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Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm225
Consolidated Statements of Financial Condition as of December 31, 2023 and 2022229
Consolidated Statements of Operations for the Years Ended December 31, 2023, 2022 and 2021233
Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2023, 2022 and 2021235
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2023, 2022 and 2021236
Consolidated Statements of Cash Flows for the Years Ended December 31, 2023, 2022 and 2021239
Notes to Consolidated Financial Statements242

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of KKR & Co. Inc.:

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated statement of financial condition of KKR & Co. Inc. and its subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), changes in equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). We also have audited the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

Accounting Pronouncement Recently Adopted

As discussed in Note 2 to the financial statements, effective January 1, 2023, the Company adopted Accounting Standards Update (ASU) 2018-12, Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts, with retrospective application to February 1, 2021. The adoption of ASU 2018-12 is also communicated as a critical audit matter below.

Basis for Opinions

The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Fair Value—Level III Investments—Refer to Notes 2, 7, and 9 to the financial statements

Critical Audit Matter Description

KKR & Co. Inc. and the funds it sponsors and manages have certain investments measured at fair value using unobservable pricing inputs and are classified as Level III Investments. These Level III investments have limited observable market activity and the inputs used in the determination of fair value require significant management judgment or estimation.

In addition, the Company recognizes carried interest from vehicles and accounts that are advised, sponsored or managed by one or more of its subsidiaries (“investment funds”) based on cumulative fund performance to date. At the end of each reporting period, the Company calculates the carried interest that would be due to the Company for each investment fund, pursuant to the investment fund agreements. Certain of the investment funds’ investments are valued using unobservable inputs and thus are classified as Level III in the fair value hierarchy. The change in the fair value of the underlying Level III Investments held by the investment funds is a significant input into the determination of carried interest for each reporting period. As the fair value of underlying investments varies between reporting periods, it is necessary to adjust the amounts recorded as carried interest. Accrued but unpaid carried interest as of the reporting date is reflected in investments in the consolidated statements of financial condition.

We identified certain Level III Investments as a critical audit matter because of the unobservable pricing inputs management used to estimate fair value, and changes in the fair value of these investments directly impacts the amount of unrealized carried interest the Company accrues for the period as well as unrealized investment income recorded during the period.

Performing audit procedures to evaluate the appropriateness of these inputs required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists who possess significant investment valuation expertise.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the unobservable pricing inputs used by management to estimate the fair values of Level III Investments included the following, among others:

  • We involved more senior, more experienced audit team members to perform audit procedures.

  • We tested the effectiveness of controls over the determination of the fair value of Level III Investments.

  • With the assistance of our fair value specialists, we evaluated management’s process for Level III Investments valuation, including their determination of the unobservable pricing inputs used to estimate fair value.

  • We assessed the consistency by which management applied its process.

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

Policy Liabilities — Valuation of Policy Liabilities Associated with the Fixed-Indexed Annuity Product — Refer to Notes 2, 8, 9, and 17 to the financial statements

Critical Audit Matter Description

The Company’s products include the fixed-indexed annuity product, which contains equity indexed features that are considered embedded derivatives and are required to be measured at fair value. In addition, certain fixed-indexed annuity contracts are issued with guarantees, which are considered Market Risk Benefits (“MRBs”).

Management applies significant judgment in selecting assumptions used to estimate the value of embedded derivative liabilities and MRBs associated with the fixed-indexed annuity product. Changes in market conditions or variations in certain assumptions could result in significant fluctuations in these estimates. Principal assumptions include surrender, withdrawal, benefit utilization, mortality, option budgets, future index credits, equity market return, interest rates, and nonperformance risk assumptions.

We identified the valuation of embedded derivative liabilities, and MRBs associated with the fixed-indexed annuity product as a critical audit matter because of the inherent management judgement required in selecting assumptions.

Performing audit procedures to evaluate the judgments made and the reasonableness of assumptions and models used in the valuations required a high degree of auditor judgment and an increased extent of auditor effort. The audit effort included the use of professionals with specialized skill and knowledge, including our valuation, modeling, and actuarial specialists, to assist in performing these procedures and evaluating the audit evidence obtained from these procedures.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the valuation of embedded derivative liabilities and MRBs associated with the fixed-indexed annuity product included the following, among others:

  • We involved more senior, more experienced audit team members to perform audit procedures.

  • We tested the effectiveness of controls over the assumptions, including controls over the underlying data used in the valuation of these liabilities.

  • With the assistance of our valuation, modeling, and actuarial specialists, we:

◦Evaluated the methods and judgments applied by management in the determination of principal assumptions used in the valuation of embedded derivative liabilities and MRBs associated with the fixed-indexed annuity product.

◦Evaluated the results of underlying experience studies, capital market projections, and judgments applied by management in setting the assumptions.

◦Developed an independent estimate of embedded derivative liabilities and MRBs associated with the fixed-indexed annuity production on a sample basis and evaluated differences.

ASU 2018-12 Implementation – Refer to Note 2 to the financial statements

Critical Audit Matter Description

Effective January 1, 2023, KKR adopted new accounting guidance for the insurance and reinsurance companies that issue long-duration contracts (“LDTI”), with retrospective application to February 1, 2021 (“GA Acquisition Date”), coinciding with the acquisition of Global Atlantic by KKR (see Accounting Pronouncement Recently Adopted explanatory paragraph above).

The adoption of LDTI significantly modified the Company’s accounting for and disclosure of long duration insurance contracts, including the modification of certain complex valuation models and the introduction of a new model for a new category of benefits referred to as MRBs. Audit procedures to evaluate the full retrospective adoption of LDTI required significant audit effort, including the involvement of our actuarial specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the adoption of LDTI included the following, among others:

  • We involved senior, more experienced audit team members, including actuarial specialists, to plan and perform audit procedures.

  • We tested the effectiveness of controls, including those related to the changes made to measurement models.

  • We evaluated the appropriateness of the Company’s accounting policies and methodologies involved in the adoption of the LDTI.

  • We involved our actuarial specialists to assist us in evaluating the reasonableness and conceptual soundness of the measurement models.

/s/ Deloitte & Touche LLP

New York, New York

February 29, 2024

We have served as the Company's auditor since 2006.

KKR & CO. INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Amounts in Thousands, Except Share and Per Share Data)

December 31, 2023December 31, 2022
Assets
Asset Management
Cash and Cash Equivalents$8,393,892$6,705,325
Restricted Cash and Cash Equivalents116,599253,431
Investments98,634,80192,375,463
Due from Affiliates1,446,8521,663,303
Other Assets4,975,2235,197,626
113,567,367106,195,148
Insurance
Cash and Cash Equivalents$11,954,675$6,118,231
Restricted Cash and Cash Equivalents342,954308,383
Investments141,370,323124,199,176
Reinsurance Recoverable36,617,34426,022,081
Insurance Intangible Assets4,450,8242,331,494
Other Assets4,883,7076,041,329
Separate Account Assets4,107,0004,130,794
203,726,827169,151,488
Total Assets$317,294,194$275,346,636
Liabilities and Equity
Asset Management
Debt Obligations$44,886,870$40,598,613
Due to Affiliates538,099466,057
Accrued Expenses and Other Liabilities7,718,4156,471,775
53,143,38447,536,445
Insurance
Policy Liabilities (market risk benefit liabilities: $1,120,968 and $682,038, respectively.)$160,058,271$137,780,929
Debt Obligations2,587,8572,128,166
Funds Withheld Payable at Interest34,339,52222,739,417
Accrued Expenses and Other Liabilities3,256,0064,600,375
Reinsurance Liabilities1,423,2421,059,820
Separate Account Liabilities4,107,0004,130,794
205,771,898172,439,501
Total Liabilities258,915,282219,975,946
December 31, 2023December 31, 2022
Commitments and Contingencies (See Note 24)
Redeemable Noncontrolling Interests (See Note 23)$615,427$152,065
Stockholders' Equity
Series C Mandatory Convertible Preferred Stock, $0.01 par value. 0 and 22,999,974 shares, issued and outstanding as of December 31, 2023 and December 31, 2022, respectively.$—$1,115,792
Series I Preferred Stock, $0.01 par value. 1 share authorized, 1 share issued and outstanding as of December 31, 2023 and December 31, 2022.——
Common Stock, $0.01 par value. 3,500,000,000 shares authorized, 885,005,588 and 861,110,478 shares, issued and outstanding as of December 31, 2023 and December 31, 2022, respectively.8,8508,611
Additional Paid-In Capital17,549,15716,284,057
Retained Earnings9,818,3366,701,107
Accumulated Other Comprehensive Income (Loss) ("AOCI")(4,517,649)(5,301,800)
Total KKR & Co. Inc. Stockholders' Equity22,858,69418,807,767
Noncontrolling Interests (See Note 22)34,904,79136,410,858
Total Equity57,763,48555,218,625
Total Liabilities and Equity$317,294,194$275,346,636

See notes to financial statements.

KKR & CO. INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (CONTINUED)

(Amounts in Thousands)

The following presents the portion of the consolidated balances provided in the consolidated statements of financial condition attributable to consolidated variable interest entities ("VIEs"). As of December 31, 2023 and 2022, KKR's consolidated VIEs consist primarily of (i) certain collateralized financing entities ("CFEs") holding collateralized loan obligations ("CLOs"), (ii) certain investment funds, and (iii) certain VIEs formed by Global Atlantic. The noteholders, creditors and equity holders of these VIEs have no recourse to the assets of any other KKR entity.

With respect to consolidated CLOs and certain investment funds, the following assets may only be used to settle obligations of these consolidated VIEs and the following liabilities are only the obligations of these consolidated VIEs and not generally to KKR. Additionally, KKR has no right to the benefits from, nor does KKR bear the risks associated with, the assets held by these VIEs beyond KKR's beneficial interest therein and any income generated from the VIEs. There are neither explicit arrangements nor does KKR hold implicit variable interests that would require KKR to provide any material ongoing financial support to the consolidated VIEs, beyond amounts previously committed to them, if any.

With respect to certain other VIEs consolidated by Global Atlantic, Global Atlantic has formed certain VIEs to hold investments, including fixed maturity securities, consumer and other loans, renewable energy, transportation and real estate. These VIEs issue beneficial interests primarily to Global Atlantic’s insurance companies.

December 31, 2023
Consolidated CLOsConsolidated Funds and Other Investment VehiclesOther VIEsTotal
Assets
Asset Management
Cash and Cash Equivalents$1,709,523$1,162,174$—$2,871,697
Restricted Cash and Cash Equivalents—110,308—110,308
Investments24,996,29857,343,237—82,339,535
Other Assets429,827345,509—775,336
27,135,64858,961,228—86,096,876
Insurance
Cash and Cash Equivalents——783,015783,015
Investments——22,556,04022,556,040
Other Assets——491,607491,607
——23,830,66223,830,662
Total Assets$27,135,648$58,961,228$23,830,662$109,927,538
Liabilities
Asset Management
Debt Obligations$25,276,404$8,554,449$—$33,830,853
Accrued Expenses and Other Liabilities869,765488,717—1,358,482
26,146,1699,043,166—35,189,335
Insurance
Accrued Expenses and Other Liabilities——337,162337,162
Total Liabilities$26,146,169$9,043,166$337,162$35,526,497
December 31, 2022
Consolidated CLOsConsolidated Funds and Other Investment VehiclesOther VIEsTotal
Assets
Asset Management
Cash and Cash Equivalents$920,821$2,936,937$—$3,857,758
Restricted Cash and Cash Equivalents—155,521—155,521
Investments22,492,36654,507,084—76,999,450
Other Assets182,487652,031—834,518
23,595,67458,251,573—81,847,247
Insurance
Cash and Cash Equivalents——619,264619,264
Investments——24,732,04224,732,042
Other Assets——1,420,9331,420,933
——26,772,23926,772,239
Total Assets$23,595,674$58,251,573$26,772,239$108,619,486
Liabilities
Asset Management
Debt Obligations$22,273,242$7,306,625$—$29,579,867
Accrued Expenses and Other Liabilities620,200742,384—1,362,584
22,893,4428,049,009—30,942,451
Insurance
Accrued Expenses and Other Liabilities——461,812461,812
Total Liabilities$22,893,442$8,049,009$461,812$31,404,263

See notes to financial statements.

KKR & CO. INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in Thousands, Except Share and Per Share Data)

Years Ended December 31,
202320222021
Revenues
Asset Management
Fees and Other$2,963,869$2,821,627$2,850,154
Capital Allocation-Based Income (Loss)2,843,437(2,500,509)6,842,414
5,807,306321,1189,692,568
Insurance
Net Premiums1,975,6751,182,4612,226,078
Policy Fees1,260,2491,261,7211,137,805
Net Investment Income5,514,9024,118,2462,845,623
Net Investment-Related Gains (Losses)(235,262)(1,318,490)203,753
Other Income176,442139,124120,213
8,692,0065,383,0626,533,472
Total Revenues14,499,3125,704,18016,226,040
Expenses
Asset Management
Compensation and Benefits3,012,6871,144,6664,428,743
Occupancy and Related Charges93,39177,27169,084
General, Administrative and Other1,056,899993,548959,077
4,162,9772,215,4855,456,904
Insurance
Net Policy Benefits and Claims (including market risk benefit loss (gain) of $224,380, $(673,399) and $(152,424), respectively; remeasurement (gain) loss on policy liabilities: $15,497, $(57,128) and $(71,227), respectively.)6,362,2572,358,2384,816,879
Amortization of Policy Acquisition Costs87,27555,349(35,377)
Interest Expense173,88387,18261,661
Insurance Expenses825,998562,585358,878
General, Administrative and Other746,215718,977555,321
8,195,6283,782,3315,757,362
Total Expenses12,358,6055,997,81611,214,266
Investment Income (Loss) - Asset Management
Net Gains (Losses) from Investment Activities3,025,383(1,665,537)7,720,923
Dividend Income791,1601,322,447698,800
Interest Income3,369,4471,895,2821,485,470
Interest Expense(2,772,088)(1,550,777)(1,070,368)
Total Investment Income (Loss)4,413,9021,4158,834,825
Income (Loss) Before Taxes6,554,609(292,221)13,846,599
Income Tax Expense (Benefit)1,197,523125,3931,394,882
Years Ended December 31,
202320222021
Net Income (Loss)5,357,086(417,614)12,451,717
Net Income (Loss) Attributable to Redeemable Noncontrolling Interests(5,405)2,7924,060
Net Income (Loss) Attributable to Noncontrolling Interests1,630,230101,2587,715,251
Net Income (Loss) Attributable to KKR & Co. Inc.3,732,261(521,664)4,732,406
Series A Preferred Stock Dividends——23,656
Series B Preferred Stock Dividends——12,991
Series C Mandatory Convertible Preferred Stock Dividends51,74769,00069,000
Net Income (Loss) Attributable to KKR & Co. Inc. Common Stockholders$3,680,514$(590,664)$4,626,759
Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Common Stock
Basic$4.24$(0.79)$7.95
Diluted$4.09$(0.79)$7.42
Weighted Average Shares of Common Stock Outstanding
Basic867,496,813749,504,970582,258,984
Diluted911,787,433749,504,970633,092,865

See notes to financial statements.

KKR & CO. INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Amounts in Thousands)

Years Ended December 31,
202320222021
Net Income (Loss)$5,357,086$(417,614)$12,451,717
Other Comprehensive Income (Loss), Net of Tax:
Unrealized Gains (Losses) on Available-For-Sale Securities and Other2,085,499(9,235,715)(450,631)
Net effect of changes in discount rates and instrument-specific credit risk on policy liabilities(491,239)1,383,19388,759
Foreign Currency Translation Adjustments(100,032)(2,673)(39,521)
Comprehensive Income (Loss)6,851,314(8,272,809)12,050,324
Comprehensive Income (Loss) Attributable to Redeemable Noncontrolling Interests(5,405)2,7924,060
Comprehensive Income (Loss) Attributable to Noncontrolling Interests2,218,645(3,818,549)7,486,975
Comprehensive Income (Loss) Attributable to KKR & Co. Inc.$4,638,074$(4,457,052)$4,559,289

See notes to financial statements.

KKR & CO. INC. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Amounts in Thousands, Except Share and Per Share Data)
Year Ended December 31, 2023
AmountsShares
Series C Mandatory Convertible Preferred Stock
Beginning of Period$1,115,79222,999,974
Conversion of Series C Mandatory Convertible Preferred Stock(1,115,792)(22,999,974)
End of Period——
Series I Preferred Stock
Beginning of Period—1
End of Period—1
Common Stock
Beginning of Period8,611861,110,478
Clawback of Transfer Restricted Shares—(25,045)
Net Delivery of Common Stock (Equity Incentive Plans)242,405,399
Conversion of Series C Mandatory Convertible Preferred Stock26926,909,918
Repurchases of Common Stock(54)(5,395,162)
End of Period8,850885,005,588
Additional Paid-In Capital
Beginning of Period (as previously reported for the prior period)16,190,407
Adoption of New Accounting Standard (See Note 2)93,650
Beginning of Period (as revised for the prior period)16,284,057
Conversion of Series C Mandatory Convertible Preferred Stock1,115,523
Excise Tax on Repurchases of Common Stock(1,349)
Net Delivery of Common Stock (Equity Incentive Plans)(41,697)
Repurchases of Common Stock(289,790)
Equity-Based Compensation197,414
Change in KKR & Co. Inc.'s Ownership Interest (See Note 22)278,529
Tax Effects of Changes in Ownership and Other6,470
End of Period17,549,157
Retained Earnings
Beginning of Period (as previously reported for the prior period)6,315,711
Adoption of New Accounting Standard (See Note 2)385,396
Beginning of Period (as revised for the prior period)6,701,107
Net Income (Loss) Attributable to KKR & Co. Inc.3,732,261
Series C Mandatory Convertible Preferred Stock Dividends ($2.25 per share)(51,747)
Common Stock Dividends ($0.650 per share)(563,285)
End of Period9,818,336
Accumulated Other Comprehensive Income (Loss) (net of tax)
Beginning of Period (as previously reported for the prior period)(5,901,701)
Adoption of New Accounting Standard (See Note 2)599,901
Beginning of Period (as revised for the prior period)(5,301,800)
Other Comprehensive Income (Loss)905,813
Change in KKR & Co. Inc.'s Ownership Interest (See Note 22)(121,662)
End of Period(4,517,649)
Total KKR & Co. Inc. Stockholders' Equity22,858,694
Noncontrolling Interests (See Note 22)34,904,791
Total Equity$57,763,485
Redeemable Noncontrolling Interests (See Note 23)$615,427
KKR & CO. INC. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONTINUED) (Amounts in Thousands, Except Share and Per Share Data)
Year Ended December 31, 2022
AmountsShares
Series C Mandatory Convertible Preferred Stock
Beginning of Period$1,115,79223,000,000
Conversion of Series C Mandatory Convertible Preferred Stock—(26)
End of Period1,115,79222,999,974
Series I Preferred Stock
Beginning of Period—1
End of Period—1
Series II Preferred Stock
Beginning of Period2,587258,726,163
Cancellation of Series II Preferred Stock - Holdings Merger (See Note 1)(2,582)(258,259,143)
Cancellation of Series II Preferred Stock(5)(467,020)
End of Period——
Common Stock
Beginning of Period5,957595,663,618
Clawback of Transfer Restricted Shares—(1,513)
Exchange of KKR Holdings Units5467,020
Holdings Merger (See Note 1)2,667266,759,143
Net Delivery of Common Stock (Equity Incentive Plans)343,413,354
Conversion of Series C Mandatory Convertible Preferred Stock—30
Repurchases of Common Stock(52)(5,191,174)
End of Period8,611861,110,478
Additional Paid-In Capital
Beginning of Period (as previously reported)8,997,435
Adoption of New Accounting Standard (See Note 2)—
Beginning of Period8,997,435
Exchange of KKR Holdings Units14,811
Holdings Merger (See Note 1)8,213,182
Tax Effects - Holdings Merger and Other (See Note 1)(1,064,869)
Net Delivery of Common Stock (Equity Incentive Plans)(65,751)
Repurchases of Common Stock(346,599)
Equity-Based Compensation215,711
Change in KKR & Co. Inc.'s Ownership Interest (See Note 22)320,137
End of Period16,284,057
Retained Earnings
Beginning of Period (as previously reported)7,670,182
Adoption of New Accounting Standard (See Note 2)65,930
Beginning of Period (as revised)7,736,112
Net Income (Loss) Attributable to KKR & Co. Inc.(521,664)
Series C Mandatory Convertible Preferred Stock Dividends ($3.00 per share)(69,000)
Common Stock Dividends ($0.610 per share)(444,341)
End of Period6,701,107
Accumulated Other Comprehensive Income (Loss) (net of tax)
Beginning of Period (as previously reported)(209,789)
Adoption of New Accounting Standard (See Note 2)10,341
Beginning of Period (as revised)(199,448)
Other Comprehensive Income (Loss)(3,935,388)
Exchange of KKR Holdings Units(1,946)
Holdings Merger (See Note 1)(1,015,317)
Change in KKR & Co. Inc.'s Ownership Interest (See Note 22)(149,701)
End of Period(5,301,800)
Total KKR & Co. Inc. Stockholders' Equity18,807,767
Noncontrolling Interests (See Note 22)36,410,858
Total Equity$55,218,625
Redeemable Noncontrolling Interests (See Note 23)$152,065
KKR & CO. INC. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Continued) (Amounts in Thousands, Except Share and Per Share Data)
Year Ended December 31, 2021
AmountsShares
Series A and B Preferred Stock
Beginning of Period$482,55420,000,000
Redemption of Series A Preferred Stock(332,988)(13,800,000)
Redemption of Series B Preferred Stock(149,566)(6,200,000)
End of Period——
Series C Mandatory Convertible Preferred Stock
Beginning of Period1,115,79223,000,000
End of Period1,115,79223,000,000
Series I Preferred Stock
Beginning of Period—1
End of Period—1
Series II Preferred Stock
Beginning of Period2,756275,626,493
Cancellation of Series II Preferred Stock(169)(16,900,330)
End of Period2,587258,726,163
Common Stock
Beginning of Period5,729572,893,738
Private Placement Share Issuance9964,871
Exchange of KKR Holdings Units16916,900,330
Net Delivery of Common Stock (Equity Incentive Plans)959,383,733
Clawback of Transfer Restricted Shares—(16,521)
Repurchases of Common Stock(45)(4,462,533)
End of Period5,957595,663,618
Additional Paid-In Capital
Beginning of Period8,687,817
Private Placement Share Issuance38,454
Exchange of KKR Holdings Units530,194
Tax Effects - Exchange of KKR Holdings Units and Other6,929
Net Delivery of Common Stock (Equity Incentive Plans)(166,939)
Repurchases of Common Stock(269,665)
Equity-Based Compensation170,645
End of Period8,997,435
Retained Earnings
Beginning of Period3,440,782
Net Income (Loss) Attributable to KKR & Co. Inc.4,732,406
Series A Preferred Stock Dividends ($0.843750 per share)(11,644)
Redemption of Series A Preferred Stock(12,012)
Series B Preferred Stock Dividends ($1.218750 per share)(7,557)
Redemption of Series B Preferred Stock(5,434)
Series C Mandatory Convertible Preferred Stock Dividends ($3.00 per share)(69,000)
Common Stock Dividends ($0.57 per share)(331,429)
End of Period7,736,112
Accumulated Other Comprehensive Income (Loss) (net of tax)
Beginning of Period(18,612)
Other Comprehensive Income (Loss)(173,117)
Exchange of KKR Holdings Units(7,719)
End of Period(199,448)
Total KKR & Co. Inc. Stockholders' Equity17,658,435
Noncontrolling Interests (See Note 22)40,579,526
Total Equity$58,237,961
Redeemable Noncontrolling Interests (See Note 23)$82,491

See notes to financial statements.

KKR & CO. INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in Thousands)

Years Ended December 31,
202320222021
Operating Activities
Net Income (Loss)$5,357,086$(417,614)$12,451,717
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided (Used) by Operating Activities:
Equity-Based and Other Non-Cash Compensation618,469730,236529,816
Net Realized (Gains) Losses - Asset Management776,473(1,298,506)(2,382,209)
Change in Unrealized (Gains) Losses - Asset Management(3,801,856)2,964,043(5,338,714)
Capital Allocation-Based (Income) Loss - Asset Management(2,843,437)2,500,509(6,842,414)
Net Investment and Policy Liability-Related (Gains) Losses - Insurance2,556,183362,480706,180
Net Accretion and Amortization68,302364,162386,867
Interest Credited to Policyholder Account Balances (net of Policy Fees) - Insurance2,799,7581,245,4671,740,965
Other Non-Cash Amounts101,539125,934(60,318)
Cash Flows Due to Changes in Operating Assets and Liabilities:
Reinsurance Transactions and Acquisitions, Net of Cash Provided - Insurance840,1731,282,6771,373,597
Change in Premiums, Notes Receivable and Reinsurance Recoverable, Net of Reinsurance Premiums Payable - Insurance1,060,972685,487685,797
Change in Deferred Policy Acquisition Costs - Insurance(534,534)(483,449)(411,063)
Change in Policy Liabilities and Accruals, Net - Insurance(717,795)(300,332)(1,253,550)
Change in Consolidation(354,121)(66,593)(373,761)
Change in Due from / to Affiliates402,465(459,226)(431,292)
Change in Other Assets188,6911,035,529507,031
Change in Accrued Expenses and Other Liabilities542,820(3,124,973)2,141,411
Investments Purchased - Asset Management(37,342,125)(38,934,027)(73,509,382)
Proceeds from Investments - Asset Management28,787,12528,508,93762,902,614
Net Cash Provided (Used) by Operating Activities(1,493,812)(5,279,259)(7,176,708)
Investing Activities
Acquisition of Global Atlantic, Net of Cash Acquired——(473,779)
Acquisition of KJRM, Net of Cash Acquired—(1,690,702)—
Purchases of Fixed Assets(108,393)(85,056)(102,049)
Investments Purchased - Insurance(29,488,315)(47,191,313)(58,617,575)
Proceeds from Investments - Insurance25,654,30835,356,26849,567,361
Other Investing Activities, Net - Insurance59,464(36,469)20,494
Net Cash Provided (Used) by Investing Activities(3,882,936)(13,647,272)(9,605,548)
Financing Activities
Series A and B Preferred Stock Dividends——(19,201)
Series C Mandatory Convertible Preferred Stock Dividends(51,747)(69,000)(69,000)
Common Stock Dividends(563,285)(444,341)(331,429)
Distributions to Redeemable Noncontrolling Interests(2,845)(2,540)(2,015)
Contributions from Redeemable Noncontrolling Interests499,43369,322—
Distributions to Noncontrolling Interests(6,956,724)(7,039,914)(7,484,620)
Contributions from Noncontrolling Interests12,871,58513,622,03513,847,646
Redemption of Series A and B Preferred Stock——(500,000)
Net Delivery of Common Stock (Equity Incentive Plans)(41,673)(65,717)(166,844)
Repurchases of Common Stock(289,844)(346,651)(269,710)
Private Placement Share Issuance——38,463
Proceeds from Debt Obligations16,383,15420,439,10130,369,415
Repayment of Debt Obligations(12,763,783)(13,910,767)(21,473,835)
Financing Costs Paid(14,781)(33,276)(128,753)
Additions to Contractholder Deposit Funds - Insurance19,314,71622,592,70314,720,510
Withdrawals from Contractholder Deposit Funds - Insurance(17,385,952)(13,315,401)(8,777,045)
Years Ended December 31,
202320222021
Reinsurance Transactions, Net of Cash Provided - Insurance1,223,56469,596610,314
Other Financing Activity, Net - Insurance552,270490,21698
Net Cash Provided (Used) by Financing Activities12,774,08822,055,36620,363,994
Effect of exchange rate changes on cash, cash equivalents and restricted cash25,410(269,769)(48,891)
Net Increase/(Decrease) in Cash, Cash Equivalents and Restricted Cash$7,422,750$2,859,066$3,532,847
Cash, Cash Equivalents and Restricted Cash, Beginning of Period13,385,37010,526,3046,993,457
Cash, Cash Equivalents and Restricted Cash, End of Period$20,808,120$13,385,370$10,526,304
Cash, Cash Equivalents and Restricted Cash are comprised of the following:
Beginning of the Period
Asset Management
Cash and Cash Equivalents$6,705,325$6,699,668$6,507,874
Restricted Cash and Cash Equivalents253,431134,298485,583
Total Asset Management6,958,7566,833,9666,993,457
Insurance
Cash and Cash Equivalents$6,118,231$3,391,934$—
Restricted Cash and Cash Equivalents308,383300,404—
Total Insurance6,426,6143,692,338—
Cash, Cash Equivalents and Restricted Cash, Beginning of Period$13,385,370$10,526,304$6,993,457
End of the Period
Asset Management
Cash and Cash Equivalents$8,393,892$6,705,325$6,699,668
Restricted Cash and Cash Equivalents116,599253,431134,298
Total Asset Management8,510,4916,958,7566,833,966
Insurance
Cash and Cash Equivalents$11,954,675$6,118,231$3,391,934
Restricted Cash and Cash Equivalents342,954308,383300,404
Total Insurance12,297,6296,426,6143,692,338
Cash, Cash Equivalents and Restricted Cash, End of Period$20,808,120$13,385,370$10,526,304

See notes to financial statements.

KKR & CO. INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(Amounts in Thousands)

Years Ended December 31,
202320222021
Supplemental Disclosures of Cash Flow Information
Payments for Interest$2,691,086$1,500,123$1,241,886
Payments for Income Taxes$981,425$764,966$658,578
Payments for Operating Lease Liabilities$58,715$52,184$46,585
Supplemental Disclosures of Non-Cash Investing and Financing Activities
Non-Cash Contribution from Noncontrolling Interests$—$84,786$845,171
Non-Cash Distribution to Noncontrolling Interests$(1,344,792)$—$—
Non-Cash Distribution to Redeemable Noncontrolling Interests$—$—$(11,399)
Debt Obligations - Net Gains (Losses), Translation and Other$(1,048,308)$2,022,751$593,699
Tax Effects - Exchange of KKR Holdings L.P. Units and Other (See Note 1)$—$(1,064,869)$6,929
Tax Effects of Changes in Ownership and Other$6,470$—$—
Right-of-Use Assets obtained in Exchange for new Operating Lease Liabilities$32,466$159,367$46,284
Investments Acquired through Reinsurance Agreements$10,772,318$5,552,508$16,339,358
Contractholder Deposit Funds Acquired through Reinsurance Agreements$8,461,031$5,542,192$14,773,306
Change in Consolidation
Investments - Asset Management$(8,675,404)$(57,440)$(5,293,537)
Investments - Insurance$(93,545)$—$—
Due from Affiliates$—$—$(3,735)
Other Assets$(216,543)$(59,675)$(67,255)
Debt Obligations$85,005$(50,339)$(4,502,453)
Due to Affiliates$—$(174)$(517)
Accrued Expenses and Other Liabilities$(294,379)$(4,162)$(39,428)
Noncontrolling Interests$(8,461,491)$—$(1,132,796)
Redeemable Noncontrolling Interests$(27,821)$—$—

See notes to financial statements.

KKR & CO. INC.

NOTES TO FINANCIAL STATEMENTS

(All Amounts in Thousands, Except Share and Per Share Data, and Except Where Noted)

1. ORGANIZATION

KKR & Co. Inc. (NYSE: KKR), through its subsidiaries (collectively, "KKR"), is a leading global investment firm that offers alternative asset management as well as capital markets and insurance solutions. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and supporting growth in its portfolio companies and communities. KKR sponsors investment funds that invest in private equity, credit and real assets and has strategic partners that manage hedge funds. KKR’s insurance subsidiaries offer retirement, life and reinsurance products under the management of The Global Atlantic Financial Group LLC ("TGAFG" and, together with its insurance companies and other subsidiaries, "Global Atlantic").

KKR & Co. Inc. is the parent company of KKR Group Co. Inc., which in turn owns KKR Group Holdings Corp., which is the general partner of KKR Group Partnership L.P. ("KKR Group Partnership"). KKR & Co. Inc. both indirectly controls KKR Group Partnership and indirectly holds Class A partner interests in KKR Group Partnership ("KKR Group Partnership Units") representing economic interests in KKR's business. As of December 31, 2023, KKR & Co. Inc. held indirectly approximately 99.5% of the KKR Group Partnership Units. The remaining balance is held indirectly by KKR employees through restricted holdings units representing an ownership interest in KKR Group Partnership Units, which may be exchanged for shares of common stock of KKR & Co. Inc. ("exchangeable securities"). As limited partner interests, these KKR Group Partnership Units are non-voting and do not entitle anyone other than KKR to manage its business and affairs. KKR Group Partnership also has outstanding limited partner interests that provide for a carry pool provided by KKR Associates Holdings L.P. ("Associates Holdings").

References to "KKR" in these financial statements refer to KKR & Co. Inc. and its subsidiaries, including Global Atlantic, unless the context requires otherwise, especially in sections where "KKR" is intended to refer to the asset management business only. References in these financial statements to "principals" are to KKR's current and former employees who held interests in KKR's business through KKR Holdings prior to the Reorganization Mergers (as defined below). References to "Global Atlantic" in these financial statements includes the insurance companies and other subsidiaries of Global Atlantic, which are consolidated by KKR.

Reorganization Agreement

On October 8, 2021, KKR entered into a Reorganization Agreement (the "Reorganization Agreement") with KKR Holdings L.P. ("KKR Holdings"), KKR Management LLP (which holds the sole outstanding share of Series I preferred stock), Associates Holdings, and the other parties thereto. Pursuant to the Reorganization Agreement, the parties agreed to undertake a series of integrated transactions to effect a number of transformative structural and governance changes, some of which were completed on May 31, 2022, and other changes to be completed in the future. On May 31, 2022, KKR completed the merger transactions ("Reorganization Mergers") contemplated by the Reorganization Agreement pursuant to which KKR acquired KKR Holdings (which changed its name to KKR Group Holdings L.P.) and all of the KKR Group Partnership Units held by it.

Pursuant to the Reorganization Agreement, the following transactions will occur in the future on the Sunset Date (as defined below):

i.the control of KKR & Co. Inc. by KKR Management LLP and the Series I Preferred Stock held by it will be eliminated,

ii.the voting rights for all common stock of KKR & Co. Inc., including with respect to the election of directors, will be established on a one vote per share basis, and

iii.KKR will acquire control of Associates Holdings, the entity providing for the allocation of carry proceeds to KKR employees, also known as the carry pool.

The “Sunset Date” will be the earlier of (i) December 31, 2026 and (ii) the six-month anniversary of the first date on which the death or permanent disability of both Mr. Henry Kravis and Mr. George Roberts (collectively, "Co-Founders") has occurred (or any earlier date consented to by KKR Management LLP in its sole discretion). In addition, KKR Management LLP agreed not to transfer its ownership of the sole share of Series I Preferred Stock, and, the changes to occur effective on the Sunset Date are unconditional commitments of the parties to the Reorganization Agreement.

Notes to Financial Statements (Continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements (referred to hereafter as the "financial statements") have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").

KKR consolidates the financial results of KKR Group Partnership and its consolidated entities, which include the accounts of KKR's investment management and capital markets companies, the general partners of certain unconsolidated investment funds, general partners of consolidated investment funds and their respective consolidated investment funds, Global Atlantic’s insurance companies and certain other entities including CFEs. References to Global Atlantic hereafter includes the insurance companies of Global Atlantic, which are consolidated by KKR starting on the 2021 GA Acquisition Date.

The presentations in the consolidated statement of financial condition and consolidated statement of operations reflect the significant industry diversification of KKR by its acquisition of Global Atlantic. Global Atlantic operates an insurance business, and KKR operates an asset management business, each of which possess distinct characteristics. As a result, KKR developed a two-tiered approach for the financial statements presentation, where Global Atlantic's insurance operations are presented separately from KKR's asset management business. KKR believes that these separate presentations provide a more informative view of the consolidated financial position and results of operations than traditional aggregated presentations and that reporting Global Atlantic’s insurance operations separately is appropriate given, among other factors, the relative significance of Global Atlantic’s policy liabilities, which are not obligations of KKR & Co. Inc. (other than the insurance companies that issued them). If a traditional aggregate presentation were to be used, KKR would expect to eliminate or combine several identical or similar captions, which would condense the presentations, but would also reduce the level of information presented. KKR also believes that using a traditional aggregate presentation would result in no new line items compared to the two-tier presentation included in the financial statements in this report.

In addition, in connection with the Global Atlantic acquisition, we organized our business into two segments: Asset Management and Insurance. Global Atlantic’s operations constitute the insurance segment. See Note 21 "Segment Reporting."

The summary of the significant accounting policies has been organized considering the two-tiered approach and includes a section for common accounting policies and an accounting policy section for each of the two tiers when a policy is specific to one of the tiers.

In the ordinary course of business, KKR’s Asset Management business and Global Atlantic enter into transactions with each other, which may include transactions pursuant to their investment management agreements and financing arrangements. All the investment management and financing arrangements between KKR's Asset Management business and Global Atlantic are eliminated in consolidation; however, KKR's allocated share of the net income from the consolidation of Global Atlantic is increased by the amount of fees earned from and decreased by the amount of interest expense incurred from noncontrolling interest holders in Global Atlantic. Accordingly, the elimination of these fees and interest impacts the net income (loss) attributable to KKR and KKR stockholders' equity for the pro-rata ownership of the noncontrolling interests in Global Atlantic.

All intercompany transactions and balances have been eliminated.

SIGNIFICANT ACCOUNTING POLICIES - COMMON AMONG ASSET MANAGEMENT AND INSURANCE

Use of Estimates and Risks and Uncertainties

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues, expenses, and investment income (loss) during the reporting periods. Such estimates include but are not limited to (i) the valuation of investments and financial instruments, (ii) the determination of the income tax provision and the valuation allowance on deferred tax assets, (iii) the impairment of goodwill and intangible assets, (iv) the impairment of available-for-sale investments, (v) the valuation of insurance policy liabilities, (vi) the valuation of embedded derivatives, (vii) the determination of the allowance for loan losses, and (viii) amortization of deferred revenues and expenses associated with the insurance business. Certain events particular to each industry and country in which the portfolio companies conduct their operations, as well as general economic, political, regulatory and public health conditions, may have a material adverse impact on KKR’s investments and profitability. Such events are beyond KKR’s control, and the likelihood that they may occur and the effect on KKR's use of estimates cannot be predicted. Actual results could differ from those estimates, and such differences could be material to the financial statements.

Notes to Financial Statements (Continued)

Principles of Consolidation

The types of entities KKR assesses for consolidation include (i) subsidiaries, including management companies, broker-dealers and general partners of investment funds that KKR manages, (ii) entities that have the attributes of an investment company, like investment funds, (iii) CFEs, (iv) Global Atlantic and its insurance companies beginning on February 1, 2021, and (v) other entities. Each of these entities is assessed for consolidation on a case by case basis depending on the specific facts and circumstances surrounding that entity.

Pursuant to its consolidation policy, KKR first considers whether an entity is considered a VIE and therefore whether to apply the consolidation guidance under the VIE model. Entities that do not qualify as VIEs are assessed for consolidation as voting interest entities ("VOEs") under the voting interest model.

KKR's funds are, for GAAP purposes, investment companies and therefore are not required to consolidate their investments in portfolio companies even if majority-owned and controlled. Rather, the consolidated funds and vehicles reflect their investments at fair value as described below in "—Fair Value Measurements."

An entity in which KKR holds a variable interest is a VIE if any one of the following conditions exist: (a) the total equity investment at risk is not sufficient to permit the legal entity to finance its activities without additional subordinated financial support, (b) the holders of the equity investment at risk (as a group) lack either the direct or indirect ability through voting rights or similar rights to make decisions about a legal entity's activities that have a significant effect on the success of the legal entity or the obligation to absorb the expected losses or right to receive the expected residual returns, or (c) the voting rights of some investors are disproportionate to their obligation to absorb the expected losses of the legal entity, their rights to receive the expected residual returns of the legal entity, or both and substantially all of the legal entity's activities either involve or are conducted on behalf of an investor with disproportionately few voting rights. Limited partnerships and other similar entities where unaffiliated limited partners have not been granted (i) substantive participatory rights or (ii) substantive rights to either dissolve the partnership or remove the general partner ("kick-out rights") are VIEs. KKR's investment funds that are not CFEs (i) are generally limited partnerships, (ii) generally provide KKR with operational discretion and control, and (iii) generally have fund investors with no substantive rights to impact ongoing governance and operating activities of the fund, including the ability to remove the general partner, and, as such, the limited partners do not have kick-out rights. Accordingly, most of KKR's investment funds are categorized as VIEs.

KKR consolidates all VIEs in which it is the primary beneficiary. A reporting entity is determined to be the primary beneficiary if it holds a controlling financial interest in a VIE. A controlling financial interest is defined as (a) the power to direct the activities of a VIE that most significantly impact the VIE's economic performance and (b) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The consolidation guidance requires an analysis to determine (i) whether an entity in which KKR holds a variable interest is a VIE and (ii) whether KKR's involvement, through holding interests directly or indirectly in the entity or contractually through other variable interests (for example, management and performance income), would give it a controlling financial interest. Performance of that analysis requires the exercise of judgment. Fees earned by KKR that are customary and commensurate with the level of effort required to provide those services, and where KKR does not hold other economic interests in the entity that would absorb more than an insignificant amount of the expected losses or returns of the entity, would not be considered to be variable interests. KKR factors in all economic interests including interests held through related parties, to determine if it holds a variable interest. KKR determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a VIE and reconsiders that conclusion when facts and circumstances change.

For entities that are determined not to be VIEs, these entities are generally considered VOEs and are evaluated under the voting interest model. KKR consolidates VOEs it controls through a majority voting interest or through other means.

The consolidation assessment, including the determination as to whether an entity qualifies as a VIE or VOE, depends on the facts and circumstances for each entity, and therefore certain of KKR's investment funds may qualify as VIEs whereas others may qualify as VOEs.

With respect to CLOs (which are generally VIEs), in KKR's role as collateral manager, KKR generally has the power to direct the activities of the CLO that most significantly impact the economic performance of the entity. In some, but not all cases, KKR, through its residual interest in the CLO may have variable interests that represent an obligation to absorb losses of, or a right to receive benefits from, the CLO that could potentially be significant to the CLO. In cases where KKR has both the power to direct the activities of the CLO that most significantly impact the CLO's economic performance and the obligation to absorb losses of the CLO or the right to receive benefits from the CLO that could potentially be significant to the CLO, KKR is deemed to be the primary beneficiary and consolidates the CLO.

Notes to Financial Statements (Continued)

Global Atlantic has formed certain VIEs to hold investments, including investments in transportation, renewable energy, consumer and other loans and fixed maturity securities. These VIEs issue beneficial interests primarily to Global Atlantic’s insurance companies, and Global Atlantic maintains the power to direct the activities of the VIEs that most significantly impact their economic performance and bears the obligation to absorb losses or receive benefits from the VIEs that could potentially be significant. Accordingly, Global Atlantic is the primary beneficiary of these VIEs, which are consolidated in Global Atlantic’s results.

For certain consolidated renewable energy partnerships consolidated by Global Atlantic's insurance companies, Global Atlantic uses a hypothetical liquidation at book value ("HLBV") method to allocate income and cash flows based on third-party investors’ claim to net assets, including those for the noncontrolling interests and redeemable noncontrolling interests.

KKR classifies certain noncontrolling interests with redemption features that are not solely within the control of KKR outside of permanent equity on its consolidated statements of financial condition. These redeemable noncontrolling interests are reported using the greater of the carrying value at each reporting date as determined by the HLBV method or the estimated redemption value in each reporting period.

Noncontrolling Interests

Noncontrolling interests in consolidated entities of KKR represent the non-redeemable ownership interests that are held primarily by:

(i)third party fund investors in KKR's consolidated funds and certain other entities;

(ii)third parties in KKR's Capital Markets business line;

(iii)certain current and former employees who hold exchangeable securities; and

(iv)third parties in KKR's insurance business including GA Rollover Investors, GA Co-Investors and third-party investors in Global Atlantic's consolidated renewable energy entities and certain other entities.

For further details see Note 22 "Equity." Noncontrolling interests held by KKR Holdings before the closing of the Reorganization Mergers are described in Note 1 "Organization."

Cash and Cash Equivalents

Generally KKR considers all liquid short‑term investments with original maturities of three months or less when purchased to be cash equivalents. Cash and cash equivalents includes cash held at consolidated entities, which represents cash that, although not legally restricted, is not available generally to fund liquidity needs of KKR, as the use of such funds is generally limited to the investment activities of KKR's investment funds and CFEs. The carrying values of cash and cash equivalents are considered to be reasonable estimates of their fair values.

Restricted Cash and Cash Equivalents

Restricted cash and cash equivalents primarily represent amounts that are held by third parties under certain of KKR's financing and derivative transactions. The duration of this restricted cash generally matches the duration of the related financing or derivative transaction. Global Atlantic’s restricted cash principally includes certain cash and cash equivalents held in trusts formed for the benefit of ceding companies or held in connection with open derivative transactions. The carrying values of restricted cash and cash equivalents are considered to be reasonable estimates of their fair values.

Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation techniques are applied. These valuation techniques involve varying levels of management estimation and judgment, the degree of which is dependent on a variety of factors.

Notes to Financial Statements (Continued)

GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of market price observability used in measuring financial instruments at fair value. Market price observability is affected by a number of factors, including the type of financial instrument, the characteristics specific to the financial instrument and the state of the marketplace, including the existence and transparency of transactions between market participants. Financial instruments with readily available quoted prices in active markets generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

Investments and financial instruments measured and reported at fair value are classified and disclosed based on the observability of inputs used in the determination of fair values, as follows:

Level I - Pricing inputs are unadjusted, quoted prices in active markets for identical assets or liabilities as of the measurement date. The types of financial instruments included in this category are publicly-listed equities, U.S. government and agencies securities, and securities sold short.

Level II - Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the measurement date, and fair value is determined through the use of models or other valuation methodologies. The types of financial instruments included in this category are credit investments, fixed-income securities held by consolidated insurance companies, investments and debt obligations of consolidated CLO entities, convertible debt securities indexed to publicly-listed securities, less liquid and restricted equity securities, certain funds withheld payable at interest, and certain over-the-counter derivatives such as foreign currency option and forward contracts.

Level III - Pricing inputs are unobservable for the financial instruments and include situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value require significant management judgment or estimation. The types of financial instruments generally included in this category are private portfolio companies, real assets investments, certain credit investments, equity method investments for which the fair value option was elected, certain fixed-income and structured securities held by the consolidated insurance subsidiaries, reinsurance recoverables carried at fair value, certain insurance policy liabilities carried at fair value, and certain embedded derivatives related to (i) certain funds withheld payable at interest, and (ii) annuities and indexed universal life products, which contain equity-indexed features.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. KKR's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and consideration of factors specific to the asset.

A significant decrease in the volume and level of activity for the asset or liability is an indication that transactions or quoted prices may not be representative of fair value because in such market conditions there may be increased instances of transactions that are not orderly. In those circumstances, further analysis of transactions or quoted prices is needed, and a significant adjustment to the transactions or quoted prices may be necessary to estimate fair value.

The availability of observable inputs can vary depending on the financial asset or liability and is affected by a wide variety of factors, including, for example, the type of instrument, whether the instrument has recently been issued, whether the instrument is traded on an active exchange or in the secondary market, and current market conditions. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires additional judgment. Accordingly, the degree of judgment exercised by KKR in determining fair value is greatest for instruments categorized in Level III. The variability and availability of the observable inputs affected by the factors described above may cause transfers between Levels I, II, and III, which KKR recognizes at the beginning of the reporting period.

Investments and other financial instruments that have readily observable market prices (such as those traded on a securities exchange) are stated at the last quoted sales price as of the reporting date. KKR does not adjust the quoted price for these investments, even in situations where KKR holds a large position and a sale could reasonably affect the quoted price.

Management's determination of fair value is based upon the methodologies and processes described below and may incorporate assumptions that are management's best estimates after consideration of a variety of internal and external factors.

Notes to Financial Statements (Continued)

Level II Valuation Methodologies

Credit Investments, U.S. Municipal Securities, Corporate Bonds and Structured Securities: These financial instruments generally have bid and ask prices that can be observed in the marketplace. Bid prices reflect the highest price that KKR and others are willing to pay for an instrument. Ask prices represent the lowest price that KKR and others are willing to accept for an instrument. For financial instruments whose inputs are based on bid-ask prices obtained from third party pricing services, fair value may not always be a predetermined point in the bid-ask range. KKR's policy is generally to allow for mid-market pricing and adjusting to the point within the bid-ask range that meets KKR's best estimate of fair value. KKR may also use model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Investments and Debt Obligations of Consolidated CLO Vehicles: Investments of consolidated CLO vehicles are reported within Investments of Consolidated CFEs and are valued using the same valuation methodology as described above for credit investments. Under ASU 2014-13, KKR measures CLO debt obligations on the basis of the fair value of the financial assets of the CLO.

Securities Indexed to Publicly-Listed Securities: These securities are typically valued using standard convertible security pricing models. The key inputs into these models that require some amount of judgment are the credit spreads utilized and the volatility assumed. To the extent the company being valued has other outstanding debt securities that are publicly-traded, the implied credit spread on the company's other outstanding debt securities would be utilized in the valuation. To the extent the company being valued does not have other outstanding debt securities that are publicly-traded, the credit spread will be estimated based on the implied credit spreads observed in comparable publicly-traded debt securities. In certain cases, an additional spread will be added to reflect an illiquidity discount due to the fact that the security being valued is not publicly-traded. The volatility assumption is based upon the historically observed volatility of the underlying equity security into which the convertible debt security is convertible and/or the volatility implied by the prices of options on the underlying equity security.

Equity Securities: The valuation of certain equity securities is based on (i) an observable price for an identical security adjusted for the effect of a restriction or leverage that collateralized the equity securities and (ii) quoted prices for identical or similar instruments in markets that are not active.

Derivatives: The valuation incorporates observable inputs comprising yield curves, foreign currency rates, interest rate volatility and credit spreads.

Level III Valuation Methodologies

Private Equity Investments: KKR generally employs two valuation methodologies when determining the fair value of a private equity investment. The first methodology is typically a market comparables analysis that considers key financial inputs, which may take into account recent public and private transactions and other available measures. The second methodology utilized is typically a discounted cash flow analysis, which incorporates significant assumptions and judgments. Estimates of key inputs used in this methodology include the weighted average cost of capital for the investment and assumed inputs used to calculate terminal values, such as exit EBITDA multiples. The results of the discounted cash flow approach can be significantly impacted by these estimates. Other inputs are also used in both methodologies. In addition, when a definitive agreement has been executed to sell an investment, KKR generally considers a significant determinant of fair value to be the consideration to be received by KKR pursuant to the executed definitive agreement.

Upon completion of the valuations conducted using these methodologies, a weighting is ascribed to each method, and an illiquidity discount is typically applied where appropriate. The ultimate fair value recorded for a particular investment will generally be within a range suggested by the two methodologies, except that the value may be higher or lower than such range in the case of investments being sold pursuant to an executed definitive agreement.

When determining the weighting ascribed to each valuation methodology, KKR considers, among other factors, the availability of direct market comparables, the applicability of a discounted cash flow analysis, the expected hold period and manner of realization for the investment, and in the case of investments being sold pursuant to an executed definitive agreement, an estimated probability of such sale being completed. These factors can result in different weightings among investments in the portfolio and in certain instances may result in up to a 100% weighting to a single methodology.

Notes to Financial Statements (Continued)

When an illiquidity discount is to be applied, KKR seeks to take a uniform approach across its portfolio and generally applies a minimum 5% discount to all private equity investments. KKR then evaluates such private equity investments to determine if factors exist that could make it more challenging to monetize the investment and, therefore, justify applying a higher illiquidity discount. These factors generally include (i) the nature of KKR's governance rights, (ii) whether the portfolio company is undergoing significant restructuring activity or similar factors, and (iii) characteristics about the portfolio company regarding its size and/or whether the portfolio company is experiencing, or expected to experience, a significant decline in earnings. These factors generally make it less likely that a portfolio company would be sold or publicly offered in the near term at a price indicated by using just a market multiples and/or discounted cash flow analysis, and these factors tend to reduce the number of opportunities to sell an investment and/or increase the time horizon over which an investment may be monetized. Depending on the applicability of these factors, KKR determines the amount of any incremental illiquidity discount to be applied above the 5% minimum, and during the time KKR holds the investment, the illiquidity discount may be increased or decreased, from time to time, based on changes to these factors. The amount of illiquidity discount applied at any time requires considerable judgment about what a market participant would consider and is based on the facts and circumstances of each individual investment. Accordingly, the illiquidity discount ultimately considered by a market participant upon the realization of any investment may be higher or lower than that estimated by KKR in its valuations.

In the case of growth equity investments, enterprise values may be determined using the market comparables analysis and discounted cash flow analysis described above. A scenario analysis may also be conducted to subject the estimated enterprise values to a downside, base and upside case, which involves significant assumptions and judgments. A milestone analysis may also be conducted to assess the current level of progress towards value drivers that we have determined to be important, which involves significant assumptions and judgments. The enterprise value in each case may then be allocated across the investment's capital structure to reflect the terms of the security and subjected to probability weightings. In certain cases, the values of growth equity investments may be based on recent or expected financings or other transactions.

Real Asset Investments: Real asset investments in infrastructure, real estate, and energy are valued using one or a combination of the discounted cash flow analysis, market comparables analysis and direct income capitalization methods, which in each case incorporates significant assumptions and judgments.

Infrastructure investments are generally valued using the discounted cash flow analysis. Key inputs used in this methodology can include the weighted average cost of capital and assumed inputs used to calculate terminal values, such as exit EBITDA multiples.

Real estate investments are generally valued using a combination of direct income capitalization and discounted cash flow analysis. Certain real estate investments are valued by KKR based on ranges of valuations determined by independent valuation firms. Key inputs used in such methodologies that require estimates include an unlevered discount rate, current capitalization rate and exit capitalization rate. The valuations of real assets investments also use other inputs.

Energy investments are generally valued using a discounted cash flow approach, and where applicable, a market approach using comparable companies and transactions. Key inputs used in our valuations include (i) the weighted average cost of capital, (ii) future commodity prices, as quoted on indices, and long-term commodity price forecasts, and (iii) the asset’s projected future operating performance.

Credit Investments: Credit investments are valued using values obtained from dealers or market makers, and where these values are not available, credit investments are generally valued by KKR based on ranges of valuations determined by an independent valuation firm. Valuation models are based on discounted cash flow analyses, for which the key inputs are determined based on market comparables, which incorporate similar instruments from similar issuers.

Real Estate Mortgage Loans: Real estate mortgage loans are illiquid, structured investments that are specific to the property and its operating performance. KKR engages an independent valuation firm to estimate the fair value of each loan. KKR reviews the quarterly loan valuation estimates provided by the independent valuation firm. These loans are generally valued using a discounted cash flow model using discount rates derived from observable market data applied to the capital structure of the respective sponsor and estimated property value.

Other Investments: With respect to other investments including equity method investments, KKR generally employs the same valuation methodologies as described above for private equity, credit investments and real assets investments when valuing these other investments.

Notes to Financial Statements (Continued)

Funds withheld at interest: The funds withheld receivables and payables at interest carried at fair value are primarily valued based on the fair value of the underlying investments, which have quoted prices or other observable inputs to pricing. A portion of the funds withheld receivable and payables at interest carried at fair value represent embedded derivatives and are generally valued as the difference between the fair value of the underlying assets and the carrying value of the host contract at the balance sheet date.

Reinsurance recoverables: Reinsurance recoverables carried at fair value are valued using present value techniques that consider inputs including mortality and surrender rates for the associated policies, as well as estimates of policy expenses and the cost of capital held in support of the related closed block policy liabilities.

Insurance policy liabilities, insurance embedded derivatives, and market risk benefits: Certain insurance policy liabilities that are carried at fair value are valued using present value techniques that discount estimated liability cash flows at a rate that reflects the variability of those cash flows and also consider policyholder behavior (including lapse rates, surrender rates and mortality).

Closed block policy liabilities carried at fair value are valued using present value techniques that consider inputs including mortality and surrender rates for the respective policies, as well as estimates of policy expenses and the cost of capital held in support of the liabilities.

Insurance embedded derivative liabilities are related to our fixed-indexed annuity, variable annuity and indexed universal life products, which contain equity-indexed features. These embedded derivative liabilities are calculated as the present value of future projected benefits in excess of the projected guaranteed benefits, using an option budget as the indexed account value growth rate and considering an adjustment to reflect the risk of nonperformance on our obligation and inputs such as projected withdrawal and surrender activity, and mortality. KKR calculates nonperformance risk using a blend of observable peer holding company credit spreads, adjusted to reflect the claims paying ability of our insurance entities, as well as an adjustment to reflect the priority of policyholder claims.

Market risk benefits include certain contract features on fixed annuity and variable annuity products. These features include minimum guarantees to policyholders, such as guaranteed minimum death benefits (GMDBs), guaranteed minimum withdrawal benefits (GMWBs), and long-term care benefits (i.e., capped at the return of account value plus one or two times the account value). Market risk benefits are measured at fair value using a non-option and option valuation approach based on current net amounts at risk, market data, experience, and other factors.

Key unobservable inputs that have a significant impact on KKR's Level III valuations as described above are included in Note 9 "Fair Value Measurements." KKR utilizes several unobservable pricing inputs and assumptions in determining the fair value of its Level III financial instruments. These unobservable pricing inputs and assumptions may differ by financial instruments and in the application of KKR's valuation methodologies. KKR's reported fair value estimates could vary materially if KKR had chosen to incorporate different unobservable pricing inputs and other assumptions or, for certain applicable investments, if KKR only used either the discounted cash flow methodology or the market comparables methodology instead of assigning a weighting to both methodologies.

There is inherent uncertainty involved in the valuation of Level III financial instruments and there is no assurance that, upon liquidation or sale, KKR will realize the values reflected in our valuations. Our valuations may differ significantly from the values that would have been used had an active market for the financial instruments existed, and it is reasonably possible that the difference could be material.

Business Combinations

KKR accounts for business combinations using the acquisition method of accounting, under which the purchase price of the acquisition is allocated to the assets acquired and liabilities assumed using the fair values determined by management as of the acquisition date.

Goodwill and Intangible Assets

Goodwill represents the excess of acquisition cost over the fair value of net tangible and intangible assets acquired in connection with an acquisition. Goodwill is assessed for impairment annually in the third quarter of each fiscal year or more frequently if circumstances indicate impairment may have occurred. Goodwill and Intangible Assets are recorded in Other Assets in the accompanying consolidated statements of financial condition.

Notes to Financial Statements (Continued)

In accordance with GAAP, KKR has the option to either (i) perform a quantitative impairment test or (ii) first perform a qualitative assessment (commonly known as "step zero") to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, in which case the quantitative test would then be performed. When performing a quantitative impairment test, KKR compares the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit is less than its carrying amount, the goodwill impairment loss is equal to the excess of the carrying value over the fair value, limited to the carrying amount of goodwill allocated to that reporting unit. The estimated fair values of the reporting units are derived based on valuation techniques KKR believes market participants would use for each respective reporting unit. The estimated fair values are generally determined by utilizing a discounted cash flow methodology and methodologies that incorporate market multiples of certain comparable companies.

KKR tests goodwill for impairment at the reporting unit level, which is generally at the level of or one level below its reportable segments, on an annual basis, or, when an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Goodwill recorded as a result of the acquisition of Global Atlantic has been allocated to the insurance segment, and goodwill recorded as a result of the acquisition of KJR Management ("KJRM") has been allocated to the asset management segment.

During the third quarter of 2023, KKR performed its annual impairment analysis for the goodwill recorded at the asset management and insurance reporting units.

KKR elected to perform step zero for the purposes of its impairment analysis for the goodwill recorded at the asset management and insurance reporting units. Based upon these assessments, KKR determined that it is more likely than not that the fair value of the reporting unit exceeds its carrying value. Factors considered in the qualitative assessment included macroeconomic conditions, industry and market considerations, cost factors, current and projected financial performance, changes in management or strategy and market capitalization.

Additionally, during the third quarter of 2023, KKR performed its annual impairment analysis on KJRM’s investment management contracts recorded at KKR’s asset management business, which were determined to have indefinite useful lives and are not subject to amortization. KKR elected to perform a qualitative assessment for the purposes of its impairment analysis. Based upon this assessment, KKR determined that it is more likely than not that the fair value of the KJRM investment management contracts exceeded their carrying value. Factors considered in the qualitative assessment included macroeconomic conditions, industry and market considerations, cost factors, and current and projected financial performance.

Fixed Assets, Depreciation and Amortization

Fixed assets consist primarily of corporate real estate, leasehold improvements, furniture and computer hardware. Such amounts are recorded at cost less accumulated depreciation and amortization and are included in Other Assets within the accompanying consolidated statements of financial condition. Depreciation and amortization are calculated using the straight‑line method over the assets' estimated economic useful lives, which for leasehold improvements are the lesser of the lease term or the life of the asset, for KKR's owner occupied corporate real estate is up to 40 years, and 3 to 7 years for other fixed assets.

Foreign Currency

Consolidated entities that have a functional currency that differs from KKR's reporting currency are (i) KKR's investment management and capital markets companies located outside the United States and (ii) certain CFEs. Foreign currency denominated assets and liabilities are translated using the exchange rates prevailing at the end of each reporting period. Results of foreign operations are translated at the weighted average exchange rate for each reporting period. Translation adjustments are included as a component of accumulated other comprehensive income (loss) until realized. Foreign currency income or expenses resulting from transactions outside of the functional currency of a consolidated entity are recorded as incurred in general, administrative and other expense in the consolidated statements of operations.

Leases

At contract inception, KKR determines if an arrangement contains a lease by evaluating whether (i) the identified asset has been deployed in the contract explicitly or implicitly and (ii) KKR obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract. Additionally, at contract inception KKR will evaluate whether the lease is an operating or finance lease. Right-of-use ("ROU") assets represent KKR’s right to use an underlying asset for the lease term and lease liabilities represent KKR’s obligation to make lease payments arising from the lease.

Notes to Financial Statements (Continued)

ROU assets and the associated lease liabilities are recognized at the commencement date based on the present value of the future minimum lease payments over the lease term. The discount rate implicit in the lease is generally not readily determinable. Consequently, KKR uses its incremental borrowing rate based on the information available including, but not limited to, collateral assumptions, the term of the lease, and the economic environment in which the lease is denominated at the commencement date in determining the present value of the future lease payments. The ROU assets are recognized as the initial measurement of the lease liabilities plus any initial direct costs and any prepaid lease payments less lease incentives received, if any. The lease terms may include options to extend or terminate the lease which are accounted for when it is reasonably certain that KKR will exercise that option. Certain leases that include lease and non-lease components are accounted for as one single lease component. In addition to contractual rent payments, occupancy lease agreements generally include additional payments for certain costs incurred by the landlord, such as building expenses and utilities. To the extent these are fixed or determinable, they are included as part of the lease payments used to measure the operating lease liability.

Operating lease expense is recognized on a straight-line basis over the lease term and is recorded within Occupancy and Related Charges in the accompanying consolidated statements of operations. The ROU assets are included in Other Assets and the lease liabilities are included in Accrued Expenses and Other Liabilities in the accompanying consolidated statements of financial condition. See Note 14 "Other Assets and Accrued Expenses and Other Liabilities."

Comprehensive Income (Loss)

Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances, excluding those resulting from contributions from and distributions to owners. In the accompanying consolidated financial statements, comprehensive income is recorded net of income taxes and is comprised of (i) Net Income (Loss), as presented in the consolidated statements of operations, (ii) unrealized gains (losses) on available-for-sale securities and other (iii) net effect of changes in discount rates and instrument-specific credit risk on policy liabilities and (iv) foreign currency translation.

The tax benefit (expense) related to items of other comprehensive income was $(339) million, $1,688 million, and $81 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Income Taxes

KKR & Co. Inc. is a domestic corporation for U.S. federal income tax purposes and is subject to U.S. federal, state and local income taxes at the entity level on its share of taxable income. In addition, KKR Group Partnership and certain of its subsidiaries operate as partnerships for U.S. federal tax purposes but as taxable entities for certain state, local or non-U.S. tax purposes. Moreover, certain corporate subsidiaries of KKR, including certain subsidiaries of Global Atlantic, are domestic corporations for U.S. federal income tax purposes and are subject to U.S. federal, state, and local income taxes.

Deferred Income Taxes

Income taxes are accounted for using the asset and liability method of accounting. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax basis, using tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred assets and liabilities of a change in tax rates is recognized in the consolidated statements of operations in the period when the change is enacted.

Deferred tax assets, which are recorded in Other Assets within the consolidated statements of financial condition, are reduced by a valuation allowance when, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. When evaluating the realizability of the deferred tax assets, all evidence, both positive and negative, is considered. Items considered when evaluating the need for a valuation allowance include the ability to carry back losses, future reversals of existing temporary differences, tax planning strategies, and expectations of future earnings.

For a particular tax‑paying component of an entity and within a particular tax jurisdiction, deferred tax assets and liabilities are offset and presented as a single amount within Other Assets or Accrued and Other Liabilities, as applicable, in the accompanying statements of financial condition.

Notes to Financial Statements (Continued)

Uncertain Tax Positions

KKR analyzes its tax filing positions in all of the U.S. federal, state and local tax jurisdictions and foreign tax jurisdictions where it is required to file income tax returns, as well as for all open tax years in these jurisdictions. If, based on this analysis, KKR determines that uncertainties in tax positions exist, a reserve is established. The reserve for uncertain tax positions is recorded in Accrued and Other Liabilities in the accompanying statements of financial condition. KKR recognizes accrued interest and penalties related to uncertain tax positions within the provision for income taxes in the consolidated statements of operations.

KKR records uncertain tax positions on the basis of a two‑step process: (a) determination is made whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position and (b) those tax positions that meet the more‑likely‑than‑not threshold are recognized as the largest amount of tax benefit that is greater than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

Net Income (Loss) attributable to KKR & Co. Inc. per share of common stock

Net Income (Loss) attributable to KKR per share of common stock (Basic) is computed by dividing earnings (losses) attributable to KKR common stockholders by the weighted average number of common shares outstanding for the period. Net Income (Loss) attributable to KKR per share of common stock (Diluted) reflects the assumed conversion of all dilutive securities.

For further information on net income (loss) per common share, see Note 13 "Net Income (Loss) Attributable to KKR & Co. Inc. per Share of Common Stock" to the financial statements.

SIGNIFICANT ACCOUNTING POLICIES - ASSET MANAGEMENT

The significant accounting policies applicable to KKR’s asset management business are described below.

Investments

Investments consist primarily of private equity, credit, investments of consolidated CFEs, real assets, equity method and other investments. Investments denominated in currencies other than the entity's functional currency are valued based on the spot rate of the respective currency at the end of the reporting period with changes related to exchange rate movements reflected in the consolidated statements of operations. Security and loan transactions are recorded on a trade date basis. Further disclosure on investments is presented in Note 7 "Investments."

The following describes the types of securities held within each investment class.

Private Equity - Consists primarily of equity investments in operating businesses, including growth equity investments.

Credit - Consists primarily of investments in below investment grade corporate debt securities (primarily high yield bonds and syndicated bank loans), originated, distressed and opportunistic credit, real estate mortgage loans, and interests in unconsolidated CLOs.

Investments of Consolidated CFEs - Consists primarily of investments in below investment grade corporate debt securities (primarily high yield bonds and syndicated bank loans) held directly by the consolidated CLOs.

Real Assets - Consists primarily of investments in (i) infrastructure assets, (ii) real estate, principally residential and commercial real estate assets and businesses, and (iii) energy related assets, principally oil and natural gas properties.

Equity Method - Other - Consists primarily of (i) certain direct interests in operating companies in which KKR is deemed to exert significant influence under GAAP and (ii) certain interests in partnerships and joint ventures that hold private equity and real assets investments.

Equity Method - Capital Allocation-Based Income - Consists primarily of (i) the capital interest KKR holds as the general partner in certain investment funds, which are not consolidated and (ii) the carried interest component of the general partner interest, which are accounted for as a single unit of account.

Other - Consists primarily of investments in common stock, preferred stock, warrants and options of companies that are not private equity, real assets, credit or investments of consolidated CFEs.

Notes to Financial Statements (Continued)

Investments held by Consolidated Investment Funds

The consolidated investment funds are, for GAAP purposes, investment companies and reflect their investments and other financial instruments, including portfolio companies that are majority-owned and controlled by KKR's investment funds, at fair value. KKR has retained this specialized accounting for the consolidated investment funds in consolidation. Accordingly, the unrealized gains and losses resulting from changes in fair value of the investments and other financial instruments held by the consolidated investment funds are reflected as a component of Net Gains (Losses) from Investment Activities in the consolidated statements of operations.

Certain energy investments are made through consolidated investment funds, including investments in working and royalty interests in oil and natural gas properties as well as investments in operating companies that operate in the energy industry. Since these investments are held through consolidated investment funds, such investments are reflected at fair value as of the end of the reporting period.

Investments in operating companies that are held through KKR's consolidated investment funds are generally classified within private equity investments and investments in working and royalty interests in oil and natural gas properties are generally classified as real asset investments.

Fair Value Option

For certain investments and other financial instruments, KKR has elected the fair value option. Such election is irrevocable until the occurrence of certain qualifying events as defined in ASC 825, when KKR has, in addition to the ability to elect or the option to cease applying the fair value option to an eligible item to which it was previously applied. and is applied on a financial instrument by financial instrument basis at initial recognition. KKR has elected the fair value option for certain private equity, real assets, credit, investments of consolidated CFEs, equity method - other and other financial instruments not held through a consolidated investment fund. Accounting for these investments at fair value is consistent with how KKR accounts for its investments held through consolidated investment funds. Changes in the fair value of such instruments are recognized in Net Gains (Losses) from Investment Activities in the consolidated statements of operations. Interest income on interest bearing credit securities on which the fair value option has been elected is based on stated coupon rates adjusted for the accretion of purchase discounts and the amortization of purchase premiums. This interest income is recorded within Interest Income in the consolidated statements of operations.

Equity Method

For certain investments in entities over which KKR exercises significant influence but which do not meet the requirements for consolidation and for which KKR has not elected the fair value option, KKR uses the equity method of accounting. The carrying value of equity method investments, for which KKR has not elected the fair value option, is determined based on the amounts invested by KKR, adjusted for the equity in earnings or losses of the investee allocated based on KKR's respective ownership percentage, less distributions.

For equity method investments for which KKR has not elected the fair value option, KKR records its proportionate share of the investee's earnings or losses based on the most recently available financial information of the investee, which in certain cases may lag the date of KKR's financial statements by no more than three calendar months. As of December 31, 2023, equity method investees for which KKR reports financial results on a lag include Marshall Wace LLP ("Marshall Wace").

KKR evaluates its equity method investments for which KKR has not elected the fair value option for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may not be recoverable.

The carrying value of investments classified as Equity Method - Capital Allocation-Based Income approximates fair value, because the underlying investments of the unconsolidated investment funds are reported at fair value.

Financial Instruments held by Consolidated CFEs

KKR measures both the financial assets and financial liabilities of the consolidated CFEs in its financial statements using the more observable of the fair value of the financial assets and the fair value of the financial liabilities which results in KKR's consolidated net income (loss) reflecting KKR's own economic interests in the consolidated CFEs including (i) changes in the fair value of the beneficial interests retained by KKR and (ii) beneficial interests that represent compensation for services rendered.

Notes to Financial Statements (Continued)

For the consolidated CLOs, KKR has determined that the fair value of the financial assets of the consolidated CLOs is more observable than the fair value of the financial liabilities of the consolidated CLOs. As a result, the financial assets of the consolidated CLOs are being measured at fair value and the financial liabilities are being measured in consolidation as: (1) the sum of the fair value of the financial assets and the carrying value of any nonfinancial assets that are incidental to the operations of the CLOs less (2) the sum of the fair value of any beneficial interests retained by KKR (other than those that represent compensation for services) and KKR's carrying value of any beneficial interests that represent compensation for services. The resulting amount is allocated to the individual financial liabilities (other than the beneficial interests retained by KKR).

Due from and Due to Affiliates

KKR considers its principals and their related entities, unconsolidated investment funds and the portfolio companies of its funds to be affiliates for accounting purposes. Receivables from and payables to affiliates are recorded at their current settlement amount.

Derivative instruments

Freestanding derivatives are instruments that KKR's asset management business and certain of its consolidated funds have entered into as part of their overall risk management and investment strategies. These derivative contracts are not designated as hedging instruments for accounting purposes. Such contracts may include forward, swap and option contracts related to foreign currencies and interest rates to manage foreign exchange risk and interest rate risk arising from certain assets and liabilities. All derivatives are recognized in Other Assets or Accrued Expenses and Other Liabilities and are presented on a gross basis in the consolidated statements of financial condition and measured at fair value with changes in fair value recorded in Net Gains (Losses) from Investment Activities in the accompanying consolidated statements of operations. KKR's derivative financial instruments contain credit risk to the extent that its counterparties may be unable to meet the terms of the agreements. KKR attempts to reduce this risk by limiting its counterparties to major financial institutions with strong credit ratings.

Securities Sold Short

Whether part of a hedging transaction or a transaction in its own right, securities sold short represent obligations of KKR to deliver the specified security at the contracted price at a future point in time, and thereby create a liability to repurchase the security in the market at the prevailing prices. The liability for such securities sold short, which is recorded in Accrued Expenses and Other Liabilities in the statement of financial condition, is marked to market based on the current fair value of the underlying security at the reporting date with changes in fair value recorded as unrealized gains or losses in Net Gains (Losses) from Investment Activities in the accompanying consolidated statements of operations. These transactions may involve market risk in excess of the amount currently reflected in the accompanying consolidated statements of financial condition.

Fees and Other

Fees and Other, as detailed above, are accounted for as contracts with customers. Under ASC 606, Revenue from Contracts with Customers ("ASC 606"), KKR is required to (a) identify the contract(s) with a customer, (b) identify the performance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance obligations in the contract, and (e) recognize revenue when (or as) KKR satisfies its performance obligation. In determining the transaction price, KKR has included variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved.

Notes to Financial Statements (Continued)

The following table summarizes KKR's revenues from contracts with customers:

Revenue TypeCustomerPerformance ObligationPerformance Obligation Satisfied Over Time or Point In Time (1)Variable or Fixed ConsiderationPayment TermsSubject to Return Once RecognizedClassification of Uncollected Amounts (2)
Management FeesInvestment funds, CLOs and other vehiclesInvestment management servicesOver time as services are renderedVariable consideration since varies based on fluctuations in the basis of the management fee over timeTypically quarterly or annually in arrearsNoDue from Affiliates
Transaction FeesPortfolio companies and third party companiesAdvisory services and debt and equity arranging and underwritingPoint in time when the transaction (e.g. underwriting) is completedFixed considerationTypically paid on or shortly after transaction closesNoDue from Affiliates (portfolio companies) Other Assets (third parties)
Monitoring Fees
Recurring FeesPortfolio companiesMonitoring servicesOver time as services are renderedVariable consideration since varies based on fluctuations in the basis of the recurring feeTypically quarterly in arrearsNoDue from Affiliates
Termination FeesPortfolio companiesMonitoring servicesPoint in time when the termination is completedFixed considerationTypically paid on or shortly after termination occursNoDue from Affiliates
Incentive FeesInvestment funds and other vehiclesInvestment management services that result in achievement of minimum investment return levelsOver time as services are renderedVariable consideration since contingent upon the investment fund and other vehicles achieving more than stipulated investment return hurdlesTypically paid shortly after the end of the performance measurement periodNoDue from Affiliates
Expense ReimbursementsInvestment funds and portfolio companiesInvestment management and monitoring servicesPoint in time when the related expense is incurredFixed considerationTypically shortly after expense is incurredNoDue from Affiliates
Consulting FeesPortfolio companies and other companiesConsulting and other servicesOver time as services are renderedFixed considerationTypically quarterly in arrearsNoDue from Affiliates

(1)For performance obligations satisfied at a point in time, there were no significant judgments made in evaluating when a customer obtains control of the promised service.

(2)For amounts classified in Other Assets, see Note 14 "Other Assets and Accrued Expenses and Other Liabilities." For amounts classified in Due from Affiliates, see Note 20 "Related Party Transactions."

Management Fees

KKR provides investment management services to investment funds, CLOs, and other vehicles and entities in exchange for a management fee. Management fees are generally determined quarterly based on an annual rate and are generally based upon a percentage of the capital committed, capital invested or net asset value during the investment period, if applicable. Thereafter, management fees are generally based on a percentage of remaining invested capital, net asset value, gross assets or as otherwise defined in the respective contractual agreements. Since some of the factors that cause the fees to fluctuate are outside of KKR's control, management fees are considered to be constrained and are therefore not included in the transaction price. Revenue recognized for the investment management services provided is generally determined at the end of the period because these management fees are payable on a regular basis (typically quarterly) and the uncertainty for that period is resolved.

Notes to Financial Statements (Continued)

Management fees earned from KKR's consolidated investment funds and other vehicles and entities are eliminated in consolidation. However, because these amounts are funded by, and earned from, noncontrolling interests, KKR's allocated share of the net income from the consolidated investment funds and other vehicles is increased by the amount of fees that are eliminated. Accordingly, net income (loss) attributable to KKR and KKR’s stockholder’s equity would be unchanged, if such investment funds and other vehicles were not consolidated.

Management fee calculations based on committed capital or invested capital are mechanical in nature and therefore do not require the use of significant estimates or judgments. Management fee calculations based on net asset value, total assets, or investment fair value depend on the fair value of the underlying investments within the investment vehicle.

Fee Credits

Under the terms of the management agreements with certain of its investment funds, KKR is required to share with such funds an agreed upon percentage of certain fees, including monitoring and transaction fees earned from portfolio companies ("Fee Credits"). Investment funds earn Fee Credits only with respect to monitoring and transaction fees that are allocable to the fund's investment in the portfolio company and not, for example, any fees allocable to capital invested through co-investment vehicles. Fee Credits are calculated after deducting certain costs incurred in connection with pursuing potential investments that do not result in completed transactions ("broken-deal expenses") and generally amount to 80% for older funds formed on or prior to January 1, 2015, or 100% for newer funds, of allocable monitoring and transaction fees after broken-deal expenses are recovered, although the actual percentage may vary from fund to fund. Fee Credits are recognized and owed to investment funds concurrently with the recognition of monitoring fees, transaction fees and broken-deal expenses. Since Fee Credits are payable to investment funds, amounts owed are generally applied as a reduction of the management fee that is otherwise billed to the investment fund. Fee credits are recorded as a reduction of revenues in the consolidated statement of operations. Fee Credits owed to investment funds are recorded in Due to Affiliates on the consolidated statements of financial condition. See Note 20 "Related Party Transactions."

Transaction Fees

KKR (i) arranges debt and equity financing, places and underwrites securities offerings, and provides other types of capital markets services for companies seeking financing in its Capital Markets business line and (ii) provides advisory services in connection with successful Private Equity, Real Assets and Credit and Liquid Strategies business line portfolio company investment transactions, in each case, in exchange for a transaction fee. Transaction fees are separately negotiated for each transaction and are generally based on (i) for Capital Markets business line transactions, a percentage of the overall transaction size and (ii) for Private Equity, Real Assets and Credit and Liquid Strategies business line transactions, a percentage of either total enterprise value of an investment or a percentage of the aggregate price paid for an investment. After the contract is established, there are no significant judgments made when determining the transaction price.

Monitoring Fees

KKR provides services in connection with monitoring portfolio companies in exchange for a fee. Recurring monitoring fees are separately negotiated for each portfolio company. In addition, certain monitoring fee arrangements may provide for a termination payment following an initial public offering or change of control as defined in the contractual terms of the related agreement. These termination payments are recognized in the period when the related transaction closes. After the contract is established, there are no significant judgments made when determining the transaction price.

Incentive Fees

KKR provides investment management services to certain investment funds, CLOs and other vehicles in exchange for a management fee as discussed above and, in some cases an incentive fee when KKR is not entitled to a carried interest. Incentive fee rates generally range from 5% to 20% of investment gains. Incentive fees are considered a form of variable consideration as these fees are subject to reversal, and therefore the recognition of such fees is deferred until the end of each fund's measurement period when the performance-based incentive fees become fixed and determinable. Incentive fees are generally paid within 90 days of the end of the investment vehicles' measurement period. After the contract is established, there are no significant judgments made when determining the transaction price.

Incentive fees earned from KKR's consolidated investment funds, CLOs, and other vehicles are eliminated in consolidation. However, because these amounts are funded by, and earned from, noncontrolling interests, KKR's allocated share of the net income from the consolidated investment funds, CLOs, and other vehicles is increased by the amount of fees that are eliminated. Accordingly, net income (loss) attributable to KKR would be unchanged if such investment funds and other vehicles were not consolidated.

Notes to Financial Statements (Continued)

Expense Reimbursements

Providing investment management services to investment funds and monitoring KKR’s portfolio companies require KKR to arrange for services on behalf of them. In those situations where KKR is acting as an agent on behalf of its investment funds or portfolio companies, it presents the cost of services on a net basis as a reduction of Revenues. In all other situations, KKR is primarily responsible for fulfilling the services and is therefore acting as a principal for those arrangements for accounting purposes. As a result, the expense and related reimbursement associated with those services is presented on a gross basis. Costs incurred are classified within Expenses and reimbursements of such costs are classified as Expense Reimbursements within Revenues on the consolidated statements of operations. After the contract is established, there are no significant judgments made when determining the transaction price.

Consulting Fees

KKR provides consulting and other services to portfolio companies and other companies in exchange for a consulting fee. Consulting fees are separately negotiated with each company for which services are provided. After the contract is established, there are no significant judgments made when determining the transaction price.

Capital Allocation-Based Income (Loss)

Capital allocation-based income (loss) is earned from those arrangements where KKR has a general partner capital interest and is entitled to a disproportionate allocation of investment income (referred to hereafter as "carried interest"). KKR accounts for its general partner interests in capital allocation-based arrangements as financial instruments under ASC 323, Investments - Equity Method and Joint Ventures ("ASC 323") since the general partner has significant governance rights in the investment funds in which it invests, which demonstrates significant influence. In accordance with ASC 323, KKR records equity method income based on the proportionate share of the income of the investment fund, including carried interest, assuming the investment fund was liquidated as of each reporting date pursuant to each investment fund's governing agreements. Accordingly, these general partner interests are accounted for outside of the scope of ASC 606. Other arrangements surrounding contractual incentive fees through an advisory contract are separate and distinct and accounted for in accordance with ASC 606. In these incentive fee arrangements, accounted for in accordance with ASC 606, KKR’s economics in the entity do not involve an allocation of capital. See "Incentive Fees" above.

Carried interest is allocated to the general partner based on cumulative fund performance to date, and where applicable, subject to a preferred return to the funds' limited partners. At the end of each reporting period, KKR calculates the carried interest that would be due to KKR for each investment fund, pursuant to the fund agreements, as if the fair value of the underlying investments were realized as of such date, irrespective of whether such amounts have been realized. As the fair value of underlying investments varies between reporting periods, it is necessary to make adjustments to amounts recorded as carried interest to reflect either (a) positive performance resulting in an increase in the carried interest allocated to the general partner or (b) negative performance that would cause the amount due to KKR to be less than the amount previously recognized, resulting in a negative adjustment to carried interest allocated to the general partner. In each case, it is necessary to calculate the carried interest on cumulative results compared to the carried interest recorded to date and to make the required positive or negative adjustments. KKR ceases to record negative carried interest allocations once previously recognized carried interest allocations for an investment fund have been fully reversed. KKR is not obligated to make payments for guaranteed returns or hurdles and, therefore, cannot have negative carried interest over the life of an investment fund. Accrued but unpaid carried interest as of the reporting date is reflected in Investments in the consolidated statements of financial condition.

Compensation and Benefits

Compensation and Benefits expense includes (i) base cash compensation consisting of salaries and wages, (ii) benefits, (iii) carry pool allocations, (iv) equity-based compensation, and (v) discretionary cash bonuses.

To supplement base cash compensation, benefits, carry pool allocations, and equity-based compensation, KKR typically pays discretionary cash bonuses, which are included in Compensation and Benefits expense in the consolidated statements of operations, based principally on the level of segment (i) management fees and other fee revenues (including incentive fees), (ii) realized performance income and (iii) realized investment income earned during the year. The amounts paid as discretionary cash bonuses, if any, are at KKR’s sole discretion and vary by individual to individual and from period to period, including having no cash bonus. KKR accrues discretionary cash bonuses when payment becomes probable and reasonably estimable which is generally in the period when KKR makes the decision to pay discretionary cash bonuses and is based upon a number of factors including the recognition of segment fee revenues, realized performance income, realized investment income and other factors determined during the year.

Notes to Financial Statements (Continued)

KKR decides whether to pay a discretionary cash bonus and determines the percentage of applicable revenue components to pay compensation only upon the occurrence of the realization event. There is no contractual or other binding obligation that requires KKR to pay a discretionary cash bonus to its employees, except in limited circumstances.

Carry Pool Allocation

With respect to our funds that provide for carried interest, KKR allocates a portion of the realized and unrealized carried interest that KKR earns to Associates Holdings, which is referred to as the carry pool, from which KKR's asset management employees and certain other carry pool participants are eligible to receive a carried interest allocation. As of December 31, 2023, the allocation is determined based upon a fixed arrangement between Associates Holdings and KKR, and KKR does not exercise discretion on whether to make an allocation to the carry pool upon a realization event. We refer to the portion of carried interest that KKR allocates to the carry pool as the carry pool percentage. These amounts are accounted for as compensatory profit sharing arrangements in Accrued Expenses and Other Liabilities within the accompanying consolidated statements of financial condition in conjunction with the related carried interest income and are recorded as compensation expense. Upon a reversal of carried interest income, the related carry pool allocation, if any, is also reversed. Accordingly, such compensation expense is subject to both positive and negative adjustments.

As of December 31, 2023, the carry pool percentage was fixed at 40%, 43% or 65% by investment fund, depending on the fund’s vintage. For funds that closed after December 31, 2020 but before December 31, 2023, the carry pool percentage was fixed at 65%. For all funds that closed after June 30, 2017 but before December 31, 2020, the carry pool percentage was fixed at 43%, and the carry pool percentage was fixed at 40% for older funds that contributed to KKR's carry pool. Effective January 2, 2024, KKR is authorized to apply a carry pool percentage in excess of these fixed percentages of up to 80% for all funds. As of the date of this filing, no carry pool percentage has been changed for our funds that have closed on or before December 31, 2023. This increase to the carry pool percentage was approved by a majority of KKR's independent directors, and the carry pool percentage may not be increased above 80% without the further approval of a majority of KKR's independent directors.

Equity-based Compensation

In addition to the cash-based compensation and carry pool allocations as described above, employees receive equity awards under the Amended and Restated KKR & Co. Inc. 2010 Equity Incentive Plan (the "2010 Equity Incentive Plan") and the Amended and Restated KKR & Co. Inc. 2019 Equity Incentive Plan (the "2019 Equity Incentive Plan" and, together with the 2010 Equity Incentive Plan, the "Equity Incentive Plans"). Most of these awards are subject to service-based vesting typically over a three to five-year period from the date of grant, while in certain cases vesting is subject to the achievement of market conditions. Certain of these awards are subject to transfer restrictions and minimum retained ownership requirements. KKR considers both historical volatility and implied volatility in estimating expected volatility. All these awards are equity-classified and the related expense is recognized in Compensation and Benefits. The total tax benefit recognized in the income statement for equity based compensation was $18.7 million, $26.6 million, and $66.9 million for the years ended December 31, 2023, 2022, and 2021, respectively.

Profit Sharing Plan

KKR provides certain profit sharing programs for KKR employees. In particular, KKR provides a 401(k) plan for eligible employees in the United States. For certain employees who are participants in the 401(k) plan, KKR may, in its discretion, contribute an amount after the end of the plan year.

General, Administrative and Other

General, administrative and other expense consists primarily of professional fees paid to legal advisors, accountants, advisors and consultants, insurance costs, travel and related expenses, communications and information services, depreciation and amortization charges, broken-deal expenses, placement fees and other general operating expenses. A portion of these general administrative and other expenses, in particular broken-deal expenses, are borne by fund investors.

Notes to Financial Statements (Continued)

Investment Income

Investment income consists primarily of the net impact of:

i.Realized and unrealized gains and losses on investments, securities sold short, derivatives and debt obligations of consolidated CFEs which are recorded in Net Gains (Losses) from Investment Activities. Upon disposition of an investment, previously recognized unrealized gains or losses are reversed and a realized gain or loss is recognized.

ii.Foreign exchange gains and losses relating to mark‑to‑market activity on foreign exchange forward contracts, foreign currency options and foreign denominated debt which are recorded in Net Gains (Losses) from Investment Activities.

iii.Dividends, which are recognized on the ex‑dividend date, or, in the absence of a formal declaration of a record date, on the date it is received.

iv.Interest income, which is recognized as earned.

v.Interest expense, which is recognized as incurred.

SIGNIFICANT ACCOUNTING POLICIES - INSURANCE

The significant accounting policies applicable to KKR’s insurance business, which is conducted by Global Atlantic, are described below.

Investments

In the normal course of business, Global Atlantic enters into transactions involving various types of investments.

Investments include the following: U.S. government and agency obligations; commercial mortgage-backed securities ("CMBS"), residential mortgage-backed securities ("RMBS"), collateralized loan obligations (“CLOs"), collateralized bond obligations ("CBOs"), and all other structured securities, consisting primarily of asset-backed securities ("ABS") (collectively, "structured securities"); corporate bonds; state and political subdivision obligations; foreign government obligations; equity securities; mortgage and other loan receivables; policy loans; and other non-derivative investments.

Available-for-sale fixed maturity securities

Global Atlantic primarily accounts for its fixed maturity securities (including bonds, structured securities and redeemable preferred stock) as available-for-sale ("AFS"). AFS fixed maturity securities are generally recorded on a trade-date basis and are carried at fair value. Impairment associated with AFS fixed maturity securities is recognized as an allowance for credit losses. The allowance for credit losses is established either by a charge to net investment-related losses in the consolidated statements of operations, for securities identified as credit impaired after purchase, or by a gross-up recognition of an initial allowance for purchased credit deteriorated ("PCD") securities.

PCD securities are those purchased by Global Atlantic that were assessed at acquisition as having experienced a more-than-insignificant deterioration in credit quality since their origination. Global Atlantic considers an AFS fixed maturity security to be PCD if there are indicators of a credit loss at the acquisition date or, in the case of structured securities, if there is a significant difference between contractual cash flows and expected cash flows at acquisition. PCD securities also include those AFS fixed maturity securities previously held by Global Atlantic that were similarly assessed at the time of the 2021 GA Acquisition. The initial amortized cost for a PCD security equals the purchase price plus the initial allowance for credit losses. The initial allowance for credit losses is determined using a discounted cash flow method based on the best estimate of the present value of cash flows expected to be collected. After purchase, the accounting for a PCD security is generally consistent with that applied to all other securities.

Unrealized gains and losses on AFS fixed maturity securities, net of tax and insurance intangible amortization, are reported in accumulated other comprehensive income ("AOCI") in the consolidated statements of financial condition. Realized investment gains and losses are recognized on a first-in first-out ("FIFO") basis and are reported in net investment-related losses in the consolidated statements of operations. The amortized cost of fixed maturity securities is adjusted for impairment charge-offs, amortization of premiums and accretion of discounts. Such amortization and accretion is calculated using the effective yield method and included in net investment income in the consolidated statements of operations.

Notes to Financial Statements (Continued)

For structured securities, Global Atlantic recognizes interest income using a constant effective yield based on estimated cash flows generated from internal models utilizing interest rate, default and prepayment assumptions. Effective yields for structured securities that are not of high credit quality are recalculated and adjusted prospectively based on changes in expected undiscounted future cash flows, after consideration of any appropriate recognition or release of an allowance for credit losses. For structured securities that are of high credit quality, effective yields are recalculated based on payments received and updated prepayment expectations, and amortized cost is adjusted to the amount that would have existed had the new effective yield been applied since acquisition with a corresponding charge or credit to net investment income. Prepayment fees are recorded when earned in net investment income in the consolidated statements of operations.

Global Atlantic generally suspends accrual of interest for securities that are more than 90 days past due and reverses any related accrued interest to net investment income in the consolidated statements of operations. When a security is in non-accrual status, coupon payments are recognized as interest income as cash is received, subject to consideration as to the overall collectibility of the security. A security is returned to accrual status when Global Atlantic determines that the collection of amounts due is probable. The allowance for credit losses excludes accrued interest from the amortized cost basis for which losses are estimated.

Trading fixed maturity securities

Global Atlantic accounts for certain fixed maturity securities as trading at acquisition, based on intent or via the election of the fair value option. Trading securities are generally recorded on a trade-date basis and are carried at fair value, with realized and unrealized gains and losses reported in net investment-related gains (losses) in the consolidated statements of operations. Interest income from these securities is reported in net investment income. Trading securities, which are primarily used to match asset and liability accounting, back funds withheld payable at interest where the investment performance is ceded to reinsurers under the terms of the respective reinsurance agreements.

Equity securities

Global Atlantic accounts for its investments in equity securities (including common stock and non-redeemable preferred stock) that do not require equity method accounting or result in consolidation, at fair value. Realized and unrealized investment gains and losses are reported in net investment-related gains (losses) in the consolidated statements of operations.

Mortgage and other loan receivables

Global Atlantic purchases and originates mortgage and other loan receivables, and these loans are carried at cost, less the allowance for credit losses and as adjusted for amortization/accretion of premiums/discounts. The allowance for credit losses is established either by a charge to net investment-related losses in the consolidated statements of operations or, for PCD mortgage and other loan receivables, by a gross-up recognition of the initial allowance in the consolidated statements of financial condition.

PCD mortgage and other loan receivables are those purchased by Global Atlantic that were assessed at acquisition as having experienced a more-than-insignificant deterioration in credit quality since their origination. PCD mortgage and other loan receivables also include those mortgage and other loan receivables previously held by Global Atlantic that were similarly assessed at the time of the 2021 GA Acquisition. The initial amortized cost for a PCD mortgage or other loan receivable equals the purchase price plus the initial allowance for credit losses. The initial allowance for credit losses is determined using a method consistent with that used for other similar loans. See further discussion of allowance methods below. After purchase, the accounting for a PCD mortgage or other loan receivable is consistent with that applied to all other mortgage and other loan receivables. As part of the 2021 GA Acquisition, Global Atlantic identified $3.7 billion of PCD mortgage and other loan receivables with a related allowance of $120.3 million. The initial allowance on the non-PCD mortgage and other loan receivables was recognized outside the purchase accounting analysis and had an impact on the consolidated statements of operations of $183.6 million.

Loan premiums or discounts are amortized or accreted using the effective yield method. Interest income is accrued on the principal balance of each loan based on its contractual interest rate. The accrual of interest is generally suspended when the collection of interest is no longer probable or the collection of any portion of principal is doubtful. Global Atlantic generally suspends accrual of interest for loans that are more than 90 days past due and reverses any related accrued interest to net investment income in the consolidated statements of operations. When a loan is in non-accrual status, coupon payments are generally recognized as interest income as cash is received, subject to consideration as to the overall collectibility of the loan. A loan is returned to accrual status when Global Atlantic determines that the collection of principal and interest due is probable. The allowance for credit losses excludes accrued interest from the amortized cost basis for which losses are estimated.

Notes to Financial Statements (Continued)

Policy loans

Policy loans are loans policyholders take out against their life insurance policies. Each policy loan is fully collateralized by the cash surrender value of the policyholder’s life insurance policy. Policy loans are carried at unpaid principal balances. Interest income on such loans is recognized as earned using the contractually agreed upon interest rate and reflected in net investment income in the consolidated statements of operations. Generally, interest is capitalized on the associated policy’s anniversary date.

Other investments

Other investments in the consolidated statements of financial condition include Global Atlantic’s investments in investment partnerships, for which Global Atlantic does not have voting control or power to direct activities. These investments are accounted for using the equity method of accounting unless Global Atlantic’s interest is so minor that it has virtually no influence over partnership operating or financial policies. The equity method of accounting requires that the investments be initially recorded at cost and the carrying amount of the investment subsequently be adjusted to recognize Global Atlantic’s share of the earnings and losses of the investee. Where there is a difference between the cost of the investment and Global Atlantic’s proportionate share of the equity method investee’s net assets, this basis difference is accreted to net investment income over the life of the underlying assets. In applying the equity method, Global Atlantic uses financial information provided by the investee, generally on a one to three month lag due to the timing of the receipt of related financial statements.

The income from Global Atlantic’s equity method investments is included in net investment income in the consolidated statements of operations. In limited circumstances, Global Atlantic elects to apply the fair value option to investment partnerships, which are carried at fair value with unrealized gains and losses reported in net investment-related gains (losses) in the consolidated statements of operations. The contributions to and distributions from investment partnerships are classified as investing activities within the consolidated statements of cash flows.

Global Atlantic consolidates investment partnerships and other entities when it has a controlling financial interest. The results of certain consolidated investment entities are reported on a one to three month lag and intervening events are evaluated for materiality and recognition by disclosure or otherwise, as appropriate.

Included in other investments are Global Atlantic’s investments in renewable energy entities, including partnerships and limited liability companies. Respective investments are consolidated when Global Atlantic has a controlling financial interest, or are accounted for using the equity method of accounting when Global Atlantic has the ability to exercise significant influence but not control. These investments involve tiered capital structures that facilitate a waterfall of returns and allocations to ensure the efficient use of tax credits. A conventional income statement oriented approach to the equity method of accounting, or to the recognition of noncontrolling interests (when Global Atlantic is consolidating the investment), based on ownership percentages does not accurately reflect the proper allocation of income and cash flows for these investments. Instead, Global Atlantic uses the HLBV which is a balance sheet oriented approach to the equity method of accounting and to the recognition of noncontrolling interests that allocates income and cash flows based on changes to each investor’s claim to net assets assuming a liquidation of the investee as of each reporting date, including an assessment of the likelihood of liquidation in determining the contractual provisions to utilize when applying the HLBV method.

Investments in real assets included in other investments in the consolidated statements of financial condition relate to Global Atlantic’s consolidated investments in renewable energy entities and investments in transportation assets. The income, as well as the depreciation and other expenses associated with these tangible assets is reported in net investment income in the consolidated statements of operations.

Income on consolidated investments in renewable energy entities is earned from the sale of the energy generated under long-term contracts. Income on investments in transportation assets is earned from the lease of these assets. Tangible assets associated with renewable energy entities primarily comprise solar energy systems, which are depreciated on a straight-line basis over their estimated useful lives of generally 35 years. Transportation assets are primarily aircraft and railcars, which are depreciated to their estimated salvage value on a straight-line basis over their remaining useful lives. These useful lives generally range up to 25 years for aircraft and 45 years for railcars, as determined from the date of manufacture.

Notes to Financial Statements (Continued)

Global Atlantic has certain investments in real estate held in consolidated investment companies that account for such real estate at fair value under investment company accounting, and this specialized accounting is retained in consolidation. Real estate investments are generally valued using a combination of direct income capitalization and discounted cash flow analysis. Certain real estate investments are valued based on ranges of valuations determined by independent valuation firms. Investments in real estate that are carried at depreciated cost are depreciated on a straight-line basis over estimated useful lives of up to 40 years. Net rental income and depreciation on the investments in real estate are recognized in net investment income and changes in the fair value of real estate in consolidated investment companies are recognized in net investment-related gains (losses) in the consolidated statements of operations.

Investments in Federal Home Loan Bank ("FHLB") common stock are also included in other investments in the consolidated statements of financial condition and are accounted at cost.

Derivative instruments

Derivatives are instruments that derive their values from underlying asset prices, indices, foreign exchange rates, reference rates and other inputs or a combination of these factors. Derivatives may be privately negotiated contracts, which are usually referred to as over-the-counter ("OTC") derivatives, or they may be listed and traded on an exchange ("exchange-traded"). Global Atlantic’s derivative instruments are primarily used to hedge certain risks, including interest rate risk, equity market risk and foreign exchange risk. Where certain criteria are met, some of these hedging arrangements may achieve hedge accounting.

Derivative instruments are recognized at estimated fair value in either funds withheld receivable at interest, other assets, funds withheld payable at interest or accrued expenses and other liabilities in the consolidated statements of financial condition, with changes in fair value recorded in net investment-related gains (losses) in the consolidated statements of operations. Where certain qualifying criteria are met, some derivative instruments are designated as accounting hedges and are recognized at estimated fair value in derivative assets or accrued expenses and other liabilities in the consolidated statements of financial condition. For derivative instruments designated as fair value hedges, changes in fair value are recognized in the consolidated statements of operations, in the same line where the hedged item is reported. For derivative instruments designated as cash flow hedges, changes in fair value are initially recognized in accumulated other comprehensive income (loss) in the consolidated statements of financial condition and subsequently reclassified to the consolidated statements of operations when the hedged item affects earnings, in the same line item where the hedged item is reported.

Derivative receivables and payables with a counterparty that are subject to an International Swaps and Derivatives Association Master Agreement ("ISDA") or other similar agreement that provides a legal right of setoff, are presented at their net amounts. Where the legal right of setoff exists, Global Atlantic also offsets the fair value of cash collateral received or posted under an ISDA, or other similar agreement with a counterparty, against the related derivative balances as appropriate.

Investment credit losses and impairment

Available-for-sale fixed maturity securities

One of the significant estimates related to AFS securities is the evaluation of those investments for credit losses. The evaluation of investments for credit losses is a quantitative and qualitative quarterly process that is subject to risks and uncertainties and involves significant estimates and judgments by management. Changes in the estimates and judgments used in such analysis can have a significant impact on the consolidated statements of operations. Considerations relevant to the evaluation of credit losses may include the severity of any loss position, as well as changes in market interest rates, changes in business climate, management changes, litigation, government actions, and other similar factors that may impact an issuer’s ability to meet current and future principal and interest obligations. Indicators of credit impairment may also include changes in credit ratings, the frequency of late payments, pricing levels and deterioration in any, or a combination of, key financial ratios, financial statements, revenue forecasts and cash flow projections.

For AFS fixed maturity securities in an unrealized loss position, Global Atlantic first considers the intent to sell a security, or whether it is more-likely-than-not that it will be required to sell the security, before the recovery of its amortized cost. If Global Atlantic intends to sell an AFS fixed maturity security with an unrealized loss or it is more-likely-than-not that it will be required to sell an AFS fixed maturity security with an unrealized loss before recovery of its amortized cost basis, the amortized cost is written down to fair value and a corresponding charge is recognized to net investment-related losses.

Notes to Financial Statements (Continued)

For AFS fixed maturity securities in an unrealized loss position that Global Atlantic does not intend to sell, and will not be required to sell, Global Atlantic bifurcates the impairment into two components: credit impairment and non-credit impairment. Credit impairments are measured as the difference between the security’s cost or amortized cost and its estimated recoverable value, which is the present value of its expected future cash flows discounted at the current effective interest rate. The estimated recoverable value is subject to a floor equal to the fair value of the security. The remaining difference between the security’s fair value and the recoverable value, if any, is the non-credit impairment. Credit impairments are recognized in the allowance for credit losses on AFS fixed maturity securities, which is established via a charge to net investment-related losses in the consolidated statements of operations, and non-credit impairments are charged to accumulated other comprehensive income in the consolidated statements of financial condition.

In determining the estimated recoverable value, the review of expected future cash flows for structured securities includes assumptions about key systemic risks (e.g., unemployment rates, housing prices) and loan-specific information (e.g., delinquency rates, loan-to-value ratios). Estimating future cash flows is a quantitative and qualitative process that incorporates information received from third parties, along with assumptions and judgments about the future performance of the underlying collateral. For corporate and government bonds the recoverable value is determined using cash flow estimates that consider facts and circumstances relevant to the security and the issuer, including overall financial strength and secondary sources of repayment as well as pending restructuring or disposition of assets. Where information for such cash flow estimates is limited or deemed not reliable, fair value is considered the best estimate of the recoverable value.

In periods subsequent to the initial recognition of an allowance for credit losses on a fixed maturity security, whether for a PCD security or a security impaired since purchase, Global Atlantic continues to monitor credit loss expectations. Deterioration in the estimated recoverable value of a credit impaired security is recognized as an addition to the allowance for credit losses, as limited by the amount by which the security’s fair value is less than amortized cost. Improvements in the estimated recoverable value of a credit impaired security or improvements in the fair value of a credit impaired security that limit the amount of the allowance result in reductions in the allowance for credit losses, which are recognized as a credit to net investment-related gains in the consolidated statements of income.

Amounts are charged off against the allowance for credit losses when deemed uncollectible or when Global Atlantic determines that it intends to sell, or more likely than not will be required to sell, the security. Charge-offs are reflected as a decrease in the allowance and a direct write down in the amortized cost of the security. If Global Atlantic recovers all or a portion of an amount previously written off on a credit impaired security, the recovery is recognized as a realized investment gain.

Mortgage and other loan receivables

Global Atlantic updates its estimate of the expected credit losses on its investments in mortgage and other loan receivables each quarter. For loans that share similar risk characteristics, expected credit losses are measured on a pool basis. For loans that do not share similar risk characteristics, expected credit losses are measured individually. Loans subject to individual evaluation include those loans that are collateral dependent, where the borrower is experiencing financial difficulty. For these collateral dependent loans, expected credit losses are measured as the difference between the fair value of the collateral (less costs to sell, where the collateral is to be sold) and the amortized cost basis of the loan.

For commercial mortgage loans, the current expected credit losses are estimated using a model that evaluates the probability that each loan will default and estimates the amount of loss given the occurrence of such a default over the life of each loan in the portfolio. The model incorporates historical and current data on the relevant property market and projects potential future paths for each loan’s collateral, considering both the net income to be generated by the collateral real estate and its market value. The model considers how macroeconomic forecasts (such as gross domestic product, unemployment, and interest rates) influence commercial real estate market factors (including vacancy rates, rental and income growth rates, property value changes), and in turn how commercial real estate market conditions, in combination with loan specific information (including debt service coverage and loan to value), drive commercial mortgage loan credit risk.

For residential mortgage loans and consumer loans, the current expected credit losses are primarily estimated using a discounted cash flow model. The model considers loan-specific information as well as current, historical and forecasted data relevant to the respective loans, including home prices, interest rates and unemployment. Expected cash flows are projected for each loan and are discounted using the effective interest rate of the respective loan. Any shortfalls between the discounted cash flows and the amortized cost of each individual loan are aggregated to determine the total allowances on the residential mortgage loan and consumer loan portfolios. For certain residential mortgage loans secured by single-family rental properties, current expected credit losses are determined using a model consistent with that described above for commercial mortgage loans.

Notes to Financial Statements (Continued)

With regard to the use of forecasts in the determination of Global Atlantic’s current expected credit losses, the reversion of forecasts to historical data is based on reversion dynamics that depend on the specific variable and its interaction with the other parameters of the respective model; however, the forecasts generally tend to revert to a long-term equilibrium trend within two to three years from the forecast start date.

For the investment in other loan receivables, a variety of methodologies are used to estimate the respective current expected credit losses. These methodologies consider the terms specific to each loan, including the value of any collateral, and evaluate the risk of loss over the life of these loans.

Global Atlantic also assesses and measures an allowance for credit losses arising from off-balance sheet commitments, including loan commitments, that are not unconditionally cancellable by Global Atlantic. This allowance for credit losses for off-balance sheet commitments is determined using methods consistent with those used for the associated mortgage and other loan receivable class, as described above, and is recognized in other liabilities in the consolidated statements of financial condition, since there is no funded asset for the committed amount.

When all or a portion of a loan is deemed uncollectible, the uncollectible portion of the carrying amount of the loan is charged off against the allowance. If Global Atlantic recovers all or a portion of an amount previously written off on a credit impaired loan, the recovery is recognized as a realized investment gain.

Other investments

The determination of the amount of impairment on other classes of investments also requires significant judgment and is based upon a periodic evaluation and assessment of known and inherent risks associated with the respective asset class. Such assessments are revised as conditions change and new information becomes available.

Impairment of consolidated renewable energy assets and transportation assets, as well as investments in real estate carried at depreciated cost, is assessed whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. When indicators of impairment are present, a recoverability test is performed to determine if the sum of the estimated undiscounted future cash flows attributable to the assets is greater than the carrying amount. If the undiscounted estimated future cash flows are less than the carrying amount, an impairment loss is recognized based on the amount by which the carrying amount exceeds its estimated fair value.

Impairment of investments subject to the equity method of accounting is assessed whenever events or circumstances suggest that the carrying amount may not be recoverable. An impairment charge is recognized in earnings for a decline in value that is determined to be other than temporary and is measured as the difference between the carrying amount and the fair value of the equity method investment as of the balance sheet date.

Deferral and amortization of certain revenues and expenses

Deferrals

Deferred policy acquisition costs ("DAC") consist of commissions and other costs that are directly related to the successful acquisition of new or renewal life insurance or annuity contracts. DAC is estimated using a group approach, instead of on an individual contract level. DAC groups, or cohorts, are by product type and issue year and consistent with the groups used in estimating the associated insurance liability. DAC is recorded in insurance intangibles in the consolidated statements of financial condition.

Value of business acquired ("VOBA") represents the difference between the carrying value of the purchased insurance contract liabilities at the time of the business combination and the estimated fair value of insurance and reinsurance contracts. VOBA can be either positive or negative. Positive VOBA is recorded in insurance intangibles. Negative VOBA is recorded in the same financial statement line in the consolidated statements of financial condition as the associated reserves.

For limited-payment products (e.g., payout annuities), gross premiums received in excess of net premiums are deferred at initial recognition as a deferred profit liability (“DPL”). DPL is measured using assumptions consistent with those used in the measurement of the liability for future policy benefits, including discount rate, mortality, lapses, and expenses. DPL is recorded in policy liabilities in the consolidated statements of financial condition.

For certain preneed contracts, the gross premium is in excess of the benefit reserve plus additional insurance liability. An unearned front-end load ("UFEL") is established to defer the recognition of this front-end load. UFEL is recorded in policy liabilities in the consolidated statements of financial condition.

Notes to Financial Statements (Continued)

Amortization

DAC is amortized on a constant level basis for the grouped contracts over the expected economic life of the related contracts. Global Atlantic amortizes DAC for all products on a constant level basis based on policy count, except for DAC for traditional life products that are amortized on a constant level basis based on face amount. The constant level bases used for amortization are projected using mortality and lapse assumptions that are based on Global Atlantic's experience, industry data, and other factors and are consistent with those used for the liability for future policy benefits. If those projected assumptions change in future periods, they will be reflected in the cohort level amortization basis at that time. Unexpected lapses, due to higher mortality and lapse experience than expected, are recognized in the current period as a reduction of the capitalized balances.

Amortization of DAC is included in amortization of policyholder acquisition costs in the consolidated statements of operations.

VOBA is generally amortized using the same methodology and assumptions used to amortize DAC.

DPL is amortized and recognized in proportion to insurance in-force for life insurance contracts and expected future benefit payments for annuity contracts. Interest is accreted on the balance of the DPL using the discount rate determined at contract issuance. Global Atlantic reviews and updates its estimates of cash flows for the DPL at the same time as the estimates of cash flows for the liability for future policy benefits. When cash flows are updated, the updated estimates are used to recalculate the DPL at contract issuance. The recalculated DPL as of the beginning of the current reporting period is compared to the carrying amount of the DPL as of the beginning of the current reporting period, and any difference is recognized as either a charge or credit to net policy benefits and claims.

UFEL is amortized consistent with the amortization of DAC on preneed contracts.

The key assumptions used in the calculation of the amortization of these balances are reviewed quarterly and updated if actual experience or other evidence suggests that current assumptions should be revised. In addition, Global Atlantic formally reviews assumptions annually as part of the assumptions review process. The effects of changes in assumptions are recorded in net income in the period in which the changes are made.

Internal replacements

An internal replacement is a modification in product benefits, features, rights, or coverages that occurs by the legal extinguishment of one contract and the issuance of another contract (a contract exchange), or by amendment, endorsement, or rider to a contract, or by the election of a benefit, feature, right, or coverage within a contract. If the modification does not substantially change the contract, the unchanged contract is viewed as a prospective revision and the unamortized DAC is adjusted prospectively. As such, unamortized DAC and other associated balances from the unchanged contract are retained and acquisition costs incurred to modify the contract are not deferred but expensed as incurred. Other balances associated with the unchanged contract, such as any liability for future policyholder benefit or market risk benefits, should similarly be accounted for as if the unchanged contract is a continuation of the original contract. If an internal replacement represents a substantial change, the original contract is considered to be extinguished and any related DAC or other policy balances are charged or credited to income, and any new deferrable costs associated with the replacement contract are deferred.

Separate accounts

Separate account assets and liabilities represent segregated funds administered and invested by Global Atlantic for the benefit of variable annuities and variable universal life insurance contractholders and certain pension funds. Global Atlantic reports separately, as assets and liabilities, investments held in the separate accounts and liabilities of separate accounts if: (1) such separate accounts are legally recognized; (2) assets supporting the contract liabilities are legally insulated from Global Atlantic’s general account liabilities; (3) investments are directed by the contract owner or participant; and (4) all investment performance, net of contract fees and assessments, is passed through to the contract owner.

Separate account assets consist principally of mutual funds at fair value. The investment income and gains and losses of these accounts generally accrue to the contractholders and therefore, are not included in Global Atlantic’s net income. However, Global Atlantic’s net income reflects fees assessed and earned on fund values of these contracts which are presented as a component of policy fees in the consolidated statements of operations. Realized investment gains and losses related to separate accounts that meet the conditions for separate account reporting accrue to and are borne by the contractholder.

Notes to Financial Statements (Continued)

Policy liabilities

Policy liabilities, or collectively, “reserves,” are the portion of past premiums or assessments received that are set aside to meet future policy and contract obligations as they become due. Interest accrues on these reserves and on future premiums, which may also be available to pay for future obligations. Global Atlantic establishes reserves to pay future policyholder benefits, claims, and certain expenses for its life policies and annuity contracts.

Reserves are estimates based on models that include many actuarial assumptions and projections. These assumptions and projections, which are inherently uncertain, involve significant judgment, including assumptions as to the levels and/or timing of premiums, benefits, claims, expenses, interest credits, investment results (including equity market returns), mortality, longevity, and persistency.

The assumptions on which reserves are based are intended to represent an estimation of experience for the period that policyholder benefits are payable. The adequacy of these reserves and the assumptions underlying those reserves are reviewed at least annually. Global Atlantic cannot, however, determine with precision the amount or the timing of actual policyholder benefit payments. If actual experience is better than or equal to the assumptions, then reserves would be adequate to provide for future policyholder benefits and expenses. If experience is worse than the assumptions, additional reserves may be required to meet future policy and contract obligations. This would result in a charge to Global Atlantic’s net income during the period in which excess policyholder benefits are paid or an increase in reserves occurs.

For a majority of Global Atlantic’s in-force policies, including its universal life policies and most annuity contracts, the base policy reserve is equal to the account value. For these products, the account value represents Global Atlantic’s obligation to repay to the policyholder the amounts held on deposit. However, there are several significant blocks of business where additional policyholder reserves are explicitly calculated, including fixed-indexed annuities, variable annuities, universal life with secondary guarantees, indexed universal life and preneed policies.

Annuity contracts

Fixed indexed annuities ("FIA")

Policy liabilities for fixed-indexed annuities earning a fixed rate of interest and certain other fixed-rate annuity products are computed under a retrospective deposit method and represent policyholder account balances before applicable surrender charges. For certain fixed-rate annuity products, an additional reserve was established for above market interest rate guarantees upon acquisition. These reserves are amortized on a straight-line basis over the remaining guaranteed interest rate period.

Certain of Global Atlantic’s fixed-indexed annuity products enable the policyholder to allocate contract value between a fixed crediting rate and strategies which reflect the change in the value of an index, such as the S&P 500 Index or other indices. These products are accounted for as investment-type contracts. The liability for these products consists of a combination of the underlying account value and an embedded derivative value. The liability for the underlying account value is primarily based on policy guarantees and its initial value is the difference between the premium payment and the fair value of the embedded derivative. Thereafter, the account value liability is determined in a manner consistent with the accounting for a deposit liability under the “effective yield method.” All future host balances are determined as: (1) the initial host balance; (2) plus interest; (3) less applicable policyholder benefits. The interest rate used in the prior roll forward is re-determined on each valuation date, per the effective yield method. The embedded derivative component’s fair value is based on an estimate of the policyholders’ expected participation in future increases in the relevant index. The fair value of this embedded derivative component includes assumptions, including those about future interest rates and investment yields, future costs for options used to hedge the contract obligations, projected withdrawal and surrender activity, benefit utilization and the level and limits on contract participation in any future increases in the respective index option. The account value liability and embedded derivative are recorded in policy liabilities in the consolidated statements of financial condition, with changes in value of the liabilities recorded in policy benefits and claims in the consolidated statements of operations.

Contractholder deposit funds reserves for certain assumed blocks of fixed-indexed and fixed-rate annuity products are accounted for as investment-type contracts. A net liability (consisting of the benefit reserve plus deferred revenue liability less ceding commission paid between a ceding and assuming reinsurance company) is established at inception and amortized under the effective yield method.

Notes to Financial Statements (Continued)

Global Atlantic issues registered index-linked annuity ("RILA") contracts, which are similar to FIAs in offering the policyholder the opportunity to participate in the performance of a market index, subject to a cap or adjusted for a participation rate. In contrast to the FIA, the RILA enables policyholders to earn higher returns but with the risk of loss to principal and related earnings. In particular, if performance of the market indices is negative, the policyholder may potentially absorb losses, subject to downside protection in the form of either a "buffer" or a "floor" specified in the contract. A "buffer" is protection from downside performance up to a certain percentage, typically 10 percent, with uncapped losses thereafter. A "floor" is protection from downside performance in excess of the "floor," e.g., if the floor is 10% then the policyholder absorbs losses up to 10% but not in excess.

The RILA is accounted for similar to the FIA. The RILA host contract is calculated at the inception of the contract as the value of the initial premium minus the value of the index option, which is an embedded derivative. That initial host value is then accreted to the guaranteed surrender value at the end of the surrender charge period. The RILA index option, which is an embedded derivative, is required to be measured at fair value. Fair value represents the policyholders’ expected participation in future increases in the relevant index and is calculated as the excess cash flows from the indexed crediting feature above the guaranteed cash flows. The excess cash flows are based on the option budget methodology whereby the indexed account is projected to grow by the option budget. A key difference from a standard FIA product is that the RILA policyholder can lose principal on this investment. Therefore, it is possible that the embedded derivative can become negative. The option budget will be calculated depending on the product type and strategy. The growth in the indexed account will be projected based on the value of the options dependent upon the strategy and associated hedge construction. The fair value of this embedded derivative component includes assumptions, including those about future interest rates and investment yields, future costs for options used to hedge the contract obligations, projected withdrawal and surrender activity, benefit utilization and the level and limits on contract participation in any future increases in the respective index option. The account value liability and embedded derivative are recorded in policy liabilities in the consolidated statements of financial condition, with changes in value of the liabilities recorded in policy benefits and claims in the consolidated statements of operations.

Variable annuities

Global Atlantic issues and assumes variable annuity contracts for which the liabilities are included in policy liabilities in the consolidated statements of financial condition. The change in the liabilities for these benefits is included in policy benefits and claims in the consolidated statements of operations. Variable annuity contracts may have certain guarantees that are accounted for as market risk benefits, which are discussed in more detail below.

Funding agreements

Global Atlantic issues funding agreements to certain unaffiliated special purpose entities that have issued debt securities for which payment of interest and principal is secured by such funding agreements. Global Atlantic also has similar obligations to Federal Home Loan Banks. Global Atlantic’s funding agreements are considered investment type contracts and liabilities are net deposits plus accrued and unpaid interest. Global Atlantic's obligation is reported in policy liabilities in the consolidated statements of financial condition. Interest expense is calculated using the effective interest method and recorded in policy benefits and claims in the consolidated statements of operations.

Interest-sensitive life products

For universal life policies, the base policy reserve is the policyholder account value.

Policy liabilities for indexed universal life with returns linked to the performance of a specified market index are equal to the sum of two components: (1) the fair value of the embedded derivative; and (2) the host (or guaranteed) component. The fair value of the embedded derivative component is based on the fair value of the policyholders’ expected participation in future increases in the relevant index over the life of the contract. The fair value of this embedded derivative component includes assumptions, including those about future interest rates and investment yields, future costs for options used to hedge the contract obligations, projected benefits, benefit utilization and the level and limits on contract participation in any future increases in the respective index option.

The initial host balance is established at the time of premium payment and is equal to the total account value less the embedded derivative component. Thereafter, the balance of the host component is determined in a manner consistent with the accounting for a deposit liability under the “effective yield method.” All future host balances are determined as: (1) the initial host balance; (2) plus interest; (3) less applicable policyholder benefits. The interest rate used in the prior roll forward is re-determined on each valuation date, per the effective yield method.

Notes to Financial Statements (Continued)

Preneed policies

Global Atlantic’s preneed life insurance contracts are accounted for as universal life-type contracts which require that the retrospective deposit method be used. That accounting method establishes a liability for policyholder benefits in an amount determined by the account or contract balance that accrues to the benefit of the policyholder. This account value is deemed to be equal to the contract’s statutory cash surrender value. The majority of Global Atlantic’s preneed insurance contracts feature death benefits with a discretionary death benefit growth rate. Global Atlantic has the discretion to adjust these rates up or down. Global Atlantic has established an additional reserve for expected future discretionary benefits which is reflected as policy liabilities in the consolidated statements of financial condition. Global Atlantic has also issued preneed insurance contracts with crediting rates tied to inflation as measured by the U.S. Consumer Price Index.

Traditional life and limited payment contracts

Liability for future policy benefits

A liability for future policy benefits, which is the present value of estimated future policy benefits to be paid to or on behalf of policyholders and certain related expenses less the present value of estimated future net premiums to be collected from policyholders, is accrued as premium revenue is recognized. The liability is estimated using current assumptions that include mortality, lapses, and expenses. These current assumptions are based on judgments that consider Global Atlantic’s historical experience, industry data, and other factors.

For nonparticipating traditional and limited-payment contracts, contracts are grouped into cohorts by contract type and issue year. The liability is adjusted for differences between actual and expected experience. With the exception of the expense assumption, Global Atlantic reviews its historical and future cash flow assumptions quarterly and updates the net premium ratio used to calculate the liability each time the assumptions are changed. Global Atlantic has elected to use expense assumptions that are locked in at contract inception and are not subsequently reviewed or updated.

Each quarter, Global Atlantic updates its estimate of cash flows expected over the entire life of a group of contracts using actual historical experience and current future cash flow assumptions. These updated cash flows are discounted using the discount rate or curve on the original contract issue date to calculate the revised net premiums and net premium ratio, which are used to derive an updated liability for future policy benefits. This amount is then compared to the carrying amount of the liability before the updating of cash flow assumptions to determine the current period change in liability estimate. This current period change in the liability is the liability remeasurement gain or loss and is presented parenthetically as a separate component of benefit expense in the consolidated statements of operations.

For nonparticipating traditional and limited-payment contracts, the discount rate assumption is a spot rate yield curve that is derived based on upper medium grade (low credit risk) fixed-income instruments with similar duration to the liability. Global Atlantic uses one or more external indices of corporate credit issues as its proxy for these instruments. The discount rate assumption is updated quarterly and used to remeasure the liability at the reporting date, with the resulting change in the discount rate reflected in other comprehensive income. For liability cash flows between two market observable points on the yield curve, Global Atlantic interpolates the effective yield by holding the marginal rates constant. For liability cash flows that are projected beyond the last market-observable point on the yield curve, Global Atlantic uses the last market-observable yield level.

Payout annuities

Payout annuities include single premium immediate annuities, annuitizations of deferred annuities, pension risk transfer and structured settlements. These contracts subject the insurer to risks over a period that extends beyond the period or periods in which premiums are collected. These contracts may be either non-life contingent or life contingent. Non-life contingent annuities are accounted for as investment contracts. For life contingent annuities, Global Atlantic records a liability at the present value of future annuity payments and estimated future expenses calculated using expected mortality and costs, and expense assumptions. Any gross premiums received in excess of the net premium is the DPL and is recognized separately in income in a constant relationship with the discounted amount of the insurance in-force or expected future benefit payments. These liabilities are recorded in policy liabilities in the consolidated statements of financial condition.

Also included under payout annuities are liabilities for disability income benefits which pertain primarily to disability income policies that are already in claim payout status. Liabilities for disability income benefits are calculated as the present value of future disability payments and estimated future expenses using expected mortality and costs, and interest assumptions. The liabilities are recorded in policy liabilities in the consolidated statements of financial condition.

Notes to Financial Statements (Continued)

Whole and term life

Global Atlantic has established liabilities for amounts payable under insurance policies, including whole life insurance and term life insurance policies. These policies provide death benefits in exchange for a guaranteed level premium for a specified period of time and, in the case of whole life, a guaranteed minimum cash surrender value. Generally, liabilities for these policies are calculated as the present value of future expected benefits to be paid, reduced by the present value of future expected net premiums. Current assumptions are used in the establishment of liabilities for future policyholder benefits including mortality, policy lapse, renewal, investment returns, inflation, expenses and other contingent events as appropriate for the respective product. Each quarter, Global Atlantic updates its estimate of cash flows using actual historical experience and current future cash flow assumptions. These updated cash flows are discounted using the discount rate or curve on the original contract issue date to calculate the revised net premiums and net premium ratio, which are used to derive an updated liability for future policy benefits. This amount is then compared to the carrying amount of the liability before the updating of cash flow assumptions to determine the current period change in liability estimate. This current period change in the liability is the liability remeasurement gain or loss and is presented parenthetically as a separate component of benefit expense in the consolidated statements of operations.

Policy liabilities for participating whole life insurance policies are equal to the aggregate of: (1) net level premium reserves for death and endowment policyholder benefits (calculated based upon the non-forfeiture interest rate, and mortality rated guarantee in calculating the cash surrender values described in such contracts); and (2) the liability for terminal dividends.

Product guarantees

Market risk benefits

Market risk benefits are contracts or contract features that both provide protection to the policyholder from other-than-nominal capital market risk and expose Global Atlantic to other-than-nominal capital market risk.

Market risk benefits include certain contract features on fixed annuity and variable annuity products. These features include minimum guarantees to policyholders, such as guaranteed minimum death benefits (“GMDBs”), guaranteed minimum withdrawal benefits (“GMWBs”), and long-term care benefits (which are capped at the return of account value plus one or two times the account value). Market risk benefits are measured at fair value using a non-option and option valuation approach based on current net amounts at risk, market data, experience, and other factors. Changes in fair value are recognized in net income each period with the exception of the portion of the change in fair value due to a change in the instrument-specific credit risk, which is recognized in other comprehensive income.

Additional liability for annuitization, death, or other insurance benefits

Global Atlantic establishes additional liabilities for contracts or contract features that provide for potential benefits in addition to the account balance but are not market risk benefits or embedded derivatives. These benefits include annuitization benefits and death or other insurance benefits (e.g., universal life secondary guarantees). For these benefits, the liability is the sum of the current benefit ratio multiplied by cumulative assessments and accreted interest, less excess payments.

In particular, Global Atlantic holds additional liabilities for universal life products with secondary guarantees, sometimes referred to as no-lapse guarantees. The additional liabilities are measured using the benefit ratio approach where excess benefits are spread over the life of the contract based on assessments collected from the policyholder. Generally, total expected excess benefit payments are the aggregate of death claims after the policyholder account value is exhausted. The exception is when the cost of insurance charges are insufficient to produce consistently positive earnings in the future. In this case, all death benefits are deemed to be excess benefits. For annuitization benefits, the benefit ratio is the present value of expected annuitization payments to be made less the accrued account balance at the expected annuitization date divided by the present value of expected assessments during the accumulation phase of the contract, discounted at the contract rate. Expected annuitization payments and related incremental claim adjustment expenses, expected assessments, and expected excess payments are calculated using discount rate, mortality, lapse, and expense assumptions.

Global Atlantic recognizes a shadow reserve adjustment for the additional insurance liabilities when unrealized gains and losses are included in the investment margin while calculating the present value of expected assessments for the benefit ratios. Shadow reserve adjustments are recognized in other comprehensive income.

For additional liabilities for death or other insurance benefits, the discount rate assumption is based on the contract rate at inception. The mortality, lapse, and expense assumptions are based on Global Atlantic’s experience, industry data, and other factors. Assumptions are reviewed and updated, if necessary, at least annually. When those assumptions are updated, the benefit ratio and the liability are remeasured, with the resulting gain or loss reflected in total benefits expense.

Notes to Financial Statements (Continued)

Outstanding claims

Outstanding claims include amounts payable relating to in course of settlement and incurred but not reported claim liabilities. In course of settlement, claim liabilities are established for policies when Global Atlantic is notified of the death of the policyholder, but the claim has not been paid as of the reporting date. Incurred but not reported claim liabilities are determined using studies of past experience and are estimated using actuarial assumptions of historical claims expense, adjusted for current trends and conditions. These estimates are continually reviewed, and the ultimate liability may vary significantly from the amounts initially recognized, which are reflected in net income in the period in which they are determined. Changes in policyholder and contract claims are recorded in policy benefits and claims in the consolidated statements of operations.

Closed blocks

Through its insurance companies, Global Atlantic has acquired several closed blocks of participating life insurance policies. Global Atlantic has elected to account for the closed block policy liabilities using the fair value option.

The assets and cash flow generated by the closed blocks inure solely to the benefit of the holders of policies included in the closed blocks. All closed block assets will ultimately be paid out as policyholder benefits and through policyholder dividends. In the event that the closed blocks’ assets are insufficient to meet the benefits of the closed blocks' benefits, general assets of Global Atlantic would be used to meet the contractual benefits to the closed blocks’ policyholders.

The closed block liabilities are measured at fair value, which comprises the fair value of the closed block assets plus the present value of projected expenses including commissions and the cost of capital charges associated with the closed blocks. In calculating the present value, Global Atlantic used a discount rate based on current U.S. Treasury rates, with a risk margin to reflect uncertainties in the closed block liability and a provision for Global Atlantic’s instrument-specific credit risk.

Reinsurance

Consistent with the overall business strategy, Global Atlantic assumes certain policy risks written by other insurance companies on a coinsurance, modified coinsurance or funds withheld coinsurance basis. Reinsurance accounting is applied for these ceded and assumed transactions when risk transfer provisions have been met. To meet risk transfer requirements, a long-duration reinsurance contract must transfer mortality or morbidity risks, and subject the reinsurer to a reasonable possibility of a significant loss. Those contracts that do not meet risk transfer requirements are accounted for using deposit accounting. Global Atlantic seeks to diversify risk and limits its overall financial exposure through reinsurance.

With respect to ceded reinsurance, Global Atlantic values reinsurance recoverables on reported claims at the time the underlying claim is recognized in accordance with contract terms. For future policyholder benefits, Global Atlantic estimates the amount of reinsurance recoverables based on the terms of the reinsurance contracts and historical reinsurance recovery information. The reinsurance recoverables are based on what Global Atlantic believes are reasonable estimates and the balance is reported as an asset in the consolidated statements of financial condition. However, the ultimate amount of the reinsurance recoverable is not known until all claims are settled.

The cost of reinsurance, which is the difference between the amount paid for a reinsurance contract and the amount of the liabilities for policy benefits relating to the underlying reinsured contracts, is deferred and amortized over the reinsurance contract period for short-duration contracts, or over the terms of the reinsured policies on a basis consistent with the reporting of those policies for long-duration contracts. Generally, Global Atlantic amortizes cost of reinsurance based on policy count or effective yield method, retrospectively calculated based on actual and projected future cash flows. Cost of reinsurance assets and liabilities are reported in insurance intangibles and policy liabilities in the consolidated statements of financial condition, respectively. Reinsurance contracts do not relieve Global Atlantic from its obligations to policyholders, and failure of reinsurers to honor their obligations could result in losses to Global Atlantic; consequently, allowances are established for expected credit losses, via a charge to policy benefits and claims in the consolidated statements of operations. Global Atlantic’s funds withheld receivable at interest and reinsurance recoverable assets are reviewed for expected credit losses by considering credit ratings for each reinsurer, historical insurance industry specific default rate factors, rights of offset, expected recovery rates upon default and the impact of other terms specific to the reinsurance arrangement.

Notes to Financial Statements (Continued)

For funds withheld and modified coinsurance agreements, Global Atlantic has the right to receive or obligation to pay the total return on assets supporting the funds withheld receivable at interest or funds withheld payable at interest. This indirectly exposes Global Atlantic to the credit risk of the underlying assets. As a result, funds withheld coinsurance and modified coinsurance agreements are viewed as total return swaps and accounted for as embedded derivatives. Embedded derivatives are required to be separated from the host contracts and measured at fair value with changes in fair value recognized in net income. Generally, the embedded derivative is measured as the difference between the fair value of the underlying assets and the carrying value of the host contract at the balance sheet date. The fair value of the embedded derivative is included in the funds withheld receivable at interest or the funds withheld payable at interest on the consolidated statements of financial condition. Changes in the fair value of the embedded derivative are reported in operating activities on the consolidated statements of cash flows.

Recognition of insurance revenue and related benefits

Premiums related to whole life and term life insurance contracts and payout contracts with life contingencies are recognized in premiums in the consolidated statements of operations when due from the contractholders.

Amounts received as payment for universal life and investment-type contracts are reported as deposits to contractholder account balances and recorded in policy liabilities in the consolidated statements of financial condition. Amounts received as payment for Global Atlantic’s fixed fund variable annuities are reported as a component of policy liabilities in the consolidated statements of financial condition. Revenues from these contracts consist primarily of fees assessed against the contractholder account balance for mortality, policy administration, separate account administration and surrender charges, and are reported in policy fees in the consolidated statements of operations. Additionally, Global Atlantic earns investment income from the investment of contract deposits in Global Atlantic’s insurance companies' general account portfolio, which is reported in net investment income in the consolidated statements of operations.

Fees assessed that represent compensation to Global Atlantic for benefits to be provided in future periods and certain other fees are established as an unearned revenue reserve liability and amortized into revenue over the expected life of the related contracts in proportion to estimated gross profits in a manner consistent with DAC for these contracts. Unearned revenue reserves are reported in policy liabilities in the consolidated statements of financial condition and amortized into policy fees in the consolidated statements of operations. Benefits and expenses for these products include claims in excess of related account balances, expenses for contract administration and interest credited to contractholder account balances in the consolidated statements of operations.

Global Atlantic primarily earns revenues from premiums, policy fees, income from investments, and other administration, management, and distribution fees. For the year ended December 31, 2023, Global Atlantic’s revenue was sourced in its entirety from the Americas (100%), based on the geographic region of the reporting subsidiary company. Additionally, none of Global Atlantic’s customers contributed more than 10% of KKR's total consolidated revenues and predominantly all of Global Atlantic’s fixed assets are located in the United States.

Other income

Other income is primarily comprised of expense allowances on ceded reinsurance, administration fees, management fees and distribution fees.

Insurance expenses

Insurance expenses are primarily comprised of commissions expense, premium taxes, amortization of acquired distribution and trade name intangibles, and other expenses related to insurance products and reinsurance transactions.

General, administrative and other expenses

General, administrative and other expenses are primarily comprised of employee compensation and benefit expenses, administrative and professional services and other operating expenses.

Equity-based, incentive and other deferred compensation

Global Atlantic has established a long-term incentive plan to foster and promote its long-term financial success. Compensation expense for Global Atlantic’s incentive awards is recognized only when vesting is deemed to be probable.

Notes to Financial Statements (Continued)

Global Atlantic measures compensation cost for service-based, equity-classified share-based payment awards at fair value as of the grant date and recognizes it in general, administrative and other expenses in the consolidated statements of operations as compensation expense over the requisite service period for awards expected to vest. Global Atlantic recognizes the expense using the straight-line attribution method, with adjustments for estimated forfeitures. For awards with performance-based vesting, expense recognition is deferred until the performance factor occurs or becomes probable.

Global Atlantic measures compensation cost for liability-classified share-based payment awards or other deferred compensation plans using the fair value method, beginning on the grant date, and re-measures the fair value of the awards at each reporting period until the awards are settled. Accrued compensation expense is recognized, net of an estimated forfeiture rate, in general, administrative and other expenses in the consolidated statements of operations and within accrued expenses and other liabilities in the consolidated statements of financial condition.

Adoption of new accounting pronouncements

Targeted improvements to the accounting for long-duration contracts

Effective January 1, 2023, Global Atlantic adopted new accounting guidance for insurance and reinsurance companies that issue long-duration contracts (“LDTI”), with retrospective application to February 1, 2021 ("2021 GA Acquisition Date"), coinciding with the acquisition of Global Atlantic by KKR ("2021 GA Acquisition").

The following table summarizes the balance of, and changes in, the liability for future policy benefits as of February 1, 2021 due to the adoption of LDTI.

Liability for future policy benefitsPayout annuitiesOtherTotal
Balance, as of February 1, 2021$12,785,557$592,242$13,377,799
Change in discount rate assumptions151,65120,930172,581
Adjusted balance, as of February 1, 2021$12,937,208$613,172$13,550,380

The increase to the liability for future policy benefits as of February 1, 2021, was primarily due to remeasuring the liability using a discount rate based on a spot rate yield curve that is derived based on upper medium grade (low credit risk) fixed-income instruments with similar duration to the liability.

The following table summarizes the balance of, and changes in, the net liability position of market risk benefits (previously recorded as product guarantees included within policy liabilities in the consolidated statement of financial condition) as of February 1, 2021 due to the adoption of LDTI.

Market risk benefitsFixed-indexed annuitiesVariable- and other annuitiesTotal
Balance, as of February 1, 2021(1)$895,114$325,311$1,220,425
Adjustment for the difference between prior carrying amount and market risk benefit value282,35487,733370,087
Adjusted balance, as of February 1, 2021$1,177,468$413,044$1,590,512

(1)The $1,220.4 million balance associated with market risk benefits prior to transition was previously recorded as product guarantees either as an embedded derivative in contractholder deposits of $236.0 million, or as an additional liability for insurance benefits of $984.4 million under policy liabilities extinguished at transition, and remeasured as market risk benefits.

The transition approach for market risk benefits requires assessing products to determine whether contracts or contract features expose Global Atlantic to other than nominal capital market risk. The balance at February 1, 2021 reflects the population of market risk benefits identified. The increase to the carrying value of the market risk benefit liability as of February 1, 2021, reflects the required adjustment to remeasure the liability at fair value using current net amounts at risk, market data, experience, and other factors. The change primarily reflects the impact of discount rates and instrument-specific credit risk as of the transition date.

Notes to Financial Statements (Continued)

The following table summarizes the balance of, and changes in, reinsurance recoverable as of February 1, 2021 due to the adoption of LDTI.

Reinsurance recoverableFixed indexed annuitiesPayout annuitiesOtherTotal
Balance, as of February 1, 2021$4,487,850$7,100,198$4,164,982$15,753,030
Change in discount rate assumptions—75,708—75,708
Adjusted balance, as of February 1, 2021, net of reinsurance$4,487,850$7,175,906$4,164,982$15,828,738

The following table summarizes the balance of, and changes in, value of business acquired, net as of February 1, 2021 due to the adoption of LDTI.

VOBAFixed indexed annuitiesFixed-rate annuitiesPayout annuitiesInterest-sensitive lifeVariable annuitiesOtherTotal
Balance, as of February 1, 2021$474,165$56,563$—$307,216$186,576$—$1,024,520
Adjustment to reflect transition impact to balance established as part of purchase accounting upon the 2021 GA Acquisition282,354—101,338692108,411—492,795
Adjusted balance, as of February 1, 2021$756,519$56,563$101,338$307,908$294,987$—$1,517,315

The following table summarizes the balance of, and changes in, negative value of business acquired, net as of February 1, 2021 due to the adoption of LDTI.

Negative VOBAFixed indexed annuitiesFixed-rate annuitiesPayout annuitiesInterest-sensitive lifeVariable annuitiesOtherTotal
Balance, as of February 1, 2021$222,135$180,769$—$549,983$119,122$201,405$1,273,414
Adjustment to reflect transition impact to balance established as part of purchase accounting upon the 2021 GA Acquisition——25,395755—(315)25,835
Adjusted balance, as of February 1, 2021$222,135$180,769$25,395$550,738$119,122$201,090$1,299,249

As a result of the 2021 GA Acquisition, Global Atlantic established a new accounting basis to reflect the fair value of assets and liabilities on the 2021 GA Acquisition Date, including resetting retained earnings, deferred acquisition costs and accumulated other comprehensive income to zero. As a result of the transition coinciding with the acquisition by KKR, the transition impact of the adoption was recorded as a change to the present value of future profits reflected in the value of business acquired insurance intangible asset recognized as part of purchase accounting.

The following table presents the effect of transition adjustments on the value of business acquired assets and liabilities due to the adoption of LDTI.

February 1, 2021
VOBANegative VOBA
Reinsurance recoverable$(75,708)$—
Liability for future policy benefits198,416(25,835)
Market risk benefits370,087—
Total transition adjustments$492,795$(25,835)

Notes to Financial Statements (Continued)

As a result of the retrospective application of the LDTI adoption, KKR adjusted certain previously reported amounts in its consolidated statements of financial condition, consolidated statements of operations, consolidated statements of comprehensive income, and consolidated statements of cash flows, as follows:

Consolidated statement of financial condition as of December 31, 2022As previously reportedAdjustmentAs revised
Reinsurance recoverable$27,919,591$(1,897,510)$26,022,081
Insurance intangible assets1,722,681608,8132,331,494
Other assets6,483,187(441,858)6,041,329
Total assets277,077,191(1,730,555)275,346,636
Policy liabilities141,223,287(3,442,358)137,780,929
Accrued expenses and other liabilities4,600,377(2)4,600,375
Total liabilities223,418,306(3,442,360)219,975,946
Additional paid-in capital16,190,40793,65016,284,057
Retained earnings6,315,711385,3966,701,107
Accumulated other comprehensive income (loss)(5,901,701)599,901(5,301,800)
Noncontrolling interests35,778,000632,85836,410,858
Total equity53,506,8201,711,80555,218,625

The cumulative impact of the retrospective application of the LDTI adoption increased net income attributable to shareholders by $319.5 million and $65.9 million for each of the periods ended December 31, 2022 and 2021, respectively ($385.4 million cumulatively), and increased other comprehensive income by $589.6 million and $10.3 million for each of the periods ended December 31, 2022 and 2021, respectively ($599.9 million cumulatively). These increases were primarily as a result of an increase in discount rates and Global Atlantic’s instrument-specific credit risk during each of the respective periods.

Consolidated statement of operations for the year ended December 31, 2022As previously reportedAdjustmentAs revised
Policy fees$1,278,736$(17,015)$1,261,721
Net policy benefits and claims(1)3,184,427(826,189)2,358,238
Amortization of policy acquisition costs10,99044,35955,349
Insurance expenses565,304(2,719)562,585
General, administrative and other718,422555718,977
Income tax expense (benefit)(35,672)161,065125,393
Net Income (Loss)(1,023,528)605,914(417,614)
Net Income (Loss) Attributable to KKR & Co. Inc. Common Stockholders(910,130)319,466(590,664)
Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Common Stock – Basic(1.21)0.42(0.79)
Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Common Stock – Diluted(1.21)0.42(0.79)

(1)Includes adjustment for market risk benefit gain for the year ended December 31, 2022 of $(673.4) million.

Consolidated statement of operations for the year ended December 31, 2021As previously reportedAdjustmentAs revised
Policy fees$1,147,913$(10,108)$1,137,805
Net policy benefits and claims(1)5,055,709(238,830)4,816,879
Amortization of policy acquisition costs(65,949)30,572(35,377)
Income tax expense (benefit)1,353,27041,6121,394,882
Net Income (Loss)12,295,179156,53812,451,717
Net Income (Loss) Attributable to KKR & Co. Inc. Common Stockholders4,560,82965,9304,626,759
Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Common Stock – Basic7.830.127.95
Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Common Stock – Diluted7.310.117.42

(1)Includes adjustment for market risk benefit gain for the year ended December 31, 2021 of $(152.4) million.

Notes to Financial Statements (Continued)

Consolidated statement of comprehensive loss for the year ended December 31, 2022As previously reportedAdjustmentAs revised
Unrealized Gains (Losses) on Available-For-Sale Securities and Other$(8,777,181)$(458,534)$(9,235,715)
Net effect of changes in discount rates and instrument-specific credit risk on policy liabilities—1,383,1931,383,193
Comprehensive Income (Loss)(9,803,382)1,530,573(8,272,809)
Comprehensive Income (Loss) Attributable to KKR & Co. Inc.(5,191,511)734,459(4,457,052)
Consolidated statement of comprehensive income for the year ended December 31, 2021As previously reportedAdjustmentAs revised
Unrealized Gains (Losses) on Available-For-Sale Securities and Other$(387,338)$(63,293)$(450,631)
Net effect of changes in discount rates and instrument-specific credit risk on policy liabilities—88,75988,759
Comprehensive Income (Loss)11,868,320182,00412,050,324
Comprehensive Income (Loss) Attributable to KKR & Co. Inc.4,483,01876,2714,559,289
Consolidated statement of cash flow for the year ended December 31, 2022As previously reportedAdjustmentAs revised
Net realized (gains) losses on insurance operations$1,035,879$(673,399)$362,480
Other non-cash amounts77,78048,154125,934
Change in policy liabilities and accruals, net(160,765)(139,567)(300,332)
Change in other assets874,463161,0661,035,529
Change in accrued expenses and other liabilities(3,122,805)(2,168)(3,124,973)
Consolidated statement of cash flow for the year ended December 31, 2021As previously reportedAdjustmentAs revised
Net realized (gains) losses on insurance operations$860,165$(153,985)$706,180
Other non-cash amounts(102,871)42,553(60,318)
Change in Premiums, Notes Receivable and Reinsurance Recoverable, Net of Reinsurance Premiums Payable - Insurance685,802(5)685,797
Change in Deferred Policy Acquisition Costs - Insurance(412,671)1,608(411,063)
Change in policy liabilities and accruals, net(1,166,726)(86,824)(1,253,550)
Change in other assets465,28841,743507,031
Change in accrued expenses and other liabilities2,143,039(1,628)2,141,411

Troubled debt restructurings and vintage disclosures

In March 2022, the FASB issued new guidance regarding the modification of receivables, which affects their recognition and measurement. The guidance eliminates the concept of troubled debt restructurings and instead requires all modifications to be analyzed to determine whether they result in a new receivable or a continuation of an existing receivable. The guidance also makes related updates to the measurement of expected credit losses for receivables. The new guidance requires additional disclosures for receivable modifications involving borrowers experiencing financial difficulty as well as disclosure of loan charge-offs by origination year (vintage). For entities that have already adopted ASC 326 (addressing credit losses on financial instruments), the guidance was effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. KKR adopted this accounting standard effective January 1, 2023. Refer to Note 7 “—Investments—Loan modifications” for additional information.

Future application of accounting standards

Fair value measurement of equity security subject to contractual sale restriction

In June 2022, the FASB issued Accounting Standard Update ("ASU") 2022-03, ASC Subtopic 820 “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.” According to ASU 2022-03, the reporting company should not consider contractual sale restrictions when measuring the equity security’s fair value and is not allowed to recognize a contractual sale restriction as a separate unit of account. ASU 2022-03 is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The adoption is not expected to have a material impact on KKR's consolidated financial statements.

Notes to Financial Statements (Continued)

Accounting for Investments in Tax Credit Structures

In March 2023, the FASB issued ASU 2023-02 "Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method." ("ASU 2023-02"). ASU 2023-02 intends to expand the population of investments in tax credit structures that may be eligible to apply the proportional amortization method (“PAM”), if certain criteria are met. The election to use the PAM can be made on a tax credit program-by-program basis. Under the new guidance, certain disclosures are required for investments in tax credit programs for which the PAM is elected. The guidance is effective for fiscal years beginning after December 15, 2023, with early adoption permitted. The adoption is not expected to have a material impact on KKR's consolidated financial statements.

Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued ASU 2023-07 "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" ("ASU 2023-07"). ASU 2023-07 intends to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. This is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. KKR is currently evaluating the impact of the adoption of this guidance on its consolidated financial statements and disclosures.

Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09 "Improvements to Income Tax Disclosures" ("ASU 2023-09"). ASU 2023-09 intends to enhance the transparency and decision usefulness of income tax disclosures, requiring disaggregated information about an entity’s effective tax rate reconciliation as well as income taxes paid. This is effective for fiscal years beginning after December 15, 2024. KKR is currently evaluating the impact of the adoption of this guidance on its consolidated financial statements and disclosures.

Notes to Financial Statements (Continued)

3. REVENUES - ASSET MANAGEMENT

For the years ended December 31, 2023, 2022, and 2021, respectively, Asset Management revenues consisted of the following:

Years Ended December 31,
202320222021
Management Fees$1,843,144$1,682,466$1,301,975
Fee Credits(297,936)(532,355)(464,594)
Transaction Fees1,075,2041,316,6371,552,621
Monitoring Fees138,339131,750134,472
Incentive Fees29,11733,53755,701
Expense Reimbursements75,687102,927178,572
Consulting Fees100,31486,66591,407
Total Fees and Other2,963,8692,821,6272,850,154
Carried Interest2,304,623(2,068,662)5,388,354
General Partner Capital Interest538,814(431,847)1,454,060
Total Capital Allocation-Based Income (Loss)2,843,437(2,500,509)6,842,414
Total Revenues - Asset Management$5,807,306$321,118$9,692,568

KKR earns management fees, incentive fees and capital allocation-based income (loss) from investment funds, CLOs, and other vehicles whose primary focus is making investments in specified geographical locations and KKR also earns transaction, monitoring, and consulting fees from portfolio companies located in varying geographies. For the years ended December 31, 2023, 2022, and 2021, over 10% of consolidated revenues were earned in the United States.

For the year ended December 31, 2023, $1.8 billion, $0.6 billion, and $0.6 billion of total fees and other were generated in the Americas, Europe/Middle East, and Asia-Pacific, respectively. For the year ended December 31, 2022, $1.7 billion, $0.5 billion, and $0.6 billion of total fees and other were generated in the Americas, Europe/Middle East, and Asia-Pacific, respectively. For the year ended December 31, 2021, $1.5 billion, $0.7 billion, and $0.6 billion of total fees and other were generated in the Americas, Europe/Middle East, and Asia-Pacific, respectively. The determination of the geographic region was based on the geographic focus of the associated investment vehicle or where the portfolio company is headquartered.

For the year ended December 31, 2023, $1.5 billion, $0.4 billion, and $0.9 billion of total capital allocation-based income (loss) were generated in the Americas, Europe/Middle East, and Asia-Pacific, respectively. For the year ended December 31, 2022, $(1.6) billion, $0.1 billion, and $(1.0) billion of total capital allocation-based income (loss) were generated in the Americas, Europe/Middle East, and Asia-Pacific, respectively. For the year ended December 31, 2021, $4.9 billion, $0.5 billion, and $1.4 billion of total capital allocation-based income (loss) were generated in the Americas, Europe/Middle East, and Asia-Pacific, respectively. The determination of the geographic region was based on the geographic focus of the associated investment vehicle.

For the year ended December 31, 2023, revenues from one of KKR’s flagship private equity funds contributed more than 10% of KKR's total consolidated revenues representing approximately $1.0 billion of total consolidated revenues. For the year ended December 31, 2022, revenues from one of KKR’s flagship private equity funds contributed more than 10% of KKR's total fees and other representing approximately $0.2 billion. For the year ended December 31, 2022, revenues from three of KKR’s flagship private equity funds contributed more than 10% of KKR's total capital allocation-based income (loss) representing approximately $(2.6) billion. For the year ended December 31, 2021, revenues from two of KKR’s flagship private equity funds contributed more than 10% of KKR's total consolidated revenues representing approximately $4.5 billion of total consolidated revenues.

Notes to Financial Statements (Continued)

4. NET GAINS (LOSSES) FROM INVESTMENT ACTIVITIES - ASSET MANAGEMENT

Net Gains (Losses) from Investment Activities in the consolidated statements of operations consist primarily of the realized and unrealized gains and losses on investments (including foreign exchange gains and losses attributable to foreign denominated investments and related activities) and other financial instruments, including those for which the fair value option has been elected. Unrealized gains or losses result from changes in the fair value of these investments and other financial instruments during a period. Upon disposition of an investment or financial instrument, previously recognized unrealized gains or losses are reversed and an offsetting realized gain or loss is recognized in the current period.

The following table summarizes total Net Gains (Losses) from Investment Activities:

For the Year Ended December 31, 2023
Net Realized Gains (Losses)Net Unrealized Gains (Losses)Total
Private Equity (1)$(300,439)$2,931,254$2,630,815
Credit (1)(322,067)505,868183,801
Investments of Consolidated CFEs (1)(104,196)1,019,063914,867
Real Assets (1)(322,894)16,107(306,787)
Equity Method - Other (1)327,549586,125913,674
Other Investments (1)(329,006)198,889(130,117)
Foreign Exchange Forward Contracts and Options (2)155,784(312,408)(156,624)
Securities Sold Short (2)4,780(12,872)(8,092)
Other Derivatives (2)11,1202,38313,503
Debt Obligations and Other (3)102,896(1,132,553)(1,029,657)
Net Gains (Losses) From Investment Activities$(776,473)$3,801,856$3,025,383
For the Year Ended December 31, 2022
Net Realized Gains (Losses)Net Unrealized Gains (Losses)Total
Private Equity (1)$784,736$(1,541,242)$(756,506)
Credit (1)(168,025)(470,254)(638,279)
Investments of Consolidated CFEs (1)(69,234)(1,437,482)(1,506,716)
Real Assets (1)323,901220,207544,108
Equity Method - Other (1)73,317(298,100)(224,783)
Other Investments (1)29,490(661,967)(632,477)
Foreign Exchange Forward Contracts and Options (2)389,371(26,406)362,965
Securities Sold Short (2)89,70511,010100,715
Other Derivatives (2)(32,614)39,4046,790
Debt Obligations and Other (3)(122,141)1,200,7871,078,646
Net Gains (Losses) From Investment Activities$1,298,506$(2,964,043)$(1,665,537)
For the Year Ended December 31, 2021
Net Realized Gains (Losses)Net Unrealized Gains (Losses)Total
Private Equity (1)$1,694,796$2,679,388$4,374,184
Credit (1)148,301(111)148,190
Investments of Consolidated CFEs (1)62,075134,174196,249
Real Assets (1)489,613260,728750,341
Equity Method - Other (1)477,344618,9061,096,250
Other Investments (1)(334,948)949,664614,716
Foreign Exchange Forward Contracts and Options (2)(28,829)574,067545,238
Securities Sold Short (2)38,69827,77366,471
Other Derivatives (2)(148,245)71,211(77,034)
Debt Obligations and Other (3)(16,596)22,9146,318
Net Gains (Losses) From Investment Activities$2,382,209$5,338,714$7,720,923

(1)See Note 7 "Investments."

(2)See Note 8 "Derivatives" and Note 14 "Other Assets and Accrued Expenses and Other Liabilities."

(3)See Note 16 "Debt Obligations."

Notes to Financial Statements (Continued)

5. NET INVESTMENT INCOME - INSURANCE

Net investment income for Global Atlantic is comprised primarily of interest income, including amortization of premiums and accretion of discounts, based on yields that change due to expectations in projected cash flows, dividend income from common and preferred stock, earnings from investments accounted for under equity method accounting, and lease income on other investments.

The components of net investment income were as follows:

Years Ended December 31,
202320222021
Fixed maturity securities – interest and other income$4,450,917$3,257,226$2,262,326
Mortgage and other loan receivables1,958,8751,572,308952,951
Investments in transportation and other leased assets319,167281,941208,057
Investments in renewable energy104,709206,566142,095
Investments in real estate169,557116,97516,101
Short-term and other investment income342,135119,47654,785
Income assumed from funds withheld receivable at interest94,65891,60879,989
Policy loans37,46031,43335,411
Equity securities – dividends and other income——1,492
Income ceded to funds withheld payable at interest(1,363,704)(954,763)(461,505)
Gross investment income6,113,7744,722,7703,291,702
Less investment expenses:
Investment management and administration352,042364,609272,321
Transportation and renewable energy asset depreciation and maintenance198,385215,672171,306
Interest expense on derivative collateral and repurchase agreements48,44524,2432,452
Net investment income$5,514,902$4,118,246$2,845,623

Notes to Financial Statements (Continued)

6. NET INVESTMENT-RELATED GAINS (LOSSES) - INSURANCE

Net investment-related gains (losses) from insurance operations primarily consists of (i) realized gains (losses) from the disposal of investments, (ii) unrealized gains (losses) from investments held for trading, equity securities, real estate investments accounted for under investment company accounting, and investments with fair value remeasurements recognized in earnings as a result of the election of a fair-value option, (iii) unrealized gains (losses) on funds withheld at interest, (iv) unrealized gains (losses) from derivatives (excluding certain derivatives designated as hedge accounting instruments), and (v) allowances for credit losses, and other impairments of investments.

Net investment-related gains (losses) were as follows:

Years Ended December 31,
202320222021
Realized losses on available-for-sale fixed maturity debt securities$(64,140)$(559,987)$(201,411)
Credit loss allowances on available-for-sale securities(168,899)(57,411)25,316
Credit loss allowances on mortgage and other loan receivables(210,704)(369,296)(252,979)
Allowances on unfunded commitments6,321(34,112)(21,675)
Impairment of available-for-sale fixed maturity debt securities due to intent to sell(26,741)——
Unrealized gains (losses) on fixed maturity securities classified as trading1,031,227(2,603,874)(118,714)
Unrealized (losses) gains on investments recognized under the fair-value option(110,371)60,23739,758
Unrealized (losses) gains on real estate investments recognized at fair value under investment company accounting(115,840)(42,870)35,418
Net (losses) gains on derivative instruments(680,717)2,346,747222,745
Realized gains (losses) on funds withheld at interest payable portfolio25,42738,074(30,015)
Realized (losses) gains on funds withheld at interest receivable portfolio(9,193)(3,176)12,418
Realized gains on equity investments——511,247
Other realized gains (losses)88,368(92,822)(18,355)
Net investment-related gains (losses)$(235,262)$(1,318,490)$203,753

Allowance for credit losses

Available-for-sale fixed maturity securities

The table below presents a roll-forward of the allowance for credit losses recognized for fixed maturity securities held by Global Atlantic:

Year Ended December 31, 2023Year Ended December 31, 2022
CorporateStructuredTotalCorporateStructuredTotal
Balance, as of beginning of period$1,298$127,034$128,332$3,238$84,895$88,133
Initial credit loss allowance recognized on securities with no previously recognized allowance68,16675,623143,78979168,94369,734
Initial credit loss allowance recognized on purchased credit deteriorated ("PCD") securities————707707
Accretion of initial credit loss allowance on PCD securities—1,1911,191—1,8471,847
Reductions due to sales (or maturities, pay downs or prepayments) during the period of securities with a previously recognized credit loss allowance(2,843)(13,220)(16,063)—(11,925)(11,925)
Net additions / reductions for securities with a previously recognized credit loss allowance(3,966)29,07625,1105,110(17,433)(12,323)
Balances charged off(13,647)—(13,647)(7,841)—(7,841)
Balance, as of end of period$49,008$219,704$268,712$1,298$127,034$128,332

Notes to Financial Statements (Continued)

Year Ended December 31, 2021
CorporateStructuredTotal
Balance, as of beginning of period**(1)**$—$120,895$120,895
Initial credit loss allowance recognized on securities with no previously recognized allowance3,23855,27158,509
Initial credit loss allowance recognized on PCD securities—8,0728,072
Accretion of initial credit loss allowance on PCD securities—2,7822,782
Reductions due to sales (or maturities, pay downs or prepayments) during the period of securities with a previously recognized credit loss allowance—(18,300)(18,300)
Net additions / reductions for securities with a previously recognized credit loss allowance—(83,825)(83,825)
Balance, as of end of period$3,238$84,895$88,133

(1)For the year ended December 31, 2021, includes securities designated as purchased credit impaired as of the time of the acquisition of Global Atlantic.

Mortgage and other loan receivables

Changes in the allowance for credit losses on mortgage and other loan receivables held by Global Atlantic are summarized below:

Year Ended December 31, 2023Year Ended December 31, 2022
Commercial Mortgage LoansResidential Mortgage LoansConsumer and Other Loan ReceivablesTotalCommercial Mortgage LoansResidential Mortgage LoansConsumer and Other Loan ReceivablesTotal
Balance, as of beginning of period$227,315$125,825$207,088$560,228$65,970$72,082$236,025$374,077
Net provision (release)113,932(10,445)107,217210,704161,34574,798133,153369,296
Charge-offs(2)(21,616)(8,176)(160,465)(190,257)—(21,055)(162,090)(183,145)
Recoveries of amounts previously charged-off——21,76821,768————
Balance, as of end of period$319,631$107,204$175,608$602,443$227,315$125,825$207,088$560,228
Year Ended December 31, 2021
Commercial Mortgage LoansResidential Mortgage LoansConsumer and Other Loan ReceivablesTotal
Balance, as of beginning of period(1)$58,203$62,056$—$120,259
Net provision (release)7,76710,024235,188252,979
Loans purchased with credit deterioration—7998371,636
Charge-offs—(797)—(797)
Balance, as of end of period$65,970$72,082$236,025$374,077

(1)For the year ended December 31, 2021, includes loans designated as purchased credit deteriorated as of the time of the acquisition of Global Atlantic.

(2)Consumer and other loan receivables included $12.8 million of recoveries for the year ended December 31, 2022.

Notes to Financial Statements (Continued)

Proceeds and gross gains and losses from voluntary sales

The proceeds from voluntary sales and the gross gains and losses on those sales of available-for-sale ("AFS") fixed maturity securities were as follows:

Years Ended December 31,
202320222021
AFS fixed maturity securities:
Proceeds from voluntary sales$6,687,271$12,050,106$17,946,293
Gross gains$62,452$21,567$45,532
Gross losses$(120,799)$(569,706)$(187,619)

Notes to Financial Statements (Continued)

7. INVESTMENTS

Investments consist of the following:

December 31, 2023December 31, 2022
Asset Management
Private Equity$32,742,484$26,607,688
Credit8,274,9047,804,392
Investments of Consolidated CFEs24,996,29822,492,366
Real Assets12,000,00817,976,366
Equity Method - Other8,163,8316,838,541
Equity Method - Capital Allocation-Based Income7,877,9046,862,712
Other Investments4,579,3723,793,398
Investments - Asset Management$98,634,801$92,375,463
Insurance
Fixed maturity securities, available-for-sale, at fair value(1)$69,414,188$61,939,529
Mortgage and other loan receivables39,177,92735,090,698
Fixed maturity securities, trading, at fair value(2)18,805,47012,038,847
Other investments9,683,32611,374,656
Funds withheld receivable at interest2,713,6452,868,036
Policy loans1,556,030868,911
Equity securities at fair value19,73718,499
Investments - Insurance$141,370,323$124,199,176
Total Investments$240,005,124$216,574,639

(1)Amortized cost of $78.7 billion and $73.6 billion, net of credit loss allowances of $268.7 million and $128.3 million, respectively.

(2)Amortized cost of $20.5 billion and $14.8 billion, respectively.

As of both December 31, 2023 and 2022, there were no investments which represented greater than 5% of total investments.

Notes to Financial Statements (Continued)

Equity Method

KKR evaluates its equity method investments for which KKR has not elected the fair value option for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may not be recoverable. During the years ended December 31, 2023, 2022 and 2021, there were no impairment charges related to equity method investments.

Summarized Financial Information

KKR evaluates each of its equity method investments to determine if any are significant as defined in the regulations promulgated by the U.S. Securities and Exchange Commission (the "SEC"). As of and for the years ended December 31, 2023, 2022, and 2021, no individual equity method investment held by KKR met the significance criteria. As such, KKR is not required to present separate financial statements for any of its equity method investments.

The following table shows summarized financial information relating to the statements of financial condition for all of KKR's equity method investments assuming 100% ownership as of December 31, 2023 and 2022:

December 31, 2023December 31, 2022
Asset Management
Total Assets$245,172,170$236,214,688
Total Liabilities$67,695,320$78,864,977
Total Equity$177,476,850$157,349,711
Insurance
Total Assets$5,643,540$12,304,705
Total Liabilities$3,040,471$3,382,255
Total Equity$2,603,069$8,922,450

The following table shows summarized financial information relating to the statements of operations for all of KKR's equity method investments assuming 100% ownership for the years ended December 31, 2023, 2022 and 2021:

For the Years Ended December 31,
202320222021
Asset Management
Investment Related Revenues$17,454,663$28,379,991$5,812,879
Other Revenues854,595826,5573,919,200
Investment Related Expenses18,623,8674,297,3422,504,491
Other Expenses422,050223,9532,949,799
Net Realized and Unrealized Gains (Losses) from Investments15,795,029(16,279,901)31,380,451
$15,058,370$8,405,352$35,658,240
Insurance
Revenues$416,360$1,365,222$1,225,099
Expenses482,056708,229588,724
$(65,696)$656,993$636,375
Net Income (Loss)$14,992,674$9,062,345$36,294,615

Notes to Financial Statements (Continued)

Fixed maturity securities

The cost or amortized cost and fair value for AFS fixed maturity securities were as follows:

Cost or amortized costAllowance for Credit Losses (1)(2)Gross unrealizedFair value
As of December 31, 2023gainslosses
AFS fixed maturity securities portfolio by type:
U.S. government and agencies$1,209,507$—$62,514$(68,929)$1,203,092
U.S. state, municipal and political subdivisions5,562,826—29,699(985,133)4,607,392
Corporate46,378,337(49,008)211,570(6,592,143)39,948,756
Residential mortgage-backed securities, or “RMBS”8,734,629(152,067)38,206(674,550)7,946,218
Commercial mortgage-backed securities, or “CMBS”7,491,743(35,953)4,195(731,358)6,728,627
Collateralized bond obligations, or “CBOs”2,951,511(1,214)—(143,818)2,806,479
CLOs3,493,731(19,077)6,483(52,365)3,428,772
Asset-backed securities, or “ABSs”2,901,573(11,393)14,358(159,686)2,744,852
Total AFS fixed maturity securities$78,723,857$(268,712)$367,025$(9,407,982)$69,414,188

(1)Represents the cumulative amount of credit impairments that have been recognized in the consolidated statements of operations (as net investment (losses) gains) or that were recognized as a gross-up of the purchase price of PCD securities. Amount excludes unrealized losses related to non-credit impairment.

(2)Includes credit loss allowances on purchase-credit deteriorated fixed-maturity securities of $(12.8) million.

Cost or amortized costAllowance for Credit Losses (1)(2)Gross unrealizedFair value
As of December 31, 2022gainslosses
AFS fixed maturity securities portfolio by type:
U.S. government and agencies$438,931$—$304$(72,494)$366,741
U.S. state, municipal and political subdivisions5,638,252—6,582(1,233,874)4,410,960
Corporate44,253,062(1,298)49,509(7,984,341)36,316,932
RMBS7,307,526(100,554)12,052(834,212)6,384,812
CMBS7,269,662(14,490)36(834,735)6,420,473
CBOs3,051,850(426)—(217,773)2,833,651
CLOs2,726,888(6,165)127(200,160)2,520,690
ABSs2,914,617(5,399)4,702(228,650)2,685,270
Total AFS fixed maturity securities$73,600,788$(128,332)$73,312$(11,606,239)$61,939,529

(1)Represents the cumulative amount of credit impairments that have been recognized in the consolidated statements of operations (as net investment (losses) gains) or that were recognized as a gross-up of the purchase price of PCD securities. Amount excludes unrealized losses related to non-credit impairment.

(2)Includes credit loss allowances on purchase-credit deteriorated fixed-maturity securities of $(29.9) million.

Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties, or Global Atlantic may have the right to put or sell the obligations back to the issuers. Structured securities are shown separately as they have periodic payments and are not due at a single maturity.

Notes to Financial Statements (Continued)

The maturity distribution for AFS fixed maturity securities is as follows:

As of December 31, 2023Cost or amortized cost (net of allowance)Fair value
Due in one year or less$1,548,028$1,528,883
Due after one year through five years13,293,65812,831,682
Due after five years through ten years8,126,7177,626,953
Due after ten years30,133,25923,771,722
Subtotal53,101,66245,759,240
RMBS8,582,5627,946,218
CMBS7,455,7906,728,627
CBOs2,950,2972,806,479
CLOs3,474,6543,428,772
ABSs2,890,1802,744,852
Total AFS fixed maturity securities$78,455,145$69,414,188

Purchased credit deteriorated securities

Certain securities purchased by Global Atlantic were assessed at acquisition as having experienced a more-than-insignificant deterioration in credit quality since their origination. These securities are identified as PCD, and a reconciliation of the difference between the purchase price and the par value of these PCD securities is below:

Years Ended December 31,
202320222021
Purchase price of PCD securities acquired during the current period$—$24,005$1,734,352
Allowance for credit losses at acquisition—707128,967
Discount attributable to other factors—1,710311,729
Par value$—$26,422$2,175,048

Securities in a continuous unrealized loss position

The following tables provide information about AFS fixed maturity securities that have been continuously in an unrealized loss position:

Less than 12 months12 months or moreTotal
As of December 31, 2023Fair valueUnrealized lossesFair valueUnrealized lossesFair valueUnrealized losses
AFS fixed maturity securities portfolio by type:
U.S. government and agencies$94,807$(2,512)$198,750$(66,417)$293,557$(68,929)
U.S. state, municipal and political subdivisions112,468(4,140)3,829,447(980,993)3,941,915(985,133)
Corporate4,360,234(189,026)27,108,292(6,403,117)31,468,526(6,592,143)
RMBS1,371,230(66,550)4,354,902(608,000)5,726,132(674,550)
CBOs1,867(118)2,804,612(143,700)2,806,479(143,818)
CMBS332,095(4,535)6,031,766(726,823)6,363,861(731,358)
CLOs246,728(868)1,679,813(51,497)1,926,541(52,365)
ABSs553,438(15,760)1,742,373(143,926)2,295,811(159,686)
Total AFS fixed maturity securities in a continuous loss position$7,072,867$(283,509)$47,749,955$(9,124,473)$54,822,822$(9,407,982)

Notes to Financial Statements (Continued)

Less than 12 months12 months or moreTotal
As of December 31, 2022Fair valueUnrealized lossesFair valueUnrealized lossesFair valueUnrealized losses
AFS fixed maturity securities portfolio by type:
U.S. government and agencies$122,272$(52,639)$108,498$(19,855)$230,770$(72,494)
U.S. state, municipal and political subdivisions2,321,404(605,698)1,780,984(628,176)4,102,388(1,233,874)
Corporate14,792,384(2,114,695)17,943,907(5,869,646)32,736,291(7,984,341)
RMBS3,998,737(442,543)2,068,529(391,669)6,067,266(834,212)
CBOs1,351,552(103,499)1,482,099(114,274)2,833,651(217,773)
CMBS4,054,053(445,168)2,338,517(389,567)6,392,570(834,735)
CLOs1,862,608(139,766)636,014(60,394)2,498,622(200,160)
ABSs1,610,876(113,285)832,635(115,365)2,443,511(228,650)
Total AFS fixed maturity securities in a continuous loss position$30,113,886$(4,017,293)$27,191,183$(7,588,946)$57,305,069$(11,606,239)

Unrealized gains and losses can be created by changing interest rates or several other factors, including changing credit spreads. Global Atlantic had gross unrealized losses on below investment grade AFS fixed maturity securities of $694.6 million and $836.3 million as of December 31, 2023 and 2022, respectively. The single largest unrealized loss on AFS fixed maturity securities was $53.4 million and $60.4 million as of December 31, 2023 and 2022, respectively. Global Atlantic had 5,886 and 6,328 securities in an unrealized loss position as of December 31, 2023 and 2022, respectively.

As of December 31, 2023, AFS fixed maturity securities in an unrealized loss position for 12 months or more consisted of 5,053 debt securities. These debt securities primarily relate to Corporate, RMBS, and U.S. state, municipal and political subdivisions fixed maturity securities, which have depressed values due primarily to an increase in interest rates since the purchase of these securities. Unrealized losses were not recognized in net income on these debt securities since Global Atlantic neither intends to sell the securities nor does it believe that it is more likely than not that it will be required to sell these securities before recovery of their cost or amortized cost basis. For securities with significant declines in value, individual security level analysis was performed utilizing underlying collateral default expectations, market data, and industry analyst reports.

Mortgage and other loan receivables

Mortgage and other loan receivables consist of the following:

December 31, 2023December 31, 2022
Commercial mortgage loans(1)$21,861,245$18,830,780
Residential mortgage loans(1)12,722,77810,688,972
Consumer loans4,424,8825,228,534
Other loan receivables(2)771,465902,640
Total mortgage and other loan receivables39,780,37035,650,926
Allowance for credit losses(3)(602,443)(560,228)
Total mortgage and other loan receivables, net of allowance for credit losses$39,177,927$35,090,698

(1)Includes $697.4 million and $787.5 million of loans carried at fair value using the fair value option as of December 31, 2023 and 2022, respectively. The fair value option was elected for these loans for asset-liability matching purposes. These loans had unpaid principal balances of $785.2 million and $871.2 million as of December 31, 2023 and 2022, respectively.

(2)As of December 31, 2023 and 2022, other loan receivables consisted primarily of loans collateralized by aircraft of $315.4 million and $282.3 million, respectively, and loans collateralized by residential mortgages of $200.0 million for both December 31, 2023 and 2022.

(3)Includes credit loss allowances on purchase-credit deteriorated mortgage and other loan receivables of $(91.7) million and $(106.2) million as of December 31, 2023 and 2022, respectively.

Notes to Financial Statements (Continued)

The maturity distribution for residential and commercial mortgage loans was as follows as of December 31, 2023:

YearsResidentialCommercialTotal mortgage loans
2024$103,420$2,557,317$2,660,737
202514,8083,729,6243,744,432
2026809,2926,429,2827,238,574
2027830,9823,158,7933,989,775
2028127,2751,452,6081,579,883
Thereafter10,837,0014,533,62115,370,622
Total$12,722,778$21,861,245$34,584,023

Actual maturities could differ from contractual maturities, because borrowers may have the right to prepay (with or without prepayment penalties) and loans may be refinanced.

Global Atlantic diversifies its mortgage loan portfolio by both geographic region and property type to reduce concentration risk. The following tables present the mortgage loans by geographic region and property type:

Mortgage loans – carrying value by geographic regionDecember 31, 2023December 31, 2022
Pacific$8,649,25625.0%$7,197,11024.4%
West South Central4,202,50112.2%3,582,64812.1%
South Atlantic9,653,95527.9%8,051,65327.3%
Middle Atlantic4,436,12912.8%3,590,53012.2%
East North Central1,166,4603.4%1,240,2644.2%
Mountain3,262,8019.4%3,152,89510.7%
New England1,470,7414.3%1,414,8974.8%
East South Central731,0532.1%712,8862.4%
West North Central358,6091.0%349,0791.2%
Other regions652,5181.9%227,7900.7%
Total by geographic region$34,584,023100.0%$29,519,752100.0%
Mortgage loans – carrying value by property typeDecember 31, 2023December 31, 2022
Residential$12,722,77836.8%$10,688,97236.2%
Office building4,586,27713.3%4,594,23815.6%
Multi-family11,495,63833.2%9,698,72832.9%
Industrial4,415,81912.8%3,139,16310.6%
Retail493,5961.4%630,4552.1%
Warehouse291,1160.8%185,7170.6%
Other property types578,7991.7%582,4792.0%
Total by property type$34,584,023100.0%$29,519,752100.0%

As of December 31, 2023 and 2022, Global Atlantic had $510.9 million and $192.3 million of mortgage loans that were 90 days or more past due or are in the process of foreclosure, respectively, and have been classified as non-income producing (non-accrual status). Global Atlantic ceases accrual of interest on loans that are more than 90 days past due or are in the process of foreclosure and recognizes income as cash is received.

Notes to Financial Statements (Continued)

Credit quality indicators

Mortgage and loan receivable performance status

The following table represents the portfolio of mortgage and loan receivables by origination year and performance status as of December 31, 2023 and 2022:

By year of origination
Performance status as of December 31, 202320232022202120202019PriorTotal
Commercial mortgage loans
Current-period gross charge-offs$—$—$—$—$(14,000)$(7,616)$(21,616)
Current$3,600,652$6,278,419$6,633,293$624,457$1,395,717$2,969,381$21,501,919
30 to 59 days past due———————
60 to 89 days past due—————79,63579,635
90 days or more past due or in process of foreclosure——182,06936,859—60,763279,691
Total commercial mortgage loans$3,600,652$6,278,419$6,815,362$661,316$1,395,717$3,109,779$21,861,245
Residential mortgage loans
Current-period gross charge-offs$(6)$(1,228)$(2,244)$(913)$(1,412)$(2,373)$(8,176)
Current$2,794,600$1,981,373$4,518,357$1,358,200$221,566$1,365,231$12,239,327
30 to 59 days past due43,43222,29137,0823,5545,46184,079195,899
60 to 89 days past due8,4678,5209,9911,4371,38926,56556,369
90 days or more past due or in process of foreclosure2,51819,32672,75312,0489,265115,273231,183
Total residential mortgage loans$2,849,017$2,031,510$4,638,183$1,375,239$237,681$1,591,148$12,722,778
Consumer loans
Current-period gross charge-offs$(185)$(18,117)$(83,147)$(23,273)$(15,740)$(19,783)$(160,245)
Current$109,393$497,113$1,726,280$701,655$610,988$656,270$4,301,699
30 to 59 days past due1,7074,22928,9665,0824,49712,68657,167
60 to 89 days past due1,1932,54814,8723,2982,5616,75631,228
90 days or more past due or in process of foreclosure2,5973,99113,4614,2813,9076,55134,788
Total consumer loans$114,890$507,881$1,783,579$714,316$621,953$682,263$4,424,882
Total mortgage and consumer loan receivables$6,564,559$8,817,810$13,237,124$2,750,871$2,255,351$5,383,190$39,008,905

Notes to Financial Statements (Continued)

By year of origination
Performance status as of December 31, 202220222021202020192018PriorTotal
Commercial mortgage loans
Current$6,081,261$6,845,839$809,254$1,529,897$1,260,593$2,303,936$18,830,780
30 to 59 days past due———————
60 to 89 days past due———————
90 days or more past due or in process of foreclosure———————
Total commercial mortgage loans$6,081,261$6,845,839$809,254$1,529,897$1,260,593$2,303,936$18,830,780
Residential mortgage loans
Current$1,855,038$4,802,333$1,879,606$264,050$13,670$1,485,244$10,299,941
30 to 59 days past due10,53449,1696,1446,471—80,357152,675
60 to 89 days past due79613,1432,016955—27,11444,024
90 days or more past due or in process of foreclosure7,59835,97811,4838,3892,438126,446192,332
Total residential mortgage loans$1,873,966$4,900,623$1,899,249$279,865$16,108$1,719,161$10,688,972
Total mortgage loans$7,955,227$11,746,462$2,708,503$1,809,762$1,276,701$4,023,097$29,519,752

The following table represents the portfolio of consumer loan receivables by performance status:

Performance statusDecember 31, 2022
Consumer loans
Current$5,113,507
30 to 59 days past due62,742
60 to 89 days past due31,371
90 days or more past due or in process of foreclosure20,914
Total consumer loans$5,228,534

Loan-to-value ratio on mortgage loans

The loan-to-value ratio is expressed as a percentage of the current amount of the loan relative to the value of the underlying collateral. The following table summarizes Global Atlantic's loan-to-value ratios for its commercial mortgage loans as of December 31, 2023 and 2022:

Loan-to-value as of December 31, 2023, by year of originationCarrying value loan-to-value 70% and lessCarrying value loan-to-value 71% - 90%Carrying value loan-to-value over 90%Total carrying value
2023$3,600,652$—$—$3,600,652
20225,912,623365,796—6,278,419
20215,110,0111,483,763221,5886,815,362
2020496,08593,21072,021661,316
20191,257,98393,66144,0731,395,717
2018881,62052,640114,9891,049,249
Prior1,991,780—68,7502,060,530
Total commercial mortgage loans$19,250,754$2,089,070$521,421$21,861,245

Notes to Financial Statements (Continued)

Loan-to-value as of December 31, 2022, by year of originationCarrying value loan-to-value 70% and lessCarrying value loan-to-value 71% - 90%Carrying value loan-to-value over 90%Total carrying value
2022$5,677,763$403,498$—$6,081,261
20214,971,3461,758,748115,7456,845,839
2020650,825123,34335,086809,254
20191,211,523215,050103,3241,529,897
20181,061,56618,885180,1421,260,593
2017699,144—18,160717,304
Prior1,586,632——1,586,632
Total commercial mortgage loans$15,858,799$2,519,524$452,457$18,830,780

Changing economic conditions and updated assumptions affect Global Atlantic's assessment of the collectibility of commercial mortgage loans. Changing vacancies and rents are incorporated into the analysis that Global Atlantic performs to measure the allowance for credit losses. In addition, Global Atlantic continuously monitors its commercial mortgage loan portfolio to identify risk. Areas of emphasis are properties that have exposure to specific geographic events or have deteriorating credit.

The weighted average loan-to-value ratio for Global Atlantic's residential mortgage loans was 63% and 64% as of December 31, 2023 and 2022, respectively.

Loan modifications

Global Atlantic may modify the terms of a loan when the borrower is experiencing financial difficulties, as a means to optimize recovery of amounts due on the loan. Modifications may involve temporary relief, such as payment forbearance for a short period time (where interest continues to accrue) or may involve more substantive changes to a loan. Changes to the terms of a loan, pursuant to a modification agreement, are factored into the analysis of the loan’s expected credit losses, under the allowance model applicable to the loan.

For commercial mortgage loans, modifications for borrowers experiencing financial difficulty are tailored for individual loans and may include interest rate relief, maturity extensions or, less frequently, principal forgiveness. For both residential mortgage loans and consumer loans, the most common modifications for borrowers experiencing financial difficulty, aside from insignificant delays in payment, typically involve deferral of missed payments to the end of the loan term, interest rate relief, or maturity extensions.

The table below presents the carrying value of loans to borrowers experiencing financial difficulty, for which modifications have been granted during the year ended December 31, 2023.

Year ended December 31, 2023 by loan typeDeferral of Amounts DueInterest Rate ReliefMaturity ExtensionCombination**(1)**TotalPercentage of total carrying value outstanding
Commercial mortgage loans$—$—$—$478,836$478,8362.19%
Residential mortgage loans1,3711,20625,1308,14535,8520.28%
Consumer loans6,5153,76848,56818,46577,3161.75%
Total**(2)**$7,886$4,974$73,698$505,446$592,004

(1)Includes modifications involving deferral of amounts due, interest rate relief and/or maturity extension.

(2)Loans may have been modified more than once during the year; in this circumstance, the loan is only included once in this table. In addition, certain loans that were modified in prior quarters have since been repaid in full.

All of the commercial mortgage loans that had a combination of modifications had both interest rate relief and maturity extensions. For these loans, the interest rate relief generally involved either a change from a floating rate or a decrease in fixed rate to a weighted average rate of 3.6%. The maturity extensions for these loans added a weighted-average of 2.5 years to the life of the loans. In addition, one of the commercial mortgage loans that had a combination of modifications had forgiveness of a portion of the principal due. Global Atlantic has commitments to lend additional funds of $93.8 million for the modified commercial mortgage loans disclosed above.

Notes to Financial Statements (Continued)

The table below presents the performance status of the loans modified during the year ended December 31, 2023.

Performance status as of December 31, 2023 by loan typeCurrent30-59 days past due60-89 days past due90 days or more past due or in process of foreclosureTotal
Commercial mortgage loans$478,836$—$—$—$478,836
Residential mortgage loans17,8525,80421711,97935,852
Consumer loans64,5839,2072,4521,07477,316
Total$561,271$15,011$2,669$13,053$592,004

Other investments

Other investments consist of the following:

December 31, 2023December 31, 2022
Investments in real estate(1)$4,778,431$4,641,429
Investments in renewable energy(2)1,348,0803,427,062
Investments in transportation and other leased assets(3)2,972,4692,821,602
Other investment partnerships179,469197,378
Federal Home Loan Bank (FHLB) common stock and other investments404,877287,185
Total other investments$9,683,326$11,374,656

(1)Investments in real estate are held in consolidated investment companies that use fair value accounting.

(2)Net of accumulated depreciation attributed to consolidated renewable energy assets of $154.1 million and $229.7 million as of December 31, 2023 and 2022, respectively.

(3)Net of accumulated depreciation of $313.6 million and $230.2 million as of December 31, 2023 and 2022, respectively.

The total amount of other investments accounted for using the equity method of accounting was $143.3 million and $1.1 billion as of December 31, 2023 and 2022, respectively. Global Atlantic's maximum exposure to loss related to these equity method investments is limited to the carrying value of these investments plus unfunded commitments of $19.7 million and $21.0 million as of December 31, 2023 and 2022, respectively.

In addition, Global Atlantic has investments that would otherwise require the equity method of accounting for which the fair value option has been elected. The carrying amount of these investments was $175.3 million and $264.9 million as of December 31, 2023 and 2022, respectively.

Repurchase agreement transactions

As of December 31, 2023 and 2022, Global Atlantic participated in repurchase agreements with a notional value of $1.4 billion and $798.9 million, respectively. As collateral for these transactions, Global Atlantic typically posts AFS fixed maturity securities and residential mortgage loans, which are included in Insurance - Investments in the consolidated statements of financial condition. The gross obligation for repurchase agreements is reported in other liabilities in the consolidated statements of financial condition.

Notes to Financial Statements (Continued)

The carrying value of assets pledged for repurchase agreements by type of collateral and remaining contractual maturity of the repurchase agreements as of December 31, 2023 and 2022 is presented in the following tables:

As of December 31, 2023Overnight<30 Days30 - 90 Days> 90 DaysTotal
AFS corporate securities$—$—$524,411$849,368$1,373,779
Residential mortgage loans—39,289——39,289
Total assets pledged$—$39,289$524,411$849,368$1,413,068
As of December 31, 2022Overnight<30 Days30 - 90 Days> 90 DaysTotal
AFS corporate securities$—$—$507,656$325,912$833,568
Total assets pledged$—$—$507,656$325,912$833,568

Other pledges and restrictions

Certain Global Atlantic subsidiaries are members of regional banks in the FHLB system and such membership requires the members to own stock in these FHLBs. Global Atlantic owns an aggregate of $131.7 million and $129.3 million (accounted for at cost basis) of stock in FHLBs as of December 31, 2023 and 2022, respectively. In addition, Global Atlantic insurance company subsidiaries have entered into funding agreements with the FHLB, which require that Global Atlantic pledge eligible assets, such as fixed maturity securities and mortgage loans, as collateral. Assets pledged as collateral for these funding agreements had a carrying value of $3.6 billion as of both December 31, 2023 and 2022.

Insurance – statutory deposits

As of December 31, 2023 and 2022, the carrying value of the assets on deposit with various state and U.S. governmental authorities were $148.5 million and $142.7 million, respectively.

Notes to Financial Statements (Continued)

8. DERIVATIVES

Asset Management

KKR and certain of its consolidated funds have entered into derivative transactions as part of their overall risk management for the asset management business and investment strategies. These derivative contracts are not designated as hedging instruments for accounting purposes. Such contracts may include forward, swap and option contracts related to foreign currencies and interest rates to manage foreign exchange risk and interest rate risk arising from certain assets and liabilities. All derivatives are recognized in Other Assets or Accrued Expenses and Other Liabilities and are presented on a gross basis in the consolidated statements of financial condition and measured at fair value with changes in fair value recorded in Net Gains (Losses) from Investment Activities in the accompanying consolidated statements of operations. KKR's derivative financial instruments contain credit risk to the extent that its counterparties may be unable to meet the terms of the agreements. KKR attempts to reduce this risk by limiting its counterparties to major financial institutions with strong credit ratings.

Insurance

Global Atlantic holds derivative instruments that are primarily used in its hedge program. Global Atlantic has established a hedge program that seeks to mitigate economic impacts primarily from interest rate and equity price movements, while taking into consideration accounting and capital impacts.

Global Atlantic hedges interest rate and equity market risks associated with its insurance liabilities including fixed-indexed annuities, indexed universal life policies, variable annuity policies and variable universal life policies, among others. For fixed-indexed annuities and indexed universal life policies, Global Atlantic generally seeks to use static hedges to offset the exposure primarily created by changes in its embedded derivative balances. Global Atlantic generally purchases options which replicate the crediting rate strategies, often in the form of call spreads. Call spreads are the purchase of a call option matched by the sale of a different call option. For variable annuities and variable universal life policies, Global Atlantic generally seeks to dynamically hedge its exposure to changes in the value of the guarantee it provides to policyholders. Doing so requires the active trading of several financial instruments to respond to changes in market conditions. In addition, Global Atlantic enters into inflation swaps to manage inflation risk associated with inflation-indexed preneed policies.

In the context of specific reinsurance transactions in the institutional channel or acquisitions, Global Atlantic may also enter into hedges which are designed to limit short-term market risks to the economic value of the target assets. From time to time, Global Atlantic also enters into hedges designed to mitigate interest rate and credit risk in investment income, interest expense, and fair value of assets and liabilities. In addition, Global Atlantic enters into currency swaps and forwards to manage any foreign exchange rate risks that may arise from investments denominated in foreign currencies.

Global Atlantic attempts to mitigate the risk of loss due to ineffectiveness under these derivative investments through a regular monitoring process which evaluates the program’s effectiveness. Global Atlantic monitors its derivative activities by reviewing portfolio activities and risk levels. Global Atlantic also oversees all derivative transactions to ensure that the types of transactions entered into and the results obtained from those transactions are consistent with both Global Atlantic's risk management strategy and its policies and procedures.

The restricted cash which was held in connection with open derivative transactions with exchange brokers was $133.0 million and $278.7 million as of December 31, 2023 and 2022, respectively.

Global Atlantic also has embedded derivatives related to reinsurance contracts that are accounted for on a modified coinsurance and funds withheld basis. An embedded derivative exists because the arrangement exposes the reinsurer to third-party credit risk. These embedded derivatives are included in funds withheld receivable and payable at interest in the consolidated statements of financial condition.

Credit Risk

Global Atlantic may be exposed to credit-related losses in the event of nonperformance by its counterparties to derivatives. Generally, the current credit exposure of Global Atlantic’s derivatives is limited to the positive fair value of derivatives less any collateral received from the counterparty.

Global Atlantic manages the credit risk on its derivatives by entering into derivative transactions with highly rated financial institutions and other creditworthy counterparties and, where feasible, by trading through central clearing counterparties. Global Atlantic further manages its credit risk on derivatives via the use of master netting agreements, which require the daily posting of collateral by the party in a liability position. Counterparty credit exposure and collateral values are monitored regularly and

Notes to Financial Statements (Continued)

measured against counterparty exposure limits. The provisions of derivative transactions may allow for the termination and settlement of a transaction if there is a downgrade to Global Atlantic’s financial strength ratings below a specified level.

The fair value and notional value of the derivative assets and liabilities were as follows:

As of December 31, 2023Notional ValueDerivative AssetsDerivative Liabilities
Asset Management
Foreign Exchange Contracts and Options$15,771,463$264,621$441,608
Other Derivatives374,6044,7922,382
Total Asset Management$16,146,067$269,413$443,990
Insurance
Derivatives designated as hedge accounting instruments:
Interest rate contracts$7,320,500$—$372,212
Foreign currency contracts2,302,33524,27873,478
Total derivatives designated as hedge accounting instruments$9,622,835$24,278$445,690
Derivatives not designated as hedge accounting instruments:
Interest rate contracts$22,259,423$284,067$306,244
Equity market contracts35,203,2061,480,875248,127
Foreign currency contracts1,331,34565,80356,616
Credit risk contracts60,000—600
Total derivatives not designated as hedge accounting instruments$58,853,974$1,830,745$611,587
Impact of netting(2)—(1,809,329)(911,080)
Total Insurance(1)$68,476,809$45,694$146,197
Fair value included within total assets and liabilities$84,622,876$315,107$590,187

(1)Excludes embedded derivatives. The fair value of these embedded derivatives related to assets was $88.7 million and the fair value of these embedded derivatives related to liabilities was $1.6 billion as of December 31, 2023.

(2)Represents netting of derivative exposures covered by qualifying master netting agreements.

As of December 31, 2022Notional ValueDerivative AssetsDerivative Liabilities
Asset Management
Foreign Exchange Contracts and Options$16,144,795$668,716$406,746
Other Derivatives125,0007,51911,018
Total Asset Management$16,269,795$676,235$417,764
Insurance
Derivatives designated as hedge accounting instruments:
Interest rate contracts$6,999,000$—$695,296
Foreign currency contracts2,021,06142,55744,238
Total derivatives designated as hedge accounting instruments$9,020,061$42,557$739,534
Derivatives not designated as hedge accounting instruments:
Interest rate contracts$8,700,253$182,734$267,033
Equity market contracts34,889,122626,39191,344
Foreign currency contracts675,39084,88347,442
Credit risk contracts60,000—929
Total derivatives not designated as hedge accounting instruments$44,324,765$894,008$406,748
Impact of netting(2)—(212,175)(212,175)
Total Insurance(1)$53,344,826$724,390$934,107
Fair value included within total assets and liabilities$69,614,621$1,400,625$1,351,871

Notes to Financial Statements (Continued)

(1)Excludes embedded derivatives. The fair value of these embedded derivatives related to assets was $12.8 million and the fair value of these embedded derivatives related to liabilities was $(1.3) billion as of December 31, 2022.

(2)Represents netting of derivative exposures covered by qualifying master netting agreements.

Derivatives designated as accounting hedges

Where Global Atlantic has derivative instruments that are designated and qualify as accounting hedges, these derivative instruments receive hedge accounting.

Global Atlantic has designated foreign exchange ("FX") derivative contracts, including forwards and swaps, to hedge the foreign currency risk associated with foreign currency-denominated bonds in fair value hedges. These foreign currency-denominated bonds are accounted for as AFS fixed maturity securities. Changes in the fair value of the hedged AFS fixed maturity securities due to changes in spot exchange rates are reclassified from AOCI to earnings, which offsets the earnings impact of the spot changes of the FX derivative contracts, both of which are recognized within investment-related (losses) gains. The effectiveness of these hedges is assessed using the spot method. Changes in the fair value of the FX derivative contracts related to changes in the spot-forward difference are excluded from the assessment of hedge effectiveness and are deferred in AOCI and recognized in earnings using a systematic and rational method over the life of the FX derivative contracts.

Global Atlantic has designated interest rate swaps to hedge the interest rate risk associated with certain debt and policy liabilities. These fair value hedges qualify for the shortcut method of assessing hedge effectiveness.

The following table presents the financial statement classification, carrying amount and cumulative fair value hedging adjustments for qualifying hedged assets and liabilities:

As of December 31, 2023As of December 31, 2022
Carrying amount of hedged assets/(liabilities)Cumulative amount of fair value hedging adjustments included in the carrying amount of hedged assets/(liabilities)****(1)Carrying amount of hedged assets/(liabilities)Cumulative amount of fair value hedging adjustments included in the carrying amount of hedged assets/(liabilities)****(1)
AFS fixed maturity securities(2)$2,324,364$80,210$2,010,748$(61,785)
Debt(1,608,294)(165,817)(945,873)(201,603)
Policy liabilities(4,380,048)(255,308)(5,670,884)(435,494)

(1)Includes $27.8 million and $53.1 million of hedging adjustments on discontinued hedging relationships as of December 31, 2023 and 2022, respectively.

(2)Carrying amount is the amortized cost for AFS debt securities.

Global Atlantic has designated bond forwards to hedge the interest rate risk associated with the planned purchase of AFS debt securities in cash flow hedges. These arrangements are hedging purchases from January 2024 through December 2027 and are expected to affect earnings until 2053. Regression analysis is used to assess the effectiveness of these hedges.

As of December 31, 2023 and 2022, there was a cumulative loss of $(126.9) million and $(169.8) million, respectively, on the currently designated bond forwards recorded in accumulated other comprehensive loss. Amounts deferred in accumulated other comprehensive loss are reclassified to net investment income following the qualifying purchases of AFS securities, as an adjustment to the yield earned over the life of the purchased securities, using the effective interest method.

Global Atlantic estimates that the amount of gains/losses in accumulated other comprehensive loss to be reclassified into earnings in the next 12 months will not be material.

Notes to Financial Statements (Continued)

Derivative results

The following table presents the financial statement classification and amount of gains (losses) recognized on derivative instruments and related hedged items, where applicable:

Year ended December 31, 2023
Net Gains (Losses) from Investment ActivitiesNet investment-related gains (losses)Net investment incomeNet policy benefits and claimsInterest expenseChange in AOCI
Derivatives designated as hedge accounting instruments:
Fair value hedges
Gains (losses) on derivatives designated as hedge instruments:
Interest rate contracts$—$—$—$(53,870)$(20,410)$—
Foreign currency contracts—(88,384)———9,119
Total gains (losses) on derivatives designated as hedge instruments$—$(88,384)$—$(53,870)$(20,410)$9,119
Gains (losses) on hedged items:
Interest rate contracts$—$—$—$53,870$20,410$—
Foreign currency contracts—80,210————
Total gains (losses) on hedged items$—$80,210$—$53,870$20,410$—
Amortization for gains (losses) excluded from assessment of effectiveness:
Foreign currency contracts$—$28,345$—$—$—$—
Total amortization for gains (losses) excluded from assessment of effectiveness—28,345————
Total gains (losses) on fair value hedges, net of hedged items$—$20,171$—$—$—$9,119
Cash flow hedges
Interest rate contracts$—$—$(1,381)$—$—$33,446
Total gains (losses) on cash flow hedges$—$—$(1,381)$—$—$33,446
Derivatives not designated as hedge accounting instruments:
Asset Management
Foreign Exchange Contracts and Options$(156,624)$—$—$—$—$—
Other Derivatives13,503—————
Total included in Net Gains (Losses) from Investment Activities$(143,121)$—$—$—$—$—
Insurance
Embedded derivatives - funds withheld receivable$—$75,876$—$—$—$—
Embedded derivatives - funds withheld payable—(1,040,463)————
Equity index options—482,121————
Equity future contracts—(116,766)————
Interest rate and foreign exchange contracts—(101,376)————
Credit risk contracts—(280)————
Total gains (losses) on derivatives not designated as hedge accounting instruments from Insurance Activities$—$(700,888)$—$—$—$—
Total$(143,121)$(680,717)$(1,381)$—$—$42,565

Notes to Financial Statements (Continued)

Year ended December 31, 2022
Net Gains (Losses) from Investment ActivitiesNet investment-related gains (losses)Net investment incomeNet policy benefits and claimsInterest expenseChange in AOCI
Derivatives designated as hedge accounting instruments:
Fair value hedges
Gains (losses) on derivatives designated as hedge instruments:
Interest rate contracts$—$—$—$(382,376)$(177,855)$—
Foreign currency contracts—64,945———(6,784)
Total gains (losses) on derivatives designated as hedge instruments$—$64,945$—$(382,376)$(177,855)$(6,784)
Gains (losses) on hedged items:
Interest rate contracts$—$—$—$382,376$177,855$—
Foreign currency contracts—(61,785)————
Total gains (losses) on hedged items$—$(61,785)$—$382,376$177,855$—
Amortization for gains (losses) excluded from assessment of effectiveness:
Foreign currency contracts$—$14,737$—$—$—$—
Total amortization for gains (losses) excluded from assessment of effectiveness$—$14,737$—$—$—$—
Total gains (losses) on fair value hedges, net of hedged items$—$17,897$—$—$—$(6,784)
Cash flow hedges
Interest rate contracts$—$1,032$—$—$—$(169,785)
Total gains (losses) on cash flow hedges$—$1,032$—$—$—$(169,785)
Derivatives not designated as hedge accounting instruments:
Asset Management
Foreign Exchange Contracts and Options$362,965$—$—$—$—$—
Other Derivatives6,790—————
Total included in Net Gains (Losses) from Investment Activities$369,755$—$—$—$—$—
Insurance
Embedded derivatives - funds withheld receivable$—$(29,390)$—$—$—$—
Embedded derivatives - funds withheld payable—3,448,710————
Equity index options—(895,602)————
Equity future contracts—167,924————
Interest rate and foreign exchange contracts—(333,937)————
Credit risk contracts—(108)————
Other—(29,779)————
Total gains (losses) on derivatives not qualifying as hedge accounting instruments from Insurance Activities$—$2,327,818$—$—$—$—
Total$369,755$2,346,747$—$—$—$(176,569)

Notes to Financial Statements (Continued)

Year ended December 31, 2021
Net Gains (Losses) from Investment ActivitiesNet investment-related gains (losses)Net investment incomeNet policy benefits and claimsInterest expenseChange in AOCI
Derivatives designated as hedge accounting instruments:
Fair value hedges
Gains (losses) on derivatives designated as hedge instruments:
Interest rate contracts$—$—$—$(16,092)$(24,369)$—
Foreign currency contracts—21,490———2,275
Total gains (losses) on derivatives designated as hedge instruments$—$21,490$—$(16,092)$(24,369)$2,275
Gains (losses) on hedged items:
Interest rate contracts$—$—$—$16,092$24,369$—
Foreign currency contracts—(22,721)————
Total gains (losses) on hedged items$—$(22,721)$—$16,092$24,369$—
Amortization for gains (losses) excluded from assessment of effectiveness:
Foreign currency contracts$—$2,971$—$—$—$—
Total amortization for gains (losses) excluded from assessment of effectiveness$—$2,971$—$—$—$—
Total gains (losses) on fair value hedges, net of hedged items$—$1,740$—$—$—$2,275
Cash flow hedges
Interest rate contracts$—$744$—$—$—$4,843
Total gains (losses) on cash flow hedges$—$744$—$—$—$4,843
Derivatives not designated as hedge accounting instruments:
Asset Management
Foreign Exchange Contracts and Options$545,238$—$—$—$—$—
Other Derivatives(77,034)—————
Total included in Net Gains (Losses) from Investment Activities$468,204$—$—$—$—$—
Insurance
Embedded derivatives - funds withheld receivable$—$31,740$—$—$—$—
Embedded derivatives - funds withheld payable—49,491————
Equity index options—549,987————
Equity future contracts—(263,637)————
Interest rate and foreign exchange contracts—(146,920)————
Credit risk contracts—(400)————
Total gains (losses) on derivatives not qualifying as hedge accounting instruments from Insurance Activities$—$220,261$—$—$—$—
Total$468,204$222,745$—$—$—$7,118

Notes to Financial Statements (Continued)

Collateral

The amount of Global Atlantic's net derivative assets and liabilities after consideration of collateral received or pledged were as follows:

As of December 31, 2023Gross amount recognizedGross amounts offset in the statements of financial position**(1)**Net amounts presented in the statements of financial conditionCollateral (received) / pledgedNet amount after collateral
Derivative assets (excluding embedded derivatives)$1,855,023$(1,809,329)$45,694$(45,095)$599
Derivative liabilities (excluding embedded derivatives)$1,057,277$(911,080)$146,197$167,973$(21,776)

(1)Represents netting of derivative exposures covered by qualifying master netting agreements.

As of December 31, 2022Gross amount recognizedGross amounts offset in the statements of financial position**(1)**Net amounts presented in the statements of financial conditionCollateral (received) / pledgedNet amount after collateral
Derivative assets (excluding embedded derivatives)$936,565$(212,175)$724,390$(466,371)$258,019
Derivative liabilities (excluding embedded derivatives)$1,146,282$(212,175)$934,107$366,508$567,599

(1)Represents netting of derivative exposures covered by qualifying master netting agreements.

Notes to Financial Statements (Continued)

9. FAIR VALUE MEASUREMENTS

The following tables summarize the valuation of assets and liabilities measured and reported at fair value by the fair value hierarchy. Investments classified as Equity Method - Other, for which the fair value option has not been elected, and Equity Method - Capital Allocation-Based Income have been excluded from the tables below.

Assets, at fair value:

December 31, 2023
Level ILevel IILevel IIITotal
Asset Management
Private Equity$1,762,257$58,653$30,921,574$32,742,484
Credit281,6262,540,3625,452,9168,274,904
Investments of Consolidated CFEs—24,996,298—24,996,298
Real Assets676,80827,56711,295,63312,000,008
Equity Method - Other418,791326,8351,537,9622,283,588
Other Investments218,15195,4534,265,7684,579,372
Total Investments$3,357,633$28,045,168$53,473,853$84,876,654
Foreign Exchange Contracts and Options—264,621—264,621
Other Derivatives—4,792—4,792
Total Assets at Fair Value - Asset Management$3,357,633$28,314,581$53,473,853$85,146,067
Insurance
AFS fixed maturity securities:
U.S. government and agencies$1,082,421$120,671$—$1,203,092
U.S. state, municipal and political subdivisions—4,607,392—4,607,392
Corporate—31,377,7538,571,00339,948,756
Structured securities—21,824,9481,830,00023,654,948
Total AFS fixed maturity securities$1,082,421$57,930,764$10,401,003$69,414,188
Trading fixed maturity securities:
U.S. government and agencies$2,354,194$163,919$—$2,518,113
U.S. state, municipal and political subdivisions—1,223,946—1,223,946
Corporate—9,815,909656,92310,472,832
Structured securities—3,997,341593,2384,590,579
Total trading fixed maturity securities$2,354,194$15,201,115$1,250,161$18,805,470
Equity securities4,215—15,52219,737
Mortgage and other loan receivables——697,402697,402
Other investments——4,925,751(1)4,925,751
Funds withheld receivable at interest——88,66188,661
Reinsurance recoverable——926,035926,035
Derivative assets:
Equity market contracts1,6691,479,206—1,480,875
Interest rate contracts19,474264,593—284,067
Foreign currency contracts—90,081—90,081
Impact of netting(23,522)(1,785,807)—(2)(1,809,329)
Total derivative assets$(2,379)$48,073$—$45,694
Separate account assets4,107,000——4,107,000
Total Assets at Fair Value - Insurance$7,545,451$73,179,952$18,304,535$99,029,938
Total Assets at Fair Value$10,903,084$101,494,533$71,778,388$184,176,005

Notes to Financial Statements (Continued)

December 31, 2022
Level ILevel IILevel IIITotal
Asset Management
Private Equity$1,057,025$213,706$25,336,957$26,607,688
Credit187,5041,830,8625,786,0267,804,392
Investments of Consolidated CFEs—22,492,366—22,492,366
Real Assets—961,25417,015,11217,976,366
Equity Method - Other435,315883,6521,624,4202,943,387
Other Investments395,97263,0603,334,3663,793,398
Total Investments$2,075,816$26,444,900$53,096,881$81,617,597
Foreign Exchange Contracts and Options—668,716—668,716
Other Derivatives97,510—7,519
Total Assets at Fair Value - Asset Management$2,075,825$27,121,126$53,096,881$82,293,832
Insurance
AFS fixed maturity securities:
U.S. government and agencies$283,402$83,339$—$366,741
U.S. state, municipal and political subdivisions—4,410,960—4,410,960
Corporate—28,006,2758,310,65736,316,932
Structured securities—19,425,4551,419,44120,844,896
Total AFS fixed maturity securities$283,402$51,926,029$9,730,098$61,939,529
Trading fixed maturity securities:
U.S. government and agencies$93,697$59,940$—$153,637
U.S. state, municipal and political subdivisions—705,836—705,836
Corporate—7,218,354672,0237,890,377
Structured securities—2,645,186643,8113,288,997
Total trading fixed maturity securities$93,697$10,629,316$1,315,834$12,038,847
Equity securities2,213—16,28618,499
Mortgage and other loan receivables——787,515787,515
Other investments——4,883,441(1)4,883,441
Funds withheld receivable at interest——12,78512,785
Reinsurance recoverable——981,775981,775
Derivative assets:
Equity market contracts31,025595,366—626,391
Interest rate contracts4,856177,878—182,734
Foreign currency contracts—127,440—127,440
Impact of netting(7,079)(205,096)—(2)(212,175)
Total derivative assets$28,802$695,588$—$724,390
Separate account assets4,130,794——4,130,794
Total Assets at Fair Value - Insurance$4,538,908$63,250,933$17,727,734$85,517,575
Total Assets at Fair Value$6,614,733$90,372,059$70,824,615$167,811,407

(1)Other investments excluded from the fair value hierarchy include certain real estate and private equity funds for which fair value is measured at net asset value per share as a practical expedient. As of December 31, 2023 and 2022, the fair value of these investments was $138.5 million and $148.9 million, respectively.

(2)Represents netting of derivative exposures covered by qualifying master netting agreements.

Notes to Financial Statements (Continued)

Liabilities, at fair value:

December 31, 2023
Level ILevel IILevel IIITotal
Asset Management
Securities Sold Short$149,136$—$—$149,136
Foreign Exchange Contracts and Options—441,608—441,608
Unfunded Revolver Commitments——94,683(1)94,683
Other Derivatives1432,239—2,382
Debt Obligations of Consolidated CFEs—25,276,404—25,276,404
Total Liabilities at Fair Value - Asset Management$149,279$25,720,251$94,683$25,964,213
Insurance
Policy liabilities (including market risk benefits)$—$—$1,474,970(3)$1,474,970
Closed block policy liabilities——968,554968,554
Funds withheld payable at interest——(2,447,303)(2,447,303)
Derivative instruments payable:
Equity market contracts7,088241,039—248,127
Interest rate contracts17,931660,525—678,456
Foreign currency contracts—130,094—130,094
Credit contracts—600—600
Impact of netting(23,522)(887,558)—(2)(911,080)
Total derivative instruments payable1,497144,700—146,197
Embedded derivative – interest-sensitive life products——458,302458,302
Embedded derivative – annuity products——3,587,3713,587,371
Total Liabilities at Fair Value - Insurance$1,497$144,700$4,041,894$4,188,091
Total Liabilities at Fair Value$150,776$25,864,951$4,136,577$30,152,304

Notes to Financial Statements (Continued)

December 31, 2022
Level ILevel IILevel IIITotal
Asset Management
Securities Sold Short$158,751$—$—$158,751
Foreign Exchange Contracts and Options—406,746—406,746
Unfunded Revolver Commitments——137,315(1)137,315
Other Derivatives—11,018—11,018
Debt Obligations of Consolidated CFEs—22,273,242—22,273,242
Total Liabilities at Fair Value - Asset Management$158,751$22,691,006$137,315$22,987,072
Insurance
Policy liabilities (including market risk benefits)$—$—$1,063,496(3)$1,063,496
Closed block policy liabilities——1,016,3131,016,313
Funds withheld payable at interest——(3,487,766)(3,487,766)
Derivative instruments payable:
Equity market contracts2,69288,652—91,344
Interest rate contracts9,693952,636—962,329
Foreign currency contracts—91,680—91,680
Credit contracts—929—929
Impact of netting(7,079)(205,096)—(2)(212,175)
Total derivative instruments payable5,306928,801—934,107
Embedded derivative – interest-sensitive life products——337,860337,860
Embedded derivative – annuity products——1,851,3811,851,381
Total Liabilities at Fair Value - Insurance$5,306$928,801$781,284$1,715,391
Total Liabilities at Fair Value$164,057$23,619,807$918,599$24,702,463

(1)These unfunded revolver commitments are valued using the same valuation methodologies as KKR's Level III credit investments.

(2)Represents netting of derivative exposures covered by qualifying master netting agreements.

(3)Includes market risk benefit of $1.1 billion and $682.0 million as of December 31, 2023 and 2022, respectively.

Notes to Financial Statements (Continued)

The following tables summarize changes in assets and liabilities measured and reported at fair value for which Level III inputs have been used to determine fair value for the years ended December 31, 2023, 2022 and 2021, respectively. For certain insurance disclosures, the beginning of the period represents balances as of the 2021 GA Acquisition Date.

For the Year Ended December 31, 2023
Balance, Beg. of PeriodTransfers In / (Out) - Changes in Consolidation**(1)**Transfers InTransfers OutNet Purchases/Issuances/Sales/SettlementsNet Unrealized and Realized Gains (Losses)Change in OCIBalance, End of PeriodChanges in Net Unrealized Gains (Losses) Included in Earnings related to Level III Assets and Liabilities still held as of the Reporting DateChanges in Net Unrealized Gains (Losses) Included in OCI related to Level III Assets and Liabilities still held as of the Reporting Date
Assets
Asset Management
Private Equity$25,336,957$286,848$33,231$(29,417)$3,693,726$1,600,229$—$30,921,574$1,696,643$—
Credit5,786,026—253,572(188,710)(470,131)72,159—5,452,916116,478—
Real Assets17,015,112(8,962,252)—(628)3,643,071(399,670)—11,295,633(434,545)—
Equity Method - Other1,624,420——(2,335)(343,597)259,474—1,537,962260,584—
Other Investments3,334,366—22,777(22,376)1,025,854(94,853)—4,265,768(70,060)—
Other Derivatives————2,153(2,153)————
Total Assets - Asset Management$53,096,881$(8,675,404)$309,580$(243,466)$7,551,076$1,435,186$—$53,473,853$1,569,100$—
Insurance
AFS fixed maturity securities:
Corporate fixed maturity securities$8,310,657$—$108,323$—$57,480$50,066$44,477$8,571,003$—$55,176
Structured securities1,419,441—275,347(15,666)63,61819,78967,4711,830,000—60,873
Total AFS fixed maturity securities9,730,098—383,670(15,666)121,09869,855111,94810,401,003—116,049
Trading fixed maturity securities:
Corporate fixed maturity securities672,023——(188)(508)(14,404)—656,923(10,951)—
Structured securities643,811—11,971(11,878)(46,528)(4,138)—593,2385,338—
Total trading fixed maturity securities1,315,834—11,971(12,066)(47,036)(18,542)—1,250,161(5,613)—
Equity securities16,286———(218)(546)—15,522(560)—
Mortgage and other loan receivables787,515———(89,548)(565)—697,402(1,637)—
Other investments4,883,441———274,865(232,555)—4,925,751(216,860)—
Funds withheld receivable at interest12,785————75,876—88,661——
Reinsurance recoverable981,775———(7,200)(48,540)—926,035——
Total Assets - Insurance$17,727,734$—$395,641$(27,732)$251,961$(155,017)$111,948$18,304,535$(224,670)$116,049
Total$70,824,615$(8,675,404)$705,221$(271,198)$7,803,037$1,280,169$111,948$71,778,388$1,344,430$116,049

(1)For transfers (out) - changes in consolidation, in certain instances, KKR's economic interests became insignificant and certain investment vehicles are no longer consolidated as a result of additional amounts subscribed for by third party investors.

Notes to Financial Statements (Continued)

For the Year Ended December 31, 2022
Balance, Beg. of PeriodTransfers In / (Out) - Changes in ConsolidationTransfers InTransfers OutNet Purchases/Issuances/Sales/SettlementsNet Unrealized and Realized Gains (Losses)Change in OCIBalance, End of PeriodChanges in Net Unrealized Gains (Losses) Included in Earnings related to Level III Assets and Liabilities still held as of the Reporting DateChanges in Net Unrealized Gains (Losses) Included in OCI related to Level III Assets and Liabilities still held as of the Reporting Date
Assets
Asset Management
Private Equity$23,322,634$(49,000)$—$(138,220)$2,496,973$(295,430)$—$25,336,957$(593,364)$—
Credit5,826,66134,2459,617(96,218)362,875(346,686)(4,468)5,786,026(278,038)—
Real Assets11,389,530———5,115,282510,300—17,015,112114,614—
Equity Method - Other1,013,807156,183——603,992(149,562)—1,624,420(142,352)—
Other Investments3,240,013513,875—(839)93,743(512,426)—3,334,366(459,482)—
Other Derivatives479———30,593(31,072)————
Total Assets - Asset Management$44,793,124$655,303$9,617$(235,277)$8,703,458$(824,876)$(4,468)$53,096,881$(1,358,622)$—
Insurance
AFS fixed maturity securities:
Corporate fixed maturity securities$7,650,660$—$—$(88,076)$1,177,295$(59,342)$(369,880)$8,310,657$—$(328,184)
Structured securities828,401—343,338—368,742(7,296)(113,744)1,419,441—(123,614)
Total AFS fixed maturity securities8,479,061—343,338(88,076)1,546,037(66,638)(483,624)9,730,098—(451,798)
Trading fixed maturity securities:
Corporate fixed maturity securities565,025—11,826(44,273)219,892(80,447)—672,023(79,031)—
Structured securities418,774—128,744(31,741)232,211(104,177)—643,811(107,122)—
Total trading fixed maturity securities983,799—140,570(76,014)452,103(184,624)—1,315,834(186,153)—
Equity securities32,937———195(16,846)—16,286(16,846)—
Mortgage and other loan receivables832,674———54,239(99,398)—787,515(84,219)—
Other investments1,603,345———3,167,542112,554—4,883,44142,996—
Funds withheld receivable at interest31,740———10,435(29,390)—12,785——
Reinsurance recoverable1,293,791———(11,088)(300,928)—981,775——
Total Assets - Insurance$13,257,347$—$483,908$(164,090)$5,219,463$(585,270)$(483,624)$17,727,734$(244,222)$(451,798)
Total$58,050,471$655,303$493,525$(399,367)$13,922,921$(1,410,146)$(488,092)$70,824,615$(1,602,844)$(451,798)

Notes to Financial Statements (Continued)

For the Year Ended December 31, 2023
PurchasesIssuancesSalesSettlementsNet Purchases/ Issuances/ Sales/ Settlements
Assets
Asset Management
Private Equity$4,909,109$—$(1,215,383)$—$3,693,726
Credit1,598,277—(1,945,798)(122,610)(470,131)
Real Assets5,052,128—(1,408,018)(1,039)3,643,071
Equity Method - Other10,130—(353,727)—(343,597)
Other Investments1,545,695—(356,694)(163,147)1,025,854
Other Derivatives2,153———2,153
Total Assets - Asset Management$13,117,492$—$(5,279,620)$(286,796)$7,551,076
Insurance
AFS fixed maturity securities:
Corporate fixed maturity securities$1,332,909$—$(157,859)$(1,117,570)$57,480
Structured securities366,410—(1,020)(301,772)63,618
Total AFS fixed maturity securities1,699,319—(158,879)(1,419,342)121,098
Trading fixed maturity securities:
Corporate fixed maturity securities74,783—(8,014)(67,277)(508)
Structured securities55,633—(51,193)(50,968)(46,528)
Total trading fixed maturity securities130,416—(59,207)(118,245)(47,036)
Equity securities——(218)—(218)
Mortgage and other loan receivables1,796—(3,078)(88,266)(89,548)
Other investments301,108—(26,243)—274,865
Reinsurance recoverable———(7,200)(7,200)
Total Assets - Insurance$2,132,639$—$(247,625)$(1,633,053)$251,961
Total$15,250,131$—$(5,527,245)$(1,919,849)$7,803,037
For the Year Ended December 31, 2022
PurchasesIssuancesSalesSettlementsNet Purchases/ Issuances/ Sales/ Settlements
Assets
Asset Management
Private Equity$3,026,251$—$(529,278)$—$2,496,973
Credit2,468,167—(1,526,492)(578,800)362,875
Real Assets6,906,707—(1,736,916)(54,509)5,115,282
Equity Method - Other612,818—(8,826)—603,992
Other Investments497,617—(382,290)(21,584)93,743
Other Derivatives64,500—(33,907)—30,593
Total Assets - Asset Management$13,576,060$—$(4,217,709)$(654,893)$8,703,458
Insurance
AFS fixed maturity securities:
Corporate fixed maturity securities$3,175,479$—$(204,292)$(1,793,892)$1,177,295
Structured securities589,561—(13)(220,806)368,742
Total AFS fixed maturity securities3,765,040—(204,305)(2,014,698)1,546,037
Trading fixed maturity securities:
Corporate fixed maturity securities300,744—(606)(80,246)219,892
Structured securities322,291—(4,700)(85,380)232,211
Total trading fixed maturity securities623,035—(5,306)(165,626)452,103
Equity securities195———195
Mortgage and other loan receivables239,013—(7,302)(177,472)54,239
Other investments3,665,360—(497,818)—3,167,542
Funds withheld receivable at interest—10,435——10,435
Reinsurance recoverable———(11,088)(11,088)
Total Assets - Insurance$8,292,643$10,435$(714,731)$(2,368,884)$5,219,463
Total$21,868,703$10,435$(4,932,440)$(3,023,777)$13,922,921

Notes to Financial Statements (Continued)

For the Year Ended December 31, 2023
Balance, Beg. of PeriodTransfers In / (Out) - Changes in ConsolidationTransfers InTransfers OutNet Purchases/Sales/Settlements/IssuancesNet Unrealized and Realized Gains (Losses)Change in OCIBalance, End of PeriodChanges in Net Unrealized Gains (Losses) Included in Earnings related to Level III Assets and Liabilities still held as of the Reporting Date
Liabilities
Asset Management
Unfunded Revolver Commitments$137,315$—$—$—$—$(42,632)$—$94,683$(42,632)
Total Liabilities - Asset Management$137,315$—$—$—$—$(42,632)$—$94,683$(42,632)
Insurance
Policy liabilities$1,063,496$—$—$—$(4,292)$177,932$237,834$1,474,970$—
Closed block policy liabilities1,016,313———(11,951)(42,705)6,897968,554—
Funds withheld payable at interest(3,487,766)————1,040,463—(2,447,303)—
Embedded derivative – interest-sensitive life products337,860———(43,820)164,262—458,302—
Embedded derivative – annuity products1,851,381———955,812780,178—3,587,371—
Total Liabilities - Insurance$781,284$—$—$—$895,749$2,120,130$244,731$4,041,894$—
Total$918,599$—$—$—$895,749$2,077,498$244,731$4,136,577$(42,632)

Notes to Financial Statements (Continued)

For the Year Ended December 31, 2022
Balance, Beg. of PeriodTransfers In / (Out) - Changes in ConsolidationTransfers InTransfers OutNet Purchases/Sales/Settlements/IssuancesNet Unrealized and Realized Gains (Losses)Change in OCIBalance, End of PeriodChanges in Net Unrealized Gains (Losses) Included in Earnings related to Level III Assets and Liabilities still held as of the Reporting Date
Liabilities
Asset Management
Unfunded Revolver Commitments$64,276$—$—$—$1,749$71,290$—$137,315$66,957
Total Liabilities - Asset Management$64,276$—$—$—$1,749$71,290$—$137,315$66,957
Insurance
Policy liabilities$1,962,855$—$—$—$36,007$(796,711)$(138,655)$1,063,496$—
Closed block policy liabilities1,350,224———(3,479)(327,226)(3,206)1,016,313—
Funds withheld payable at interest(49,491)———10,435(3,448,710)—(3,487,766)—
Embedded derivative – interest-sensitive life products557,276———14,547(233,963)—337,860—
Embedded derivative – annuity products1,864,409———717,671(730,699)—1,851,381—
Total Liabilities - Insurance$5,685,273$—$—$—$775,181$(5,537,309)$(141,861)$781,284$—
Total$5,749,549$—$—$—$776,930$(5,466,019)$(141,861)$918,599$66,957

Notes to Financial Statements (Continued)

Year Ended December 31, 2023
IssuancesSettlementsNet Issuances/Settlements
Liabilities
Asset Management
Unfunded Revolver Commitments$—$—$—
Total Liabilities - Asset Management$—$—$—
Insurance
Policy liabilities$1,803$(6,095)$(4,292)
Closed block policy liabilities—(11,951)(11,951)
Embedded derivative – interest-sensitive life products—(43,820)(43,820)
Embedded derivative – annuity products1,081,979(126,167)955,812
Total Liabilities - Insurance$1,083,782$(188,033)$895,749
Total$1,083,782$(188,033)$895,749
Year Ended December 31, 2022
IssuancesSettlementsNet Issuances/Settlements
Liabilities
Asset Management
Unfunded Revolver Commitments$19,141$(17,392)$1,749
Total Liabilities - Asset Management$19,141$(17,392)$1,749
Insurance
Policy liabilities$42,536$(6,529)$36,007
Closed block policy liabilities—(3,479)(3,479)
Funds withheld payable at interest10,435—10,435
Embedded derivative – interest-sensitive life products14,795(248)14,547
Embedded derivative – annuity products741,488(23,817)717,671
Total Liabilities - Insurance$809,254$(34,073)$775,181
Total$828,395$(51,465)$776,930

Total realized and unrealized gains and losses recorded for Asset Management - Level III assets and liabilities are reported in Net Gains (Losses) from Investment Activities in the accompanying consolidated statements of operations while Insurance - Level III assets and liabilities are reported in Net Investment Gains and Policy Benefits and Claims in the accompanying consolidated statements of operations.

The following table presents additional information about valuation methodologies and significant unobservable inputs used for financial assets and liabilities that are measured and reported at fair value and categorized within Level III as of December 31, 2023. Because input information includes only those items for which information is reasonably available, balances shown below may not equal total amounts reported for such Level III assets and liabilities:

Level III AssetsFair Value December 31, 2023Valuation Methodologies & InputsUnobservable Input(s) (1)Weighted Average (2)RangeImpact to Valuation from an Increase in Input (3)
ASSET MANAGEMENT
Private Equity$30,921,574
Private Equity$28,183,233Inputs to market comparables, discounted cash flow and transaction priceIlliquidity Discount5.8%5.0% - 15.0%Decrease
Weight Ascribed to Market Comparables26.0%0.0% - 100.0%(4)
Weight Ascribed to Discounted Cash Flow60.8%0.0% - 100.0%(5)
Weight Ascribed to Transaction Price13.2%0.0% - 100.0%(6)
Market comparablesEnterprise Value/LTM EBITDA Multiple16.2x6.6x - 55.1xIncrease
Enterprise Value/Forward EBITDA Multiple15.9x4.9x - 34.3xIncrease
Discounted cash flowWeighted Average Cost of Capital10.1%6.5% - 15.8%Decrease
Enterprise Value/EBITDA Exit Multiple14.1x6.0x - 27.6xIncrease

Notes to Financial Statements (Continued)

Level III AssetsFair Value December 31, 2023Valuation Methodologies & InputsUnobservable Input(s) (1)Weighted Average (2)RangeImpact to Valuation from an Increase in Input (3)
Growth Equity$2,738,341Inputs to market comparables, discounted cash flow and milestonesIlliquidity Discount8.9%5.0% - 15.0%Decrease
Weight Ascribed to Market Comparables42.7%0.0% - 100.0%(4)
Weight Ascribed to Discounted Cash Flow2.0%0.0% - 50.0%(5)
Weight Ascribed to Transaction Price4.8%0.0% - 50.0%
Weight Ascribed to Milestones50.5%0.0% - 100.0%(6)
Scenario WeightingBase68.6%60.0% - 80.0%Increase
Downside9.3%5.0% - 15.0%Decrease
Upside22.1%10.0% - 35.0%Increase
Market ComparablesEnterprise Value/Revenues Multiple9.3x3.7x - 10.4xIncrease
Credit$5,452,916Yield AnalysisYield11.6%7.9% - 24.4%Decrease
Net Leverage6.1x1.9x -24.0xDecrease
EBITDA Multiple12.6x6.8x - 30.0xIncrease
Real Assets$11,295,633
Energy$1,504,407Inputs to market comparables, discounted cash flow and transaction priceWeight Ascribed to Market Comparables44.3%0.0% - 50.0%(4)
Weight Ascribed to Discounted Cash Flow55.7%50.0% - 100.0%(5)
Weight Ascribed to Transaction Price—%0.0% - 0.0%(6)
Market comparablesEnterprise Value/LTM EBITDA Multiple4.5x4.5x - 4.5xIncrease
Enterprise Value/Forward EBITDA Multiple4.0x4.0x- 4.0xIncrease
Discounted cash flowWeighted Average Cost of Capital12.2%11.7% - 12.3%Decrease
Average Price Per BOE (8)$49.30$44.34 - $54.40Increase
Infrastructure$1,520,473Inputs to market comparables, discounted cash flow and transaction priceIlliquidity Discount5.7%5.0% - 10.0%Decrease
Weight Ascribed to Market Comparables5.4%0.0% - 25.0%(4)
Weight Ascribed to Discounted Cash Flow63.2%25.0% - 100.0%(5)
Weight Ascribed to Transaction Price31.4%0.0% - 75.0%(6)
Market comparablesEnterprise Value/LTM EBITDA Multiple10.8x10.8x - 10.8xIncrease
Enterprise Value/Forward EBITDA Multiple17.9x10.5x - 22.1xIncrease
Discounted cash flowWeighted Average Cost of Capital7.5%6% - 9.0%Decrease
Enterprise Value/EBITDA Exit Multiple15.6x10.0x - 22.0xIncrease
Real Estate$8,270,753Inputs to direct income capitalization, discounted cash flow and transaction priceWeight Ascribed to Direct Income Capitalization21.7%0.0% - 100.0%(7)
Weight Ascribed to Discounted Cash Flow74.6%0.0% - 100.0%(5)
Weight Ascribed to Transaction Price3.7%0.0% - 100.0%(6)
Direct income capitalizationCurrent Capitalization Rate4.4%1.9% - 8.5%Decrease
Discounted cash flowExit Capitalization Rate5.6%2.9% - 9.0%Decrease
Unlevered Discount Rate6.4%2.6% - 18.0%Decrease
Equity Method - Other$1,537,962Inputs to market comparables, discounted cash flow and transaction priceIlliquidity Discount6.9%5.0% - 15.0%Decrease
Weight Ascribed to Market Comparables46.5%0.0% - 100.0%(4)
Weight Ascribed to Discounted Cash Flow41.8%0.0% - 50.0%(5)
Weight Ascribed to Transaction Price11.7%0.0% - 100.0%(6)
Market comparablesEnterprise Value/LTM EBITDA Multiple13.9x4.5x - 19.6xIncrease
Enterprise Value/Forward EBITDA Multiple11.6x4.0x - 16.9xIncrease
Discounted cash flowWeighted Average Cost of Capital10.8%7.5% - 14.9%Decrease
Enterprise Value/EBITDA Exit Multiple11.0x9.5x - 17.3xIncrease
Other Investments$4,265,768(9)Inputs to market comparables, discounted cash flow and transaction priceIlliquidity Discount8.3%5.0% - 15.0%Decrease
Weight Ascribed to Market Comparables16.9%0.0% - 100.0%(4)
Weight Ascribed to Discounted Cash Flow52.2%0.0% - 100.0%(5)
Weight Ascribed to Transaction Price30.9%0.0% - 100.0%(6)
Market comparablesEnterprise Value/LTM EBITDA Multiple9.7x0.6x - 21.5xIncrease
Enterprise Value/Forward EBITDA Multiple11.9x5.3x - 19.1xIncrease

Notes to Financial Statements (Continued)

Level III AssetsFair Value December 31, 2023Valuation Methodologies & InputsUnobservable Input(s) (1)Weighted Average (2)RangeImpact to Valuation from an Increase in Input (3)
Discounted cash flowWeighted Average Cost of Capital11.8%5.9% - 43.2%Decrease
Enterprise Value/EBITDA Exit Multiple9.0x6.7x - 15.0xIncrease
INSURANCE
Corporate fixed maturity securities$1,279,386Discounted cash flowDiscount Spread3.6%1.4% - 5.8%Decrease
Structured securities$82,010Discounted cash flowDiscount Spread3.6%3.1% - 6.3%Decrease
Constant Prepayment Rate6.8%5.0% - 15.0%Increase/Decrease
Constant Default Rate1.2%1.0% - 2.5%Decrease
Loss Severity100.0%Decrease
Other investments$4,775,549Discounted cash flowVacancy rate2.1%0.0% - 2.5%Decrease
Discount rate6.1%5.0% - 7.0%Decrease
Terminal capitalization rate7.6%6.3% - 8.1%Decrease
Funds withheld receivable at interest$88,661Discounted cash flowDuration/Weighted Average Life8.1 years0.0 years - 19.5 yearsIncrease
Contractholder Persistency4.5%2.0% - 24.9%Increase
Instrument-specific credit risk0.8%0.6% - 0.9%Decrease
Reinsurance recoverable$926,035Present value of expenses paid from the open block plus the cost of capital held in support of the liabilities.Expense assumption$17.5The average expense assumption is between $8.2 and $78.0 per policy, increased by inflation. The annual inflation rate was increased by 2.5%.Increase
Unobservable inputs are a market participant’s view of the expenses, a risk margin on the uncertainty of the level of expenses and a cost of capital on the capital held in support of the liabilities.Expense risk margin9.4%Decrease
Cost of capital9.7%3.7% - 13.9%Increase
Discounted cash flowMortality Rate5.5%Increase
Surrender Rate2.0%Increase

(1)In determining certain of these inputs, management evaluates a variety of factors including economic conditions, industry and market developments, market valuations of comparable companies and company specific developments including exit strategies and realization opportunities. KKR has determined that market participants would take these inputs into account when valuing the investments and debt obligations. "LTM" means last twelve months, and "EBITDA" means earnings before interest, taxes, depreciation and amortization.

(2)Inputs were weighted based on the fair value of the investments included in the range.

(3)Unless otherwise noted, this column represents the directional change in the fair value of the Level III investments that would result from an increase to the corresponding unobservable input. A decrease to the unobservable input would have the opposite effect. Significant increases and decreases in these inputs in isolation could result in significantly higher or lower fair value measurements.

(4)The directional change from an increase in the weight ascribed to the market comparables approach would increase the fair value of the Level III investments if the market comparables approach results in a higher valuation than the discounted cash flow approach and transaction price. The opposite would be true if the market comparables approach results in a lower valuation than the discounted cash flow approach and transaction price.

(5)The directional change from an increase in the weight ascribed to the discounted cash flow approach would increase the fair value of the Level III investments if the discounted cash flow approach results in a higher valuation than the market comparables approach, transaction price and direct income capitalization approach. The opposite would be true if the discounted cash flow approach results in a lower valuation than the market comparables approach, transaction price and direct income capitalization approach.

(6)The directional change from an increase in the weight ascribed to the transaction price or milestones would increase the fair value of the Level III investments if the transaction price or milestones results in a higher valuation than the market comparables and discounted cash flow approach. The opposite would be true if the transaction price or milestones results in a lower valuation than the market comparables approach and discounted cash flow approach.

Notes to Financial Statements (Continued)

(7)The directional change from an increase in the weight ascribed to the direct income capitalization approach would increase the fair value of the Level III investments if the direct income capitalization approach results in a higher valuation than the discounted cash flow approach. The opposite would be true if the direct income capitalization approach results in a lower valuation than the discounted cash flow approach.

(8)The total energy fair value amount includes multiple investments (in multiple locations throughout North America) that are held in different investment funds and produce varying quantities of oil, condensate, natural gas liquids, and natural gas. Commodity price may be measured using a common volumetric equivalent where one barrel of oil equivalent ("BOE") is determined using the ratio of six thousand cubic feet of natural gas to one barrel of oil, condensate or natural gas liquids. The price per BOE is provided to show the aggregate of all price inputs for the various investments over a common volumetric equivalent although the valuations for specific investments may use price inputs specific to the asset for purposes of our valuations. The discounted cash flows include forecasted production of liquids (oil, condensate, and natural gas liquids) and natural gas with a forecasted revenue ratio of approximately 88% liquids and 12% natural gas.

(9)Consists primarily of investments in common stock, preferred stock, warrants and options of companies that are not private equity, real assets, credit, equity method - other or investments of consolidated CFEs.

Level III LiabilitiesFair Value December 31, 2023Valuation MethodologiesUnobservable Input(s) (1)Weighted Average (2)RangeImpact to Valuation from an Increase in Input (3)
ASSET MANAGEMENT
Unfunded Revolver Commitments$94,683Yield AnalysisYield11.4%9.1% - 18.9%Decrease
INSURANCE
Policy liabilities$1,474,970Policy liabilities under fair value option:
Present value of best estimate liability cash flows. Unobservable inputs include a market participant view of the risk margin included in the discount rate which reflects the variability of the cash flows.Risk Margin Rate0.8%0.7% - 1.0%Decrease
Policyholder behavior is also a significant unobservable input, including lapse, surrender and mortality.Surrender Rate6.2%3.4% - 7.4%Decrease
Mortality Rate4.7%3.5% - 9.0%Increase
Market risk benefit:
Fair value using a non-option and option valuation approachInterest rates (10 and 30 year Treasury)3.9% / 4.0%Decrease
Instrument-specific credit risk (10 and 30 year)0.7% / 0.9%Decrease
Policyholder behavior is also a significant unobservable input, including lapse, surrender, and mortality.Mortality Rate2.4%0.7% - 29.5%Increase
Surrender Rate3.8%0.1% - 45.4%Increase

Notes to Financial Statements (Continued)

Level III LiabilitiesFair Value December 31, 2023Valuation MethodologiesUnobservable Input(s) (1)Weighted Average (2)RangeImpact to Valuation from an Increase in Input (3)
Closed block policy liabilities$968,554Present value of expenses paid from the open block plus the cost of capital held in support of the liabilities.Expense assumption$17.5The average expense assumption is between $8.2 and $78.0 per policy, increased by inflation. The annual inflation rate was increased by 2.5%.Increase
Instrument-specific credit risk0.8%0.6% - 0.9%Decrease
Unobservable inputs are a market participant’s view of the expenses, a risk margin on the uncertainty of the level of expenses and a cost of capital on the capital held in support of the liabilities.Expense Risk Margin9.4%Decrease
Cost of Capital9.7%3.7% - 13.9%Increase
Discounted cash flowMortality Rate5.5%Increase
Surrender Rate2.0%Increase
Funds withheld payable at interest$(2,447,303)Discounted cash flowDuration/Weighted Average Life7.9 years0.0 years - 16.9 yearsDecrease
Contractholder Persistency4.5%2.0% - 24.9%Decrease
Instrument-specific credit risk0.8%0.6% - 0.9%Decrease
Embedded derivative – interest-sensitive life products$458,302Policy persistency is a significant unobservable input.Lapse Rate3.3%Decrease
Mortality Rate0.8%Decrease
Future costs for options used to hedge the contract obligationsOption Budge Assumption3.8%Increase
Instrument-specific credit risk0.8%0.6% - 0.9%Decrease
Embedded derivative – annuity products$3,587,371Policyholder behavior is a significant unobservable input, including utilization and lapse.Utilization:
Fixed-indexed annuity3.1%Decrease
Surrender Rate:
Retail FIA13.3%Decrease
Institutional FIA16.5%Decrease
Mortality Rate:
Retail FIA2.5%Decrease
Institutional FIA2.1%Decrease
Future costs for options used to hedge the contract obligationsOption Budge Assumption:
Retail RIA2.6%Increase
Institutional FIA3.2%Increase
Instrument-specific credit risk0.8%0.6% - 0.9%Decrease

(1)In determining certain of these inputs, management evaluates a variety of factors including economic conditions, industry and market developments, market valuations of comparable companies and company specific developments including exit strategies and realization opportunities. KKR has determined that market participants would take these inputs into account when valuing the investments and debt obligations. "LTM" means last twelve months, and "EBITDA" means earnings before interest, taxes, depreciation and amortization.

(2)Inputs were weighted based on the fair value of the investments included in the range.

(3)Unless otherwise noted, this column represents the directional change in the fair value of the Level III investments that would result from an increase to the corresponding unobservable input. A decrease to the unobservable input would have the opposite effect. Significant increases and decreases in these inputs in isolation could result in significantly higher or lower fair value measurements.

Notes to Financial Statements (Continued)

In the table above, certain private equity investments may be valued at cost for a period of time after an acquisition as the best indicator of fair value. In addition, certain valuations of private equity investments may be entirely or partially derived by reference to observable valuation measures for a pending or consummated transaction.

The various unobservable inputs used to determine the Level III valuations may have similar or diverging impacts on valuation. Significant increases and decreases in these inputs in isolation and interrelationships between those inputs could result in significantly higher or lower fair value measurements as noted in the table above.

Financial Instruments Not Carried At Fair Value

Asset management financial instruments are primarily measured at fair value on a recurring basis, except as disclosed in Note 16 "Debt Obligations."

The following tables present carrying amounts and fair values of Global Atlantic’s financial instruments which are not carried at fair value as of December 31, 2023 and 2022:

Fair Value Hierarchy
As of December 31, 2023Carrying ValueLevel ILevel IILevel IIIFair Value
($ in thousands)
Financial assets:
Insurance
Mortgage and other loan receivables$38,480,525$—$—$35,539,059$35,539,059
Policy loans1,556,030——1,341,0051,341,005
FHLB common stock and other investments173,148——173,148173,148
Funds withheld receivables at interest2,624,984—2,624,984—2,624,984
Cash and cash equivalents11,954,67511,954,675——11,954,675
Restricted cash and cash equivalents342,954342,954——342,954
Total financial assets$55,132,316$12,297,629$2,624,984$37,053,212$51,975,825
Financial liabilities:
Insurance
Policy liabilities - policyholder account balances$53,821,432$—$45,395,423$6,966,991$52,362,414
Funds withheld payables at interest36,786,825—36,786,825—36,786,825
Debt obligations2,587,857——2,396,5872,396,587
Securities sold under agreements to repurchase1,358,434—1,358,434—1,358,434
Total financial liabilities$94,554,548$—$83,540,682$9,363,578$92,904,260

Notes to Financial Statements (Continued)

Fair Value Hierarchy
As of December 31, 2022Carrying ValueLevel ILevel IILevel IIIFair Value
($ in thousands)
Financial assets:
Insurance
Mortgage and other loan receivables$34,303,183$—$—$31,256,107$31,256,107
Policy loans868,911——789,726789,726
FHLB common stock and other investments163,289——163,289163,289
Funds withheld receivables at interest2,855,251—2,855,251—2,855,251
Cash and cash equivalents6,118,2316,118,231——6,118,231
Restricted cash and cash equivalents308,383308,383——308,383
Total financial assets$44,617,248$6,426,614$2,855,251$32,209,122$41,490,987
Financial liabilities:
Insurance
Policy liabilities - policyholder account balances$48,403,949$—$38,328,025$7,383,537$45,711,562
Funds withheld payables at interest26,227,183—26,227,183—26,227,183
Debt obligations2,128,166——1,698,5261,698,526
Securities sold under agreements to repurchase805,316—805,316—805,316
Total financial liabilities$77,564,614$—$65,360,524$9,082,063$74,442,587

Notes to Financial Statements (Continued)

10. FAIR VALUE OPTION

The following table summarizes the financial instruments for which the fair value option has been elected:

December 31, 2023December 31, 2022
Assets
Asset Management
Credit$976,978$1,121,775
Investments of Consolidated CFEs24,996,29822,492,366
Real Assets59,721202,153
Equity Method - Other2,283,5882,943,387
Other Investments153,59788,046
Total Asset Management$28,470,182$26,847,727
Insurance
Mortgage and other loan receivables$697,402$787,515
Other investments232,877335,168
Reinsurance recoverable926,035981,775
Total Insurance$1,856,314$2,104,458
Total Assets$30,326,496$28,952,185
Liabilities
Asset Management
Debt Obligations of Consolidated CFEs$25,276,404$22,273,242
Total Asset Management$25,276,404$22,273,242
Insurance
Policy liabilities$1,322,555$1,410,951
Total Insurance$1,322,555$1,410,951
Total Liabilities$26,598,959$23,684,193

Notes to Financial Statements (Continued)

The following table presents the net realized and unrealized gains (losses) on financial instruments for which the fair value option was elected:

For the Year Ended December 31, 2023
Net Realized Gains (Losses)Net Unrealized Gains (Losses)Total
Assets
Asset Management
Credit$(85,682)$66,109$(19,573)
Investments of Consolidated CFEs(104,196)1,019,063914,867
Real Assets51,637(54,697)(3,060)
Equity Method - Other170,90961,205232,114
Other Investments1,455(813)642
Total Asset Management$34,123$1,090,867$1,124,990
Insurance
Mortgage and other loan receivables$—$(1,342)$(1,342)
Other investments—(65,414)(65,414)
Total Insurance$—$(66,756)$(66,756)
Total Assets$34,123$1,024,111$1,058,234
Liabilities
Asset Management
Debt Obligations of Consolidated CFEs$(1,212)$(1,015,491)$(1,016,703)
Total Asset Management$(1,212)$(1,015,491)$(1,016,703)
Insurance
Policy liabilities$—$62,621$62,621
Total Insurance$—$62,621$62,621
Total Liabilities$(1,212)$(952,870)$(954,082)

Notes to Financial Statements (Continued)

For the Year Ended December 31, 2022
Net Realized Gains (Losses)Net Unrealized Gains (Losses)Total
Assets
Asset Management
Credit$(103,860)$(9,326)$(113,186)
Investments of Consolidated CFEs(69,234)(1,437,482)(1,506,716)
Real Assets8519,29519,380
Equity Method - Other(14,891)(201,935)(216,826)
Other Investments6,657(9,927)(3,270)
Total Asset Management$(181,243)$(1,639,375)$(1,820,618)
Insurance
Mortgage and other loan receivables$—$(96,569)$(96,569)
Other investments—153,109153,109
Total Insurance$—$56,540$56,540
Total Assets$(181,243)$(1,582,835)$(1,764,078)
Liabilities
Asset Management
Debt Obligations of Consolidated CFEs$(785)$1,175,161$1,174,376
Total Asset Management$(785)$1,175,161$1,174,376
Insurance
Policy liabilities$—$138,039$138,039
Total Insurance$—$138,039$138,039
Total Liabilities$(785)$1,313,200$1,312,415
For the Year Ended December 31, 2021
Net Realized Gains (Losses)Net Unrealized Gains (Losses)Total
Assets
Asset Management
Credit$43,227$19,833$63,060
Investments of Consolidated CFEs62,075134,174196,249
Real Assets(1,133)16,37515,242
Equity Method - Other404,513(90,867)313,646
Other Investments15,81626,63942,455
Total Asset Management$524,498$106,154$630,652
Insurance
Mortgage and other loan receivables$—$(2,257)$(2,257)
Other investments—490,607490,607
Total Insurance$—$488,350$488,350
Total Assets$524,498$594,504$1,119,002
Liabilities
Asset Management
Debt Obligations of Consolidated CFEs$47,179$(72,376)$(25,197)
Total Asset Management$47,179$(72,376)$(25,197)
Insurance
Policy liabilities$—$122,738$122,738
Total Insurance$—$122,738$122,738
Total Liabilities$47,179$50,362$97,541

Notes to Financial Statements (Continued)

11. INSURANCE INTANGIBLES, UNEARNED REVENUE RESERVES AND UNEARNED FRONT-END LOADS

The following reflects the reconciliation of the components of insurance intangibles to the total balance reported in the consolidated statements of financial condition as of December 31, 2023 and 2022:

December 31,December 31,
20232022
Deferred acquisition costs$1,154,697$820,970
Value of business acquired1,252,9841,316,529
Cost-of-reinsurance intangibles2,043,143193,995
Total insurance intangibles$4,450,824$2,331,494

Deferred acquisition costs

The following tables reflect the deferred acquisition costs roll-forward by product category for the years ended December 31, 2023, 2022 and 2021:

Year ended December 31, 2023
Fixed rate annuitiesFixed indexed annuitiesInterest sensitive lifeOtherTotal
Balance, as of the beginning of the period$221,679$367,813$116,021$115,457$820,970
Capitalizations218,243175,86923,59266,458484,162
Amortization expense(66,059)(61,712)(7,534)(15,130)(150,435)
Balance, as of the end of the period$373,863$481,970$132,079$166,785$1,154,697
Year ended December 31, 2022
Fixed rate annuitiesFixed indexed annuitiesInterest sensitive lifeOtherTotal
Balance, as of the beginning of the period$107,104$179,449$54,298$56,730$397,581
Capitalizations144,635220,86667,89269,515502,908
Amortization expense(30,060)(32,502)(6,169)(10,788)(79,519)
Balance, as of the end of the period$221,679$367,813$116,021$115,457$820,970
Year ended December 31, 2021
Fixed rate annuitiesFixed indexed annuitiesInterest sensitive lifeOtherTotal
Balance, as of the beginning of the period$—$—$—$—$—
Capitalizations116,231187,30155,63659,427418,595
Amortization expense(9,127)(7,852)(1,338)(2,697)(21,014)
Balance, as of the end of the period$107,104$179,449$54,298$56,730$397,581

Value of business acquired

The following tables reflect the value of business acquired, or “VOBA” asset roll-forward by product category for the years ended December 31, 2023, 2022 and 2021:

Year ended December 31, 2023
Fixed rate annuitiesFixed indexed annuitiesInterest sensitive lifeVariable annuitiesOtherTotal
Balance, as of the beginning of the period$48,762$663,296$276,795$241,778$85,898$1,316,529
Amortization expense(3,840)(41,924)(13,853)3,264(7,192)(63,545)
Balance, as of the end of the period$44,922$621,372$262,942$245,042$78,706$1,252,984

Notes to Financial Statements (Continued)

Year ended December 31, 2022
Fixed rate annuitiesFixed indexed annuitiesInterest sensitive lifeVariable annuitiesOtherTotal
Balance, as of the beginning of the period$52,723$709,271$292,323$269,172$94,479$1,417,968
Amortization expense(3,961)(45,975)(15,528)(27,394)(8,581)(101,439)
Balance, as of the end of the period$48,762$663,296$276,795$241,778$85,898$1,316,529
Year ended December 31, 2021
Fixed rate annuitiesFixed indexed annuitiesInterest sensitive lifeVariable annuitiesOtherTotal
Balance, as of the beginning of the period$56,563$756,519$307,908$294,987$101,338$1,517,315
Amortization expense(3,840)(47,248)(15,585)(25,815)(6,859)(99,347)
Balance, as of the end of the period$52,723$709,271$292,323$269,172$94,479$1,417,968

The following tables reflect the negative value of business acquired, or “negative VOBA” liability roll-forward by product category for the years ended December 31, 2023, 2022 and 2021:

Year ended December 31, 2023
Fixed rate annuitiesFixed indexed annuitiesInterest sensitive lifeVariable annuitiesOtherTotal
Balance, as of the beginning of the period$98,342$145,610$461,592$99,776$198,804$1,004,124
Amortization expense(32,376)(39,072)(40,379)(8,481)(15,884)(136,192)
Balance, as of the end of the period$65,966$106,538$421,213$91,295$182,920$867,932
Year ended December 31, 2022
Fixed rate annuitiesFixed indexed annuitiesInterest sensitive lifeVariable annuitiesOtherTotal
Balance, as of the beginning of the period$136,227$184,664$500,264$109,826$211,296$1,142,277
Amortization expense(37,885)(39,054)(38,672)(10,050)(12,492)(138,153)
Balance, as of the end of the period$98,342$145,610$461,592$99,776$198,804$1,004,124
Year ended December 31, 2021
Fixed rate annuitiesFixed indexed annuitiesInterest sensitive lifeVariable annuitiesOtherTotal
Balance, as of the beginning of the period$180,769$222,135$550,738$119,122$226,485$1,299,249
Amortization expense(44,542)(37,471)(50,474)(9,296)(15,189)(156,972)
Balance, as of the end of the period$136,227$184,664$500,264$109,826$211,296$1,142,277

Estimated future amortization of VOBA and Negative VOBA as of December 31, 2023 is as follows:

YearsVOBANegative VOBATotal, net
2024$84,836$(103,411)$(18,575)
202580,544(83,505)(2,961)
202675,528(68,168)7,360
202771,497(57,616)13,881
202867,669(49,748)17,921
Thereafter872,910(505,484)367,426
Total$1,252,984$(867,932)$385,052

Notes to Financial Statements (Continued)

Unearned revenue reserves and unearned front-end loads

Years Ended December 31,
202320222021
Preneed
Balance, as of the beginning of the period$118,186$55,510$—
Deferral71,79869,54857,649
Amortized to income during the year(11,931)(6,872)(2,139)
Balance, as of the end of the period$178,053$118,186$55,510

Significant inputs, judgments, assumptions for DAC and related amortization amounts

Global Atlantic considers surrender rates, mortality rates, and other relevant policy decrements in determining the expected life of the contract. As a part of Global Atlantic's actual experience update for the year ended December 31, 2023, Global Atlantic updated mortality and surrender assumptions. These updates reduced the amortization rate for DAC and related amortization amounts by $4.4 million per year. For the year ended December 31, 2022, Global Atlantic observed that there was no significant change in relevant inputs, judgments, or assumptions requiring an update of the amortization rate for DAC and related amortization amounts.

Notes to Financial Statements (Continued)

12. REINSURANCE

Global Atlantic maintains a number of reinsurance treaties with third parties whereby Global Atlantic assumes annuity and life policies on a coinsurance, modified coinsurance or funds withheld basis. Global Atlantic also maintains other reinsurance treaties including the cession of certain annuity, life and health policies.

The effects of all reinsurance agreements on the consolidated statements of financial condition were as follows:

December 31, 2023December 31, 2022
Policy liabilities:
Direct$75,715,857$71,833,991
Assumed84,342,41465,946,938
Total policy liabilities160,058,271137,780,929
Ceded(1)(35,773,958)(25,755,283)
Net policy liabilities$124,284,313$112,025,646

(1)Reported within reinsurance recoverable within the consolidated statements of financial condition.

A key credit quality indicator is a counterparty’s A.M. Best financial strength rating. A.M. Best ratings are an independent opinion of a reinsurer’s ability to meet ongoing obligations to policyholders. Global Atlantic mitigates counterparty credit risk by requiring collateral and credit enhancements in various forms including engaging in funds withheld at interest and modified coinsurance transactions. The following shows the amortized cost basis of Global Atlantic’s reinsurance recoverable and funds withheld receivable at interest by credit quality indicator and any associated credit enhancements Global Atlantic has obtained to mitigate counterparty credit risk:

As of December 31, 2023As of December 31, 2022
A.M. Best Rating**(1)**Reinsurance recoverable and funds withheld receivable at interest**(2)**Credit enhancements**(3)**Net reinsurance credit exposure**(4)**Reinsurance recoverable and funds withheld receivable at interest**(2)**Credit enhancements**(3)**Net reinsurance credit exposure**(4)**
A++$38,857$—$38,857$55,630$—$55,630
A+1,801,954—1,801,9541,883,864—1,883,864
A2,212,800—2,212,8002,462,963—2,462,963
A-4,430,4843,814,976615,5084,780,1654,197,739582,426
B++589—58937,939—37,939
B+——————
B——————
B-———(221)——
C++/C+(228)—————
Not rated or private rating(5)30,859,06830,210,350648,71819,691,98418,541,6781,150,306
Total$39,343,524$34,025,326$5,318,426$28,912,324$22,739,417$6,173,128

(1)Ratings are periodically updated (at least annually) as A.M. Best issues new ratings.

(2)At amortized cost, excluding any associated embedded derivative assets and liabilities.

(3)Includes funds withheld payable at interest and deferred intangible reinsurance assets and liabilities.

(4)Includes credit loss allowance of $21.0 million and $41.2 million as of December 31, 2023 and 2022, respectively, held against reinsurance recoverable.

(5)Includes $30.8 billion and $19.7 billion as of December 31, 2023 and 2022, respectively, associated with cessions to co-investment vehicles (the "sponsored reinsurance sidecar vehicles") that participate in qualifying reinsurance transactions sourced by Global Atlantic.

As of December 31, 2023 and 2022, Global Atlantic had $2.7 billion and $2.9 billion of funds withheld receivable at interest, respectively, with six counterparties related to modified coinsurance and funds withheld contracts. The assets supporting these receivables were held in trusts and not part of the respective counterparty’s general accounts.

Notes to Financial Statements (Continued)

The effects of reinsurance on the consolidated statements of operations were as follows:

Years Ended December 31,
202320222021
Net premiums:
Direct$118,535$111,602$107,733
Assumed(1)4,138,7582,413,2344,573,925
Ceded(2,281,618)(1,342,375)(2,455,580)
Net premiums$1,975,675$1,182,461$2,226,078

(1)Includes related party activity of $8.7 million for the year ended December 31, 2021.

Years Ended December 31,
202320222021
Policy fees:
Direct$912,931$950,702$850,062
Assumed(1)442,085328,528288,870
Ceded(94,767)(17,509)(1,127)
Net policy fees$1,260,249$1,261,721$1,137,805

(1)Includes related party activity of $6.2 million for the year ended December 31, 2021.

Years Ended December 31,
202320222021
Net policy benefits and claims:
Direct$3,406,055$812,961$1,986,661
Assumed(1)5,922,9273,255,3545,613,319
Ceded(2,966,725)(1,710,077)(2,783,101)
Net policy benefits and claims$6,362,257$2,358,238$4,816,879

(1)Includes related party activity of $76.2 million for the year ended December 31, 2021.

Global Atlantic holds collateral for and provides collateral to its reinsurance clients. Global Atlantic held $36.7 billion and $26.1 billion of collateral in the form of funds withheld payable on behalf of its reinsurers as of December 31, 2023 and 2022, respectively. As of December 31, 2023 and 2022, reinsurers held collateral of $1.2 billion and $1.3 billion on behalf of Global Atlantic, respectively. A significant portion of the collateral that Global Atlantic provides to its reinsurance clients is provided in the form of assets held in a trust for the benefit of the counterparty. As of December 31, 2023 and 2022, these trusts held in excess of the $81.8 billion and $65.8 billion of assets they are required to hold in order to support reserves of $79.4 billion and $62.4 billion, respectively. Of the cash held in trust, Global Atlantic classified $90.8 million and $31.3 million as restricted as of December 31, 2023 and 2022, respectively.

Notes to Financial Statements (Continued)

13. NET INCOME (LOSS) ATTRIBUTABLE TO KKR & CO. INC. PER SHARE OF COMMON STOCK

For the years ended December 31, 2023, 2022 and 2021, basic and diluted Net Income (Loss) attributable to KKR & Co. Inc. per share of common stock were calculated as follows:

Years Ended December 31,
202320222021
Net Income (Loss) Available to KKR & Co. Inc. Common Stockholders - Basic$3,680,514$(590,664)$4,626,759
(+) Series C Mandatory Convertible Preferred Dividend (if dilutive) (1)51,747—69,000
Net Income (Loss) Available to KKR & Co. Inc. Common Stockholders - Diluted$3,732,261$(590,664)$4,695,759
Basic Net Income (Loss) Per Share of Common Stock
Weighted Average Shares of Common Stock Outstanding - Basic867,496,813749,504,970582,258,984
Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Common Stock - Basic$4.24$(0.79)$7.95
Diluted Net Income (Loss) Per Share of Common Stock
Weighted Average Shares of Common Stock Outstanding - Basic867,496,813749,504,970582,258,984
Incremental Common Shares:
Assumed vesting of dilutive equity awards (2)25,294,958—24,011,281
Assumed conversion of Series C Mandatory Convertible Preferred Stock (1)18,995,662—26,822,600
Weighted Average Shares of Common Stock Outstanding - Diluted911,787,433749,504,970633,092,865
Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Common Stock - Diluted$4.09$(0.79)$7.42

(1)For the years ended December 31, 2023 and 2021, the impact of Series C Mandatory Convertible Preferred Stock calculated under the if-converted method was dilutive, and as such (i) shares of common stock (assuming a conversion ratio based on the average volume weighted average price per share of common stock over each reporting period) were included in the Weighted Average Shares of Common Stock Outstanding - Diluted and (ii) Series C Mandatory Convertible Preferred dividends were added back to Net Income (Loss) Available to KKR & Co. Inc. Common Stockholders - Diluted. For the year ended December 31, 2022, the impact of Series C Mandatory Convertible Preferred Stock is excluded from the calculation of Diluted Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Common Stock because inclusion of such shares would be anti-dilutive having the effect of decreasing the loss per share of common stock.

(2)For the years ended December 31, 2023 and 2021, Weighted Average Shares of Common Stock Outstanding – Diluted includes unvested equity awards, including certain equity awards that have met their market price-based vesting condition but have not satisfied their service-based vesting condition, which have been granted under the Equity Incentive Plans. Vesting of these equity awards dilute equity holders of KKR Group Partnership, including KKR & Co. Inc. and holders of exchangeable securities pro rata in accordance with their respective ownership interests in KKR Group Partnership. For the year ended December 31, 2022, all unvested equity awards are excluded from the calculation of Diluted Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Common Stock because inclusion of such unvested equity awards would be anti-dilutive having the effect of decreasing the loss per share of common stock.

Notes to Financial Statements (Continued)

Exchangeable Securities

For the years ended December 31, 2023, 2022, and 2021 KKR Holdings Units and vested restricted holdings units (as defined in Note 19 "Equity Based Compensation") have been excluded from the calculation of Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Common Stock - Diluted since the exchange of these units would not dilute KKR & Co. Inc.'s ownership interests in KKR Group Partnership. Since May 31, 2022, there are no outstanding KKR Holdings Units. See Note 1 "Organization" in our financial statements.

Years Ended December 31,
202320222021
Weighted Average KKR Holdings Units—107,018,025271,719,976
Weighted Average Vested Restricted Holdings Units3,675,3452,250,1861,190,590
Total3,675,345109,268,211272,910,566

Market Condition Awards

For the years ended December 31, 2023, 2022, and 2021 25.7 million, 17.5 million, and 9.1 million, respectively, of unvested equity awards that are subject to market price based and service-based vesting conditions were excluded from the calculation of Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Common Stock - Diluted since the market price based vesting condition was not satisfied. See Note 19 "Equity Based Compensation" in our financial statements.

Notes to Financial Statements (Continued)

14. OTHER ASSETS AND ACCRUED EXPENSES AND OTHER LIABILITIES

Other Assets consist of the following:

December 31, 2023December 31, 2022
Asset Management
Unsettled Investment Sales (1)$271,544$90,072
Receivables55,60226,119
Due from Broker (2)76,075160,533
Deferred Tax Assets, net (See Note 18)48,58054,769
Interest Receivable351,999223,660
Fixed Assets, net (3)863,096857,903
Foreign Exchange Contracts and Options (4)264,621668,716
Goodwill (5)558,279594,270
Intangible Assets (6)1,624,6481,747,891
Derivative Assets4,7927,519
Prepaid Taxes211,96668,107
Prepaid Expenses56,82848,233
Operating Lease Right of Use Assets (7)358,684344,022
Deferred Financing Costs19,21316,382
Other209,296289,430
Total Asset Management$4,975,223$5,197,626
Insurance
Unsettled Investment Sales(1) and Derivative Collateral Receivables$27,562$663,280
Deferred Tax Assets, net2,273,7572,272,153
Derivative Assets45,694724,390
Accrued Investment Income1,220,7811,130,103
Goodwill501,496501,496
Intangible Assets and Deferred Sales Inducements(8)258,529276,176
Operating Lease Right of Use Assets(7)172,955175,035
Premiums and Other Account Receivables188,136141,551
Other152,486121,114
Prepaid Taxes42,29422,851
Market Risk Benefit Asset1713,180
Total Insurance$4,883,707$6,041,329
Total Other Assets$9,858,930$11,238,955

(1)Represents amounts due from third parties for investments sold for which cash settlement has not occurred.

(2)Represents amounts held at clearing brokers resulting from securities transactions.

(3)Net of accumulated depreciation and amortization of $257.4 million and $188.8 million as of December 31, 2023 and December 31, 2022, respectively. Depreciation and amortization expense of $68.4 million, $54.6 million, and $46.5 million for the years ended December 31, 2023, 2022, and 2021, respectively, are included in General, Administrative and Other in the accompanying consolidated statements of operations. Additionally, KKR’s fixed assets are predominantly located in the United States.

(4)Represents derivative financial instruments used to manage foreign exchange risk arising from certain foreign currency denominated investments. Such instruments are measured at fair value with changes in fair value recorded in Net Gains (Losses) from Investment Activities in the accompanying consolidated statements of operations. See Note 4 "Net Gains (Losses) from Investment Activities - Asset Management" in our financial statements for the net changes in fair value associated with these instruments.

(5)As of December 31, 2023, the carrying value of goodwill is recorded and assessed for impairment at the reporting unit. As of December 31, 2023, there are approximately $(34.2) million of cumulative foreign currency translation adjustments included in AOCI related to the goodwill recorded as result of the acquisition of KJRM.

(6)As of December 31, 2023, there are approximately $(116.8) million of cumulative foreign currency translation adjustments included in AOCI related to the intangible assets recorded as result of the acquisition of KJRM.

(7)For Asset Management, non-cancelable operating leases consist of leases for office space in North America, Europe, Asia and Australia. KKR is the lessee under the terms of the operating leases. The operating lease cost was $67.8 million, $54.2 million, and $49.0 million for the years ended December 31, 2023, 2022, and 2021, respectively. For Insurance, non-cancelable operating leases consist of leases for office space and land in the U.S. For the years ended December 31, 2023, 2022 and 2021, the operating lease cost was $21.9 million, $25.0 million and $14.6 million, respectively. Insurance lease right-of-use assets are reported net of $20.6 million and $21.8 million in deferred rent and lease incentives as of December 31, 2023 and 2022, respectively.

Notes to Financial Statements (Continued)

(8)The definite life intangible assets are amortized using the straight-line method over the useful life of the assets which is an average of 14 years. The indefinite life intangible assets are not subject to amortization. The amortization expense of definite life intangible assets was $17.6 million, $17.6 million and $16.2 million for the years ended December 31, 2023, 2022, and 2021, respectively.

Accrued Expenses and Other Liabilities consist of the following:

December 31, 2023December 31, 2022
Asset Management
Amounts Payable to Carry Pool (1)$2,664,694$1,872,568
Unsettled Investment Purchases (2)574,986416,822
Securities Sold Short (3)149,136158,752
Derivative Liabilities2,38211,018
Accrued Compensation and Benefits210,625265,712
Interest Payable492,501363,849
Foreign Exchange Contracts and Options (4)441,608406,746
Accounts Payable and Accrued Expenses221,851216,688
Taxes Payable39,255136,245
Uncertain Tax Positions23,57956,032
Unfunded Revolver Commitments94,683137,315
Operating Lease Liabilities (5)360,852347,901
Deferred Tax Liabilities, net (See Note 18)2,370,1181,667,740
Other Liabilities72,145414,387
Total Asset Management$7,718,415$6,471,775
Insurance
Unsettled Investment Purchases(2) and Derivative Collateral Liabilities$205,669$675,312
Accrued Expenses607,262600,633
Insurance Operations Balances in Course of Settlement250,367949,383
Securities Sold Under Agreements to Repurchase1,358,434805,316
Derivative Liabilities146,197934,107
Accrued Employee Related Expenses370,984322,698
Operating Lease Liabilities(5)193,566195,001
Tax Payable to Former Parent Company62,54567,086
Interest Payable15,89413,329
Accounts and Commissions Payable32,10425,261
Other Tax Related Liabilities12,98412,249
Total Insurance$3,256,006$4,600,375
Total Accrued Expenses and Other Liabilities$10,974,421$11,072,150

(1)Represents the amount of carried interest payable to current and former KKR employees arising from KKR's investment funds and co-investment vehicles that provide for carried interest.

(2)Represents amounts owed to third parties for investment purchases for which cash settlement has not occurred.

(3)Represents the obligations of KKR to deliver a specified security at a future point in time. Such securities are measured at fair value with changes in fair value recorded in Net Gains (Losses) from Investment Activities in the accompanying consolidated statements of operations. See Note 4 "Net Gains (Losses) from Investment Activities - Asset Management" in our financial statements for the net changes in fair value associated with these instruments.

(4)Represents derivative financial instruments used to manage foreign exchange risk arising from certain foreign currency denominated investments. Such instruments are measured at fair value with changes in fair value recorded in Net Gains (Losses) from Investment Activities in the accompanying consolidated statements of operations. See Note 4 "Net Gains (Losses) from Investment Activities - Asset Management" in our financial statements for the net changes in fair value associated with these instruments.

(5)For Asset Management, operating leases for office space have remaining lease terms that range from approximately 1 year to 17 years, some of which include options to extend the leases from 5 years to 10 years. The weighted average remaining lease terms were 10.3 years and 10.4 years as of December 31, 2023 and December 31, 2022, respectively. The weighted average discount rates were 2.9% and 2.5% as of December 31, 2023 and December 31, 2022, respectively. For Insurance, operating leases for office space have remaining lease terms that range from approximately 1 year to 11 years, some of which include options to extend the leases for up to 10 years. The weighted average remaining lease terms were 7.6 years and 7.0 years as of December 31, 2023 and 2022, respectively. The weighted average discount rates were 4.4% and 3.6% as of December 31, 2023 and 2022, respectively. The weighted average remaining lease terms for land were 43.7 years and 26.9 years as of December 31, 2023 and 2022, respectively.

Notes to Financial Statements (Continued)

15. VARIABLE INTEREST ENTITIES

Consolidated VIEs

KKR consolidates certain VIEs in which it is determined that KKR is the primary beneficiary. The consolidated VIEs are predominately CLOs and certain investment funds sponsored by KKR. The primary purpose of these VIEs is to provide strategy specific investment opportunities to earn investment gains, current income or both in exchange for management fees and performance income. KKR's investment strategies differ for these VIEs; however, the fundamental risks have similar characteristics, including loss of invested capital and loss of management fees and performance income. KKR does not provide performance guarantees and has no other financial obligation to provide funding to these consolidated VIEs, beyond amounts previously committed, if any. Furthermore, KKR consolidates certain VIEs that are formed by Global Atlantic to hold investments, including investments in transportation, renewable energy, consumer and other loans and fixed maturity securities.

Unconsolidated VIEs

KKR holds variable interests in certain VIEs which are not consolidated as it has been determined that KKR is not the primary beneficiary. VIEs that are not consolidated predominantly include certain investment funds sponsored by KKR as well as certain investment partnerships where Global Atlantic retains an economic interest. KKR's investment strategies differ by investment fund; however, the fundamental risks have similar characteristics, including loss of invested capital and loss of management fees and performance income. KKR's maximum exposure to loss as a result of its investments in the unconsolidated investment funds is the carrying value of such investments, including KKR's capital interest and any unrealized carried interest. Accordingly, disaggregation of KKR's involvement by type of unconsolidated investment fund would not provide more useful information. For these unconsolidated investment funds in which KKR is the sponsor, KKR may have an obligation as general partner to provide commitments to such investment funds. As of December 31, 2023, KKR's commitments to these unconsolidated investment funds were $2.6 billion. KKR has not provided any financial support other than its obligated amount as of December 31, 2023. Additionally, Global Atlantic also has unfunded commitments of $22.7 million in relation to other limited partnership interests as of December 31, 2023.

As of December 31, 2023 and December 31, 2022, the maximum exposure to loss, before allocations to the carry pool and noncontrolling interests, if any, for those VIEs in which KKR is determined not to be the primary beneficiary but in which it has a variable interest is as follows:

December 31, 2023December 31, 2022
Investments - Asset Management$7,877,904$6,862,712
Due from (to) Affiliates, net - Asset Management1,097,9391,356,308
Maximum Exposure to Loss - Asset Management$8,975,843$8,219,020
Other Investment Partnerships - Insurance$169,265$295,808
Investment in Renewable Energy - Insurance55,48530,177
Maximum Exposure to Loss - Insurance$224,750$325,985
Total Maximum Exposure to Loss$9,200,593$8,545,005

Notes to Financial Statements (Continued)

16. DEBT OBLIGATIONS

Asset Management Debt Obligations

In Asset Management, KKR enters into credit agreements and issues debt for its general operating and investment purposes. KKR consolidates and reports debt obligations of KKR Financial Holdings LLC, a KKR subsidiary ("KFN"), which are non-recourse to KKR beyond the assets of KFN. From time to time, KKR may provide credit support for the funding obligations of its subsidiaries.

Certain of KKR's consolidated investment funds have entered into financing arrangements with financial institutions, generally to provide liquidity to such investment funds. These financing arrangements are generally not direct obligations of the general partners of KKR's investment funds (beyond KKR's capital interest) or its management companies. Such borrowings have varying maturities and bear interest at floating rates. Borrowings are generally secured by the investment purchased with the proceeds of the borrowing and/or the uncalled capital commitment of each respective fund. When an investment vehicle borrows, the proceeds are available only for use by that investment vehicle and are not available for the benefit of other investment vehicles or KKR. Collateral within each investment vehicle is also available only against borrowings by that investment vehicle and not against the borrowings of other investment vehicles or KKR.

In certain other cases, investments and other assets held directly by majority-owned consolidated investment vehicles and other entities have been funded with borrowings that are collateralized by the investments and assets they own. These borrowings are non-recourse to KKR beyond the investments or assets serving as collateral or the capital that KKR has committed to fund such investment vehicles. Such borrowings have varying maturities and generally bear interest at fixed rates.

In addition, consolidated CFEs issue debt securities to third-party investors which are collateralized by assets held by the CFE. Debt securities issued by CFEs are supported solely by the assets held at the CFEs and are not collateralized by assets of any other KKR entity. CFEs also may have warehouse facilities with banks to provide liquidity to the CFE. The CFE's debt obligations are non-recourse to KKR beyond the assets of the CFE.

Notes to Financial Statements (Continued)

KKR's Asset Management debt obligations consisted of the following:

December 31, 2023December 31, 2022
Financing AvailableBorrowing OutstandingFair ValueFinancing AvailableBorrowing OutstandingFair Value
Revolving Credit Facilities:
Corporate Credit Agreement$1,500,000$—$—$1,500,000$—$—
KCM Credit Agreement (1)736,492——723,132——
KCM 364-Day Revolving Credit Agreement750,000——750,000——
Notes Issued: (2)
KKR ¥25 billion (or $177.3 million) 0.509% Notes Due 2023 (8)(5)————189,432189,447
KKR ¥5 billion (or $35.5 million) 0.764% Notes Due 2025(5)—35,31635,390—37,64637,625
KKR ¥36.4 billion (or $258.1 million) 1.054% Notes Due 2027(5)—257,132255,840—274,628271,081
KKR ¥44.7 billion (or $317.0 million) 1.428% Notes Due 2028(5)—315,599315,217———
KKR €650 million (or $717.4 million) 1.625% Notes Due 2029(5)—712,331646,248—687,928565,003
KKR $750 million 3.750% Notes Due 2029 (7)(5)—726,331684,323—744,222675,413
KKR ¥4.9 billion (or $34.7 million) 1.244% Notes Due 2029(5)—34,33933,985—36,65736,020
KKR ¥1.8 billion (or $12.8 million) 1.614% Notes Due 2030(5)—12,44812,514———
KKR $750 million 4.850% Notes Due 2032(5)—742,545733,163—741,655701,610
KKR ¥6.2 billion (or $44.0 million) 1.437% Notes Due 2032(5)—43,46142,155—46,43144,800
KKR ¥1.5 billion (or $10.6 million) 1.939% Notes Due 2033(5)—10,31610,322———
KKR ¥7.5 billion (or $53.2 million) 1.553% Notes Due 2034(5)—52,59549,937—56,20453,477
KKR ¥5.5 billion (or $39.0 million) 1.795% Notes Due 2037(5)—38,45035,742—41,09738,550
KKR ¥10.3 billion (or $73.0 million) 1.595% Notes Due 2038(5)—72,16164,646—77,13469,565
KKR ¥3 billion (or $21.3 million) 2.312% Notes Due 2038(5)—20,87420,272———
KKR $500 million 5.500% Notes Due 2043 (7)(5)—490,728475,022—490,494455,287
KKR ¥4.5 billion (or $31.9 million) 2.574% Notes Due 2043(5)—31,41329,723———
KKR $1 billion 5.125% Notes Due 2044 (7)(5)—963,674887,286—964,726845,944
KKR $500 million 3.625% Notes Due 2050(5)—493,020358,580—492,753343,490
KKR $750 million 3.500% Notes Due 2050 (7)(5)—734,437527,183—736,451503,862
KKR $750 million 3.250% Notes Due 2051(5)—740,184516,038—739,832475,920
KKR ¥6 billion (or $42.5 million) 2.747% Notes Due 2053(5)—41,92937,801———
KKR $500 million 4.625% Notes Due 2061(6)—486,755377,400—486,399340,400
KFN $500 million 5.500% Notes Due 2032(3)—495,997455,340—495,511417,551
KFN $120 million 5.200% Notes Due 2033(3)—118,895106,030—118,77396,502
KFN $70 million 5.400% Notes Due 2033(3)—69,14062,648—69,04857,042
KFN Issued Junior Subordinated Notes (4)(3)—238,801208,902—237,471189,673
2,986,4927,978,8716,981,7072,973,1327,764,4926,408,262
Other Debt Obligations(1)(7)6,618,69236,907,99936,699,9204,837,89332,834,12132,649,546
$9,605,184$44,886,870$43,681,627$7,811,025$40,598,613$39,057,808

Notes to Financial Statements (Continued)

(1)Financing available is reduced by the dollar amounts specified in any issued letters of credit.

(2)Borrowing outstanding includes: (i) unamortized note discount (net of premium), as applicable and (ii) unamortized debt issuance costs, as applicable. Financing costs related to the issuance of the notes have been deducted from the note liability and are being amortized over the life of the notes.

December 31, 2023December 31, 2022
KKR Issued 0.509% Notes Due 2023$—$68
KKR Issued 0.764% Notes Due 2025140254
KKR Issued 1.054% Notes Due 20279871,284
KKR Issued 1.428% Notes Due 20281,377—
KKR Issued 1.625% Notes Due 20293,3013,914
KKR Issued 3.750% Notes Due 20293,5344,177
KKR Issued 1.244% Notes Due 2029408485
KKR Issued 1.614% Notes Due 2030316—
KKR Issued 4.850% Notes Due 20325,2375,862
KKR Issued 1.437% Notes Due 2032504565
KKR Issued 1.939% Notes Due 2033321—
KKR Issued 1.553% Notes Due 2034589646
KKR Issued 1.795% Notes Due 2037552593
KKR Issued 1.595% Notes Due 2038879940
KKR Issued 2.312% Notes Due 2038400—
KKR Issued 5.500% Notes Due 20432,8312,979
KKR Issued 2.574% Notes Due 2043497—
KKR Issued 5.125% Notes Due 20446,4206,736
KKR Issued 3.625% Notes Due 20504,6884,867
KKR Issued 3.500% Notes Due 20506,9657,226
KKR Issued 3.250% Notes Due 20517,5537,824
KKR Issued 2.747% Notes Due 2053618—
KKR Issued 4.625% Notes Due 206113,24513,601
KFN Issued 5.500% Notes Due 20324,1434,548
KFN Issued 5.200% Notes Due 20331,1461,243
KFN Issued 5.400% Notes Due 2033890964
$67,541$68,776

(3)These debt obligations are classified as Level III within the fair value hierarchy and valued using the same valuation methodologies as KKR's Level III credit investments.

(4)KKR consolidates KFN and reports KFN's outstanding $258.5 million aggregate principal amount of junior subordinated notes. The weighted average interest rate is 8.1% and 6.9% and the weighted average years to maturity is 12.8 years and 13.8 years as of December 31, 2023 and December 31, 2022, respectively.

(5)The notes are classified as Level II within the fair value hierarchy and fair value is determined by third party broker quotes.

(6)The notes are classified as Level I within the fair value hierarchy and fair value is determined by quoted prices in active markets since the debt is publicly listed.

(7)As of December 31, 2023 and December 31, 2022, the borrowing outstanding and fair value reflects the elimination for the portion of these debt obligations that are held by Global Atlantic.

(8)On March 22, 2023, the 2023 Notes matured, and KKR Group Finance Co. IV LLC repaid the principal and accrued interest in full.

KCM Short-Term Credit Agreement

On April 7, 2023, KKR Capital Markets Holdings L.P. and certain other capital markets subsidiaries (the "KCM Borrowers") replaced their existing 364-day revolving credit agreement with a new 364-day revolving credit agreement (the "KCM Short-Term Credit Agreement”) with Mizuho Bank, Ltd., as administrative agent, and one or more lenders party thereto. The KCM Short-Term Credit Agreement replaces the prior 364-day revolving credit agreement, dated as of April 8, 2022, between the KCM Borrowers and the administrative agent, and one or more lenders party to the KCM Short-Term Agreement, which was terminated according to its terms on April 7, 2023. The KCM Short-Term Credit Agreement provides for revolving borrowings up to $750 million, expires on April 5, 2024, and ranks pari passu with the existing $750 million revolving credit facility provided by them for KKR's capital markets business (the "KCM Credit Agreement").

Notes to Financial Statements (Continued)

If a borrowing is made under the KCM Short-Term Credit Agreement, the interest rate will vary depending on the type of drawdown requested. If the borrowing is (i) denominated in U.S. dollars and a term rate, it will be based on the term Secured Overnight Financing Rate ("SOFR"), (ii) denominated in euros, it will be based on EURIBOR and (iii) denominated in pounds sterling, it will be based on the Sterling Overnight Interbank Average Rate ("SONIA"), in each case, plus the applicable margin which ranges initially between 1.50% and 2.75%, depending on the duration of the loan. If the borrowing is an ABR Loan, it will be based on the greater of (i) the federal funds rate plus 0.50% and (ii) term SOFR for one-month tenor plus 1.00%, in each case, plus the applicable margin which ranges initially between 0.50% and 1.75% depending on the amount and nature of the loan. Borrowings under the KCM Short-Term Credit Agreement may only be used to facilitate the settlement of debt transactions syndicated by KKR's capital markets business. Obligations under the KCM Short-Term Credit Agreement are limited to the KCM Borrowers, which are solely entities involved in KKR's capital markets business, and liabilities under the KCM Short-Term Credit Agreement are non-recourse to other parts of KKR.

The KCM Short-Term Credit Agreement contains customary representations and warranties, events of default, and affirmative and negative covenants, including a financial covenant providing for a maximum debt to equity ratio for the KCM Borrowers. The KCM Borrowers' obligations under the KCM Short-Term Credit Agreement are secured by certain assets of the KCM Borrowers, including a pledge of equity interests of certain subsidiaries of the KCM Borrowers.

Repayment of KKR Issued 2023 Yen Senior Notes

On March 23, 2018, KKR Group Finance Co. IV LLC, an indirect subsidiary of KKR & Co. Inc., issued ¥40.3 billion aggregate principal amount of its (i) ¥25.0 billion 0.509% Senior Notes due 2023 (the "2023 Notes"), (ii) ¥5.0 billion 0.764% Senior Notes due 2025 (the "2025 Notes") and (iii) ¥10.3 billion 1.595% Senior Notes due 2038 (the "2038 Notes" and, together with the 2023 Notes and the 2025 Notes, the "JPY Notes"). On March 22, 2023, the 2023 Notes matured, and KKR Group Finance Co. IV LLC repaid the principal and accrued interest in full.

KKR Issued Yen Senior Notes

On May 25, 2023, KKR Group Finance Co. XI LLC, an indirect subsidiary of KKR & Co. Inc., completed the offering of (i) ¥44.7 billion aggregate principal amount of its 1.428% Senior Notes due May 25, 2028 (the “2028 Notes”), (ii) ¥1.8 billion aggregate principal amount of its 1.614% Senior Notes due May 24, 2030 (the “2030 Notes”), (iii) ¥1.5 billion aggregate principal amount of its 1.939% Senior Notes due May 25, 2033 (the “2033 Notes”), (iv) ¥3.0 billion aggregate principal amount of its 2.312% Senior Notes due May 25, 2038 (the “2038 Notes”), (v) ¥4.5 billion aggregate principal amount of its 2.574% Senior Notes due May 22, 2043 (the “2043 Notes”) and (vi) ¥6.0 billion aggregate principal amount of its 2.747% Senior Notes due May 23, 2053 (the “2053 Notes” and, together with the 2028 Notes, the 2030 Notes, the 2033 Notes, the 2038 Notes and the 2043 Notes, the “Yen Notes”). The Yen Notes are guaranteed by KKR & Co. Inc. and KKR Group Partnership.

The Yen Notes bear interest at the rates, and will mature on the dates, set forth above unless earlier redeemed. Interest on the Yen Notes accrues from May 25, 2023 and is payable semi-annually in arrears on May 25 and November 25 of each year, commencing on November 25, 2023 and ending on the applicable maturity date. The Yen Notes are unsecured and unsubordinated obligations of KKR Group Finance Co. XI LLC. The Yen Notes are fully and unconditionally guaranteed, jointly and severally, by each of the guarantors. The guarantees are unsecured and unsubordinated obligations of the guarantors.

The Yen Notes were issued pursuant to an indenture, dated as of April 26, 2022, among KKR Group Finance Co. XI LLC, KKR Group Co. Inc. (formerly known as KKR & Co. Inc.), KKR Group Partnership and The Bank of New York Mellon Trust Company, N.A., as trustee. The indenture governing the Yen Notes includes covenants, including limitations on KKR Group Finance Co. XI LLC’s and the Guarantors’ ability to, subject to exceptions, incur indebtedness secured by liens on voting stock or profit participating equity interests of their subsidiaries or merge, consolidate or sell, transfer or convey all or substantially all of their assets. The indenture also provides for events of default and further provides that the trustee or the holders of not less than 25% in aggregate principal amount of the outstanding Yen Notes may declare the Yen Notes immediately due and payable upon the occurrence and during the continuance of any event of default after expiration of any applicable grace period. In the case of specified events of bankruptcy, insolvency, receivership or reorganization, the principal amount of the Yen Notes and any accrued and unpaid interest on the Yen Notes automatically become due and payable. KKR Group Finance Co. XI LLC may redeem the Yen Notes at its option, in whole but not in part, at a redemption price equal to 100% of the principal amount of the Yen Notes to be redeemed, together with interest accrued and unpaid to, but excluding, the date fixed for redemption, at any time, in the event of certain changes affecting taxation as provided in the indenture governing the Yen Notes. If a change of control repurchase event occurs, the Yen Notes are subject to repurchase by KKR Group Finance Co. XI LLC at a repurchase price in cash equal to 101% of the aggregate principal amount of the Yen Notes repurchased plus any accrued and unpaid interest on the Yen Notes repurchased to, but not including, the date of repurchase.

Notes to Financial Statements (Continued)

Other Asset Management Debt Obligations

As of December 31, 2023, other debt obligations consisted of the following:

Financing AvailableBorrowing OutstandingFair ValueWeighted Average Interest RateWeighted Average Remaining Maturity in Years
Financing Facilities of Consolidated Funds and Other (1)$6,618,692$11,631,595$11,423,5166.2%5.2
Debt Obligations of Consolidated CLOs—25,276,40425,276,404(2)9.3
$6,618,692$36,907,999$36,699,920

(1)Includes borrowings collateralized by fund investments, fund co-investments and other assets held by levered investment vehicles of $2.9 billion.

(2)The senior notes of the consolidated CLOs had a weighted average interest rate of 6.9%. The subordinated notes of the consolidated CLOs do not have contractual interest rates but instead receive a pro rata amount of the net distributions from the excess cash flows of the respective CLO vehicle. Accordingly, weighted average borrowing rates for the subordinated notes are based on cash distributions during the period, if any.

Debt obligations of consolidated CLOs are collateralized by assets held by each respective CLO vehicle and assets of one CLO vehicle may not be used to satisfy the liabilities of another. As of December 31, 2023, the fair value of the consolidated CLO assets was $27.1 billion. This collateral consisted of Cash and Cash Equivalents, Investments, and Other Assets.

Insurance Debt Obligations

Global Atlantic's debt obligations consisted of the following:

December 31, 2023December 31, 2022
Financing AvailableBorrowing OutstandingFair Value**(2)**Financing AvailableBorrowing OutstandingFair Value**(2)**
Revolving Credit Facilities:
Global Atlantic revolving credit facility, due August 2026$800,000$200,000$200,000$600,000$400,000$400,000
Notes Issued and Others:
Global Atlantic senior notes, due October 2029500,000460,850500,000419,550
Global Atlantic senior notes, due June 2031650,000533,130650,000478,335
Global Atlantic senior notes, due June 2033650,000721,175——
Global Atlantic subordinated debentures, due October 2051750,000643,575750,000572,475
2,750,000$2,558,7302,300,000$1,870,360
Purchase accounting adjustments(1)40,17343,285
Debt issuance costs, net of accumulated amortization(36,499)(17,623)
Fair value loss of hedged debt obligations, recognized in earnings(165,817)(197,496)
$2,587,857$2,128,166

(1)The amortization of the purchase accounting adjustments was $3.1 million, $7.8 million and $4.9 million for the years ended December 31, 2023, 2022 and 2021, respectively.

(2)These debt obligations are classified as Level III within the fair value hierarchy and valued using the same valuation methodologies as KKR's Level III credit investments.

Global Atlantic Credit Agreement

Global Atlantic (Fin) Company ("GA FinCo") and Global Atlantic Limited (Delaware) (formerly known as Global Atlantic Financial Limited, "GALD") are both wholly-owned indirect subsidiaries of TGAFG, the holding company for the Global Atlantic business.

On August 4, 2021, GA FinCo, as borrower, and GALD, as guarantor, entered into a Credit Agreement (the "GA Credit Agreement") with Wells Fargo Bank, N.A., as administrative agent, and other lenders thereto. The GA Credit Agreement provides for up to $1.0 billion of revolving borrowings (with the option to request an increase of up to an additional $250 million), including up to $500 million of letters of credit, and has a maturity of August 2026.

On September 23, 2022, GA FinCo amended the GA Credit Agreement with Wells Fargo Bank, N.A., as administrative agent, and other lenders thereto. The principal amendments made were to replace LIBOR based interest rates with interest rates

Notes to Financial Statements (Continued)

based on term SOFR with certain rate adjustments. Beginning on September 30, 2022, interest on any funded balances will accrue at term SOFR plus a spread ranging from 1.225% to 2.100%.

As of December 31, 2023, there was $200 million in revolving borrowings outstanding and no letters of credit outstanding under the GA Credit Agreement.

Global Atlantic Senior Notes due 2033

In June 2023, Global Atlantic (Fin) Company, or “GA FinCo,” a Delaware corporation and an indirect subsidiary of TGAFG, issued $650 million aggregate principal amount of 7.950% senior unsecured notes due 2033 (the “GA 2033 Senior Notes”). This included $500 million issued on June 15, 2023, and a subsequent reopening of $150 million issued on June 21, 2023. The proceeds of the 2033 Senior Notes were used, in part, to repay outstanding indebtedness under Global Atlantic's revolving credit facility. Remaining proceeds are intended to be used for Global Atlantic's general corporate purposes. The GA 2033 Senior Notes were issued pursuant to an indenture, dated as of October 7, 2019, among GA FinCo, as issuer, GALD, as guarantor, and U.S. Bank National Association, as trustee, and supplemented by the Third and Fourth Supplemental Indentures, dated as of June 15, 2023 and June 21, 2023, respectively, among GA FinCo, GALD and the trustee. The GA 2033 Senior Notes are fully and unconditionally guaranteed on a senior unsecured basis by GALD.

The GA 2033 Senior Notes bear interest at a rate of 7.950% per year. Interest on the GA 2033 Senior Notes is payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2023. The GA 2033 Senior Notes will mature on June 15, 2033. GA FinCo may, at its option, redeem some or all of the GA 2033 Senior Notes at any time: (i) prior to March 15, 2033 at a redemption price equal to 100% of the principal amount of the GA 2033 Senior Notes to be redeemed plus a “make-whole” premium and accrued and unpaid interest, if any, to the date of redemption; and (ii) on or after March 15, 2033 at a redemption price equal to 100% of the principal amount of the GA 2033 Senior Notes to be redeemed, plus accrued and unpaid interest to the date of redemption.

Debt Covenants

Borrowings of KKR (including Global Atlantic) contain various debt covenants. These covenants do not, in management's opinion, materially restrict KKR's operating business or investment strategies as of December 31, 2023. KKR (including Global Atlantic) was in compliance with such debt covenants in all material respects as of December 31, 2023.

Scheduled principal payments for Asset Management debt obligations at December 31, 2023 are as follows:
Revolving Credit FacilitiesNotes IssuedOther Debt ObligationsTotal
2024——3,617,4253,617,425
2025—35,456318,191353,647
2026——1,129,0951,129,095
2027—258,119519,240777,359
2028—316,976991,6621,308,638
Thereafter—7,470,91630,630,59838,101,514
$—$8,081,467$37,206,211$45,287,678
Scheduled principal payments for Insurance debt obligations at December 31, 2023 are as follows:
Revolving Credit FacilitiesNotes IssuedOther Debt ObligationsTotal
2024$—$—$—$—
2025————
2026200,000——200,000
2027————
2028————
Thereafter—2,550,000—2,550,000
$200,000$2,550,000$—$2,750,000

Notes to Financial Statements (Continued)

17. POLICY LIABILITIES

The following reflects the reconciliation of the components of policy liabilities to the total balance reported in the consolidated statements of financial condition as of December 31, 2023 and 2022:

December 31, 2023December 31, 2022
Policyholders’ account balances$125,187,354$112,281,236
Liability for future policy benefits17,823,75014,445,920
Additional liability for annuitization, death, or other insurance benefits7,129,7854,970,969
Market risk benefit liability1,120,968682,038
Other policy-related liabilities(1)8,796,4145,400,766
Total policy liabilities$160,058,271$137,780,929

(1)Other policy-related liabilities as of December 31, 2023 and 2022 primarily consist of negative VOBA ($867.9 million and $1.0 billion, respectively), policy liabilities accounted under a fair value option ($1.2 billion and $1.3 billion, respectively), embedded derivatives associated with contractholder deposit funds ($4.0 billion and $2.2 billion, respectively), cost-of-reinsurance liabilities ($1.8 billion and $108.4 million, respectively) and outstanding claims ($235.1 million and $253.7 million, respectively).

Policyholders’ account balances

The following reflects the policyholders’ account balances roll-forward for the years ended December 31, 2023 and 2022, and the policyholders’ account balances weighted average interest rates, net amount at risk, and cash surrender value as of those dates:

Year ended December 31, 2023
Fixed rate annuitiesFixed indexed annuitiesInterest sensitive lifeFunding agreementsOther**(1)**Total
Balance as of beginning of period$48,510,703$29,123,926$17,397,185$7,535,489$9,713,933$112,281,236
Issuances and premiums received16,604,4454,891,4285,824,786510,000675,34028,505,999
Benefit payments, surrenders, and withdrawals(9,493,423)(4,234,383)(917,240)(1,415,763)(1,585,439)(17,646,248)
Interest(2)1,483,545533,127497,919226,394303,0263,044,011
Other activity(3)(342,534)(145,653)(833,597)159,878164,262(997,644)
Balance as of end of period$56,762,736$30,168,445$21,969,053$7,015,998$9,271,122$125,187,354
Less: reinsurance recoverable(10,279,657)(3,191,151)(7,190,573)—(3,021,333)(23,682,714)
Balance as of end of period, net of reinsurance recoverable$46,483,079$26,977,294$14,778,480$7,015,998$6,249,789$101,504,640
Average interest rate3.36%2.15%3.28%3.12%2.74%2.94%
Net amount at risk, gross of reinsurance(4)$—$—$135,840,650$—$1,168,689$137,009,339
Cash surrender value(5)$43,590,426$28,429,388$15,161,982$—$4,659,916$91,841,712

(1)“Other” consists of activity related to payout annuities (without life contingencies), preneed, variable annuities and life products.

(2)Interest includes interest credited to policyholders’ account values, and interest accreted in other components of the policyholder account balance, including investment-type contract values, host amounts for contractholder deposits with embedded derivatives, funding agreements and other associated reserves.

(3) “Other activity” includes policy charges, fees and commissions, transfers, assumption changes, fair value changes and the impact of hedge fair value adjustments.

(4)Net amount at risk represents the difference between the face value of the insurance policy and the reserve accumulated under that same policy.

(5)Cash surrender values are reported net of any applicable surrender charges, net of reinsurance.

Notes to Financial Statements (Continued)

Year ended December 31, 2022
Fixed rate annuitiesFixed indexed annuitiesInterest sensitive lifeFunding agreementsOther**(1)**Total
Balance as of beginning of period$42,408,740$25,204,787$17,391,996$6,014,553$6,624,562$97,644,638
Issuances and premiums received11,930,4796,048,9671,080,2923,118,7763,733,84125,912,355
Benefit payments, surrenders, and withdrawals(6,555,890)(2,408,735)(712,204)(1,338,392)(862,341)(11,877,562)
Interest(2)1,024,872323,086506,836132,590228,4522,215,836
Other activity(3)(297,498)(44,179)(869,735)(392,038)(10,581)(1,614,031)
Balance as of end of period$48,510,703$29,123,926$17,397,185$7,535,489$9,713,933$112,281,236
Less: reinsurance recoverable(6,704,792)(3,525,320)(3,469,319)—(3,061,609)(16,761,040)
Balance as of end of period, net of reinsurance recoverable$41,805,911$25,598,606$13,927,866$7,535,489$6,652,324$95,520,196
Average interest rate2.58%1.46%3.09%1.98%2.84%2.13%
Net amount at risk, gross of reinsurance(4)$—$—$81,049,075$—$1,187,719$82,236,794
Cash surrender value(5)$39,035,216$25,924,670$12,907,551$—$5,022,020$82,889,457

(1)“Other” consists of activity related to payout annuities (without life contingencies), preneed, variable annuities and life products.

(2)Interest includes interest credited to policyholders’ account values, and interest accreted in other components of the policyholder account balance, including investment-type contract values, host amounts for contractholder deposits with embedded derivatives, funding agreements and other associated reserves.

(3)“Other activity” includes policy charges, fees and commissions, transfers, assumption changes, fair value changes and the impact of hedge fair value adjustments.

(4)Net amount at risk represents the difference between the face value of the insurance policy and the reserve accumulated under that same policy.

(5)Cash surrender values are reported net of any applicable surrender charges, net of reinsurance.

The following table presents the account values by range of guaranteed minimum crediting rates and the related range of difference, in basis points, between rates being credited to policyholders and the respective guaranteed minimums. Account values, as disclosed below, differ from policyholder account balances as they exclude balances associated with index credits, contractholder deposit fund host balances, funding agreements, and other associated reserves. In addition, policyholder account balances include discounts and premiums on assumed business which are not reflected in account values.

As of December 31, 2023
Account values with adjustable crediting rates subject to guaranteed minimums:
Range of guaranteed minimum crediting rates:At guaranteed minimum1 - 49 bps above guaranteed minimum50 - 99 bps above guaranteed minimum100 - 150 bps above guaranteed minimumGreater than 150 bps above guaranteed minimumTotal
Less than 1.00%$2,706,701$25,839$660,189$3,546,450$25,940,436$32,879,615
1.00% - 1.99%1,471,3201,013,423999,8521,968,5196,603,79512,056,909
2.00% - 2.99%896,27644,85055,874109,4111,310,2342,416,645
3.00% - 4.00%12,494,4391,186,572414,111953,5601,067,32516,116,007
Greater than 4.00%12,095,6471,385,538138,112117,561298,49314,035,351
Total$29,664,383$3,656,222$2,268,138$6,695,501$35,220,283$77,504,527
Percentage of total38%5%3%9%45%100%
As of December 31, 2022
Account values with adjustable crediting rates subject to guaranteed minimums:
Range of guaranteed minimum crediting rates:At guaranteed minimum1 - 49 bps above guaranteed minimum50 - 99 bps above guaranteed minimum100 - 150 bps above guaranteed minimumGreater than 150 bps above guaranteed minimumTotal
Less than 1.00%$3,211,064$25,500$847,989$4,669,081$20,158,257$28,911,891
1.00% - 1.99%2,350,3481,171,9111,077,2191,910,8632,820,4739,330,814
2.00% - 2.99%1,096,38353,3609,7471,222590,0321,750,744
3.00% - 4.00%12,505,278417,005147,812494,726136,42913,701,250
Greater than 4.00%7,822,2741,596,91865,4986,08755,5899,546,366
Total$26,985,347$3,264,694$2,148,265$7,081,979$23,760,780$63,241,065
Percentage of total43%5%3%11%38%100%

Notes to Financial Statements (Continued)

Liability for future policy benefits

The following tables summarize the balances of, and changes in, the liability for future policy benefits for traditional and limited-payment contracts for the years ended December 31, 2023 and 2022:

Years Ended
December 31, 2023December 31, 2022
Payout annuities**(1)**Other**(2)**TotalPayout annuities**(1)**Other**(2)**Total
Present value of expected net premiums
Balance as of beginning of the period$—$(255,401)$(255,401)$—$(329,716)$(329,716)
Balance at original discount rate$—$(308,674)$(308,674)$—$(334,780)$(334,780)
Effect of changes in cash flow assumptions—43,84243,842—5,2265,226
Effect of actual variances from expected experience—(4,839)(4,839)—(9,738)(9,738)
Adjusted beginning of period balance—(269,671)(269,671)—(339,292)(339,292)
Interest(4,314)(4,314)—(4,768)(4,768)
Net premiums collected—32,92732,927—35,38635,386
Ending balance at original discount rate—(241,058)(241,058)—(308,674)(308,674)
Effect of changes in discount rate assumptions—32,68832,688—53,27353,273
Balance as of the end of the period$—$(208,370)$(208,370)$—$(255,401)$(255,401)
Present value of expected future policy benefits
Balance as of beginning of the period$14,021,515$679,806$14,701,321$16,302,904$883,399$17,186,303
Balance at original discount rate$17,321,203$818,450$18,139,653$16,443,480$895,295$17,338,775
Effect of changes in cash flow assumptions(1,563)(46,438)(48,001)—(7,224)(7,224)
Effect of actual variances from expected experience29,33913,29642,635(149,324)11,202(138,122)
Adjusted beginning of period balance17,348,979785,30818,134,28716,294,156899,27317,193,429
Issuances3,869,1334583,869,5912,228,9769,3912,238,367
Interest437,5969,246446,842305,30316,385321,688
Benefit payments(1,615,708)(93,357)(1,709,065)(1,507,232)(100,994)(1,608,226)
De-recognition (lapses and withdrawals)————(5,605)(5,605)
Ending balance at original discount rate20,040,000701,65520,741,65517,321,203818,45018,139,653
Effect of changes in discount rate assumptions(2,612,647)(96,888)(2,709,535)(3,299,688)(138,644)(3,438,332)
Balance as of the end of the period17,427,353604,76718,032,12014,021,515679,80614,701,321
Net liability for future policy benefits17,427,353396,39717,823,75014,021,515424,40514,445,920
Less: reinsurance recoverable(3)(9,270,511)(3,042)(9,273,553)(7,442,737)1,911(7,440,826)
Net liability for future policy benefits, net of reinsurance recoverables$8,156,842$393,355$8,550,197$6,578,778$426,316$7,005,094

(1)Payout annuities generally only have a single premium received at contract inception. As a result, the liability for future policy benefits generally would not reflect a present value for future premiums for payout annuities.

(2)“Other” consists of activity related to variable annuities, traditional life insurance, preneed insurance and fixed-rate annuity products.

(3)Reinsurance recoverables associated with the liability for future policy benefits is net of the effect of changes in discount rate assumptions of $389.9 million and $(1.8) billion for the years ended December 31, 2023 and 2022, respectively.

Notes to Financial Statements (Continued)

The following table summarizes the amount of gross premiums related to traditional and limited-payment contracts recognized in the consolidated statements of operations for the years ended December 31, 2023, 2022 and 2021:

Gross premiums
Years ended December 31,
202320222021
Payout annuities$4,143,287$2,400,351$4,745,708
Other64,49372,15971,804
Total products$4,207,780$2,472,510$4,817,512

`

The following table reflects the weighted-average duration and weighted-average interest rates of the future policy benefit liability as of December 31, 2023 and 2022:

As of December 31, 2023
Payout annuitiesOther
Weighted-average interest rates, original discount rate3.37%2.57%
Weighted-average interest rates, current discount rate4.95%4.95%
Weighted-average liability duration (years, current rates)8.589.03
As of December 31, 2022
Payout annuitiesOther
Weighted-average interest rates, original discount rate2.76%2.50%
Weighted-average interest rates, current discount rate5.04%5.03%
Weighted-average liability duration (years, current rates)8.399.32

The following reflects the undiscounted ending balance of expected future gross premiums and expected future benefits and payments for traditional and limited-payment contracts, as of December 31, 2023 and 2022:

As of December 31, 2023
Payout annuitiesOther
Expected future benefit payments, undiscounted$29,164,580$832,608
Expected future benefit payments, discounted (original discount rate)19,899,423689,760
Expected future benefit payments, discounted (current discount rate)17,427,352604,768
Expected future gross premiums, undiscounted—377,693
Expected future gross premiums, discounted (original discount rate)—317,710
Expected future gross premiums, discounted (current discount rate)—262,653
As of December 31, 2022
Payout annuitiesOther
Expected future benefit payments, undiscounted$23,980,780$986,614
Expected future benefit payments, discounted (original discount rate)17,321,202812,773
Expected future benefit payments, discounted (current discount rate)14,021,514680,807
Expected future gross premiums, undiscounted—524,122
Expected future gross premiums, discounted (original discount rate)—431,466
Expected future gross premiums, discounted (current discount rate)—356,968

Notes to Financial Statements (Continued)

Significant inputs, judgments and assumptions used in measuring future policyholder benefits

Significant policyholder behavior and other assumption inputs to the calculation of the liability for future policy benefits include discount rates, mortality and, for life insurance, lapse rates. Global Atlantic reviews all assumptions at least annually, and more frequently if necessary. Accordingly, as part of the annual assumption review conducted during the year ended December 31, 2023, premium and lapse assumptions were revised for traditional life insurance products (included with the “Other” category), which resulted in a $4.2 million favorable impact to net income before taxes.

For the years ended December 31, 2023 and 2022, Global Atlantic recognized $(315.0) million and $1.4 billion, net of reinsurance, in other comprehensive income, respectively, due to changes in the future policy benefits estimate from updating discount rates. During the years ended December 31, 2023 and 2022, there were no changes to the methods used to determine the discount rates.

Additional liability for annuitization, death, or other insurance benefits

The following tables reflect the additional liability for annuitization, death, or other insurance benefits roll-forward for the years ended December 31, 2023 and 2022:

Years ended December 31,
20232022
Balance as of beginning of period$5,104,810$4,832,678
Effect of changes in cash flow assumptions13,77318,346
Effect of changes in experience(43,775)(18,298)
Adjusted balance as of beginning of period5,074,8084,832,726
Issuances1,929,57123,790
Assessments495,559505,365
Benefits paid(399,201)(406,062)
Interest150,529148,991
Balance as of end of period7,251,2665,104,810
Less: impact of unrealized investment gain and losses121,481133,841
Less: reinsurance recoverable, end of period1,434,130—
Balance, end of year, net of reinsurance recoverable and impact of unrealized investment gains and losses$5,695,655$4,970,969

The additional liability for annuitization, death, or other insurance benefits relates primarily to secondary guarantees on certain interest-sensitive life products, and preneed insurance.

The following reflects the amount of gross assessments recognized for the additional liability for annuitization, death, or other insurance benefits in the consolidated statements of operations for the years ended December 31, 2023, 2022 and 2021:

Gross assessments
Years ended December 31,
202320222021
Total amount recognized within revenue in the consolidated statements of operations$471,957$586,269$562,955

The following reflects the weighted average duration and weighted average interest rate for the additional liability for annuitization, death, or other insurance benefits as of December 31, 2023 and 2022:

As of
December 31, 2023December 31, 2022
Weighted-average interest, current discount rate3.09%3.00%
Weighted-average liability duration (years)27.6428.21

Significant inputs, judgments and assumptions used in measuring the additional liabilities for annuitization, death, or other insurance benefits

Significant policyholder behavior assumption inputs to the calculation of the additional liability for annuitization, death, or other insurance benefits include mortality and lapse rates. Global Atlantic reviews all assumptions at least annually, and more

Notes to Financial Statements (Continued)

frequently if necessary. Accordingly, as part of the annual assumption review conducted during the year ended December 31, 2023, assumptions for lapse rates, investment yields, and option budget costs were updated, which resulted in a $13.8 million increase in the additional liability for annuitization, death, and other insurance benefits. During the year ended December 31, 2022, assumptions for lapse rates and investment yields were updated, which resulted in a $18.3 million increase in the liability.

Market risk benefits

The following table presents the balances of, and changes in, market risk benefits:

Years ended
December 31, 2023December 31, 2022
Fixed-indexed annuityVariable- and other annuitiesTotalFixed-indexed annuityVariable- and other annuitiesTotal
Balance as of beginning of period$548,536$120,322$668,858$1,188,355$255,048$1,443,403
Balance as of beginning of period, before impact of changes in instrument-specific credit risk$651,641$150,558$802,199$1,183,116$254,972$1,438,088
Issuances1,839(36)1,80353242,00442,536
Interest38,7398,59047,32917,4284,79422,222
Attributed fees collected103,96183,712187,67398,70384,978183,681
Benefit payments(4,366)(1,729)(6,095)(2,587)(3,941)(6,528)
Effect of changes in interest rates(27,401)4,464(22,937)(614,650)(355,242)(969,892)
Effect of changes in equity markets(23,026)(86,643)(109,669)65,050159,836224,886
Effect of actual experience different from assumptions142,45311,021153,47416,892(47,595)(30,703)
Effect of changes in other future expected assumptions(93,225)55,657(37,568)(112,843)10,752(102,091)
Balance as of end of period before impact of changes in instrument-specific credit risk790,615225,5941,016,209651,641150,558802,199
Effect of changes in instrument-specific credit risk77,65327,089104,742(103,105)(30,236)(133,341)
Balance as of end of period868,268252,6831,120,951548,536120,322668,858
Less: reinsurance recoverable as of the end of the period—(14,214)(14,214)—(23,113)(23,113)
Balance as of end of period, net of reinsurance recoverable$868,268$238,469$1,106,737$548,536$97,209$645,745
Net amount at risk$4,282,995$1,423,763$5,706,758$3,846,090$1,267,418$5,113,508
Weighted-average attained age of contract holders (years)706970707170

The following reflects the reconciliation of the market risk benefits reflected in the preceding table to the amounts reported in an asset and liability position, respectively, in the consolidated statements of financial condition as of December 31, 2023 and 2022:

As of December 31, 2023As of December 31, 2022
AssetLiabilityNetAssetLiabilityNet
Fixed-indexed annuities$—$868,268$(868,268)$13,150$561,686$(548,536)
Variable- and other annuities17252,700(252,683)30120,352(120,322)
Total$17$1,120,968$(1,120,951)$13,180$682,038$(668,858)

Significant inputs, judgments, and assumptions used in measuring market risk benefits

Significant policyholder behavior and other assumption inputs to the calculation of the market risk benefits include interest rates, instrument-specific credit risk, mortality rates, surrender rates, and utilization rates. Global Atlantic reviews all assumptions at least annually, and more frequently if evidence suggests. Accordingly, as part of the annual assumption review conducted during the year ended December 31, 2023, assumptions for fixed-indexed annuity surrender and partial withdrawals,

Notes to Financial Statements (Continued)

and variable annuity surrender and activations were updated, which resulted in a $37.6 million favorable impact to net income before taxes. During the year ended December 31, 2022, assumptions for fixed-indexed annuity activations, surrender rates, option budgets, and variable and other annuity rider fees and termination rates were updated, which resulted in a $102.1 million favorable impact to net income before taxes.

Separate account liabilities

Separate account assets and liabilities consist of investment accounts established and maintained by Global Atlantic for certain variable annuity and interest-sensitive life insurance contracts. Some of these contracts include minimum guarantees such as GMDBs and GMWBs that guarantee a minimum payment to the policyholder.

The assets that support these variable annuity and interest-sensitive life insurance contracts are measured at fair value and are reported as separate account assets on the consolidated statements of financial condition. An equivalent amount is reported as separate account liabilities. Market risk benefit assets and liabilities for minimum guarantees are valued and presented separately from separate account assets and separate account liabilities. For more information on market risk benefits see “—Market risk benefits” in this footnote. Policy charges assessed against the policyholders for mortality, administration and other services are included in “Policy fees” in the consolidated statements of operations.

The following table presents the balances of and changes in separate account liabilities:

December 31, 2023December 31, 2022
Variable annuitiesInterest-sensitive lifeTotalVariable annuitiesInterest-sensitive lifeTotal
Balance as of beginning of period$3,627,770$503,024$4,130,794$4,922,704$663,724$5,586,428
Premiums and deposits30,66913,72344,39233,69715,36049,057
Surrenders, withdrawals and benefit payments(470,858)(22,207)(493,065)(437,395)(13,673)(451,068)
Investment performance497,88795,314593,201(763,710)(115,136)(878,846)
Other(120,439)(47,883)(168,322)(127,526)(47,251)(174,777)
Balance as of end of period$3,565,029$541,971$4,107,000$3,627,770$503,024$4,130,794
Cash surrender value as of end of period(1)$3,565,029$541,971$4,107,000$3,627,770$503,024$4,130,794

(1)Cash surrender value attributed to the separate accounts does not reflect the impact of surrender charges; surrender charges are attributed to policyholder account balances recorded in the general account.

The following table presents the aggregate fair value of assets, by major investment asset type, supporting separate accounts:

December 31, 2023December 31, 2022
Asset type:
Managed volatility equity/fixed income blended fund$2,131,149$2,246,803
Equity1,596,4671,634,357
Fixed income152,398156,594
Money market226,38792,284
Alternative599756
Total assets supporting separate account liabilities$4,107,000$4,130,794

Notes to Financial Statements (Continued)

Closed blocks

Summarized financial information of Global Atlantic’s closed blocks is as follows:

December 31, 2023December 31, 2022
Assets
Total investments$1,272$1,365
Cash and cash equivalents6,3324,007
Accrued investment income4644
Reinsurance recoverable926,035981,775
Deferred income taxes42,92643,766
Total assets976,6111,030,957
Liabilities
Policy liabilities877,856923,039
Policyholder dividend obligation at fair value77,76279,575
Policyholder dividends payable at fair value10,24010,013
Total policy liabilities965,8581,012,627
Accrued expenses and other liabilities12,79312,803
Total liabilities978,6511,025,430
Excess of closed block liabilities over assets designated to the closed blocks and maximum future earnings to be recognized from closed block assets and liabilities$2,040$(5,527)
Years Ended
December 31, 2023December 31, 2022December 31, 2021
Revenues
Premiums and other income$(911)$(436)$660
Net investment expense319164(28)
Total revenues(592)(272)632
Benefits and expenses
Policy benefits and claims(2,219)(12,141)(5,652)
Other expenses(13)2518
Total benefits and expenses(2,232)(11,890)(5,644)
Net contribution from the closed blocks1,64011,6186,276
Income tax (benefit) expense86116,185(3,026)
Net (loss) income$779$(4,567)$9,302

Many expenses related to the closed block operations are charged to operations outside the closed blocks; accordingly, the contribution from the closed blocks does not represent the actual profitability of the closed block operations.

The closed blocks of business represent policies acquired through acquisition, which were valued at fair value as of the acquisition date.

Notes to Financial Statements (Continued)

18. INCOME TAXES

KKR & Co. Inc. is a domestic corporation for U.S. federal income tax purposes and is subject to U.S. federal, state and local income taxes at the entity level on its share of taxable income. In addition, KKR Group Partnership and certain of its subsidiaries operate as partnerships for U.S. federal tax purposes but as taxable entities for certain state, local or non-U.S. tax purposes. Moreover, certain corporate subsidiaries of KKR, including certain subsidiaries of Global Atlantic, are domestic corporations for U.S. federal income tax purposes and are subject to U.S. federal, state, and local income taxes.

Income before income taxes includes the following components:

For the Years Ended December 31,
202320222021
Income before Income Taxes:
United States$5,614,242$(713,238)$13,357,237
Foreign940,367421,017489,362
Total Income before Income Taxes$6,554,609$(292,221)$13,846,599

The provision (benefit) for income taxes consists of the following:

For the Years Ended December 31,
202320222021
Current
Federal$462,940$737,737$344,052
State and Local52,48097,07440,336
Foreign108,83694,47381,370
Subtotal624,256929,284465,758
Deferred
Federal447,488(703,169)835,151
State and Local121,198(83,113)97,063
Foreign4,581(17,609)(3,090)
Subtotal573,267(803,891)929,124
Total Income Taxes$1,197,523$125,393$1,394,882

The following table reconciles the U.S. Federal Statutory Tax Rate to the Effective Income Tax Rate:

For the Years Ended December 31,
202320222021
Statutory U.S. Federal Income Tax Rate21.0%21.0%21.0%
Income not attributable to KKR & Co. Inc. (1)(8.8)%(94.1)%(13.8)%
Foreign Income Taxes(0.3)%0.8%0.3%
State and Local Income Taxes2.2%(4.6)%0.8%
Compensation Charges not attributable to KKR & Co. Inc.4.9%31.4%2.8%
Other(0.7)%2.6%(1.0)%
Effective Income Tax Rate18.3%(42.9)%10.1%

(1)Represents primarily income attributable to (i) noncontrolling interests for all periods. This item also includes investment income of certain entities and net carried interest of certain general partners of KKR investment funds that were not subject to U.S. federal income taxes prior to the conversion of KKR & Co. L.P. to KKR & Co. Inc.

Notes to Financial Statements (Continued)

A summary of the tax effects of the temporary differences is as follows:

Asset ManagementDecember 31, 2023December 31, 2022
Deferred Tax Assets
Fund Management Fee Credits$117,958$185,154
Equity Based Compensation87,64970,246
KKR Holdings Unit Exchanges (1)421,065445,587
Depreciation and Amortization (2)172,995185,865
Operating Lease Liability83,59480,323
Other28,12729,273
Total Deferred Tax Assets before Valuation Allowance911,388996,448
Valuation Allowance——
Total Deferred Tax Assets911,388996,448
Deferred Tax Liabilities
Investment Basis Differences / Net Unrealized Gains & Losses (2)(3)2,629,5721,971,093
Indefinite Lived Intangible Asset(4)494,907532,274
Operating Lease Right-of-Use Asset83,59480,323
Other24,85325,729
Total Deferred Tax Liabilities3,232,9262,609,419
Total Deferred Taxes, Net$(2,321,538)$(1,612,971)

(1)In connection with exchanges of KKR Holdings units into common stock of KKR & Co. Inc., KKR records a deferred tax asset associated with an increase in KKR & Co. Inc.'s share of the tax basis of the tangible and intangible assets of KKR Group Partnership. This amount is offset by an adjustment to record amounts due to KKR Holdings and principals under the tax receivable agreement, which is included within Due to Affiliates in the consolidated statements of financial condition. The net impact of these adjustments was recorded as an adjustment to equity at the time of the exchanges.

(2)This deferred tax item includes a portion of the tax benefit KKR recognized as a result of the step-up in tax basis generated by the conversion of KKR & Co. L.P. to KKR & Co. Inc.

(3)This deferred tax item includes a portion of the tax liability KKR recognized as a result of the Reorganization Mergers. See Note 1 "Organization" in our financial statements.

(4)In connection with the acquisition of KJRM in 2022, KKR recognized a deferred tax liability resulting from the difference in the book and tax basis of the indefinite lived intangibles as of the acquisition date.

InsuranceDecember 31, 2023December 31, 2022
Deferred Tax Assets
Insurance Reserves$552,373$537,234
Insurance Intangibles358,154209,922
Net Operating Loss and Capital Loss Carryforwards828,72769,566
Insurance Investment Basis Differences, Including Derivatives587,3391,620,238
Other92,34331,546
Total Deferred Tax Assets before Valuation Allowance2,418,9362,468,506
Valuation Allowance(89,250)(89,250)
Total Deferred Tax Assets2,329,6862,379,256
Deferred Tax Liabilities
Insurance Loss Reserve Adjustment55,92983,894
Other—23,209
Total Deferred Tax Liabilities55,929107,103
Total Deferred Taxes, Net$2,273,757$2,272,153

Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets.

Notes to Financial Statements (Continued)

In 2022, changes in market conditions, including rapidly rising interest rates, impacted the unrealized tax gains and losses in the available for sale securities portfolios of Global Atlantic, resulting in deferred tax assets related to net unrealized tax capital losses for which the carryforward period has not yet begun. As such, when assessing recoverability, Global Atlantic considered our ability and intent to hold the underlying securities to recovery. Based on all available evidence, Global Atlantic concluded that a valuation allowance should be established on a portion of the deferred tax assets related to unrealized tax capital losses that are not more-likely-than-not to be realized, which represents the portion of the portfolio Global Atlantic estimates it would not be able to hold to recovery. For the year ended December 31, 2023, Global Atlantic maintained $89.3 million of valuation allowance associated with the unrealized tax capital losses in the available for sale securities portfolio. The valuation allowance establishment was allocated to other comprehensive income. Based on available evidence and various assumptions as to the timing of income, KKR believes it is likely that all other deferred tax assets will be realized.

As of December 31, 2023, the Global Atlantic (Fin) Company ("GA FinCo") consolidated group has a U.S. federal net operating loss ("NOL") carryforward of $274 million; $56 million will begin to expire in 2034 and the remainder has an indefinite life. The GA FinCo consolidated group also has capital loss carryforwards of $143 million which will begin to expire in 2027. In addition, Global Atlantic Re had a federal NOL of $3.5 billion, all of which has an indefinite life.

As of December 31, 2023, KKR has accumulated undistributed earnings generated by certain foreign subsidiaries for which we have not recorded any deferred taxes with respect to outside U.S. federal income tax basis difference on these subsidiaries because of our ability and intent to reinvest such earnings indefinitely unless they can be distributed tax free. KKR will continue to evaluate its capital management plans. It is not practicable for us to determine the amount of unrecognized deferred income tax liability due to the complexity associated with the hypothetical calculation.

As a result of the Reorganization Mergers (see Note 1 "Organization" in our financial statements), KKR recorded additional deferred tax liabilities of $1,095 million with a corresponding decrease to Additional Paid-In Capital during the twelve months ended December 31, 2022.

On August 16, 2022, the Inflation Reduction Act (the “IRA”) was signed into law. The IRA enacted a new 15% corporate minimum tax ("CAMT") on the "adjusted financial statement income" of certain large corporations, which became effective on January 1, 2023. In addition, the IRA enacted a 1% excise tax on corporate stock repurchases completed after December 31, 2022. While KKR expects to have a corporate alternative minimum tax ("CAMT") liability for the year ending December 31, 2023, there is no material impact to its provision for income taxes given that any current year payments made under CAMT would be permitted to be carried forward and used as credits in future years, resulting in a deferred tax benefit. KKR will continue to review and monitor the issuance of additional guidance from the U.S. Treasury and the IRS.

Tax Contingencies

KKR files its tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, KKR is subject to examination by U.S. federal and certain state, local and foreign tax regulators. As of December 31, 2023, tax returns of KKR and its predecessor entities are no longer subject to examinations for years before 2017 for U.S. federal tax returns and 2012 for state and local tax returns under general statute of limitations provisions.

At December 31, 2023, 2022 and 2021, KKR's unrecognized tax benefits relating to uncertain tax positions, excluding related interest and penalties, consisted of the following:

For the Years Ended December 31,
202320222021
Unrecognized Tax Benefits, beginning of period$41,008$59,633$60,712
Gross increases in tax positions in prior periods—5,169—
Gross decreases in tax positions in prior periods(13,878)(8,414)(2,009)
Gross increases in tax positions in current period9356,2612,671
Lapse of statute of limitations(219)(551)(1,741)
Settlements with taxing authorities(11,370)(21,090)—
Unrecognized Tax Benefits, end of period$16,476$41,008$59,633

If the above tax benefits were recognized, the effective income tax rate would be reduced. KKR believes that there could be a decrease to the tax positions up to $0.3 million within 12 months of the reporting date but the impact of such decrease to the effective tax rate would not be significant.

Notes to Financial Statements (Continued)

KKR recognizes interest and penalties accrued related to unrecognized tax benefits as income tax expense. Related to the unrecognized tax benefits, KKR had a net decrease of accrued penalties of $1.3 million and interest of $6.7 million during 2023 and in total, as of December 31, 2023, recognized a liability for penalties of $2.0 million and interest of $5.1 million. During 2022, penalties of $2.0 million and interest of $2.0 million were accrued and in total, as of December 31, 2022, recognized a liability for penalties of $3.2 million and interest of $11.8 million. During 2021, penalties of $2.6 million and interest of $0.5 million were accrued and in total, as of December 31, 2021, recognized a liability for penalties of $5.2 million and interest of $13.8 million.

Notes to Financial Statements (Continued)

19. EQUITY BASED COMPENSATION

For the Years Ended December 31,
202320222021
KKR Equity Incentive Plan Awards(1)$518,251$458,659$272,994
KKR Holdings Awards (2)—119,834160,722
Total$518,251$578,493$433,716

(1)For the years ended December 31, 2023, 2022 and 2021, KKR recorded equity based compensation related to our insurance business of $15.4 million, $9.0 million, and $11.7 million respectively.

(2)Represents equity-based compensation expense in connection with the allocation of units of KKR Holdings, which were not dilutive to common stockholders of KKR & Co. Inc.

Asset Management

KKR Equity Incentive Plan Awards

Under KKR's Equity Incentive Plans, KKR is permitted to grant equity awards representing ownership interests in KKR & Co. Inc. common stock. On March 29, 2019, the 2019 Equity Incentive Plan became effective. Following the effectiveness of the 2019 Equity Incentive Plan, KKR no longer makes further grants under the 2010 Equity Incentive Plan, and the 2019 Equity Incentive Plan became KKR's only plan for providing new equity-based awards by KKR & Co. Inc. Outstanding awards under the 2010 Equity Incentive Plan will remain outstanding, unchanged and subject to the terms of the 2010 Equity Incentive Plan and their respective equity award agreements, until the vesting, expiration or lapse of such awards in accordance with their terms. The total number of equity awards representing shares of common stock that may be issued under the 2019 Equity Incentive Plan is equivalent to 15% of the aggregate number of the shares of common stock and KKR Group Partnership Units (excluding KKR Group Partnership Units held by KKR & Co. Inc. or its wholly-owned subsidiaries), subject to annual adjustment. As of December 31, 2023, 46,426,437 shares may be issued under the 2019 Equity Incentive Plan. Equity awards granted pursuant to the Equity Plans generally consist of (i) restricted stock units that convert into shares of common stock of KKR & Co. Inc. (or cash equivalent) upon vesting and (ii) restricted holdings units that are exchangeable into shares of common stock of KKR & Co. Inc. upon vesting and certain other conditions.

Service-Vesting Awards

Under the Equity Incentive Plans, KKR grants restricted stock units and restricted holdings units that are subject to service-based vesting, typically over a three to five-year period from the date of grant (referred to hereafter as "Service-Vesting Awards"). In certain cases, these Service-Vesting Awards may have a percentage of the award that vests immediately upon grant, and certain Service-Vesting Awards may have vesting periods longer than five years. Additionally, some but not all Service-Vesting Awards are subject to transfer restrictions and/or minimum retained ownership requirements. Generally, the transfer restriction period, if applicable, lasts for (i) one year with respect to one-half of the interests vesting on any vesting date and (ii) two years with respect to the other one-half of the interests vesting on such vesting date. While providing services to KKR, some but not all of these awards are also subject to minimum retained ownership rules requiring the award recipient to continuously hold shares of common stock equivalents equal to at least 15% of their cumulatively vested awards that have or had the minimum retained ownership requirement. Holders of the Service-Vesting Awards do not participate in dividends until such awards have met their vesting requirements.

Expense associated with the vesting of these Service-Vesting Awards is based on the closing price of KKR & Co. Inc. common stock on the date of grant, discounted for the lack of participation rights in the expected dividends on unvested equity awards. Expense is recognized on a straight line basis over the life of the award and assumes a forfeiture rate of up to 7% annually based upon expected turnover by class of recipient.

As of December 31, 2023, there was approximately $933.9 million of total estimated unrecognized expense related to unvested Service-Vesting Awards, which is expected to be recognized over the weighted average remaining requisite service period of 2.8 years.

Notes to Financial Statements (Continued)

A summary of the status of unvested Service-Vesting Awards granted under the Equity Incentive Plans from January 1, 2023 through December 31, 2023 is presented below:

Shares (1)Weighted Average Grant Date Fair Value
Balance, January 1, 202316,170,064$45.82
Granted12,932,97459.12
Vested(4,955,354)46.53
Forfeitures(919,013)42.11
Balance, December 31, 202323,228,671$53.22

(1)Unvested Service-Vesting Awards include restricted stock units granted to Global Atlantic employees.

Market Condition Awards

Under the Equity Incentive Plans, KKR also grants restricted stock units and restricted holdings units that are subject to both a service-based vesting condition and a market price based vesting condition (referred to hereafter as "Market Condition Awards") for certain employees. The following is a discussion of Market Condition Awards, excluding the Co-CEO Awards (as defined below), except where discussed below.

The number of Market Condition Awards (other than the Co-CEO awards) that will vest depend upon (i) the market price of KKR common stock reaching certain price targets that range from $45.00 to $140.00 and (ii) the employee being employed by KKR on a certain date, which typically ranges from five to six years from the date of grant (with exceptions for involuntary termination without cause, death and permanent disability). The market price vesting condition is met when the average closing price of KKR common stock during 20 consecutive trading days meets or exceeds the stock price targets. Holders of the Market Condition Awards do not participate in dividends until such awards have met both their service-based and market price based vesting requirements. Additionally, these awards are subject to additional transfer restrictions and minimum retained ownership requirements after vesting.

Due to the existence of the service requirement, the vesting period for these Market Condition Awards (other than the Co-CEO awards) is explicit, and as such, compensation expense will be recognized on (i) a straight-line basis over the period from the date of grant through the date the award recipient is required to be employed by KKR and (ii) assumes a forfeiture rate of up to 7% annually based upon expected turnover. The fair value of the awards granted are based on a Monte Carlo simulation valuation model. In addition, the grant date fair value assumes that holders of the Market Condition Awards will not participate in dividends until such awards have met all of their vesting requirements.

Below is a summary of the grant date fair value based on the Monte Carlo simulation valuation model and the significant assumptions used to estimate the grant date fair value of these Market Condition Awards:

Weighted AverageRange
Grant Date Fair Value$29.11$19.87 - $66.80
Closing KKR share price as of valuation date$49.96$37.93 - $82.85
Risk Free Rate2.11%0.41% - 4.41%
Volatility30.05%28.00% - 38.00%
Dividend Yield1.29%0.76% - 1.53%
Expected Cost of Equity10.75%9.13% - 11.80%

As of December 31, 2023, there was approximately $650.0 million of total estimated unrecognized expense related to these unvested Market Condition Awards, which is expected to be recognized over the weighted average remaining requisite service period of 3.6 years.

Notes to Financial Statements (Continued)

A summary of the status of unvested Market Condition Awards granted under the Equity Incentive Plans from January 1, 2023 through December 31, 2023 is presented below:

SharesWeighted Average Grant Date Fair Value
Balance, January 1, 202326,198,531$25.30
Granted11,965,27237.78
Vested(560,000)20.21
Forfeitures(1,106,214)21.28
Balance, December 31, 202336,497,589$29.59

As of December 31, 2023, 18.4 million of these Market Condition awards have met their market price based vesting condition.

Co-CEO Awards

On December 9, 2021, the Board of Directors approved grants of 7.5 million restricted holdings units to each of KKR’s Co-Chief Executive Officers that are subject to both a service-based vesting condition and a market price based vesting condition (referred to hereafter as "Co-CEOs Awards"). For both Co-Chief Executive Officers, 20% of the Co-CEOs Awards are eligible to vest at each of the following KKR common stock prices targets: $95.80, $105.80, $115.80, $125.80 and $135.80. The market price based vesting condition is met when the average closing price of KKR common stock during 20 consecutive trading days meets or exceeds the stock price targets. In addition to the market price based vesting conditions, in order for the award to vest, the Co-Chief Executive Officer is required to be employed by KKR on December 31, 2026 (with exceptions for involuntary termination without cause, death and permanent disability).

These awards will be automatically canceled and forfeited upon the earlier of a Co-Chief Executive Officer’s termination of service (except for involuntary termination without cause, death or permanent disability) or the failure to meet the market price based vesting condition by December 31, 2028 (for which continued service is required if the market price vesting condition is met after December 31, 2026). Co-CEO Awards do not participate in dividends until such awards have met both their service-based and market price based vesting requirements. Additionally, these awards are subject to additional transfer restrictions and minimum retained ownership requirements after vesting.

Due to the existence of the service requirement, the vesting period for these Co-CEO Awards is explicit, and as such, compensation expense will be recognized on a straight-line basis over the period from the date of grant through December 31, 2026 given the derived service period is less than the explicit service period. The fair value of the awards granted are based on a Monte Carlo simulation valuation model. In addition, the grant date fair value assumes that these Co-CEO Awards will not participate in dividends until such awards have met all of their vesting requirements.

Below is a summary of the grant date fair value based on the Monte Carlo simulation valuation model and the significant assumptions used to estimate the grant date fair value of these Co-CEO Awards:

Grant Date Fair Value$48.91
Closing KKR share price as of valuation date$75.76
Risk Free Rate1.42%
Volatility28.0%
Dividend Yield0.77%
Expected Cost of Equity9.36%

As of December 31, 2023, there was approximately $435.1 million of total estimated unrecognized expense related to these unvested Co-CEO Awards, which is expected to be recognized ratably from January 1, 2024 to December 31, 2026. As of December 31, 2023, none of these Co-CEO awards have met their market price based vesting condition.

Notes to Financial Statements (Continued)

Insurance

Global Atlantic recognized $77.8 million, $72.0 million and $63.9 million for the years ended December 31, 2023, 2022 and 2021, respectively, of expense related to equity-based compensation and long-term incentive awards.

The income tax benefit recognized by Global Atlantic with respect to the equity-based compensation and long-term incentive plans for the years ended December 31, 2023, 2022 and 2021 was $17.8 million, $11.5 million and $11.0 million, respectively, and was recognized as income tax benefit in the consolidated statements of operations.

No equity-based compensation costs were capitalized during the years ended December 31, 2023, 2022 and 2021.

Equity Classified Awards - KKR Equity Incentive Plan Awards

On February 1, 2021, in connection with the 2021 GA Acquisition, employees of Global Atlantic were awarded restricted stock units under the 2019 Equity Incentive Plan. These awards are subject to service-based vesting conditions, and expense associated with the vesting of these awards is based on the closing price of KKR & Co. Inc. common stock on the date of grant, consistent with other awards granted under the 2019 Equity Incentive Plan as described above.

On July 1, 2021, a grant of a Market Condition Award was made under the 2019 Equity Incentive Plan. This award is subject to meeting certain market price based vesting conditions of KKR common stock but has no service vesting condition. Expense associated with the grant date fair value of this award of $10.5 million was fully recognized in the three months ended September 30, 2021.

Global Atlantic recognized $15.4 million, $9.0 million and $11.7 million for the years ended December 31, 2023, 2022 and 2021, respectively, of total equity-based compensation expense associated with these awards.

Liability Classified Awards - Book Value Awards

On February 1, 2021, Global Atlantic adopted the Global Atlantic Financial Company Book Value Award Plan ("GA Book Value Plan") to enhance the ability of Global Atlantic to attract, motivate and retain its employees and to promote the success of the Global Atlantic business.

The GA Book Value Plan authorizes the grant of cash-settled awards ("book value awards," or "BVAs") representing the right to receive one or more payments upon vesting equal to the product of an initial dollar value set by the award multiplied by a pre-determined formula as of each applicable vesting date. The predetermined formula is equal to the quotient determined by dividing the book value of one share of TGAFG on the applicable vesting date by the book value of a share on the original grant date, subject to adjustments. Book value awards generally vest in three equal, annual installments, subject to continued employment.

On February 1, 2021, under the terms of the GA Merger Agreement and in accordance with applicable plan documentation, former Global Atlantic restricted share awards that were unvested immediately prior to the closing of the 2021 GA Acquisition converted into the right to receive a number of book value awards under the GA Book Value Plan having the same value and the same vesting schedule as the former Global Atlantic restricted share awards immediately prior to the closing of the 2021 GA Acquisition.

An aggregate of 3,020,017 unvested former Global Atlantic restricted share awards having a fair value of $29.47 per share were converted to book value awards at an aggregate grant-date value of $89.0 million. On February 28, 2021, book value awards having an aggregate value of approximately $28.0 million vested as set forth in the former Global Atlantic grant agreements and resulted in a cash payment of $17.0 million to participants, net of applicable tax withholding.

Also in connection with the 2021 GA Acquisition, on February 1, 2021, Global Atlantic employees were issued a one-time grant of book value awards having an aggregate initial value of $23.0 million. These one-time book value awards vest over five (5) years, with the first 25% vesting on April 1, 2023 and the remainder vesting 25% annually on April 1 each subsequent year until fully vested, subject to continued employment. Global Atlantic is recording compensation expense over the vesting schedule of the awards, net of an estimated forfeiture rate of 4%.

On March 1, 2021, pursuant to the GA Book Value Plan, book value awards having an aggregate initial value of approximately $32 million were granted. Such book value awards generally vest annually over three years in equal increments, subject to continued employment. Global Atlantic is recording compensation expense over the vesting schedule of the awards, net of an estimated forfeiture rate of 4%.

Notes to Financial Statements (Continued)

Global Atlantic began recognizing long-term incentive expense for the book value awards described above at the grant dates, based on their initial value, net of a 4% estimated forfeiture rate. Global Atlantic adjusts expense periodically for changes in book value until the awards are settled or forfeited. Expense recognized on forfeited awards is reversed in the period of forfeiture.

On April 1, 2023, BVAs having an aggregate value of approximately $35 million vested as set forth under the terms of the Book Value Plan agreements and resulted in a cash payment on April 3, 2023 of an aggregate $21 million to unit holders, net of applicable tax withholdings.

On February 28, 2023, BVAs having an aggregate value of approximately $24 million vested as set forth under the pre-acquisition grant agreements and resulted in a cash payment of an aggregate $14 million to participants, net of applicable tax withholdings.

The table below presents the activity related to book value awards for the year ended December 31, 2023:

Year Ended
December 31, 2023
Outstanding amount as of beginning of period$138,595
Granted35,766
Forfeited(3,486)
Impact of change in book value on outstanding awards4,971
Vested and cash-settled(64,253)
Outstanding amount as of end of period$111,593

Global Atlantic recognized $62.3 million, $63.0 million and $52.2 million for the years ended December 31, 2023, 2022 and 2021, respectively, of compensation expense associated with these awards. As of December 31, 2023, the remaining unamortized compensation expenses of $72.1 million are expected to be recognized over a remaining average period of 1.98 years.

GA Equity Incentive Plan Awards

On June 24, 2021, Global Atlantic issued 1,000 non-voting incentive shares to a Bermuda exempted partnership owned by certain Global Atlantic employees, who are eligible to receive incentive units under Global Atlantic's Senior Management Equity Incentive Plan ("GA Equity Incentive Plan"). These incentive units represent an interest in the receipt of certain amounts based on Global Atlantic's book value, market value, and AUM, in each case as derived in part from the value of TGAFG’s fully-diluted equity shares.

On June 24, 2021, Global Atlantic granted approximately 808 incentive units under the GA Equity Incentive Plan. The book value component of the incentive units vests 20% per year on the anniversary of the 2021 GA Acquisition Date, as long as the grantee remains then employed, and will be settled in cash. The market value and AUM components of the incentive units cliff vest upon the earlier to occur of (i) the fifth anniversary of the 2021 GA Acquisition Date, or (ii) a change of control, and will be settled in a variable number of TGAFG’s non-voting common shares. TGAFG shares issued under the AUM component of the Plan are exchangeable for shares of KKR. Except in the event of termination due to death or disability, generally, unvested market value and AUM amounts are forfeited upon a termination of employment.

The GA Equity Incentive Plan is accounted for as a hybrid compensation plan, consisting of one component most closely aligned with a profit-sharing plan under ASC 710, Compensation - General, as well as other components within scope of ASC 718, Compensation - Stock Compensation, in all cases with obligations liability-classified. Accordingly, with regard to awards within scope of ASC 710, Global Atlantic records expense based on payouts deemed to be probable and reasonably estimable based on the book value growth of Global Atlantic at the grant date and at each reporting period. For award components subject to liability-classification under ASC 718, Global Atlantic records expense, net of a 0% estimated forfeiture rate, based on the fair value of awards granted, with periodic adjustments to expense for changes in fair value, over the requisite 5-year service period.

The aggregate value of the GA Equity Incentive Plan awards at the initial date of grant was $197.0 million, based on the intrinsic value of the book value component ($5.0 million), as determined by applying the book value profit share percentage rate to Global Atlantic’s net book value growth at the date of grant, and the fair value of the market value and AUM components at the date of grant ($192.0 million, collectively), based on the projected growth in value of each component over the 5-year vesting schedule and applying a forfeiture rate of 0%. Expense is remeasured accordingly at each reporting period and adjusted as needed until the awards are forfeited or settled.

Notes to Financial Statements (Continued)

During the year ended December 31, 2023, 273 incentive units were granted to employees and 118 incentive units were forfeited. As of December 31, 2023 and 2022, there were approximately 1,000 and 845 incentive units outstanding under the Plan, respectively.

Global Atlantic recorded compensation expense of $37.6 million, $89.1 million and $43.3 million for the years ended December 31, 2023, 2022 and 2021, respectively, for the GA Units granted under the GA Equity Incentive Plan, with a corresponding offset to other liabilities. As of December 31, 2023, there was approximately $48.6 million of unrecognized expense related to the GA Units granted under the GA Equity Incentive Plan with a weighted average service period remaining of 2.09 years.

Notes to Financial Statements (Continued)

20. RELATED PARTY TRANSACTIONS

Due from Affiliates consists of:

December 31, 2023December 31, 2022
Amounts due from unconsolidated investment funds$1,229,308$1,401,766
Amounts due from portfolio companies217,544261,537
Due from Affiliates$1,446,852$1,663,303

Due to Affiliates consists of:

December 31, 2023December 31, 2022
Amounts due to current and former employees under the tax receivable agreement (1)$406,730$420,599
Amounts due to unconsolidated investment funds131,36945,458
Due to Affiliates$538,099$466,057

(1)See Note 1 "Organization" in our financial statements.

Tax Receivable Agreement

KKR Group Co. Inc. (formerly KKR & Co. Inc.) and KKR Holdings were parties to a tax receivable agreement, which required KKR to pay to KKR Holdings or to its limited partners a portion of any cash tax savings realized by KKR resulting from their exchange of KKR Group Partnership Units for shares of common stock. In connection with the Reorganization Mergers, KKR Holdings and KKR terminated the tax receivable agreement on May 30, 2022; provided that, notwithstanding such termination of the tax receivable agreement, all obligations of KKR to make payments arising under the tax receivable agreement with respect to any exchanges completed prior to May 30, 2022 remain outstanding until fully paid.

Prior to the Reorganization Mergers, KKR was required to acquire KKR Group Partnership Units from time to time pursuant to the exchange agreement with KKR Holdings. The KKR Group Partnership made an election under Section 754 of the Code that was effective for each taxable year in which an exchange of KKR Group Partnership Units for shares of common stock occurred, which may have resulted in an increase in KKR's tax basis of the assets of KKR Group Partnership at the time of an exchange of KKR Group Partnership Units. Certain of these exchanges were expected to result in an increase in KKR's share of the tax basis of the tangible and intangible assets of the KKR Group Partnership, primarily attributable to a portion of the goodwill inherent in KKR's business that would not otherwise have been available. This increase in tax basis may have increased depreciation and amortization deductions for tax purposes and therefore reduced the amount of income tax KKR otherwise would be required to pay. This increase in tax basis may have also decreased gain (or increased loss) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets.

The tax receivable agreement required KKR to pay to KKR Holdings, or to current and former principals who exchanged KKR Holdings Units for shares of common stock (as transferees of KKR Group Partnership Units), 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that KKR realized as a result of the increase in tax basis described above, as well as 85% of the amount of any such savings KKR actually realized as a result of increases in tax basis that arose due to future payments under the agreement. KKR benefited from the remaining 15% of cash savings, if any, in income tax that it realized.

These payment obligations are obligations of KKR Group Co. Inc. (formerly KKR & Co. Inc.) and its wholly-owned subsidiary, KKR Group Holdings Corp., which are treated as corporations for U.S. tax purposes, but are not payment obligations of KKR & Co. Inc. or KKR Group Partnership L.P., and are recorded within Due to Affiliates in the accompanying consolidated statements of financial condition. Payments made under the tax receivable agreement are required to be made within 90 days of the filing of KKR's tax returns, which may result in a timing difference between the tax savings received by KKR and the cash payments made to the exchanging holders of KKR Group Partnership Units.

Notes to Financial Statements (Continued)

Effective July 1, 2018, we amended the tax receivable agreement to reflect the conversion of KKR & Co. L.P. to KKR Group Co. Inc. (formerly KKR & Co. Inc.) on July 1, 2018 (the "Conversion"). The amendment also provides that, in the event the maximum U.S. federal corporate income tax rate is increased to a rate higher than 21.0% within the five- year period following the Conversion, for exchanges pursuant to the exchange agreement that take place within that five-year period (other than exchanges following the death of an individual), payments of cash tax savings realized as a result of such exchanges shall be calculated by applying a U.S. federal corporate income tax rate not to exceed 21.0%. The amendment also clarified that the tax benefit payments with respect to exchanges completed at any time prior to the Conversion will be calculated without taking into account the step-up in tax basis in our underlying assets that we generated in 2018 as a result of the Conversion.

For the years ended December 31, 2023, 2022 and 2021, cash payments that have been made under the tax receivable agreement were $16.3 million, $10.3 million, and $7.2 million, respectively. KKR expects to benefit from the remaining 15% of cash savings, if any, in income tax that they realize. As of December 31, 2023, $13.5 million of cumulative income tax savings have been realized.

Discretionary Investments

Certain of KKR's current and former employees and other qualifying personnel are permitted to invest, and have invested, their own capital in KKR's funds, in side-by-side investments with these funds and the firm, as well as in funds managed by its hedge fund partnerships. Side-by-side investments are made on the same terms and conditions as those acquired by the applicable fund or the firm, except that the side-by-side investments do not subject the investor to management fees or a carried interest. The cash contributed by these individuals aggregated $629.0 million, $714.8 million, and $685.8 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Aircraft and Other Services

Certain of our senior employees own aircraft that are used for KKR's business in the ordinary course of its operations. The hourly rates that KKR pays for the use of these aircraft are based on current market rates for chartering private aircraft of the same type. KKR incurred $3.4 million, $2.9 million, and $1.7 million for the use of these aircraft for the years ended December 31, 2023, 2022 and 2021, respectively, of which substantially all was paid to entities controlled by Messrs. Kravis and Roberts, and of which substantially all was borne by KKR rather than its investment funds (which indirectly bear the cost of some of these flights at commercial airline rates).

Facilities

Messrs. Kravis and Roberts, including their estate planning trusts, whose beneficiaries include their children, and certain other senior employees who are not executive officers of KKR, are minority limited partners in a real estate partnership that owns KKR's Menlo Park location. Payments made to this partnership were $9.5 million, $8.8 million, and $8.6 million for the years ended December 31, 2023, 2022 and 2021, respectively. In November 2022, this lease was renewed for another 15-year term.

Notes to Financial Statements (Continued)

21. SEGMENT REPORTING

KKR operates through two reportable segments which are presented below and reflect how its chief operating decision-makers allocate resources and assess performance:

  • Asset Management - the asset management business offers a broad range of investment management services to investment funds, vehicles and accounts (including Global Atlantic) and provides capital markets services to portfolio companies and third parties. This reportable segment also reflects how its business lines operate collaboratively with predominantly a single expense pool.

  • Insurance - the insurance business is operated by Global Atlantic, which is a leading U.S. retirement and life insurance company that provides a broad suite of protection, legacy and savings products and reinsurance solutions to clients across individual and institutional markets. Global Atlantic primarily generates income by earning a spread between its investment income and the cost of policyholder benefits.

KKR’s segment profitability measure used to make operating decisions and assess performance across KKR’s reportable segments is presented prior to giving effect to the allocation of income (loss) among KKR & Co. Inc. and holders of any exchangeable securities, and the consolidation of the investment funds, vehicles and accounts that KKR advises, manages or sponsors (including CFEs). KKR's segment profitability measure excludes: (i) equity-based compensation charges, (ii) amortization of acquired intangibles, (iii) strategic corporate related charges and (iv) non-recurring items, if any. Strategic corporate related items arise from corporate actions and consist primarily of (i) impairments, (ii) transaction costs from strategic acquisitions, and (iii) depreciation on real estate that KKR owns and occupies. Inter-segment transactions are not eliminated from segment results when management considers those transactions in assessing the results of the respective segments. These transactions include (i) management fees earned by KKR as the investment adviser for Global Atlantic insurance companies and (ii) interest income and expense based on lending arrangements where one or more KKR subsidiaries borrow from a Global Atlantic insurance subsidiary. Inter-segment transactions are recorded by each segment based on the definitive documents that contain arms' length terms and comply with applicable regulatory requirements. Segment operating earnings for the asset management and insurance segments is further defined as follows:

  • Asset Management Segment Operating Earnings is the segment profitability measure used to make operating decisions and to assess the performance of the asset management segment and is comprised of: (i) Fee Related Earnings, (ii) Realized Performance Income, (iii) Realized Performance Income Compensation, (iv) Realized Investment Income, and (v) Realized Investment Income Compensation. Asset Management Segment Operating Earnings excludes the impact of: (i) unrealized gains (losses) on investments, (ii) unrealized carried interest, and (iii) related unrealized carried interest compensation (carry pool). Management fees earned by KKR as the adviser, manager or sponsor for its investment funds, vehicles and accounts, including its Global Atlantic insurance companies, are included in Asset Management Segment Operating Earnings.

  • Insurance Segment Operating Earnings is the segment profitability measure used to make operating decisions and to assess the performance of the Insurance segment. This measure is presented before income taxes and is comprised of: (i) Net Investment Income, (ii) Net Cost of Insurance, (iii) General, Administrative, and Other Expenses, and (iv) Net Income Attributable to Noncontrolling Interests. The non-operating adjustments made to derive Insurance Segment Operating Earnings excludes the impact of: (i) investment gains (losses) which include realized gains (losses) related to asset/liability matching investments strategies and unrealized investment gains (losses) and (ii) non-operating changes in policy liabilities and derivatives which includes (a) changes in the fair value of market risk benefits and other policy liabilities measured at fair value and related benefit payments, (b) fees attributed to guaranteed benefits, (c) derivatives used to manage the risks associated with policy liabilities, and (d) losses at contract issuance on payout annuities. Insurance Segment Operating Earnings includes (i) realized gains and losses not related to asset/liability matching investments strategies and (ii) the investment management costs that are earned by KKR as the investment adviser of the Global Atlantic insurance companies.

Notes to Financial Statements (Continued)

Modification of Segment Information

In connection with the adoption of LDTI (see Note 2 in our financial statements), KKR reevaluated the manner in which it makes operational and resource deployment decisions and assesses the overall performance of KKR's business. As a result, KKR has modified the presentation of its segment financial information effective as of and for the year ended December 31, 2023 with retrospective application to all prior periods presented. The most significant changes are as follows:

**(1)**implementation of the accounting changes as a result of LDTI within KKR’s insurance segment. KKR excludes (i) changes in the fair value of market risk benefits and other policy liabilities and the associated derivatives, (ii) fees attributed to guaranteed benefits, and (iii) losses at contract issuance on payout annuities from the Insurance Segment Operating Earnings. These items are excluded from Insurance Segment Operating Earnings, because the chief operating decision-makers believe these items do not reflect the underlying performance of this business; and

(2)reporting on a pre-tax basis Insurance Segment Operating Earnings (which was previously reported on an after-tax basis).

Notes to Financial Statements (Continued)

Segment Presentation

The following tables set forth information regarding KKR's segment results:

For the Years Ended December 31,
202320222021
Asset Management
Management Fees (1)$3,030,325$2,656,487$2,071,440
Transaction and Monitoring Fees, Net720,654775,9331,004,241
Fee Related Performance Revenues94,42790,66545,852
Fee Related Compensation(865,336)(769,735)(702,387)
Other Operating Expenses(596,284)(585,999)(449,155)
Fee Related Earnings2,383,7862,167,3511,969,991
Realized Performance Income1,065,3892,176,6582,141,596
Realized Performance Income Compensation(666,440)(1,333,526)(1,239,177)
Realized Investment Income (2)690,7271,134,4191,613,244
Realized Investment Income Compensation(103,590)(159,003)(241,994)
Asset Management Segment Operating Earnings$3,369,872$3,985,899$4,243,660
Insurance
Net Investment Income (1) (2)$5,377,817$4,112,244$3,329,570
Net Cost of Insurance(3,283,009)(2,295,133)(1,564,264)
General, Administrative and Other(805,109)(638,274)(500,410)
Pre-tax Operating Earnings1,289,6991,178,8371,264,896
Pre-tax Operating Earnings Attributable to Noncontrolling Interests(473,062)(454,075)(489,456)
Insurance Segment Operating Earnings$816,637$724,762$775,440
Total Segment Operating Earnings$4,186,509$4,710,661$5,019,100
(1) Includes intersegment management fees of $445.9 million, $301.3 million, and $158.7 million for the years ended December 31, 2023, 2022, and 2021, respectively.
(2) Includes intersegment interest expense and income of $186.4 million, $145.3 million, and $31.0 million for the years ended December 31, 2023, 2022, and 2021, respectively.
As of December 31,
20232022
Segment Assets:
Asset Management$33,721,279$30,373,666
Insurance207,160,065171,711,966
Total Segment Assets$240,881,344$202,085,632
For the Years Ended December 31,
Noncash expenses excluded from Segment Operating Earnings202320222021
Equity Based Compensation and Other
Asset Management$502,816$449,685$261,330
Insurance (1)113,043152,08395,344
Total Non-cash expenses$615,859$601,768$356,674

(1)Amounts include the portion allocable to noncontrolling interests.

Notes to Financial Statements (Continued)

Reconciliations of Total Segment Amounts

The following tables reconcile the Segment Revenues, Segment Operating Earnings, and Segment Assets to their equivalent GAAP measure:

For the Years Ended December 31,
202320222021
Total GAAP Revenues$14,499,312$5,704,180$16,226,040
Impact of Consolidation and Other861,928841,711808,174
Asset Management Adjustments:
Capital Allocation-Based Income (Loss) (GAAP)(2,843,437)2,500,509(6,842,414)
Realized Carried Interest1,005,7591,993,8601,752,130
Realized Investment Income690,7271,134,4191,613,244
Capstone Fees(100,314)(86,665)(91,407)
Expense Reimbursements(75,687)(102,927)(178,572)
Insurance Adjustments:
Net Premiums(1,975,675)(1,182,461)(2,226,078)
Policy Fees(1,260,249)(1,261,721)(1,137,805)
Other Income(176,442)(139,124)(120,213)
(Gains) Losses from Investments(1)700,380472,053544,357
Non-operating Changes in Policy Liabilities and Derivatives(346,963)1,072,572(141,513)
Total Segment Revenues (2)$10,979,339$10,946,406$10,205,943

(1)Includes gains and losses on funds withheld receivables and payables embedded derivatives.

(2)Total Segment Revenues is comprised of (i) Management Fees, (ii) Transaction and Monitoring Fees, Net, (iii) Fee Related Performance Revenues, (iv) Realized Performance Income, (v) Realized Investment Income, and (vi) Net Investment Income.

For the Years Ended December 31,
202320222021
Income (Loss) Before Tax (GAAP)$6,554,609$(292,221)$13,846,599
Impact of Consolidation and Other(1,543,641)(371,227)(5,041,282)
Interest Expense357,084315,189250,183
Equity-based compensation - KKR Holdings(1)—119,834161,283
Asset Management Adjustments:
Unrealized (Gains) Losses(1,534,934)2,002,082(2,590,280)
Unrealized Carried Interest(1,656,974)4,231,359(4,043,135)
Unrealized Carried Interest Compensation (Carry Pool)792,758(1,753,396)1,751,912
Strategic Corporate Related Charges(2)31,80594,62925,153
Equity-based compensation230,858210,756183,100
Equity-based compensation - Performance based271,958238,92978,230
Insurance Adjustments:**(3)
(Gains) Losses from Investments(3)(4)363,956379,647352,819
Non-operating Changes in Policy Liabilities and Derivatives(3)228,929(584,495)(39,858)
Strategic Corporate Related Charges(3)7,34715,21515,808
Equity-based and Other Compensation(3)71,57993,50858,622
Amortization of Acquired Intangibles(3)11,17510,8529,946
Total Segment Operating Earnings$4,186,509$4,710,661$5,019,100

(1)Represents equity-based compensation expense in connection with the allocation of units of KKR Holdings, which were not dilutive to common stockholders of KKR & Co. Inc.

(2)For the year ended December 31, 2022, strategic corporate related charges include a $40.7 million realized loss from foreign exchange derivatives that were entered into in connection with the acquisition of KJRM and that were settled upon closing in the second quarter of 2022.

(3)Amounts represent the portion allocable to KKR & Co. Inc.

(4)Includes gains and losses on funds withheld receivables and payables embedded derivatives.

Notes to Financial Statements (Continued)

As of
December 31, 2023December 31, 2022
Total GAAP Assets$317,294,194$275,346,636
Impact of Consolidation and Reclassifications(73,748,156)(71,388,436)
Carry Pool Reclassifications(2,664,694)(1,872,568)
Total Segment Assets$240,881,344$202,085,632

22. EQUITY

Stockholders' Equity

Common Stock

The common stock of KKR & Co. Inc. is entitled to vote as provided by its certificate of incorporation, Delaware General Corporation Law and the rules of the New York Stock Exchange ("NYSE"). Subject to preferences that apply to any shares of preferred stock outstanding at the time on which dividends are payable, the holders of common stock are entitled to receive dividends out of funds legally available if the Board of Directors, in its discretion, determines to declare dividends and then only at the times and in the amounts that the Board of Directors may determine. The common stock is not entitled to preemptive rights and is not subject to conversion, redemption or sinking fund provisions.

Series I Preferred Stock

Except for any distribution required by Delaware law to be made upon a dissolution event, the holders of Series I preferred stock do not have any economic rights to receive dividends. Series I preferred stock is entitled to vote on various matters that may be submitted to vote of the stockholders and the other matters as set forth in the certificate of incorporation. Upon a dissolution event, each holder of Series I preferred stock will be entitled to a payment equal to $0.01 per share of Series I preferred stock. The Series I preferred stock will be eliminated on the Sunset Date (as defined in Note 1 "Organization"), which is scheduled to occur not later than December 31, 2026.

Series C Mandatory Convertible Preferred Stock

On August 14, 2020, KKR & Co. Inc. issued 23,000,000 shares, or $1.15 billion aggregate liquidation preference, of its 6.00% Series C Mandatory Convertible Preferred Stock (the "Series C Mandatory Convertible Preferred Stock").

On September 15, 2023, the mandatory conversion date, each share of Series C Mandatory Convertible Preferred Stock then outstanding automatically converted into 1.1700 shares of KKR & Co. Inc.'s common stock, in each case, subject to the receipt of cash in lieu of fractional shares. The number of shares of common stock issuable upon conversion was determined based on the average volume weighted average price per share of common stock over the 20 consecutive trading day period beginning on, and including, the 21st scheduled trading day immediately prior to September 15, 2023. Upon conversion of the Series C Mandatory Convertible Preferred Stock, no outstanding shares of Series C Mandatory Convertible Preferred Stock remained issued or outstanding. Holders of record at the close of business on September 1, 2023 separately received a final quarterly cash dividend of $0.75 per share of the Series C Mandatory Convertible Preferred Stock, payable on the conversion date.

In connection with the redemption of the Series C Mandatory Convertible Preferred Stock, KKR Group Partnership's preferred units with economic terms designed to mirror those of the Series C Mandatory Convertible Preferred Stock automatically converted into KKR Group Partnership Units on a one-for-one basis relative to the number of shares of common stock issued in respect of the conversion of Series C Mandatory Convertible Preferred Stock.

Notes to Financial Statements (Continued)

Share Repurchase Program

Under KKR's repurchase program, shares of common stock of KKR & Co. Inc. may be repurchased from time to time in open market transactions, in privately negotiated transactions or otherwise. The timing, manner, price and amount of any repurchases will be determined by KKR in its discretion and will depend on a variety of factors, including legal requirements, price and economic and market conditions. In addition to the repurchases of common stock, the repurchase program will be used for the retirement (by cash settlement or the payment of tax withholding amounts upon net settlement) of equity awards granted pursuant to our Equity Incentive Plans representing the right to receive common stock. KKR expects that the program, which has no expiration date, will be in effect until the maximum approved dollar amount has been used. The program does not require KKR to repurchase or retire any specific number of shares of common stock or equity awards, respectively, and the program may be suspended, extended, modified or discontinued at any time. As of February 6, 2024, there was approximately $194 million remaining under the program.

The following table presents KKR & Co. Inc. common stock that has been repurchased or equity awards retired under the repurchase program:

For the Years Ended December 31,
202320222021
Shares of common stock repurchased5,395,1625,191,1744,462,533
Equity awards for common stock retired764,9991,308,5013,350,874

Change in KKR & Co. Inc.'s Ownership Interest

Vesting of restricted holdings units results in a change in ownership in KKR Group Partnership L.P., while KKR retains a controlling interest, and is accounted for as an equity transaction between the controlling and noncontrolling interests. The impact of the vesting of restricted holdings units are included within "Change in KKR & Co. Inc.'s Ownership Interest." Additionally, in December 2023, Global Atlantic completed a $400 million equity raise. The impact of (i) the vesting of restricted holdings units and (ii) the change in ownership in Global Atlantic after the equity raise are included within "Change in KKR & Co. Inc.'s Ownership Interest."

Noncontrolling Interests

Noncontrolling interests in consolidated entities represent the non-redeemable ownership interests in KKR that are held primarily by:

(i)third party fund investors in KKR's consolidated funds and certain other entities;

(ii)third parties in KKR's Capital Markets business line;

(iii)certain current and former employees who hold exchangeable securities; and

(iv)third parties in KKR's insurance business including GA Rollover Investors, GA Co-Investors and third-party investors in Global Atlantic's consolidated renewable energy entities and certain other entities.

Notes to Financial Statements (Continued)

The following table presents the calculation of total noncontrolling interests:

For the Years Ended December 31,
202320222021
Beginning of Period (as previously reported for the prior period)$35,778,000$40,474,565$27,083,098
Adoption of New Accounting Standard (See Note 2)632,858104,961—
Balance at the beginning of the period (as revised for the prior period)36,410,85840,579,52627,083,098
Net Income (Loss) Attributable to Noncontrolling Interests1,630,230101,2587,715,251
Other Comprehensive Income (Loss), net of tax588,415(3,919,807)(228,276)
Change in KKR & Co. Inc.'s Ownership Interest(156,867)(170,436)—
Equity Based Compensation (Non Cash Contribution)323,577364,225266,121
Capital Contributions12,871,58513,706,82114,692,817
Capital Distributions(8,301,516)(7,039,914)(7,484,620)
Exchange of KKR Holdings units to Common Stock—(12,865)(522,474)
Holdings Merger (1)—(7,197,950)—
Impact of Acquisition (2)——190,405
Changes in Consolidation (3)(8,461,491)—(1,132,796)
Balance at the end of the period$34,904,791$36,410,858$40,579,526

(1)Refer to Note 1 "Organization" for further information on the Reorganization Mergers that closed on May 31, 2022, pursuant to which KKR acquired KKR Holdings and all of the KKR Group Partnership Units held by it, and all outstanding KKR Holdings Units were exchanged for KKR & Co. Inc. common stock.

(2)Represents other noncontrolling interests at the 2021 GA Acquisition Date.

(3)In certain instances, KKR's economic interests became insignificant and certain investment vehicles are no longer consolidated as a result of additional amounts subscribed for by third party investors.

Notes to Financial Statements (Continued)

23. REDEEMABLE NONCONTROLLING INTERESTS

Redeemable noncontrolling interests represent:

(i) Noncontrolling interests of certain KKR investment funds and vehicles that are subject to periodic redemption by fund investors following the expiration of a specified period of time, or may be withdrawn subject to a redemption fee during the period when capital may not be otherwise withdrawn. Consolidated fund investor's interests subject to redemption as described above are presented as Redeemable Noncontrolling Interests in the accompanying consolidated statements of financial condition and presented as Net Income (Loss) Attributable to Redeemable Noncontrolling Interests in the accompanying consolidated statements of operations. When redeemable amounts become legally payable to fund investors, they are classified as a liability and included in Accounts Payable, Accrued Expenses and Other Liabilities in the accompanying consolidated statements of financial condition.

(ii) Global Atlantic has redeemable noncontrolling interests related to renewable energy entities of approximately $47.8 million and $82.7 million as of December 31, 2023 and 2022, respectively, as determined by the hypothetical liquidation at book value ("HLBV") method. The estimated redemption value of redeemable noncontrolling interests is calculated as the discounted cash flows subsequent to the expected flip date of the respective renewable energy entity. The flip date represents the date at which the allocation of income and cash flows among the investors in the entity is adjusted, pursuant to the redeemable noncontrolling interest investors having achieved an agreed-upon return. The flip date of renewable energy partnerships determines when the redeemable noncontrolling interests are eligible to be redeemed. Eligible redemption dates range from January 1, 2028 to June 30, 2028. For the redeemable noncontrolling interests outstanding as of December 31, 2023 and 2022, the estimated redemption value that would be due at the respective redemption dates is $3.2 million and $5.3 million, respectively.

The following table presents the calculation of Redeemable Noncontrolling Interests:

For the Years Ended December 31,
202320222021
Balance at the beginning of the period$152,065$82,491$—
Impact of Acquisition——91,845
Net Income (Loss) Attributable to Redeemable Noncontrolling Interests(5,405)2,7924,060
Capital Contributions499,43369,322—
Capital Distributions(2,845)(2,540)(13,414)
Changes in Consolidation(27,821)——
Balance at the end of the period$615,427$152,065$82,491

Notes to Financial Statements (Continued)

24. COMMITMENTS AND CONTINGENCIES

Funding Commitments and Others

As of December 31, 2023, KKR had unfunded commitments consisting of $7.7 billion to its investment funds and vehicles. KKR has also agreed for certain of its investment vehicles to fund or otherwise be liable for a portion of their investment losses (up to a maximum of approximately $86.1 million) and/or to provide them with liquidity upon certain termination events (the maximum amount of which is unknown until the scheduled termination date of the investment vehicle).

In addition to these uncalled commitments and funding obligations to KKR's investment funds and vehicles, KKR has entered into contractual commitments primarily with respect to underwriting transactions, debt financing, revolving credit facilities, and syndications in KKR's Capital Markets business line. As of December 31, 2023, these commitments amounted to $280.8 million. Whether these amounts are actually funded, in whole or in part, depends on the contractual terms of such commitments, including the satisfaction or waiver of any conditions to closing or funding. KKR's capital markets business has arrangements with third parties, which reduce its risk when underwriting certain debt transactions, and thus our unfunded commitments as of December 31, 2023 have been reduced to reflect the amount to be funded by such third parties. As of December 31, 2023, KKR's capital markets business line has entered into such arrangements representing a total notional amount of $4.5 billion. In the case of purchases of investments or assets in our Principal Activities business line, the amount to be funded includes amounts that are intended to be syndicated to third parties, and the actual amounts to be funded may be less.

Global Atlantic has commitments to purchase or fund investments of $4.2 billion as of December 31, 2023. These commitments include those related to mortgage loans, other lending facilities and other investments. For those commitments that represent a contractual obligation to extend credit, Global Atlantic has recorded a liability of $49.4 million for current expected credit losses as of December 31, 2023.

In addition, Global Atlantic has entered into certain forward flow agreements to purchase loans. Global Atlantic's obligations under these agreements are subject to change, curtailment, and cancellation based on various provisions including repricing mechanics, due diligence reviews, and performance or pool quality, among other factors.

As of December 31, 2023, purchase commitments under agreements with third-party administrators and other service providers were as follows:

2024$36,181
202531,937
202622,721
202713,355
202812,072
Thereafter67,444
Total$183,710

Notes to Financial Statements (Continued)

Non-cancelable Operating Leases

KKR's non-cancelable operating leases consist of leases of office space around the world. There are no material rent holidays, contingent rent, rent concessions or leasehold improvement incentives associated with any of these property leases. In addition to base rentals, certain lease agreements are subject to escalation provisions and rent expense is recognized on a straight‑line basis over the term of the lease agreement.

As of December 31, 2023, the approximate aggregate future lease payments required on the asset management operating leases are as follows:

2024$55,985
202554,573
202645,193
202732,252
202828,295
Thereafter203,335
Total lease payments required (1)419,633
Less: Imputed Interest58,781
Total operating lease liabilities$360,852

(1) Lease payments required exclude approximately $456 million for leases signed, but not yet commenced. These leases related to corporate offices and will commence in 2024 with lease terms of 15 years.

Global Atlantic also enters into land leases for its consolidated investments in renewable energy.

As of December 31, 2023, the approximate aggregate future lease payments required on the Global Atlantic operating leases are as follows:

2024$19,233
202517,651
202615,987
202716,088
202813,146
Thereafter296,028
Total lease payments required378,133
Less: Imputed Interest184,567
Total operating lease liabilities$193,566

Contingent Repayment Guarantees

The partnership documents governing KKR's carry-paying investment funds and vehicles generally include a "clawback" provision that, if triggered, may give rise to a contingent obligation requiring the general partner to return amounts to the fund for distribution to the fund investors at the end of the life of the fund. Under a clawback obligation, upon the liquidation of a fund, the general partner is required to return, typically on an after-tax basis, previously distributed carry to the extent that, due to the diminished performance of later investments, the aggregate amount of carry distributions received by the general partner during the term of the fund exceed the amount to which the general partner was ultimately entitled, including the effects of any performance thresholds. KKR has guaranteed its general partners' clawback obligations.

Notes to Financial Statements (Continued)

As of December 31, 2023, approximately $546 million of carried interest was subject to this clawback obligation, assuming that all applicable carry-paying funds and their alternative investment vehicles were liquidated at their December 31, 2023 fair values. Although KKR would be required to remit the entire amount to fund investors that are entitled to receive the clawback payment, KKR would be entitled to seek reimbursement of approximately $222 million of that amount from Associates Holdings, which is not a KKR subsidiary. As of December 31, 2023, Associates Holdings had access to cash reserves sufficient to reimburse the full $222 million that would be due to KKR. If the investments in all carry-paying funds were to be liquidated at zero value, the clawback obligation would have been approximately $3.5 billion, and KKR would be entitled to seek reimbursement of approximately $1.5 billion of that amount from Associates Holdings. KKR will acquire control of Associates Holdings when a subsidiary of KKR becomes its general partner upon the closing of the transactions contemplated to occur on the Sunset Date (as defined in Note 1 "Organization"), which will occur not later than December 31, 2026.

Carried interest is recognized in the consolidated statements of operations based on the contractual conditions set forth in the agreements governing the fund as if the fund were terminated and liquidated at the reporting date and the fund's investments were realized at the then estimated fair values. Amounts earned pursuant to carried interest are earned by the general partner of those funds to the extent that cumulative investment returns are positive and where applicable, preferred return thresholds have been met. If these investment amounts earned decrease or turn negative in subsequent periods, recognized carried interest will be reversed and to the extent that the aggregate amount of carry distributions received by the general partner during the term of the fund exceed the amount to which the general partner was ultimately entitled, a clawback obligation would be recorded. For funds that are consolidated, this clawback obligation, if any, is reflected as an increase in noncontrolling interests in the consolidated statements of financial condition. For funds that are not consolidated, this clawback obligation, if any, is reflected as a reduction of KKR's investment balance as this is where carried interest is initially recorded.

Indemnifications and Other Guarantees

Asset Management Segment

KKR may incur contingent liabilities for claims that may be made against it in the future. KKR enters into contracts that contain a variety of representations, warranties and covenants, including indemnifications. KKR (including KFN) and certain of KKR's investment funds have provided and provide certain credit support, such as indemnities and guarantees, relating to a variety of matters, including non-recourse carve-out guarantees for fraud, willful misconduct and other wrongful acts in connection with the financing of (i) certain real estate investments that we have made, including KKR's corporate real estate, and (ii) certain investment vehicles that KKR manages or sponsors.

KKR also has provided, and provides, credit support in connection with the Asset Management business, including:

i.to certain of its subsidiaries' obligations in connection with a limited number of investment vehicles that KKR manages,

ii.in connection with repayment and funding obligations to third-party lenders on behalf of certain employees, excluding its executive officers, in connection with their personal investments in KKR investment funds and a levered multi-asset investment vehicle,

iii.to one of its hedge fund partnerships,

iv.through a contingent guarantee of a subsidiary’s loan repayment obligations, which does not become effective unless and until its loan becomes accelerated due to certain specified events of default involving the investment vehicles managed by KJRM,

v.the obligations of our subsidiaries' funding obligations to our investment vehicles, and

vi.certain of our investment vehicles to fund or otherwise be liable for a portion of their investment losses and/or to provide them with liquidity upon certain termination events (the maximum amount of which is unknown until the scheduled termination date of the investment vehicle).

KKR may also become liable for certain fees payable to sellers of businesses or assets if a transaction does not close, subject to certain conditions, if any, specified in the acquisition agreements for such businesses or assets.

Notes to Financial Statements (Continued)

Insurance Segment

The Global Atlantic business was formerly owned by The Goldman Sachs Group, Inc. (together with its subsidiaries, "Goldman Sachs"). In connection with the separation of Global Atlantic from Goldman Sachs in 2013, Global Atlantic entered into a tax benefit payment agreement with Goldman Sachs. Under the tax benefit payment agreement, GA FinCo is obligated to make annual payments out of available cash, guaranteed by GAFG, to Goldman Sachs over an approximately 25-year period totaling $214.0 million. As of December 31, 2023, the present value of the remaining amount to be paid is $62.5 million. Although these payments are subordinated and deferrable, deferral of these payments would result in restrictions on distributions by GA FinCo and GAFG.

In lieu of funding certain investments in loan facilities to third party borrowers in cash, Global Atlantic has arranged or participated in letters of credit issued by third-party banks on behalf of the borrowers in the amount of $14.7 million, as of December 31, 2023, with expiration dates between May 2024 and November 2024. Global Atlantic has available lines of credit that would allow for additional letters of credit to be issued on behalf of certain borrowers, up to $160.3 million, as of December 31, 2023. For accounting purposes, these letters of credit are considered guarantees of certain obligations of the borrowers. If a letter of credit were to be drawn, Global Atlantic would be obligated to repay the issuing third-party bank, and Global Atlantic would recognize a loan receivable from the borrowers on the consolidated statements of financial condition. Global Atlantic monitors the likelihood of these letters of credit being drawn, and any related contingent obligation. As of both December 31, 2023 and 2022, the expected credit loss on the contingent liability associated with these letters of credit was not material.

Unless otherwise stated above, KKR's maximum exposure under the arrangements described under this section “—Indemnifications and Other Guarantees” are currently unknown as there are no stated or notional amounts included in these arrangements and KKR's liabilities for these matters would require a claim to be made against KKR in the future.

Legal Proceedings

From time to time, KKR (including Global Atlantic) is involved in various legal proceedings, requests for information, lawsuits, arbitration and claims incidental to the conduct of KKR's businesses. KKR's asset management and insurance businesses are also subject to extensive regulation, which may result in regulatory or other legal proceedings against them. Moreover, in the ordinary course of business, KKR is and can be both the defendant and the plaintiff in numerous lawsuits with respect to acquisitions, bankruptcy, insolvency and other events. Such lawsuits may involve claims that adversely affect the value of certain investments owned by KKR's funds and Global Atlantic's insurance companies.

Kentucky Matter

In December 2017, KKR & Co. L.P. (which is now KKR Group Co. Inc.) and its then Co-Chief Executive Officers, Henry Kravis and George Roberts, were named as defendants in a lawsuit filed in Kentucky state court (the “2017 Action”) alleging, among other things, the violation of fiduciary and other duties in connection with certain separately managed accounts that Prisma Capital Partners LP, a former subsidiary of KKR, manages for the Kentucky Retirement Systems. Also named as defendants in the lawsuit are certain current and former trustees and officers of the Kentucky Retirement Systems, Prisma Capital Partners LP, and various other service providers to the Kentucky Retirement Systems and their related persons. The 2017 Action was dismissed at the direction of the Supreme Court of Kentucky for lack of Kentucky constitutional standing. This dismissal became final on February 16, 2024.

On July 21, 2020, the Office of the Attorney General, on behalf of the Commonwealth of Kentucky, filed a new lawsuit in the same Kentucky state court (the “2020 AG Action”) making essentially the same allegations as those raised in the 2017 Action, including against what was then KKR & Co. Inc. (now KKR Group Co. Inc.) and Messrs. Kravis and Roberts. On September 14, 2023, KKR & Co. Inc., Messrs. Kravis and Roberts and other defendants moved to dismiss the 2020 AG Action. Oral arguments on the motion to dismiss the 2020 AG Action are scheduled for February 29, 2024.

In January 2021, some of the attorneys for the plaintiffs in the 2017 Action filed a new lawsuit on behalf of a new set of plaintiffs, who claim to be “Tier 3” members of Kentucky Retirement Systems (the “Tier 3 Plaintiffs”), alleging substantially the same allegations as in the 2017 Action. On July 9, 2021, the Tier 3 Plaintiffs served an amended complaint, which purports to assert, on behalf of a class of beneficiaries of Kentucky Retirement Systems, direct claims for breach of fiduciary duty and civil violations under the Racketeer Influenced and Corrupt Organizations Act (“RICO”). This complaint was removed to the U.S. District Court for the Eastern District of Kentucky, which has entered an order staying this case until the completion of the 2020 AG Action. On August 20, 2021, the Tier 3 Plaintiffs and other individual plaintiffs filed a second complaint in Kentucky state court (the “Second Tier 3 Action”), purportedly on behalf of Kentucky Retirement Systems’ funds, alleging the same claims against what was then KKR & Co. Inc. (now KKR Group Co. Inc.) and Messrs. Kravis and Roberts as in the July 9th

Notes to Financial Statements (Continued)

amended complaint but without the RICO or class action allegations. KKR and the other defendants have moved to dismiss the Second Tier 3 Action. On October 26, 2023, the trial court heard oral arguments on these motions to dismiss.

On March 24, 2022, in a separate declaratory judgment action brought by the Commonwealth of Kentucky regarding the enforceability of certain indemnification provisions available to what was then KKR & Co. Inc. (now KKR Group Co. Inc.) and Prisma Capital Partners LP, the Kentucky state court concluded that it has personal jurisdiction over KKR & Co. Inc. in that action, and that the indemnification provisions violated the Kentucky Constitution and were therefore unenforceable. On December 1, 2023, the Kentucky Court of Appeals reversed the trial court’s summary judgment on the issue of personal jurisdiction over KKR & Co. Inc., but affirmed the trial court’s rulings that the indemnification provisions violated the Kentucky Constitution and were unenforceable. On February 5, 2024, the Kentucky Court of Appeals denied the petitions of KKR & Co. Inc. and others for rehearing. The deadline to file a motion with the Supreme Court of Kentucky for discretionary review of the Court of Appeals’ December 1, 2023 decision is March 6, 2024.

KKR intends to continue to vigorously defend against these claims against KKR and Messrs. Kravis and Roberts.

Regulatory Matters

KKR currently is, and expects to continue to become from time to time, subject to various examinations, inquiries and investigations by various U.S. and non-U.S. governmental and regulatory agencies. Such examinations, inquiries and investigations may result in the commencement of civil, criminal or administrative proceedings, or the imposition of fines, penalties, or other remedies, against KKR and its personnel. KKR is subject to periodic examinations of its regulated businesses by various U.S. and non-U.S. governmental and regulatory agencies, including but not limited to the Securities and Exchange Commission ("SEC"), Financial Industry Regulatory Authority ("FINRA"), the U.K. Financial Conduct Authority, Central Bank of Ireland, Monetary Authority of Singapore, U.S. state insurance regulatory authorities, and the Bermuda Monetary Authority. KKR may also become subject to inquiries or investigations (through a request for information, civil investigative demand, subpoena or otherwise) by any of the foregoing governmental and regulatory agencies as well as by any other U.S. or non-U.S. governmental or regulatory agency, including but not limited to the SEC, U.S. Department of Justice ("DOJ"), U.S. state attorney generals, and similar non-U.S. governmental or regulatory agencies. KKR is currently subject to investigations by the Antitrust Division of the DOJ related to antitrust matters, including civil investigative demands and a grand jury subpoena seeking information with respect to the accuracy and completeness of certain filings made by KKR pursuant to the premerger notification requirements under the Hart-Scott-Rodino Act of 1976 for certain transactions in 2021 and 2022. In addition, KKR is currently subject to an investigation by the Antitrust Division of the DOJ related to the restrictions on interlocking directorates under Section 8 of the Clayton Act. KKR is also currently subject to investigations by the SEC related to business-related electronic communications, including with respect to the preservation of text messages and similar communications on electronic messaging applications under the Investment Advisers Act of 1940. KKR is currently cooperating with each of these named investigations.

Loss Contingencies

KKR establishes an accrued liability for legal or regulatory proceedings only when those matters present loss contingencies that are both probable and reasonably estimable. KKR includes in its financial statements the amount of any reserve for regulatory, litigation and related matters that Global Atlantic includes in its financial statements. No loss contingency is recorded for matters where such losses are either not probable or reasonably estimable (or both) at the time of determination. Such matters also have the possibility of resulting in losses in excess of any amounts accrued. To the extent KKR can in any particular period estimate an aggregate range of reasonably possible losses, these decisions involve significant judgment given that it is inherently difficult to determine whether any loss for a matter is probable or even possible or to estimate the amount of any loss in many legal, governmental and regulatory matters.

Estimating an accrued liability or a reasonably possible loss involves significant judgment due to many uncertainties, including among others: (i) the proceeding may be in early stages; (ii) damages sought may be unspecified, unsupportable, unexplained or uncertain; (iii) discovery may not have been started or is incomplete; (iv) there may be uncertainty as to the outcome of pending appeals or motions; (v) there may be significant factual issues to be resolved; (vi) there may be novel legal issues or unsettled legal theories to be presented or a large number of parties; or (vii) the proceeding relates to a regulatory examination, inquiry, or investigation. It is not possible to predict the ultimate outcome of all pending litigations, arbitrations, claims, and governmental or regulatory examinations, inquiries, investigations and proceedings, and some of the matters discussed above seek or may seek potentially large or indeterminate relief. Consequently, management is unable as of the date of filing of this report to estimate an amount or range of reasonably possible losses related to matters pending against KKR. In addition, any amounts accrued as loss contingencies or disclosed as reasonably possible losses may be, in part or in whole, subject to insurance or other payments such as contributions and indemnity, which may reduce any ultimate loss.

Notes to Financial Statements (Continued)

As of the date of filing this report, management does not believe, based on currently available information, that the outcomes of the matters pending against KKR will have a material adverse effect upon its financial statements. However, given the potentially large and/or indeterminate relief sought or that may be sought in certain of these matters and the inherent unpredictability of litigations, arbitrations, claims, and governmental or regulatory examinations, inquiries, investigations and proceedings, it is possible that an adverse outcome in certain matters could have a material adverse effect on KKR's financial results in any future period. In addition, there can be no assurance that material losses will not be incurred from claims that have not yet been asserted or those where potential losses have not yet been determined to be probable or possible and reasonably estimable.

Other Financing Arrangements

Global Atlantic has financing arrangements with unaffiliated third parties to support the reserves of its affiliated special purpose reinsurers. Total fees associated with these financing arrangements were $20.3 million, $20.1 million and $16.4 million for the years ended December 31, 2023, 2022 and 2021, respectively, and are included in insurance expenses in the consolidated statements of operations. As of both December 31, 2023 and 2022, the total capacity of the financing arrangements with third parties was $2.3 billion.

Other than the matters disclosed above, there were no outstanding or unpaid balances from the financing arrangements with unaffiliated third parties as of both December 31, 2023 and 2022.

Notes to Financial Statements (Continued)

25. CAPITAL & REGULATORY REQUIREMENTS

Insurance subsidiary capital requirements

All of our Global Atlantic insurance companies are subject to minimum capital and surplus requirements. Insurance companies typically operate in excess of such requirements. Failure to maintain such minimum capital will result in regulatory actions, including in certain circumstances regulatory takeover of the insurance company.

In the United States, our Global Atlantic's insurance companies are subject to risk based capital ("RBC") standards and other minimum capital and surplus requirements imposed by state laws. The RBC formula is intended to measure the adequacy of the insurance company’s statutory surplus in relation to the risks inherent in its business. The RBC formula requires higher surplus in relation to items deemed to have higher risk. Regulatory action is triggered beginning at 200% RBC and below.

Our Global Atlantic Bermuda insurance companies are subject to Bermuda Solvency Capital Requirements ("BSCR") standards and other minimum capital and surplus requirements imposed by the BMA. The BMA expects that insurers operate at or above a BSCR ratio of at least 120%.

Each of our Global Atlantic insurance companies exceeded the minimum requirements that would trigger regulatory action for all periods presented in this report.

Insurance subsidiary dividend restrictions

Payments of dividends by our U.S. and Bermuda-domiciled insurance companies are restricted by insurance statutes and regulations. Our ability to pay dividends out of our U.S.-domiciled insurance companies is limited to the dividend paying capacity of Global Atlantic's indirect insurance subsidiary, Commonwealth Annuity and Life Insurance Company (“Commonwealth”). Commonwealth has negative unassigned surplus and while it remains so, Commonwealth must obtain written approval from the Massachusetts Division of Insurance prior to the payment of any dividend or distribution. Without prior regulatory approval, and subject to maintaining certain solvency requirements, our U.S. and Bermuda insurance subsidiaries, may declare ordinary dividends or distributions to their holding companies during 2024, as follows:

Ordinary dividend and distribution capacity
($ in thousands)
U.S. domiciled
Commonwealth Annuity and Life Insurance CompanyNone
Bermuda domiciled
Global Atlantic Re Limited(1)$1,896,922
Global Atlantic Assurance Limited266,904

Shareholders’ equity of our principal U.S.-domiciled insurance subsidiary, Commonwealth Annuity and Life Insurance Company, determined pursuant to statutory accounting rules was approximately $4.3 billion and $4.2 billion as of December 31, 2023 and 2022, respectively. Statutory surplus computed under those methodologies differ from equity reported in accordance with U.S. GAAP primarily because fixed maturity securities are required to be carried at cost or amortized cost, embedded derivatives on funds withheld reinsurance balances are not recognized, policy acquisition costs are expensed when incurred and asset valuation and interest maintenance reserves are required to be held. Life insurance reserves are calculated based upon different assumptions and the recognition of deferred tax assets is based on different recoverability assumptions.

Combined shareholders’ equity of our Bermuda-domiciled insurance subsidiaries determined pursuant to statutory accounting rules was approximately $3.4 billion and $2.2 billion as of December 31, 2023 and 2022, respectively. Bermuda reinsurers file statutory financial statements with the Bermuda Monetary Authority (the "BMA") that may differ from U.S. GAAP. For example, Bermuda statutory surplus differs from U.S. GAAP primarily due to a modification that permits our Bermuda insurance subsidiaries to not measure the embedded derivative included within certain funds withheld coinsurance agreements at fair value.

Notes to Financial Statements (Continued)

26. SUBSEQUENT EVENTS

Common Stock Dividend

A dividend of $0.165 per share of common stock of KKR & Co. Inc. has been declared and was announced on February 6, 2024. This dividend will be paid on March 1, 2024 to common stockholders of record as of the close of business on February 16, 2024. Additionally, beginning with the dividend to be announced with the results of the quarter ending March 31, 2024, KKR intends to increase its regular annualized dividend per share of common stock from $0.66 to $0.70.

Acquisition of the Remaining Interests of Global Atlantic

On January 2, 2024, KKR acquired all of the remaining minority equity interests of Global Atlantic that KKR did not already own. At the closing of the transaction (the “Closing”), Global Atlantic became a wholly-owned subsidiary of KKR. The total cash purchase price for the minority equity interests of Global Atlantic that KKR did not already own was approximately $2.6 billion, which is subject to certain post-Closing purchase price adjustments. Additionally, in connection with the Closing, certain Global Atlantic employees rolled over a majority of their equity interests in Global Atlantic and received restricted holdings units issued by KKR Holdings III, which are subject to certain post-Closing purchase price adjustments. The outstanding debt securities of Global Atlantic remain solely outstanding obligations of Global Atlantic and were not assumed or guaranteed by other parts of KKR.

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