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 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, or Level 2 when based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

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, or Level 2 when based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.

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 the contingent consideration liability is classified as Level 3 and the fair value of the liability is remeasured at each reporting period. The inputs used to derive the fair value of the contingent consideration include the application of probabilities when assessing certain performance thresholds for the relevant periods. Any change in the fair value is recognized in “amortization and other acquisition-related costs” in the condensed consolidated statement of operations. Our business acquisitions may involve the potential payment of contingent consideration upon the achievement of certain performance thresholds. The contingent consideration liability is initially recorded at fair value of the contingent payments on the acquisition date and is included in “other liabilities” on the condensed consolidated statements of financial condition.

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. See Note 6.

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 September 30, 2023 and December 31, 2022, 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:


	September 30, 2023
	Level 1		Level 2		Level 3		NAV		Total
Assets:
Investments:
Debt	$	3,524	$	957	$	-	$	-	$	4,481
Equities	40,119		-		540		-		40,659
Funds:
Alternative investments	15,534		-		-		44,676		60,210
Debt	173,546		10,240		-		4		183,790
Equity	324,197		-		-		42		324,239
Private equity	-		-		261		44,240		44,501
Derivatives	-		3,678		-		-		3,678
Total	$	556,920	$	14,875	$	801	$	88,962	$	661,558
Liabilities:
Securities sold, not yet purchased	$	1,724	$	-	$	-	$	-	$	1,724
Contingent consideration liability	-		-		6,503		-		6,503
Derivatives	-		342,483		-		-		342,483
Total	$	1,724	$	342,483	$	6,503	$	-	$	350,710


	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


	Three Months Ended September 30, 2023
	Beginning Balance		Net Unrealized/ Realized Gains/Losses Included In Earnings (a)		Purchases/ Issuances		Sales/ Settlements		Foreign Currency Translation Adjustments		Ending Balance
Assets:
Investments:
Equities	$	642	$	(95)	$	-	$	-	$	(7)	$	540
Private equity funds	268		-		-		-		(7)		261
Total Level 3 assets	$	910	$	(95)	$	-	$	-	$	(14)	$	801

Liabilities:
Contingent consideration liability	$	6,422	$	81	$	-	$	-	$	-	$	6,503
Total Level 3 liabilities	$	6,422	$	81	$	-	$	-	$	-	$	6,503


	Nine Months Ended September 30, 2023
	Beginning Balance		Net Unrealized/ Realized Gains/Losses Included In Earnings (a)		Purchases/Acquisitions/ Issuances		Sales/ Settlements/ Transfers (b)		Foreign Currency Translation Adjustments		Ending Balance
Assets:
Investments:
Equities	$	646	$	(81)	$	-	$	-	$	(25)	$	540
Private equity funds	18,772		-		-		(18,508)		(3)		261
Total Level 3 assets	$	19,418	$	(81)	$	-	$	(18,508)	$	(28)	$	801

Liabilities:
Contingent consideration liability (c)	$	-	$	194	$	7,754	$	(1,445)	$	-	$	6,503
Total Level 3 liabilities	$	-	$	194	$	7,754	$	(1,445)	$	-	$	6,503


	Three Months Ended September 30, 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	$	542	$	28	$	-	$	-	$	(41)	$	529
Private equity funds	256		-		-		-		(16)		240
Total Level 3 assets	$	798	$	28	$	-	$	-	$	(57)	$	769


	Nine Months Ended September 30, 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	$	35	$	-	$	-	$	(84)	$	529
Private equity funds	293		-		-		(13)		(40)		240
Total Level 3 assets	$	871	$	35	$	-	$	(13)	$	(124)	$	769

__________________________________

(a)Earnings recorded in “other revenue” for investments in Level 3 assets for the three month and nine month periods ended September 30, 2023 and 2022 include net unrealized gains (losses) of $(76), $(62), $28 and $35, respectively. Unrealized losses of $81 and $194 were recorded in “amortization and other acquisition-related costs” for the contingent consideration liability for the three month and nine month periods ended September 30, 2023.

(c)For the nine month period ended September 30, 2023, acquisitions represent the initial recognition of the contingent consideration liability (noncash transaction), and settlements represent aggregate cash and noncash settlement of contingent consideration after the acquisition date.

September 30, 2023

Investments Redeemable

NAV

Unfunded

Commitments

% of
NAV
Not
Redeemable

Redemption

Frequency

Redemption

Notice Period

Alternative investment funds:

Hedge funds

44,022

(a)

30-60 days

Other

654

(b)

<30-30 days

Debt funds

(c)

<30 days

Equity funds

(d)

<30-60 days

Private equity funds:

Equity growth

44,240

5,547

(e)

100%

(f)

Total

88,962

5,547

(e)Unfunded commitments to private equity investments consolidated but not owned by Lazard of $10,206 are excluded. Such commitments are required to be funded by capital contributions from noncontrolling interest holders.

December 31, 2022

Investments Redeemable

NAV

Unfunded
Commitments

% of
NAV
Not
Redeemable

Redemption
Frequency

Redemption
Notice Period

Alternative investment funds:

Hedge funds

29,259

(a)

30-60 days

Other

615

(b)

<30-30 days

Debt funds

(c)

<30 days

Equity funds

(d)

<30-60 days

Private equity funds:

Equity growth

35,050

5,455

(e)

100%

(f)

Total

64,968

5,455

(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.

Investment Capital Funding Commitments—At September 30, 2023, the Company’s maximum unfunded commitments for capital contributions to investment funds primarily arose from commitments to EGCP III, which amounted to $5,028. 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.