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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

2025-02-14 compared with 2024-02-16 · 40 added, 19 removed, 9 unchanged (87% of the section changed)

1 unchanged sentence

Assets Under Management Market Price Risk

Our Consolidated revenue and equity method revenue are derived primarily from asset-based fees that are typically determined as a percentage of the value of a client’s assets under management.

Such values are affected by changes in financial markets (including declines in the capital markets, fluctuations in foreign currency exchange rates, inflation rates or the yield curve, and other market factors) and, accordingly, declines in the financial markets may negatively impact our Consolidated revenue and equity method revenue.

As of December 31, 2023, we estimate a proportional 1% change in the value of our assets under management would have resulted in a $16.3 million annualized change in asset-based fees in Consolidated revenue for our consolidated Affiliates and a $14.8 million annualized change in asset-based fees in equity method revenue for our Affiliates accounted for under the equity method.

This proportional increase or decrease excludes assets under management on which asset-based fees are charged on committed capital.

Our Consolidated revenue and equity method revenue are derived primarily from asset-based fees that are typically

determined as a percentage of the value of a client’s assets under management.

Such values are affected by changes in financial

markets (including declines in the capital markets, fluctuations in foreign currency exchange rates, inflation rates or the yield

curve, and other market factors) and, accordingly, declines in the financial markets may negatively impact our Consolidated

revenue and equity method revenue.

As of December 31, 2024 , we estimate a proportional 1% change in the value of our assets under management would have

resulted in a $15.9 million annualized change in asset-based fees in Consolidated revenue for our consolidated Affiliates and a

$15.9 million annualized change in asset-based fees in equity method revenue for our Affiliates accounted for under the equity

This proportional increase or decrease excludes assets under management on which asset-based fees are charged on

committed capital.

Interest Rate Risk

We have fixed rates of interest on our senior notes, junior subordinated notes, and junior convertible securities.

While a change in market interest rates would not affect the interest expense incurred on our fixed rate securities, such a change may affect the fair value of these securities.

We estimate that a 1% change in interest rates would have resulted in a $145.7 million net change in the fair value of our fixed rate securities as of December 31, 2023.

We pay a variable rate of interest on our credit facilities at specified rates, based either on an applicable term Secured Overnight Financing Rate (“SOFR”) plus a SOFR adjustment of 0.10% or prime rate, plus a marginal rate determined based on our credit rating.

As of December 31, 2023, the interest rate for our outstanding borrowings under the term loan was term-SOFR plus a SOFR adjustment of 0.10%, plus the marginal rate of 0.85%.

We estimate that a 1% change in interest rates would have changed our annual interest expense on the outstanding balances under our credit facilities by $3.5 million, as of December 31, 2023.

change in market interest rates would not affect the interest expense incurred on our fixed rate securities, such a change may

affect the fair value of these securities.

We estimate that a 1% change in interest rates would have resulted in a $226.1 million

net change in the fair value of our fixed rate securities as of December 31, 2024 .

We pay a variable rate of interest on any

outstanding obligations under our revolver at specified rates, based either on an applicable term Secured Overnight Financing

Rate (“SOFR”) plus a SOFR adjustment of 0.10% or prime rate, plus a marginal rate determined based on our credit rating.

of December 31, 2024 , we had no outstanding borrowings under the revolver .

Foreign Currency Risk

The functional currency of most of our Affiliates is the U.S.

Certain of our Affiliates have the pound sterling, Canadian dollar, or the Euro as their functional currency, and are, therefore, impacted by movements in pound sterling, Canadian dollar, and Euro to U.S.

Certain of our Affiliates have the pound sterling,

Canadian dollar, or the Euro as their functional currency, and are, therefore, impacted by movements in pound sterling,

Canadian dollar, and Euro to U.S.

dollar foreign currency exchange rates.

In addition, the valuations of our foreign Affiliates with a non-U.S.

dollar functional currency change based on fluctuations in foreign currency exchange rates, among other factors.

In addition, the valuations of our foreign Affiliates

with a non-U.S.

dollar functional currency change based on fluctuations in foreign currency exchange rates, among other

Changes due to fluctuations in foreign currency exchange rates are recorded as a component of stockholders’ equity.

To illustrate the effect of possible changes in foreign currency exchange rates, we estimate a 1% change in the pound sterling, Canadian dollar, and Euro to U.S.

dollar exchange rates would have resulted in a $8.0 million, $2.1 million, and $1.2 million change to stockholders’ equity, respectively, based on the December 31, 2023 carrying value of Affiliates whose functional currency is the pound sterling, Canadian dollar, or the Euro, and of our and our Affiliates’ pound sterling- and Euro-denominated derivative financial instruments.

For the year ended December 31, 2023, we estimate a 1% change in the pound

sterling, Canadian dollar, and the Euro to U.S.

dollar exchange rates would have resulted in $1.2 million, $0.3 million, and $0.0 million in annual changes to Income before income taxes (controlling interest), respectively.

To illustrate the effect of possible changes in foreign currency exchange rates, we estimate a 1% change in the pound

sterling, Canadian dollar, and Euro to U.S.

dollar exchange rates would have resulted in an $8.4 million , $1.9 million , and $1.5

million change to stockholders’ equity, respectively, primarily based on the December 31, 2024 carrying value of Affiliates

whose functional currency is the pound sterling, Canadian dollar, or the Euro.

For the year ended December 31, 2024 , we

estimate a 1% change in the pound sterling, Canadian dollar, and the Euro to U.S.

dollar exchange rates would have resulted in

$1.2 million , $0.3 million , and $0.0 million in annual changes to Income before income taxes (controlling interest),

respectively.

Derivative Risk

From time to time, we and our Affiliates seek to offset exposure to changes in interest rates, foreign currency exchange rates, and markets by entering into derivative financial instruments.

There can be no assurance that our or our Affiliates’ derivative financial instruments will meet their overall objective or that we or our Affiliates will be successful in entering into such instruments in the future.

From time to time, we and our Affiliates seek to offset exposure to changes in interest rates, foreign currency exchange

rates, and markets by entering into derivative financial instruments.

There can be no assurance that our or our Affiliates’

derivative financial instruments will meet their overall objective or that we or our Affiliates will be successful in entering into

such instruments in the future.

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 7A. Quantitative and Qualitative Disclosures About Market Risk