 million , of which $397.1

million was presented as Redeemable non-controlling interests (including $13.3 million of consolidated Affiliate sponsored

investment products primarily attributable to third-party investors), and $58.9 million was included in Other liabilities.

Although the timing and amounts of these purchases are difficult to predict, we paid $60.4 million for Affiliate equity purchases

and received $6.3 million for Affiliate equity issuances during the nine months ended September 30, 2024 , and we expect net

purchases of approximately $60 million of Affiliate equity during the remainder of 2024 .

In the event of a purchase, we

become the owner of the cash flow associated with the purchased equity.

See Notes 13 and 14 of our Consolidated Financial

Share Repurchases

Our Board of Directors authorized share repurchase programs in October 2022 , October 2023 , and July 2024 to repurchase

up to 3.0 million , 3.3 million , and 5.4 million shares of our common stock, respectively, and these authorizations have no

up to 3.0 million , 3.3 million , and 5.4 million sha res of our common stock, respectively, and these authorizations have no

Purchases may be made from time to time, at management’s discretion, in the open market or in privately negotiated

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the shares in the repurchase program authorized in October 2022.

During the three and six months ended June 30, 2024 , we

repurchased 2.1 million and 3.0 million shares of our common stock at an average price per share of $158.62 and $157.66 ,

D uring the three and nine months ended September 30, 2024 ,

we repurchased 0.6 million and 3.6 million shares of our common stock at an average price per share of $163.23 and $158.62 ,

respectively.

As of the July 22, 2024 authorization, there were approximately 6 million shares available for repurchase under

our share repurchase programs.

As of September 30, 2024 , there were a total of 5.9 million shares available for repurchase under our share

repurchase programs.

The following table presents the carrying value of our outstanding indebtedness.

The weighted average maturity of our

outstanding debt is 21 years, with approximately 87% of debt maturing in 2030 and beyond.

Our nearest term maturity relates

to our $350.0 million senior notes due August 2025 (“the 2025 senior notes”).

See Note 7 of our Consolidated Financial

(in millions)

September 30,

Senior bank debt

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Senior Bank Debt

In the first quarter of 2024, we repaid $50.0 million of our senior unsecured term loan facility (the “term loan”).

As of June 30, 2024 , we had a $1.25 billion revolver and a $300.0 million term loan (together, the “credit facilities”).

revolver matures on October 25, 2027 and the term loan matures on October 23, 2026.

Subject to certain conditions, we 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.

As of June 30, 2024 , we had no outstanding borrowings under the revolver, and could borrow all capacity and remain in

compliance with our credit facilities.

During the nine months ended September 30, 2024 , we repaid the $350.0 million outstanding under the term loan .

As of September 30, 2024 , we had a $1.25 billion revolver.

The revolver matures on October 25, 2027 and the term loan

terminated upon payment in full.

Subject to certain conditions, we may increase the commitments under the revolver by up to

an additional $500.0 million .

As of September 30, 2024 , we had no outstanding borrowings under the revolver, and could borrow all capacity and remain

in compliance with the revolver.

In the first quarter of 2024, our $400.0 million 2024 senior notes matured and were fully repaid.

As of June 30, 2024 , we had senior notes outstanding, the respective principal terms of which are presented and described

As of September 30, 2024 , we had senior notes outstanding, the respective principal terms of which are presented and

described below:

February 2015

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Semi-annually

The senior notes may be redeemed, in whole or in part, at any time, in the case of the 2025 senior notes, and at any time

prior to March 15, 2030, in the case of the 2030 senior notes.

Semi-annually

On August 20, 2024, we issued $400.0 million of 2034 senior unsecured notes with a maturity date of August 20, 2034.

Interest is payable beginning February 20, 2025.

In addition to customary event of default provisions, the indenture governing

the 2034 senior notes limits our ability to consolidate, merge or sell all or substantially all of its assets and requires us to make

an offer to repurchase the 2034 senior notes upon certain change of control triggering events.

The senior notes may be redeemed, in whole or in part, at a make-whole redemption price (plus accrued and unpaid

interest), at any time, in the case of the 2025 senior notes, at any time prior to March 15, 2030, in the case of the 2030 senior

notes, and at any time prior to May 20, 2034, in the case of the 2034 senior notes.

In addition, the 2030 and 2034 senior notes

may be redeemed at par, in whole or in part, at any time, on or after March 15, 2030 and May 20, 2034, respectively.

also repurchase senior notes in the open market or in privately negotiated transactions from time to time at management’s

We have used a majority of the net proceeds from the 2034 senior notes for the repayment of the term loan, and in the

future intend to use the remaining net proceeds for further repayment or refinancing of indebtedness, as well for other general

corporate purposes, which may include share repurchases and investments in new and existing Affiliates.

Junior Subordinated Notes

As of June 30, 2024 , we had junior subordinated notes outstanding, the respective principal terms of which are presented

and described below:

As of September 30, 2024 , we had junior subordinated notes outstanding, the respective principal terms of which are

presented and described below:

Junior Subordinated

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subordinate in right of payment and upon liquidation to all of our current and future senior indebtedness.

As of June 30, 2024 ,

As of September 30,

2024 , the 2059 junior subordinated notes could be redeemed at any time, in whole or in part.

The other junior subordinated notes may

be redeemed at any time, in whole or in part, on or after September 30, 2025, in the case of the 2060 junior subordinated notes,

on or after September 30, 2026, in the case of the 2061 junior subordinated notes, and on or after March 30, 2029, in the case of

the 2064 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.

Prior to the applicable redemption date, at

our option, the applicable junior subordinated notes may also be redeemed, in whole but not in part, at 100% of the principal

amount, plus any accrued and unpaid interest, if certain changes in tax laws, regulations, or interpretations occur;

or at 102% of

the principal amount, plus any accrued and unpaid interest, if a rating agency makes certain changes relating to the equity credit

criteria for securities with features similar to the applicable notes.

The other junior subordinated

notes may be redeemed at any time, in whole or in part, on or after September 30, 2025, in the case of the 2060 junior

subordinated notes, on or after September 30, 2026, in the case of the 2061 junior subordinated notes, and on or after March 30,

2029, in the case of the 2064 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.

Prior to the applicable

redemption date, at our option, the applicable junior subordinated notes may also be redeemed, in whole but not in part, at

100% of the principal amount, plus any accrued and unpaid interest, if certain changes in tax laws, regulations, or

interpretations occur;

or at 102% of the principal amount, plus any accrued and unpaid interest, if a rating agency makes certain

changes relating to the equity credit criteria for securities with features similar to the applicable notes.

We have used, and in the future intend to use, the net proceeds from the 2064 junior subordinated notes for general

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Junior Convertible Securities

As of June 30, 2024 , we had $341.7 million of principal outstanding in our 5.15% junior convertible trust preferred

As of September 30, 2024 , we had $341.7 million of principal outstanding in our 5.15% junior convertible trust preferred

securities (the “junior convertible securities”), maturing in 2037.

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convertible securities in the open market or in privately negotiated transactions from time to time at management’s discretion.

We did not repurchase any of our junior convertible securities during the six months ended June 30, 2023 and 2024 .

We did not repurchase any of our junior convertible securities during the nine months ended September 30, 2023 and 2024 .

Equity Distribution Program

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distribution program superseded and replaced our prior equity distribution program.

As of June 30, 2024 , no sales had occurred

under the equity distribution program.

As of September 30, 2024 , no sales had

occurred under the equity distribution program.

See Note 8 of our Consolidated Financial Statements.

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See Notes 5 and 8 of our Consolidated Financial Statements.

As of June 30, 2024 , our lease obligations were $19.4 million for the remainder of 2024 , $61.0 million from 2025 through

As of September 30, 2024 , our lease obligations were $10.2 million for the remainder of 2024 , $62.4 million from 2025

through 2026, $45.0 million from 2027 through 2028, and $70.4 million thereafter.

The portion of these lease obligations

attributable to the controlling interest were $2.8 million for the remainder of 2024 , $13.9 million from 2025 through 2026, $4.1

million from 2027 through 2028, and $8.5 million thereafter.

The portion of these lease obligations attributable to

the controlling interest were $5.7 million for the remainder of 2024 , $13.9 million from 2025 through 2026, $4.1 million from

2027 through 2028, and $8.5 million thereafter.

Recent Accounting Developments

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Judgments, and should be read in conjunction with this Quarterly Report on Form 10‑Q.

Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to our Quantitative and Qualitative Disclosures About Market Risk for the three

months ended June 30, 2024 .

Please refer to Item 7A of our 2023 Annual Report on Form 10 -K and Item 3 of our Quarterly

Report on Form 10-Q for the three months ended March 31, 2024.

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-Q

Item 2. Management’s Discussion and Analysis