Brookfield Asset Management Ltd.BAM
Brookfield Asset Management Ltd. Fair Value Disclosure
FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS
Fair value approximates carrying value for the following financial instruments that are not measured at fair value in the consolidated financial statements: cash, accounts receivable and other, net, accounts payable and other, net, due to affiliates and due from affiliates.
Financial Instruments
The following tables summarize the fair value hierarchy of financial assets and liabilities of the Company that are measured at fair value as at December 31, 2025 and 2024:
2025 | |||||||||||||||||||||||||||||
AS AT DECEMBER 31, (MILLIONS) | Level I | Level II | Level III | NAV | Total | ||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||
| Cash equivalents | $ | 1,181 | $ | — | $ | — | $ | — | $ | 1,181 | |||||||||||||||||||
| Financial assets | — | 7 | 410 | — | 417 | ||||||||||||||||||||||||
| Investments: | |||||||||||||||||||||||||||||
| Common and preferred shares | — | — | 310 | 27 | 337 | ||||||||||||||||||||||||
| Investments in affiliates | — | — | — | 700 | 700 | ||||||||||||||||||||||||
| Equity method investments under fair value option | — | — | 330 | — | 330 | ||||||||||||||||||||||||
| Total assets at fair value | $ | 1,181 | $ | 7 | $ | 1,050 | $ | 727 | $ | 2,965 | |||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||
| Financial liabilities | $ | — | $ | 5 | $ | 444 | $ | — | $ | 449 | |||||||||||||||||||
| Total liabilities at fair value | $ | — | $ | 5 | $ | 444 | $ | — | $ | 449 | |||||||||||||||||||
| 2024 | |||||||||||||||||||||||||||||
AS AT DECEMBER 31, (MILLIONS) | Level I | Level II | Level III | NAV | Total | ||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||
| Cash equivalents | $ | 172 | $ | — | $ | — | $ | — | $ | 172 | |||||||||||||||||||
| Financial assets | — | — | 231 | — | 231 | ||||||||||||||||||||||||
| Investments: | |||||||||||||||||||||||||||||
| Common and preferred shares | 10 | — | 363 | 25 | 398 | ||||||||||||||||||||||||
| Investments in affiliates | — | — | — | 1,026 | 1,026 | ||||||||||||||||||||||||
| Equity method investments under fair value option | — | — | 351 | — | 351 | ||||||||||||||||||||||||
| Investments held for sale | — | — | 242 | — | 242 | ||||||||||||||||||||||||
| Total assets at fair value | $ | 182 | $ | — | $ | 1,187 | $ | 1,051 | $ | 2,420 | |||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||
| Financial liabilities | $ | — | $ | — | $ | 228 | $ | — | $ | 228 | |||||||||||||||||||
| Total liabilities at fair value | $ | — | $ | — | $ | 228 | $ | — | $ | 228 | |||||||||||||||||||
Level III Measurements
The fair value measurement of items categorized in Level III of the fair value hierarchy is subject to valuation uncertainty arising from the use of significant unobservable inputs. The significant unobservable inputs used in the fair value measurement of financial assets and liabilities recurringly measured at fair value are discount rates, capitalization rates, volatility assumptions, and inputs to prescribed settlement formulas on certain of our options. Significant changes in these inputs in isolation would have resulted in a significantly higher or lower fair value measurement.
The following tables summarize the quantitative inputs and assumptions used for items categorized in Level III of the fair value hierarchy as at December 31, 2025 and 2024:
AS AT DECEMBER 31, 2025 (MILLIONS) | ||||||||||||||||||||||||||||||||||||||
| Asset/Liability | Fair Value | Valuation Techniques | Unobservable Inputs | Ranges | Weighted Average (a) | Impact to Valuation from an Increase in Input | ||||||||||||||||||||||||||||||||
| Financial assets (b) | $ | 410 | Option pricing model | Volatility | 35% - 40% | 39 | % | Higher | ||||||||||||||||||||||||||||||
| Discount rate | 3% - 9% | 5 | % | Lower | ||||||||||||||||||||||||||||||||||
| Common and preferred shares (c) | 310 | Market approach | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||
| Equity method investments under fair value option (d) | 330 | Market approach | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||
| Financial liabilities (f) | 444 | Option pricing model | Volatility | 25% - 40% | 35 | % | Higher | |||||||||||||||||||||||||||||||
| Discount rate | 3% - 4% | 4 | % | Lower | ||||||||||||||||||||||||||||||||||
AS AT DECEMBER 31, 2024 (MILLIONS) | ||||||||||||||||||||||||||||||||||||||
| Asset/Liability | Fair Value | Valuation Techniques | Unobservable Inputs | Ranges | Weighted Average (a) | Impact to Valuation from an Increase in Input | ||||||||||||||||||||||||||||||||
| Financial assets (b) | $ | 231 | Option pricing model | Volatility | 30% - 40% | 38 | % | Higher | ||||||||||||||||||||||||||||||
| Discount rate | 5% - 9% | 6 | % | Lower | ||||||||||||||||||||||||||||||||||
| Common and preferred shares (c) | 363 | Market approach | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||
| Equity method investments under fair value option (d) | 351 | Market approach | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||
| Investments held for sale (e) | 242 | Market approach | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||||||||||
| Financial liabilities (f) | 228 | Option pricing model | Volatility | 30% - 40% | 38 | % | Higher | |||||||||||||||||||||||||||||||
| Discount rate | 5% - 8% | 5 | % | Lower | ||||||||||||||||||||||||||||||||||
(a)Unobservable inputs were weighted based on the fair value of the investments included in the range.
(b)Financial assets relate to call options held by the Company to acquire additional shares of Primary Wave, LCM, Angel Oak and Castlelake from other investors of the investee using a prescribed valuation methodology in exchange for cash, Class A Shares of BAM or BN or other forms of consideration at the discretion of the Company. Financial assets also includes a financial guarantee that ensures a pre-determined return is earned on the 11% economic interest in Pretium. The fair value of these instruments are determined quarterly using a Monte Carlo simulation and various inputs prepared by management.
(c)Common shares categorized as Level III represents investments of $64 million in Brookfield Renewable Energy L.P. (2024 – $64 million). Preferred shares represent $188 million of preferred shares in GEMS Education (2024 – $249 million) and $58 million preferred shares of Cherry Painting Company, Inc. (2024 – $50 million). Common and preferred share investments are carried at fair value with changes in fair value recorded in the consolidated statements of operations.
(d)Equity method investments under fair value option represents an approximate 11% economic interest in Pretium of $330 million (2024 – $351 million) for which BAM has elected the fair value option under ASC 825 Financial Instruments upon initial recognition with changes in fair value recognized in the consolidated statements of operations.
(e)On March 27, 2025, the Company disposed of its interest in Redwood Evergreen Fund LP for approximately $257 million. As a result, for the year ended December 31, 2025, BAM recognized a gain of $15 million, reported in Other expenses, net within the consolidated statements of operations.
(f)Financial liabilities relate to put options held by other investors of Oaktree, Castlelake, LCM and Primary Wave under which the Company may be required to purchase additional shares of these investees using a prescribed valuation methodology in exchange for cash, Class A Shares of BAM or BN or other forms of consideration at the discretion of the Company. The balance also includes contingent consideration agreed to as part of the acquisition of certain investments and other financial derivatives. The fair value of these instruments is determined quarterly using a Monte Carlo simulation and various inputs prepared by management.
Level III Changes in Fair Value
During the year ended December 31, 2025 and 2024, there have been no changes in valuation techniques within Level III that have had a material impact on the valuation of financial instruments.
The following tables summarize the changes in financial assets and liabilities measured at fair value for which the Company has used Level III inputs to determine fair value. Total realized and unrealized gains and losses recorded for Level III investments are reported in other expenses, net in the consolidated statements of operations.
AS AT AND FOR THE YEAR ENDED DECEMBER 31, 2025 (MILLIONS) | Financial assets | Common and preferred shares | Equity method investments under fair value option | Financial liabilities | |||||||||||||||||||
| Balance, beginning | $ | 231 | $ | 363 | $ | 351 | $ | 228 | |||||||||||||||
| Fair value changes in net income | 132 | 16 | (21) | 142 | |||||||||||||||||||
| Purchases and other | 47 | (10) | 40 | 86 | |||||||||||||||||||
| Transfers | — | (59) | (40) | — | |||||||||||||||||||
| Payments | — | — | — | (12) | |||||||||||||||||||
| Balance, ending | $ | 410 | $ | 310 | $ | 330 | $ | 444 | |||||||||||||||
AS AT AND FOR THE YEAR ENDED DECEMBER 31, 2024 (MILLIONS) | Financial assets | Common and preferred shares | Equity method investments under fair value option | Financial liabilities | |||||||||||||||||||
| Balance, beginning | $ | 37 | $ | 64 | $ | — | $ | 122 | |||||||||||||||
| Fair value changes in net income | 68 | — | — | (7) | |||||||||||||||||||
| Purchases | 126 | 532 | 351 | 113 | |||||||||||||||||||
| Sales | — | (233) | — | — | |||||||||||||||||||
| Balance, ending | $ | 231 | $ | 363 | $ | 351 | $ | 228 | |||||||||||||||
Financial Instruments of Consolidated Funds
The following tables summarize the fair value hierarchy of financial assets and liabilities measured at fair value for the Company's consolidated funds as at December 31, 2025 and 2024:
2025 | 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
AS AT DECEMBER 31, (MILLIONS) | Level I | Level II | Level III | Total | Level I | Level II | Level III | Total | |||||||||||||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||||||||||||||||
| Investments in equity securities | $ | — | $ | — | $ | 253 | $ | 253 | $ | — | $ | — | $ | 251 | $ | 251 | |||||||||||||||||||||||||||||||
| Investments in debt | — | — | 252 | 252 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
| Total assets at fair value | $ | — | $ | — | $ | 505 | $ | 505 | $ | — | $ | — | $ | 251 | $ | 251 | |||||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||||||||||||||||||||
| Borrowings | $ | 462 | $ | — | $ | — | $ | 462 | $ | 251 | $ | — | $ | — | $ | 251 | |||||||||||||||||||||||||||||||
| Total liabilities at fair value | $ | 462 | $ | — | $ | — | $ | 462 | $ | 251 | $ | — | $ | — | $ | 251 | |||||||||||||||||||||||||||||||
Level III Measurements of Consolidated Funds
AS AT DECEMBER 31, 2025 (MILLIONS) | ||||||||||||||||||||||||||||||||||||||
| Level III Asset/Liability | Fair Value | Valuation Techniques | Unobservable Inputs | Ranges | Weighted Average (a) | Impact to Valuation from an Increase in Input | ||||||||||||||||||||||||||||||||
| Investments in equity securities | $ | 253 | Market approach | N/A | N/A | N/A | N/A | |||||||||||||||||||||||||||||||
| Investments in debt | 252 | Par (net of amortized discount) plus accrued interest | Discount rate | 14% | 14 | % | Lower | |||||||||||||||||||||||||||||||
AS AT DECEMBER 31, 2024 (MILLIONS) | ||||||||||||||||||||||||||||||||||||||
| Level III Asset/Liability | Fair Value | Valuation Techniques | Unobservable Inputs | Ranges | Weighted Average (a) | Impact to Valuation from an Increase in Input | ||||||||||||||||||||||||||||||||
| Investments in equity securities | $ | 251 | Market approach | N/A | N/A | N/A | N/A | |||||||||||||||||||||||||||||||
Level III Changes in Fair Value of Consolidated Funds
AS AT AND FOR THE YEAR ENDED DECEMBER 31, 2025 (MILLIONS) | Investments in debt | Investments in equity securities | |||||||||
| Balance, beginning | $ | — | $ | 251 | |||||||
| Fair value changes in net income | 25 | 22 | |||||||||
| Deconsolidation of consolidated funds | — | (267) | |||||||||
| Purchases, net | 227 | 247 | |||||||||
| Balance, ending | $ | 252 | $ | 253 | |||||||
AS AT AND FOR THE YEAR ENDED DECEMBER 31, 2024 (MILLIONS) | Investments in equity securities | |||||||
| Balance, beginning | $ | — | ||||||
| Fair value changes in net income | — | |||||||
| Purchases, net | 251 | |||||||
| Balance, ending | $ | 251 | ||||||
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.