Affiliated Managers Group, Inc.: Form 10-Q for the period ended Mar 31, 2026

Forward-Looking Statements

Certain matters discussed in this Quarterly Report on Form 10-Q, in our other filings with the Securities and Exchange

Commission, in our press releases, and in oral statements made with the approval of an executive officer may constitute

“forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements

include, but are not limited to, statements related to our expectations regarding the performance of our business, our financial

results, our liquidity and capital resources, and other non-historical statements, and may be prefaced with words such as

“outlook,” “guidance,” “believes,” “expects,” “potential,” “preliminary,” “continues,” “may,” “will,” “should,” “seeks,”

“approximately,” “predicts,” “projects,” “positioned,” “prospects,” “intends,” “plans,” “estimates,” “pending

investments,” “anticipates,” or the negative version of these words or other comparable words. Such statements are subject to

certain risks and uncertainties, including, among others, the factors discussed under the caption “Item 1A. Risk Factors” in our

Annual Report on Form 10-K for the year ended December 31, 2025, and from time to time, as applicable, our Quarterly

Reports on Form 10-Q . These factors (among others) could affect our financial condition, business activities, results of

operations, cash flows, or overall financial performance and cause actual results and business activities to differ materially

from historical periods and those presently anticipated and projected. Forward-looking statements speak only as of the date

they are made, and we will not undertake and we specifically disclaim any obligation to release publicly the result of any

revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of such

statements or to reflect the occurrence of events, whether or not anticipated. In that respect, we caution readers not to place

undue reliance on any such forward-looking statements.

Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction

with our Consolidated Financial Statements and the notes thereto contained elsewhere in this Quarterly Report on Form 10-Q.

References throughout this report to “AMG,” “we,” “us,” “our,” the “Company,” and similar references refer to

Affiliated Managers Group, Inc., unless otherwise stated or the context otherwise requires.

Executive Overview

AMG is a strategic partner to leading independent investment firms globally. Our strategy is to generate long-term value

by investing in high-quality independent partner-owned firms, which we refer to as “Affiliates,” through a proven partnership

approach, and allocating resources across our unique opportunity set to the areas of highest growth and return. With their

entrepreneurial, investment-centric cultures and alignment of interests with clients through direct equity ownership by firm

principals, independent firms have fundamental competitive advantages in offering unique return streams to the marketplace.

Through AMG’s distinctive approach, we enhance these advantages to magnify the long-term success of our Affiliates and

actively support their independence. Our innovative model enables each Affiliate’s management team to retain autonomy

and significant equity ownership in their firm, while they leverage our strategic capabilities and insight, including access to

growth capital, product strategy and development, capital formation capabilities, incentive alignment and succession

planning, and strategic advisory to expand their reach, diversify their business, and enhance their long-term success. As of

March 31, 2026, our aggregate assets under management were approximately $882 billion across a diverse range of private

markets, liquid alternative, and differentiated long-only investment strategies.

In the first quarter of 2026, we completed our agreement with Brown Brothers Harriman (“BBH”) to acquire a minority

equity interest in BBH Credit Partners, BBH’s taxable fixed income and credit franchise, our additional minority investment

in Garda Capital Partners LP (“Garda”), a liquid alternatives manager specializing in fixed income relative value strategies

and an Affiliate since 2019, and our minority investment in HighBrook Investors (“HighBrook”), a private markets manager

specializing in real estate assets. Following the close of the transactions, Affiliate management continues to hold a majority

of the equity of the respective businesses and directs the day-to-day operations, and, with respect to Garda, our investment

continues to be accounted for under the equity method.

Operating Performance Measures

Under accounting principles generally accepted in the U.S. (“GAAP”), we are required to consolidate certain of our

Affiliates and use the equity method of accounting for others. Whether we consolidate an Affiliate or use the equity method of

accounting, we maintain the same innovative partnership approach and provide support and assistance in substantially the same

manner for all of our Affiliates. Furthermore, all of our Affiliates are investment managers and are impacted by similar

marketplace factors and industry trends. Therefore, certain key aggregate operating performance measures are important in

providing management with a comprehensive view of the operating performance and material trends across our entire business.

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The following table presents our key aggregate operating performance measures:

(in billions, except as noted)

Assets under management, and therefore average assets under management, include the assets under management of our

consolidated and equity method Affiliates. Assets under management is presented on a current basis without regard to the

timing of the inclusion of an Affiliate’s financial results in our operating performance measures and Consolidated Financial

Statements. Average assets under management reflects the timing of the inclusion of an Affiliate’s financial results in our

operating performance measures and Consolidated Financial Statements. Average assets under management for equities and

similar investment products generally represents an average of the daily net assets under management, while for liquid

alternatives and multi-asset and fixed income products, average assets under management generally represents an average of the

assets at the beginning or end of each month during the applicable period. Average assets under management for private

markets products generally represents total commitments or invested assets under management.

Aggregate fees consist of the total asset- and performance-based fees earned by all of our consolidated and equity method

Affiliates. In the case of our equity method Affiliates, asset- and performance-based fees are presented net of certain expense

reimbursements paid by the underlying products. For certain of our Affiliates accounted for under the equity method, we report

the Affiliate’s aggregate fees one quarter in arrears. Aggregate fees are provided in addition to, but not as a substitute for,

Consolidated revenue or other GAAP performance measures.

Assets Under Management

Our Affiliates manage capital on behalf of clients across a diverse range of investment strategies. Our Affiliates earn asset-

based fees on the capital that they manage and certain of our Affiliate’s strategies earn performance-based fees based on the

performance generated by their investment products. For the three months ended March 31, 2026, assets under management

increased $68.7 billion or 8.4% driven by net client cash inflows and the addition of assets associated with new partnerships.

We continue to see client demand for alternative strategies with broad-based demand for our Affiliates’ liquid alternative and

private markets strategies generating strong net inflows in the quarter, while our equity strategies experienced net outflows in

line with trends across the industry. As we continue to execute our growth strategy by investing in new and existing Affiliates,

as well as in AMG’s strategic capabilities, we expect our business mix to further evolve, expanding our exposure to in-demand

strategies in both private markets and liquid alternatives, better positioning AMG to continue to benefit from industry growth

trends with an increasingly diversified business profile.

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The following table presents changes in our assets under management by strategy for the three months ended March 31,

2026:

(in billions)

(1) Attributable to BBH Credit Partners and HighBrook as of their respective closing dates.

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

currency is not the U.S. dollar into our functional currency.

(3) Other includes product transitions and reclassifications.

The following tables present performance of our investment strategies, where available, measured by the percentage of

assets under management ahead of their relevant benchmark:

(1) Past performance is not indicative of future results. Performance and AUM information is as of March 31, 2026 and is

based on data available at the time of calculation. Product returns are sourced from Affiliates while benchmark returns are

generally sourced via third-party subscriptions.

(2) For private markets products, performance is reported as the percentage of assets that have outperformed benchmarks on a

since-inception internal rate of return basis. Benchmarks utilized include a combination of public market equivalents, peer

medians, and absolute returns where benchmarks are not available. For purposes of investment performance comparisons,

the latest vintage comparison includes the most recent vehicles and strategies (traditional long-duration investment funds,

customized vehicles, and other evergreen vehicles and product structures) where meaningful performance is available and

calculable. In order to illustrate the performance of our private markets product category over a longer period of history,

the last three vintages comparison incorporates the latest vintage vehicles and the prior two vintages for traditional long-

duration investment funds, as well as additional vehicles and strategies launched during the equivalent time period as the

last three vintages of traditional long-duration investment funds. Due to the nature of these investments and vehicles,

reported performance is typically on a three- to six-month lag basis.

(3) For liquid alternative and equity products, performance is reported as the percentage of assets that have outperformed

benchmarks across the indicated periods, and excludes market-hedging products. For purposes of investment performance

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comparisons, products are an aggregation of portfolios (separate accounts, investment funds, and other products) that each

represent a particular investment objective, using the most representative portfolio for the performance comparison.

Performance is presented for products with a three-, five-, and/or ten-year track record and is measured on a consistent

basis relative to the most appropriate benchmarks. Benchmark appropriateness is generally reviewed annually to reflect

any changes in how underlying portfolios/mandates are managed. Product and benchmark performance is reflected as total

return and is annualized. Reported product performance is gross-of-fees for institutional and high-net-worth separate

accounts, and generally net-of-fees across retail funds and other commingled vehicles such as hedge funds.

(4) Multi-asset and fixed income products are mainly our wealth management and solutions offerings. These investment

products are primarily customized toward wealth preservation, estate planning, and liability and tax management, and

therefore are typically not measured against a benchmark.

Aggregate Fees

Aggregate fees consist of asset- and performance-based fees of our consolidated and equity method Affiliates. In the case

of our equity method Affiliates, asset- and performance-based fees are presented net of certain expense reimbursements paid by

the underlying products. Asset-based fees include advisory and other fees earned by our Affiliates for services provided to their

clients and are typically determined as a percentage of the value of a client’s assets under management, generally inclusive of

uncalled commitments. Asset-based fees are generally impacted by the level of average assets under management and the

composition of these assets across our strategies with different asset-based fee ratios. Our asset-based fee ratio is calculated as

asset-based fees divided by average assets under management.

In some cases, if product returns exceed certain performance thresholds, we will participate in performance-based fees.

Performance-based fees are based on investment performance, typically on an absolute basis or relative to a benchmark or a

hurdle rate, and are generally recognized when it is improbable that there will be a significant reversal in the amount of revenue

recognized. Performance-based fees are generally recognized less frequently than asset-based fees and will vary from period to

period because they inherently depend on investment performance. As of March 31, 2026, approximately 27% of our total

assets under management could potentially earn performance-based fees. These percentages were approximately 12% and 40%

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.

Aggregate fees were $1,909.9 million for the three months ended March 31, 2026, an increase of $639.5 million or 50% as

compared to the three months ended March 31, 2025. The increase in aggregate fees was due to a $400.5 million or 31%

increase from asset-based fees and a $239.0 million or 19% increase from performance-based fees, primarily in liquid

alternative strategies. The increase in asset-based fees was principally due to an increase in our Affiliates’ average assets under

management, primarily in liquid alternative and multi-asset and fixed income strategies, including the impact of our

investments in new Affiliates, and changes in the composition of our assets under management, including net client cash flows

from our Affiliates managing alternative strategies, which typically have higher fee rates.

Financial and Supplemental Financial Performance Measures

The following table presents our key financial and supplemental financial performance measures:

(in millions)

(1) Adjusted EBITDA (controlling interest) and Economic net income (controlling interest) are non-GAAP performance

measures and are discussed in “Supplemental Financial Performance Measures.”

Net income (controlling interest) increased $38.0 million or 52% for the three months ended March 31, 2026. This

increase was primarily due to a $72.1 million increase in Equity method income (net) and a $32.7 million decrease in Intangible

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amortization and impairments attributable to the controlling interest, partially offset by a $34.6 million increase in Affiliate

equity expense attributable to the controlling interest and a $21.0 million increase in Income tax expense attributable to the

controlling interest.

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

Our Adjusted EBITDA (controlling interest) increased $89.1 million or 39% for the three months ended March 31, 2026,

primarily due to a $639.5 million or 50% increase in aggregate fees. Adjusted EBITDA (controlling interest) increased less

than aggregate fees on a percentage basis primarily due to an increase in earnings at certain Affiliates, many of which manage

alternative strategies and are accounted for under the equity method, and therefore we own less of an economic interest.

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

because it represents our performance before non-cash expenses relating to the acquisition of interests in Affiliates and

improves comparability of performance between periods. For the three months ended March 31, 2026, our Economic net

income (controlling interest) increased $65.9 million or 42%, primarily due to an $89.1 million or 39% increase in Adjusted

EBITDA (controlling interest).

Results of Operations

The following discussion includes the key operating performance measures and financial results of our consolidated and

equity method Affiliates. Our consolidated Affiliates’ financial results are included in Consolidated revenue, Consolidated

expenses, and Investment and other income, and our share of our equity method Affiliates’ financial results is reported, net of

intangible amortization and impairments and tax, in Equity method income (net) in our Consolidated Statements of Income.

Consolidated Revenue

The following table presents our consolidated Affiliates’ average assets under management and Consolidated revenue:

(in millions, except as noted)

Consolidated revenue increased $48.3 million or 10% for the three months ended March 31, 2026, due to a $54.9 million or

11% increase from asset-based fees, partially offset by a $6.6 million or 1% decrease from performance-based fees, primarily in

private markets strategies. The increase in asset-based fees was principally due to an increase in our consolidated Affiliates’

average assets under management, primarily in private markets and multi-asset and fixed income strategies, and changes in the

composition of our assets under management.

Consolidated Expenses

The following table presents our Consolidated expenses:

(in millions)

Compensation and related expenses increased $56.8 million or 25% for the three months ended March 31, 2026, primarily

due to a $33.7 million increase in Affiliate equity expense and a $27.0 million increase in compensation accruals, partially

offset by a $3.9 million decrease in share-based compensation.

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Selling, general and administrative expenses increased $12.7 million or 13% for the three months ended March 31, 2026,

primarily due to a $7.1 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, and a $5.6 million increase in professional fees.

Intangible amortization and impairments decreased $34.1 million or 41% for the three months ended March 31, 2026,

primarily due to a $34.0 million decrease in expenses to reduce the carrying value of indefinite-lived acquired client

relationships for certain mutual fund assets to fair value.

Interest expense increased $4.3 million or 13% for the three months ended March 31, 2026, primarily due to a $6.0 million

increase from our 5.50% senior unsecured notes issued in December 2025 (the “2036 senior notes”) and a $5.8 million increase

from borrowings under our senior unsecured multicurrency revolving credit facility (the “revolver”). These increases were

partially offset by a $4.4 million decrease due to the repayment of our junior convertible trust preferred securities in January

2026 and a $3.2 million decrease due to the maturity of our 3.50% senior notes in August 2025.

There were no significant changes to Depreciation and other amortization for the three months ended March 31, 2026.

Other expenses (net) increased $9.6 million or 82% for the three months ended March 31, 2026, primarily due to a $9.3

million increase in expenses related to the settlement of conversions with respect to our former junior convertible securities.

See Note 6 of our Consolidated Financial Statements.

Equity Method Income (Net)

For our Affiliates accounted for under the equity method, we use structured partnership interests in which we contractually

share in the Affiliate’s revenue or revenue less agreed-upon expenses. Our share of pre-tax earnings or losses from Affiliates

accounted for under the equity method (“pre-tax equity method earnings”), net of intangible amortization and impairments and

tax, is included in Equity method income (net). For certain of our Affiliates accounted for under the equity method, we report

the Affiliate’s financial results in our Consolidated Financial Statements one quarter in arrears.

The following table presents our equity method Affiliates’ average assets under management and equity method Affiliate

revenue, net of certain expense reimbursements paid by the underlying products (“equity method revenue, net”), as well as pre-

tax equity method earnings, equity method intangible amortization, equity method intangible impairments, if any, and equity

method income tax, which in aggregate form Equity method income (net):

(in millions, except as noted)

(1) Percent change is not meaningful.

Equity method revenue, net increased $591.2 million or 76% for the three months ended March 31, 2026, due to a $345.6

million or 44% increase from asset-based fees and a $245.6 million or 32% increase from performance-based fees, primarily in

liquid alternative strategies. The increase in asset-based fees was principally due to an increase in our equity method Affiliates’

average assets under management, primarily in liquid alternative and multi-asset and fixed income strategies, including the

impact of our investments in new Affiliates, and changes in the composition of our assets under management, including net

client cash flows from our equity method Affiliates managing alternative strategies, which typically have higher fee rates.

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Pre-tax equity method earnings increased $86.7 million or 87% for the three months ended March 31, 2026, primarily due

to a $591.2 million or 76% increase in equity method revenue, net. Pre-tax equity method earnings increased more than equity

method revenue, net on a percentage basis primarily due to margin expansion at certain Affiliates.

Equity method intangible amortization increased $8.0 million or 43% for the three months ended March 31, 2026,

primarily due to a $10.8 million increase in amortization expense due to investments in new Affiliates, partially offset by a $1.1

million decrease in amortization expense related to certain definite-lived assets being fully amortized.

Equity method intangible impairments increased $8.0 million for the three months ended March 31, 2026. See Note 9 of

our Consolidated Financial Statements.

There were no significant changes to equity method income tax for the three months ended March 31, 2026.

Investment and Other Income

The following table presents our Investment and other income:

(in millions)

Investment and other income decreased $5.1 million or 44% for the three months ended March 31, 2026, primarily due to a

$5.8 million decrease in interest income.

Income Tax Expense

The following table presents our Income tax expense:

(in millions)

Our consolidated income tax provision includes taxes attributable to the controlling interest and, to a lesser extent, taxes

attributable to the non-controlling interests.

Income tax expense increased $19.1 million or 70% for the three months ended March 31, 2026. Our effective tax rate

(controlling interest) for the three months ended March 31, 2026 was 29.3% as compared to 25.4% for the three months ended

March 31, 2025. The increase in the effective tax rate (controlling interest) was primarily due to expenses attributable to

Affiliate equity awards for which no tax benefit was recorded, partially offset by higher tax windfalls attributable to share-based

compensation for the three months ended March 31, 2026.

Net Income

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

(in millions)

Net income (controlling interest) increased $38.0 million or 52% for the three months ended March 31, 2026, primarily due

to an increase in Equity method income (net) and a decrease in Intangible amortization and impairments attributable to the

controlling interest, partially offset by increases in Affiliate equity expense attributable to the controlling interest and Income

tax expense attributable to the controlling interest.

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Supplemental Financial Performance Measures

As supplemental information to our GAAP performance measures, including Net income (see Note 17 of our Consolidated

Financial Statements), we provide non-GAAP performance measures of Adjusted EBITDA (controlling interest), Economic net

income (controlling interest), and Economic earnings per share. We believe that many investors use our Adjusted EBITDA

(controlling interest) when comparing our financial performance to other companies in the investment management industry.

Management utilizes these non-GAAP performance measures to assess our performance before our share of certain non-cash

GAAP expenses primarily related to the acquisition of interests in Affiliates and to improve comparability between periods.

Economic net income (controlling interest) and Economic earnings per share are used by management and our Board of

Directors as our principal performance benchmarks, including as one of the measures for determining executive compensation.

These non-GAAP performance measures are provided in addition to, but not as a substitute for, Net income, Net income

(controlling interest), Earnings per share, or other GAAP performance measures.

Adjusted EBITDA (controlling interest)

Adjusted EBITDA (controlling interest) represents our performance before our share of interest expense, income and

certain non-income based taxes, depreciation, amortization, impairments, gains and losses related to Affiliate transactions, and

non-cash items such as certain Affiliate equity-related activities, gains and losses on our contingent payment obligations, and

unrealized gains and losses on seed capital, general partner commitments, and other strategic investments. Adjusted EBITDA

(controlling interest) is also adjusted to include realized economic gains and losses related to these seed capital, general partner

commitments, and other strategic investments.

The following table presents a reconciliation of Net income (controlling interest) to Adjusted EBITDA (controlling

interest):

(in millions)

(1) Includes equity method income tax.

(2) Intangible amortization and impairments in our Consolidated Statements of Income include amortization attributable to the

non-controlling interests of our consolidated Affiliates. For our Affiliates accounted for under the equity method, we do

not separately report intangible amortization and impairments in our Consolidated Statements of Income. Our share of

these Affiliates’ amortization and impairments is included in Equity method income (net). The following table presents the

Intangible amortization and impairments shown above:

(in millions)

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

related activities, gains and losses on our contingent payment obligations, unrealized gains and losses on seed capital,

general partner commitments, and other strategic investments, and realized economic gains and losses related to these seed

capital, general partner commitments, and other strategic investments. For the three months ended March 31, 2026, the

increase in other items was predominantly the result of Affiliate equity-related activities.

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Economic Net Income (controlling interest) and Economic Earnings Per Share

Under our Economic net income (controlling interest) definition, we adjust Net income (controlling interest) for our share

of pre-tax intangible amortization and impairments related to intangible assets (including the portion attributable to equity

method investments in Affiliates) because these expenses do not correspond to the changes in the value of these assets, which

do not diminish predictably over time. We also adjust for deferred taxes attributable to intangible assets because we believe it

is unlikely these accruals will be used to settle material tax obligations. Further, we adjust for gains and losses related to

Affiliate transactions, net of tax, and other economic items.

Economic earnings per share represents Economic net income (controlling interest) divided by the Average shares

outstanding (adjusted diluted). In this calculation, we exclude the potential shares issued upon settlement of Redeemable non-

controlling interests from Average shares outstanding (adjusted diluted) because we intend to settle those obligations without

issuing shares, consistent with all prior Affiliate equity purchase transactions. The potential share issuance in connection with

our former junior convertible securities is measured using a “treasury stock” method. Under this method, only the net number

of shares of common stock equal to the value of the junior convertible securities in excess of par, if any, are deemed to be

outstanding. We believe the inclusion of net shares under a treasury stock method best reflects the benefit of the increase in

available capital resources (which could be used to repurchase shares of our common stock) that occurs when these securities

are converted and we are relieved of our debt obligation.

The following table presents a reconciliation of Net income (controlling interest) to Economic net income (controlling

interest) and Economic earnings per share:

(in millions, except per share data)

(1) See note (2) to the table in “Adjusted EBITDA (controlling interest).”

(2) Includes equity method deferred taxes.

(3) Other economic items include certain Affiliate equity-related activities, gains and losses related to contingent payment

obligations, tax windfalls and shortfalls from share-based compensation, unrealized gains and losses on seed capital,

general partner commitments, and other strategic investments, and realized economic gains and losses related to these seed

capital, general partner commitments, and other strategic investments. For the three months ended March 31, 2026, the

increase in other economic items was predominantly the result of Affiliate equity-related activities.

Liquidity and Capital Resources

We generate long-term value by investing in new Affiliate partnerships, existing Affiliates, and strategic value-add

capabilities through which we can leverage our scale and resources to benefit our Affiliates and enhance their long-term growth

prospects. Given our annual cash generation from operations, in addition to investing for growth in our business, we are also

able to return excess capital to shareholders primarily through share repurchases. We continue to manage our capital structure

consistent with an investment grade company and are currently rated A3 by Moody’s Investor Services and BBB+ by S&P

Global Ratings.

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Cash and cash equivalents were $376.1 million as of March 31, 2026 and were attributable to both our controlling and the

non-controlling interests. In the three months ended March 31, 2026, we met our cash requirements primarily through cash

generated by operating activities and senior bank debt borrowings. Our principal uses of cash in the three months ended

March 31, 2026 were for investments in new Affiliates, settlement of each of our conversion obligations with respect to our

former junior convertible securities, the return of excess capital through share repurchases, distributions to Affiliate equity

holders, and repayment of debt.

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

interests and general partner and seed capital investments, the return of capital through share repurchases and the payment of

cash dividends on our common stock, repayment of debt, distributions to Affiliate equity holders, payment of income taxes, and

general working capital to be the primary uses of cash on a consolidated basis for the foreseeable future. We anticipate that our

current cash balance, cash flows from operations, and borrowings under the revolver will be sufficient to support our uses of

cash for the foreseeable future. In addition, we may draw funding from the debt and equity capital markets, and our credit

ratings, among other factors, allow us to access these sources of funding on favorable terms.

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

(in millions)

Operating Cash Flow

Operating cash flows are calculated by adjusting Net income for other significant sources and uses of cash, significant non-

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

For the three months ended March 31, 2026, Cash flows from operating activities were $299.3 million, primarily from

distributions of earnings received from equity method investments of $294.4 million and Net income of $146.4 million adjusted

for non-cash items of $74.2 million. These items were partially offset by timing differences in the cash settlement of

receivables, other assets, and payables, accrued liabilities, and other liabilities of $63.3 million. For the three months ended

March 31, 2026, operating cash flows were primarily attributable to the controlling interest.

Investing Cash Flow

For the three months ended March 31, 2026, Cash flows used in investing activities were $229.0 million, primarily due to

$242.3 million of investments in Affiliates and $18.6 million of purchases of investment securities. These items were partially

offset by $35.7 million of maturities and sales of investment securities. For the three months ended March 31, 2026, investing

cash flows were primarily attributable to the controlling interest.

Financing Cash Flow

For the three months ended March 31, 2026, Cash flows used in financing activities were $277.3 million, primarily due to

the settlement of junior convertible securities of $514.6 million, $185.1 million of repurchases of common stock, net,

$84.1 million of distributions to non-controlling interests, repayment of senior bank debt borrowings of $60.0 million, $35.2

million of taxes paid on shares withheld for share-based awards, and $29.3 million of Affiliate equity purchases, net of

issuances. These items were partially offset by senior bank debt borrowings of $625.0 million. For the three months ended

March 31, 2026, financing cash flows were primarily attributable to the controlling interest.

Affiliate Equity

We periodically purchase Affiliate equity from and issue Affiliate equity to our consolidated Affiliate partners and other

parties under agreements that provide us with a conditional right to call and Affiliate equity holders with a conditional right to

put their Affiliate equity interests to us at certain intervals. We have the right to settle a portion of these purchases in shares of

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

arrangements. The purchase price of these conditional purchases is generally calculated based upon a multiple of the Affiliate’s

cash flow distributions, which is intended to represent fair value. In certain cases, Affiliate equity holders are also permitted to

sell their equity interests to Affiliate partners or other parties, subject to our approval or other restrictions.

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As of March 31, 2026, the current redemption value of Affiliate equity interests was $458.2 million, of which $264.0

million was presented as Redeemable non-controlling interests (including $36.0 million of consolidated Affiliate sponsored

investment products primarily attributable to third-party investors), and $194.2 million was included in Other liabilities on the

Consolidated Balance Sheets. Although the timing and amounts of these purchases are difficult to predict, we paid $33.2

million for Affiliate equity purchases and received $3.9 million for Affiliate equity issuances during the three months ended

March 31, 2026, and we expect net purchases of approximately $65 million of Affiliate equity during the remainder of 2026. In

the event of a purchase, we become the owner of the cash flow associated with the purchased equity. See Notes 11 and 12 of

our Consolidated Financial Statements.

Share Repurchases

Our Board of Directors authorized share repurchase programs in July 2024 and January 2026 to repurchase up to 5.4

million and 4.2 million shares of our 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. During the three months ended March 31, 2026, we repurchased

0.6 million shares of our common stock at an average price per share of $307.01. As of March 31, 2026, there were a total of

5.6 million shares available for repurchase under our share repurchase programs.

Debt

The following table presents the carrying value of our outstanding indebtedness and a reconciliation to Debt as presented

on our Consolidated Balance Sheets:

(in millions)

As of March 31, 2026 , the weighted average maturity of our outstanding senior and junior subordinated notes is 22 years,

all of which is maturing in 2030 and beyond. Our nearest term maturity with respect to our senior and junior subordinated

notes relates to our $350.0 million senior notes due June 2030 (the “2030 senior notes”). See Note 6 of our Consolidated

Financial Statements.

Senior Bank Debt

As of March 31, 2026, we had a $1.25 billion revolver which matures on November 15, 2029. Subject to certain

conditions, we may increase the commitments under the revolver by up to an additional $500.0 million.

As of March 31, 2026, we had outstanding borrowings under the revolver of $565.0 million, and we could borrow all

remaining capacity and maintain compliance with all of the terms of the revolver.

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Senior Notes

As of March 31, 2026, we had senior notes outstanding, the respective principal terms of which are presented and

described below:

In addition to customary event of default provisions, the indenture governing the senior notes, including the applicable

supplemental indentures with respect to the 2030, 2034, and 2036 senior notes, limits our ability to consolidate, merge, or sell

all or substantially all of our assets, and requires us to make an offer to repurchase the applicable senior notes at 101% of the

principal amount (plus any accrued and unpaid interest), 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 prior to

March 15, 2030, in the case of the 2030 senior notes, at any time prior to May 20, 2034, in the case of the 2034 senior notes,

and at any time prior to November 15, 2035, in the case of the 2036 senior notes. In addition, the 2030, 2034, and 2036 senior

notes may be redeemed at par (plus accrued and unpaid interest), in whole or in part, at any time, on or after March 15, 2030,

May 20, 2034, and November 15, 2035, respectively. We may also repurchase senior notes in the open market or in privately

negotiated transactions from time to time at management’s discretion.

Junior Subordinated Notes

As of March 31, 2026, we had junior subordinated notes outstanding, the respective principal terms of which are presented

and described below:

As of March 31, 2026, each of the 2059 and the 2060 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, 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.

Junior Convertible Securities

On December 8, 2025, we delivered notice that we had elected to redeem all of our outstanding 5.15% junior convertible

trust preferred securities (the “junior convertible securities”) on December 29, 2025 (the “Redemption Date”), and announced

our intention to settle any and all conversion obligations in cash. Substantially all holders of the junior convertible securities

delivered requests to convert their securities prior to the Redemption Date. On December 15, 2025 (the “Election Date”), we

made an irrevocable election to settle our conversion obligations in cash by reference to the daily volume weighted average

price of our common stock during each applicable ten trading day conversion reference period. These conversions resulted in a

settlement value in excess of the associated carrying value (the “conversion premium”). As of December 31, 2025, the

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conversion premium of $155.5 million was recorded within Other liabilities, with a corresponding reduction to Additional paid-

in capital. In addition, the conversion resulted in a reduction to Deferred tax liability (net) on the Consolidated Balance Sheets

of $38.9 million, with a corresponding increase to Additional paid-in capital. Our election to settle each applicable conversion

premium in cash using a ten-day reference period was accounted for as a forward sale contract, which resulted in a $9.2 million

expense recorded in Other expenses (net), in the fourth quarter of 2025.

On the Redemption Date, we redeemed $1.1 million of junior convertible securities which were not converted, reflecting

the principal amount of the redeemed securities, plus accrued and unpaid interest, up to, but not including, the Redemption

Date.

In January 2026, we settled each of our applicable conversion obligations in cash for an aggregate amount of

$514.6 million which resulted in an incremental expense related to the forward sale contract of $9.3 million. The junior

convertible securities were considered contingent payment debt instruments under federal income tax regulations, which

required us to deduct interest in an amount greater than our reported interest expense (“excess interest expense deductions”).

As a result of the settlement of these securities, we incurred a current cash tax liability of approximately $56 million, reflective

of the recapture of excess interest expense deductions.

Prior to their redemption or requests for conversion by the holders, as applicable and described above, the junior

convertible securities bore interest at a rate of 5.15% per annum, which interest payments were payable quarterly in cash.

Equity Distribution Program

In the first quarter of 2025, we entered into an equity distribution agreement and forward sale agreements with several

major securities firms under which we may, from time to time, issue and sell shares of our common stock (immediately or on a

forward basis) having an aggregate sales price of up to $500.0 million (the “equity distribution program”). This equity

distribution program superseded and replaced our prior equity distribution program. As of March 31, 2026, no sales had

occurred under the equity distribution program.

Commitments

See Note 7 of our Consolidated Financial Statements.

Other Contingent Commitments

See Notes 4 and 7 of our Consolidated Financial Statements.

Leases

As of March 31, 2026, our lease obligations were $21.8 million for the remainder of 2026, $61.4 million from 2027

through 2028, $56.2 million from 2029 through 2030, and $60.7 million thereafter. The portion of these lease obligations

attributable to the controlling interest were $3.3 million for the remainder of 2026, $6.7 million from 2027 through 2028, $6.5

million from 2029 through 2030, and $11.0 million thereafter.

Recent Accounting Developments

See Note 2 of our Consolidated Financial Statements.

Critical Accounting Estimates and Judgments

Our 2025 Annual Report on Form 10‑K includes additional information about our Critical Accounting Estimates and

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

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

months ended March 31, 2026. Please refer to Item 7A of our 2025 Annual Report on Form 10-K.

We carried out an evaluation under the supervision and with the participation of our management, including our Chief

Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and

procedures during the quarter covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, our Chief

Executive Officer and Chief Financial Officer concluded that, as of the end of the quarter covered by this Quarterly Report on

Form 10-Q, our disclosure controls and procedures are effective in ensuring that (i) the information required to be disclosed by

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us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is

recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s

rules and forms, and (ii) such information is accumulated and communicated to our management, including our principal

executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In

designing and evaluating our disclosure controls and procedures, we recognize that any controls and procedures, no matter how

well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our

management necessarily was required to apply its judgment in evaluating and implementing possible controls and procedures.

Our disclosure controls and procedures were designed to provide reasonable assurance of achieving their stated objectives, and

our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were

effective at the reasonable assurance level. We review on an ongoing basis and document our disclosure controls and

procedures, and our internal control over financial reporting, and we may from time to time make changes in an effort to

enhance their effectiveness and ensure that our systems evolve with our business.

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange

Act) occurred during the quarter covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably

likely to materially affect, our internal control over financial reporting.