Segment Reporting

The Company conducts its operations through two segments: the investment management segment and the investment bank segment. These activities are conducted primarily in the United States and substantially all of its revenues are generated domestically. The performance measure for these segments is Economic Income (Loss), which management uses to evaluate the financial performance of and make operating decisions for the segments including determining appropriate compensation levels. Expenses not directly associated with specific segments are allocated based on the most relevant measures applicable, including headcount, square footage and other factors.

In general, Economic Income (Loss) is a pre-tax measure that (i) eliminates the impact of consolidation for consolidated funds and excludes (ii) goodwill and intangible impairment (iii) certain other transaction-related adjustments and/or reorganization expenses (iv) certain costs associated with debt and (v) preferred stock dividends. In addition, Economic Income (Loss) revenues include investment income that represents the income the Company has earned in investing its own capital, including realized and unrealized gains and losses, interest and dividends, net of associated investment related expenses. For US GAAP purposes, these items are included in each of their respective line items. Economic Income (Loss) revenues also include management fees, incentive income and investment income earned through the Company's investment as a general partner in certain real estate entities and the Company's investment in the activist business and certain funds. For US GAAP purposes, all of these items, are recorded in other income (loss). Economic Income (Loss) recognizes incentive fees during periods when the fees are not yet crystallized for US GAAP reporting. In addition, Economic Income (Loss) expenses are reduced by reimbursement from affiliates, which for US GAAP purposes is presented gross as part of revenue.

As further stated below, one major difference between Economic Income (Loss) and US GAAP net income (loss) is that Economic Income (Loss) presents the segments' results of operations without the impact resulting from the full consolidation of any of the Consolidated Funds. The consolidation of these funds results include the pro rata share of the income or loss attributable to other owners of such entities which is reflected in net income (loss) attributable to redeemable non-controlling interest in consolidated subsidiaries in the accompanying condensed consolidated statements of operations. This pro rata share has no effect on the overall financial performance for the investment management segment, as ultimately, this income or loss is not income or loss for the investment management segment itself. Included in Economic Income (Loss) is the actual pro rata share of the income or loss attributable to the Company as an investor in such entities, which is relevant in management making operating decisions and evaluating financial performance.

The following tables set forth operating results for the Company's investment management and investment bank segments and related adjustments necessary to reconcile the Company's Economic Income (Loss) measure to arrive at the Company's consolidated US GAAP net income (loss):



	Three Months Ended March 31, 2018
									Adjustments
	Investment Management			Investment Bank		Total Economic Income/(Loss)			Funds Consolidation			Other Adjustments				US GAAP
	(dollars in thousands)
Revenues
Investment banking	$	—		$	93,924	$	93,924		$	—		$	4,064		(i)	$	97,988
Brokerage	—			114,071		114,071			—			(8,338		)	(h)	105,733
Management fees	12,355			771		13,126			(1,203		)	(4,506		)	(a)	7,417
Incentive income (loss)	5,197			—		5,197			(9		)	(5,172		)	(a)(i)	16
Investment income (loss)	11,896			2,405		14,301			—			(14,301		)	(c)(f)	—
Interest and dividends	—			—		—			—			25,954			(c)	25,954
Reimbursement from affiliates	—			—		—			(68		)	445			(e)	377
Aircraft lease revenue	—			—		—			—			715			(f)	715
Reinsurance premiums	—			—		—			—			8,647			(g)	8,647
Other revenue	361			527		888			—			449			(g)	1,336
Consolidated Funds revenues	—			—		—			3,185			—				3,201
Total revenues	29,809			211,698		241,507			1,905			7,957				251,384
Expenses
Non interest expense	22,881			186,452		209,333			—			13,966			(b)(d)(i)	223,315
Interest and dividends	3,854			2,104		5,958			—			18,582			(c)	24,540
Consolidated Funds expenses	—			—		—			2,431			—				2,431
Total expenses	26,735			188,556		215,291			2,431			32,548				250,286
Total other income (loss)	—			—		—			10,063			23,770			(c)	33,834
Income taxes expense / (benefit)	—			—		—			—			6,923			(b)	6,923
(Income) loss attributable to redeemable non-controlling interests in consolidated subsidiaries and funds	(2,158		)	—		(2,158		)	(9,537		)	539				(11,156		)
Economic Income (Loss) / Net Income (loss) attributable to Cowen Inc.	$	916		$	23,142	$	24,058		$	—		$	(7,205	)		$	16,853



	Three Months Ended March 31, 2017
									Adjustments
	Investment Management			Investment Bank		Total Economic Income/(Loss)			Funds Consolidation			Other Adjustments				US GAAP
	(dollars in thousands)
Revenues
Investment banking	$	—		$	36,553	$	36,553		$	—		$	—			$	36,553
Brokerage	—			52,313		52,313			—			(1,779		)	(h)	50,534
Management fees	13,145			801		13,946			(527		)	(4,711		)	(a)	8,708
Incentive income (loss)	3,060			—		3,060			(489		)	(2,025		)	(a)	546
Investment income (loss)	15,149			6,477		21,626			—			(21,626		)	(c)(f)	—
Interest and dividends	—			—		—			—			5,089			(c)	5,089
Reimbursement from affiliates	—			—		—			(78		)	1,730			(e)	1,652
Aircraft lease revenue	—			—		—			—			1,059			(f)	1,059
Reinsurance premiums	—			—		—			—			7,089			(g)	7,089
Other revenue	819			285		1,104			—			296			(g)	1,400
Consolidated Funds revenues	—			—		—			2,341			—				2,341
Total revenues	32,173			96,429		128,602			1,247			(14,878		)		114,971
Expenses
Non interest expense	23,191			93,967		117,158			(429		)	8,751			(b)(d)	125,480
Interest and dividends	3,241			1,100		4,341			—			5,589			(c)	9,930
Consolidated Funds expenses	—			—		—			4,963			—				4,963
Total expenses	26,432			95,067		121,499			4,534			14,340				140,373
Total other income (loss)	—			—		—			11,674			27,728			(c)	39,402
Income taxes expense / (benefit)	—			—		—			—			1,911			(b)	1,911
(Income) loss attributable to redeemable non-controlling interests in consolidated subsidiaries and funds	(1,645		)	—		(1,645		)	(8,387		)	927				(9,105		)
Economic Income (Loss) / Net Income (loss) attributable to Cowen Inc.	$	4,096		$	1,362	$	5,458		$	—		$	(2,474	)		$	2,984

The following is a summary of the adjustments made to US GAAP net income (loss) for the segment to arrive at

Economic Income (Loss):

Funds Consolidation: The impacts of consolidation and the related elimination entries of the Consolidated Funds are not included in Economic Income (Loss). Adjustments to reconcile to US GAAP net income (loss) included elimination of incentive income and management fees earned from the Consolidated Funds and addition of fund expenses excluding management fees paid, fund revenues and investment income (loss).

Other Adjustments:

(a) Economic Income (Loss) recognizes revenues (i) net of distribution fees paid to agents and (ii) our proportionate share

of management and incentive fees of certain real estate operating entities, the healthcare royalty business and the activist business.

(b) Economic Income (Loss) excludes income taxes and acquisition related adjustments as management does not consider

these items when evaluating the performance of the segment.

(d) Economic Income (Loss) recognizes the Company's proportionate share of expenses, for certain real estate

operating entities and the activist business, for which the investments are recorded under the equity method of accounting for investments.

(e) Reimbursement from affiliates is shown as a reduction of Economic Income expenses, but is included as a part of

revenues under US GAAP.

(f) Aircraft lease revenue is shown net of expenses in investment income for Economic Income (Loss).

(g) Economic Income (Loss) recognizes underwriting income from the Company's insurance related activities, net of

expenses, within other revenue.

(h) Economic Income (Loss) brokerage revenues included net securities borrowed and securities loaned activities.

(i) Economic Income (Loss) presents underwriting expenses net of investment banking revenues and records income from

uncrystallized incentive fees.

For the three months ended March 31, 2018 and 2017, there was no one fund or other customer which represented more than 10% of the Company's total revenues.