Cover and table of contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Form 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the fiscal year ended December 31, 2020

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the Transition period from to .

Commission File Number 001-34820

KKR & CO. INC.

(Exact name of Registrant as specified in its charter)

Delaware						26-0426107
(State or other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification Number)

30 Hudson Yards

New York, New York 10001

Telephone: (212) 750-8300

(Address, zip code, and telephone number, including

area code, of registrant's principal executive office.)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class			Trading symbol(s)			Name of each exchange on which registered
Common Stock			KKR			New York Stock Exchange
6.75% Series A Preferred Stock			KKR PR A			New York Stock Exchange
6.50% Series B Preferred Stock			KKR PR B			New York Stock Exchange
6.00% Series C Mandatory Convertible Preferred Stock			KKR PR C			New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No ý

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 and 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer			☒						Accelerated filer			☐
Non-accelerated filer			☐						Smaller reporting company			☐
									Emerging growth company			☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of common stock of the registrant held by non-affiliates as of June 30, 2020, was approximately $16.5 billion. As of February 17, 2021, the registrant had 576,611,174 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None

KKR & CO. INC.

FORM 10-K

For the Year Ended December 31, 2020

INDEX

						Page No.
			PART I
Item 1.			Business			7
Item 1A.			Risk Factors			37
Item 1B.			Unresolved Staff Comments			121
Item 2.			Properties			121
Item 3.			Legal Proceedings			121
Item 4.			Mine Safety Disclosures			121
			PART II
Item 5.			Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			122
Item 6.			[Reserved]
Item 7.			Management's Discussion and Analysis of Financial Condition and Results of Operations			125
Item 7A.			Quantitative and Qualitative Disclosures About Market Risk			171
Item 8.			Financial Statements and Supplementary Data			175
Item 9.			Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			250
Item 9A.			Controls and Procedures			250
Item 9B.			Other Information			251
			PART III
Item 10.			Directors, Executive Officers and Corporate Governance			252
Item 11.			Executive Compensation			257
Item 12.			Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			271
Item 13.			Certain Relationships and Related Transactions, and Director Independence			274
Item 14.			Principal Accounting Fees and Services			280
			PART IV
Item 15.			Exhibits, Financial Statement Schedules			281
Item 16.			Form 10-K Summary			289
SIGNATURES						290

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which reflect our current views with respect to, among other things, our operations and financial performance. You can identify these forward-looking statements by the use of words such as "outlook," "believe," "expect," "potential," "continue," "may," "should," "seek," "approximately," "predict," "intend," "will," "plan," "estimate," "anticipate," the negative version of these words, other comparable words or other statements that do not relate strictly to historical or factual matters. Without limiting the foregoing, statements regarding the declaration and payment of dividends on common or preferred stock of KKR & Co. Inc.; the timing, manner and volume of repurchase of common stock pursuant to its repurchase program; the amount that The Global Atlantic Financial Group LLC (together with its subsidiaries, "Global Atlantic") will contribute to KKR's assets under management ("AUM"); KKR's ability to manage Global Atlantic's investments; operation of Global Atlantic following the closing of the transaction; the transaction's effects on KKR’s operating results; expansion and growth opportunities and other synergies resulting from the Global Atlantic acquisition and other acquisitions, reorganizations or strategic partnerships may constitute forward-looking statements. Forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements or cause the anticipated benefits and synergies from transactions to not be realized. We believe these factors include those described under the section entitled "Risk Factors" in this report. These factors should be read in conjunction with the other cautionary statements that are included in this report and in our other filings with the U.S. Securities and Exchange Commission (the "SEC"). We do not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

In this report, references to "KKR," "we," "us" and "our" refer to KKR & Co. Inc. and its subsidiaries, including Global Atlantic, unless the context requires otherwise. On January 1, 2020, KKR completed an internal reorganization (the "Reorganization"), which was undertaken to, among other purposes, simplify KKR's internal structure. In the Reorganization, (i) KKR Management Holdings L.P. and KKR International Holdings L.P., which were former intermediate holdings companies for KKR's business, were combined with another intermediate holding company, KKR Fund Holdings L.P., which changed its name to KKR Group Partnership L.P. ("KKR Group Partnership") and became the sole intermediate holding company for KKR's business, (ii) the issuers of each series of KKR’s outstanding senior notes were contributed to KKR Group Partnership and the guarantees by KKR International Holdings L.P. and KKR Management Holdings L.P. under the senior notes were automatically and unconditionally released and discharged pursuant to the terms of the indentures governing such senior notes, with KKR Group Partnership remaining as a guarantor, and (iii) the ownership interests of certain operating subsidiaries of KKR Group Partnership were reorganized. In connection with the 6.75% Series A Preferred Stock ("Series A Preferred Stock"), 6.50% Series B Preferred Stock ("Series B Preferred Stock") and 6.00% Series C Mandatory Convertible Preferred Stock ("Series C Mandatory Convertible Preferred Stock") of KKR & Co. Inc., KKR Group Partnership has series of preferred units issued and outstanding with economic terms designed to mirror those of the Series A Preferred Stock, Series B Preferred Stock and Series C Mandatory Convertible Preferred Stock, respectively. On May 8, 2020, we amended and restated our certificate of incorporation and our bylaws (as amended and restated, our "certificate of incorporation" and our "bylaws," respectively) to, among other things, rename Class A common stock of KKR & Co. Inc. as common stock, and reclassify Class B common stock and Class C common stock of KKR & Co. Inc. into Series I preferred stock and Series II preferred stock, respectively (the "Reclassification"). KKR & Co. Inc. has one class of common stock authorized and outstanding.

References to "KKR Group Partnership" for periods prior to the Reorganization mean KKR Fund Holdings L.P., KKR Management Holdings L.P. and KKR International Holdings L.P., collectively, and references to "KKR Group Partnership" for periods following the Reorganization mean KKR Group Partnership L.P. References to a "KKR Group Partnership Unit" mean (i) one Class A partner interest in each of KKR Fund Holdings L.P., KKR Management Holdings L.P. and KKR International Holdings L.P., collectively, for periods prior to the Reorganization and (ii) one Class A partner interest in KKR Group Partnership for periods following the Reorganization. References to "common stock" for periods prior to the Reclassification mean Class A common stock of KKR & Co. Inc. and references to "Series I preferred stock" and "Series II preferred stock" for periods prior to the Reclassification mean Class B common stock and Class C common stock of KKR & Co. Inc., respectively. References to the "Series I preferred stockholder" are to KKR Management LLP, the holder of the sole share of our Series I preferred stock, which converted from a limited liability company named KKR Management LLC to a limited liability partnership in the Reorganization.

Contemporaneously with the Reorganization, KKR acquired KKR Capstone Americas LLC and its affiliates ("KKR Capstone") on January 1, 2020. References to "non-employee operating consultants" for periods prior to the acquisition mean

employees of KKR Capstone, who were not employees of KKR during such periods. Prior to the acquisition, KKR Capstone was owned and controlled by its senior management and was not a subsidiary or affiliate of KKR.

Unless otherwise indicated, references to equity interests in KKR's business, or to percentage interests in KKR's business, reflect the aggregate equity interests in KKR Group Partnership and are net of amounts that have been allocated to our principals and other employees in respect of the carried interest from KKR's business as part of our "carry pool" and certain minority interests. References to "principals" are to our senior employees who hold interests in KKR's business through KKR Holdings L.P. ("KKR Holdings") or another KKR entity, and references to our "senior principals" are to our senior employees who hold interests in the Series I preferred stockholder.

On February 1, 2021, KKR completed its previously announced transaction to acquire Global Atlantic. Upon closing KKR holds all of the voting interests in Global Atlantic and owns 61.1% of the economic equity interests in Global Atlantic, which percentage is subject to change due to certain post-closing purchase price adjustments. KKR's historical financial results included in this report, including its audited consolidated financial statements as of and for the year ended December 31, 2020, do not reflect Global Atlantic's financial results and may not be indicative of KKR's financial results for future periods that will consolidate the results of Global Atlantic.

In this report, the term "GAAP" refers to accounting principles generally accepted in the United States of America.

We disclose certain financial measures in this report that are calculated and presented using methodologies other than in accordance with GAAP, including after-tax distributable earnings, distributable revenues, distributable expenses, distributable operating earnings, fee related earnings ("FRE"), book assets, book liabilities, book value and book value per adjusted share. We believe that providing these performance measures on a supplemental basis to our GAAP results is helpful to stockholders in assessing the overall performance of KKR's businesses. These non-GAAP financial measures should not be considered as a substitute for, or superior to, similar financial measures calculated in accordance with GAAP. We caution readers that these non-GAAP financial measures may differ from the calculations of other investment managers, and as a result, may not be comparable to similar measures presented by other investment managers. Reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP, where applicable, are included under "Management's Discussion and Analysis of Financial Condition and Results of Operations—Reconciliations to GAAP Measures." This report also uses the terms AUM, fee paying assets under management ("FPAUM"), capital invested and syndicated capital. You should note that our calculations of these and other operating metrics may differ from the calculations of other investment managers and, as a result, may not be comparable to similar metrics presented by other investment managers. These non-GAAP and operating metrics are defined in the section "Management's Discussion and Analysis of Financial Condition and Results of Operations—Key Non-GAAP and Other Operating and Performance Measures."

References to our "funds" or our "vehicles" refer to investment funds, vehicles and accounts that are advised, sponsored or managed by one or more subsidiaries of KKR, including collateralized loan obligations ("CLOs") and commercial real estate mortgage-backed securities ("CMBS") vehicles, unless the context requires otherwise. They do not include investment funds, vehicles or accounts of any hedge fund or other manager with which we have formed a strategic partnership where we have acquired an ownership interest.

Unless otherwise indicated, references in this report to our fully exchanged and diluted common stock outstanding, or to our common stock outstanding on a fully exchanged and diluted basis, reflect (i) actual shares of common stock outstanding, (ii) shares of common stock into which KKR Group Partnership Units held by KKR Holdings are exchangeable pursuant to the terms of the exchange agreement described in this report, (iii) shares of common stock into which all outstanding shares of Series C Mandatory Convertible Preferred Stock are convertible and (iv) shares of common stock issuable pursuant to any equity awards actually granted from the Amended and Restated KKR & Co. Inc. 2010 Equity Incentive Plan (the "2010 Equity Incentive Plan") or the Amended and Restated KKR & Co. Inc. 2019 Equity Incentive Plan (the "2019 Equity Incentive Plan" and, together with the 2010 Equity Incentive Plan, our "Equity Incentive Plans"). Our fully exchanged and diluted common stock outstanding does not include shares of common stock available for issuance pursuant to the Equity Incentive Plans for which equity awards have not yet been granted.

The use of any defined term in this report to mean more than one entities, persons, securities or other items collectively is solely for convenience of reference and in no way implies that such entities, persons, securities or other items are one indistinguishable group. For example, notwithstanding the use of the defined terms "KKR," "we" and "our" in this report to refer to KKR & Co. Inc. and its subsidiaries, each subsidiary of KKR & Co. Inc. is a standalone legal entity that is separate and distinct from KKR & Co. Inc. and any of its other subsidiaries.

SUMMARY RISK FACTORS

The following is a summary of the risk factors associated with investing in our securities. You should read this summary together with a more detailed description of these risks in the "Risk Factors" section of this report and in other filings that we make from time to time with the SEC.

We are subject to risks related to our business, including risks involving:

• difficult market and economic conditions;

• disruptions caused by the COVID-19 pandemic;

• changes in the debt financing markets*;*

• transition away from the London interbank offered rate ("LIBOR") as a benchmark reference for interest rates;

• significant liquidity requirements and sources of liquidity;

• "clawback" provisions in our governing agreements;

• increased risks related to strategic investor partnerships;

• high variability in our earnings and cash flow;

• decline in the pace or size of investment by our funds;

• inability to raise additional or successor funds at all or at a comparable size to predecessor funds;

• less favorable economic terms of our future funds;

• intense competition in the investment management business;

• increasing focus by stakeholders on environmental, social and governance matters;

• changes in relevant tax laws, regulations and treaties or adverse interpretations by tax authorities;

• our dependence on our founders and other key personnel;

• recruiting, retaining and motivating our employees and other key personnel;

• operational risks, cyber-security failures and data security breaches;

• entering into new lines of business and expansion into new investment strategies, geographic markets and businesses;

• complexities of new investment strategies, markets and businesses;

• ability to syndicate the securities or indebtedness and realize returns on investments financed with our balance sheet;

• extensive regulation of our businesses;

• increased regulatory focus or legislative or regulatory change;

• complex regulations affecting capital raising activities;

• federal, state and foreign anti-corruption and trade sanctions laws;

• litigation allegations and negative publicity;

• certain types of investment vehicles with increased risk of litigation and regulatory scrutiny;

• misconduct of our employees, consultants or sub-contractors or by our portfolio companies;

• underwriting, syndicating and securities placement activities; and

• use of third-party service providers.

We are subject to risks related to assets we manage, including risks involving:

• historical returns not being indicative of future results;

• valuation methodologies;

• various economic conditions and events outside our control;

• dependence on significant leverage in investments;

• limitation inherent in the due diligence process;

• investments in relatively high-risk, illiquid assets;

• risks inherent in our investments including risks specific to real assets and growth equity investments;

• investments in real assets, such as real estate, infrastructure and energy, and emerging and less established companies;

• failure to protect intellectual property rights;

• investments in high-yield, below investment grade or unrated debt or in companies in distress;

• investments involving business, regulatory, legal or other complexities;

• large size of our private equity and real assets investments;

• investments in companies that we do not control;

• investments in companies that are based outside of the United States;

• third-party investors' contractual obligation to fund capital calls;

• ranking of our equity and debt investments compared to investments made by others;

• hedging transactions and other risk management activities undertaken by us;

• concentration of investments by our funds or by our balance sheet;

• conflicts of interest between our businesses and our funds;

• redemption by fund investors in certain of our credit funds; and

• our hedge fund partnerships.

We are subject to risks related to our common stock, including risks involving:

• significant voting power held by the Series I preferred stockholder;

• exemptions available to us as a "controlled company" under the NYSE corporate governance rules;

• exemptions from proxy rules under U.S. securities laws;

• provisions in our certificate of incorporation limiting the obligation and liability of the Series I preferred stockholder;

• exclusive forum provision included in our certificate of incorporation;

• volatility of market price and trading volume of our common stock;

• assets and revenues of our funds not being directly available to us or our common stockholders;

• large number of shares eligible for future sale or for exchange and issuable as grants or in acquisitions;

• ability to issue preferred stock may cause the price of our common stock to decline; and

• our right to repurchase all outstanding shares of common stock under specific circumstances.

We are subject to risks related to our organizational structure, including risks involving:

• potential conflicts of interest among the Series I preferred stockholder and our common stockholders;

• certain actions by our board of directors requiring the approval of the Series I preferred stockholder;

• ability of the Series I preferred stockholder to transfer its share of Series I preferred stock;

• limitations on our ability to pay periodic dividends;

• our obligations to pay under tax receivable agreement;

• potential application of restrictions under the Investment Company Act of 1940 (the "Investment Company Act");

• internal reorganizations undertaken by us; and

• anti-takeover provisions in our organizational documents.

We are subject to risks related to Global Atlantic, including risks involving:

• possibility of not achieving the intended benefit of the acquisition;

• inclusion of Global Atlantic as our consolidated subsidiary;

• interest rate fluctuations and sustained periods of low or high interest rates;

• use of derivative financial instruments in risk management strategy;

• competitiveness of the insurance industry;

• dependence on third-party service providers, including distribution partners and agents;

• guarantees within certain of Global Atlantic's products;

• volatility in its net income under GAAP;

• acceleration of amortization of deferred revenues and expenses;

• difference between policyholder behavior estimates, reserve assumptions and actual claim experience;

• estimates used in preparation of financial statements and models for insurance products;

• ability to execute Global Atlantic's growth strategies successfully;

• any gaps in Global Atlantic's risk management policies and procedures;

• Global Atlantic's actual or perceived financial strength and ratings of Global Atlantic and its insurance subsidiaries;

• failure to comply with covenants in credit facilities or agreements;

• lack of captive or proprietary distribution or direct sale;

• businesses Global Atlantic reinsures and business it cedes to reinsurers;

• natural and man-made disasters and other catastrophes;

• protection of confidentiality of client information;

• changes in accounting standards;

• ability to cover policyholder benefits, withdrawals, recaptures or collateralization requirements;

• reinsurance assets held in trust, which limits Global Atlantic's ability to invest those assets;

• reinsurance agreements that permit the reinsurance client to recapture some or all of the reinsurance portfolio;

• determination of the amount of impairments and allowances for credit losses;

• Global Atlantic's membership in Federal Home Loan Banks;

• repurchase and reverse repurchase transactions that subject Global Atlantic to liquidity risks;

• applicability of the U.S. federal income taxes, changes to U.S. tax laws or Global Atlantic's tax status in Bermuda; and

• insurance and other regulations, including those related to statutory accounting rules, reserves, guaranty association laws and licensing requirements, that apply to Global Atlantic and its insurance subsidiaries.

PART I