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Fair Value Measurements
 3 Months Ended
Mar. 31, 2017
Fair Value Disclosures [Abstract]  
Fair Value Measurements
Fair Value Measurements
The following tables summarize the Company’s financial assets and liabilities that are measured at fair value on a recurring basis:
 
 
 
Fair Value Measurements
 
December 31,
2016
 
 
 
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
Significant Other Observable Inputs (Level 2)
 
Significant Other Unobservable Inputs (Level 3)
Financial Assets
 
 
 
 
 
 
 
Cash equivalents
$
64.1

 
$
64.1

 
$
—

 
$
—

Investments in marketable securities(1)
 
 
 
 
 
 
 
Trading securities
40.5

 
40.5

 
—

 
—

Available-for-sale securities
81.9

 
81.9

 
—

 
—

Other investments
3.4

 
3.4

 
—

 
—

Foreign currency forward contracts(2)
0.6

 
—

 
0.6

 
—

Financial Liabilities(2)
 
 
 
 
 
 
 
Contingent payment arrangements
$
8.6

 
$
—

 
$
—

 
$
8.6

Affiliate equity obligations
12.1

 
—

 
—

 
12.1

Foreign currency forward contracts
0.5

 
—

 
0.5

 
—



 
 
 
Fair Value Measurements
 
March 31,
2017
 
 
 
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
Significant Other Observable Inputs (Level 2)
 
Significant Other Unobservable Inputs (Level 3)
Financial Assets
 
 
 
 
 
 
 
Cash equivalents
$
26.3

 
$
26.3

 
$
—

 
$
—

Investments in marketable securities(1)
 
 
 
 
 
 
 
Trading securities
48.7

 
48.7

 
—

 
—

Available-for-sale securities
66.8

 
66.8

 
—

 
—

Foreign currency forward contracts(2)
0.3

 
—

 
0.3

 
—

Financial Liabilities(2)
 
 
 
 
 
 
 
Contingent payment arrangements
$
8.9

 
$
—

 
$
—

 
$
8.9

Affiliate equity obligations
91.5

 
—

 
—

 
91.5

Foreign currency forward contracts
0.1

 
—

 
0.1

 
—

__________________________

(1) 
Principally investments in equity securities.

(2) 
Amounts are presented within Other assets or Other liabilities.
The following are descriptions of the significant financial assets and liabilities measured at fair value and the fair value methodologies used.
Cash equivalents consist primarily of highly liquid investments in daily redeeming money market funds, without enacted liquidity fees or redemption gates.
Investments in marketable securities consist primarily of investments in publicly traded securities and in funds advised by Affiliates that are valued at NAV. Publicly traded securities and funds advised by Affiliates are valued using unadjusted quoted market prices for identical instruments in active markets and are classified as level 1. Publicly traded securities valued using quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active and are classified as level 2.
Contingent payment arrangements represent the present value of the expected future settlement of contingent payment arrangements related to the Company’s investments in consolidated Affiliates. The significant unobservable inputs that are used in the fair value measurement of these obligations are growth and discount rates. Increases in the growth rate result in a higher obligation while increases in the discount rate result in a lower obligation.
Affiliate equity obligations include agreements to repurchase Affiliate equity. The significant unobservable inputs that are used in the fair value measurement of the agreements to repurchase Affiliate equity are growth and discount rates. Increases in the growth rate result in a higher obligation while increases in the discount rate result in a lower obligation.
Foreign currency forward contracts use model-derived valuations in which all significant inputs are observable in active markets to determine fair value and are classified as level 2.
It is the Company’s policy to value financial assets or liabilities transferred as of the beginning of the period in which the transfer occurs. There were no significant transfers of financial assets or liabilities between level 1 and level 2 in the three months ended March 31, 2016 and 2017.
Level 3 Financial Assets and Liabilities
The following tables present the changes in level 3 liabilities:
 
For the Three Months Ended March 31,
 
2016
2017
 
Contingent Payment Arrangements
 
Affiliate Equity Obligations
 
 
Contingent Payment Arrangements
 
Affiliate Equity Obligations
Balance, beginning of period
$
10.2

 
$
62.3

 
 
$
8.6

 
$
12.1

Net (gains) losses
(2.4
)
(1) 
—

 
 
0.3

(1) 
—

Purchases and issuances
—

 
30.1

 
 
—

 
99.6

Settlements and reductions
—

 
(56.8
)
 
 
—

 
(20.2
)
Balance, end of period
$
7.8

 
$
35.6

 
 
$
8.9

 
$
91.5

 
 
 
 
 
 
 
 
 
Net change in unrealized (gains) losses relating to instruments still held at the reporting date
$
(2.4
)
(1) 
$
—

 
 
$
0.3

(1) 
$
—

___________________________

(1) 
Accretion and changes in the expected value of the Company’s contingent payment arrangements are recorded in Imputed interest expense and contingent payment arrangements.
The following table presents certain quantitative information about the significant unobservable inputs used in valuing the Company’s level 3 financial liabilities:
 
Quantitative Information About Level 3 Fair Value Measurements
 
Valuation
Techniques
 
Unobservable
Input
 
Fair Value at
December 31,
2016
 
Range at
December 31, 2016
 
Fair Value at March 31, 2017
 
Range at March 31, 2017
Contingent payment arrangements
Discounted cash flow
 
Growth rates
 
$
8.6

 
3% - 8%
 
$
8.9

 
3% - 8%
 
 
 
Discount rates
 
 

 
14% - 15%
 
 

 
14% - 16%
Affiliate equity obligations
Discounted cash flow
 
Growth rates
 
12.1

 
4% - 10%
 
91.5

 
4% - 10%
 
 
 
Discount rates
 
 

 
15% - 16%
 
 

 
12% - 17%

Investments in Certain Entities that Calculate Net Asset Value
The Company uses the NAV of certain investments as their fair value. The NAVs provided by the investees have been derived from the fair values of the underlying assets and liabilities as of the measurement dates. The following table summarizes the nature of these investments and any related liquidity restrictions or other factors that may impact the ultimate value realized:
 
December 31, 2016
 
March 31, 2017
Category of Investment
Fair Value
 
Unfunded
Commitments
 
Fair Value
 
Unfunded
Commitments
Private equity funds(1)
$
137.8

 
$
92.2

 
$
141.9

 
$
97.1

Other funds(2)
9.7

 
—

 
6.9

 
—

Other investments
147.5

 
92.2

 
148.8

 
97.1

Marketable securities
27.1

 
—

 
36.1

 
—

Total
$
174.6

 
$
92.2

 
$
184.9

 
$
97.1

___________________________

(1) 
To determine the fair value, the Company uses NAV as a practical expedient one quarter in arrears (adjusted for current period calls and distributions). These funds primarily invest in a broad range of private equity funds, as well as making direct investments. Distributions will be received as the underlying assets are liquidated over the life of the funds, which is generally up to 15 years.
(2) 
To determine the fair value, the Company uses NAV as a practical expedient. These are multi-disciplinary funds that invest across various asset classes and strategies, including long/short equity, credit and real estate. Investments are generally redeemable on a daily, monthly or quarterly basis.
Other Financial Assets and Liabilities Not Carried at Fair Value
The carrying amount of Receivables and Payables and accrued liabilities approximates fair value because of the short-term nature of these instruments. The carrying value of notes receivable approximates fair value because interest rates and other terms are at market rates. The carrying value of the credit facilities approximates fair value because the debt has variable interest based on selected short-term rates. The following table summarizes the Company’s other financial liabilities not carried at fair value:
 
December 31, 2016
 
March 31, 2017
 
 
 
Carrying Value
 
Fair Value
 
Carrying Value
 
Fair Value
 
Fair Value Hierarchy
Senior notes
$
945.1

 
$
936.0

 
$
945.3

 
$
962.2

 
Level 2
Convertible securities
307.5

 
466.9

 
308.0

 
489.5

 
Level 2