Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements of KKR & Co. Inc., together with its consolidated subsidiaries, and the related notes included elsewhere in this report and our Annual Report, including the audited consolidated financial statements and the related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained therein. In addition, this discussion and analysis contains forward-looking statements and involves numerous risks and uncertainties, including those described under "Cautionary Note Regarding Forward-looking Statements" and "Business Environment" in this report and our Annual Report and "Risk Factors" in our Annual Report, and our other filings with the SEC. Actual results may differ materially from those contained in any forward-looking statements.

The unaudited condensed consolidated financial statements and the related notes included elsewhere in this report are hereafter referred to as the "financial statements." Additionally, the condensed consolidated statements of financial condition are referred to herein as the "consolidated statements of financial condition"; the condensed consolidated statements of operations are referred to herein as the "consolidated statements of operations"; the condensed consolidated statements of comprehensive income (loss) are referred to herein as the "consolidated statements of comprehensive income (loss)"; the condensed consolidated statements of changes in equity are referred to herein as the "consolidated statements of changes in equity"; and the condensed consolidated statements of cash flows are referred to herein as the "consolidated statements of cash flows."

Overview

We are a leading global investment firm that offers alternative asset management as well as capital markets and insurance solutions. We aim to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and supporting growth in our portfolio companies and communities. We sponsor investment funds that invest in private equity, credit and real assets and have strategic partners that manage hedge funds. Our insurance subsidiaries offer retirement, life and reinsurance products under the management of Global Atlantic.

Our asset management business offers a broad range of investment management services to fund investors around the world. As of June 30, 2022, we manage $491 billion of assets for our clients. Throughout our history, we have consistently been a leader in the private equity industry, having completed approximately 675 private equity investments in portfolio companies with a total transaction value in excess of $690 billion as of June 30, 2022. Since the inception of our firm in 1976, we have expanded our investment strategies and product offerings from traditional private equity to areas such as leveraged credit, alternative credit, infrastructure, energy, real estate, growth equity, core and impact investments. We also provide capital markets services for our firm, our portfolio companies and third parties. Our balance sheet provides a significant source of capital in the growth and expansion of our business, and it has allowed us to further align our interests with those of our fund investors. Building on these efforts and leveraging our industry expertise and intellectual capital have allowed us to capitalize on a broader range of the opportunities we source.

Our insurance business is operated by Global Atlantic, in which we acquired a majority controlling interest on February 1, 2021. Global Atlantic 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 offers individuals fixed-rate annuities, fixed-indexed annuities and targeted life products through a network of banks, broker-dealers and independent marketing organizations. Global Atlantic provides its institutional clients customized reinsurance solutions, including block, flow and pension risk transfer reinsurance, as well as funding agreements. Global Atlantic primarily generates income by earning a spread between its investment income and the cost of policyholder benefits. As of June 30, 2022, Global Atlantic served approximately three million policyholders.

Asset Management

In our asset management business, we have historically had four business lines: (1) Private Markets, (2) Public Markets, (3) Capital Markets, and (4) Principal Activities. Beginning in this Quarterly Report on Form 10-Q, the Private Markets business line will be split into two business lines, “Private Equity” and “Real Assets”, each of which was historically included as part of the Private Markets business line. As a result of this change, our asset management segment’s business lines will increase from four to five. In addition, the Public Markets business line will, beginning in this Quarterly Report on Form 10-Q, be renamed Credit and Liquid Strategies.

As an asset management firm, we earn fees, including incentive fees, and carried interest for providing investment management and other services to our funds, vehicles, CLOs, managed accounts and portfolio companies, and we generate transaction-specific income from capital markets transactions. We earn additional investment income by investing our own capital alongside that of our fund investors and from other assets on our balance sheet. Carried interest we receive from our funds and certain other investment vehicles entitles us to a specified percentage of investment gains that are generated on third-party capital that is invested.

Our investment teams have deep industry knowledge and are supported by a substantial and diversified capital base; an integrated global investment platform; the expertise of operating professionals, senior advisors and other advisors; and a worldwide network of business relationships that provide a significant source of investment opportunities, specialized knowledge during due diligence and substantial resources for creating and realizing value for stakeholders. These teams invest capital, a substantial portion of which is of a long duration or not subject to predetermined redemption requirements, which provides us with significant flexibility to grow investments and select exit opportunities. As of June 30, 2022, approximately 90% of our AUM consists of capital that is not subject to redemption for at least 8 years from inception and what we refer to as perpetual capital. For more information about the limitations of perpetual capital, please see "Risks Related to Our Business—AUM referred to as perpetual capital is subject to material reduction, including through withdrawal, redemption, or dividends, and termination" in our Annual Report. We believe that these aspects of our business help us continue to grow our asset management business and deliver strong investment performance in a variety of economic and financial conditions.

Asset Management - Private Equity

Through our Private Equity business line, we manage and sponsor a group of what we call traditional private equity funds that invest capital for long-term appreciation, either through controlling ownership of a company or strategic minority positions. In addition to our traditional private equity funds that invest in large and mid-sized companies, we sponsor investment funds that invest in core equity and growth equity, which includes our impact investments. Our Private Equity business line includes separately managed accounts that invest in multiple strategies, which may include our credit and real asset strategies in addition to our private equity strategies. These funds and accounts are managed by Kohlberg Kravis Roberts & Co. L.P., an SEC-registered investment adviser, or one of its subsidiaries. As of June 30, 2022, our Private Equity business line had $171.5 billion of AUM.

Asset Management - Real Assets

Through our Real Assets business line, we manage and sponsor a group of real assets funds that invest capital in infrastructure, real estate, or energy. These funds and accounts are managed by Kohlberg Kravis Roberts & Co. L.P., an SEC-registered investment adviser, or one of its subsidiaries. As of June 30, 2022, our Real Assets business line had $113.8 billion of AUM.

The table below presents information as of June 30, 2022, relating to our current private equity and real asset funds for which we have the ability to earn carried interest. This data does not reflect acquisitions or disposals of investments, changes in investment values, or distributions occurring after June 30, 2022.

			Investment Period (1)						Amount ($ in millions)
			Start Date			End Date			Commitment (2)			Uncalled Commitments			Percentage Committed by General Partner			Invested			Realized			Remaining Cost (3)			Remaining Fair Value			Gross Accrued Carried Interest
Private Equity Business Line
North America Fund XIII			6/2021			8/2027			$	18,400		$	15,335		3%			$	3,065		$	—		$	3,065		$	3,096		$	—
Americas Fund XII			1/2017			6/2021			13,500			1,706			4%			12,292			4,948			11,219			20,105			1,687
North America Fund XI			9/2012			1/2017			8,718			408			3%			9,769			20,199			2,957			6,197			667
2006 Fund (4)			9/2006			9/2012			17,642			247			2%			17,309			35,557			1,274			1,708			141
Millennium Fund (4)			12/2002			12/2008			6,000			—			3%			6,000			14,123			—			6			1
European Fund VI			3/2022			6/2028			7,120			7,120			11%			—			—			—			—			—
European Fund V			3/2019			2/2022			6,328			1,604			2%			4,793			782			4,640			5,395			212
European Fund IV			12/2014			3/2019			3,513			64			6%			3,577			5,122			1,799			2,473			135
European Fund III (4)			3/2008			3/2014			5,509			145			5%			5,360			10,604			669			129			(25)
European Fund II (4)			11/2005			10/2008			5,751			—			2%			5,751			8,507			—			34			—
Asian Fund IV			7/2020			7/2026			14,735			11,353			4%			3,423			41			3,402			3,635			—
Asian Fund III			4/2017			7/2020			9,000			2,000			6%			7,404			4,199			6,438			11,949			981
Asian Fund II			4/2013			4/2017			5,825			34			1%			6,839			5,946			3,794			2,778			(346)
Asian Fund (4)			7/2007			4/2013			3,983			—			3%			3,974			8,728			110			22			4
China Growth Fund (4)			11/2010			11/2016			1,010			—			1%			1,010			1,056			330			243			(4)
Next Generation Technology Growth Fund II			12/2019			5/2022			2,088			597			7%			1,688			259			1,544			2,210			119
Next Generation Technology Growth Fund			3/2016			12/2019			659			4			22%			666			834			359			1,050			78
Health Care Strategic Growth Fund II			5/2021			5/2027			3,789			3,657			4%			132			—			132			154			—
Health Care Strategic Growth Fund			12/2016			5/2021			1,331			380			11%			1,081			196			972			1,472			71
Global Impact Fund II			6/2022			6/2028			1,312			1,312			11%			—			—			—			—			3
Global Impact Fund			2/2019			3/2022			1,242			350			8%			1,042			168			939			1,466			100
Co-Investment Vehicles and Other			Various			Various			18,161			6,550			Various			11,746			7,648			8,302			10,723			1,164
Core Investment Vehicles			Various			Various			24,657			13,729			31%			11,627			712			11,323			18,525			108
Unallocated Commitments (5)									4,320			4,320			Various			—			—			—			—			—
Total Private Equity									$	184,593		$	70,915					$	118,548		$	129,629		$	63,268		$	93,370		$	5,096
Real Assets Business Line
Energy Income and Growth Fund II			6/2018			3/2022			$	994		$	—		20%			$	1,187		$	193		$	1,024		$	1,835		$	52
Energy Income and Growth Fund			9/2013			6/2018			1,974			—			13%			1,974			956			1,134			716			—
Natural Resources Fund (4)			Various			Various			887			—			Various			887			123			191			48			—
Global Energy Opportunities			Various			Various			915			62			Various			519			169			323			213			—
Global Infrastructure Investors IV			8/2021			8/2027			16,603			13,717			2%			2,886			—			2,886			3,053			15
Global Infrastructure Investors III			6/2018			6/2021			7,164			1,667			4%			5,764			1,241			5,137			5,634			121
Global Infrastructure Investors II			10/2014			6/2018			3,039			123			4%			3,163			4,246			1,281			1,767			48
Global Infrastructure Investors			9/2011			10/2014			1,040			—			5%			1,050			2,228			—			—			—
Asia Pacific Infrastructure Investors II			(6)			(7)			4,122			4,122			9%			—			—			—			—			—
Asia Pacific Infrastructure Investors			1/2020			1/2026			3,792			2,036			7%			2,041			323			1,848			1,952			32
Diversified Core Infrastructure Fund			12/2020			(8)			7,636			3,127			7%			4,519			100			4,509			4,609			—
Real Estate Partners Americas III			12/2020			1/2025			4,253			2,065			5%			2,214			92			2,173			2,490			51
Real Estate Partners Americas II			5/2017			12/2020			1,921			265			8%			1,892			2,446			588			820			80
Real Estate Partners Americas			5/2013			5/2017			1,229			139			16%			1,020			1,405			111			61			1
Real Estate Partners Europe II			12/2019			3/2024			2,065			806			10%			1,326			184			1,237			1,432			43
Real Estate Partners Europe			9/2015			12/2019			707			131			9%			654			609			285			334			12
Asia Real Estate Partners			6/2019			7/2023			1,682			1,280			15%			405			7			388			561			16
Real Estate Credit Opportunity Partners II			4/2019			6/2022			950			413			5%			560			102			560			564			11
Real Estate Credit Opportunity Partners			2/2017			4/2019			1,130			122			4%			1,008			371			1,008			1,039			11
Property Partners Americas			12/2019			(8)			2,488			266			20%			2,222			110			2,222			3,117			38
Co-Investment Vehicles and Other			Various			Various			5,681			1,422			Various			4,320			1,670			3,737			3,858			19
Total Real Assets									$	70,272		$	31,763					$	39,611		$	16,575		$	30,642		$	34,103		$	550

(1)The start date represents a date on or in between the date on which the general partner of the applicable fund commenced investment of the fund's capital and the date of the first closing. The end date represents the approximate date on which the general partner of the applicable fund was or will be required by the fund's governing agreement to cease making investments (other than reserved amounts) on behalf of the fund, unless extended by a vote of the fund investors.

(2)The commitment represents the aggregate capital commitments to the fund, including capital commitments by third-party fund investors and the general partner. Foreign currency commitments have been converted into U.S. dollars based on (i) the foreign exchange rate at the date of purchase for each investment and (ii) the exchange rate that prevailed on June 30, 2022, in the case of uncalled commitments.

(3)The remaining cost represents the initial investment of the general partner and limited partners, reduced for returns of capital.

(4)The "Invested" and "Realized" columns do not include the amounts of any realized investments that restored the unused capital commitments of the fund investors, if any.

(5)"Unallocated Commitments" represent unallocated commitments from our strategic investor partnerships.

(6)Upon first investment of the fund.

(7)Six years from first investment date.

(8)No pre-determined date of termination.

The table below presents information as of June 30, 2022, relating to the historical performance of certain of our Private Equity and Real Assets business lines investment vehicles since inception, which we believe illustrates the benefits of our investment approach. This data does not reflect additional capital raised since June 30, 2022, or acquisitions or disposals of investments, changes in investment values or distributions occurring after that date. However, the information presented below is not intended to be representative of any past or future performance for any particular period other than the period presented below. Past performance is no guarantee of future results.

			Amount									Fair Value of Investments
Private Equity and Real Assets Business Lines Investment Funds			Commitment (2)			Invested						Realized (4)			Unrealized						Total Value						Gross IRR (5)			Net IRR (5)									Gross Multiple of Invested Capital (5)
($ in millions)
Legacy Funds (1)
1976 Fund			$	31		$	31					$	537		$	—					$	537					39.5		%	35.5		%							17.1
1980 Fund			357			357						1,828			—						1,828						29.0		%	25.8		%							5.1
1982 Fund			328			328						1,291			—						1,291						48.1		%	39.2		%							3.9
1984 Fund			1,000			1,000						5,964			—						5,964						34.5		%	28.9		%							6.0
1986 Fund			672			672						9,081			—						9,081						34.4		%	28.9		%							13.5
1987 Fund			6,130			6,130						14,949			—						14,949						12.1		%	8.9		%							2.4
1993 Fund			1,946			1,946						4,143			—						4,143						23.6		%	16.8		%							2.1
1996 Fund			6,012			6,012						12,477			—						12,477						18.0		%	13.3		%							2.1
Subtotal - Legacy Funds			16,475			16,475						50,269			—						50,269						26.1		%	19.9		%							3.1
Included Funds
European Fund (1999)			3,085			3,085						8,758			—						8,758						26.9		%	20.2		%							2.8
Millennium Fund (2002)			6,000			6,000						14,123			6						14,129						22.0		%	16.1		%							2.4
European Fund II (2005)			5,751			5,751						8,507			34						8,541						6.1		%	4.5		%							1.5
2006 Fund (2006)			17,642			17,309						35,557			1,708						37,265						11.9		%	9.3		%							2.2
Asian Fund (2007)			3,983			3,974						8,728			22						8,750						18.9		%	13.7		%							2.2
European Fund III (2008)			5,509			5,360						10,604			129						10,733						16.5		%	11.3		%							2.0
E2 Investors (Annex Fund) (2009)			196			196						200			—						200						0.6		%	0.5		%							1.0
China Growth Fund (2010)			1,010			1,010						1,056			243						1,299						6.1		%	2.0		%							1.3
Natural Resources Fund (2010)			887			887						123			48						171						(25.9)		%	(27.8)		%							0.2
Global Infrastructure Investors (2011)			1,040			1,050						2,228			—						2,228						17.6		%	15.6		%							2.1
North America Fund XI (2012)			8,718			9,769						20,199			6,197						26,396						24.8		%	20.2		%							2.7
Asian Fund II (2013)			5,825			6,839						5,946			2,778						8,724						7.0		%	5.3		%							1.3
Real Estate Partners Americas (2013)			1,229			1,020						1,405			61						1,466						16.4		%	11.5		%							1.4
Energy Income and Growth Fund (2013)			1,974			1,974						956			716						1,672						(5.7)		%	(8.3)		%							0.8
Global Infrastructure Investors II (2014)			3,039			3,163						4,246			1,767						6,013						19.6		%	16.9		%							1.9
European Fund IV (2015)			3,513			3,577						5,122			2,473						7,595						24.3		%	18.9		%							2.1
Real Estate Partners Europe (2015)			707			654						609			334						943						14.0		%	9.9		%							1.4
Next Generation Technology Growth Fund (2016)			659			666						834			1,050						1,884						34.0		%	28.9		%							2.8
Health Care Strategic Growth Fund (2016)			1,331			1,081						196			1,472						1,668						27.2		%	17.3		%							1.5
Americas Fund XII (2017)			13,500			12,292						4,948			20,105						25,053						32.2		%	26.3		%							2.0
Real Estate Credit Opportunity Partners (2017)			1,130			1,008						371			1,039						1,410						9.9		%	8.5		%							1.4
Core Investment Vehicles (2017)			24,657			11,627						712			18,525						19,237						22.8		%	21.5		%							1.7
Asian Fund III (2017)			9,000			7,404						4,199			11,949						16,148						38.3		%	30.3		%							2.2
Real Estate Partners Americas II (2017)			1,921			1,892						2,446			820						3,266						32.2		%	27.0		%							1.7
Global Infrastructure Investors III (2018)			7,164			5,764						1,241			5,634						6,875						11.2		%	7.9		%							1.2
Global Impact Fund (2019)			1,242			1,042						168			1,466						1,634						39.4		%	28.9		%							1.6
European Fund V (2019)			6,328			4,793						782			5,395						6,177						19.4		%	14.4		%							1.3
Energy Income and Growth Fund II (2019)			994			1,187						193			1,835						2,028						42.8		%	39.2		%							1.7
Asia Real Estate Partners (2019)			1,682			405						7			561						568						40.6		%	18.7		%							1.4
Next Generation Technology Growth Fund II (2019)			2,088			1,688						259			2,210						2,469						33.4		%	25.8		%							1.5
Real Estate Credit Opportunity Partners II (2019)			950			560						102			564						666						13.3		%	11.9		%							1.2
Asia Pacific Infrastructure Investors (2020)			3,792			2,041						323			1,952						2,275						18.4		%	10.4		%							1.1
Asian Fund IV (2020)			14,735			3,423						41			3,635						3,676						10.1		%	(1.7)		%							1.1
Real Estate Partners Europe II (2020)			2,065			1,326						184			1,432						1,616						30.0		%	19.6		%							1.2
Real Estate Partners Americas III (2021) (3)			4,253			2,214						92			2,490						2,582						—			—									—
Health Care Strategic Growth Fund II (2021) (3)			3,789			132						—			154						154						—			—									—
Global Infrastructure Investors IV (2021) (3)			16,603			2,886						—			3,053						3,053						—			—									—
North America Fund XIII (2021) (3)			18,400			3,065						—			3,096						3,096						—			—									—
European Fund VI (2022) (3)			7,120			—						—			—						—						—			—									—
Global Impact Fund II (2022) (3)			1,312			—						—			—						—						—			—									—
Asia Pacific Infrastructure Investors II (2022) (3)			4,122			—						—			—						—						—			—									—
Subtotal - Included Funds			218,945			138,114						145,465			104,953						250,418						16.6		%	12.8		%							1.9
All Funds			$	235,420		$	154,589					$	195,734		$	104,953					$	300,687					25.6		%	18.8		%							2.0

(1)These funds were not contributed to KKR as part of the acquisition of the assets and liabilities of KKR & Co. (Guernsey) L.P. (formerly known as KKR Private Equity Investors, L.P.) on October 1, 2009.

(2)Where commitments are euro-denominated, such amounts have been converted into U.S. dollars based on (i) the foreign exchange rate at the date of purchase for each investment and (ii) the exchange rate prevailing on June 30, 2022, in the case of unfunded commitments.

(3)The gross IRR, net IRR and gross multiple of invested capital are calculated for our investment funds that made their first investment at least 24 months prior to June 30, 2022. We therefore have not calculated gross IRRs, net IRRs and gross multiples of invested capital with respect to these funds.

(4)An investment is considered realized when it has been disposed of or has otherwise generated disposition proceeds or current income that has been distributed by the relevant fund.

(5)IRRs measure the aggregate annual compounded returns generated by a fund's investments over a holding period. Net IRRs are calculated after giving effect to the allocation of realized and unrealized carried interest and the payment of any applicable management fees and organizational expenses. Gross IRRs are calculated before giving effect to the allocation of realized and unrealized carried interest and the payment of any applicable management fees and organizational expenses.

The gross multiples of invested capital measure the aggregate value generated by a fund's investments in absolute terms. Each multiple of invested capital is calculated by adding together the total realized and unrealized values of a fund's investments and dividing by the total amount of capital invested by the fund. Such amounts do not give effect to the allocation of realized and unrealized carried interest or the payment of any applicable management fees or organizational expenses.

KKR's private equity and real assets funds may utilize third-party financing facilities to provide liquidity to such funds. The above net and gross IRRs are calculated from the time capital contributions are due from fund investors to the time fund investors receive a related distribution from the fund, and the use of such financing facilities generally decreases the amount of time that would otherwise be used to calculate IRRs, which tends to increase IRRs when fair value grows over time and decrease IRRs when fair value decreases over time. KKR's private equity and real assets funds also generally provide in certain circumstances, which vary depending on the relevant fund documents, for a portion of capital returned to investors to be restored to unused commitments as recycled capital. For KKR's private equity and real assets funds that have a preferred return, we take into account recycled capital in the calculation of IRRs and multiples of invested capital because the calculation of the preferred return includes the effect of recycled capital. For KKR's private equity and real assets funds that do not have a preferred return, we do not take recycled capital into account in the calculation of IRRs and multiples of invested capital. The inclusion of recycled capital generally causes invested and realized amounts to be higher and IRRs and multiples of invested capital to be lower than had recycled capital not been included. The inclusion of recycled capital would reduce the composite net IRR of all Included Funds by 0.1% and the composite net IRR of all Legacy Funds by 0.5% and would reduce the composite multiple of invested capital of Included Funds by less than 0.1 and the composite multiple of invested capital of Legacy Funds by 0.4.

Asset Management - Credit and Liquid Strategies

Through our Credit and Liquid Strategies business line, we report our credit and hedge funds platforms on a combined basis.

Our credit business invests capital in a broad range of corporate debt and collateral-backed investments across asset classes and capital structures. Our credit strategies are managed by KKR Credit Advisors (US) LLC, which is an SEC-registered investment adviser, KKR Credit Advisors (Ireland) Unlimited Company, which is regulated by the Central Bank of Ireland (“CBI”), KKR Credit Advisors (EMEA) LLP, which is regulated by the Financial Conduct Authority, and KKR Credit Advisors (Singapore) Pte. Ltd., which is regulated by the Monetary Authority of Singapore and also registered with the SEC. We also jointly own with a third party FS/KKR Advisor, LLC, which is the investment adviser for FS KKR Capital Corp. (NYSE: FSK) ("FSK"), a publicly listed business development company (a “BDC”).

Our hedge funds platform consists of strategic partnerships with third-party hedge fund managers in which KKR owns a minority stake. Our hedge fund partnerships offer a range of alternative investment strategies, including long/short equity, hedge fund-of-funds and energy credit investments.

Credit

Our credit business pursues investments in two principal investment strategies: leveraged credit and alternative credit.

Leveraged Credit. Our leveraged credit strategy is principally directed at investing in leveraged loans, high-yield bonds, opportunistic credit, structured credit and revolving credit investments. Our opportunistic credit strategy seeks to deploy capital across investment themes that take advantage of credit market dislocations, spanning asset types and liquidity profiles. Our revolving credit strategy invests in senior secured revolving credit facilities.

Alternative Credit. Our alternative credit strategy consists of our private credit strategies and debt and equity investments sourced by our strategic investments group (“SIG”).

• Private Credit.** Our private credit strategies focus on privately or directly originated and negotiated transactions. These strategies include direct lending, mezzanine debt and asset-based finance. Through our direct lending strategy, we seek to make investments in primarily senior debt financings for middle-market companies. Through our mezzanine debt strategy, investments typically consist of subordinated debt, which generates a current yield, coupled with marginal equity exposure for additional upside potential. Our asset-based finance strategy focuses on portfolios of financial loans and loans backed by hard assets.

• SIG. Our SIG strategy seeks to pursue investments in corporate credit and asset or real estate-backed credit where market volatility or other investment themes have created the opportunity to generate outsized returns with downside-protected securities. These investments may include stressed or distressed investments (including post-restructuring equity), control-oriented opportunities, rescue financing (debt or equity investments made to address covenant, maturity or liquidity issues), debtor-in-possession or exit financing, and other event-driven investments in debt or equity.

Performance

The following table presents information regarding the larger leveraged credit strategies managed by KKR from inception to June 30, 2022. The information presented below is not intended to be representative of any past or future performance for any particular period other than the period presented below. Past performance is no guarantee of any future result.

Leveraged Credit Strategies: Inception-to-Date Annualized Gross Performance vs. Benchmark by Strategy

Leveraged Credit Strategy						Inception Date												Gross Returns						Net Returns						Benchmark (1)						Benchmark Gross Returns
Bank Loans Plus High Yield						Jul 2008												6.45		%				5.85		%				65% S&P/LSTA Loan Index, 35% BoAML HY Master II Index (2)						5.08		%
Opportunistic Credit (3)						May 2008												10.08		%				8.40		%				50% S&P/LSTA Loan Index, 50% BoAML HY Master II Index (3)						5.25		%
Bank Loans						Apr 2011												4.69		%				4.12		%				S&P/LSTA Loan Index (4)						3.65		%
High-Yield						Apr 2011												5.24		%				4.67		%				BoAML HY Master II Index (5)						4.58		%
European Leveraged Loans (6)						Sep 2009												3.86		%				3.34		%				CS Inst West European Leveraged Loan Index (7)						2.97		%
European Credit Opportunities (6)						Sept 2007												4.47		%				3.64		%				S&P European Leveraged Loans (All Loans) (8)						3.47		%

(1)The benchmarks referred to herein include the S&P/LSTA Leveraged Loan Index (the "S&P/LSTA Loan Index"), S&P/LSTA U.S. B/BB Ratings Loan Index (the "S&P/LSTA BB-B Loan Index"), the Bank of America Merrill Lynch High Yield Master II Index (the "BoAML HY Master II Index"), the BofA Merrill Lynch BB-B US High Yield Index (the "BoAML HY BB-B Constrained"), the Credit Suisse Institutional Western European Leveraged Loan Index (the "CS Inst West European Leveraged Loan Index"), and S&P European Leveraged Loans (All Loans). The S&P/LSTA Loan Index is a daily tradable index for the U.S. loan market that seeks to mirror the market-weighted performance of the largest institutional loans that meet certain criteria. The BoAML HY Master II Index is an index for high-yield corporate bonds. It is designed to measure the broad high-yield market, including lower-rated securities. The CS Inst West European Leveraged Loan Index contains only institutional loan facilities priced above 90, excluding TL and TLa facilities and loans rated CC, C or are in default. The S&P European Leveraged Loan Index reflects the market-weighted performance of institutional leveraged loan portfolios investing in European credits. While the returns of our leveraged credit strategies reflect the reinvestment of income and dividends, none of the indices presented in the chart above reflect such reinvestment, which has the effect of increasing the reported relative performance of these strategies as compared to the indices. Furthermore, these indices are not subject to management fees, incentive allocations, or expenses.

(2)Performance is based on a blended composite of Bank Loans Plus High Yield strategy accounts. The benchmark used for purposes of comparison for the Bank Loans Plus High Yield strategy is based on 65% S&P/LSTA Loan Index and 35% BoAML HY Master II Index.

(3)The Opportunistic Credit strategy invests in high-yield securities and corporate loans with no preset allocation. The benchmark used for purposes of comparison for the Opportunistic Credit strategy presented herein is based on 50% S&P/LSTA Loan Index and 50% BoAML HY Master II Index. Funds within this strategy may utilize third-party financing facilities to enhance investment returns. In cases where financing facilities are used, the amounts drawn on the facility are deducted from the assets of the fund in the calculation of net asset value, which tends to increase returns when net asset value grows over time and decrease returns when net asset value decreases over time.

(4)Performance is based on a composite of portfolios that primarily invest in leveraged loans. The benchmark used for purposes of comparison for the Bank Loans strategy is based on the S&P/LSTA Loan Index.

(5)Performance is based on a composite of portfolios that primarily invest in high-yield securities. The benchmark used for purposes of comparison for the High Yield strategy is based on the BoAML HY Master II Index.

(6)The returns presented are calculated based on local currency.

(7)Performance is based on a composite of portfolios that primarily invest in higher quality leveraged loans. The benchmark used for purposes of comparison for the European Leveraged Loans strategy is based on the CS Inst West European Leveraged Loan Index.

(8)Performance is based on a composite of portfolios that primarily invest in European institutional leveraged loans. The benchmark used for purposes of comparison for the European Credit Opportunities strategy is based on the S&P European Leveraged Loans (All Loans) Index.

The following table presents information regarding our credit investment funds where investors are subject to capital commitments from inception to June 30, 2022. The information presented below is not intended to be representative of any past or future performance for any particular period other than the period presented below. Past performance is no guarantee of any future result.

Alternative Credit Strategies: Fund Performance

												Amount												Fair Value of Investments
Credit and Liquid Strategies Investment Funds						Inception Date						Commitment						Invested (1)						Realized (1)						Unrealized						Total Value						Gross IRR (2)						Net IRR (2)												Multiple of Invested Capital (3)						Gross Accrued Carried Interest
($ in Millions)
Dislocation Opportunities Fund						May 2020						$	2,967					$	2,286					$	538					$	2,080					$	2,618					14.4		%				11.4		%										1.1						$	38
Special Situations Fund II						Dec 2014						3,525						3,241						2,068						1,863						3,931						5.5		%				3.5		%										1.2						—
Special Situations Fund						Dec 2012						2,274						2,273						1,700						390						2,090						(1.9)		%				(3.8)		%										0.9						—
Mezzanine Partners						Mar 2010						1,023						990						1,157						131						1,288						8.9		%				5.6		%										1.3						(20)
Asset-Based Finance Partners						Aug 2020						1,959						—						—						—						—						N/A						N/A												N/A						—
Private Credit Opportunities Partners II						Dec 2015						2,245						1,738						674						1,375						2,049						6.1		%				4.4		%										1.2						—
Lending Partners III						Apr 2017						1,498						741						356						796						1,152						15.9		%				13.1		%										1.6						31
Lending Partners II						Jun 2014						1,336						1,179						1,149						131						1,280						3.0		%				1.5		%										1.1						—
Lending Partners						Dec 2011						460						419						451						19						470						3.5		%				1.9		%										1.1						—
Lending Partners Europe II						Jun 2019						837						551						52						552						604						17.4		%				12.6		%										1.1						2
Lending Partners Europe						Mar 2015						848						662						379						249						628						(1.8)		%				(4.3)		%										0.9						—
Asia Credit						Dec 2020						1,084						271						—						280						280						N/A						N/A												N/A						—
Other Alternative Credit Vehicles						Various						13,056						6,654						4,800						3,947						8,747						N/A						N/A												N/A						63
All Funds												$	33,112					$	21,005					$	13,324					$	11,813					$	25,137																													$	114

(1)Recycled capital is excluded from the amounts invested and realized.

(2)These credit funds utilize third-party financing facilities to provide liquidity to such funds, and in such event IRRs are calculated from the time capital contributions are due from fund investors to the time fund investors receive a related distribution from the fund. The use of such financing facilities generally decreases the amount of invested capital that would otherwise be used to calculate IRRs, which tends to increase IRRs when fair value grows over time and decrease IRRs when fair value decreases over time. IRRs measure the aggregate annual compounded returns generated by a fund's investments over a holding period and are calculated taking into account recycled capital. Net IRRs presented are calculated after giving effect to the allocation of realized and unrealized carried interest and the payment of any applicable management fees. Gross IRRs are calculated before giving effect to the allocation of carried interest and the payment of any applicable management fees.

(3)The multiples of invested capital measure the aggregate value generated by a fund's investments in absolute terms. Each multiple of invested capital is calculated by adding together the total realized and unrealized values of a fund's investments and dividing by the total amount of capital invested by the investors. The use of financing facilities generally decreases the amount of invested capital that would otherwise be used to calculate multiples of invested capital, which tends to increase multiples when fair value grows over time and decrease multiples when fair value decreases over time. Such amounts do not give effect to the allocation of any realized and unrealized returns on a fund's investments to the fund's general partner pursuant to a carried interest or the payment of any applicable management fees and are calculated without taking into account recycled capital.

Hedge Funds

Our hedge fund platform consists of strategic partnerships with third-party hedge fund managers in which KKR owns a minority stake. This principally consists of a 39.6% interest in Marshall Wace LLP (together with its affiliates, "Marshall Wace"), a global alternative investment manager specializing in long/short equity products. We also own (i) a 39.9% interest in PAAMCO Prisma Holdings, LLC ("PAAMCO Prisma"), an investment manager focused on liquid alternative investment solutions, including hedge fund-of-fund portfolios, and (ii) a 24.9% interest in BlackGold Capital Management L.P. ("BlackGold"), a credit-oriented investment manager focused on energy and hard asset investments.

Credit and Liquid Strategies AUM

As of June 30, 2022, our Credit and Liquid Strategies business line had $205.4 billion of AUM, comprised of $97.2 billion of assets managed in our leveraged credit strategies, $71.3 billion of assets managed in our private credit strategy, and $8.2 billion of assets managed in our SIG strategy, $27.0 billion of assets managed through our hedge fund platform, and $1.7 billion of assets managed in other credit and liquid strategies. We manage $90.9 billion of credit investments for our Global Atlantic insurance companies, which are included in the amounts described in the preceding sentence. Our BDC has approximately $17.0 billion in assets under management, which is reflected in the AUM of our leveraged credit and private credit strategies above. We report all of the assets under management of our BDC in our AUM, but we report only a pro rata portion of the assets under management of our hedge fund partnerships based on our percentage ownership in them.

($ in millions)						AUM						FPAUM						Typical Management Fee Rate						Incentive Fee / Carried Interest						Preferred Return						Duration of Capital
Leveraged Credit:
Leveraged Credit SMAs/Funds						$	71,442					$	69,292					0.15% - 1.10%						Various (1)						Various (1)						Subject to redemptions
CLOs						23,983						23,983						0.40% - 0.50%						Various (1)						Various (1)						10-14 Years (2)
Total Leveraged Credit						95,425						93,275
Alternative Credit: (3)
Private Credit						57,646						51,083						0.30% - 1.50% (4)						10.00 - 20.00%						5.00 - 8.00%						8-15 Years (2)
SIG						8,265						4,512						0.50% - 1.75%						10.00 - 20.00%						7.00 - 12.00%						7-15 Years (2)
Total Alternative Credit						65,911						55,595
Hedge Funds (5)						27,026						27,026						0.50% - 2.00%						Various (1)						Various (1)						Subject to redemptions
BDCs (6)						17,000						17,000						0.60%						8.00%						7.00%						Indefinite
Total						$	205,362					$	192,896

(1)Certain funds and CLOs are subject to a performance fee in which the manager or general partner of the funds share up to 20% of the net profits earned by investors in excess of performance hurdles (generally tied to a benchmark or index) and subject to a provision requiring the funds and vehicles to regain prior losses before any performance fee is earned.

(2)Duration of capital is measured from inception. Inception dates for CLOs were between 2013 and 2022 and for separately managed accounts and funds investing in alternative credit strategies from 2009 through 2022.

(3)Our alternative credit funds generally have investment periods of two to five years and our newer alternative credit funds generally earn management fees on invested capital throughout their lifecycle.

(4)Lower fees on uninvested capital in certain vehicles.

(5)Hedge Funds represent KKR's pro rata portion of AUM and FPAUM of our hedge fund partnerships.

(6)Consists of FSK. We report all of the assets under management of this BDC in our AUM and FPAUM.

Asset Management - Capital Markets

Our Capital Markets business line is comprised of our global capital markets business, which is integrated with KKR's other asset management business lines, and serves our firm, our funds, our portfolio companies and third-party clients by developing and implementing both traditional and non-traditional capital solutions for investments or companies seeking financing. These services include arranging debt and equity financing, placing and underwriting securities offerings, and providing other types of capital markets services that may result in the firm receiving fees, including underwriting, placement, transaction and syndication fees, commissions, underwriting discounts, interest payments and other compensation, which may be payable in cash or securities, in respect of the activities described above.

Our capital markets business underwrites credit facilities and arranges loan syndications and participations. When we are sole arrangers of a credit facility, we may advance amounts to the borrower on behalf of other lenders, subject to repayment. When we underwrite an offering of securities on a firm commitment basis, we commit to buy and sell an issue of securities and generate revenue by purchasing the securities at a discount or for a fee. When we act in an agency capacity or best efforts basis, we generate revenue for arranging financing or placing securities with capital markets investors. We may also provide issuers with capital markets advice on security selection, access to markets, marketing considerations, securities pricing, and other aspects of capital markets transactions in exchange for a fee. Our capital markets business also provides syndication services in respect of co-investments in transactions participated in by KKR funds or third-party clients, which may entitle the firm to receive syndication fees, management fees and/or a carried interest.

The capital markets business has a global footprint, with local presence and licenses to carry out certain broker-dealer activities in various countries in North America, Europe, Asia-Pacific and the Middle East. Our flagship capital markets subsidiary is KKR Capital Markets LLC, an SEC-registered broker-dealer and a member of the Financial Industry Regulatory Authority ("FINRA").

Asset Management - Principal Activities

Through our Principal Activities business line, we manage the firm’s own assets on our firm’s balance sheet and deploy capital to support and grow our Private Equity, Real Assets, Credit and Liquid Strategies, and Credit Markets business lines.

Typically, the funds that we manage in our Private Equity, Real Assets and Credit and Liquid Strategies business lines contractually require us, as general partner of the funds, to make sizable capital commitments. We believe making general partner commitments assists us in raising new funds from limited partners by demonstrating our conviction in a given fund’s strategy. Our commitments to fund capital also occurs where we are the holder of the subordinated notes or the equity tranche of investment vehicles that we sponsor, including structured transactions. We also use our balance sheet to bridge investment activity during fundraising, for example by funding investments for new funds and acquiring investments to establish a track record for new investment strategies. We also use our own capital to bridge capital selectively for our funds’ investments or finance strategic transactions, although the financial results of an acquired business may be reported in our other business lines.

Our Principal Activities business line also provides the required capital to fund the various commitments of our Capital Markets business line when underwriting or syndicating securities, or when providing term loan commitments for transactions involving our portfolio companies and for third parties. Our Principal Activities business line also holds assets that are utilized to satisfy regulatory requirements for our Capital Markets business line and risk retention requirements for certain investment vehicles.

We also make opportunistic investments through our Principal Activities business line, which include co-investments alongside the funds we manage as well as Principal Activities investments that do not involve our funds.

We endeavor to use our balance sheet strategically and opportunistically to generate an attractive risk-adjusted return on equity in a manner that is consistent with our fiduciary duties, in compliance with applicable laws, and consistent with our one-firm approach.

The chart below presents the holdings of our Principal Activities business line by asset class as of June 30, 2022.

Holdings by Asset Class (1)

(1)General partner commitments in our funds are included in the various asset classes shown above. Assets and revenues of other asset managers with which KKR has formed strategic partnerships where KKR does not hold more than 50% ownership interest are not included in our Principal Activities business line but are reported in the financial results of our other business lines. Private Equity includes our investments in private equity funds, co-investments alongside such KKR-sponsored private equity funds, certain core equity investments, and other opportunistic investments. Equity investments in other asset classes, such as real estate, special situations and energy appear in these other asset classes. Other Credit consists of certain leveraged credit and specialty finance strategies.

Insurance

Our insurance business is operated by Global Atlantic, which we acquired on February 1, 2021. As of June 30, 2022, KKR owns a 61.5% economic interest in Global Atlantic with the balance of Global Atlantic owned by third-party investors and Global Atlantic employees. Following the Global Atlantic acquisition, Global Atlantic continues to operate as a separate business with its existing brands and management team. Since the first quarter of 2021, we have presented Global Atlantic's financial results as a separate reportable segment.

Global Atlantic is a leading U.S. retirement and life insurance company that provides a broad suite of protection, legacy and savings products to customers and reinsurance solutions to clients across individual and institutional markets. Global Atlantic focuses on target markets that it believes supports issuing products that have attractive risk and return characteristics. These markets allow Global Atlantic to leverage its strength in distribution and to deploy capital opportunistically across market conditions.

Global Atlantic primarily offers individual market customers fixed-rate annuities, fixed-indexed annuities, and targeted life products through a network of banks, broker-dealers, and insurance agencies. Global Atlantic provides its institutional market clients customized reinsurance solutions, including block, flow and pension risk transfer ("PRT") reinsurance, as well as funding agreements. Subject to changes in asset values, Global Atlantic's assets generally increase when individual market sales and reinsurance transactions exceed run-off of in-force policies. Global Atlantic primarily generates income by earning a spread between its investment income and the cost of policyholder benefits. As of June 30, 2022, Global Atlantic served approximately three million policyholders.

Global Atlantic inflows are derived from new business production in its individual and institutional markets channels. Global Atlantic expects new business production from its individual markets channel and certain institutional markets products to be largely consistent quarter over quarter while exhibiting growth over time, subject to market and business risks. In contrast, Global Atlantic expects block reinsurance transactions generated in the institutional markets channel to be episodic rather than steady quarter over quarter. Similarly, funding agreements issued in the funding agreement backed note ("FABN") program are subject to capital markets conditions and are not expected to be consistent quarter over quarter.

The following table represents Global Atlantic’s new business volumes by business and product for the three and six months ended June 30, 2022 and 2021:

						Three Months Ended June 30,												Six Months Ended June 30,
						2022						2021						2022						2021**(4)**
($ in millions)
Individual market channel:
Fixed-rate annuities						$	1,481					$	1,545					$	2,520					$	2,583
Fixed-indexed annuities						1,117						901						2,021						1,496
Variable annuities						11						15						22						23
Total retirement products**(1)**						$	2,609					$	2,461					$	4,563					$	4,102
Life insurance products						$	12					$	11					$	19					$	17
Preneed life						73						62						138						100
Institutional market channel:
Block						5						10						2,782						1,089
Flow & pension risk transfer						2,143						1,629						3,842						2,393
Funding agreements(3)						900						700						2,000						700
Total institutional channel**(2)**						$	3,048					$	2,339					$	8,624					$	4,182

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(1)New business volumes in individual markets are referred to as sales. In Global Atlantic's individual market channel, sales of annuities include all money paid into new and existing contracts. Individual channel sales of life insurance products are based on commissionable premium and individual market

channel sales for preneed life are based on the face amount of insurance. Life insurance product sales do not include the recurring premiums that policyholders may pay over time.

(2)New business volume from Global Atlantic's institutional market channel is based on the assets assumed, net of any ceding commission, and is gross of any retrocessions to investment vehicles that participate in qualifying reinsurance transactions sourced by Global Atlantic and to other third party reinsurers.

(3)Funding agreement new business volumes represents funding agreements issued in connection with our FABN program only.

(4)For the six month period ended June 30, 2021, the results of Global Atlantic's insurance operations included in our condensed consolidated results of operations are from February 1, 2021 through June 30, 2021.

The table below represents a breakdown of Global Atlantic’s policy liabilities by business and product type as of June 30, 2022, separated by reserves originated through its individual and institutional markets.

			Reserves as of June 30, 2022
			Individual market						Institutional market**(4)**						Total						Ceded						Total, net						Percentage of total
			($ in millions, except percentages, if applicable)
Fixed-rate annuity			$	22,586					$	44,282					$	66,868					$	(17,362)					$	49,506					48.4		%
Fixed-indexed annuity			21,663						7,253						28,916						(3,227)						25,689						20.9		%
Variable annuity			2,751						3,411						6,162						(646)						5,516						4.5		%
Indexed universal life			12,126						—						12,126						(72)						12,054						8.8		%
Preneed life			2,851						—						2,851						—						2,851						2.1		%
Other life insurance(1)			2,007						10,246						12,253						(3,772)						8,481						8.9		%
Funding agreements(2)			2,196						5,554						7,750						—						7,750						5.6		%
Closed block			—						1,137						1,137						(1,092)						45						0.8		%
Other corporate(3)			—						48						48						(47)						1						—		%
Total reserves			$	66,180					$	71,931					$	138,111					$	(26,218)					$	111,893					100.0		%
Total general account			$	63,697					$	70,051					133,748						$	(26,218)					$	107,530					96.8		%
Total separate account			2,483						1,880						4,363						—						4,363						3.2		%
Total reserves			$	66,180					$	71,931					$	138,111					$	(26,218)					$	111,893					100.0		%

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(1)“Other life insurance” includes universal life, term and whole life insurance products.

(2)"Funding agreements” includes funding agreements associated with Federal Home Loan Bank advances and under our FABN program.

(3)“Other corporate” primarily includes accident & health reserves that Global Atlantic assumed as part of a reinsurance transaction in 2009.

(4)Institutional market reserves are sourced using customized reinsurance solutions such as block, flow and PRT. As of June 30, 2022, reserves sourced through for block, flow and PRT transactions were $50.3 billion, $8.9 billion, and $4.1 billion, respectively.

Business Environment

Economic and Market Conditions

Impact of COVID-19. The outbreak of COVID-19 continues to impact various countries throughout the world. For a description of the impact that COVID-19 had and may in the future have on our business, see "Risk Factors—Risks Related to Our Business—COVID-19 continues to impact the United States and other countries throughout the world, and it has caused and may further cause disruptions to our business and adversely affect our financial results" and "Risk Factors—Risks Related to the Assets We Manage—Our investments are impacted by various economic conditions and events outside of our control that are difficult to quantify or predict, which may have a significant impact on the valuation of our investments and, therefore, on the investment income we realize and our results of operations and financial condition" in our Annual Report.

Economic Conditions. As a global investment firm, we are affected by financial and economic conditions globally. Global and regional economic conditions, including those caused by the COVID-19 pandemic, have substantial impact on our financial condition and results of operations, impacting the values of the investments we make, our ability to exit these investments profitably, our ability to raise capital from investors, and our ability to make new investments. Financial and economic conditions in the United States, European Union, China, Japan, and other major economies are significant contributors to the global economy.

During the quarter ended June 30, 2022, the United States showed signs of slowing economic activity, potentially indicating the early stages of a recession. Inflation continued to present a headwind for the U.S. economy. In keeping with its stated intention to bring down inflation, the U.S. Federal Reserve pursued a more restrictive monetary policy. The Federal Reserve raised interest rates by 50 basis points in May, 75 basis points in June and 75 basis points in July, leading to increased market volatility. In the United States, real GDP is estimated to have expanded at a 0.4% seasonally-adjusted annualized rate in the quarter ended June 30, 2022, after contracting at a -1.6% seasonally-adjusted annualized rate in the quarter ended March 31, 2022; the U.S. unemployment rate was 3.6% as of June 30, 2022, unchanged from March 31, 2022; the U.S. consumer price index rose 9.1% year-over-year as of June 30, 2022, up from 8.5% year-over-year as of March 31, 2022; the U.S. core consumer price index rose 5.9% on a year-over-year basis as of June 30, 2022, down from 6.5% on a year-over-year basis as of March 31, 2022; and the effective federal funds rate set by the U.S. Federal Reserve was 1.6% as of June 30, 2022, up from 0.3% as of March 31, 2022.

During the quarter ended June 30, 2022, the Euro Area (also known as the Eurozone) economy experienced slowing growth and the potential for recession for countries in the Euro Area is generally high. The European Central Bank (ECB) has signaled its intention to pursue a more restrictive monetary policy. Euro Area real GDP is estimated to have risen by 0.1% on a seasonally-adjusted quarter-over-quarter basis in the quarter ended June 30, 2022, lower than the 0.6% increase recorded in the quarter ended March 31, 2022. In addition, Euro Area unemployment was estimated to be 6.6% as of June 30, 2022, down from 6.8% as of March 31, 2022; euro area core inflation was 3.7% as of June 30, 2022, up from 3.0% as of March 31, 2022; and the short-term benchmark interest rate set by the European Central Bank was 0.0% as of June 30, 2022, unchanged from March 31, 2022. As of June 30, 2022, we have no investments in any portfolio companies whose executive headquarters are located in Russia, Ukraine or Belarus, and we believe that the direct exposure of our investment portfolio to Russia, Ukraine and Belarus is insignificant.

During the quarter ended June 30, 2020, the Chinese economy contracted due in part from the ongoing slowdown in China’s property sector and the effects of the government’s zero-COVID policies. Real GDP in China fell by 2.6% on a seasonally-adjusted quarter-over-quarter basis in the quarter ended June 30, 2022, compared to growth of 1.4% reported for the quarter ended March 31, 2022. Estimated core inflation in China was 1.0% on a year-over-year basis as of June 30, 2022, down from 1.1% on a year-over-year basis as of March 31, 2022.

In Japan, the economic recovery from COVID-19 has slowed, with higher energy costs and significant volatility in currency markets presenting headwinds to GDP growth. In Japan, real GDP growth for the quarter ended June 30, 2022 is estimated to have been 1.0% on a seasonally-adjusted annualized basis, unchanged from the quarter ended March 31, 2022; core inflation rose to 0.2% on a year-over-year basis as of June 30, 2022, up from -1.6% as of March 31, 2022; and the short-term benchmark interest rate set by the Bank of Japan was -0.1% as of June 30, 2022, unchanged from March 31, 2022.

These and other key issues could have repercussions across regional and global financial markets, which could adversely affect the valuations of our investments. In particular, in response to persistent inflationary pressure and central bank policy designed to combat inflation, short- and medium-term interest rates may continue to rise, which may adversely impact equity and credit markets and in turn both increase volatility in equity and debt markets and reduce economic growth. As noted above, the U.S. Federal Reserve has recently raised interest rates and has indicated that it is prepared to take decisive action to manage inflation, including raising interest rates further and shrinking the size of its balance sheet. In addition, commodity prices are generally expected to rise in inflationary environments, and foreign exchange rates are often affected by countries’ monetary and fiscal responses to inflationary trends. The Russia-Ukraine conflict, including the sanctions imposed in response to Russia's invasion of Ukraine, have exacerbated and may further exacerbate these issues and trends. Protectionist policies have also increased globally as a result of the Russian invasion of Ukraine. Other key issues include (i) further developments regarding infectious diseases, including COVID-19, which may prolong the adverse economic impact of the COVID-19 pandemic on the U.S. and global economies, including supply chain disruptions that promote cost inflation for critical goods and labor shortages, (ii) geopolitical uncertainty such as U.S.-China relations, (iii) political uncertainty caused by, among other things, economic nationalist sentiments, tensions surrounding socioeconomic inequality issues, and partisan sentiments in the United States, all of which have potentially global ramifications with regards to policy, (iv) regulatory changes regarding, for example, taxation, international trade, cross-border investments, immigration, stimulus programs and rising levels of debt, (v) increased volatility and/or downturn in equity or credit markets, (vi) unexpected shifts in central banks' monetary policies, and (vii) technological advancements and innovations that may disrupt marketplaces and businesses. For a further discussion of how market conditions may affect our businesses, see "Risk Factors—Risks Related to Our Business—Difficult market and economic conditions can adversely affect our business in many ways, including by reducing the value or performance of the investments that we manage or by reducing the ability of our funds to raise or deploy capital, each of which could negatively impact our net income and cash flow and adversely affect our financial condition" in our Annual Report. In addition, members of U.S. Congress and New York State are proposing (and after the date of this report may propose other) various significant changes in tax law, including

significant changes in the way U.S. corporations like ourselves and many of our U.S. portfolio companies are taxed. If enacted, these changes could materially increase the amount of taxes we and our portfolio companies are required to pay. See “Risk Factors—Risks Related to Our Business—Changes in relevant tax laws, regulations or treaties or an adverse interpretation of these items by tax authorities could adversely impact our effective tax rate and tax liability” in our Annual Report.

Equity and Credit Markets. Global equity and credit markets have a substantial effect on our financial condition and results of operations. In general, a climate of reasonable interest rates and high levels of liquidity in the debt and equity capital markets provide a positive environment for us to generate attractive investment returns, which also impacts our ability to generate incentive fees and carried interest. Periods of volatility and dislocation in the capital markets raise substantial risks, but also can present us with opportunities to invest at reduced valuations that position us for future growth and investment returns. Low interest rates related to monetary stimulus and economic stagnation may negatively impact expected returns on all types of investments. Higher interest rates in conjunction with slower growth or weaker currencies in some emerging market economies have caused, and may further cause, the default risk of these countries to increase, and this could impact the operations or value of our investments that operate in these regions. Areas that have central bank quantitative easing or tightening campaigns affecting their interest rates relative to the United States could potentially experience further currency volatility relative to the U.S. dollar.

In our asset management business, many of our investments are in equities, so a change in global equity prices or in market volatility directly impacts the value of our investments and our profitability as well as our ability to realize investment gains and the receptiveness of fund investors to our investment products. For the quarter ended June 30, 2022, global equity markets were negative, with the S&P 500 down 16.1% and the MSCI World Index down 16.1% on a total return basis including dividends. Equity market volatility as evidenced by the Chicago Board Options Exchange Market Volatility Index (VIX), a measure of volatility, ended at 28.7 as of June 30, 2022, increasing from 20.6 as of March 31, 2022. For a discussion of our valuation methods, see “Risk Factors—Risks Related to the Assets We Manage—Our investments are impacted by various economic conditions and events outside of our control that are difficult to quantify or predict, which may have a significant impact on the valuation of our investments and, therefore, on the investment income we realize and our results of operations and financial condition” and see also “—Critical Accounting Policies—Fair Value Measurements—Level III Valuation Methodologies” in our Annual Report. In our insurance business, a change in equity prices also impacts Global Atlantic’s equity-sensitive annuity and life insurance products, including with respect to hedging costs related to and fee-income earned on those products.

Many of our investments in asset management are in non-investment grade credit instruments and investment grade credit instruments. Our funds, our portfolio companies and Global Atlantic also rely on credit financing and the ability to refinance existing debt. Consequently, any decrease in the value of credit instruments that we have invested in or any increase in the cost of credit financing reduces our returns and decreases our net income.

Higher interest rates, periods of changes in rates and lower rates each may result in differing impacts on Global Atlantic’s business. See "Risk Factors—Risks Related to Global Atlantic— Interest rate fluctuations and sustained periods of low or high interest rates could adversely affect Global Atlantic’s business, financial condition, liquidity, results of operations, cash flows and prospects" in our Annual Report. In our insurance segment, the majority of our investments are in investment grade credit instruments. Sales of those investments at a loss, for example as we rotate out of investments acquired with new reinsurance transactions during a period of rising rates, is expected to decrease our net income in that period. In addition, in our insurance segment, rising interest rates is expected to decrease the fair value of credit investments and may decrease the value of embedded derivatives associated with funds withheld reinsurance transactions, resulting in unrealized losses reported in AOCI. However, we do not expect to incur these unrealized losses as we intend to hold the investments to maturity as part of our asset liability cashflow matching strategy. Based on our review of applicable factors, we determined that it was not more likely than not that goodwill in the insurance segment was impaired. However, if the market, industry and company-specific factors relating to these investments deteriorate meaningfully, Global Atlantic may be required to recognize an impairment to goodwill, which could have a material adverse effect on our results of operations and financial condition.

Due in part to holdings of credit instruments such as CLOs on our balance sheet, the performance of the credit markets has had an amplified impact on our financial results, as we directly bear the full extent of losses from credit instruments on our balance sheet. Credit markets can also impact valuations because a discounted cash flow analysis is generally used as one of the methodologies to ascertain the fair value of our investments that do not have readily observable market prices. In addition, with respect to our credit instruments, tightening credit spreads are generally expected to lead to an increase, and widening credit spreads are generally expected to lead to a decrease, in the value of these credit investments, if not offset by hedging or other factors. In addition, the significant widening of credit spreads is also typically expected to negatively impact equity markets, which in turn would negatively impact our portfolio and us as noted above. Conversely, widening credit spreads may have a positive impact on our insurance business, as the margin Global Atlantic is able to earn between crediting rates offered on its insurance products and the investment income it earns from its credit investments could increase, and tightening credit spreads

may negatively impact the pricing and therefore competitiveness of Global Atlantic’s products, adversely impacting sales and growth, or may negatively impact the margins that Global Atlantic earns on sales and transactions.

During the quarter ended June 30, 2022, U.S. investment grade corporate bond spreads (BofA Merrill Lynch US Corporate Index) widened by 42 basis points and U.S. high-yield corporate bond spreads (BofAML HY Master II Index) widened by 244 basis points. The non-investment grade credit indices were down during the quarter ended June 30, 2022, with the S&P/LSTA Leveraged Loan Index down 4.5% and the BAML US High Yield Index down 10%. During the quarter ended June 30, 2022, 10-year government bond yields rose 67 basis points in the United States, rose 62 basis points in the United Kingdom, rose 79 basis points in Germany, rose 3 basis points in China, and rose 1 basis point in Japan. For a further discussion of how market conditions may affect our businesses, see “Risk Factors—Risks Related to Our Business—Difficult market and economic conditions can adversely affect our business in many ways, including by reducing the value or performance of the investments that we manage or by reducing the ability of our funds to raise or deploy capital, each of which could negatively impact our net income and cash flow and adversely affect our financial condition” and “Risk Factors—Risks Related to the Assets We Manage—Our investments are impacted by various economic conditions and events outside of our control that are difficult to quantify or predict, which may have a significant impact on the valuation of our investments and, therefore, on the investment income we realize and our results of operations and financial condition” in our Annual Report.

For further discussion of the impact of global credit markets on our financial condition and results of operations, see "Risk Factors—Risks Related to the Assets We Manage—Changes in the debt financing markets may negatively impact the ability of our investment funds, their portfolio companies and strategies pursued with our balance sheet assets to obtain attractive financing for their investments or to refinance existing debt and may increase the cost of such financing or refinancing if it is obtained, which could lead to lower-yielding investments and potentially decrease our net income," "Risk Factors—Risks Related to the Assets We Manage—Our investments are impacted by various economic conditions and events outside of our control that are difficult to quantify or predict, which may have a significant impact on the valuation of our investments and, therefore, on the investment income we realize and our results of operations and financial condition," "Risk Factors—Risks Related to the Assets We Manage—Our funds and our firm through our balance sheet may make a limited number of investments, or investments that are concentrated in certain issuers, geographic regions or asset types, which could negatively affect our performance or the performance of our funds to the extent those concentrated assets perform poorly" and "Risk Factors—Risks Related to Global Atlantic—Interest rate fluctuations and sustained periods of low or high interest rates could adversely affect Global Atlantic’s business, financial condition, liquidity, results of operations, cash flows and prospects" in our Annual Report. For a further discussion of our valuation methods, see "—Critical Accounting Policies—Fair Value Measurements—Level III Valuation Methodologies."

Foreign Exchange Rates. Foreign exchange rates have a substantial impact on the valuations of our investments that are denominated in currencies other than the U.S. dollar. Currency volatility can also affect our businesses and investments that deal in cross-border trade. The appreciation or depreciation of the U.S. dollar is expected to contribute to a decrease or increase, respectively, in the U.S. dollar value of our non-U.S. investments to the extent unhedged. In addition, an appreciating U.S. dollar would be expected to make the exports of U.S. based companies less competitive, which may lead to a decline in their export revenues, if any, while a depreciating U.S. dollar would be expected to have the opposite effect. Moreover, when selecting investments for our investment funds that are denominated in U.S. dollars, an appreciating U.S. dollar may create opportunities to invest at more attractive U.S. dollar prices in certain countries outside of the United States, while a depreciating U.S. dollar would be expected to have the opposite effect. For our investments denominated in currencies other than the U.S. dollar, the depreciation in such currencies will generally contribute to the decrease in the valuation of such investments, to the extent unhedged, and adversely affect the U.S. dollar equivalent revenues of portfolio companies with substantial revenues denominated in such currencies, while the appreciation in such currencies would be expected to have the opposite effect. For the quarter ended June 30, 2022, the euro fell 5.3%, the British pound fell 7.3%, the Japanese yen fell 10.3%, and the Chinese renminbi fell 5.4%, respectively, relative to the U.S. dollar. For additional information regarding our foreign exchange rate risk, see “Quantitative and Qualitative Disclosure About Market Risk—Exchange Rate Risk” in our Annual Report.

LIBOR Transition. On March 15, 2022, the Consolidated Appropriations Act of 2022, which includes the Adjustable Interest Rate (LIBOR) Act of 2021, was signed into law in the United States. This legislation establishes a uniform benchmark replacement mechanic for financial contracts that mature after June 30, 2023 which do not contain either clearly defined or practicable fallback provisions or are contractually silent on a benchmark replacement rate. The legislation also creates a safe harbor that shields involved parties from liability if they choose to utilize a replacement rate recommended by the Board of Governors of the Federal Reserve. For a discussion of the LIBOR transition that will impact certain debt obligations, see Note 2 "Summary of Significant Accounting Policies – Adoption of new accounting pronouncements—Reference rate reform" in our financial statements and for a discussion of the risks related to the LIBOR transition, see "Risk Factors – Risks Related to Our Business – Transition away from LIBOR as a benchmark reference for interest rates may affect the cost of capital and requires amending or restructuring existing debt instruments and related hedging arrangements for us, our investment funds and our

portfolio companies, and may impact the value of floating rate securities or loans based on LIBOR that we or our investment funds have held, all of which may result in additional costs or adversely affect our or our funds’ liquidity, results of results of operations and financial condition" in our Annual Report.

Commodity Markets. Our Real Assets business line portfolio contains energy real asset investments, and certain of our other Private Equity, Real Assets and Credit and Liquid Strategies business line strategies have investments in or related to the energy sector. The value of these investments is heavily influenced by the price of natural gas and oil. As noted above, the actions taken by Russia in the Ukraine starting in February 2022 have also caused volatility in the commodities markets. During the quarter ended June 30, 2022, the 3-year forward price of WTI crude oil increased approximately 1%, and the 3-year forward price of natural gas increased approximately 16%. The 3-year forward price of WTI crude oil increased from approximately $72.85 per barrel to $73.46 per barrel, and the 3-year forward price of natural gas increased from approximately $3.77 per mcf to $4.36 per mcf as of March 31, 2022 and June 30, 2022, respectively.

When commodity prices decline or if a decline is not offset by other factors, we would expect the value of our energy real asset investments to be adversely impacted, to the extent unhedged. In general, we expect downward price movements to have a negative impact on the fair value of our energy portfolio, all other things being equal, given those commodity prices are an input in our valuation models. The reverse is true for upward price movements. However, because we typically use near-term commodity derivative transactions to hedge our exposures, we expect long-term oil and natural gas prices to be a more significant driver of the valuation of our energy investments in asset management than spot prices. In addition, to the extent energy real asset investments are directly held by our balance sheet, price movements can have an amplified impact on our financial results, as we would directly bear the full extent of such gains or losses, subject to hedging. However, as of June 30, 2022, energy investments in oil and gas assets made up only approximately 1% of our assets under management, 1% of our total GAAP assets and 1% of our total segment assets. For additional information regarding our energy real assets, see "—Critical Accounting Policies—Fair Value Measurements—Level III Valuation Methodologies—Real Asset Investments" and see also "Risk Factors—Risks Related to the Assets We Manage—Our funds and our firm through our balance sheet may make a limited number of investments, or investments that are concentrated in certain issuers, geographic regions or asset types, which could negatively affect our performance or the performance of our funds to the extent those concentrated assets perform poorly" in our Annual Report.

Business Conditions

Our operating revenues consist of fees, performance income, investment income and other operating income.

Our ability to grow our revenues depends in part on our ability to attract new capital and investors, our successful deployment of capital including from our balance sheet and our ability to realize investments at a profit.

Our ability to attract new capital and investors. Our ability to attract new capital and investors in our funds is driven, in part, by the extent to which they continue to see the alternative asset management industry generally, and our investment products specifically, as attractive means for capital appreciation or income. In addition, our ability to attract new capital and investors in our insurance business is driven, in part, by the extent to which they continue to see the life and annuity insurance industry generally, and in certain cases our reinsurance vehicles, as attractive means for capital appreciation or income. Since 2010, we have expanded into strategies such as real assets, credit, core, growth and, through hedge fund partnerships, hedge funds, and insurance. We have also reached out to new fund investors, including retail and high net worth investors. However, fundraising continues to be competitive. While our Asian Fund IV, European Fund V, North America Fund XIII, Real Estate Partners Americas III, Real Estate Partners Europe II, Global Infrastructure Investors IV, Next Generation Technology Growth Fund II and Health Care Strategic Growth Fund II exceeded the size of their respective predecessor funds, there is no assurance that fundraises for our other flagship investment funds or vehicles or for our newer strategies and their successor funds will experience similar success. If we are unable to successfully raise comparably sized or larger funds, our AUM, FPAUM, and associated fees attributable to new capital raised in future periods may be lower than in prior years. See "Risk Factors—Risks Related to Our Business—Our inability to raise additional or successor funds (or raise successor funds of a comparable size as our predecessor funds) could have a material adverse impact on our business" in our Annual Report.

Our ability to successfully deploy capital. Our ability to maintain and grow our revenue base is dependent upon our ability to successfully deploy the capital available to us as well as our participation in capital markets transactions. Greater competition, high valuations, increased overall cost of credit and other general market conditions may impact our ability to identify and execute attractive investments. Additionally, because we seek to make investments that have an ability to achieve our targeted returns while taking on a reasonable level of risk, we may experience periods of reduced investment activity. We have a long-term investment horizon and the capital deployed in any one quarter may vary significantly from the capital deployed in any other quarter or the quarterly average of capital deployed in any given year. Reduced levels of transaction activity also tends to result in reduced potential future investment gains, lower transaction fees and lower fees for our capital markets business line, which may earn fees in the syndication of equity or debt. In our insurance business, we deploy capital by investing in assets that are anticipated to generate net investment income in excess of the net cost of insurance. If we are unable to originate or source attractive investments, the success and growth in revenues of our insurance business will be adversely impacted. See “Risk Factors—Risks Related to the Assets We Manage—Changes in the debt financing markets may negatively impact the ability of our investment funds, their portfolio companies and strategies pursued with our balance sheet assets to obtain attractive financing for their investments or to refinance existing debt and may increase the cost of such financing or refinancing if it is obtained, which could lead to lower-yielding investments and potentially decrease our net income” in our Annual Report.

Our ability to realize investments. Challenging market and economic conditions may adversely affect our ability to exit and realize value from our investments and result in lower-than-expected returns. Although the equity markets are not the only means by which we exit investments from our funds, the strength and liquidity of the U.S. and relevant global equity markets generally, and the initial public offering market specifically, affect the valuation of, and our ability to successfully exit, our equity positions in the portfolio companies of our funds in a timely manner. We may also realize investments through strategic sales. When financing is not available or becomes too costly, it may be more difficult to find a buyer that can successfully raise sufficient capital to purchase our investments. In addition, volatile debt and equity markets may also make the exit of our investments more difficult to execute. In our insurance business, we depend on the ability of our investments to generate their anticipated returns, through the payment of interest and dividends and interest as well as return of principal, in the amounts and at the times that we expect them to be made in order to manage our obligations to make payments to our policyholders. If policyholder behavior differs from our expectations, we may be forced to sell our investments earlier than we anticipated and during market conditions where we may realize losses on the investment. In addition, material delays in payments or impairments to our anticipated investment returns could have material adverse effects to our results of operations. For additional information about how business environment and market conditions affect Global Atlantic, see "—Global Atlantic's Investment Portfolio."

Basis of Accounting

We consolidate the financial results of KKR Group Partnership and its consolidated entities, which include the accounts of our investment advisers, broker-dealers, Global Atlantic’s insurance companies, the general partners of certain unconsolidated investment funds, general partners of consolidated investment funds and their respective consolidated investment funds and certain other entities including collateralized financing entities ("CFEs").

When an entity is consolidated, we reflect the accounts of the consolidated entity, including its assets, liabilities, revenues, expenses, investment income, cash flows and other amounts, on a gross basis. While the consolidation of an investment fund or entity does not have an effect on the amounts of Net Income Attributable to KKR or KKR's stockholders' equity that KKR reports, the consolidation does significantly impact the financial statement presentation under GAAP. This is due to the fact that the accounts of the consolidated entities are reflected on a gross basis while the allocable share of those amounts that are attributable to third parties are reflected as single line items. The single line items in which the accounts attributable to third parties are recorded are presented as noncontrolling interests on the consolidated statements of financial condition and net income (loss) attributable to noncontrolling interests on the consolidated statements of operations.

The presentation in the financial statements 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 presentation approach for the financial statements in this Management's Discussion and Analysis. KKR believes that these separate presentations provide a more informative view of the consolidated financial position and results of operations than traditional aggregated presentations. KKR believes 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 (other than the insurance companies that issued them). If a traditional aggregated presentation were to be used, KKR would expect to eliminate or combine several

identical or similar captions, which would condense the presentations but would reduce transparency. KKR also believes that using a traditional aggregated presentation would result in no new line items compared to the two-tier presentation included in the financial statements in this report. We acquired Global Atlantic on February 1, 2021; accordingly, the results of Global Atlantic's insurance operations included in our consolidated results of operations for the six months ended June 30, 2021 are from February 1, 2021 (the closing date of the acquisition) through June 30, 2021.

All the intercompany transactions have been eliminated.

The summary of the significant accounting policies has been organized considering the two-tiered approach described above 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.

For a further discussion about our critical accounting policies, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies” in the 2021 Form 10-K and Note 2 "Summary of Significant Accounting Policies" in our financial statements.

Key Financial Measures Under GAAP - Asset Management

The following discussion of key financial measures under GAAP is based on KKR's asset management business as of June 30, 2022.

Revenues

Fees and Other

Fees and other consist primarily of (i) management and incentive fees from providing investment management services to unconsolidated funds, CLOs, other vehicles, and separately managed accounts; (ii) transaction fees earned in connection with successful investment transactions and from capital markets activities; (iii) monitoring fees from providing services to portfolio companies; (iv) expense reimbursements from certain investment funds and portfolio companies; and (v) consulting fees. These fees are based on the contractual terms of the governing agreements and are recognized when earned, which coincides with the period during which the related services are performed and in the case of transaction fees, upon closing of the transaction. Monitoring fees may provide for a termination payment following an initial public offering or change of control. These termination payments are recognized in the period when the related transaction closes.

Capital Allocation-Based Income (Loss)

Capital allocation-based income (loss) is earned from those arrangements whereby KKR serves as general partner and includes income or loss from KKR's capital interest as well as "carried interest" which entitles KKR to a disproportionate allocation of investment income or loss from an investment fund's limited partners.

Expenses

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, we typically pay discretionary cash bonuses, which are included in Compensation and Benefits expense in the consolidated statements of operations, based principally on the level of (i) management fees and other fee revenues (including incentive fees), (ii) realized carried interest and (iii) realized investment income earned during the year. The amounts paid as discretionary cash bonuses, if any, are at our sole discretion and vary from individual to individual and from period to period, including having no cash bonus. We accrue discretionary cash bonuses when payment becomes probable and reasonably estimable which is generally in the period when we make the decision to pay discretionary cash bonuses and is based upon a number of factors, including the recognition of fee revenues, realized carried interest, realized investment income and other factors determined during the year.

Beginning in 2021, we expect to pay our employees by assigning a percentage range to each component of asset management segment revenues. Based on the current components and blend of our asset management segment revenues on an annual basis, we expect to use approximately: (i) 20‐25% of fee related revenues, (ii) 60‐70% of realized carried interest and incentive fees not included in fee related performance revenues or earned from our hedge fund partnerships, and (iii) 10‐20% of

realized investment income and hedge fund partnership incentive fees to pay our asset management employees. Because these ranges are applied to applicable distributable revenue components independently, and on an annual basis, the amount paid as a percentage of total distributable revenues will vary and will, for example, likely be higher in a period with relatively higher realized carried interest and lower in a period with relatively lower realized carried interest. We decide whether to pay a discretionary cash bonus and determine 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 us to pay a discretionary cash bonus to the asset management employees, except in limited circumstances.

Assuming that we had accrued compensation of (i) 65% of the unrealized carried interest earned by the funds that allocate 40% and 43% to the carry pool and (ii) 15% of the unrealized net gains in our Principal Activities business line (in each case at the mid-point of the ranges above), KKR & Co. Inc. Stockholders’ Equity – Series I Preferred, Common Stock as of June 30, 2022 would have been reduced by approximately $1.79 per share, compared to our reported $20.88 per share on such date, and our book value as of June 30, 2022 would have been reduced by approximately $1.74 per adjusted share, compared to our reported book value of $26.78 per adjusted share on such date.

Carry Pool Allocation

With respect to our funds that provide for carried interest, we allocate a portion of the realized and unrealized carried interest that we earn to a carry pool established at KKR Associates Holdings L.P., which is not a KKR subsidiary, from which our asset management employees and certain other carry pool participants are eligible to receive a carried interest allocation. The allocation is determined based upon a fixed arrangement between KKR Associates Holdings and us, and we do not exercise discretion on whether to make an allocation to the carry pool upon a realization event. 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.

In February 2021, with the approval of a majority of our independent directors, KKR amended the percentage of carried interest that is allocable to the carry pool to 65% for (i) current investment funds for which no or de minimis amounts of carried interest was accrued as of December 31, 2020 and (ii) all future funds. For all other funds, the percentage of carried interest remains 40% or 43%, as applicable. The percentage of carried interest allocable to the carry pool may be increased above 65% only with the approval of a majority of our independent directors. To account for the difference in the carry pool allocation percentages, we expect to use a portion of realized carried interest from the older funds equal to the difference between 65% and 40% or 43%, as applicable, to supplement the carry pool and to pay amounts as discretionary cash bonus compensation as described above to our asset management employees. The amounts paid as discretionary cash bonuses, if any, are at our discretion and vary from individual to individual and from period to period, including having no cash bonus at all for certain employees. See "—Critical Accounting Policies - Asset Management—Recognition of Carried Interest in the Statement of Operations" and "—Key Financial Measures Under GAAP - Asset Management—Expenses—Compensation and Benefits."

On the Sunset Date (as defined in the Reorganization Agreement), KKR will acquire control of KKR Associates Holdings and will commence making decisions regarding the allocation of carry proceeds pursuant to the limited partnership agreement of KKR Associates Holdings. Until the Sunset Date, our Co-Founders will continue to make decisions regarding the allocation of carry proceeds to themselves and others, pursuant to the limited partnership agreement of KKR Associates Holdings, provided that any allocation of carry proceeds to the Co-Founders will be on a percentage basis consistent with past practice.

Equity-based Compensation

In addition to the cash-based compensation and carry pool allocations as described above, employees receive equity awards under our Equity Incentive Plans, most of which are subject to service-based vesting typically over a three to five-year period from the date of grant, and some of which are also subject to the achievement of market-based conditions. Certain of these awards are subject to post-vesting transfer restrictions and minimum retained ownership requirements.

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, CLOs and investment funds that were consolidated, costs incurred in connection with pursuing potential investments that do not result in completed transactions ("broken-deal expenses"), expense reimbursements, 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.

Investment Income (Loss)

Net Gains (Losses) from Investment Activities

Net gains (losses) from investment activities consist of realized and unrealized gains and losses arising from our investment activities as well as income earned from certain equity method investments. Fluctuations in net gains (losses) from investment activities between reporting periods is driven primarily by changes in the fair value of our investment portfolio as well as the realization of investments. The fair value of, as well as the ability to recognize gains from, our investments is significantly impacted by the global financial markets, which, in turn, affects the net gains (losses) from investment activities recognized in any given period. Upon the disposition of an investment, previously recognized unrealized gains and losses are reversed and an offsetting realized gain or loss is recognized in the current period. Since our investments are carried at fair value, fluctuations between periods could be significant due to changes to the inputs to our valuation process over time. For a further discussion of our fair value measurements and fair value of investments, see "—Critical Accounting Policies - Combined—Fair Value Measurements."

Dividend Income

Dividend income consists primarily of distributions that we and our consolidated investment funds receive from portfolio companies or real assets investments in which we and our consolidated investment funds invest. Dividend income is recognized primarily in connection with (i) dispositions of operations by portfolio companies, (ii) distributions of cash generated from operations from portfolio investments or real assets investments, and (iii) other significant refinancings undertaken by portfolio investments.

Interest Income

Interest income consists primarily of interest that is received on our credit instruments in which we and our consolidated investment funds, CLOs and other entities invest as well as interest on our cash and other investments.

Interest Expense

Interest expense is incurred from (i) debt issued by KKR, including debt issued by KFN, (ii) credit facilities entered into by KKR, (iii) debt securities issued by consolidated CFEs, (iv) financing arrangements at our majority owned investment vehicles that have been funded with borrowings that are collateralized by the investments and assets they own and (v) financing arrangements at our consolidated funds entered into primarily with the objective of managing cash flow. KFN's debt obligations are non-recourse to KKR beyond the assets of KFN. Debt securities issued by consolidated CFEs are supported solely by the investments held at the CFE and are not collateralized by assets of any other KKR entity. Our obligations under financing arrangements at our consolidated investment funds are generally limited to our pro rata equity interest in such funds. However, in some circumstances, we may provide limited guarantees of the obligations of our general partners in an amount equal to its pro rata equity interest in such funds. Our management companies bear no obligations with respect to financing arrangements at our consolidated funds. We also may provide other kinds of guarantees. See "—Liquidity."

Key Financial Measures Under GAAP - Insurance

The following discussion of key financial measures under GAAP is based on KKR's insurance business as conducted by Global Atlantic as of June 30, 2022.

Revenues

Premiums

Premiums primarily relate to payout annuities with life contingencies and whole life and term life insurance policies, recognized when due from the policyholders. Premiums are reported net of premiums ceded under reinsurance agreements.

Policy fees

Policy fees include charges assessed against policyholder account balances for mortality, administration, separate account, benefit rider and surrender fees.

Net investment income

Net investment income reflects the income earned on our investments, net of any associated investment expenses (including management fees charged by the asset management segment) and net of ceded amounts under reinsurance agreements. Net investment income includes, amongst other things (i) interest earned on our fixed income available-for-sale and fixed-income trading investments, (ii) interest income and other related fees from our mortgage and other loan receivables, (iii) interest on funds withheld at interest receivables, (iv) proportional share of income from equity-method investments and (v) income from physical assets, such as renewable energy plants, real estate, railcars, and airplanes (net of depreciation and operating expenses).

Net investment-related gains

Net investment-related gains primarily consists of (i) realized gains and losses from the disposal of investments, including realized gains and losses on the disposal of investments not related to asset/liability matching strategies (“variable investment income”), (ii) unrealized gains and losses from investments held for trading, real estate investments accounted under investment company accounting, and investments with fair value re-measurements recognized in earnings as a result of the election of a fair-value option, (iii) unrealized gains and losses on funds withheld at interest receivable and payable, (iv) unrealized gains and losses from derivatives not designated in an hedging relationship and (v) allowances for credit losses, and other impairments of investments.

Other income

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

Expenses

Policy benefits and claims

Policy benefits and claims represent the current period expense associated with providing insurance benefits to policyholders, including claims and benefits paid, interest credited to policyholders, changes in policy liability reserves (including fair value reserves), amortization of cost of reinsurance liabilities, and amortization of deferred sales inducements.

Amortization of policy acquisition costs

Amortization of policy acquisition costs primarily consist of amortization of value of business acquired and deferred policy acquisition costs.

Insurance expense

Insurance expenses are primarily comprised of commissions expense, net of amounts capitalized, reinsurance ceding allowances, premium taxes, amortization of acquired intangibles and captive financing charges.

Interest expense

Interest expense is incurred from insurance segment debt issued, including related interest rate swaps, credit facilities and other financing agreements.

General, administrative and other

General, administrative and other expenses are primarily comprised of employee compensation and benefit expenses, third-party administrator ("TPA") policy servicing fees, administrative and professional services, and other operating expenses.

Other Key Financial Measures Under GAAP

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 Global Atlantic subsidiaries, are domestic corporations for U.S. federal income tax purposes and are subject to U.S. federal, state, and local income taxes.

Tax laws are complex and subject to different interpretations by the taxpayer and respective governmental taxing authorities. Significant judgment is required in determining tax expense and in evaluating tax positions including evaluating uncertainties. We review our tax positions quarterly and adjust our tax balances as new information becomes available.

For a further discussion of our income tax policies, see Note 18 "Income Taxes" in our financial statements.

Net Income (Loss) Attributable to Noncontrolling Interests

Net income (loss) attributable to noncontrolling interests primarily represents the ownership interests that certain third parties hold in entities that were consolidated in the financial statements as well as the ownership interests in KKR Group Partnership represented by exchangeable securities. The allocable share of income and expense attributable to these interests is accounted for as net income (loss) attributable to noncontrolling interests. Given the consolidation of certain of our investment funds and the significant ownership interests in KKR Group Partnership held by KKR Holdings, we expect a portion of net income (loss) will continue to be attributed to noncontrolling interests in our business.

For a further discussion of our noncontrolling interests policies, see Note 22 "Equity" in the financial statements.

Key Segment and Non-GAAP Performance Measures

The following key segment and non-GAAP performance measures are used by management in making operational and resource deployment decisions as well as assessing the performance of KKR's businesses. They include certain financial measures that are calculated and presented using methodologies other than in accordance with GAAP. These performance measures as described below are presented prior to giving effect to the allocation of income (loss) between KKR & Co. Inc. and holders of exchangeable securities and as such represent the entire KKR business in total. In addition, these performance measures are presented without giving effect to the consolidation of the investment funds and CFEs that KKR manages.

We believe that providing these segment and non-GAAP performance measures on a supplemental basis to our GAAP results is helpful to stockholders in assessing the overall performance of KKR's business. These non-GAAP measures should not be considered as a substitute for financial measures calculated in accordance with GAAP. Reconciliations of these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP, where applicable are included under "—Reconciliations to GAAP Measures."

After-tax Distributable Earnings

After-tax distributable earnings is a non-GAAP performance measure of KKR’s earnings, which is derived from KKR’s reported segment results. After-tax distributable earnings is used to assess the performance of KKR’s business operations and measures the earnings potentially available for distribution to its equity holders or reinvestment into its business. After-tax distributable earnings is equal to Distributable Operating Earnings less Interest Expense, Net Income Attributable to Noncontrolling Interests and Income Taxes Paid. Series C Mandatory Convertible Preferred Stock dividends have been

excluded from After-tax Distributable Earnings, because the definition of Adjusted Shares used to calculate After-tax Distributable Earnings per Adjusted Share assumes that all shares of Series C Mandatory Convertible Preferred Stock have been converted to shares of common stock of KKR & Co. Inc. Income Taxes Paid represents the amount of income taxes that would be paid assuming that all pre-tax distributable earnings were allocated to KKR & Co. Inc. and taxed at the same effective rate, which assumes that all exchangeable securities were exchanged for shares of common stock of KKR & Co. Inc. Income Taxes Paid includes the benefit of tax deductions arising from equity-based compensation, which reduces income taxes paid or payable during the period. Equity based compensation expense is excluded from After-tax Distributable Earnings, because (i) KKR believes that the cost of equity awards granted to employees does not contribute to the earnings potentially available for distributions to its equity holders or reinvestment into its business and (ii) excluding this expense makes KKR’s reporting metric more comparable to the corresponding metric presented by other publicly traded companies in KKR’s industry, which KKR believes enhances an investor’s ability to compare KKR’s performance to these other companies. If tax deductions from equity-based compensation were to be excluded from Income Taxes Paid, KKR’s After-tax Distributable Earnings would be lower and KKR’s effective tax rate would appear to be higher, even though a lower amount of income taxes would have actually been paid or payable during the period. KKR separately discloses the amount of tax deduction from equity-based compensation for the period reported and the effect of its inclusion in After-tax Distributable Earnings for the period. KKR makes these adjustments when calculating After-tax Distributable Earnings in order to more accurately reflect the net realized earnings that are expected to be or become available for distribution to KKR’s equity holders or reinvestment into KKR’s business. However, After-tax Distributable Earnings does not represent and is not used to calculate actual dividends under KKR’s dividend policy, which is a fixed amount per period, and After-tax Distributable Earnings should not be viewed as a measure of KKR’s liquidity.

Book Value

Book Value is a non-GAAP performance measure of the net assets of KKR and is used by management primarily in assessing the unrealized value of KKR’s net assets presented on a basis that (i) deconsolidates KKR’s investment funds and CFEs that KKR manages, (ii) includes the net assets that are attributable to exchangeable securities, and (iii) includes KKR’s ownership of the net assets of Global Atlantic. We believe this measure is useful to stockholders as it provides additional insight into the net assets of KKR excluding those net assets that are allocated to investors in KKR’s investment funds and other noncontrolling interest holders. KKR's book value includes the net impact of KKR's tax assets and liabilities as prepared under GAAP. Prior to the Reorganization Mergers, KKR's book value included the implied amount of (1) tax assets and liabilities attributable to KKR Holdings L.P. as if it was subject to corporate income taxes and (2) the recognition of deferred tax liabilities relating to certain assets of KKR Group Partnership L.P. that was expected to occur upon the completion of the Reorganization Mergers. Series C Mandatory Convertible Preferred Stock has been included in book value, because the definition of adjusted shares used to calculate book value per adjusted share assumes that all shares of Series C Mandatory Convertible Preferred Stock have been converted to shares of common stock of KKR & Co. Inc. To calculate Global Atlantic book value and to make it more comparable with the corresponding metric presented by other publicly traded companies in Global Atlantic’s industry, Global Atlantic book value excludes (i) accumulated other comprehensive income and (ii) accumulated change in fair value of reinsurance balances and related assets, net of deferred acquisition costs and income tax.

Distributable Operating Earnings

Distributable operating earnings is a non-GAAP performance measure that KKR believes is useful to stockholders as it provides a supplemental measure of our operating performance without taking into account items that KKR does not believe arise from or relate directly to KKR's operations. Distributable Operating Earnings excludes: (i) equity-based compensation charges, (ii) amortization of acquired intangibles, (iii) strategic corporate transaction-related charges and (iv) non-recurring items, if any. Strategic corporate transaction-related items arise from corporate actions and consist primarily of (i) impairments, (ii) non-monetary gains or losses on divestitures, (iii) transaction costs from strategic acquisitions, and (iv) 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. Distributable Operating Earnings represents operating earnings of KKR’s Asset Management and Insurance segments, which are comprised of the following:

• 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 (i)

unrealized carried interest, (ii) net unrealized gains (losses) on investments, and (iii) related unrealized carried interest. Management fees earned by KKR as the adviser, manager or sponsor for its investment funds, vehicles and accounts, including its Global Atlantic insurance companies and co-investment vehicles that participate in qualifying reinsurance transactions sourced by Global Atlantic (Ivy Re Limited and Ivy Re II Limited), which are , 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 and is comprised of: (i) Net Investment Income, (ii) Net Cost of Insurance, (iii) General, Administrative, and Other Expenses, (iv) Income Taxes, and (v) Net Income Attributable to Noncontrolling Interests. The non-operating adjustments made to derive Insurance Segment Operating Earnings eliminate the impact of: (i) realized (gains) losses related to asset/liability matching investments strategies, (ii) unrealized investment (gains) losses, (iii) changes in the fair value of derivatives, embedded derivatives, and fair value liabilities for fixed-indexed annuities, indexed universal life contracts and variable annuities, and (iv) the associated income tax effects of all exclusions from Insurance Segment Operating Earnings except for equity-based compensation expense. Insurance Segment Operating Earnings includes (i) realized gains and losses not related to asset/liability matching investments strategies and (ii) the investment management fee expenses that are earned by KKR as the investment adviser of the Global Atlantic insurance companies.

Fee Related Earnings ("FRE")

Fee related earnings is a performance measure used to assess the Asset Management segment’s generation of profits from revenues that are measured and received on a recurring basis and are not dependent on future realization events. KKR believes this measure is useful to stockholders as it provides additional insight into the profitability of KKR’s fee generating asset management and capital markets businesses and other recurring revenue streams. FRE equals (i) Management Fees, including fees paid by the Insurance segment to the Asset Management segment and fees paid by certain insurance co-investment vehicles, (ii) Transaction and Monitoring Fees, Net and (iii) Fee Related Performance Revenues, less (x) Fee Related Compensation, and (y) Other Operating Expenses.

• Fee Related Performance Revenues refers to the realized portion of Incentive Fees from certain AUM that has an indefinite term and for which there is no immediate requirement to return invested capital to investors upon the realization of investments. Fee-related performance revenues consists of performance fees (i) to be received from our investment funds, vehicles and accounts on a recurring basis, and (ii) that are not dependent on a realization event involving investments held by the investment fund, vehicle or account.

• Fee Related Compensation refers to the compensation expense, excluding equity-based compensation, paid from (i) Management Fees, (ii) Transaction and Monitoring Fees, Net, and (iii) Fee Related Performance Revenues.

• Other Operating Expenses represents the sum of (i) occupancy and related charges and (ii) other operating expenses.

Total Asset Management Segment Revenues

Total Asset Management Segment Revenues is a performance measure that represents the realized revenues of the Asset Management segment (which excludes unrealized carried interest and unrealized net gains (losses) on investments) and is the sum of (i) Management Fees, (ii) Transaction and Monitoring Fees, Net, (iii) Fee Related Performance Revenues, (iv) Realized Performance Income, and (v) Realized Investment Income. KKR believes that this performance measure is useful to stockholders as it provides additional insight into the realized revenues generated by KKR's Asset Management segment.

Other Terms and Capital Metrics

Adjusted Shares

Adjusted shares represents shares of common stock of KKR & Co. Inc. outstanding under GAAP adjusted to include (i) the number of shares of common stock of KKR & Co. Inc. assumed to be issuable upon conversion of the Series C Mandatory Convertible Preferred Stock and (ii) shares of common stock of KKR & Co. Inc. issuable upon exchange of all exchangeable securities. Weighted average adjusted shares is used in the calculation of After-tax Distributable Earnings per Adjusted Share, and Adjusted Shares is used in the calculation of Book Value per Adjusted Share.

Assets Under Management ("AUM")

Assets under management represent the assets managed, advised or sponsored by KKR from which KKR is entitled to receive management fees or performance income (currently or upon a future event), general partner capital, and assets managed, advised or sponsored by our strategic BDC partnership and the hedge fund and other managers in which KKR holds an ownership interest. We believe this measure is useful to stockholders as it provides additional insight into the capital raising activities of KKR and its hedge fund and other managers and the overall activity in their investment funds and other managed or sponsored capital. KKR calculates the amount of AUM as of any date as the sum of: (i) the fair value of the investments of KKR's investment funds and the Global Atlantic insurance companies; (ii) uncalled capital commitments from these funds, including uncalled capital commitments from which KKR is currently not earning management fees or performance income; (iii) the fair value of investments in KKR's co-investment vehicles; (iv) the par value of outstanding CLOs; (v) KKR's pro rata portion of the AUM of hedge fund and other managers in which KKR holds an ownership interest; (vi) all AUM of KKR's strategic BDC partnership; (vii) the acquisition cost of invested assets of certain non-US real estate investment trusts, and (viii) the value of other assets managed or sponsored by KKR. The pro rata portion of the AUM of hedge fund and other managers is calculated based on KKR’s percentage ownership interest in such entities multiplied by such entity’s respective AUM. KKR's definition of AUM (i) is not based on any definition of AUM that may be set forth in the governing documents of the investment funds, vehicles, accounts or other entities whose capital is included in this definition, (ii) includes assets for which KKR does not act as an investment adviser, and (iii) is not calculated pursuant to any regulatory definitions.

Capital Invested

Capital invested is the aggregate amount of capital invested by (i) KKR’s investment funds and Global Atlantic insurance companies, (ii) KKR's Principal Activities business line as a co-investment, if any, alongside KKR’s investment funds, and (iii) KKR's Principal Activities business line in connection with a syndication transaction conducted by KKR's Capital Markets business line, if any. Capital invested is used as a measure of investment activity at KKR during a given period. We believe this measure is useful to stockholders as it provides a measure of capital deployment across KKR’s business lines. Capital invested includes investments made using investment financing arrangements like credit facilities, as applicable. Capital invested excludes (i) investments in certain leveraged credit strategies, (ii) capital invested by KKR’s Principal Activities business line that is not a co-investment alongside KKR’s investment funds, and (iii) capital invested by KKR’s Principal Activities business line that is not invested in connection with a syndication transaction by KKR’s Capital Markets business line. Capital syndicated by KKR's Capital Markets business line to third parties other than KKR’s investment funds or Principal Activities business line is not included in capital invested.

Fee Paying AUM ("FPAUM")

Fee paying AUM represents only the AUM from which KKR is entitled to receive management fees. We believe this measure is useful to stockholders as it provides additional insight into the capital base upon which KKR earns management fees. FPAUM is the sum of all of the individual fee bases that are used to calculate KKR's and its hedge fund and BDC partnership management fees and differs from AUM in the following respects: (i) assets and commitments from which KKR is not entitled to receive a management fee are excluded (e.g., assets and commitments with respect to which it is entitled to receive only performance income or is otherwise not currently entitled to receive a management fee) and (ii) certain assets, primarily in its private equity funds, are reflected based on capital commitments and invested capital as opposed to fair value because fees are not impacted by changes in the fair value of underlying investments.

Uncalled Commitments

Uncalled commitments is the aggregate amount of unfunded capital commitments that KKR’s investment funds and carry-paying co-investment vehicles have received from partners to contribute capital to fund future investments. We believe this measure is useful to stockholders as it provides additional insight into the amount of capital that is available to KKR’s investment funds and carry paying co-investment vehicles to make future investments. Uncalled commitments are not reduced for investments completed using fund-level investment financing arrangements or investments we have committed to make but remain unfunded at the reporting date.

Condensed Consolidated Results of Operations (GAAP Basis - Unaudited)

The following is a discussion of our consolidated results of operations on a GAAP basis for the three months ended June 30, 2022 and 2021. You should read this discussion in conjunction with the financial statements and related notes included elsewhere in this report. For a more detailed discussion of the factors that affected our segment results in these periods, see "—Analysis of Segment Operating Results." See "Business Environment" for more information about factors that may impact our business, financial performance, operating results and valuations.

The presentation of our consolidated results of operations that follows reflects 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 presentation approach, where Global Atlantic's insurance business is presented separately from KKR's asset management business. Additionally, for the six months ended June 30, 2021, the results of Global Atlantic's insurance operations included in our consolidated results of operations are from February 1, 2021 (closing date of the acquisition) through June 30, 2021.

			Three Months Ended
			June 30, 2022						June 30, 2021						Change
			($ in thousands)
Revenues
Asset Management
Fees and Other			$	615,264					$	675,526					$	(60,262)
Capital Allocation-Based Income (Loss)			(923,474)						1,525,393						(2,448,867)
			(308,210)						2,200,919						(2,509,129)
Insurance
Net Premiums			(225,502)						(452,133)						226,631
Policy Fees			325,707						312,262						13,445
Net Investment Income			931,889						716,497						215,392
Net Investment-Related Gains (Losses)			(426,326)						326,558						(752,884)
Other Income			32,512						32,078						434
			638,280						935,262						(296,982)
Total Revenues			330,070						3,136,181						(2,806,111)
Expenses
Asset Management
Compensation and Benefits			250,876						1,099,423						(848,547)
Occupancy and Related Charges			18,861						18,651						210
General, Administrative and Other			253,832						237,296						16,536
			523,569						1,355,370						(831,801)
Insurance
Net Policy Benefits and Claims			(45,407)						411,199						(456,606)
Amortization of Policy Acquisition Costs			13,204						(20,031)						33,235
Interest Expense			18,970						11,373						7,597
Insurance Expenses			131,065						100,973						30,092
General, Administrative and Other			170,892						132,828						38,064
			288,724						636,342						(347,618)
Total Expenses			812,293						1,991,712						(1,179,419)
Investment Income (Loss) - Asset Management
Net Gains (Losses) from Investment Activities			(1,885,469)						3,220,053						(5,105,522)
Dividend Income			147,355						125,821						21,534
Interest Income			391,549						381,254						10,295
Interest Expense			(328,726)						(265,056)						(63,670)
Total Investment Income (Loss)			(1,675,291)						3,462,072						(5,137,363)
Income (Loss) Before Taxes			(2,157,514)						4,606,541						(6,764,055)
Income Tax Expense (Benefit)			(153,104)						343,667						(496,771)

			Three Months Ended
			June 30, 2022						June 30, 2021						Change
			($ in thousands)
Net Income (Loss)			(2,004,410)						4,262,874						(6,267,284)
Net Income (Loss) Attributable to Redeemable Noncontrolling Interests			8						1,337						(1,329)
Net Income (Loss) Attributable to Noncontrolling Interests			(1,193,734)						2,946,262						(4,139,996)
Net Income (Loss) Attributable to KKR & Co. Inc.			(810,684)						1,315,275						(2,125,959)
Series A Preferred Stock Dividends			—						17,834						(17,834)
Series B Preferred Stock Dividends			—						2,519						(2,519)
Series C Mandatory Convertible Preferred Stock Dividends			17,250						17,250						—
Net Income (Loss) Attributable to KKR & Co. Inc. Common Stockholders			$	(827,934)					$	1,277,672					$	(2,105,606)

Condensed Consolidated Results of Operations (GAAP Basis - Unaudited) - Asset Management

Revenues

For the three months ended June 30, 2022 and 2021, revenues consisted of the following:

						Three Months Ended
						June 30, 2022						June 30, 2021						Change
						($ in thousands)
Management Fees						$	418,229					$	306,194					$	112,035
Fee Credits						(63,574)						(122,284)						58,710
Transaction Fees						177,861						374,887						(197,026)
Monitoring Fees						30,522						32,953						(2,431)
Incentive Fees						7,141						2,692						4,449
Expense Reimbursements						25,576						60,056						(34,480)
Consulting Fees						19,509						21,028						(1,519)
Total Fees and Other						615,264						675,526						(60,262)
Carried Interest						(738,309)						1,196,668						(1,934,977)
General Partner Capital Interest						(185,165)						328,725						(513,890)
Total Capital Allocation-Based Income (Loss)						(923,474)						1,525,393						(2,448,867)
Total Revenues - Asset Management						$	(308,210)					$	2,200,919					$	(2,509,129)

Fees and Other

Total Fees and Other for the three months ended June 30, 2022 decreased compared to the three months ended June 30, 2021 primarily as a result of the decrease in transaction fees, partially offset by the increase in management fees.

For a more detailed discussion of the factors that affected our transaction fees during the period, see "—Analysis of Asset Management Segment Operating Earnings."

The increase in management fees was primarily due to management fees earned from North America Fund XIII and Global Infrastructure Investors IV, each of which entered its investment period in the second quarter of 2021, and European Fund VI, which entered its investment period in the first quarter of 2022. The increase was partially offset primarily by a decrease in management fees earned from Americas Fund XII as a result of entering its post-investment period in the second quarter of 2021, which now earns fees based on capital invested rather than capital committed and at a lower fee rate.

Management fees due from consolidated investment funds and other vehicles are eliminated upon consolidation under GAAP. 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, the elimination of these fees does not impact the net income (loss) attributable to KKR or KKR stockholders' equity. For a more detailed discussion on the factors that affect our management fees during the period including the fees earned from unconsolidated investment funds and other vehicles see "—Analysis of Asset Management Segment Operating Earnings."

Fee credits decreased compared to the prior period as a result of a lower level of transaction fees in our Private Equity, Real Assets and Credit and Liquid Strategies business lines in the current period. Fee credits owed to consolidated investment funds and other vehicles are eliminated upon consolidation under GAAP. However, because these amounts are owed to noncontrolling interests, KKR's allocated share of the net income from the consolidated investment funds and other vehicles is decreased by the amount of fee credits that are eliminated. Accordingly, the elimination of these fee credits does not impact the net income (loss) attributable to KKR or KKR stockholders' equity.

Transaction and monitoring fees are earned from KKR portfolio companies and are not eliminated upon consolidation because these fees are earned from companies which are not consolidated. Furthermore, transaction fees earned in our Capital Markets business line are not shared with fund investors. Accordingly, certain transaction fees are reflected in revenues without a corresponding fee credit.

Capital Allocation-Based Income (Loss)

Capital Allocation-Based Income (Loss) for the three months ended June 30, 2022 was negative primarily due to the net depreciation of the underlying investments at many of our carry earning investment funds, most notably Americas Fund XII and Asian Fund III. Capital Allocation-Based Income (Loss) for the three months ended June 30, 2021 was positive primarily due to the net appreciation of the underlying investments at certain of our carry earning investment funds, most notably Americas Fund XII, Asian Fund III and North America Fund XI.

KKR generally 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.

Investment Income (Loss) - Asset Management

For additional information about net gains (losses) from investment activities, see Note 5 "Net Gains (Losses) from Investment Activities - Asset Management" in our financial statements.

Net Gains (Losses) from Investment Activities for the three months ended June 30, 2022

The net losses from investment activities for the three months ended June 30, 2022 were comprised of net realized gains of $550.0 million and net unrealized losses of $(2,435.4) million.

Investment gains and losses relating to our general partner capital interest in our unconsolidated funds are not reflected in our discussion and analysis of Net Gains (Losses) from Investment Activities. Our economics associated with these gains and losses are reflected in Capital Allocation-Based Income (Loss) as described above.

Realized Gains and Losses from Investment Activities

For the three months ended June 30, 2022, net realized gains related primarily to the sales of our investments in Fiserv Inc. (NASDAQ: FISV), Internet Brands, Inc. (technology sector) held in one of our consolidated funds and the sales of certain real estate equity investments that were held in Real Estate Partners Americas II. Partially offsetting these realized gains were realized losses primarily relating to certain investments held in our consolidated alternative credit funds.

Unrealized Gains and Losses from Investment Activities

For the three months ended June 30, 2022, net unrealized losses were driven primarily by mark-to-market losses from (i) Crescent Energy Company (NYSE: CRGY), (ii) Söderberg & Partners (financial services sector), and (iii) investments held in our consolidated credit funds. These unrealized losses were partially offset by mark-to-market gains related to (i) certain investments held in our consolidated energy funds, (ii) certain investments held in our consolidated core real estate funds and (iii) the reversal of previously recognized unrealized gains relating to the realization activity described above.

For a discussion of other factors that affected KKR's realized investment income for the three months ended June 30, 2022, see "—Analysis of Asset Management Segment Operating Results."

Net Gains (Losses) from Investment Activities for the three months ended June 30, 2021

The net gains from investment activities for the three months ended June 30, 2021 were comprised of net realized gains of $338.9 million and net unrealized gains of $2,881.1 million.

Realized Gains and Losses from Investment Activities

For the three months ended June 30, 2021, net realized gains related primarily to the sales of our investments in FanDuel Inc. (technology sector), Fiserv, Inc., and Mr. Cooper Group Inc. (NASDAQ: COOP). Partially offsetting these realized gains were realized losses primarily relating to (i) certain investments held in our consolidated credit funds and (ii) realized losses related to certain hedging instruments.

Unrealized Gains and Losses from Investment Activities

For the three months ended June 30, 2021, net unrealized gains were driven primarily by (i) mark-to-market gains from private equity, growth equity and core investments held by KKR and certain consolidated funds, the most significant of which were PetVet Care Centers, LLC (healthcare sector) and Heartland Dental LLC (healthcare sector), and (ii) mark-to-market gains from certain investments held in our consolidated energy funds, special situations funds, real estate funds and CLOs. These unrealized gains were partially offset by the reversal of previously recognized unrealized gains relating to the realization activity described above.

For a discussion of other factors that affected KKR's realized investment income for the three months ended June 30, 2022, see "—Analysis of Asset Management Segment Operating Results."

Dividend Income

During the three months ended June 30, 2022, the most significant dividends received included (i) $71.8 million from investments held in our consolidated real estate core plus equity and opportunistic real estate equity funds and (ii) $8.9 million from our investment in Inkling Holdings LLC (media sector). During the three months ended June 30, 2021, the most significant dividends received included (i) $45.3 million from our consolidated real estate funds and (ii) a dividend of $26.9 million from our investment in Viridor Limited (infrastructure).

Significant dividends from portfolio companies and consolidated funds are generally not recurring quarterly dividends, and while they may occur in the future, their size and frequency are variable. For a discussion of other factors that affected KKR's dividend income, see "—Analysis of Asset Management Segment Operating Results."

Interest Income

The increase in interest income during the three months ended June 30, 2022 compared to the three months ended June 30, 2021 was primarily due to (i) the impact of closing CLOs that were consolidated subsequent to June 30, 2021 and (ii) a higher level of interest income from investments held in certain of our consolidated alternative credit funds, primarily related to an increase in the amount of capital deployed and higher interest rates. Partially offsetting these increases was the deconsolidation of KKR Real Estate Finance Trust Inc. (NYSE: KREF) ("KREF") in the fourth quarter of 2021. For a discussion of other factors that affected KKR's interest income, see "—Analysis of Asset Management Segment Operating Results."

Interest Expense

The increase in interest expense during the three months ended June 30, 2022 compared to the three months ended June 30, 2021 was primarily due to (i) the increase in the amount of borrowings outstanding from consolidated funds and other vehicles, (ii) impact of closing CLOs that were consolidated after June 30 2021 and (iii) the impact of issuances of our senior notes after June 30, 2021. Partially offsetting these increases was the deconsolidation of KREF in the fourth quarter of 2021. For a discussion of other factors that affected KKR's interest expense, see "—Analysis of Non-GAAP Performance Measures."

Expenses - Asset Management

Compensation and Benefits Expense

The decrease in compensation and benefits expense during the three months ended June 30, 2022 compared to the three months ended June 30, 2021 was primarily due to the reversal of previously recognized accrued carried interest compensation, partially offset by (i) higher equity-based compensation charges and (ii) a higher level of discretionary cash compensation accrued resulting from a higher level of fee revenue and realized performance income in the current period.

General, Administrative and Other

The increase in general, administrative and other expenses during the three months ended June 30, 2022 compared to the three months ended June 30, 2021 was primarily due to a higher level of (i) expenses at our consolidated funds and investment vehicles, (ii) broken-deal expenses, (iii) professional fees, information technology and other administrative costs in connection with the overall growth of the firm and (iv) travel related expenses as a result of COVID-19 pandemic travel restrictions being reduced.

The level of broken-deal expenses can vary significantly period to period based upon a number of factors, the most significant of which are the number of potential investments being pursued for our investment funds, the size and complexity of investments being pursued and the number of investment funds currently in their investment period. Also, in periods of significant fundraising and to the extent that we use third parties to assist in our capital raising efforts, our General, Administrative and Other are expected to increase accordingly. Similarly, our General, Administrative and Other expenses are expected to increase as a result of increased levels of professional and other fees incurred as part of due diligence related to strategic acquisitions and new product development.

Condensed Consolidated Results of Operations (GAAP Basis - Unaudited) - Insurance

As discussed above, our Insurance segment consists solely of the operations of Global Atlantic, which was acquired on February 1, 2021. Accordingly, prior periods have been excluded for Insurance segment results. For the six month period ended June 30, 2021, the results of Global Atlantic's insurance operations included in our condensed consolidated results of operations are from February 1, 2021 through June 30, 2021.

Revenues

For the three months ended June 30, 2022 and 2021, revenues consisted of the following:

			Three Months Ended
			June 30, 2022						June 30, 2021						Change
			($ in thousands)
Net Premiums			$	(225,502)					$	(452,133)					$	226,631
Policy Fees			325,707						312,262						13,445
Net Investment Income			931,889						716,497						215,392
Net Investment-Related Losses			(426,326)						326,558						(752,884)
Other Income			32,512						32,078						434
Total Insurance Revenues			$	638,280					$	935,262					$	(296,982)

Net Premiums

Net premiums increased for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 primarily due to lower retrocessions to third-party reinsurers during the three months ended June 30, 2022 as compared to the three months ended June 30, 2021. These lower retrocessions are offset by a comparable decrease in policy reserves reported within net policy benefits and claims (as discussed below). Premiums are negatively impacted in any quarter when Global Atlantic retrocedes business to third-party reinsurers in excess of the amount of business written or assumed in the quarter, including when retrocessions of assumed business occur in a later quarter than Global Atlantic’s assumption of the business.

Policy fees

Policy fees increased for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 primarily due to higher administrative and rider fees due to growth in the individual market channel.

Net investment income

Net investment income increased for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 primarily due to (i) increased average assets under management due to growth in our institutional market assets as a result of new reinsurance transactions and individual market sales and (ii) higher yields on floating-rate investments due to higher market interest rates.

Net investment-related losses

The components of net investment-related losses were as follows:

			Three Months Ended
			June 30, 2022						June 30, 2021						Change
			($ in thousands)
Funds withheld payable at interest embedded derivatives			$	1,363,700					$	(368,402)					$	1,732,102
Equity futures contracts			82,389						(104,182)						186,571
Foreign currency forwards			19,355						2,291						17,064
Credit risk contracts			1,867						(22)						1,889
Equity index options			(504,859)						196,868						(701,727)
Interest rate contracts			(73,725)						131,654						(205,379)
Funds withheld receivable embedded derivatives			(33,361)						22,567						(55,928)
Net gains on derivative instruments			855,366						(119,226)						974,592
Net other investment gains (losses)			(1,281,692)						445,784						(1,727,476)
Net investment-related gains (losses)			$	(426,326)					$	326,558					$	(752,884)

Net losses on derivative instruments

The increase in the fair value of embedded derivatives on funds withheld at interest payable was driven primarily by the change in fair value of the underlying investments in the funds withheld payable at interest portfolio, which is primarily comprised of fixed maturity securities (designated as trading for accounting purposes), mortgage and other loan receivables and other investments. The underlying investments in the funds withheld payable at interest portfolio declined in value in the current period primarily due to an increase in market interest rates and wider credit spreads. The underlying investments in the funds withheld payable at interest portfolio increased in value in the prior period primarily due to a decrease in market interest rates and tighter credit spreads.

The increase in the fair value of equity futures contracts was driven primarily by the performance of equity markets. Global Atlantic purchases equity futures primarily to hedge the market risk in our variable annuity products which are accounted for in net policy benefits and claims. The majority of Global Atlantic's equity futures are based on the S&P 500 Index, which decreased during the three months ended June 30, 2022, as compared to an increase during the three months ended June 30, 2021, resulting in respectively, a gain, and a loss, on equity futures contracts in the respective periods.

The decrease in the fair value of equity index options was primarily driven by the performance of the indexes upon which call options are based. Global Atlantic purchases equity index options to hedge the market risk of embedded derivatives in indexed universal life and fixed-indexed annuity products (the change in which is accounted for in net policy benefits and claims). The majority of Global Atlantic's equity index call options are based on the S&P 500 index, which decreased during the three months ended June 30, 2022, as compared to the increase during the three months ended June 30, 2021.

The decrease in the fair value of interest rate contracts was primarily driven by an increase in market interest rates during the three months ended June 30, 2022 as compared to a decrease in market interest rates during the three months ended June 30, 2021.

The decrease in the fair value of embedded derivatives on funds withheld at interest receivable was primarily due to widening of credit spreads during the three months ended June 30, 2022, as compared to the tightening of credit spreads during three months ended June 30, 2021.

Net other investment losses

The components of net other investment losses were as follows:

			Three Months Ended
			June 30, 2022						June 30, 2021						Change
			($ in thousands)
Realized gains (losses) on investments not supporting asset-liability matching strategies			$	44,600					$	47,441					$	(2,841)
Realized gains (losses) on equity investments			—						22,882						(22,882)
Realized gains (losses) on available-for-sale fixed maturity debt securities			(287,373)						(27,634)						(259,739)
Credit loss allowances			(28,908)						51,698						(80,606)
Unrealized gains (losses) on fixed maturity securities classified as trading			(989,678)						319,942						(1,309,620)
Unrealized gains (losses) on investments classified as trading or accounted under a fair-value option			(38,435)						59,587						(98,022)
Unrealized gains (losses) on real estate investments recognized at fair value under investment company accounting			45,396						10,267						35,129
Realized gains (losses) on funds withheld at interest payable portfolio			28,727						(11,734)						40,461
Realized gains (losses) on funds withheld at interest receivable portfolio			(22,162)						7,263						(29,425)
Other			(33,859)						(33,928)						69
Net other investment gains (losses)			$	(1,281,692)					$	445,784					$	(1,727,476)

The decrease in net other investment losses was primarily due to (i) an increase in unrealized losses on fixed maturity securities classified as trading, and investments classified as trading or accounted under a fair-value option, primarily driven by an increase in interest rates and widening credit spreads in the current period compared to a decrease in interest rates and tighter credit spreads in the prior period, and (ii) the increase in realized losses on available-for-sale fixed maturity debt securities primarily due to portfolio rotation in a higher interest rate environment.

Expenses

Net Policy benefits and claims

Net policy benefits and claims decreased for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 primarily due to a decrease in the value of embedded derivatives in our indexed universal life and fixed indexed annuity products, as a result of lower equity market returns (as discussed above under "–Net investment-related losses–Gains on derivatives," Global Atlantic purchases equity index options in order to hedge this risk, the fair value changes of which are accounted for in gains on derivative instruments, and generally offsetting the change in embedded derivative fair value reported in net policy benefits and claims). This decrease was offset by (i) an increase in net policy benefits and claims due to new business originated from both individual and institutional market channel sales (net of retrocessions), and (ii) an increase in variable annuity reserves primarily due to lower equity market returns.

Amortization of policy acquisition costs

Amortization of policy acquisition costs increased for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 primarily due to (i) a decrease in the net benefit (that is, a reduction to expense) from the amortization of the net negative insurance intangibles recognized as part of purchase accounting of the GA Acquisition, as the underlying business runs off, and (ii) growth in our individual market channel. Offsetting these increases in expense was a decrease in amortization due to realized investment losses.

Interest expense

Interest expense increased for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 primarily due to a net increase in debt outstanding, including a draw on the Global Atlantic revolving credit facility in the quarter ended March 31, 2022.

Insurance expenses

Insurance expenses increased for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 primarily due to (i) increased commission expense related to increased sales in our individual market and increased reinsurance transactions and (ii) increased reinsurance ceding expense allowances paid for policy administration services as a result of an increase in reinsurance transactions.

General, administrative and other

General, administrative and other expenses increased for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 primarily due to (i) increased employee compensation and benefits-related expenses, (ii) increased professional service fees, and (iii) increased third-party administrator ("TPA") policy servicing fees, all due to growth of the business.

Other Condensed Consolidated Results of Operations (GAAP Basis - Unaudited)

Income Tax Expense (Benefit)

For the three months ended June 30, 2022, income tax was a benefit of $153.1 million compared to an income tax expense of $343.7 million in the prior period. In the current period, a deferred tax benefit was generated primarily due to pre-tax unrealized losses driven by net capital allocation-based losses and investment losses that are not currently deductible for tax purposes. Our effective tax rate under GAAP for the three months ended June 30, 2022 was 7.1%. For a discussion of factors that impacted KKR's tax provision, see Note 18 "Income Taxes" to the financial statements included elsewhere in this report. The amount of U.S. federal or state corporate income taxes we pay in future periods may be materially increased if adverse tax laws become enacted. See “—Business Environment— Economic and Market Conditions” in this report.

Net Income (Loss) Attributable to Noncontrolling Interests

Net Income (Loss) attributable to noncontrolling interests for the three months ended June 30, 2022 relates primarily to net income (loss) attributable to (i) exchangeable securities representing ownership interests in KKR Group Partnership, (ii) third-party limited partner interests in consolidated investment funds and (iii) interests that co-investors and rollover investors hold in Global Atlantic. Net income (loss) attributable to noncontrolling interests for the three months ended June 30, 2022 was primarily due to (i) net losses from investment activities at our consolidated investment funds and (ii) a net loss attributable to exchangeable securities in the current period.

Net Income (Loss) Attributable to KKR & Co. Inc.

The net loss attributable to KKR & Co. Inc. for the three months ended June 30, 2022 was primarily due to (i) net capital allocation-based losses and (ii) net losses from investment activities, partially offset by (i) a higher level of management fees and (ii) a reversal of previously recognized accrued carried interest compensation, as described above.

Consolidated Results of Operations (GAAP Basis)

The following is a discussion of our consolidated results of operations on a GAAP basis for the six months ended June 30, 2022 and 2021. You should read this discussion in conjunction with the financial statements and related notes included elsewhere in this report. See "Business Environment" for more information about factors that may affect our business, financial performance, operating results and valuations.

			Six Months Ended
			June 30, 2022						June 30, 2021						Change
			($ in thousands)
Revenues
Asset Management
Fees and Other			$	1,395,775					$	1,168,837					$	226,938
Capital Allocation-Based Income (Loss)			(1,869,217)						4,210,040						(6,079,257)
			(473,442)						5,378,877						(5,852,319)
Insurance
Net Premiums			146,642						724,009						(577,367)
Policy Fees			644,143						513,945						130,198
Net Investment Income			1,744,494						1,161,278						583,216
Net Investment-Related Gains (Losses)			(795,006)						(129,144)						(665,862)
Other Income			67,256						50,222						17,034
			1,807,529						2,320,310						(512,781)
Total Revenues			1,334,087						7,699,187						(6,365,100)
Expenses
Asset Management
Compensation and Benefits			534,548						2,406,220						(1,871,672)
Occupancy and Related Charges			37,010						33,851						3,159
General, Administrative and Other			488,497						404,293						84,204
			1,060,055						2,844,364						(1,784,309)
Insurance
Net Policy Benefits and Claims			680,653						1,896,517						(1,215,864)
Amortization of Policy Acquisition Costs			5,471						(40,509)						45,980
Interest Expense			32,189						22,045						10,144
Insurance Expenses			247,808						153,057						94,751
General, Administrative and Other			338,106						212,783						125,323
			1,304,227						2,243,893						(939,666)
Total Expenses			2,364,282						5,088,257						(2,723,975)
Investment Income (Loss) - Asset Management
Net Gains (Losses) from Investment Activities			(971,208)						5,916,253						(6,887,461)
Dividend Income			809,705						201,567						608,138
Interest Income			744,105						748,709						(4,604)
Interest Expense			(610,485)						(516,812)						(93,673)
Total Investment Income (Loss)			(27,883)						6,349,717						(6,377,600)
Income (Loss) Before Taxes			(1,058,078)						8,960,647						(10,018,725)
Income Tax Expense (Benefit)			(156,270)						782,406						(938,676)

			Six Months Ended
			June 30, 2022						June 30, 2021						Change
			($ in thousands)
Net Income (Loss)			(901,808)						8,178,241						(9,080,049)
Net Income (Loss) Attributable to Redeemable Noncontrolling Interests			(55)						1,337						(1,392)
Net Income (Loss) Attributable to Noncontrolling Interests			(34,549)						5,191,793						(5,226,342)
Net Income (Loss) Attributable to KKR & Co. Inc.			(867,204)						2,985,111						(3,852,315)
Series A Preferred Stock Dividends			—						23,656						(23,656)
Series B Preferred Stock Dividends			—						5,038						(5,038)
Series C Mandatory Convertible Preferred Stock Dividends			34,500						34,500						—
Net Income (Loss) Attributable to KKR & Co. Inc. Common Stockholders			$	(901,704)					$	2,921,917					$	(3,823,621)

Consolidated Results of Operations (GAAP Basis) - Asset Management

Revenues

For the six months ended June 30, 2022 and 2021, revenues consisted of the following:

						Six Months Ended
						June 30, 2022						June 30, 2021						Change
						($ in thousands)
Management Fees						$	816,275					$	582,375					$	233,900
Fee Credits						(251,319)						(157,682)						(93,637)
Transaction Fees						644,827						540,780						104,047
Monitoring Fees						69,922						68,341						1,581
Incentive Fees						14,198						6,130						8,068
Expense Reimbursements						66,879						87,785						(20,906)
Consulting Fees						34,993						41,108						(6,115)
Total Fees and Other						1,395,775						1,168,837						226,938
Carried Interest						(1,521,997)						3,337,094						(4,859,091)
General Partner Capital Interest						(347,220)						872,946						(1,220,166)
Total Capital Allocation-Based Income (Loss)						(1,869,217)						4,210,040						(6,079,257)
Total Revenues - Asset Management						$	(473,442)					$	5,378,877					$	(5,852,319)

Fees and Other

Total Fees and Other for the six months ended June 30, 2022 increased compared to the six months ended June 30, 2021 primarily as a result of the increase in management fees and transaction fees.

For a more detailed discussion of the factors that affected our transaction fees during the period, see "—Analysis of Asset Management Segment Operating Earnings."

The increase in management fees was primarily attributable to management fees earned from North America Fund XIII and Global Infrastructure Investors IV, each of which entered its investment period in the second quarter of 2021, and European Fund VI, which entered its investment period in the first quarter of 2022. The increase was partially offset by a decrease in management fees earned from Americas Fund XII and Global Infrastructure Investors III as a result of entering their post-investment period in the second quarter of 2021 and earning fees based on capital invested rather than capital committed.

Management fees due from consolidated investment funds and other vehicles are eliminated upon consolidation under GAAP. 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, the elimination of these fees does not impact the net income (loss) attributable to KKR or KKR stockholders' equity. For a more detailed discussion on the factors that affect our management fees during the period, see "—Analysis of Asset Management Segment Operating Earnings."

Fee credits increased compared to the prior period as a result of a higher level of transaction fees in our private equity, real asset and credit businesses. Fee credits owed to consolidated investment funds are eliminated upon consolidation under GAAP. However, because these amounts are owed to noncontrolling interests, KKR's allocated share of the net income from the consolidated investment funds is decreased by the amount of fee credits that are eliminated. Accordingly, the elimination of these fee credits does not impact the net income (loss) attributable to KKR or KKR stockholders' equity. Transaction and monitoring fees earned from KKR portfolio companies are not eliminated upon consolidation because those fees are earned from companies which are not consolidated. Furthermore, transaction fees earned in our capital markets business are not shared with fund investors. Accordingly, certain transaction fees are reflected in revenues without a corresponding fee credit.

Capital Allocation-Based Income (Loss)

Capital Allocation-Based Income (Loss) for the six months ended June 30, 2022 was negative primarily due to the net depreciation of the underlying investments at many of our carry earning investment funds, most notably Americas Fund XII, Asia Fund II and Asian Fund III. Capital Allocation-Based Income (Loss) for the six months ended June 30, 2021 was positive due to the net appreciation of the underlying investments at certain of our carry earning investment funds, most notably Americas Fund XII, Asian Fund III and North America Fund XI.

KKR generally 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 the reporting date, irrespective of whether such amounts have been realized. Since the fair value of the underlying investments varies between reporting periods, it is necessary to make adjustments to the 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.

Investment Income (Loss) - Asset Management

For additional information about net gains (losses) from investment activities, see Note 5 "Net Gains (Losses) from Investment Activities - Asset Management" in our financial statements.

Net Gains (Losses) from Investment Activities for the six months ended June 30, 2022

The net losses from investment activities for the six months ended June 30, 2022 were comprised of net realized gains of $829.6 million and net unrealized losses of $(1,800.8) million.

Investment gains and losses relating to our general partner capital interest in our unconsolidated funds are not reflected in our discussion and analysis of Net Gains (Losses) from Investment Activities. Our economics associated with these gains and losses are reflected in Capital Allocation-Based Income (Loss) as described above.

Realized Gains and Losses from Investment Activities

For the six months ended June 30, 2022, net realized gains related primarily to the sales of our investments in Fiserv Inc., Internet Brands, Inc. held in one of our consolidated funds and the sale of certain real estate equity investments that were held in Real Estate Partners Americas II. Partially offsetting these realized gains were realized losses primarily relating to certain investments held in our consolidated alternative credit funds and a real estate equity investment in one of our consolidated US real estate funds.

Unrealized Gains and Losses from Investment Activities

For the six months ended June 30, 2022, net unrealized losses were driven primarily by mark-to-market losses from (i) investments held in our consolidated credit funds, (ii) OutSystems Holdings S.A. (technology sector) and (iii) the reversal of previously recognized unrealized gains relating to the realization activity described above. These unrealized losses were partially offset by mark-to-market gains related to (i) certain investments held in our consolidated energy funds, (ii) Viridor Limited, and (iii) Clarify Health Solutions Inc. (healthcare sector).

For a discussion of other factors that affected KKR's realized investment income, see "—Analysis of Asset Management Segment Operating Results".

Net Gains (Losses) from Investment Activities for the six months ended June 30, 2021

The net gains from investment activities for the six months ended June 30, 2021 were comprised of net realized gains of $923.3 million and net unrealized gains of $4,992.9 million.

Realized Gains and Losses from Investment Activities

For the six months ended June 30, 2021, net realized gains related primarily to the sale of our investments in FanDuel Inc., BridgeBio Pharma, Inc. (NASDAQ: BBIO) and Fiserv, Inc. Partially offsetting these realized gains were realized losses primarily relating to certain investments held in our consolidated credit funds and realized losses related to certain hedging instruments.

Unrealized Gains and Losses from Investment Activities

For the six months ended June 30, 2021, net unrealized gains were driven primarily by (i) mark-to-market gains from private equity, growth equity and core investments held by KKR and certain consolidated funds, the most significant of which were PetVet Care Centers, LLC and Heartland Dental LLC, and (ii) mark-to-market gains for certain investments held in our consolidated energy funds, special situations funds, real estate funds and CLOs. These unrealized gains were partially offset by the reversal of previously recognized unrealized gains relating to the realization activity described above.

For a discussion of other factors that affected KKR's realized investment income, see "—Analysis of Asset Management Segment Operating Results".

Dividend Income

During the six months ended June 30, 2022, the most significant dividends received included (i) $370.8 million from investments held in our consolidated real estate core plus and real estate opportunistic equity funds and (ii) $86.6 million from our investment in Exact Group B.V. (technology sector) held in our consolidated core vehicles. During the six months ended June 30, 2021, the most significant dividends received included (i) $72.0 million from our consolidated real estate funds and (ii) $26.9 million from our investment in Viridor Limited.

Significant dividends from portfolio companies and consolidated funds are generally not recurring quarterly dividends, and while they may occur in the future, their size and frequency are variable. For a discussion of other factors that affected KKR's dividend income, see "—Analysis of Asset Management Segment Operating Results."

Interest Income

The decrease in interest income during the six months ended June 30, 2022 compared to the six months ended June 30, 2021 was primarily due to deconsolidation of KREF in the fourth quarter of 2021, partially offset by (i) the impact of closing additional CLOs that were consolidated subsequent to June 30, 2021 and (ii) a higher level of interest income from investments held in certain of our consolidated alternative credit funds, primarily related to an increase in the amount of capital deployed and higher interest rates. For a discussion of other factors that affected KKR's interest income, see "—Analysis of Asset Management Segment Operating Results."

Interest Expense

The increase in interest expense during the six months ended June 30, 2022 compared to the six months ended June 30, 2021 was primarily due to the (i) increase in the amount of borrowings outstanding from consolidated funds and other vehicles, (ii) impact of closing consolidated CLOs after June 30 2021 and (iii) the impact of issuances of our senior notes after June 30, 2021. Partially offsetting these increases was the deconsolidation of KREF in the fourth quarter of 2021. For a discussion of other factors that affected KKR's interest expense, see "—Analysis of Non-GAAP Performance Measures."

Expenses - Asset Management

Compensation and Benefits Expenses

The decrease in compensation and benefits expense during the six months ended June 30, 2022 compared to the six months ended June 30, 2021 was primarily due to the reversal of previously recognized accrued carried interest, partially offset by (i) higher equity-based compensation charges and (ii) a higher level of discretionary cash compensation accrued resulting from a higher level of fee revenue and realized performance income in the current period.

General, Administrative and Other

The increase in general, administrative and other expenses during the six months ended June 30, 2022 compared to the six months ended June 30, 2021 was primarily due to a higher level of (i) expenses at our consolidated funds and investment vehicles, (ii) strategic corporate transaction-related charges, (iii) broken-deal expenses, (iv) professional fees, information technology and other administrative costs and (v) travel related expenses as a result of COVID-19 pandemic travel restrictions being reduced.

The level of broken-deal expenses can vary significantly period to period based upon a number of factors, the most significant of which are the number of potential investments being pursued for our investment funds, the size and complexity of investments being pursued and the number of investment funds currently in their investment period. Also, in periods of significant fundraising and to the extent that we use third parties to assist in our capital raising efforts, our General, Administrative and Other are expected to increase accordingly. Similarly, our General, Administrative and Other expenses are expected to increase as a result of increased levels of professional and other fees incurred as part of due diligence related to strategic acquisitions and new product development.

Consolidated Results of Operations (GAAP Basis) - Insurance

For the six months ended June 30, 2021, the results of Global Atlantic's insurance operations included in our consolidated results of operations are from the acquisition date, February 1, 2021, through June 30, 2021.

Revenues

For the six months ended June 30, 2022 and 2021, revenues consisted of the following:

						Six Months Ended
						June 30, 2022						June 30, 2021						Change
						($ in thousands)
Net Premiums						$	146,642					$	724,009					$	(577,367)
Policy Fees						644,143						513,945						130,198
Net Investment Income						1,744,494						1,161,278						583,216
Net Investment-Related Gains						(795,006)						(129,144)						(665,862)
Other Income						67,256						50,222						17,034
Total Insurance Revenues						$	1,807,529					$	2,320,310					$	(512,781)

Net Premiums

Net premiums decreased for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 primarily due to lower initial premiums related to fewer reinsurance transactions with life contingencies assumed during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021. The decrease was partially offset by lower retrocessions to third party reinsurers during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021. These initial premiums on assumed reinsurance are offset by a comparable increase in policy reserves reported within net policy benefits and claims (as discussed below).

Policy fees

Policy fees increased for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 primarily due to one less month of activity reported in the prior period as a result of the GA Acquisition on February 1, 2021.

Net investment income

Net investment income increased for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 primarily due to (i) one less month of activity reported in the prior period as a result of the GA Acquisition having occurred on February 1, 2021, (ii) increased average assets under management due to growth in assets in our institutional market channel as a result of new reinsurance transactions and individual market channel sales, and (iii) higher yields on floating-rate investments due to higher market interest rates.

Net investment-related losses

The components of net investment-related losses were as follows:

						Six Months Ended
						June 30, 2022						June 30, 2021						Change
						($ in thousands)
Funds withheld payable embedded derivatives						$	2,544,135					$	(55,172)					$	2,599,307
Equity futures contracts						162,185						(173,765)						335,950
Foreign currency forwards						27,912						4,101						23,811
Credit risk contracts						335						(58)						393
Equity index options						(728,225)						300,889						(1,029,114)
Interest rate contracts						(223,901)						(125,139)						(98,762)
Funds withheld receivable embedded derivatives						(67,341)						78,450						(145,791)
Net gains on derivative instruments						1,715,100						29,306						1,685,794
Net other investment losses						(2,510,106)						(158,450)						(2,351,656)
Net investment-related gains						$	(795,006)					$	(129,144)					$	(665,862)

Net gains on derivative instruments

The increase in the fair value of embedded derivatives on funds withheld at interest payable was primarily driven by the change in fair value of the underlying investments in the funds withheld payable at interest portfolio, which is primarily comprised of fixed maturity securities (designated as trading for accounting purposes), mortgage and other loan receivables, and other investments. The underlying investments in the funds withheld payable at interest portfolio declined in value in the current period primarily due to an increase in market interest rates and wider credit spreads.

The increase in the fair value of equity futures was driven primarily by the performance of equity markets. Global Atlantic purchases equity futures primarily to hedge the market risk in our variable annuity products which are accounted for in net policy benefits and claims. The majority of Global Atlantic's equity futures are based on the S&P 500 Index, which decreased during the six months ended June 30, 2022, as compared to an increase during the six months ended June 30, 2021, resulting in respectively, a gain, and a loss, on equity futures contracts in the respective periods.

The decrease in the fair value of equity index options was primarily driven by the performance of the indexes upon which call options are based. Global Atlantic purchases equity index options to hedge the market risk of embedded derivatives in indexed universal life and fixed-indexed annuity products (the change in which is accounted for in net policy benefits and claims). The majority of Global Atlantic's equity index call options are based on the S&P 500 index, which decreased during the six months ended June 30, 2022, as compared to the increase during the six months ended June 30, 2021.

The decrease in the fair value of embedded derivatives on funds withheld at interest receivable was primarily due to widening of credit spreads during the six months ended June 30, 2022, as compared to the tightening of credit spreads in the six months ended June 30, 2021.

The decrease in the fair value of interest rate contracts was driven by an increase in market interest rates during both the six months ended June 30, 2022 and the prior period, resulting in a loss on interest rate contracts.

Net other investment losses

The components of net other investment losses were as follows:

						Six Months Ended
						June 30, 2022						June 30, 2021						Change
						($ in thousands)
Realized gains (losses) on investments not supporting asset-liability matching strategies						$	59,564					$	47,441					$	12,123
Realized gains (losses) on equity investments						—						25,125						(25,125)
Realized gains (losses) on available-for-sale fixed maturity debt securities						(530,723)						(73,274)						(457,449)
Credit loss allowances						(58,805)						(167,903)						109,098
Unrealized gains (losses) on fixed maturity securities classified as trading						(2,028,124)						2,890						(2,031,014)
Unrealized gains (losses) on investments classified as trading or fair-value option						(40,928)						47,421						(88,349)
Unrealized gains (losses) on real estate investments recognized at fair value under investment company accounting						123,088						10,267						112,821
Realized gains (losses) on funds withheld at interest, payable						2,340						(19,112)						21,452
Realized gains (losses) on funds withheld at interest, receivable						3,438						7,617						(4,179)
Other						(39,956)						(38,922)						(1,034)
Net investment-related gains						$	(2,510,106)					$	(158,450)					$	(2,351,656)

The increase in net other investment losses were primarily due to (i) increase in unrealized losses on fixed maturity securities classified as trading primarily due to an increase in interest rates and widening credit spreads in the current period and (ii) the increase in realized losses on available-for-sale fixed maturity debt securities primarily due to portfolio rotation in a higher interest rate environment.

Offsetting these losses were (i) unrealized gains on real estate investments recognized at fair value under investment company accounting, and (ii) a higher credit loss allowance on mortgage and other loan receivables in the prior period primarily due to the recognition of an initial credit loan loss allowance upon the adoption of the current expected credit loss accounting standard concurrent with the GA Acquisition.

Other income

Other income increased for the six months ended June 30, 2022 as compared to the prior period primarily due to one less month of activity reported in the prior period as a result of the GA Acquisition having occurred on February 1, 2021.

Expenses

Net policy benefits and claims

Net policy benefits and claims decreased for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 primarily due to (i) lower initial reserves related to fewer new reinsurance transactions with life contingencies in the six months ended June 30, 2022 as compared to the six months ended June 30, 2021, and (ii) a decrease in the value of embedded derivatives in Global Atlantic's indexed universal life and fixed indexed annuity products, as a result of lower equity market returns (as discussed above under "–Net investment related losses–Gains on derivatives," Global Atlantic purchases equity index options in order to hedge this risk, the fair value changes of which are accounted for in gains on derivative instruments, and generally offsetting the change in embedded derivative fair value reported in net policy benefits and claims). This decrease was offset by (i) one less month of activity reported in the prior period as a result of the GA Acquisition having occurred on February 1, 2021, (ii) an increase in net flows from both individual and institutional market channel sales, and (iii) an increase in variable annuity reserves primarily due to lower equity market returns.

Amortization of policy acquisition costs

Amortization of policy acquisition costs increased for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 primarily due to (i) a decrease in the net benefit (that is, a reduction to expense) from the amortization of the net negative insurance intangibles recognized as part of purchase accounting of the GA Acquisition, as the underlying business runs off, and (ii) growth in our individual market channel. Offsetting these increases in expense was a decrease of amortization due to realized investment losses.

Interest expense

Interest expense increased for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 primarily due to (i) a net increase in debt outstanding, including a draw on the revolving credit facility in the quarter ended March 31, 2022, and (ii) the impact of one less month of activity reported in the prior period as a result of the GA Acquisition having occurred on February 1, 2021.

Insurance expenses

Insurance expenses increased for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 primarily due to (i) one less month of activity reported in the prior period as a result of the GA Acquisition having occurred on February 1, 2021, (ii) increased commission expense related to increased sales in our individual market and increased reinsurance transactions, and (iii) increased reinsurance ceding expense allowances paid for policy administration services as a result of an increase in reinsurance transactions.

General, administrative and other

General, administrative and other expenses increased for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 primarily due to (i) one less month of activity reported in the prior period as a result of the GA Acquisition having occurred on February 1, 2021, (ii) increased employee compensation and benefits related expenses, and (iii) increased professional service fees, (iv) increased TPA policy servicing fees, all due to growth of the business.

Other Consolidated Results of Operations (GAAP Basis)

Income Tax Expense (Benefit)

For the six months ended June 30, 2022, income tax was a benefit of $156.3 million compared to an income tax expense of $782.4 million in the prior period. In the current period, a deferred tax benefit was generated primarily due to pre-tax unrealized losses driven by net capital allocation-based losses and investment losses that are not currently deductible for tax purposes. Our effective tax rate under GAAP for the six months ended June 30, 2022 was 14.8%. For a discussion of factors that impacted KKR's tax provision, see Note 18 "Income Taxes" to the financial statements included elsewhere in this report. The amount of U.S. federal and state corporate income taxes we pay in future periods may be materially increased if adverse tax laws become enacted. See “—Business Environment— Economic and Market Conditions” in this report.

Net Income (Loss) Attributable to Noncontrolling Interests

Net Income (Loss) attributable to noncontrolling interests for the six months ended June 30, 2022 relates primarily to net income (loss) attributable to (i) exchangeable securities representing ownership interests in KKR Group Partnership, (ii) third-party limited partner interests in consolidated investment funds and (iii) interests that co-investors and rollover investors hold in Global Atlantic. The net loss attributable to noncontrolling interests for the six months ended June 30, 2022 was primarily due to (i) net losses from investment activities at our consolidated investment funds and (ii) a net loss attributable to exchangeable securities in the current period.

Net Income (Loss) Attributable to KKR & Co. Inc.

The net loss attributable to KKR & Co. Inc. for the six months ended June 30, 2022 was primarily due to (i) net capital allocation-based losses and (ii) net losses from investment activities, partially offset by (i) a higher level of management fees and transaction fees and (ii) a reversal of previously recognized accrued carried interest compensation, as described above.

Condensed Consolidated Statements of Financial Condition (GAAP Basis - Unaudited)

The following table provides our condensed consolidated statements of financial condition on a GAAP basis as of June 30, 2022 and December 31, 2021.

(Amounts in thousands, except per share amounts)
						As of						As of
						June 30, 2022						December 31, 2021
Assets
Asset Management
Cash and Cash Equivalents						$	6,720,983					$	6,699,668
Investments						88,191,528						88,775,514
Other Assets						6,520,792						4,244,894
						101,433,303						99,720,076
Insurance
Cash and Cash Equivalents						5,130,193						3,391,934
Investments						119,507,782						123,763,675
Other Assets						40,003,820						37,409,755
						164,641,795						164,565,364
Total Assets						$	266,075,098					$	264,285,440
Liabilities and Equity
Asset Management
Debt Obligations						$	37,177,474					$	36,669,755
Other Liabilities						7,905,447						8,359,619
						45,082,921						45,029,374
Insurance
Debt Obligations						1,975,473						1,908,006
Other Liabilities						166,198,313						159,208,840
						168,173,786						161,116,846
Total Liabilities						$	213,256,707					$	206,146,220
Redeemable Noncontrolling Interests						81,167						82,491
Stockholders' Equity
Stockholders' Equity - Series C Mandatory Convertible Preferred Stock						1,115,792						1,115,792
Stockholders' Equity - Common Stock						17,956,891						16,466,372
Noncontrolling Interests						33,664,541						40,474,565
Total Equity						52,737,224						58,056,729
Total Liabilities and Equity						$	266,075,098					$	264,285,440
KKR & Co. Inc. Stockholders' Equity - Common Stock Per Outstanding Share of Common Stock						$	20.88					$	27.64

KKR & Co. Inc. Stockholders’ Equity - Common Stock per Outstanding Share of Common Stock was $20.88 as of June 30, 2022, down from $27.64 as of December 31, 2021. The decrease was primarily due to the (i) unrealized losses on available-for-sale-securities from Global Atlantic that are recorded in other comprehensive income, (ii) repurchases of common stock, (iii) dividends to common stockholders and (iv) a net loss attributable to KKR & Co. Inc. common stockholders during the six months ended June 30, 2022.

Condensed Consolidated Statements of Cash Flows (GAAP Basis - Unaudited)

The following is a discussion of our consolidated cash flows for the six months ended June 30, 2022 and 2021. You should read this discussion in conjunction with the financial statements and related notes included elsewhere in this report.

The consolidated statements of cash flows include the cash flows of our consolidated entities, which include certain consolidated investment funds, CLOs and certain variable interest entities formed by Global Atlantic notwithstanding the fact that we may hold only a minority economic interest in those investment funds and CFEs. The assets of our consolidated investment funds and CFEs, on a gross basis, can be substantially larger than the assets of our business and, accordingly, could have a substantial effect on the cash flows reflected in our consolidated statements of cash flows. The primary cash flow activities of our consolidated funds and CFEs involve: (i) capital contributions from fund investors; (ii) using the capital of fund investors to make investments; (iii) financing certain investments with indebtedness; (iv) generating cash flows through the realization of investments; and (v) distributing cash flows from the realization of investments to fund investors. Because our consolidated funds are treated as investment companies for accounting purposes, certain of these cash flow amounts are included in our cash flows from operations.

Net Cash Provided (Used) by Operating Activities

Our net cash provided (used) by operating activities was $(3.1) billion and $(1.3) billion during the six months ended June 30, 2022 and 2021, respectively. These amounts primarily included: (i) investments purchased (asset management), net of proceeds from investments (asset management) of $(5.3) billion and $(3.1) billion during the six months ended June 30, 2022 and 2021, respectively, (ii) net realized gains (losses) on asset management investments of $829.6 million and $923.3 million during the six months ended June 30, 2022 and 2021, respectively, (iii) change in unrealized gains (losses) on investments (asset management) of $(1.8) billion and $5.0 billion during the six months ended June 30, 2022 and 2021, respectively, (iv) capital allocation-based income (loss) of $(1.9) billion and $4.2 billion during the six months ended June 30, 2022 and 2021, respectively, and (v) net realized gains (losses) on insurance operations of $(11.2) million and $(420.2) million during the six months ended June 30, 2022 and 2021, respectively. Investment funds are investment companies under GAAP and reflect their investments and other financial instruments at fair value.

Net Cash Provided (Used) by Investing Activities

Our net cash provided (used) by investing activities was $(7.1) billion and $(2.5) billion during the six months ended June 30, 2022 and 2021, respectively. Our investing activities included: (i) investments purchased (insurance), net of proceeds from investments (insurance) of $(5.3) billion and $(2.4) billion during the six months ended June 30, 2022 and 2021, respectively, (ii) acquisitions, net of cash acquired of $(1.7) billion and $(473.8) million during the six months ended June 30, 2022 and 2021, respectively, and (iii) the purchase of fixed assets of $(34.2) million and $(49.6) million during the six months ended June 30, 2022 and 2021, respectively.

Net Cash Provided (Used) by Financing Activities

Our net cash provided (used) by financing activities was $12.3 billion and $8.9 billion during the six months ended June 30, 2022 and 2021, respectively. Our financing activities primarily included: (i) contributions by, net of distributions to, our noncontrolling and redeemable noncontrolling interests of $3.7 billion and $3.3 billion during the six months ended June 30, 2022 and 2021, respectively, (ii) proceeds received net of repayment of debt obligations of $3.3 billion and $3.1 billion during the six months ended June 30, 2022 and 2021, respectively, (iii) additions to, net of withdrawals from contractholder deposit funds of $5.5 billion and $3.3 billion during six months ended June 30, 2022 and 2021, respectively, (iv) common stock dividends of $(177.6) million and $(162.1) million during the six months ended June 30, 2022 and 2021, respectively, (v) net delivery of common stock of $(34.9) million and $(106.9) million during the six months ended June 30, 2022 and 2021, respectively, (vi) repurchases of common stock of $(346.7) million and $(135.9) million during the six months ended June 30, 2022 and 2021, respectively, (vii) Series A and B Preferred Stock dividends of $(16.7) million during the six months ended June 30, 2021, (viii) Series C Mandatory Convertible Preferred Stock dividends of $(34.5) million during the six months ended June 30, 2022 and 2021, respectively, and (ix) private placement share issuance of $38.5 million during six months ended June 30, 2021.

Analysis of Segment Operating Results

The following is a discussion of the results of our business on a segment basis for the three months ended June 30, 2022 and 2021. You should read this discussion in conjunction with the information included under "—Key Segment and Non-GAAP Performance Measures and Other Terms and Operating Metrics" and the financial statements and related notes included elsewhere in this report. See "Business Environment" for more information about factors that may impact our business, financial performance, operating results and valuations.

For the six months ended June 30, 2021, the results of our Insurance segment are from February 1, 2021 (closing date of the acquisition) through June 30, 2021.

Analysis of Asset Management Segment Operating Results

The following tables set forth information regarding KKR's Asset Management segment operating results and certain key capital metrics for the three months ended June 30, 2022 and 2021:

						Three Months Ended
						June 30, 2022						June 30, 2021						Change
						($ in thousands)
Management Fees						$	654,927					$	480,122					$	174,805
Transaction and Monitoring Fees, Net						107,301						259,761						(152,460)
Fee Related Performance Revenues						9,999						14,567						(4,568)
Fee Related Compensation						(173,748)						(169,751)						(3,997)
Other Operating Expenses						(137,244)						(114,550)						(22,694)
Fee Related Earnings						461,235						470,149						(8,914)
Realized Performance Income						730,858						618,310						112,548
Realized Performance Income Compensation						(474,428)						(413,024)						(61,404)
Realized Investment Income						276,888						368,863						(91,975)
Realized Investment Income Compensation						(41,533)						(55,330)						13,797
Asset Management Segment Operating Earnings						$	953,020					$	988,968					$	(35,948)

Management Fees

The following table presents management fees by business line:

						Three Months Ended
						June 30, 2022						June 30, 2021						Change
						($ in thousands)
Management Fees
Private Equity						$	299,099					$	221,192					$	77,907
Real Assets						161,707						97,105						64,602
Credit and Liquid Strategies						194,121						161,825						32,296
Total Management Fees						$	654,927					$	480,122					$	174,805

The increase in Private Equity management fees was primarily attributable to (i) management fees earned from our North America Fund XIII and European Fund VI, each of which entered its investment periods during the second quarter of 2021 and first quarter of 2022, respectively and (ii) approximately $10 million of management fees on new capital raised that is retroactive to the start of the fund's investment period. These increases were partially offset by a decrease in management fees earned from our European Fund V and Americas Fund XII as a result of entering their post-investment periods in the first quarter of 2022 and second quarter of 2021, respectively, and now earn fees based on capital invested rather than capital committed and at a lower fee rate.

The increase in Real Asset management fees was primarily due to (i) management fees earned from Global Infrastructure Investors IV, which entered its investment period during the second quarter of 2021, (ii) an increase in management fees earned from new capital raised from Global Atlantic under our investment management agreements with Global Atlantic's insurance companies and (iii) management fees earned on assets we now manage from our acquisition of KJRM.

The increase in Credit and Liquid Strategies management fees was primarily attributable to (i) an increase in management fees earned from new capital raised from Global Atlantic under our investment management agreements with Global Atlantic's insurance companies, (ii) a higher level of management fees from our business development company, FSK and (iii) new CLO issuances.

Transaction and Monitoring Fees, Net

The following table presents transaction and monitoring fees, net by business line:

						Three Months Ended
						June 30, 2022						June 30, 2021						Change
						($ in thousands)
Transaction and Monitoring Fees, Net
Private Equity						$	16,809					$	33,087					$	(16,278)
Real Assets						1,569						4,579						(3,010)
Credit and Liquid Strategies						4,322						3,142						1,180
Capital Markets						84,601						218,953						(134,352)
Total Transaction and Monitoring Fees, Net						$	107,301					$	259,761					$	(152,460)

Our Capital Markets business line earns transaction fees, which are not shared with fund investors. The decrease in capital markets transaction fees was primarily due to a decrease in the number and average size of capital markets transactions for the three months ended June 30, 2022, compared to the three months ended June 30, 2021. Overall, we completed 60 capital markets transactions for the three months ended June 30, 2022, of which 5 represented equity offerings and 55 represented debt offerings, as compared to 81 transactions for the three months ended June 30, 2021, of which 15 represented equity offerings and 66 represented debt offerings. We earned fees in connection with underwriting, syndication and other capital markets services. While each of the capital markets transactions that we undertake in this business line is separately negotiated, our fee rates are generally higher with respect to underwriting or syndicating equity offerings than with respect to debt offerings, and the amount of fees that we earn for similar transactions generally correlates with overall transaction sizes.

Our Capital Markets business line fees are generated in connection with our Private Equity, Real Assets and Credit and Liquid Strategies business lines as well as from third-party companies. For the three months ended June 30, 2022, approximately 25% of our transaction fees in our Capital Markets business line were earned from unaffiliated third parties as compared to approximately 28% for the three months ended June 30, 2021. Our transaction fees are comprised of fees earned in North America, Europe, and the Asia-Pacific region. For the three months ended June 30, 2022, approximately 47% of our transaction fees were generated outside of North America as compared to approximately 50% for the three months ended June 30, 2021. Our Capital Markets business line is dependent on the overall capital markets environment, which is influenced by equity prices, credit spreads, and market volatility. Our Capital Markets business line does not generate monitoring fees.

Our Private Equity, Real Assets and Credit and Liquid Strategies business lines separately earn transaction and monitoring fees from portfolio companies, and under the terms of the management agreements with certain of our investment funds, we are required to share all or a portion of such fees with our fund investors. Additionally, transaction fees are generally not earned with respect to energy and real estate investments.

The decrease in Private Equity business line transaction and monitoring fees, net, was primarily attributable to a lower level of transaction fees. During the three months ended June 30, 2022, there were 19 transaction fee-generating investments that paid an average fee of $3.8 million compared to 25 transaction fee-generating investments that paid an average fee of $4.4 million during the three months ended June 30, 2021. For the three months ended June 30, 2022, approximately 51% of these transaction fees were paid by companies in Europe, 36% were paid from companies in the Asia-Pacific region, and 13% were paid from companies in North America. Transaction fees vary by investment based upon a number of factors, the most significant of which are transaction size, the particular agreements as to the amount of the fees, the complexity of the transaction, and KKR's role in the transaction.

Fee Related Performance Revenues

The following table presents fee related performance revenues by business line:

						Three Months Ended
						June 30, 2022						June 30, 2021						Change
						($ in thousands)
Fee Related Performance Revenues
Private Equity						$	—					$	—					$	—
Real Assets						1,108						1,701						(593)
Credit and Liquid Strategies						8,891						12,866						(3,975)
Total Fee Related Performance Revenues						$	9,999					$	14,567					$	(4,568)

Fee related performance revenues represent performance fees that are (i) to be received from our investment funds, vehicles and accounts on a recurring basis, and (ii) not dependent on a realization event involving investments held by the investment fund, vehicle or account. These performance fees are primarily earned from (i) our business development company, FSK in our Credit and Liquid Strategies business line, and (ii) our registered closed-end real estate equity fund, KKR Real Estate Select Trust Inc. ("KREST"), and our real estate credit investment trust, KKR Real Estate Finance Trust Inc. ("KREF"), both of which are in our Real Assets business line. Fee related performance revenues were lower for the three months ended June 30, 2022 compared to the prior period primarily due to a lower level of investment income at FSK.

Fee Related Compensation

The increase in fee related compensation for the three months ended June 30, 2022 compared to the prior period was primarily due to a higher level of compensation recorded in connection with the higher level of revenues included within fee related earnings.

Other Operating Expenses

The increase in other operating expenses for the three months ended June 30, 2022 compared to the prior period was primarily due to (i) a higher level of professional fees, information technology and other administrative costs and (ii) an increase in travel related expenses as a result of COVID-19 pandemic travel restrictions being reduced.

Fee Related Earnings

The decrease in fee related earnings for the three months ended June 30, 2022 compared to the prior period was primarily due to a lower level of transaction fees and a higher level of other operating expenses, partially offset by a higher level of management fees, as described above.

Realized Performance Income

The following table presents realized performance income by business line:

						Three Months Ended
						June 30, 2022						June 30, 2021						Change
						($ in thousands)
Realized Performance Income
Private Equity						$	634,146					$	547,699					$	86,447
Real Assets						85,310						42,535						42,775
Credit and Liquid Strategies						11,402						28,076						(16,674)
Total Realized Performance Income						$	730,858					$	618,310					$	112,548

						Three Months Ended
						June 30, 2022						June 30, 2021						Change
						($ in thousands)
Private Equity
North America Fund XI						$	443,170					$	248,578					$	194,592
Asian Fund III						51,397						110,515						(59,118)
2006 Fund						47,117						114,425						(67,308)
Americas Fund XII						39,261						—						39,261
Co-Investment Vehicles and Other						35,656						30,205						5,451
European Fund IV						17,545						43,976						(26,431)
Total Realized Carried Interest (1)						634,146						547,699						86,447
Incentive Fees						—						—						—
Total Realized Performance Income						$	634,146					$	547,699					$	86,447

						Three Months Ended
						June 30, 2022						June 30, 2021						Change
						($ in thousands)
Real Assets
Real Estate Partners Americas II						$	85,310					$	—					$	85,310
Global Infrastructure Investors II						—						36,215						(36,215)
Co-Investment Vehicles and Other						—						3,283						(3,283)
Global Infrastructure Investors						—						3,037						(3,037)
Total Realized Carried Interest (1)						85,310						42,535						42,775
Incentive Fees						—						—						—
Total Realized Performance Income						$	85,310					$	42,535					$	42,775

						Three Months Ended
						June 30, 2022						June 30, 2021						Change
						($ in thousands)
Credit and Liquid Strategies
Other Alternative Credit Vehicles						$	4,153					$	15,336					$	(11,183)
Total Realized Carried Interest (1)						4,153						15,336						(11,183)
Incentive Fees						7,249						12,740						(5,491)
Total Realized Performance Income						$	11,402					$	28,076					$	(16,674)

(1)The above tables exclude any funds for which there was no realized carried interest during both of the periods presented.

Realized performance income includes (i) realized carried interest from our carry earning funds and (ii) incentive fees not included in Fee Related Performance Revenues.

Realized carried interest in our Private Equity business line for the three months ended June 30, 2022 consisted primarily of a realized gain from the sale of our investment in Internet Brands, Inc. held by our North America Fund XI.

Realized carried interest in our Private Equity business line for the three months ended June 30, 2021 consisted primarily of (i) realized gains from the sale of our investments in Endeavor Group Holdings, Inc. (NASDAQ: EDR) and Calabrio, Inc. (technology sector) and (ii) dividends received from our investment in Kokusai Electric Corporation (manufacturing sector).

Realized carried interest in our Real Assets business line for the three months ended June 30, 2022 consisted primarily of realized proceeds from dividends received and sales of various investments in our real estate funds.

Realized carried interest in our Real Assets business line for the three months ended June 30, 2021 consisted primarily of a realized gain from the sale of our infrastructure investment, Calisen PLC (LSN: CLSNLN).

Realized carried interest in our Credit and Liquid Strategies business line decreased for the three months ended June 30, 2022 compared to the prior period as a result of a lower level of realization activity at certain alternative credit investment funds, from which we are eligible to take cash carry.

Incentive fees consist of performance fees earned from (i) our hedge fund partnerships, (ii) investment management agreements with KKR credit vehicles and (iii) investment management agreements to provide KKR’s investment strategies to funds managed by a third party asset management firm. Incentive fees in our Credit and Liquid Strategies business line decreased for the three months ended June 30, 2022 compared to the prior period as a result of a lower level of performance fees earned from our hedge fund partnership, Marshall Wace.

Realized Performance Income Compensation

The increase in realized performance income compensation for the three months ended June 30, 2022 compared to the prior period was primarily due to a higher level of compensation recorded in connection with the higher level of realized performance income.

Realized Investment Income

The following table presents realized investment income in our Principal Activities business line:

						Three Months Ended
						June 30, 2022						June 30, 2021						Change
						($ in thousands)
Realized Investment Income
Net Realized Gains (Losses)						$	196,408					$	263,353					$	(66,945)
Interest Income and Dividends						80,480						105,510						(25,030)
Total Realized Investment Income						$	276,888					$	368,863					$	(91,975)

The decrease in realized investment income is primarily due to a lower level of net realized gains and interest income and dividends. The amount of realized investment income depends on the transaction activity of our funds and balance sheet, which can vary from period to period.

For the three months ended June 30, 2022, net realized gains were comprised of realized gains primarily from the sale of our Private Equity business line investments in Fiserv, Inc., Internet Brands, Inc. and Max Healthcare Institute Limited (NSE: MAXHEALTH). Partially offsetting these realized gains were realized losses, the most significant of which were realized losses from sale of revolving credit facilities and various alternative credit strategy investments.

For the three months ended June 30, 2021, net realized gains were comprised of realized gains primarily from the sale of our Private Equity business line investments in Fiserv, Inc., Mr. Cooper Group Inc., and FanDuel Inc. Partially offsetting these realized gains were realized losses related to certain hedging instruments.

For the three months ended June 30, 2022, interest income and dividends were comprised of (i) $46.5 million of interest income, primarily from our investments in CLOs, and (ii) $34.0 million of dividend income primarily from our real estate investments, as well as a dividend distribution received from our private equity investment in Inkling Holdings LLC.

For the three months ended June 30, 2021, interest income and dividends were comprised primarily of (i) $66.4 million of dividend income primarily from our real asset investments including our investment in KREF and our infrastructure investments, as well as dividend distributions received from our private equity investment in Kokusai Electric Corporation and (ii) $39.1 million of interest income which consists primarily of interest received from our investments in CLOs and credit investments. See "—Analysis of Non-GAAP Performance Measures—Non-GAAP Balance Sheet Measures."

We expect realized performance income and realized investment income to be greater than $500 million in the third quarter of 2022 relating to realized carried interest and realized investment income from completed, or signed and expected to be completed sales, partial sales or secondary sales subsequent to June 30, 2022 with respect to certain private equity portfolio companies and other investments. Some of these transactions are not complete, and are subject to the satisfaction of closing conditions, including but not limited to regulatory approvals; there can be no assurance if or when any of these transactions will be completed.

Prior to the acquisition of KKR Capstone on January 1, 2020, (i) KKR Capstone's financial results were consolidated with KKR's financial results in accordance with GAAP, and as such the fees and expenses attributable to KKR Capstone were included in KKR's consolidated revenues and expenses, and (ii) KKR Capstone's financial results were excluded from KKR's non-GAAP financial measures, because KKR presented its non-GAAP financial measures prior to the effect to the consolidation of certain entities that were not subsidiaries of KKR. Following the acquisition of KKR Capstone on January 1, 2020, after-tax distributable earnings includes the net income (loss) from KKR Capstone within realized investment income (loss).

For the quarter ended June 30, 2022, total fees attributable to KKR Capstone were $19.5 million and total expenses attributable to KKR Capstone were $20.5 million. For KKR Capstone-related adjustments in reconciling Asset Management segment revenues to GAAP revenues see "—Analysis of Non-GAAP Performance Measures—Reconciliations to GAAP Measures".

Realized Investment Income Compensation

The decrease in realized investment income compensation for the three months ended June 30, 2022 compared to the prior period is primarily due to a lower level of compensation recorded in connection with the lower level of realized investment income.

Other Operating and Capital Measures

The following table presents certain key operating and capital metrics as of June 30, 2022 and March 31, 2022:

						As of
						June 30, 2022						March 31, 2022						Change
						($ in millions)
Assets Under Management						$	490,692					$	479,032					$	11,660
Fee Paying Assets Under Management						$	384,470					$	371,176					$	13,294
Uncalled Commitments						$	115,300					$	114,836					$	464

The following table presents one of our key capital metrics for the three months ended June 30, 2022 and 2021:

						Three Months Ended
						June 30, 2022						June 30, 2021						Change
						($ in millions)
Capital Invested						$	18,651					$	18,526					$	125

Assets Under Management

Private Equity

The following table reflects the changes in our Private Equity business line AUM from March 31, 2022 to June 30, 2022:

			($ in millions)
March 31, 2022			$	174,406
New Capital Raised			8,277
Distributions and Other			(5,245)
Change in Value			(5,897)
June 30, 2022			$	171,541

AUM for the Private Equity business line was $171.5 billion at June 30, 2022, a decrease of $2.9 billion, compared to $174.4 billion at March 31, 2022.

The decrease was primarily attributable to a decrease in investment valuation at Americas Fund XII, Asian Fund III, and European Fund V, and to a lesser extent, distributions to fund investors, primarily as a result of realized proceeds, most notably from North America Fund XI, Asian Fund III, and 2006 Fund. Partially offsetting these decreases was new capital raised for our Next Generation Technology Growth Fund III, new investment vehicles involving Internet Brands and a new strategic investor partnership.

For the three months ended June 30, 2022, the value of our traditional private equity investment portfolio decreased 7%. This was comprised of a 24% decrease in share prices of various publicly held investments and a 3% decrease in value of our privately held investments, as discussed further below. For the three months ended June 30, 2022, the value of our growth equity and core equity investment portfolios decreased 8% and 2%, respectively. See "Business Environment" for more information about certain factors that impact our business, financial performance, operating results and valuations.

The most significant decreases in share prices of our publicly held private equity investments were decreases in Applovin Corporation (NASDAQ: APP), PHC Holdings Corporation (TYO: 6523), and Fiserv, Inc. The prices of publicly held companies may experience volatile changes following the reporting period.

The most significant decreases in value of our privately held investments related to OneStream Software, LLC (technology sector), Unzer GmbH (financial services sector), and Kokusai Electric Corporation. These decreases in value were partially offset by increases in value relating primarily to CHI Overhead Doors, Inc. (manufacturing sector), Westbrick Energy Ltd. (energy sector), and Internet Brands, Inc. The decreased valuations of individual companies in our privately held investments, in the aggregate, generally related to (i) a decrease in the value of market comparables and (ii) an unfavorable business outlook, both influenced by economic outlook and market environment. The increased valuations of individual companies in our privately held investments, in the aggregate, generally related to (i) individual company performance and (ii) with respect to CHI Overhead Doors, Inc., an increase in valuation reflecting an agreement to exit the investment.

For the three months ended June 30, 2021, the value of our traditional private equity investment portfolio increased 9%. This was comprised of a 12% increase in share prices of various publicly held investments and a 8% increase in value of our privately held investments. For the three months ended June 30, 2021, the value of our growth equity and core equity investment portfolios increased 16% and 15%, respectively.

The most significant increases in share prices of various publicly held investments were increases in AppLovin Corporation, KnowBe4, Inc. (NASDAQ: KNBE), Darktrace Limited (LSE: DARK), and Hensoldt AG (FRA: HAG). These increases were partially offset by decreases in share prices of various publicly held investments, the most significant of which was a decrease in Fiserv, Inc.

The most significant increase in value of our privately held investments related to OneStream Software, LLC, PetVet Care Centers, LLC, and The Bountiful Company (consumer products sector). These increases in value were partially offset by decreases in value relating primarily to OutSystems Holdings S.A. and Channel Control Merchants (retail sector). The increased valuations of individual companies in our privately held investments, in the aggregate, generally related to (i) individual company performance, (ii) an increase in the value of market comparables, (iii) transactional activity related to new rounds of funding, and with respect to The Bountiful Company, an increase in valuation reflecting an agreement to exit this investment. The decreased valuations of individual companies in our privately held investments, in the aggregate, generally related to (i) an unfavorable business outlook and (ii) a decrease in the value of market comparables, both influenced from the impact of COVID-19 on the economic outlook and overall market environment.

Certain investments included in our AUM are denominated in currencies other than the U.S. dollar. Those investments expose our AUM to the risk that the value of the investments will be affected by changes in exchange rates between the currency in which the investments are denominated and the currency in which the investments are made. We generally seek to reduce these risks by employing hedging transactions in connection with certain investments, including using foreign currency options and foreign exchange forward contracts to reduce exposure to changes in exchange rates when a meaningful amount of capital has been invested in currencies other than the currencies in which the investments are denominated. We do not, however, hedge our currency exposure in all currencies or for all investments. See "Quantitative and Qualitative Disclosures about Market Risk—Exchange Rate Risk" and "Risk Factors—Risks Related to the Assets We Manage—We make investments in companies that are based outside of the United States, which may expose us to additional risks not typically associated with investing in companies that are based in the United States" in our Annual Report.

Real Assets

The following table reflects the changes in our Real Assets business line AUM from March 31, 2022 to June 30, 2022:

			($ in millions)
March 31, 2022			$	93,807
New Capital Raised			10,542
Acquisitions(1)			12,730
Distributions and Other			(1,682)
Change in Value			(1,608)
June 30, 2022			$	113,789

(1) Reflects the AUM of KJRM at closing.

AUM for the Real Assets business line was $113.8 billion at June 30, 2022, an increase of $20.0 billion, compared to $93.8 billion at March 31, 2022.

The increase was primarily attributable to (i) Japanese REIT assets we now manage from our acquisition of KJRM and (ii) new capital raised from Global Atlantic under our investment management agreements with Global Atlantic's insurance companies and Asia Pacific Infrastructure Investors II. Partially offsetting these increases were payments to Global Atlantic policyholders and distributions to fund investors and to a lesser extent, a decline in investment value on the assets managed under our investment management agreements with Global Atlantic's insurance companies.

For the three months ended June 30, 2022, the value of our energy, real estate and infrastructure investment portfolios increased 4%, 2% and 0%, respectively. See "Business Environment" for more information about certain factors that impact our business, financial performance, operating results and valuations.

For the three months ended June 30, 2021, the value of our energy, real estate and infrastructure investment portfolios increased 10%, 9%, and 2%, respectively.

Credit and Liquid Strategies

The following table reflects the changes in our Credit and Liquid Strategies business line AUM from March 31, 2022 to June 30, 2022:

			($ in millions)
March 31, 2022			$	210,819
New Capital Raised			6,476
Distributions and Other			(3,335)
Redemptions			(735)
Change in Value			(7,863)
June 30, 2022			$	205,362

AUM in our Credit and Liquid Strategies business line totaled $205.4 billion at June 30, 2022, a decrease of $5.4 billion compared to $210.8 billion at March 31, 2022.

The decrease was primarily attributable to (i) a decline in investment value on the assets managed across our credit portfolio, including at Global Atlantic, (ii) distributions to fund investors at certain leveraged and alternative credit funds, (iii) payments to Global Atlantic policyholders and (iv) redemptions at our hedge fund partnerships. Partially offsetting these decreases was new capital raised from (i) Global Atlantic, (ii) new CLO issuances, and (iii) various leveraged and alternative credit funds.

Fee Paying Assets Under Management

Private Equity

The following table reflects the changes in our Private Equity business line FPAUM from March 31, 2022 to June 30, 2022:

			($ in millions)
March 31, 2022			$	94,812
New Capital Raised			5,311
Distributions and Other			(922)
Net Changes in Fee Base of Certain Funds			(255)
Change in Value			(630)
June 30, 2022			$	98,316

FPAUM in our Private Equity business line was $98.3 billion at June 30, 2022, an increase of $3.5 billion, compared to $94.8 billion at March 31, 2022.

The increase was primarily attributable to new capital raised from our Next Generation Technology Growth Fund III and new investment vehicles involving Internet Brands, Inc. Partially offsetting this increase were decreases from (i) distributions to fund investors, primarily as a result of realized proceeds, most notably from North America Fund XI and Asian Fund III, and (ii) net change in fee base of Next Generation Technology Growth Fund II as a result of entering its post investment period, during which we earn fees on invested capital rather than committed capital.

Uncalled capital commitments from private equity and multi-strategy investment funds from which KKR is currently not earning management fees amounted to approximately $22.5 billion at June 30, 2022, which includes capital commitments reserved for follow-on investments for funds that have completed their investment periods. This capital will generally begin to earn management fees upon deployment of the capital or upon the commencement of the fund's investment period. The average annual management fee rate associated with this capital is approximately 1.0%. We will not begin earning fees on this capital until it is deployed or the related investment period commences, neither of which is guaranteed to occur and which may not occur for an extended period of time. If and when such management fees are earned, a portion of existing FPAUM may cease paying fees or pay lower fees, thus offsetting a portion of any new management fees earned.

Real Assets

The following table reflects the changes in our Real Assets business line FPAUM from March 31, 2022 to June 30, 2022:

			($ in millions)
March 31, 2022			$	77,260
New Capital Raised			5,981
Acquisitions(1)			12,730
Distributions and Other			(1,007)
Change in Value			(1,706)
June 30, 2022			$	93,258

(1) Reflects the AUM of KJRM at closing.

FPAUM in our Real Assets business line was $93.3 billion at June 30, 2022, an increase of $16.0 billion, compared to $77.3 billion at March 31, 2022.

The increase was primarily attributable to (i) the Japanese REITs we now manage from our acquisition of KJRM and (ii) new capital raised by Global Atlantic and in KKR Real Estate Select Trust. Partially offsetting these increases were a decline in investment value on the assets managed for Global Atlantic and to a lesser extent, payments to Global Atlantic policyholders and distributions to real estate fund investors.

Uncalled capital commitments from real assets investment funds from which KKR is currently not earning management fees amounted to approximately $12.9 billion at June 30, 2022, which includes capital commitments reserved for follow-on investments for funds that have completed their investment periods. This capital will generally begin to earn management fees upon deployment of the capital or upon the commencement of the fund's investment period. The average annual management fee rate associated with this capital is approximately 1.2%. We will not begin earning fees on this capital until it is deployed or the related investment period commences, neither of which is guaranteed to occur and which may not occur for an extended period of time. If and when such management fees are earned, a portion of existing FPAUM may cease paying fees or pay lower fees, thus offsetting a portion of any new management fees earned.

Credit and Liquid Strategies

The following table reflects the changes in our Credit and Liquid Strategies business line FPAUM from March 31, 2022 to June 30, 2022:

			($ in millions)
March 31, 2022			$	199,104
New Capital Raised			5,335
Distributions and Other			(3,434)
Redemptions			(735)
Change in Value			(7,374)
June 30, 2022			$	192,896

FPAUM in our Credit and Liquid Strategies business line was $192.9 billion at June 30, 2022, a decrease of $6.2 billion, compared to $199.1 billion at March 31, 2022.

The decrease was primarily attributable to (i) a decline in investment value in assets managed across our credit portfolio, including at Global Atlantic, (ii) distributions to fund investors at certain alternative credit funds, (iii) payments to Global Atlantic policyholders and (iv) redemptions at our hedge fund partnerships. Partially offsetting these decreases was new capital raised by or from (i) Global Atlantic, (ii) new CLO issuances, and (iii) various leveraged and alternative credit funds.

Uncalled capital commitments from investment funds in our Credit and Liquid Strategies business line from which KKR is currently not earning management fees amounted to approximately $8.9 billion at June 30, 2022. This capital will generally begin to earn management fees upon deployment of the capital or upon the commencement of the fund's investment period. The average annual management fee rate associated with this capital is approximately 0.8%. We will not begin earning fees on this capital until it is deployed or the related investment period commences, neither of which is guaranteed to occur. If and when such management fees are earned, which will occur over an extended period of time, a portion of existing FPAUM may cease paying fees or pay lower fees, thus offsetting a portion of any new management fees earned.

Uncalled Commitments

Private Equity

As of June 30, 2022, our Private Equity business line had $71.0 billion of remaining uncalled capital commitments that could be called for investments in new transactions as compared to $70.4 billion as of March 31, 2022. The increase was primarily attributable to new commitments from fund investors, which was partially offset by capital called from fund investors to make investments during the period.

Real Assets

As of June 30, 2022, our Real Assets business line had $31.9 billion of remaining uncalled capital commitments that could be called for investments in new transactions as compared to $33.1 billion as of March 31, 2022. The decrease was primarily attributable to capital called from fund investors to make investments during the period, partially offset by new commitments from fund investors.

Credit and Liquid Strategies

As of June 30, 2022, our Credit and Liquid Strategies business line had $12.5 billion of remaining uncalled capital commitments that could be called for investments in new transactions as compared to $11.4 billion as of March 31, 2022. The increase was primarily attributable to new commitments from fund investors, which was partially offset by capital called from fund investors to make investments during the period.

Capital Invested

Private Equity

For the three months ended June 30, 2022, our Private Equity business line had $5.7 billion of capital invested as compared to $3.6 billion for the three months ended June 30, 2021. The increase was driven primarily by a $2.5 billion increase in capital invested in our traditional private equity strategy. During the three months ended June 30, 2022, 62% of capital deployed in private equity (including core and growth equity (including impact) investments) was in transactions in North America, 26% was in the Europe, and 12% was in the Asia-Pacific region. The number of large private equity investments made in any quarter is volatile and consequently, a significant amount of capital invested in one quarter or a few quarters may not be indicative of a similar level of capital deployment in future quarters.

Real Assets

For the three months ended June 30, 2022, our Real Assets business line had $8.1 billion of capital invested as compared to $4.6 billion for the three months ended June 30, 2021. The increase was driven primarily by a $3.3 billion increase in capital invested in our real estate strategy. During the three months ended June 30, 2022, 85% of capital deployed in real assets was in transactions in North America, 14% was in Europe, and 1% was in the Asia-Pacific region.

Credit and Liquid Strategies

For the three months ended June 30, 2022, our Credit and Liquid Strategies business line had $4.9 billion of capital invested as compared to $10.3 billion for the three months ended June 30, 2021. The decrease was primarily due to a lower level of (i) capital deployed across our private credit strategies and (ii) a lower level of capital deployed by Global Atlantic's insurance companies. During the three months ended June 30, 2022, 93% of capital deployed was in transactions in North America, 5% was in Europe, and 2% was in the Asia-Pacific region.

Analysis of Insurance Segment Operating Results

The following tables set forth information regarding KKR's insurance segment operating results and certain key operating metrics as of and for the three months ended June 30, 2022 and 2021:

			Three Months Ended
			June 30, 2022						June 30, 2021						Change
			($ in thousands)
Net Investment Income			$	964,396					$	759,503					$	204,893
Net Cost of Insurance			(528,572)						(389,932)						(138,640)
General, Administrative and Other			(165,551)						(123,347)						(42,204)
Pre-tax Insurance Operating Earnings			270,273						246,224						24,049
Income Taxes			(47,353)						(37,476)						(9,877)
Net Income Attributable to Noncontrolling Interests			(85,867)						(81,228)						(4,639)
Insurance Segment Operating Earnings			$	137,053					$	127,520					$	9,533

Insurance segment operating earnings

Insurance segment operating earnings increased for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 primarily due to higher net investment income resulting from an increase in average assets under management due to growth of the business. The increase was offset in part by (i) higher net cost of insurance, primarily due to the growth in both our individual market and institutional market channels, (ii) corresponding increase in general and administrative expenses and (iii) an increase in income tax expense.

Net investment income

Net investment income increased for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 primarily due to (i) increased average assets under management due to growth in assets from our institutional markets channel as a result of new reinsurance transactions and new individual market sales, and (ii) higher yields on floating-rate investments due to higher market interest rates.

Net cost of insurance

Net cost of insurance increased for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 primarily due to (i) growth in reserves in the institutional market as a result of new reinsurance transactions and in the individual market as a result of new business volumes, and (ii) higher funding costs on new business originated.

General, administrative and other expenses

General and administrative expenses increased for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 primarily due to (i) increased employee compensation and benefits related expenses, (ii) increased professional service fees, and (iii) increased third-party administrator ("TPA") policy servicing fees, all due to growth of the business.

Income taxes

Insurance segment income tax expense reflects the annual estimated effective tax rate for the insurance segment on an operating basis, including the benefit of investment tax credits for the three months ended June 30, 2021.

Net income (loss) attributable to non-controlling interests

Net income (loss) attributable to non-controlling interests increased for the three months ended June 30, 2022 as compared to the three months ended June 30, 2021 proportional to the increase in insurance segment operating earnings for the comparable period. Net income (loss) attributable to non-controlling interests represent the proportionate interest in the insurance segment operating earnings attributable to other investors in Global Atlantic.

Analysis of Non-GAAP Performance Measures

The following is a discussion of our Non-GAAP performance measures for the three months ended June 30, 2022 and 2021:

						Three Months Ended
						June 30, 2022						June 30, 2021						Change
						($ in thousands)
Asset Management Segment Operating Earnings						$	953,020					$	988,968					$	(35,948)
Insurance Segment Operating Earnings						137,053						127,520						9,533
Distributable Operating Earnings						1,090,073						1,116,488						(26,415)
Interest Expense						(76,619)						(64,109)						(12,510)
Preferred Dividends						—						(8,341)						8,341
Net Income Attributable to Noncontrolling Interests						(4,535)						(5,414)						879
Income Taxes Paid						(169,118)						(113,049)						(56,069)
After-tax Distributable Earnings						$	839,801					$	925,575					$	(85,774)

Distributable Operating Earnings

The decrease in distributable operating earnings for the three months ended June 30, 2022 compared to the prior period is primarily due to a lower level of Asset Management segment operating earnings partially offset by a higher level of Insurance segment operating earnings. For a discussion of the Asset Management and Insurance segment operating earnings, see "—Analysis of Asset Management Segment Operating Results and Analysis of Insurance Segment Operating Results."

Interest Expense

The increase in interest expense for the three months ended June 30, 2022 compared to the prior period is due primarily to debt issuances by KKR's financing subsidiaries subsequent to June 30, 2021.

Preferred Dividends

The decrease in preferred dividends for the three months ended June 30, 2022 compared to the prior period was attributable to the redemption of all of our Series A and B preferred stock outstanding after June 30, 2021.

Income Taxes Paid

The increase in income taxes paid for the three months ended June 30, 2022 compared to the prior period was primarily due to an increase in the effective tax rate.

After-tax Distributable Earnings

The decrease in after-tax distributable earnings for the three months ended June 30, 2022 compared to the prior period was due primarily to a lower level of distributable operating earnings and increases in income taxes paid and interest expense, as described above.

The amount of tax benefit from equity-based compensation included in income taxes paid for the three months ended June 30, 2022 and 2021 was $15.9 million and $55.2 million, respectively, and its inclusion in after-tax distributable earnings had the effect of increasing this measure by 2% and 6%, respectively.

Analysis of Asset Management Segment Operating Results

The following tables set forth information regarding KKR's Asset Management segment operating results and certain key capital metrics as of and for the six months ended June 30, 2022 and 2021.

						Six Months Ended
						June 30, 2022						June 30, 2021						Change
						($ in thousands)
Management Fees						$	1,279,855					$	919,862					$	359,993
Transaction and Monitoring Fees, Net						413,339						395,438						17,901
Fee Related Performance Revenues						22,050						24,863						(2,813)
Fee Related Compensation						(385,968)						(301,536)						(84,432)
Other Operating Expenses						(263,119)						(204,711)						(58,408)
Fee Related Earnings						1,066,157						833,916						232,241
Realized Performance Income						1,340,065						789,619						550,446
Realized Performance Income Compensation						(858,063)						(523,010)						(335,053)
Realized Investment Income						626,242						830,136						(203,894)
Realized Investment Income Compensation						(93,936)						(124,521)						30,585
Asset Management Segment Operating Earnings						$	2,080,465					$	1,806,140					$	274,325

Management Fees

The following table presents management fees by business line:

						Six Months Ended
						June 30, 2022						June 30, 2021						Change
						($ in thousands)
Management Fees
Private Equity						$	581,283					$	433,018					$	148,265
Real Assets						315,520						172,246						143,274
Credit and Liquid Strategies						383,052						314,598						68,454
Total Management Fees						$	1,279,855					$	919,862					$	359,993

The increase in Private Equity business line management fees was primarily attributable to management fees earned from North America Fund XIII, European Fund VI, and Health Care Strategic Growth Fund II, which entered their investment periods in the second quarter of 2021, first quarter of 2022, and second quarter of 2021, respectively. The increase was partially offset by a decrease in management fees earned from Americas Fund XII, European Fund V, and Health Care Strategic Growth Fund as a result of entering their post-investment periods in the second quarter of 2021, first quarter of 2022, and second quarter of 2021, respectively, with all three investment funds now earning fees based on capital invested rather than capital committed and at a lower fee rate.

The increase in Real Assets business line management fees was primarily due to (i) management fees earned from Global Infrastructure Investors IV, which entered its investment period during the second quarter of 2021, (ii) an increase in management fees earned from new capital raised by Global Atlantic and (iii) management fees earned from Real Estate Partners Americas III as a result of additional capital raised subsequent to June 30, 2021. These increases were partially offset by a decrease in management fees earned from Global Infrastructure Investors III as a result of entering its post-investment period in the second quarter of 2021, which is now earning fees based on capital invested rather than capital committed.

The increase in Credit and Liquid Strategies business line management fees was primarily attributable to (i) an increase in management fees earned from new capital raised by Global Atlantic, (ii) a higher level of management fees from FSK, our business development company and (iii) a higher level of FPAUM at our hedge fund partnership, Marshall Wace.

Transaction and Monitoring Fees, Net

The following table presents transaction and monitoring fees, net by business line:

						Six Months Ended
						June 30, 2022						June 30, 2021						Change
						($ in thousands)
Transaction and Monitoring Fees, Net
Private Equity						$	49,865					$	53,075					$	(3,210)
Real Assets						9,199						7,053						2,146
Credit and Liquid Strategies						14,418						4,172						10,246
Capital Markets						339,857						331,138						8,719
Total Transaction and Monitoring Fees, Net						$	413,339					$	395,438					$	17,901

Our Capital Markets business line earns transaction fees, which are not shared with fund investors. The increase in transaction fees was primarily due to an increase in the number of capital markets transactions for the six months ended June 30, 2022, compared to the six months ended June 30, 2021. Overall, we completed 147 capital markets transactions for the six months ended June 30, 2022, of which 16 represented equity offerings and 131 represented debt offerings, as compared to 138 transactions for the six months ended June 30, 2021, of which 26 represented equity offerings and 112 represented debt offerings. We earned fees in connection with underwriting, syndication and other capital markets services. While each of the capital markets transactions that we undertake in this business line is separately negotiated, our fee rates are generally higher with respect to underwriting or syndicating equity offerings than with respect to debt offerings, and the amount of fees that we earn for similar transactions generally correlates with overall transaction sizes.

Our capital markets fees are generated in connection with activity involving our private equity, real assets and credit funds as well as from third-party companies. For the six months ended June 30, 2022, approximately 21% of our transaction fees in our Capital Markets business line were earned from unaffiliated third parties as compared to approximately 27% for the six months ended June 30, 2021. Our transaction fees are comprised of fees earned from North America, Europe, and the Asia-Pacific region. For the six months ended June 30, 2022, approximately 40% of our transaction fees were generated outside of North America as compared to approximately 44% for the six months ended June 30, 2021. Our Capital Markets business line is dependent on the overall capital markets environment, which is influenced by equity prices, credit spreads, and volatility. Our Capital Markets business line does not generate monitoring fees.

Our Private Equity, Real Assets and Credit and Liquid Strategies business lines separately earn transaction and monitoring fees from portfolio companies, and under the terms of the management agreements with certain of our investment funds, we are generally required to share all or a portion of such fees with our fund investors. Additionally, transaction fees are generally not earned with respect to energy and real estate investments.

This increase in Credit and Liquid Strategies transaction fees was primarily attributable to an increase in the number of transaction fees earned during the period. During the six months ended June 30, 2022, there were 38 transaction fee generating investments that paid an average fee of $1.2 million, compared to 27 transaction fee generating investments that paid an average fee of $1.5 million during the six months ended June 30, 2021. Transaction fees vary by investment based upon a number of factors, the most significant of which are transaction size, the particular agreements as to the amounts of the fees, the complexity of the transaction, and KKR's role in the transaction.

For the six months ended June 30, 2022, approximately 40% of Private Equity transaction fees were paid by companies in Europe, 35% were paid from companies in the Asia-Pacific region, and 25% were paid from companies in North America. Transaction fees vary by investment based upon a number of factors, the most significant of which are transaction size, the particular agreements as to the amount of the fees, the complexity of the transaction, and KKR's role in the transaction.

Fee Related Performance Revenues

The following table presents fee related performance revenues by business line:

						Six Months Ended
						June 30, 2022						June 30, 2021						Change
						($ in thousands)
Fee Related Performance Revenues
Private Equity						$	—					$	—					$	—
Real Assets						3,425						3,253						172
Credit and Liquid Strategies						18,625						21,610						(2,985)
Total Fee Related Performance Revenues						$	22,050					$	24,863					$	(2,813)

Fee related performance revenues represent performance fees that are (i) to be received from our investment funds, vehicles and accounts on a recurring basis, and (ii) not dependent on a realization event involving investments held by the investment fund, vehicle or account. These performance fees are primarily earned from FSK (our business development company), KREST (our registered closed-end real estate equity fund) and KREF (our real estate credit investment trust). Fee related performance revenues were lower for the six months ended June 30, 2022 compared to the prior period primarily due to a lower level of investment income at FSK.

Fee Related Compensation

The increase in fee related compensation for the six months ended June 30, 2022 compared to the prior period was primarily due to a higher level of compensation recorded in connection with the higher level of revenues included within fee related earnings.

Other Operating Expenses

The increase in other operating expenses for the six months ended June 30, 2022 compared to the prior period was primarily due to (i) a higher level of professional fees, information technology and other administrative costs and (2) an increase in travel related expenses as a result of COVID-19 pandemic travel restrictions being reduced.

Fee Related Earnings

The increase in fee related earnings for the six months ended June 30, 2022 compared to the prior period is primarily due to a higher level of management fees from our Private Equity, Real Assets, and Credit and Liquid Strategies business lines and transaction fees from our Capital Markets business line, partially offset by a higher level of fee related compensation and other operating expenses, as described above.

Realized Performance Income

The following table presents realized performance income by business line:

						Six Months Ended
						June 30, 2022						June 30, 2021						Change
						($ in thousands)
Realized Performance Income
Private Equity						$	1,237,969					$	710,639					$	527,330
Real Assets						85,310						46,013						39,297
Credit and Liquid Strategies						16,786						32,967						(16,181)
Total Realized Performance Income						$	1,340,065					$	789,619					$	550,446

						Six Months Ended
						June 30, 2022						June 30, 2021						Change
						($ in thousands)
Private Equity
North America Fund XI						$	563,112					$	293,459					$	269,653
Asian Fund III						51,397						110,515						(59,118)
2006 Fund						80,575						134,385						(53,810)
Americas Fund XII						122,277						—						122,277
European Fund IV						86,233						43,976						42,257
Co-Investment Vehicles and Other						48,100						45,738						2,362
Core Investment Vehicles						262,219						80,937						181,282
European Fund III						—						353						(353)
Total Realized Carried Interest (1)						1,213,913						709,363						504,550
Incentive Fees						24,056						1,276						22,780
Total Realized Performance Income						$	1,237,969					$	710,639					$	527,330

						Six Months Ended
						June 30, 2022						June 30, 2021						Change
						($ in thousands)
Real Assets
Real Estate Partners Americas II						$	85,310					$	—					$	85,310
Global Infrastructure Investors II						—						36,215						(36,215)
Real Estate Partners Europe						—						3,478						(3,478)
Co-Investment Vehicles and Other						—						3,283						(3,283)
Global Infrastructure Investors						—						3,037						(3,037)
Total Realized Carried Interest (1)						85,310						46,013						39,297
Incentive Fees						—						—						—
Total Realized Performance Income						$	85,310					$	46,013					$	39,297

						Six Months Ended
						June 30, 2022						June 30, 2021						Change
						($ in thousands)
Credit and Liquid Strategies
Other Alternative Credit Vehicles						$	4,153					$	15,336					$	(11,183)
Total Realized Carried Interest (1)						4,153						15,336						(11,183)
Incentive Fees						12,633						17,631						(4,998)
Total Realized Performance Income						$	16,786					$	32,967					$	(16,181)

(1)The above tables exclude any funds for which there was no realized carried interest during both of the periods presented.

Realized performance income includes (i) realized carried interest from our carry earning funds and (ii) incentive fees not included in Fee Related Performance Revenues.

Realized carried interest in our Private Equity business line for the six months ended June 30, 2022 consisted primarily of (i) a realized gain from the sale of our investment in Internet Brands, Inc. held by our North America Fund XI, (ii) a realized gain from the sale of our investment in Hensoldt AG and (iii) realized performance income from our core investment vehicles.

Realized carried interest in our Private Equity business line for the six months ended June 30, 2021 consisted primarily of (i) realized gains from the sale of our investments in Endeavor Group Holdings, Inc. and Calabrio, Inc., (ii) a dividend received from our investment in Kokusai Electric Corporation and (iii) realized performance income from our core investment vehicles.

Realized carried interest in our Real Assets business line for the six months ended June 30, 2022 consisted primarily of realized proceeds from dividends received from and sales of various investments in our real estate strategy.

Realized carried interest in our Real Assets business line for the six months ended June 30, 2021 consisted primarily of a realized gain from the sale of our infrastructure investment, Calisen PLC.

Realized carried interest in our Credit and Liquid Strategies business line decreased for the six months ended June 30, 2022 compared to the prior period as a result of a lower level of realization activity at certain alternative credit investment funds, from which we are eligible to receive carried interest.

Incentive fees consist of performance fees earned from (i) our hedge fund partnerships, (ii) investment management agreements with KKR sponsored investment vehicles and (iii) investment management agreements to provide KKR’s investment strategies to funds managed by a third party asset management firm.

Incentive fees in our Private Equity business line increased for the six months ended June 30, 2022 compared to the prior period as a result of incentive fees being earned from certain levered multi-asset investment vehicles in 2022. Incentive fees in our Credit and Liquid Strategies business line decreased for the six months ended June 30, 2022 compared to the prior period as a result of a lower level of performance fees earned from our hedge fund partnership, Marshall Wace.

Realized Performance Income Compensation

The increase in realized performance income compensation for the six months ended June 30, 2022 compared to the prior period is primarily due to a higher level of compensation recorded in connection with the higher level of realized performance income.

Realized Investment Income

The following table presents realized investment income from our Principal Activities business line:

						Six Months Ended
						June 30, 2022						June 30, 2021						Change
						($ in thousands)
Realized Investment Income
Net Realized Gains (Losses)						$	272,544					$	636,473					$	(363,929)
Interest Income and Dividends						353,698						193,663						160,035
Total Realized Investment Income						$	626,242					$	830,136					$	(203,894)

The decrease in realized investment income is due to a lower level of net realized gains partially offset by a higher level of interest income and dividends. The amount of realized investment income depends on the transaction activity of our funds and our subsidiaries, which can vary from period to period.

For the six months ended June 30, 2022, net realized gains were comprised of realized gains primarily from the sale of our Private Equity business line investments in Fiserv, Inc., Internet Brands, Inc. and Hensoldt AG. Partially offsetting these realized gains were realized losses, the most significant of which were realized losses of an alternative credit investment and real estate equity investment and realized losses from the sale of revolving credit facilities by our credit funds.

For the six months ended June 30, 2021, net realized gains were comprised of realized gains primarily from the sale of our Private Equity business line investments in FanDuel Inc., Fiserv, Inc., and BridgeBio Pharma Inc. and our Principal Activities business line investment in Mr. Cooper Group Inc. Partially offsetting these realized gains were realized losses related to certain hedging instruments.

For the six months ended June 30, 2022, interest income and dividends were comprised of (i) $252.9 million of dividend income primarily from levered multi-asset investment vehicles and our Private Equity business line investments in Exact Holdings B.V. and Internet Brands, Inc., and (ii) $100.8 million of interest income primarily from our investments in CLOs.

For the six months ended June 30, 2021,interest income and dividends were comprised primarily of (i) $110.9 million of dividend income primarily from distributions received from our real estate investments, including our investment in KREF, as well as distributions received from our Private Equity business line investments in Kokusai Electric Corporation, Internet Brands, Inc. and US Foods Holding Corp. (NYSE: USFD) and (ii) $82.7 million of interest income primarily from our investments in CLOs and to a lesser extent other credit investments. See "—Analysis of Non-GAAP Performance Measures—Non-GAAP Balance Sheet Measures."

For the six months ended June 30, 2022, total fees attributable to KKR Capstone were $35.0 million and total expenses attributable to KKR Capstone were $39.4 million. For KKR Capstone-related adjustments in reconciling Asset Management segment revenues to GAAP revenues see "—Analysis of Non-GAAP Performance Measures—Reconciliations to GAAP Measures".

Realized Investment Income Compensation

The decrease in realized investment income compensation for the six months ended June 30, 2022 compared to the prior period is primarily due to a lower level of compensation recorded in connection with the lower level of realized investment income.

Other Operating and Capital Measures

The following table presents certain key operating and capital metrics as of June 30, 2022 and December 31, 2021:

						As of
						June 30, 2022						December 31, 2021						Change
						($ in millions)
Assets Under Management						$	490,692					$	470,555					$	20,137
Fee Paying Assets Under Management						$	384,470					$	357,389					$	27,081
Uncalled Commitments						$	115,300					$	111,822					$	3,478

The following table presents one of our key capital metrics for the six months ended June 30, 2022 and 2021:

						Six Months Ended
						June 30, 2022						June 30, 2021						Change
						($ in millions)
Capital Invested						$	40,027					$	25,418					$	14,609

Assets Under Management

Private Equity

The following table reflects the changes in our Private Equity business line AUM from December 31, 2021 to June 30, 2022:

			($ in millions)
December 31, 2021			$	173,745
New Capital Raised			14,888
Distributions and Other			(8,032)
Change in Value			(9,060)
June 30, 2022			$	171,541

AUM for the Private Equity business line was $171.5 billion at June 30, 2022, a decrease of $2.2 billion, compared to $173.7 billion at December 31, 2021.

The decrease was primarily attributable to a decrease in investment value from Americas Fund XII, Asian Fund III, and Asian Fund II, and to a lesser extent, distributions to fund investors, primarily as a result of realized proceeds, most notably from North America Fund XI, 2006 Fund, and Americas Fund XII. Partially offsetting these decreases was new capital raised from European Fund VI, a new strategic investor partnership, and new investment vehicles for Internet Brands, Inc.

For the six months ended June 30, 2022, the value of our traditional private equity investment portfolio decreased by 11%. This was comprised of a 42% decrease in share prices of various publicly held investments and no change in value of our privately held investments. For the six months ended June 30, 2022, the value of our growth equity investment portfolio decreased 11% and our core equity investment portfolio increased 1%. See "Business Environment" for more information about the factors that may impact our business, financial performance, operating results and valuations.

The most significant decreases in share prices of our publicly held investments were decreases in AppLovin Corporation, PHC Holdings Corporation, and Max Healthcare Institute Limited. These decreases were partially offset by increases in share prices of other publicly held investments, the most significant of which was Hensoldt AG. The prices of publicly held companies may experience volatile changes following the reporting period.

The most significant increases in value of our privately held investments related to CHI Overhead Doors, Inc., Internet Brands, Inc., and Wella Co. (consumer products sector). These increases in value on our privately held investments were partially offset by decreases in value relating primarily to OneStream Software, LLC, Kokusai Electric Corporation, and Unzer GmbH. The increased valuations of individual companies in our privately held investments, in the aggregate, generally related to (i) individual company performance and (ii) with respect to CHI Overhead Doors, Inc., an increase in valuation reflecting an agreement to exit the investment. The decreased valuations of individual companies in our privately held investments, in the aggregate, generally related to (i) an unfavorable business outlook and (ii) a decrease in the value of market comparables, both influenced by the economic outlook and overall market environment.

For the six months ended June 30, 2021, the value of our traditional private equity investment portfolio increased by 28%. This was comprised of a 57% increase in share prices of various publicly held investments and an 18% increase in value of our privately held investments. For the six months ended June 30, 2021, the value of our growth equity and core equity investment portfolios increased 48% and 23%, respectively.

The most significant increases in share prices of various publicly held investments were increases in AppLovin Corporation, Max Healthcare Institute Limited, Academy Sports & Outdoor Inc., and J.B. Chemicals and Pharmaceuticals Limited (NSE: JBCP). These increases were partially offset by decreases in share prices of various publicly held investments, the most significant of which was Fiserv, Inc. The prices of publicly held companies may experience volatile changes following the reporting period.

The most significant increases in value of our privately held private equity investments related to increases in OneStream Software, LLC, PetVet Care Centers, LLC, Internet Brands, Inc., BrightSpring Health Services, (health care sector) and The Bountiful Company. These increases in value on our privately held investments were partially offset by decreases in value relating primarily to Channel Control Merchants and Goodpack Limited (packaging sector). The increased valuations of individual companies in our privately held investments, in the aggregate, generally related to (i) individual company performance, (ii) an increase in the value of market comparables, (iii) transactional activity related to new rounds of funding, and with respect to The Bountiful Company an increase in valuation reflecting an agreement to exit the investment. The decreased valuations of individual companies in our privately held investments, in the aggregate, generally related to (i) an unfavorable business outlook and (ii) a decrease in the value of market comparables, both influenced by the impact of COVID-19 on the economic outlook and overall market environment.

Real Assets

The following table reflects the changes in our Real Assets business line AUM from December 31, 2021 to June 30, 2022:

			($ in millions)
December 31, 2021			$	83,303
New Capital Raised			21,226
Acquisitions(1)			12,730
Distributions and Other			(3,178)
Change in Value			(292)
June 30, 2022			$	113,789

(1)Reflects the AUM of KJRM at closing.

AUM for the Real Assets business line was $113.8 billion at June 30, 2022, an increase of $30.5 billion, compared to $83.3 billion at December 31, 2021.

The increase was primarily attributable to (i) Japanese REIT assets we now manage from our acquisition of KJRM and (ii) new capital raised by Global Atlantic and Asia Pacific Infrastructure Investors II. Partially offsetting these increases were payments to Global Atlantic policyholders and distributions to fund investors as a result of realized proceeds, most notably from Real Estate Partners Americas II.

For the six months ended June 30, 2022, the value of our energy investment portfolio increased by 20%, the value of our real estate investment portfolio increased by 12%, and the value of our infrastructure investment portfolio increased 3%. See "Business Environment" for more information about the factors that may impact our business, financial performance, operating results and valuations.

For the six months ended June 30, 2021, the value of our energy investment portfolio increased by 18%, the value of our real estate investment portfolio increased by 14%, and the value of our infrastructure investment portfolio increased 6%.

Credit and Liquid Strategies

The following table reflects the changes in our Credit and Liquid Strategies business line AUM from December 31, 2021 to June 30, 2022:

			($ in millions)
December 31, 2021			$	213,507
New Capital Raised			15,411
Distributions and Other			(7,615)
Redemptions			(2,668)
Change in Value			(13,273)
June 30, 2022			$	205,362

AUM in our Credit and Liquid Strategies business line totaled $205.4 billion at June 30, 2022, a decrease of $8.1 billion compared to AUM of $213.5 billion at December 31, 2021.

The decrease was primarily attributable to (i) a decline in investment value on the assets managed across our credit portfolio, including for Global Atlantic, (ii) distributions to fund investors at certain leveraged and alternative credit funds, (iii) payments to Global Atlantic policyholders and (iv) redemptions at our hedge fund partnerships. Partially offsetting these decreases was new capital raised by or from (i) Global Atlantic, (ii) new CLO issuances, (iii) various leveraged and alternative credit funds and (iv) our hedge fund partnerships.

See also "Business Environment" for more information about the factors that may impact our business, financial performance, operating results and valuations.

Fee Paying Assets Under Management

Private Equity

The following table reflects the changes in our Private Equity business line FPAUM from December 31, 2021 to June 30, 2022:

			($ in millions)
December 31, 2021			$	87,890
New Capital Raised			15,137
Distributions and Other			(2,469)
Net Changes in Fee Base of Certain Funds			(1,573)
Change in Value			(669)
June 30, 2022			$	98,316

FPAUM in our Private Equity business line was $98.3 billion at June 30, 2022, an increase of $10.4 billion, compared to $87.9 billion at December 31, 2021.

The increase was primarily attributable to new capital raised from our European Fund VI, new investment vehicles for Internet Brands, Inc. and Next Generation Technology Growth Fund III. Partially offsetting this increase were decreases from (i) distributions to fund investors, primarily as a result of realized proceeds, most notably from North America Fund XI and Asian Fund III, and (ii) net change in fee base of European Fund V and Next Generation Technology Growth Fund II as a result of these funds entering their post investment periods, during which we earn fees on invested capital rather than committed capital.

Real Assets

The following table reflects the changes in our Real Assets business line FPAUM from December 31, 2021 to June 30, 2022:

			($ in millions)
December 31, 2021			$	66,965
New Capital Raised			19,062
Acquisitions (1)			12,730
Distributions and Other			(2,273)
Change in Value			(3,226)
June 30, 2022			$	93,258

(1)Reflects the FPAUM of KJRM at closing.

FPAUM in our Real Assets business line was $93.3 billion at June 30, 2022, an increase of $26.3 billion, compared to $67.0 billion at December 31, 2021.

The increase was primarily attributable to (i) assets we now manage from our acquisition of KJRM and (ii) new capital raised by Global Atlantic, Indigrid (an asset management firm in India), and Diversified Core Infrastructure Fund. Partially offsetting these increases were a decline in investment value on the assets managed for Global Atlantic under our investment management agreements with Global Atlantic's insurance companies and to a lesser extent, payments to Global Atlantic policyholders and distributions to fund investors, most notably from Real Estate Partners Americas II.

Credit and Liquid Strategies

The following table reflects the changes in our Credit and Liquid Strategies business line FPAUM from December 31, 2021 to June 30, 2022:

			($ in millions)
December 31, 2021			$	202,534
New Capital Raised			12,780
Distributions and Other			(7,025)
Redemptions			(2,668)
Change in Value			(12,725)
June 30, 2022			$	192,896

FPAUM in our Credit and Liquid Strategies business line was $192.9 billion at June 30, 2022, a decrease of $9.6 billion compared to $202.5 billion at December 31, 2021.

The decrease was primarily attributable to (i) a decline in investment value in assets managed across our credit portfolio, including for Global Atlantic, (ii) distributions to fund investors at certain leveraged and alternative credit funds, (iii) payments to Global Atlantic policyholders and (iv) redemptions at our hedge fund partnerships. Partially offsetting these decreases was new capital raised from (i) Global Atlantic, (ii) new CLO issuances, (iii) various leveraged and alternative credit funds and (iv) our hedge fund partnerships.

See "Business Environment" for more information about the factors that may impact our business, financial performance, operating results and valuations.

Uncalled Commitments

Private Equity

As of June 30, 2022, our Private Equity business line had $71.0 billion of remaining uncalled capital commitments that could be called for investments in new transactions as compared to $66.3 billion as of December 31, 2021. The increase was primarily attributable to new capital commitments from fund investors, which were partially offset by capital called from fund investors to make investments during the period.

Real Assets

As of June 30, 2022, our Real Assets business line had $31.9 billion of remaining uncalled capital commitments that could be called for investments in new transactions as compared to $35.2 billion as of December 31, 2021. The decrease was primarily attributable to capital called from fund investors to make investments during the period, partially offset by new capital commitments from fund investors.

Credit and Liquid Strategies

As of June 30, 2022, our Credit and Liquid Strategies business line had $12.5 billion of remaining uncalled capital commitments that could be called for investments in new transactions as compared to $10.3 billion as of December 31, 2021. The increase was primarily attributable to new commitments from fund investors, which was partially offset by capital called from fund investors to make investments during the period.

Capital Invested

Private Equity

For the six months ended June 30, 2022, $10.1 billion of capital was invested by our Private Equity business line, as compared to $5.5 billion for the six months ended June 30, 2021. The increase was driven primarily by a $4.7 billion increase in capital invested in our traditional private equity strategy. During the six months ended June 30, 2022, 51% of capital deployed in private equity was in transactions in North America, 28% was in Europe, and 21% was in the Asia-Pacific region. The number of large private equity investments made in any quarterly or year-to-date period is volatile and, consequently, a significant amount of capital invested in one period or a few periods may not be indicative of a similar level of capital deployment in future periods.

Real Assets

For the six months ended June 30, 2022, $17.1 billion of capital was invested by our Real Assets business line, as compared to $6.8 billion for the six months ended June 30, 2021. The increase was driven primarily by a $6.3 billion increase in capital invested in our real estate strategy and a $3.0 billion increase in capital invested in our infrastructure strategy. During the six months ended June 30, 2022, 80% of capital deployed in real assets was in transactions in North America, 10% was in Europe, and 10% was in the Asia-Pacific region.

Credit and Liquid Strategies

For the six months ended June 30, 2022, $12.8 billion of capital was invested by our Credit and Liquid Strategies business line, as compared to $13.2 billion for the six months ended June 30, 2021. The decrease was primarily due to a lower level of capital deployed across our direct lending and SIG strategies, partially offset by a higher level of capital deployed by Global Atlantic's insurance companies. During the six months ended June 30, 2022, 88% of capital deployed was in transactions in North America, 8% was in Europe and 4% was in the Asia-Pacific region.

Analysis of Insurance Segment Operating Results

As discussed above, our Insurance segment consists solely of the operations of Global Atlantic, which was acquired on February 1, 2021. Accordingly, prior periods have been excluded for Insurance segment results. For the six months ended June 30, 2021, the results of our Insurance segment is from the acquisition date, February 1, 2021, through June 30, 2021.

The following tables set forth information regarding KKR's insurance segment operating results and certain key operating metrics as of and for the six months ended June 30, 2022 and 2021:

			Six Months Ended
			June 30, 2022						June 30, 2021						Change
($ in thousands)
Net Investment Income			$	1,826,810					$	1,205,401					$	621,409
Net Cost of Insurance			(1,022,221)						(640,151)						(382,070)
General, Administrative and Other			(311,553)						(198,836)						(112,717)
Pre-tax Insurance Operating Earnings			493,036						366,414						126,622
Income Taxes			(81,459)						(54,102)						(27,357)
Net Income Attributable to Noncontrolling Interests			(158,536)						(121,527)						(37,009)
Insurance Segment Operating Earnings			$	253,041					$	190,785					$	62,256

Insurance segment operating earnings

Insurance segment operating earnings increased for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 primarily due to (i) one less month of activity reported in the prior period as a result of the GA Acquisition having occurred on February 1, 2021 and (ii) higher net investment income resulting from an increase in average assets under management due to growth of the business. The increase was offset in part by (i) higher net cost of insurance, primarily due to the growth in both our individual market and institutional market channels, (ii) corresponding increase in general and administrative expenses, and (iii) an increase in income tax expense.

Net investment income

Net investment income increased for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 primarily due to (i) one less month of activity reported in the prior period as a result of the GA Acquisition having occurred on February 1, 2021, (ii) increased average assets under management due to growth in assets in our institutional markets channel as a result of new reinsurance transactions and new individual market channel sales, and (iii) higher yields on floating-rate investments due to higher market interest rates.

Net cost of insurance

Net cost of insurance increased for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 primarily due to (i) one less month of activity reported in the prior period as a result of the GA Acquisition having occurred on February 1, 2021, (ii) growth in reserves in the institutional market as a result of new reinsurance transactions and in the individual market as a result of new business volumes, and (iii) higher funding costs on new business originated.

General, administrative and other expenses

General and administrative expenses increased for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 primarily due to (i) one less month of activity reported in the prior period as a result of the GA Acquisition having occurred on February 1, 2021, (ii) increased employee compensation and benefits-related expenses, (iii) increased professional service fees, and (iv) increased TPA policy servicing fees, all due to growth of the business.

Income taxes

Insurance segment income tax expense reflects the annual estimated effective tax rate for the insurance segment on an operating basis, including the benefit of investment tax credits for the prior year period.

Net Income attributable to non-controlling interests

Net income attributable to non-controlling interests increased for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 is proportional to the increase in insurance segment operating earnings for the comparable period. Net income attributable to non-controlling interests represent the proportionate interest in the insurance segment operating earnings attributable to other investors in Global Atlantic.

Analysis of Non-GAAP Performance Measures

The following is a discussion of our Non-GAAP performance measures for the six months ended June 30, 2022 and 2021:

						Six Months Ended
						June 30, 2022						June 30, 2021						Change
						($ in thousands)
Asset Management Segment Operating Earnings						$	2,080,465					$	1,806,140					$	274,325
Insurance Segment Operating Earnings						253,041						190,785						62,256
Distributable Operating Earnings						2,333,506						1,996,925						336,581
Interest Expense						(146,079)						(121,654)						(24,425)
Preferred Dividends						—						(16,682)						16,682
Net Income Attributable to Noncontrolling Interests						(12,151)						(8,606)						(3,545)
Income Taxes Paid						(366,960)						(264,169)						(102,791)
After-tax Distributable Earnings						$	1,808,316					$	1,585,814					$	222,502

For the six months ended June 30, 2021, the results of our Insurance Segment above are from February 1, 2021 (closing date of the GA Acquisition) through June 30, 2021.

Distributable Operating Earnings

The increase in distributable operating earnings for the six months ended June 30, 2022 compared to the prior period is primarily due to a higher level of Asset Management segment operating earnings and Insurance segment operating earnings. For a discussion of the Asset Management and Insurance segment operating earnings, see "—Analysis of Asset Management Segment Operating Results and Analysis of Insurance Segment Operating Results."

Interest Expense

The increase in interest expense for the six months ended June 30, 2022 compared to the prior period is due primarily to debt issuances by KKR's financing subsidiaries subsequent to June 30, 2021.

Preferred Dividends

The decrease in preferred dividends for the six months ended June 30, 2022 compared to the prior period was attributable to the redemption of all of our Series A and B preferred stock subsequent to June 30, 2021.

Income Taxes Paid

The increase in income taxes paid for the six months ended June 30, 2022 compared to the prior period was primarily due to a higher level of asset management segment operating earnings.

After-tax Distributable Earnings

The increase in after-tax distributable earnings for the six months ended June 30, 2022 compared to the prior period was primarily due to a higher level of distributable operating earnings, partially offset by an increase in income taxes paid and interest expense, as discussed above.

For the six months ended June 30, 2022 and 2021, the amount of the tax benefit from equity-based compensation included in income taxes paid was $27.7 million and $98.2 million, respectively. The inclusion of the tax benefit from equity-based compensation in After-tax Distributable Earnings had the effect of increasing this measure by 2% and 6% for the six months ended June 30, 2022 and 2021.

Non-GAAP Balance Sheet Measures

Book Value

The following table presents our calculation of book value as of June 30, 2022 and December 31, 2021:

									As of
									June 30, 2022						December 31, 2021
									($ in thousands)
(+)			Cash and Short-term Investments						$	4,392,050					$	4,869,203
(+)			Investments						17,159,029						17,763,542
(+)			Net Unrealized Carried Interest (1)						3,294,629						4,967,401
(+)			Other Assets, Net (2)						6,612,229						4,706,108
(+)			Global Atlantic Book Value						3,487,964						3,372,498
(-)			Debt Obligations - KKR (excluding KFN and Global Atlantic)						6,920,649						5,836,267
(-)			Debt Obligations - KFN						948,517						948,517
(-)			Tax Liabilities, Net						1,898,911						2,697,317
(-)			Other Liabilities						1,338,628						774,711
(-)			Noncontrolling Interests						30,045						33,058
			Book Value						$	23,809,151					$	25,388,882
			Book Value Per Adjusted Share						$	26.78					$	28.77
			Adjusted Shares						889,121,824						882,589,036

(1)The following table provides net unrealized carried interest by business line:

						As of
						June 30, 2022						December 31, 2021
						($ in thousands)
Private Equity Business Line						$	2,907,192					$	4,697,134
Real Assets Business Line						282,121						159,709
Credit and Liquid Strategies Business Line						105,316						110,558
Total						$	3,294,629					$	4,967,401

(2)Other Assets, Net include our (i) ownership interest in FS/KKR Advisor, (ii) minority ownership interests in hedge fund partnerships and (iii) the net assets of KJRM.

Book value per adjusted share decreased 7% from December 31, 2021. The decrease was primarily attributable to (i) a reduction in net unrealized carried interest from our carried interest eligible investment funds, most notably Americas Fund XII and Asian Fund II, (ii) a reduction in the value of our investments (iii) repurchases of our common stock, and (iv) payment of dividends during the period. Partially offsetting these decreases was the positive impact of our after-tax distributable earnings recognized during the period.

With respect to book value relating to the Asset Management business, for the six months ended June 30, 2022, the largest drivers of the reduction was due to the value of the Asset Management segment balance sheet portfolio decreasing by 5% and KKR's traditional private equity portfolio decreasing by 11%. For a further discussion, see "—Unaudited Consolidated Results of Operations (GAAP Basis) - Asset Management—Unrealized Gains and Losses from Investment Activities." For a discussion of the changes in KKR's private equity portfolio, see "—Analysis of Asset Management Segment Operating Results—Assets Under Management." For a discussion of factors that impacted KKR's after-tax distributable earnings, see "—Analysis of Non-GAAP Performance Measures— After-tax Distributable Earnings" and for more information about the factors that may impact our business, financial performance, operating results and valuations, see "—Business Environment."

The following table presents the holdings of our investments in the Asset Management segment by asset class as of June 30, 2022. To the extent investments are realized at values below their cost in future periods, after-tax distributable earnings would be adversely affected by the amount of such loss, if any, during the period in which the realization event occurs.

						As of June 30, 2022
						($ in thousands)
Investments (1)						Cost						Fair Value						Fair Value as a Percentage of Total Investments
Traditional Private Equity						$	1,776,076					$	3,564,023					20.8		%
Core Private Equity						2,699,714						5,352,614						31.2		%
Growth Equity						261,751						726,040						4.2		%
Private Equity Total						4,737,541						9,642,677						56.2		%
Energy						906,936						1,000,723						5.8		%
Real Estate						1,793,949						2,182,440						12.7		%
Infrastructure						857,864						1,018,307						5.9		%
Real Assets Total						3,558,749						4,201,470						24.5		%
Leveraged Credit						1,342,954						1,094,901						6.4		%
Alternative Credit						836,146						880,671						5.1		%
Credit Total						2,179,100						1,975,572						11.5		%
Other						1,623,085						1,339,310						7.8		%
Total Investments						$	12,098,475					$	17,159,029					100.0		%

(1)Investments is a term used solely for purposes of financial presentation of a portion of KKR's balance sheet and includes majority ownership of subsidiaries that operate KKR's asset management and insurance businesses, including the general partner interests of KKR's investment funds. Investments presented are principally the assets measured at fair value that are held by KKR's asset management segment, which, among other things, does not include the underlying investments held by Global Atlantic and Marshall Wace.

						As of June 30, 2022
						($ in thousands)
Top 20 Investments: (1)						Cost						Fair Value
PetVet Care Centers, LLC						$	243,211					$	1,216,053
USI, Inc.						531,425						1,094,073
Heartland Dental, LLC						320,656						833,704
Fiserv, Inc. (NASDAQ: FISV)						235,719						467,096
Exact Group B.V.						213,362						456,176
Arnott's Biscuits Limited						250,841						421,623
Internet Brands, Inc.						340,312						373,695
1-800 Contacts Inc.						300,178						360,213
Crescent Energy Company (NYSE: CRGY)						552,912						316,366
Teaching Strategies, LLC						307,162						307,161
Resolution Life Group Holdings, L.P.						262,191						253,818
ERM Worldwide Group Limited						228,710						251,573
Roompot B.V.						193,578						229,042
Viridor Limited						150,876						208,338
Atlantic Aviation FBO Inc.						170,274						186,672
GenesisCare Pty Ltd.						196,103						160,692
Veresen Midstream						92,674						154,064
KKR Real Estate Finance Trust Inc. (NYSE: KREF)						162,500						141,781
The Bay Clubs Company, LLC						139,001						139,001
PortAventura						155,803						134,126
Total Top 20 Investments						$	5,047,488					$	7,705,267

(1)This list of investments identifies the twenty largest companies or assets based on their fair values as of June 30, 2022. It does not deduct fund or vehicle level debt, if any, incurred in connection with funding the investment. This list excludes (i) investments expected to be syndicated, (ii) investments expected to be transferred in connection with a new fundraising, (iii) investments in funds and other entities that are owned by one or more third parties and established for the purpose of making investments and (iv) the portion of any investment that may be held through collateralized loan obligations or levered multi-asset investment vehicles, if any. For additional information about the asset classes of the investments held on KKR's balance sheet see "—Our Business—Principal Activities" for the "Holdings by Asset Class" pie chart. The fair value figures include the co-investment and the limited partner and/or general partner interests held by KKR in the underlying investment, if applicable.

With respect to KKR's book value relating to its insurance business, KKR includes Global Atlantic's book value, which consists of KKR's pro rata equity interest in Global Atlantic on a GAAP basis, excluding (i) accumulated other comprehensive income and (ii) accumulated change in fair value of reinsurance embedded derivative balances and related assets, net of deferred acquisition costs and income tax. KKR believes this presentation of Global Atlantic's book value is comparable with the corresponding metric presented by other publicly traded companies in Global Atlantic's industry. As of June 30, 2022, KKR's pro rata interest in Global Atlantic's book value was $3.5 billion. For more information about the composition and credit quality of Global Atlantic's investments on a consolidated basis, please see "—Global Atlantic's Investment Portfolio" below.

Global Atlantic's Investment Portfolio

As of June 30, 2022, 96% and 85% of Global Atlantic's AFS fixed maturity securities were considered investment grade under ratings from the Securities Valuation Office of the National Association of Insurance Commissioners ("NAIC") and nationally recognized statistical rating organizations ("NRSROs"), respectively. As of December 31, 2021, 97% and 87% of Global Atlantic's AFS fixed maturity securities were considered investment grade under ratings from NAIC and nationally recognized statistical rating organizations ("NRSROs"), respectively. Securities where a rating by an NRSRO was not available are considered investment grade if they have an NAIC designation of “1” or “2.” The three largest asset categories in Global Atlantic's AFS fixed-maturity security portfolio as of June 30, 2022 were Corporate, RMBS and CMBS securities, comprising 29%, 6% and 5% of Global Atlantic's investment portfolio, respectively. Within these categories, 94%, 98% and 99% of Global Atlantic's Corporate, RMBS and CMBS securities, respectively, were investment grade according to NAIC ratings and 94%, 43% and 54% of its Corporate, RMBS and CMBS securities, respectively, were investment grade according to NRSRO ratings as of June 30, 2022. The three largest asset categories in Global Atlantic's available-for-sale fixed-maturity security portfolio as of December 31, 2021 were Corporate, RMBS and CMBS securities, comprising 34%, 6% and 5% of Global Atlantic's investment portfolio, respectively. Within these categories, 95%, 96% and 99% of Global Atlantic's Corporate, RMBS and

CMBS securities, respectively, were investment grade according to NAIC ratings and 95%, 38% and 62% of its Corporate, RMBS and CMBS securities, respectively, were investment grade according to NRSRO ratings as of December 31, 2021. NRSRO and NAIC ratings have different methodologies. Global Atlantic believes the NAIC ratings methodology, which considers the likelihood of recovery of amortized cost as opposed to the recovery of all contractual payments including the principal at par, as the more appropriate way to view the ratings quality of its AFS fixed maturity portfolio since a large portion of its holdings were purchased at a significant discount to par value. The portion of Global Atlantic's AFS fixed maturity portfolio consisting of floating rate assets was 42% and 36% as of June 30, 2022 and December 31, 2021, respectively.

Within the funds withheld receivable at interest portfolio, 96% of the fixed maturity securities were investment grade by NAIC designation as of both June 30, 2022 and December 31, 2021.

Trading fixed maturity securities back funds withheld payable at interest where the investment performance is ceded to reinsurers under the terms of the respective reinsurance agreements.

Credit quality of AFS fixed maturity securities

The Securities Valuation Office of the NAIC evaluates the AFS fixed maturity security investments of insurers for regulatory reporting and capital assessment purposes and assigns securities to one of six credit quality categories called “NAIC designations.” Using an internally developed rating is permitted by the NAIC if no rating is available. These designations are generally similar to the credit quality designations of NRSROs for marketable fixed maturity securities, except for certain structured securities as described below. NAIC designations of “1,” highest quality, and “2,” high quality, include fixed maturity securities generally considered investment grade by NRSROs. NAIC designations “3” through “6” include fixed maturity securities generally considered below investment grade by NRSROs.

Consistent with the NAIC Process and Procedures Manual, an NRSRO rating was assigned based on the following criteria: (i) the equivalent S&P rating where the security is rated by one NRSRO; (ii) the equivalent S&P rating of the lowest NRSRO when the security is rated by two NRSROs; and (iii) the equivalent S&P rating of the second lowest NRSRO if the security is rated by three or more NRSROs. If the lowest two NRSROs’ ratings are equal, then such rating will be the assigned rating. NRSROs’ ratings available for the periods presented were S&P, Fitch, Moody’s, DBRS, Inc. and Kroll Bond Rating Agency, Inc. If no rating is available from a rating agency, then an internally developed rating is used.

Substantially all of the AFS fixed maturity securities portfolio, 96% and 97% as of June 30, 2022 and December 31, 2021, respectively, were invested in investment grade assets with a NAIC rating of 1 or 2.

The portion of the AFS fixed maturity securities portfolio that was considered below investment grade by NAIC designation was 4% and 3% as of June 30, 2022 and December 31, 2021, respectively. Pursuant to Global Atlantic's investment guidelines, Global Atlantic actively monitors the percentage of its portfolio that is held in investments rated NAIC 3 or lower and must obtain an additional approval from Global Atlantic's management investment committee before making a significant investment in an asset rated NAIC 3 or lower.

As of June 30, 2022 and December 31, 2021, the non-rated AFS fixed-maturity securities include $177.2 million and $118.8 million, respectively, of private placement securities for which Global Atlantic has not sought individual ratings from the NRSROs.

Corporate fixed maturity securities

Global Atlantic maintains a diversified portfolio of corporate fixed maturity securities across industries and issuers. As of June 30, 2022 and December 31, 2021, 57% and 60%, respectively, of the AFS fixed maturity securities portfolio was invested in corporate fixed maturity securities.

As of June 30, 2022 and December 31, 2021, 94% and 95% of the total fair value of corporate fixed maturity securities is rated NAIC investment grade and 94% and 95% is rated NRSROs investment grade, respectively.

Residential mortgage-backed securities

As of both June 30, 2022 and December 31, 2021, 11% of the AFS fixed maturity securities portfolio was invested in RMBS. RMBS are securities constructed from pools of residential mortgages and backed by payments from those pools. Excluding limitations on access to lending and other extraordinary economic conditions, Global Atlantic would expect prepayments of principal on the underlying loans to accelerate with decreases in market interest rates and diminish with increases in market interest rates.

The NAIC designations for RMBS, including prime, sub-prime, alt-A, and adjustable rate mortgages with variable payment options ("Option ARM"), are based upon a comparison of the bond’s amortized cost to the NAIC’s loss expectation for each security. Accordingly, an investment in the same security at a lower cost may result in a higher quality NAIC designation in recognition of the lower likelihood the investment would result in a realized loss. Prime residential mortgage lending includes loans to the most creditworthy borrowers with high quality credit profiles. Alt-A is a classification of mortgage loans where the risk profile of the borrower is between prime and sub-prime. Sub-prime mortgage lending is the origination of residential mortgage loans to borrowers with weak credit profiles.

As of June 30, 2022 and December 31, 2021, 94% and 93%, respectively, of RMBS securities that are below investment grade as rated by the NRSRO, carry an NAIC 1 ("highest quality") designation.

As of June 30, 2022, Alt-A, Option ARM, Re-Performing and Sub-prime represent 32%, 28%, 13% and 12% of the total RMBS portfolio ($7 billion), respectively. As of December 31, 2021, Alt-A, Option ARM, Re-Performing and Sub-prime represent 33%, 30%, 14% and 12% of the total RMBS portfolio ($7.7 billion), respectively.

Unrealized gains and losses for AFS fixed maturity securities

Global Atlantic's investments in AFS fixed maturity securities are reported at fair value with changes in fair value recorded in other comprehensive income as unrealized gains or losses, net of taxes and offsets. Unrealized gains and losses can be created by changes in interest rates or by changes in credit spreads.

As of June 30, 2022 and December 31, 2021, Global Atlantic had gross unrealized losses on below investment grade AFS fixed maturity securities of $575.7 million and $80.3 million based on NRSRO rating and $73.3 million and $13.5 million based on NAIC ratings, respectively.

Mortgage and other loan receivables - Credit quality indicators

Mortgage and other loan receivables consist of commercial and residential mortgage loans, and other loan receivables. As of June 30, 2022 and December 31, 2021, 28% and 23%, respectively, of Global Atlantic's total investments consisted of mortgage and other loan receivables. Global Atlantic invests in U.S. mortgage loans, comprised of first lien and mezzanine real estate loans, residential mortgage loans, consumer loans, and other loan receivables.

Global Atlantic's commercial mortgage loans may also be rated based on NAIC designations, with designations “CM1” and “CM2” considered to be investment grade. As of June 30, 2022 and December 31, 2021, 97% and 96% of the commercial mortgage loan portfolio was rated investment grade based on NAIC designation, respectively. 100% of the commercial mortgage loan portfolio is in current status.

As of June 30, 2022, 96% of the residential mortgage loan portfolio is in current status, and approximately $199.9 million is over 90 days past due (representing 2% of the total residential mortgage portfolio).

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. Approximately 85% of the commercial mortgage loans has a loan-to-value ratio of 70% or less and 0.2% has loan-to-value ratio over 90%.

Changing economic conditions affect Global Atlantic’s valuation of commercial mortgage loans. Changing vacancies and rents are incorporated into the discounted cash flow analysis that Global Atlantic performs for monitored loans and may contribute to the establishment of (or increase or decrease in) a commercial mortgage loan valuation allowance for 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 residential mortgage loans was 63% and 68% as of June 30, 2022 and December 31, 2021, respectively.

Global Atlantic's residential mortgage loan portfolio is comprised mainly of re-performing loans that were purchased at a discount after they were modified and returned to performing status, as well as prime jumbo loans and mortgage loans backed by single family rental properties. Global Atlantic has also extended financing to counterparties in the form of repurchase agreements secured by mortgage loans, including performing and non-performing mortgage loans.

Global Atlantic’s consumer loan portfolio is primarily comprised of home improvement loans, solar panel loans, student loans and auto loans.

Reconciliations to GAAP Measures

The following tables reconcile the most directly comparable financial measures calculated and presented in accordance with GAAP to KKR's non-GAAP financial measures for the three and six months ended June 30, 2022 and 2021:

Revenues

			Three Months Ended												Six Months Ended
			June 30, 2022						June 30, 2021						June 30, 2022						June 30, 2021
			($ in thousands)
Total GAAP Revenues			$	330,070					$	3,136,181					$	1,334,087					$	7,699,187
Impact of Consolidation and Other			172,118						134,911						385,518						258,359
Asset Management Adjustments:
Capital Allocation-Based Income (Loss) (GAAP)			923,474						(1,525,393)						1,869,217						(4,210,040)
Realized Carried Interest			723,609						605,570						1,303,376						770,712
Realized Investment Income			276,888						368,863						626,242						830,136
Capstone Fees			(19,510)						(21,028)						(34,995)						(41,108)
Expense Reimbursements			(25,576)						(60,056)						(66,879)						(87,785)
Insurance Adjustments:
Net Premiums			225,502						452,133						(146,642)						(724,009)
Policy Fees			(325,707)						(312,262)						(644,143)						(513,945)
Other Income			(32,512)						(32,078)						(67,256)						(50,222)
Investment Gains and Losses			21,041						(19,106)						188,143						240,062
Derivative Gains and Losses			474,972						(226,609)						761,693						(6,028)
Total Segment Revenues (1)			$	2,744,369					$	2,501,126					$	5,508,361					$	4,165,319

(1)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.

Net Income (Loss) Attributable to KKR & Co. Inc. Common Stockholders

			Three Months Ended												Six Months Ended
			June 30, 2022						June 30, 2021						June 30, 2022						June 30, 2021
			($ in thousands)
Net Income (Loss) Attributable to KKR & Co. Inc. Common Stockholders (GAAP)			$	(827,934)					$	1,277,672					$	(901,704)					$	2,921,917
Preferred Stock Dividends			17,250						37,603						34,500						63,194
Net Income (Loss) Attributable to Noncontrolling Interests			(1,193,726)						2,947,599						(34,604)						5,193,130
Income Tax Expense (Benefit)			(153,104)						343,667						(156,270)						782,406
Income (Loss) Before Tax (GAAP)			$	(2,157,514)					$	4,606,541					$	(1,058,078)					$	8,960,647
Impact of Consolidation and Other			961,840						(2,143,586)						(278,096)						(3,522,153)
Equity-based Compensation - KKR Holdings(1)			80,513						10,536						100,334						26,970
Preferred Stock Dividends			—						(8,341)						—						(16,682)
Income Taxes Paid			(169,118)						(113,049)						(366,960)						(264,169)
Asset Management Adjustments:
Net Unrealized (Gains) Losses			1,178,759						(975,378)						1,501,028						(2,292,022)
Unrealized Carried Interest			1,561,367						(851,976)						2,851,400						(2,960,994)
Unrealized Carried Interest Compensation (Carry Pool)			(646,239)						373,091						(1,160,226)						1,269,998
Strategic Corporate Transaction-Related Charges (2)			50,306						5,260						70,204						10,135
Equity-based Compensation			50,582						43,947						105,693						93,708
Equity-based Compensation - Performance based			59,831						17,495						117,784						32,051
Insurance Adjustments:**(3)
Net (Gains) Losses from Investments and Derivatives			(114,183)						(30,152)						(65,448)						259,083
Strategic Corporate Transaction-Related Charges			4,700						7,197						9,707						12,016
Equity-based and Other Compensation			21,898						16,564						53,609						23,975
Amortization of Acquired Intangibles			4,412						4,902						8,824						7,353
Income Taxes			(47,353)						(37,476)						(81,459)						(54,102)
After-tax Distributable Earnings			$	839,801					$	925,575					$	1,808,316					$	1,585,814
Interest Expense			76,619						64,109						146,079						121,654
Preferred Stock Dividends			—						8,341						—						16,682
Net Income Attributable to Noncontrolling Interests			4,535						5,414						12,151						8,606
Income Taxes Paid			169,118						113,049						366,960						264,169
Distributable Operating Earnings			$	1,090,073					$	1,116,488					$	2,333,506					$	1,996,925
Insurance Segment Operating Earnings			(137,053)						(127,520)						(253,041)						(190,785)
Realized Performance Income			(730,858)						(618,310)						(1,340,065)						(789,619)
Realized Performance Income Compensation			474,428						413,024						858,063						523,010
Realized Investment Income			(276,888)						(368,863)						(626,242)						(830,136)
Realized Investment Income Compensation			41,533						55,330						93,936						124,521
Fee Related Earnings			$	461,235					$	470,149					$	1,066,157					$	833,916
Insurance Segment Operating Earnings			137,053						127,520						253,041						190,785
Realized Performance Income			730,858						618,310						1,340,065						789,619
Realized Performance Income Compensation			(474,428)						(413,024)						(858,063)						(523,010)
Realized Investment Income			276,888						368,863						626,242						830,136
Realized Investment Income Compensation			(41,533)						(55,330)						(93,936)						(124,521)
Depreciation and Amortization			7,801						6,029						15,366						12,193
Adjusted EBITDA			$	1,097,874					$	1,122,517					$	2,348,872					$	2,009,118

(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 three and six months ended June 30, 2022, strategic corporate transaction-related charges include a $40.7 million realized loss from foreign exchange derivatives that were entered in connection with the acquisition of KJRM and that were settled upon closing.

(3)Amounts include the portion allocable to noncontrolling interests (~39%).

KKR & Co. Inc. Stockholders' Equity - Common Stock

			As of
			June 30, 2022						December 31, 2021
			($ in thousands)
KKR & Co. Inc. Stockholders' Equity - Series I and II Preferred Stock, Common Stock			$	17,956,891					$	16,466,372
Series C Mandatory Convertible Preferred Stock			1,115,792						1,115,792
Impact of Consolidation and Other			344,300						(1,048,569)
KKR Holdings and Other Exchangeable Securities			122,074						8,595,510
Accumulated Other Comprehensive Income (AOCI) and Other (Insurance)			4,270,094						259,777
Book Value			$	23,809,151					$	25,388,882

The following table provides a reconciliation of KKR's GAAP Shares of Common Stock Outstanding to Adjusted Shares:

			As of
			June 30, 2022						December 31, 2021
GAAP Shares of Common Stock Outstanding			859,833,444						595,663,618
Adjustments:
KKR Holdings Units			—						258,726,163
Exchangeable Securities (1)			2,465,810						1,376,655
Common Stock - Series C Mandatory Convertible Preferred Stock (2)			26,822,570						26,822,600
Adjusted Shares (3)			889,121,824						882,589,036
Unvested Equity Awards and Exchangeable Securities (4)			35,294,649						39,000,561

(1)Consists of vested restricted holdings units granted under our 2019 Equity Incentive Plan, which are exchangeable for shares of KKR & Co. Inc. common stock on a one-for-one basis.

(2)Assumes that all shares of Series C Mandatory Convertible Preferred Stock have been converted into shares of KKR & Co. Inc. common stock on June 30, 2022 and December 31, 2021.

(3)Amounts exclude unvested equity awards granted under our Equity Incentive Plans.

(4)Represents equity awards granted under our Equity Incentive Plans. Excludes market condition awards that did not meet their market-price based vesting conditions as of June 30, 2022 and December 31, 2021.

Liquidity

We manage our liquidity and capital requirements by (i) focusing on our cash flows before the consolidation of our funds and CFEs and the effect of changes in short term assets and liabilities, which we anticipate will be settled for cash within one year, and (ii) seeking to maintain access to sufficient liquidity through various sources. The overall liquidity framework and cash management approach of our insurance business are also based on seeking to build an investment portfolio that is cash flow matched, providing cash inflows from insurance assets that meet our insurance companies' expected cash outflows to pay their liabilities. Our primary cash flow activities typically involve: (i) generating cash flow from operations; (ii) generating income from investment activities, by investing in investments that generate yield (namely interest and dividends), as well as through the sale of investments and other assets; (iii) funding capital commitments that we have made to, and advancing capital to, our funds and CLOs; (iv) developing and funding new investment strategies, investment products, and other growth initiatives, including acquisitions of other investments, assets, and businesses; (v) underwriting and funding commitments in our capital markets business; (vi) distributing cash flow to our stockholders and holders of our preferred stock; and (vii) paying borrowings, interest payments, and repayments under credit agreements, our senior and subordinated notes, and other borrowing arrangements. See "—Liquidity—Liquidity Needs—Dividends."

See "Business Environment" for more information on factors that may impact our business, financial performance, operating results and valuations.

Sources of Liquidity

Our primary sources of liquidity consist of amounts received from: (i) our operating activities, including the fees earned from our funds, portfolio companies, and capital markets transactions; (ii) realizations on carried interest from our investment funds; (iii) interest and dividends from investments that generate yield, including our investments in CLOs; (iv) in our insurance business, cash inflows in respect of new premiums, policyholder deposits, reinsurance transactions and funding agreements, including through memberships in Federal Home Loan Banks; (v) realizations on and sales of investments and other assets, including the transfers of investments or other assets for fund formations (including CLOs and other investment vehicles); and (vi) borrowings, including advances under our revolving credit facilities, debt offerings, committed repurchase agreements, uncommitted financing, and other borrowing arrangements. In addition, we may generate cash proceeds from issuances of our equity securities.

Many of our investment funds provide carried interest. With respect to our private equity funds, carried interest is distributed to the general partner of a private equity fund with a clawback provision only after all of the following are met: (i) a realization event has occurred (e.g., sale of a portfolio company, dividend, etc.); (ii) the vehicle has achieved positive overall investment returns since its inception, in excess of performance hurdles where applicable, and is accruing carried interest; and (iii) with respect to investments with a fair value below cost, cost has been returned to fund investors in an amount sufficient to reduce remaining cost to the investments' fair value. As of June 30, 2022, certain of our funds had met the first and second criteria, as described above, but did not meet the third criteria. In these cases, carried interest accrues on the consolidated statement of operations, but will not be distributed in cash to us as the general partner of an investment fund upon a realization event. For a fund that has a fair value above cost, overall, and is otherwise accruing carried interest, but has one or more investments where fair value is below cost, the shortfall between cost and fair value for such investments is referred to as a "netting hole." When netting holes are present, realized gains on individual investments that would otherwise allow the general partner to receive carried interest distributions are instead used to return invested capital to our funds' limited partners in an amount equal to the netting hole. Once netting holes have been filled with either (a) return of capital equal to the netting hole for those investments where fair value is below cost or (b) increases in the fair value of those investments where fair value is below cost, then realized carried interest will be distributed to the general partner upon a realization event. A fund that is in a position to pay cash carry refers to a fund for which carried interest is expected to be paid to the general partner upon the next material realization event, which includes funds with no netting holes as well as funds with a netting hole that is sufficiently small in size such that the next material realization event would be expected to result in the payment of carried interest. Strategic investor partnerships with fund investors may require netting across the various funds in which they invest, which may reduce the carried interest we otherwise would have earned if such fund investors were to have invested in our funds without the existence of the strategic investor partnership. See "Risk Factors—Risks Related to Our Business—Strategic investor partnerships have longer investment periods and invest in multiple strategies, which may increase the possibility of a 'netting hole,' which will result in less carried interest for us, as well as clawback liabilities" in our Annual Report.

As of June 30, 2022, netting holes in excess of $50 million existed at one of our private equity funds, which was Asian Fund III of $187 million. In accordance with the criteria set forth above, other funds currently have and may in the future develop netting holes, and netting holes for those and other funds may otherwise increase or decrease in the future.

We have access to funding under various credit facilities, other borrowing arrangements and other sources of liquidity that we have entered into with major financial institutions or which we receive from the capital markets.

For a discussion of our debt obligations, including our debt securities, revolving credit agreements and loans, see Note 17 "Debt Obligations" in our financial statements.

Liquidity Needs

We expect that our primary liquidity needs will consist of cash required to:

• continue to support and grow our Asset Management business lines, including funding our capital commitments made to existing and future funds, pay the costs related to fundraising and launching of new strategies, and otherwise supporting investment vehicles which we sponsor

• to grow and expand our businesses generally, including by acquiring or launching new, complementary or adjacent businesses;

• seed or warehouse investments for the benefit of new strategies or funds, including CLOs, pending the contribution of committed capital by the investors in such funds, and advancing capital to our funds for operational or other needs;

• pay interest expense;

• service debt obligations, including the payment of obligations upon maturity or redemption, as well as any contingent liabilities that may give rise to future cash payments, including funding requirements to levered investment vehicles or structured transactions;

• fund cash operating expenses and contingencies, including litigation matters and guarantees;

• pay corporate income taxes and other taxes;

• pay policyholders and amounts in our insurance business related to investment, reinvestment, reinsurance or funding agreement activity;

• pay amounts that may become due under our tax receivable agreement with KKR Holdings;

• pay cash dividends in accordance with our dividend policy for our common stock or the terms of our preferred stock;

• underwrite commitments, advance loan proceeds and fund syndication commitments within our capital markets business, and fund any net capital or regulatory requirements of our capital markets companies;

• post or return collateral in respect of derivative contracts;

• support and acquire other assets for our Principal Activities business line, including other businesses, investments and assets, some of which may be required to satisfy risk retention requirements for CLOs (to the extent they may apply); and

• repurchase KKR's common stock or retire equity awards pursuant to the share repurchase program or repurchase or redeem other securities issued by KKR.

For a discussion of KKR's share repurchase program, see Note 22 "Equity" in our financial statements.

Capital Commitments

The agreements governing our active investment funds generally require the general partners of the funds to make minimum capital commitments to such funds, which generally range from 2% to 8% of a fund's total capital commitments at final closing, but may be greater for certain funds (i) where we are pursuing newer strategies, (ii) where third party investor demand is limited, and (iii) where a larger commitment is consistent with the asset allocation strategy for our Principal Activities business line, including core investments and exposure to the Asia-Pacific region.

The following table presents our uncalled commitments to our active investment funds and other vehicles as of June 30, 2022:

			Uncalled Commitments
Private Equity			($ in millions)
Core Investment Vehicles			$	4,196
European Fund VI			750
Asian Fund IV			428
North America Fund XIII			416
Global Impact Fund II			145
Health Care Strategic Growth Fund II			137
Next Generation Technology Growth Fund II			43
Other Private Equity Vehicles			1,933
Total Private Equity Commitments			8,048
Real Assets
Global Infrastructure Investors IV			384
Asia Pacific Infrastructure Investors II			357
Asia Real Estate Partners			189
Diversified Core Infrastructure Fund			150
Asia Pacific Infrastructure Investors			127
Real Estate Partners Americas III			104
Real Estate Partners Europe II			80
Real Estate Credit Opportunity Partners II			22
Other Real Assets Vehicles			413
Total Real Assets Commitments			1,826
Credit and Liquid Strategies
Asset-Based Finance Partners			138
Dislocation Opportunities Fund			98
Asia Credit			97
Lending Partners Europe II			19
Lending Partners III			13
Other Credit and Liquid Strategies Vehicles			744
Total Credit and Liquid Strategies Commitments			1,109
Total Uncalled Commitments			$	10,983

Other Commitments

In addition to the uncalled commitments to our investment funds as shown above, KKR has entered into contractual commitments primarily with respect to underwriting transactions, debt financing, revolving credit facilities, and equity syndications in our Capital Markets business line. As of June 30, 2022, these commitments amounted to $1.0 billion.

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. Our capital markets business has arrangements with third parties, which reduce our risk under certain circumstances when underwriting certain debt transactions, and thus our unfunded commitments as of June 30, 2022 have been reduced to reflect the amount to be funded by such third parties. 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. For more information about our capital markets business line's risks, see "Risks Related to Our Business—Our capital markets activities expose us to risks, and our risk management strategy may not be effective or sufficient" in our Annual Report.

Tax Receivable Agreement

On May 31, 2022, KKR terminated the tax receivable agreement with KKR Holdings other than with respect to exchanges of KKR Holdings units prior to the closing of the Reorganization Mergers. As of June 30, 2022, an undiscounted payable of $400.1 million has been recorded in due to affiliates in the financial statements representing management's best estimate of the amounts currently expected to be owed under the tax receivable agreement. As of June 30, 2022, approximately $60.4 million of cumulative cash payments have been made under the tax receivable agreement.

Dividends

A dividend of $0.155 per share of our common stock has been declared and will be paid on August 30, 2022 to holders of record of our common stock as of the close of business on August 15, 2022.

A dividend of $0.75 per share of Series C Mandatory Convertible Preferred Stock has been declared and set aside for payment on September 15, 2022 to holders of record of Series C Mandatory Convertible Preferred Stock as of the close of business on September 1, 2022.

When KKR & Co. Inc. receives distributions from KKR Group Partnership, holders of exchangeable securities receive their pro rata share of such distributions from KKR Group Partnership.

The declaration and payment of dividends to our common stockholders will be at the sole discretion of our board of directors, and our dividend policy may be changed at any time. The declaration of dividends is subject to the discretion of our board of directors based on a number of factors, including KKR’s future financial performance and other considerations that the board deems relevant, and compliance with the terms of KKR & Co. Inc.'s certificate of incorporation and applicable law. For U.S. federal income tax purposes, any dividends we pay (including dividends on our preferred stock) generally will be treated as qualified dividend income for U.S. individual stockholders to the extent paid out of our current or accumulated earnings and profits, as determined for U.S. federal income tax purposes. There can be no assurance that future dividends will be made as intended or at all or that any particular dividend policy for our common stock will be maintained. Furthermore, the declaration and payment of distributions by KKR Group Partnership and our other subsidiaries may also be subject to legal, contractual and regulatory restrictions, including restrictions contained in our debt agreements and the terms of the preferred units of KKR Group Partnership.

Other Liquidity Needs

From time to time, we fund various underwriting, syndication and fronting commitments in our capital markets business in connection with the arranging or underwriting of loans, securities or other financial instruments, for which we may draw all or substantially all of our availability for borrowings under our available credit facilities. We generally expect these borrowings by our Capital Markets business line to be repaid promptly as these commitments are syndicated to third parties or otherwise fulfilled or terminated, although we may in some instances elect to retain a portion of the commitments for our own investment. For more information about our Capital Markets business line's risks, see "Risks Related to Our Business—Our capital markets activities expose us to risks, and our risk management strategy may not be effective or sufficient" in our Annual Report.

Contractual Obligations, Commitments and Contingencies

In the ordinary course of business, we (including Global Atlantic) and our consolidated funds and CFEs enter into contractual arrangements that may require future cash payments. Contractual arrangements include (1) commitments to fund the purchase of investments or other assets (including obligations to fund capital commitments as the general partner of our investment funds) or to fund collateral for derivative transactions or otherwise, (2) obligations arising under our senior notes, subordinated notes, and other indebtedness, (3) commitments by our capital markets business to underwrite transactions or to lend capital, (4) obligations arising under insurance policies written, (5) other contractual obligations, including servicing agreements with third-party administrators for insurance policy administration, and (6) commitments to fund the business, operations or investments of our subsidiaries.

We may incur contingent liabilities for claims that may be made against us in the future. We enter into contracts that contain a variety of representations, warranties and covenants, including indemnifications. For example, we and certain of our investment funds have provided certain indemnities relating to environmental and other matters and have provided nonrecourse carve-out guarantees for violations of bankruptcy remoteness restrictions and for fraud, willful misconduct and other wrongful acts, each 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 we manage or sponsor.

We provide credit support to certain subsidiaries' obligations in connection with a limited number of investment vehicles that we manage. For example, we have guaranteed the obligations of a general partner to post collateral on behalf of its investment vehicle in connection with such vehicle's derivative transactions. We have also entered into a contingent guarantee for 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 it. We also (i) provided credit support regarding repayment and funding obligations to third party lenders on behalf of certain employees, excluding executive officers, in connection with their personal investments in KKR investment funds and a levered multi-asset investment vehicle and (ii) provided credit support to one of our hedge fund partnerships.

We expect to continue to guarantee, from time to time, the obligations of our subsidiaries' funding obligations to our investment vehicles. These include KKR's obligations to fund its capital commitments to various levered multi-asset investment vehicles, which are special purpose entities that invest in various funds and co-investments sponsored by KKR. In addition, we have also agreed for certain of our investment vehicles, including certain levered multi-asset investment vehicles, to fund or otherwise be liable for a portion of their investment losses (up to a maximum of approximately $116 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).

The partnership documents governing our carry-paying funds 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. In addition, Global Atlantic is obligated to make annual payments out of available cash to its former owner, and Global Atlantic has also arranged or participated in letters of credit in lieu of funding certain loan facilities to third party borrowers. See Note 24 "Commitments and Contingencies—Contingent Repayment Guarantees" to our financial statements included elsewhere in this report for further information.

We have also indemnified employees and non-employees against potential liabilities, in connection with their service as described under "Certain Relationships and Related Transactions, and Director Independence—Indemnification of Directors, Officers and Others" in our Annual Report.

Off Balance Sheet Arrangements

We do not have any off-balance sheet financings or liabilities other than contractual commitments and other legal contingencies incurred in the normal course of our business.

Critical Accounting Estimates

The preparation of our financial statements in accordance with GAAP requires our management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and reported amounts of fees, expenses and investment income. Our management bases these estimates and judgments on available information, historical experience and other assumptions that we believe are reasonable under the circumstances. However, these estimates, judgments and assumptions are often subjective and may be impacted negatively based on changing circumstances or changes in our analyses. If actual amounts are ultimately different from those estimated, judged or assumed, revisions are included in the financial statements in the period in which the actual amounts become known. We believe our critical accounting policies could potentially produce materially different results if we were to change underlying estimates, judgments or assumptions.

For a further discussion about our critical accounting policies, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies” in our Annual Report and Note 2 "Summary of Significant Accounting Policies" in our financial statements included in this report.

Recently Issued Accounting Pronouncements

For a full discussion of recently issued accounting pronouncements, see Note 2 "Summary of Significant Accounting Policies" in our financial statements.

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.

GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of market price observability used in measuring financial instruments at fair value. Investments and other 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.

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.

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 valuation of our Level III investments at June 30, 2022 represents management's best estimate of the amounts that we would anticipate realizing on the sale of these investments in an orderly transaction at such date.

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.

Level III Valuation Methodologies

Our investments and financial instruments are impacted by various economic conditions and events outside of our control that are difficult to quantify or predict, which may have a significant impact on the valuation of our investments and, therefore, on the carried interest and investment income we realize. Additionally, a change in interest rates could have a significant impact on valuations.

Across the total Level III private equity investment portfolio (including core equity investments), and including investments in both consolidated and unconsolidated investment funds, approximately 55% of the fair value is derived from investments that are valued based exactly 50% on market comparables and 50% on a discounted cash flow analysis. Less than 5% of the fair value of this Level III private equity investment portfolio is derived from investments that are valued either based 100% on market comparables or 100% on a discounted cash flow analysis. As of June 30, 2022, the overall weights ascribed to the market comparables methodology, the discounted cash flow methodology, and a methodology based on pending sales for this portfolio of Level III private equity investments were 38%, 52%, and 10%, respectively.

There is inherent uncertainty involved in the valuation of Level III investments, and there is no assurance that, upon liquidation, 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 investments existed, and it is reasonably possible that the difference could be material. See "Business Environment" for more information on factors that may impact our business, financial performance, operating results and valuations.

Key unobservable inputs that have a significant impact on our Level III valuations as described above are included in Note 10 "Fair Value Measurements" in our financial statements.

Level III Valuation Process

The valuation process involved for Level III measurements is completed on a quarterly basis and is designed to subject the valuation of Level III investments to an appropriate level of consistency, oversight, and review.

For private equity and real asset investments classified as Level III, investment professionals prepare preliminary valuations based on their evaluation of financial and operating data, company specific developments, market valuations of comparable companies and other factors. KKR begins its procedures to determine the fair values of its Level III assets approximately one month prior to the end of a reporting period, and KKR follows additional procedures to ensure that its determinations of fair value for its Level III assets are appropriate as of the relevant reporting date. These preliminary valuations are reviewed by an independent valuation firm engaged by KKR to perform certain procedures in order to assess the reasonableness of KKR's valuations annually for all Level III private equity and real asset investments and quarterly for investments other than certain investments, which have values less than preset value thresholds and which in the aggregate comprise less than 1% of the total value of KKR's Level III private equity and real asset investments. The valuations of certain real asset investments are determined solely by independent valuation firms without the preparation of preliminary valuations by our investment professionals, and instead such independent valuation firms rely on valuation information available to it as a broker or valuation firm. For credit investments, an independent valuation firm is generally engaged by KKR to assist with the valuations of most investments classified as Level III. The valuation firm either provides a value, provides a valuation range from which KKR's investment professionals select a point in the range to determine the valuation, or performs certain procedures in order to assess the reasonableness of KKR's valuations. After reflecting any input from the independent valuation firm, the valuation proposals are submitted for review and approval by KKR's valuation committees. As of June 30, 2022, less than 1% of the total value of our Level III credit investments were not valued with the engagement of an independent valuation firm.

For Level III investments in Asset Management, KKR has a global valuation committee that is responsible for coordinating and implementing the firm's valuation process to ensure consistency in the application of valuation principles across portfolio investments and between periods. The global valuation committee is assisted by the asset class-specific valuation committees that exist for private equity (including core equity investments and certain impact investments), growth equity (including certain impact investments), real estate, energy, infrastructure and credit. The asset class-specific valuation committees are responsible for the review and approval of all preliminary Level III valuations in their respective asset classes on a quarterly basis. The members of these valuation committees are comprised of investment professionals, including the heads of each respective strategy, and professionals from business operations functions such as legal, compliance and finance, who are not primarily responsible for the management of the investments. All Level III valuations for investments in Asset Management are also subject to approval by the global valuation committee, which is comprised of senior employees including investment professionals and professionals from business operations functions, and includes one of KKR's Co-Chief Executive Officers and its Chief Financial Officer, General Counsel and Chief Compliance Officer. When valuations are approved by the global valuation committee after reflecting any input from it, the valuations of Level III investments, as well as the valuations of Level I and Level II investments, are presented to the Audit Committee of the Board of Directors of KKR & Co. Inc. and are then reported to the Board of Directors.

Level III investments held by Global Atlantic are valued on the basis of pricing services, reputable broker-dealers or internal models. Global Atlantic performs a quantitative and qualitative analysis and review of the information and prices received from independent pricing services as well as broker-dealers to verify that it represents a reasonable estimate of fair value. For all the internally developed models, Global Atlantic seeks to verify the reasonableness of fair values by analyzing the inputs and other assumptions used. As of June 30, 2022, approximately 68% of these investments were priced via external sources, while approximately 32% were valued on the basis of internal models. When valuations are approved by Global Atlantic's management, the valuations of its Level III investments, as well as the valuations of Level I and Level II investments, are presented to the Audit Committee of the Board of Directors of KKR & Co. Inc. and are then reported to the Board of Directors.

As of June 30, 2022, upon completion by, where applicable, independent valuation firms of certain limited procedures requested to be performed by them on certain Level III investments, the independent valuation firms concluded that the fair values, as determined by KKR (including Global Atlantic), of those investments reviewed by them were reasonable. The limited procedures did not involve an audit, review, compilation or any other form of examination or attestation under generally accepted auditing standards and were not conducted on all Level III investments. We are responsible for determining the fair value of investments in good faith, and the limited procedures performed by an independent valuation firm are supplementary to the inquiries and procedures that we are required to undertake to determine the fair value of the commensurate investments.

As described above, Level II and Level III investments were valued using internal models with significant unobservable inputs, and our determinations of the fair values of these investments may differ materially from the values that would have resulted if readily observable inputs had existed. Additional external factors may cause those values, and the values of investments for which readily observable inputs exist, to increase or decrease over time, which may create volatility in our earnings and the amounts of assets and stockholders' equity that we report from time to time.

Changes in the fair value of investments impacts the amount of carried interest that is recognized as well as the amount of investment income that is recognized for investments held directly in Asset Management and through our consolidated funds as described below. We estimate that an immediate 10% decrease in the fair value of investments held directly and through consolidated investment funds generally would result in a commensurate change in the amount of net gains (losses) from investment activities for investments held directly and through investment funds and a more significant impact to the amount of carried interest recognized, regardless of whether the investment was valued using observable market prices or management estimates with significant unobservable pricing inputs. With respect to consolidated investment funds, the impact that the consequential decrease in investment income would have on net income attributable to KKR would generally be significantly less than the amount described above, given that a majority of the change in fair value of our consolidated funds would be attributable to noncontrolling interests and therefore we are only impacted to the extent of our carried interest and our balance sheet investments. With respect to Insurance, a decrease in investment income for certain assets where investment gains and losses are recognized through the statement of operations would impact KKR only to the extent of our economic ownership interest in Global Atlantic.

As of June 30, 2022, there were no investments which represented greater than 5% of total investments on a GAAP basis. On a non-GAAP basis, as of June 30, 2022, investments which represented greater than 5% of total non-GAAP investments consisted of PetVet Care Centers, LLC and USI, Inc. (financial services sector) valued at $1,216 million and $1,094 million, respectively. Our investment income on a GAAP basis and our book value can be impacted by volatility in the public markets related to our holdings of publicly traded securities, including our sizable holdings of Fiserv, Inc., Crescent Energy Company, KREF, and AppLovin Corporation. See "—Business Environment" for a discussion of factors that may impact the valuations of our investments, financial results, operating results and valuations, and "—Non-GAAP Balance Sheet Measures" for additional information regarding our largest holdings on a non-GAAP basis.