Securities & Asset Management: Fair value: Level 3 measurements

In determining fair value, we use various valuation approaches. A hierarchy for inputs is used in measuring fair value that maximizes the use of observable prices and inputs, and minimizes the use of unobservable prices and inputs by requiring that the relevant observable inputs be used when available. The hierarchy is broken down into three levels: wherein Level 1 represents quoted prices in active markets, Level 2 represents valuations based on quoted prices in markets that are not active or for which all significant inputs are observable, and Level 3 consists of valuation techniques that incorporate significant unobservable inputs and, therefore, require the greatest use of judgment. The fair values for the substantial majority of our financial assets and liabilities carried at fair value are based on observable prices and inputs and are classified in level 1 or 2, of the fair value hierarchy. Level 3 financial assets represented 0.7% and 0.9% of our total assets, as of December 31, 2025 and December 31, 2024, respectively.

In periods of market disruption, the observability of prices and inputs, as well as market liquidity, may be reduced for many instruments, which could cause an instrument to be recategorized from Level 1 to Level 2 or from Level 2 to Level 3. In addition, a downturn in market conditions could lead to declines in the valuation of many instruments carried at fair value. Imprecision in estimating unobservable market inputs or other factors can affect the amount of gain or loss recorded for a particular position. The Firm uses various methodologies and assumptions in the determination of fair value. The use of methodologies or assumptions different than those used by the Firm could result in a different estimate of fair value at the reporting date. For further information on the definition of fair value, Level 1, Level 2, Level 3 and related valuation techniques, and quantitative information about and sensitivity of significant unobservable inputs used in Level 3 fair value measurements, see Notes 2 and 4 to the financial statements.

Where appropriate, valuation adjustments are made to account for various factors, such as liquidity risk (bid-ask adjustments), credit quality, model uncertainty, concentration risk and funding, in order to arrive at fair value. For a further discussion of valuation adjustments that we apply, see Note 2 to the financial statements.

Goodwill and Intangible Assets

Goodwill

As described in Notes 4 and 5 to the consolidated financial statements, as of December 31, 2025, the Company had unsecured long-term borrowings of $15.8 billion and unsecured short-term borrowings of $7.7 billion accounted for at fair value and classified in level 3 of the fair value hierarchy, a significant portion of which are hybrid financial instruments. The significant unobservable inputs used to value certain level 3 hybrid financial instruments include volatility, correlation and credit spreads, which primarily relate to the embedded derivative component of these long-term and short-term unsecured borrowings.

The principal considerations for our determination that performing procedures relating to the valuation of certain level 3 hybrid financial instruments is a critical audit matter are (i) the significant judgment by management when developing the valuation of certain level 3 hybrid financial instruments, (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to the significant unobservable input related to correlation and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the valuation of certain level 3 hybrid financial instruments, including controls over the significant unobservable input related to correlation. These procedures also included, among others (i) testing the completeness and accuracy of certain data provided by management and (ii) the involvement of professionals with specialized skill and knowledge to assist in evaluating the reasonableness of management’s estimate by (a) developing an independent range of prices for a sample of certain level 3 hybrid financial instruments using independently developed assumptions, and (b) comparing the independent range of prices to management’s estimate.

/s/ PricewaterhouseCoopers LLP

New York, New York

February 25, 2026

We have served as the Company’s auditor since 1922.

Certain funds may hold significant illiquid investments whose fair values are based on unobservable inputs. These investments have limited observable market activity and the inputs used in the determination of the investments fair value require significant management judgement or estimation. Changes in the fair value of these investments directly impact the amount of performance allocations the Company is entitled to recognize as investment income for the period.

We considered the valuation of certain investments without readily determinable fair values used in the calculation of performance allocations as a critical audit matter because of the valuation techniques, assumptions, market impacts and the degree of subjectivity of certain unobservable inputs used in the valuation. Auditing the fair value of these investments required a high degree of auditor judgment and increased effort, including the involvement of our internal fair value specialists as needed, who possess significant fair value methodology and modeling expertise.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the valuation models and significant unobservable inputs utilized by the Company to estimate the fair value of certain illiquid investments held by the funds included the following, among others:

• We involved senior, more experienced audit team members in the performance of our audit procedures.

• We tested the design and operating effectiveness of controls over management’s determination of the fair value of certain illiquid investments.

• With the assistance of our fair value specialists, we evaluated the valuation methods, assumptions and unobservable inputs used by the Company to determine the fair value of certain illiquid investments held by the funds.

• We evaluated the Company’s historical ability to accurately estimate the fair value of illiquid investments by comparing previous estimates of fair value to market transactions with third parties.

Valuation of Certain Structured Level 3 Asset-Backed Securities - Refer to Note 4 , Investments, Note 7 , Fair Value, and Note 18, Related Parties

Critical Audit Matter Description