XML 30 R16.htm IDEA: XBRL DOCUMENT v3.22.4
Fair Value Measurements
 12 Months Ended
Dec. 31, 2022
Fair Value Disclosures [Abstract]  
Fair Value Measurements

6.

FAIR VALUE MEASUREMENTS

Fair Value Hierarchy of Investments and Certain Other Assets and Liabilities—Lazard categorizes its investments and certain other assets and liabilities recorded at fair value into a three-level fair value hierarchy as follows:

Level 1.

Assets and liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that Lazard has the ability to access.

Level 2.

Assets and liabilities whose values are based on (i) quoted prices for similar assets or liabilities in an active market, or quoted prices for identical or similar assets or liabilities in non-active markets, or (ii) inputs other than quoted prices that are directly observable or derived principally from, or corroborated by, market data.

Level 3.

Assets and liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs reflect our own assumptions about the assumptions a market participant would use in pricing the asset or liability. Items included in Level 3 include securities or other financial assets whose trading volume and level of activity have significantly decreased when compared with normal market activity and there is no longer sufficient frequency or volume to provide pricing information on an ongoing basis.

The fair value of debt is classified as Level 1 when the fair values are based on unadjusted quoted prices in active markets.

The fair value of equities is classified as Level 1 or Level 3 as follows: marketable equity securities are classified as Level 1 and are valued based on the last trade price on the primary exchange for that security as provided by external pricing services; equity interests in private companies are generally classified as Level 3.

The fair value of investments in alternative investment funds, debt funds and equity funds is classified as Level 1 when the fair values are based on the publicly reported closing price for the fund.

The fair value of investments in certain private equity funds is classified as Level 3 for (i) certain investments that are valued based on the potential transaction value and (ii) when the acquisition price is considered the best measure of fair value.

The fair value of securities sold, not yet purchased, is classified as Level 1 when the fair values are based on unadjusted quoted prices in active markets.

The fair value of derivatives entered into by the Company and classified as Level 1 is based on the listed market price of such instruments. The fair value of derivatives entered into by the Company and classified as Level 2 is based on the values of the related underlying assets, indices or reference rates as follows: the fair value of forward foreign currency exchange rate contracts is a function of the spot rate and the interest rate differential of the two currencies from the trade date to settlement date; the fair value of total return swaps is based on the change in fair value of the related underlying equity security, financial instrument or index and a specified notional holding; the fair value of interest rate swaps is based on the interest rate yield curve; and the fair value of derivative liabilities related to LFI and other similar deferred compensation arrangements is based on the value of the underlying investments, adjusted for forfeitures. The fair value of derivatives entered into by the Company and classified as Level 3 is based on a Black-Scholes valuation model that utilizes both observable and unobservable inputs. Unobservable inputs include model adjustments for valuation uncertainty. See Note 7.

Investments Measured at Net Asset Value (“NAV”)—As a practical expedient, the Company uses NAV or its equivalent to measure the fair value of certain investments. NAV is primarily determined based on information provided by external fund administrators. The Company’s investments valued at NAV as a practical expedient in (i) alternative investment funds, debt funds and equity funds are redeemable in the near term, and (ii) private equity funds are not redeemable in the near term as a result of redemption restrictions.

The following tables present, as of December 31, 2022 and 2021, the classification of (i) investments and certain other assets and liabilities measured at fair value on a recurring basis within the fair value hierarchy and (ii) investments measured at NAV or its equivalent as a practical expedient:

 

 

 

December 31, 2022

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

NAV

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equities

 

$

43,243

 

 

$

-

 

 

$

646

 

 

$

-

 

 

$

43,889

 

Funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alternative investments

 

 

27,073

 

 

 

-

 

 

 

-

 

 

 

29,874

 

 

 

56,947

 

Debt

 

 

178,552

 

 

 

-

 

 

 

-

 

 

 

4

 

 

 

178,556

 

Equity

 

 

350,242

 

 

 

-

 

 

 

-

 

 

 

40

 

 

 

350,282

 

Private equity

 

 

-

 

 

 

-

 

 

 

18,772

 

 

 

35,050

 

 

 

53,822

 

Derivatives

 

 

-

 

 

 

14,554

 

 

 

-

 

 

 

-

 

 

 

14,554

 

Total

 

$

599,110

 

 

$

14,554

 

 

$

19,418

 

 

$

64,968

 

 

$

698,050

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities sold, not yet purchased

 

$

4,651

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

4,651

 

Derivatives

 

 

115

 

 

 

327,045

 

 

 

-

 

 

 

-

 

 

 

327,160

 

Total

 

$

4,766

 

 

$

327,045

 

 

$

-

 

 

$

-

 

 

$

331,811

 

 

 

 

 

December 31, 2021

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

NAV

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt

 

$

299,990

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

299,990

 

Equities

 

 

53,462

 

 

 

-

 

 

 

578

 

 

 

-

 

 

 

54,040

 

Funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Alternative investments

 

 

24,972

 

 

 

-

 

 

 

-

 

 

 

24,785

 

 

 

49,757

 

Debt

 

 

164,947

 

 

 

-

 

 

 

-

 

 

 

5

 

 

 

164,952

 

Equity

 

 

375,712

 

 

 

-

 

 

 

-

 

 

 

49

 

 

 

375,761

 

Private equity

 

 

-

 

 

 

-

 

 

 

293

 

 

 

46,296

 

 

 

46,589

 

Derivatives

 

 

-

 

 

 

922

 

 

 

-

 

 

 

-

 

 

 

922

 

Total

 

$

919,083

 

 

$

922

 

 

$

871

 

 

$

71,135

 

 

$

992,011

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities sold, not yet purchased

 

$

6,828

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

6,828

 

Derivatives

 

 

10,005

 

 

 

362,240

 

 

 

-

 

 

 

-

 

 

 

372,245

 

Total

 

$

16,833

 

 

$

362,240

 

 

$

-

 

 

$

-

 

 

$

379,073

 

 

The following tables provide a summary of changes in fair value of the Company’s Level 3 assets and liabilities for the years ended December 31, 2022, 2021 and 2020:

 

 

 

Year Ended December 31, 2022

 

 

 

Beginning

Balance

 

 

Net Unrealized/

Realized

Gains/Losses

Included In

Earnings (a)

 

 

Purchases/

Issuances

 

 

Sales/

Settlements

 

 

Foreign

Currency

Translation

Adjustments

 

 

Ending

Balance

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equities

 

$

578

 

 

$

99

 

 

$

-

 

 

$

-

 

 

$

(31

)

 

$

646

 

Private equity funds

 

 

293

 

 

 

-

 

 

 

18,000

 

 

 

(13

)

 

 

492

 

 

 

18,772

 

Total Level 3 assets

 

$

871

 

 

$

99

 

 

$

18,000

 

 

$

(13

)

 

$

461

 

 

$

19,418

 

 

 

 

Year Ended December 31, 2021

 

 

 

Beginning

Balance

 

 

Net Unrealized/

Realized

Gains/Losses

Included In

Earnings (a)

 

 

Purchases/

Issuances

 

 

Sales/

Settlements/ Transfers (b)

 

 

Foreign

Currency

Translation

Adjustments

 

 

Ending

Balance

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equities

 

$

1,671

 

 

$

(796

)

 

$

-

 

 

$

(235

)

 

$

(62

)

 

$

578

 

Private equity funds

 

 

1,486

 

 

 

951

 

 

 

-

 

 

 

(2,121

)

 

 

(23

)

 

 

293

 

Total Level 3 assets

 

$

3,157

 

 

$

155

 

 

$

-

 

 

$

(2,356

)

 

$

(85

)

 

$

871

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivatives

 

$

-

 

 

$

-

 

 

$

11,500

 

 

$

(11,500

)

 

$

-

 

 

$

-

 

Total Level 3 liabilities

 

$

-

 

 

$

-

 

 

$

11,500

 

 

$

(11,500

)

 

$

-

 

 

$

-

 

 

 

 

 

Year Ended December 31, 2020

 

 

 

Beginning

Balance

 

 

Net Unrealized/

Realized

Gains/Losses

Included In

Earnings (a)

 

 

Purchases/

Issuances

 

 

Sales/

Settlements

 

 

Foreign

Currency

Translation

Adjustments

 

 

Ending

Balance

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equities

 

$

1,600

 

 

$

73

 

 

$

-

 

 

$

-

 

 

$

(2

)

 

$

1,671

 

Private equity funds

 

 

1,371

 

 

 

(190

)

 

 

299

 

 

 

-

 

 

 

6

 

 

 

1,486

 

Total Level 3 assets

 

$

2,971

 

 

$

(117

)

 

$

299

 

 

$

-

 

 

$

4

 

 

$

3,157

 

 

(a)

Earnings recorded in “other revenue” for investments in Level 3 assets for the years ended December 31, 2022, 2021 and 2020 include net unrealized gains (losses) of $99, $155 and $(117), respectively.

(b)

Transfers out of Level 3 private equity funds during the year ended December 31, 2021 reflect investments valued at NAV as of December 31, 2021. Transfers out of Level 3 derivatives during the year ended December 31, 2021 reflected transfers of derivative liabilities for LGAC Warrants to Level 1 principally due to a change in the inputs used to value these derivatives.

There were no other transfers into or out of Level 3 within the fair value hierarchy during the years ended December 31, 2022, 2021 and 2020.

Financial Instruments Not Measured at Fair Value—The tables below present the carrying value, fair value and fair value hierarchy category of certain financial instruments as of December 31, 2022 and 2021 that are not measured at fair value in the Company’s consolidated statement of financial condition.

 

 

 

December 31, 2022

 

 

 

 

 

 

 

Fair Value Measurements Using:

 

 

 

 

 

 

 

Carrying Value

 

 

Fair Value

 

 

Quoted Prices

in Active

Markets for

Identical

Assets

(Level 1)

 

 

Significant

Observable

Inputs

(Level 2)

 

 

Significant

Unobservable

Inputs

(Level 3)

 

Financial Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,234,773

 

 

$

1,234,773

 

 

$

1,234,773

 

 

$

-

 

 

$

-

 

Deposits with banks and short-term

   investments

 

 

779,246

 

 

 

779,246

 

 

 

779,246

 

 

 

-

 

 

 

-

 

Restricted cash

 

 

625,381

 

 

 

625,381

 

 

 

625,381

 

 

 

-

 

 

 

-

 

Financing receivables

 

 

97,964

 

 

 

98,362

 

 

 

-

 

 

 

-

 

 

 

98,362

 

Customer loans

 

 

128,890

 

 

 

128,890

 

 

 

-

 

 

 

-

 

 

 

128,890

 

Other fees and customers and other

   receivables

 

 

425,904

 

 

 

425,904

 

 

 

425,904

 

 

 

-

 

 

 

-

 

Financial Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits and other customer payables

 

$

921,834

 

 

$

921,834

 

 

$

921,834

 

 

$

-

 

 

$

-

 

Senior debt

 

 

1,687,714

 

 

 

1,601,917

 

 

 

-

 

 

 

1,601,917

 

 

 

-

 

 

 

 

 

December 31, 2021

 

 

 

 

 

 

 

Fair Value Measurements Using:

 

 

 

 

 

 

 

Carrying Value

 

 

Fair Value

 

 

Quoted Prices

in Active

Markets for

Identical

Assets

(Level 1)

 

 

Significant

Observable

Inputs

(Level 2)

 

 

Significant

Unobservable

Inputs

(Level 3)

 

Financial Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,465,022

 

 

$

1,465,022

 

 

$

1,465,022

 

 

$

-

 

 

$

-

 

Deposits with banks and short-term

   investments

 

 

1,347,544

 

 

 

1,347,544

 

 

 

1,347,544

 

 

 

-

 

 

 

-

 

Restricted cash

 

 

617,448

 

 

 

617,448

 

 

 

617,448

 

 

 

-

 

 

 

-

 

Financing receivables

 

 

123,189

 

 

 

125,024

 

 

 

-

 

 

 

-

 

 

 

125,024

 

Customer loans

 

 

122,229

 

 

 

122,229

 

 

 

-

 

 

 

-

 

 

 

122,229

 

Other fees and customers and other

   receivables

 

 

560,391

 

 

 

560,391

 

 

 

560,391

 

 

 

-

 

 

 

-

 

Financial Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits and other customer payables

 

$

1,442,701

 

 

$

1,442,701

 

 

$

1,442,701

 

 

$

-

 

 

$

-

 

Senior debt

 

 

1,685,227

 

 

 

1,884,690

 

 

 

-

 

 

 

1,884,690

 

 

 

-

 

Cash and cash equivalents are carried at either cost or amortized cost that approximates fair value due to their short-term maturities.

The carrying value of deposits with banks and short-term investments, and restricted cash, approximates fair value because of the relatively short period of time between their origination and expected maturity.

Fair values of financing receivables were generally determined by discounting both principal and interest cash flows expected to be collected, using a discount rate approximating current market interest rates for comparable financial instruments and based on unobservable inputs.

The carrying value of customer loans approximates fair value as such loans are fully collateralized and bear interest at rates that regularly reset in accordance with market reference rates.

The carrying value of other fees and customers and other receivables and deposits and other customer payables approximates fair value due to their short-term nature.

The Company’s senior debt is carried at its principal balances outstanding, net of unamortized debt costs. The fair value of the Company’s senior debt is based on market quotations.

The following tables present, at December 31, 2022 and 2021, certain investments that are valued using NAV or its equivalent as a practical expedient in determining fair value:

 

 

 

December 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments

Redeemable

 

 

Fair Value

 

 

Unfunded

Commitments

 

 

% of

Fair Value

Not

Redeemable

 

 

Redemption

Frequency

 

Redemption

Notice Period

Alternative investment funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hedge funds

 

$

29,259

 

 

$

-

 

 

NA

 

 

(a)

 

30-60 days

Other

 

 

615

 

 

 

-

 

 

NA

 

 

(b)

 

<30-30 days

Debt funds

 

 

4

 

 

 

-

 

 

NA

 

 

(c)

 

<30 days

Equity funds

 

 

40

 

 

 

-

 

 

NA

 

 

(d)

 

<30-60 days

Private equity funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity growth

 

 

35,050

 

 

 

5,455

 

(e)

 

100

%

(f)

NA

 

NA

Total

 

$

64,968

 

 

$

5,455

 

 

 

 

 

 

 

 

 

 

(a)

monthly (68%) and quarterly (32%)

(b)

daily (5%) and monthly (95%)

(c)

daily (100%)

(d)

monthly (35%) and annually (65%)

(e)

Unfunded commitments to private equity investments consolidated but not owned by Lazard of $8,003 are excluded. Such commitments are required to be funded by capital contributions from noncontrolling interest holders.

(f)

Distributions from each fund will be received as the underlying investments of the funds are liquidated.

  

 

 

December 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investments

Redeemable

 

 

Fair Value

 

 

Unfunded

Commitments

 

 

% of

Fair Value

Not

Redeemable

 

 

Redemption

Frequency

 

Redemption

Notice Period

Alternative investment funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hedge funds

 

$

24,162

 

 

$

-

 

 

NA

 

 

(a)

 

30-60 days

Other

 

 

623

 

 

 

-

 

 

NA

 

 

(b)

 

<30-30 days

Debt funds

 

 

5

 

 

 

-

 

 

NA

 

 

(c)

 

<30 days

Equity funds

 

 

49

 

 

 

-

 

 

NA

 

 

(d)

 

<30-60 days

Private equity funds:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity growth

 

 

46,296

 

 

 

5,597

 

(e)

 

100

%

(f)

NA

 

NA

Total

 

$

71,135

 

 

$

5,597

 

 

 

 

 

 

 

 

 

 

(a)

monthly (79%) and quarterly (21%)

(b)

daily (8%) and monthly (92%)

(c)

daily (100%)  

(d)

monthly (36%) and annually (64%)

(e)

Unfunded commitments to private equity investments consolidated but not owned by Lazard of $9,128 are excluded. Such commitments are required to be funded by capital contributions from noncontrolling interest holders.     

(f)

Distributions from each fund will be received as the underlying investments of the funds are liquidated.  

Investment Capital Funding Commitments—At December 31, 2022, the Company’s maximum unfunded commitments for capital contributions to investment funds primarily arose from commitments to EGCP III, which amounted to $5,093. The investment period for EGCP III ended on October 12, 2016, after which point the

Company’s obligation to fund capital contributions for new investments in EGCP III expired. The Company remains obligated until October 12, 2023 (or any earlier liquidation of EGCP III) to make capital contributions necessary to fund follow-on investments and to pay for fund expenses.