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Investments and Fair Value Measurements
 12 Months Ended
Dec. 31, 2022
Fair Value Disclosures [Abstract]  
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure Investments and Fair Value Measurements
 
We classify our investments into two categories: equity investments and debt securities. We further classify our debt securities into available-for-sale and held-to-maturity. Our investment portfolio consists of stocks, bonds, options, mutual funds, money market funds, or exchange-traded products that replicate the model portfolios and strategies created by Morningstar. These investment accounts may also include exchange-traded products where Morningstar is an index provider. Except for the convertible note described below, all investments in our investment portfolio have valuations based on quoted prices in active markets for identical assets or liabilities that we have the ability to access, and, therefore, are classified as Level 1 within the fair value hierarchy. We classify our investment portfolio as shown below:
 
As of December 31
(in millions)20222021
Equity investments$32.7 $46.8 
Available-for-sale2.3 12.3 
Held-to-maturity3.0 3.2 
Total$38.0 $62.3 
The following table shows the cost, unrealized gains, and fair values related to investments classified as equity investments, available-for-sale, and held-to-maturity:
 
 As of December 31, 2022As of December 31, 2021
(in millions)CostUnrealized
Gain		Unrealized
Loss		Fair
Value		CostUnrealized
Gain		Unrealized
Loss		Fair
Value
Equity investments:        
Marketable equity investments, exchange traded funds, and mutual funds$30.7 $2.5 $(0.5)$32.7 $39.6 $8.2 $(1.0)$46.8 
Available-for-sale:
Marketable debt securities2.2 0.1 — 2.3 5.5 — — 5.5 
Convertible note— — — — 5.0 1.8 — 6.8 
Held-to-maturity:
Certificates of deposit
3.0 — — 3.0 3.2 — — 3.2 
Total$35.9 $2.6 $(0.5)$38.0 $53.3 $10.0 $(1.0)$62.3 
 
As of December 31, 2022 and 2021, debt securities with unrealized losses for greater than a 12-month period were not material to the Consolidated Balance Sheets and were not deemed to have other than temporary declines in value.

The table below shows the cost and fair value of investments classified as held-to-maturity based on their contractual maturities as of December 31, 2022 and 2021.

 As of December 31, 2022As of December 31, 2021
(in millions)CostFair ValueCostFair Value
Held-to-maturity:    
Due in one year or less$3.0 $3.0 $3.2 $3.2 
Due in one to three years— — — — 
Total$3.0 $3.0 $3.2 $3.2 

The following table shows the realized gains and losses arising from sales of our investments classified as equity investments and available-for-sale recorded in our Consolidated Statements of Income: 
(in millions)202220212020
Realized gains$1.0 $5.0 $2.1 
Realized losses(3.1)— — 
Realized gains (losses), net$(2.1)$5.0 $2.1 

We determine realized gains and losses using the specific identification method.

The following table shows the net unrealized gains (losses) on the convertible note and equity securities as recorded in our Consolidated Statements of Income:

 
(in millions)202220212020
Unrealized gains (losses), net$5.4 $1.8 $(0.4)
The table below shows the fair value of our assets and liabilities subject to fair value measurements that are measured at fair value on a recurring basis using the fair value hierarchy:
 

 Fair Value
 as ofLevel Within the Fair Value Hierarchy as of December 31, 2022
(in millions)December 31, 2022Level 1Level 2Level 3
Financial assets:
Marketable equity investments, exchange-traded funds, and mutual funds$32.7 $32.7 $— $— 
Marketable debt securities2.3 2.3 — — 
Convertible note— — — — 
Cash equivalents0.2 0.2 — — 
Financial liabilities:
Contingent consideration50.0 — — 50.0 
Total$85.2 $35.2 $— $50.0 
 
 Fair Value
 as ofLevel Within the Fair Value Hierarchy as of December 31, 2021
(in millions)December 31, 2021Level 1Level 2Level 3
Financial assets:
Marketable equity investments, exchange-traded funds, and mutual funds$46.8 $46.8 $— $— 
Marketable debt securities5.5 5.5 — — 
Convertible note6.8 — — 6.8 
Cash equivalents0.6 0.6 — — 
Financial liabilities:
Contingent consideration17.3 — — 17.3 
Total$77.0 $52.9 $— $24.1 

We measure the fair value of money market funds, mutual funds, marketable equity securities, marketable debt securities, and exchange-traded funds based on quoted prices in active markets for identical assets or liabilities. We did not hold any securities categorized as Level 2 as of December 31, 2022 and 2021.

As of December 31, 2022, financial assets and liabilities that are classified as Level 3 within the fair value hierarchy include a contingent consideration liability of $50.0 million, which represents the acquisition date fair value of $45.5 million plus changes due to fair value remeasurement in subsequent reporting periods.

The contingent consideration reflects potential future payments that are contingent upon the achievement of certain conditions related to the separation of LCD’s contractual relationships from S&P Global (S&P) contracts that include other S&P products and services. This additional purchase consideration, for which the amount is contingent, is recognized at fair value at the date of acquisition, which was calculated as the weighted average of the estimated contingent payment scenarios. The contingent consideration is remeasured each reporting period until the contingency is resolved with any changes in fair value recorded in current period earnings. As of the balance sheet date, the maximum amount of the contingent consideration related to the LCD acquisition has been accrued as December 31, 2022.

As of December 31, 2021, financial assets and liabilities that were classified as Level 3 within the fair value hierarchy included a contingent consideration liability of $17.3 million and a convertible note recorded as an available-for-sale investment of $6.8 million.
As of December 31, 2021, the contingent consideration liability reflected potential future payments that were contingent upon the achievement of certain revenue metrics related to our acquisition of Sustainalytics that were paid on June 30, 2022. This additional purchase consideration, for which the amount was contingent, was recognized at fair value at the date of acquisition using a Monte Carlo simulation, which required the use of management assumptions and inputs, such as projected financial information related to revenue growth and expected margin percentage, among other valuation related items, and was remeasured each reporting period until the contingency was resolved with any changes in fair value recorded in current period earnings. At December 31, 2021, the fair value of the contingent consideration liability was impacted by foreign currency translations and not by adjustments to key assumptions used in our fair value estimates compared to the assumptions used in the acquisition date fair value estimates. In the second quarter of 2022, we made the third and final cash payment of $56.2 million, resolving our contingent consideration liability related to our acquisition of Sustainalytics. The payment was based on the achievement of certain revenue metrics for the year ended December 31, 2021.

The convertible note purchased in the second quarter of 2021 was remeasured at fair value each reporting period until it was converted, with any gains or losses recorded in our Consolidated Statements of Income. During the second quarter of 2022, we converted our convertible note, which was previously recorded as an available-for-sale investment, into shares of preferred stock of SmartX Advisory Solutions, which are now accounted for as an investment in equity securities. The preferred stock was initially measured at fair value and any subsequent remeasurement may occur upon impairment or an observable price change via a transaction with identical or similar instruments of the same issuer. The preferred stock is classified as an "Investment in unconsolidated entities" on our Consolidated Balance Sheet as of December 31, 2022.