Affiliated Managers Group, Inc.

Greetings and welcome to the AMG second quarter 2023 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Patricia Figueroa, Head of Investor Relations for AMG. Thank you. You may begin.

Good morning, and thank you for joining us today to discuss AMG's results for the second quarter of 2023. Before we begin, I'd like to remind you that during this call, we may make a number of forward-looking statements which could differ from our actual results materially, and AMG assumes no obligation to update these statements. A replay of today's call will be available on the Investor Relations section of our website, along with a copy of our earnings release and a reconciliation of any non-GAAP financial measures, including any earnings guidance announced on this call. In addition, we posted an updated investor presentation to our website this morning and encourage investors to consult our site regularly for updated information. With us today to discuss the company's results for the quarter are Jay Horgan, President and Chief Executive Officer, and Tom Wojcik, Chief Financial Officer. With that, I'll turn the call over to Jay.

Thanks, Patricia, and good morning, everyone. AMG's second quarter results reflect the positive impact of our capital allocation strategy across both growth investments and share repurchases. During the quarter, we announced a new partnership with Forbian, marking our seventh investment in alternatives over the last four years, further evolving the composition of our business towards in-demand strategies. We continue to see attractive new investment opportunities and advance several of them during the quarter. Looking ahead, we expect to deploy additional capital toward private markets and liquid alternatives through investments in new and existing affiliates. Given our robust financial flexibility, which will be further enhanced by the proceeds from the Veritable Transaction, along with our capital allocation discipline and differentiated partnership model, AMG is uniquely positioned to deliver significant shareholder value over time as we continue to execute on our long-term growth strategy. In June, we announced a minority investment in Forbien. a leading European life sciences venture capital and growth equity firm with more than $3 billion in assets under management. Formian is well-positioned to benefit from strong investor demand for the development and commercialization of innovative drug therapies. The firm will be our first affiliate focused on venture capital, bringing further diversification to our business profile. And this new partnership broadens our participation in private markets, as well as life sciences, a sector with robust client demand trends and meaningful societal impact. The ForBian team chose to partner with AMG because of our unique approach, which preserves their operational autonomy and investment independence while providing access to our strategic capabilities. The ForBian partners were attracted to AMG given our firm's deep cultural alignment, including our respective entrepreneurial cultures, and long-term partnership orientations, as well as our capital formation capabilities, which we expect will expand Forbian's client base. Building an enduring multi-generational firm is of paramount importance to the Forbian partners, as reflected in the firm's deliberate design of an incentive structure that ensures long-term alignment, and AMG's expertise will further advance Forbian's ability to achieve this objective. As evidenced by some of our recent new investments, we are seeing greater demand for firms in private markets that are seeking succession planning-oriented partnerships, given the inevitable need for next generation leadership transitions at firms that now have operated for decades. AMG's proven approach and 30-year track record in the area are unmatched, making AMG a uniquely attractive partner to independent private markets firms seeking succession-oriented solutions. Taking a step back, over the last few years, AMG has broadened its strategic capabilities, enhancing our existing affiliates' competitive position, and providing an even more attractive value proposition for prospective affiliates. Today, we offer the broadest array of partnership solutions available to independent firms, including strategic and business development support, succession planning, product development, capital formation capabilities, growth capital, and insights on the most significant questions that independent firms face. Our ability to engage and collaborate with our affiliates to magnify their success has yielded tangible results. Over the past several years, we have meaningfully enhanced the efforts of affiliates, including through product launches and asset gathering support. On our U.S. wealth platform, we launched one of the first evergreen funds in the private equity space. the AMG Pantheon Fund, and have successfully scaled the strategy since. This fund has grown to more than $2 billion in asset center management and is one of the most highly regarded private markets products in the U.S. wealth channel. In the institutional channel, we have successfully supported Comvest in growing its private debt platform from approximately $2 billion at the time of our investment to more than $8 billion today through growth capital, and enhanced institutional capabilities, yielding broader opportunities across both the US and global client base. We've also been successful in magnifying the growth of multiple affiliates by leveraging AMG's scale and strategic relationships globally, enabling affiliates to efficiently access hard-to-reach marketplaces. We have recently facilitated client wins in the Middle East, Korea, Australia, and Japan, extending our affiliates' reach beyond their own historical geographic focus. AMG's abilities to strategically engage across a range of growth initiatives can materially improve affiliates' long-term success. In addition, our proven ability to create value together with our existing affiliates differentiates AMG to prospective new affiliates and has an increasingly important consideration as excellent independent firms seek a strategic partner. As we continue to cultivate attractive opportunities to partner with the highest quality independent firms in areas of secular growth, we are well positioned to increase our new investment activity, further evolving the composition of our business towards in-demand strategies. More broadly, The growth investments we have made over the last few years have already played a critical role in reshaping AMG's business, accelerating the evolution of our strategic profile from predominantly traditional long-only exposures to a substantial contribution from alternatives. In the last 12 months, approximately half of our earnings were generated by alternative strategies, including private markets and liquid alternatives. And as we continue to execute on our growth strategy, we expect the composition of our earnings to reflect an even greater contribution from alternatives, both private markets and liquid alternatives. Further, given our focus on high-performing independent firms and our ongoing strategic evolution towards areas of secular growth, we expect AMG's long-term organic growth profile to improve. While active equity outflows in the current macro environment obfuscate the underlying momentum in our business, specifically in alternatives, the actions we have taken over the last few years are producing results. As evidenced by the shift in our earnings composition, meaningful flows into alternatives, and the significant growth in our earnings per share over the past five years. Looking forward, We are well positioned to continue to evolve our business through growth investments in new and existing affiliates, given our track record, pipeline, and significant financial flexibility. And our financial flexibility will be further enhanced by the proceeds of the Variable transaction announced last week. For more than a decade, AMG and Variable enjoyed a productive and prosperous partnership that saw Variable more than double its asset center management as an independent firm. However, when the opportunity presented itself, both AMG and the veritable partners recognized the strategic benefits of a full combination with Pasto. And given our alignment and collaborative approach, AMG supported this successful outcome for all stakeholders. Consistent with our disciplined capital allocation framework, we will deploy the considerable proceeds from the transaction to benefit our shareholders, prioritizing growth investments, and returning any excess capital thereafter to shareholders. Since 2019, we've invested more than $1.5 billion in growth areas, with alternatives accounting for approximately two-thirds of that total, while also returning more than $2 billion in excess capital. Looking ahead, our opportunities to invest for growth have been steadily building, including as a result of our broadened capabilities. Given our enhanced opportunity set, our excellent capital position, and our unique competitive advantages, we are confident in our ability to generate incremental value over time. And with that, I'll turn it over to Tom to review the details of the court.