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Item 1. FINANCIAL STATEMENTS

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Item 1. FINANCIAL STATEMENTS

KKR & CO. INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)

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

March 31, 2024December 31, 2023
Assets
Asset Management and Strategic Holdings
Cash and Cash Equivalents$7,083,931$8,393,892
Restricted Cash and Cash Equivalents227,486116,599
Investments100,693,98798,634,801
Due from Affiliates1,449,3941,446,852
Other Assets4,869,5754,975,223
114,324,373113,567,367
Insurance
Cash and Cash Equivalents$8,524,962$11,954,675
Restricted Cash and Cash Equivalents329,149342,954
Investments157,747,170141,370,323
Reinsurance Recoverable44,160,22636,617,344
Insurance Intangible Assets4,856,9234,450,824
Other Assets5,607,9514,883,707
Separate Account Assets4,223,1734,107,000
225,449,554203,726,827
Total Assets$339,773,927$317,294,194
Liabilities and Equity
Asset Management and Strategic Holdings
Debt Obligations$45,053,639$44,886,870
Due to Affiliates443,219538,099
Accrued Expenses and Other Liabilities8,868,3727,718,415
54,365,23053,143,384
Insurance
Policy Liabilities (market risk benefit liabilities: $1,023,053 and $1,120,968, respectively.)$173,598,686$160,058,271
Debt Obligations3,086,1132,587,857
Funds Withheld Payable at Interest42,639,72534,339,522
Accrued Expenses and Other Liabilities3,384,4443,256,006
Reinsurance Liabilities1,564,7061,423,242
Separate Account Liabilities4,223,1734,107,000
228,496,847205,771,898
Total Liabilities282,862,077258,915,282
March 31, 2024December 31, 2023
Commitments and Contingencies (See Note 24)
Redeemable Noncontrolling Interests (See Note 23)$922,093$615,427
Stockholders' Equity
Series I Preferred Stock, $0.01 par value. 1 share authorized, 1 share issued and outstanding as of March 31, 2024 and December 31, 2023.——
Common Stock, $0.01 par value. 3,500,000,000 shares authorized, 885,010,967 and 885,005,588 shares, issued and outstanding as of March 31, 2024 and December 31, 2023, respectively.8,8508,850
Additional Paid-In Capital18,032,59917,549,157
Retained Earnings10,354,5249,818,336
Accumulated Other Comprehensive Income (Loss) ("AOCI")(6,974,780)(4,517,649)
Total KKR & Co. Inc. Stockholders' Equity21,421,19322,858,694
Noncontrolling Interests (See Note 22)34,568,56434,904,791
Total Equity55,989,75757,763,485
Total Liabilities and Equity$339,773,927$317,294,194

See notes to financial statements.

KKR & CO. INC.

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED) (CONTINUED)

(Amounts in Thousands)

The following presents the portion of the consolidated balances provided in the consolidated statements of financial condition attributable to consolidated variable interest entities ("VIEs"). As of March 31, 2024 and December 31, 2023, KKR's consolidated VIEs consist primarily of (i) certain collateralized financing entities ("CFEs") holding collateralized loan obligations ("CLOs"), (ii) certain investment funds, and (iii) certain VIEs formed by Global Atlantic. The noteholders, creditors and equity holders of these VIEs have no recourse to the assets of any other KKR entity.

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

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

March 31, 2024
Consolidated CLOsConsolidated Funds and Other Investment VehiclesOther VIEsTotal
Assets
Asset Management and Strategic Holdings
Cash and Cash Equivalents$1,809,877$1,320,273$—$3,130,150
Restricted Cash and Cash Equivalents—222,046—222,046
Investments24,961,63558,005,968—82,967,603
Other Assets446,810481,088—927,898
27,218,32260,029,375—87,247,697
Insurance
Cash and Cash Equivalents——971,977971,977
Investments——22,073,50722,073,507
Other Assets——763,028763,028
——23,808,51223,808,512
Total Assets$27,218,322$60,029,375$23,808,512$111,056,209
Liabilities
Asset Management and Strategic Holdings
Debt Obligations$25,075,510$9,031,007$—$34,106,517
Accrued Expenses and Other Liabilities1,087,500380,741—1,468,241
26,163,0109,411,748—35,574,758
Insurance
Accrued Expenses and Other Liabilities——325,974325,974
Total Liabilities$26,163,010$9,411,748$325,974$35,900,732
December 31, 2023
Consolidated CLOsConsolidated Funds and Other Investment VehiclesOther VIEsTotal
Assets
Asset Management and Strategic Holdings
Cash and Cash Equivalents$1,709,523$1,162,174$—$2,871,697
Restricted Cash and Cash Equivalents—110,308—110,308
Investments24,996,29857,343,237—82,339,535
Other Assets429,827345,509—775,336
27,135,64858,961,228—86,096,876
Insurance
Cash and Cash Equivalents——783,015783,015
Investments——22,556,04022,556,040
Other Assets——491,607491,607
——23,830,66223,830,662
Total Assets$27,135,648$58,961,228$23,830,662$109,927,538
Liabilities
Asset Management and Strategic Holdings
Debt Obligations$25,276,404$8,554,449$—$33,830,853
Accrued Expenses and Other Liabilities869,765488,717—1,358,482
26,146,1699,043,166—35,189,335
Insurance
Accrued Expenses and Other Liabilities——337,162337,162
Total Liabilities$26,146,169$9,043,166$337,162$35,526,497

See notes to financial statements.

KKR & CO. INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

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

Three Months Ended March 31,
20242023
Revenues
Asset Management and Strategic Holdings
Fees and Other$693,526$677,016
Capital Allocation-Based Income (Loss)1,262,942449,018
1,956,4681,126,034
Insurance
Net Premiums6,036,522473,624
Policy Fees328,947313,802
Net Investment Income1,519,9021,300,697
Net Investment-Related Gains (Losses)(241,486)(123,833)
Other Income56,38537,158
7,700,2702,001,448
Total Revenues9,656,7383,127,482
Expenses
Asset Management and Strategic Holdings
Compensation and Benefits1,316,448575,670
Occupancy and Related Charges23,54022,149
General, Administrative and Other277,981213,689
1,617,969811,508
Insurance
Net Policy Benefits and Claims (including market risk benefit loss (gain) of $(101,760) and $146,309, respectively.)7,261,0691,527,054
Amortization of Policy Acquisition Costs(3,752)44,211
Interest Expense54,56740,261
Insurance Expenses199,236225,318
General, Administrative and Other183,855211,731
7,694,9752,048,575
Total Expenses9,312,9442,860,083
Investment Income (Loss) - Asset Management and Strategic Holdings
Net Gains (Losses) from Investment Activities638,162(159,409)
Dividend Income245,057148,167
Interest Income890,102728,616
Interest Expense(754,064)(576,338)
Total Investment Income (Loss)1,019,257141,036
Income (Loss) Before Taxes1,363,051408,435
Income Tax Expense (Benefit)269,201148,747
Three Months Ended March 31,
20242023
Net Income (Loss)1,093,850259,688
Net Income (Loss) Attributable to Redeemable Noncontrolling Interests32,678(7,303)
Net Income (Loss) Attributable to Noncontrolling Interests378,958(73,003)
Net Income (Loss) Attributable to KKR & Co. Inc.682,214339,994
Series C Mandatory Convertible Preferred Stock Dividends—17,250
Net Income (Loss) Attributable to KKR & Co. Inc. Common Stockholders$682,214$322,744
Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Common Stock
Basic$0.77$0.37
Diluted$0.74$0.36
Weighted Average Shares of Common Stock Outstanding
Basic885,005,824861,108,510
Diluted925,141,166887,169,336

See notes to financial statements.

KKR & CO. INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

(Amounts in Thousands)

Three Months Ended March 31,
20242023
Net Income (Loss)$1,093,850$259,688
Other Comprehensive Income (Loss), Net of Tax:
Unrealized Gains (Losses) on Available-For-Sale Securities and Other(200,221)1,132,752
Net effect of changes in discount rates and instrument-specific credit risk on policy liabilities125,180(137,101)
Foreign Currency Translation Adjustments(107,161)(18,238)
Comprehensive Income (Loss)911,6481,237,101
Comprehensive Income (Loss) Attributable to Redeemable Noncontrolling Interests32,678(7,303)
Comprehensive Income (Loss) Attributable to Noncontrolling Interests377,478294,185
Comprehensive Income (Loss) Attributable to KKR & Co. Inc.$501,492$950,219

See notes to financial statements.

KKR & CO. INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED) (Amounts in Thousands, Except Share and Per Share Data)
Three Months Ended March 31, 2024Three Months Ended March 31, 2023
AmountsSharesAmountsShares
Series C Mandatory Convertible Preferred Stock
Beginning of Period$——$1,115,79222,999,974
End of Period——1,115,79222,999,974
Series I Preferred Stock
Beginning of Period—1—1
End of Period—1—1
Common Stock
Beginning of Period8,850885,005,5888,611861,110,478
Clawback of Transfer Restricted Shares———(13,624)
Private Placement Share Issuance—5,379——
Net Delivery of Common Stock———7,146
End of Period8,850885,010,9678,611861,104,000
Additional Paid-In Capital
Beginning of Period (as previously reported for the prior period)17,549,15716,190,407
Adoption of New Accounting Standard (See Note 2)—93,650
Beginning of Period (as revised for the prior period)17,549,15716,284,057
Compensation Modification (See Note 19)226,011—
Compensation Modification - Issuance of Holdings III Units (See Note 19)(53,623)—
Equity-Based Compensation79,50455,415
2024 GA Acquisition - Issuance of Holdings III Units (See Note 1)(40,789)—
Change in KKR & Co. Inc.'s Ownership Interest - 2024 GA Acquisition128,194—
Change in KKR & Co. Inc.'s Ownership Interest (See Note 22)144,145—
End of Period18,032,59916,339,472
Retained Earnings
Beginning of Period (as previously reported for the prior period)9,818,3366,315,711
Adoption of New Accounting Standard (See Note 2)—385,396
Beginning of Period (as revised for the prior period)9,818,3366,701,107
Net Income (Loss) Attributable to KKR & Co. Inc.682,214339,994
Series C Mandatory Convertible Preferred Stock Dividends ($0.75 per share)—(17,250)
Common Stock Dividends ($0.165 and $0.155 per share)(146,026)(133,470)
End of Period10,354,5246,890,381
Accumulated Other Comprehensive Income (Loss) (net of tax)
Beginning of Period (as previously reported for the prior period)(4,517,649)(5,901,701)
Adoption of New Accounting Standard (See Note 2)—599,901
Beginning of Period (as revised for the prior period)(4,517,649)(5,301,800)
Other Comprehensive Income (Loss)(180,722)610,225
Change in KKR & Co. Inc.'s Ownership Interest - 2024 GA Acquisition(2,297,494)
Change in KKR & Co. Inc.'s Ownership Interest (See Note 22)21,085—
End of Period(6,974,780)(4,691,575)
Total KKR & Co. Inc. Stockholders' Equity21,421,19319,662,681
Noncontrolling Interests (See Note 22)34,568,56437,316,569
Total Equity$55,989,757$56,979,250
Redeemable Noncontrolling Interests (See Note 23)$922,093$144,126

See notes to financial statements.

KKR & CO. INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(Amounts in Thousands)

Three Months Ended March 31,
20242023
Operating Activities
Net Income (Loss)$1,093,850$259,688
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided (Used) by Operating Activities:
Equity-Based and Other Non-Cash Compensation183,411184,135
Net Realized (Gains) Losses - Asset Management and Strategic Holdings190,905(99,380)
Change in Unrealized (Gains) Losses - Asset Management and Strategic Holdings(829,067)258,789
Capital Allocation-Based (Income) Loss - Asset Management and Strategic Holdings(1,262,942)(449,018)
Net Investment and Policy Liability-Related (Gains) Losses - Insurance591,288953,155
Net Accretion and Amortization(14,484)32,180
Interest Credited to Policyholder Account Balances (net of Policy Fees) - Insurance925,399623,849
Other Non-Cash Amounts59,03049,999
Cash Flows Due to Changes in Operating Assets and Liabilities:
Reinsurance Transactions and Acquisitions, Net of Cash Provided - Insurance152,861242,554
Change in Premiums, Notes Receivable and Reinsurance Recoverable, Net of Reinsurance Premiums Payable - Insurance583,293(263,534)
Change in Deferred Policy Acquisition Costs - Insurance(178,684)(166,926)
Change in Policy Liabilities and Accruals, Net - Insurance(89,817)130,151
Change in Due from / to Affiliates(101,267)(145,301)
Change in Other Assets(19,836)493,728
Change in Accrued Expenses and Other Liabilities951,953699,553
Investments Purchased - Asset Management and Strategic Holdings(10,454,480)(9,966,282)
Proceeds from Investments - Asset Management and Strategic Holdings9,746,0205,229,772
Net Cash Provided (Used) by Operating Activities1,527,433(1,932,888)
Investing Activities
Purchases of Fixed Assets(17,295)(23,207)
Investments Purchased - Insurance(13,726,204)(8,769,518)
Proceeds from Investments - Insurance7,528,6574,956,273
Other Investing Activities, Net - Insurance16,06317,919
Net Cash Provided (Used) by Investing Activities(6,198,779)(3,818,533)
Financing Activities
Series C Mandatory Convertible Preferred Stock Dividends—(17,250)
Common Stock Dividends(146,026)(133,470)
Distributions to Redeemable Noncontrolling Interests(8,265)(636)
Contributions from Redeemable Noncontrolling Interests282,253—
Distributions to Noncontrolling Interests(1,732,066)(1,840,303)
Contributions from Noncontrolling Interests1,434,3232,468,778
2024 GA Acquisition - Cash consideration (See Note 1)(2,622,230)—
Proceeds from Debt Obligations5,717,2823,378,792
Repayment of Debt Obligations(4,928,299)(1,858,984)
Additions to Contractholder Deposit Funds - Insurance7,451,2534,547,895
Withdrawals from Contractholder Deposit Funds - Insurance(4,887,018)(4,060,332)
Reinsurance Transactions, Net of Cash Provided - Insurance12,19879,516
Other Financing Activity, Net - Insurance(528,441)(491,038)
Net Cash Provided (Used) by Financing Activities44,9642,072,968
Effect of exchange rate changes on cash, cash equivalents and restricted cash(16,210)21,603
Net Increase/(Decrease) in Cash, Cash Equivalents and Restricted Cash$(4,642,592)$(3,656,850)
Cash, Cash Equivalents and Restricted Cash, Beginning of Period20,808,12013,385,370
Cash, Cash Equivalents and Restricted Cash, End of Period$16,165,528$9,728,520
Three Months Ended March 31,
20242023
Cash, Cash Equivalents and Restricted Cash are comprised of the following:
Beginning of the Period
Asset Management and Strategic Holdings
Cash and Cash Equivalents$8,393,892$6,705,325
Restricted Cash and Cash Equivalents116,599253,431
Total Asset Management and Strategic Holdings8,510,4916,958,756
Insurance
Cash and Cash Equivalents$11,954,675$6,118,231
Restricted Cash and Cash Equivalents342,954308,383
Total Insurance12,297,6296,426,614
Cash, Cash Equivalents and Restricted Cash, Beginning of Period$20,808,120$13,385,370
End of the Period
Asset Management and Strategic Holdings
Cash and Cash Equivalents$7,083,931$5,576,121
Restricted Cash and Cash Equivalents227,486161,619
Total Asset Management and Strategic Holdings7,311,4175,737,740
Insurance
Cash and Cash Equivalents$8,524,962$3,713,382
Restricted Cash and Cash Equivalents329,149277,398
Total Insurance8,854,1113,990,780
Cash, Cash Equivalents and Restricted Cash, End of Period$16,165,528$9,728,520

KKR & CO. INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (CONTINUED)

(Amounts in Thousands)

Three Months Ended March 31,
20242023
Supplemental Disclosures of Cash Flow Information
Payments for Interest$745,412$566,904
Payments for Income Taxes$39,375$21,441
Payments for Operating Lease Liabilities$17,339$15,281
Supplemental Disclosures of Non-Cash Investing and Financing Activities
Non-Cash Contribution from Noncontrolling Interests$3,879$—
Debt Obligations - Net Gains (Losses), Translation and Other$400,122$(428,559)
Right-of-Use Assets obtained in Exchange for new Operating Lease Liabilities$—$17,167
Investments Acquired through Reinsurance Agreements$9,996,537$—
Contractholder Deposit Funds Acquired through Reinsurance Agreements$1,229,728$24,083
Change in Consolidation
Investments - Insurance$—$(93,545)
Noncontrolling Interests$—$(93,545)

See notes to financial statements.

KKR & CO. INC.

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

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

1. ORGANIZATION

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

KKR & Co. Inc. is the parent company of KKR Group Co. Inc., which in turn owns KKR Group Holdings Corp., which is the general partner of KKR Group Partnership L.P. ("KKR Group Partnership"). KKR & Co. Inc. both indirectly controls KKR Group Partnership and indirectly holds Class A partner interests in KKR Group Partnership ("KKR Group Partnership Units") representing economic interests in KKR's business. As of March 31, 2024, KKR & Co. Inc. held indirectly approximately 99.4% of the KKR Group Partnership Units. The remaining balance is held indirectly by KKR employees through restricted holdings units representing an ownership interest in KKR Group Partnership Units, which may be exchanged for shares of common stock of KKR & Co. Inc. ("exchangeable securities"). As limited partner interests, these KKR Group Partnership Units are non-voting and do not entitle anyone other than KKR to manage its business and affairs. KKR Group Partnership also has outstanding limited partner interests that provide for a carry pool provided by KKR Associates Holdings L.P. ("Associates Holdings").

On January 2, 2024, KKR acquired the remaining minority interests of Global Atlantic held by third party co-investors and Global Atlantic employees in exchange for cash and securities exchangeable for shares of KKR & Co. Inc. common stock (the “2024 GA Acquisition”). The purchase price paid by KKR was approximately $2.6 billion in cash and approximately $41 million in securities exchangeable for shares of KKR & Co. Inc. common stock. Global Atlantic was consolidated prior to January 2, 2024 and consequently, this transaction was accounted for as an equity transaction. At the time of the 2024 GA Acquisition, the carrying value of the noncontrolling interests held by third party co-investors and Global Atlantic employees in Global Atlantic was lower than the purchase price paid by KKR, which was determined by excluding unrealized losses on its available-for-sale portfolio and consistent with the calculation of the purchase price paid by KKR to acquire Global Atlantic in 2021. As such, this transaction resulted in a decrease in KKR & Co. Inc. Stockholders’ Equity.

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

Reorganization Agreement

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

Notes to Financial Statements (Continued)

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

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

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

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

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

Notes to Financial Statements (Continued)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited financial statements of KKR & Co. Inc. have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and the instructions to this Quarterly Report on Form 10-Q. The condensed consolidated financial statements (referred to hereafter as the "financial statements"), including these notes, are unaudited and exclude some of the disclosures required in annual financial statements. Management believes it has made all necessary adjustments (consisting of only normal recurring items) such that the financial statements are presented fairly and that estimates made in preparing the financial statements are reasonable and prudent. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. The consolidated balance sheet data as of December 31, 2023 were derived from audited financial statements included in KKR & Co. Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 filed with the U.S. Securities and Exchange Commission ("SEC") on February 29, 2024 (our "Annual Report"), and the financial statements should be read in conjunction with the audited financial statements included therein. Additionally, in the accompanying financial statements, the condensed consolidated statements of financial condition are referred to hereafter as the "consolidated statements of financial condition"; the condensed consolidated statements of operations are referred to hereafter as the "consolidated statements of operations"; the condensed consolidated statements of comprehensive income (loss) are referred to hereafter as the "consolidated statements of comprehensive income (loss)"; the condensed consolidated statements of changes in equity are referred to hereafter as the "consolidated statements of changes in equity"; and the condensed consolidated statements of cash flows are referred to hereafter as the "consolidated statements of cash flows."

KKR consolidates the financial results of KKR Group Partnership and its consolidated entities, which include the accounts of KKR's investment management and capital markets companies, the general partners of certain unconsolidated investment funds, general partners of consolidated investment funds and their respective consolidated investment funds, Global Atlantic’s insurance companies and certain other entities including CFEs.

The presentations in the consolidated statement of financial condition and consolidated statement of operations reflect the significant industry diversification of KKR by its acquisition of Global Atlantic. Global Atlantic operates an insurance business, and KKR operates an asset management business, which manages the operations of the newly-formed Strategic Holdings segment (see Note 21 - "Segment Reporting"), each of which possess distinct characteristics. As a result, KKR developed a two-tiered approach for the financial statements presentation, where Global Atlantic's insurance operations are presented separately from KKR's asset management business. KKR believes that these separate presentations provide a more informative view of the consolidated financial position and results of operations than traditional aggregated presentations and that reporting Global Atlantic’s insurance operations separately is appropriate given, among other factors, the relative significance of Global Atlantic’s policy liabilities, which are not obligations of KKR. (other than the insurance companies that issued them). If a traditional aggregate presentation were to be used, KKR would expect to eliminate or combine several identical or similar captions, which would condense the presentations, but would also reduce the level of information presented. KKR also believes that using a traditional aggregate presentation would result in no new line items compared to the two-tier presentation included in the financial statements in this report.

In the ordinary course of business, KKR’s Asset Management business, Strategic Holdings business and Insurance business enter into transactions with each other, which may include transactions pursuant to their investment management agreements and certain financing arrangements. The borrowings from these financing arrangements are non-recourse to KKR beyond the assets designated to support such borrowings. All of the investment management and financing arrangements amongst KKR segments are eliminated in consolidation.

All intercompany transactions and balances have been eliminated.

For a detailed discussion about KKR’s significant accounting policies and for further information on accounting updates adopted in the prior year, see Note 2 to the financial statements in the Annual Report. Other than the items listed below, during the three months ended March 31, 2024, there were no significant updates to KKR’s significant accounting policies.

Notes to Financial Statements (Continued)

Use of Estimates

The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the recognition and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues, expenses, investment income (loss) and income taxes during the reporting periods. Such estimates include but are not limited to (i) the valuation of investments and financial instruments, (ii) the determination of the income tax provision, (iii) the impairment of goodwill and intangible assets, (iv) the impairment of available-for-sale investments, (v) the valuation of insurance policy liabilities, including market risk benefits, (vi) the valuation of embedded derivatives in policy liabilities and funds withheld, (vii) the determination of the allowance for loan losses, and (viii) amortization of deferred revenues and expenses associated with the insurance business.

Certain events particular to each industry and country or region in which the portfolio companies conduct their operations, as well as general market, economic, political and geopolitical, regulatory and public health conditions, may have a significant negative impact on KKR’s investments and profitability. Such events are beyond KKR’s control, and the likelihood that they may occur and the effect on KKR's use of estimates cannot be predicted. Actual results could differ from those estimates, and such differences could be material to the financial statements.

Compensation and Benefits

Carry Pool Allocation

With respect to our funds that provide for carried interest, KKR allocates a portion of the realized and unrealized carried interest that KKR earns to Associates Holdings, which is referred to as the carry pool, from which KKR's asset management employees and certain other carry pool participants are eligible to receive a carried interest allocation. The allocation is determined based upon a fixed arrangement between Associates Holdings and KKR, and KKR does not exercise discretion on whether to make an allocation to the carry pool upon a realization event. KKR refers to the portion of carried interest that KKR allocates to the carry pool as the carry pool percentage.

As of December 31, 2023, the carry pool percentage was fixed at 40%, 43% or 65% by investment fund, depending on the fund’s vintage. For funds that closed after December 31, 2020 but before December 31, 2023, the carry pool percentage was fixed at 65%. For funds that closed after June 30, 2017 but before December 31, 2020, the carry pool percentage was fixed at 43%, and the carry pool percentage was fixed at 40% for older funds that contributed to KKR's carry pool. Effective January 2, 2024, KKR is authorized to apply a carry pool percentage in excess of these fixed percentages of up to 80% for all funds.

This increase to the carry pool percentage was approved by a majority of KKR's independent directors, and the carry pool percentage may not be increased above 80% without the further approval of a majority of KKR's independent directors. For funds that closed after December 31, 2023, the carry pool percentage is fixed at 80%. For funds that closed prior to December 31, 2023, the carry pool percentage is calculated at a fixed percentage of 40%, 43% or 65% (depending on the fund’s vintage) for carried interest realized up to a high water mark, which was established based on the unrealized carried interest balance that existed on January 2, 2024, plus an additional percentage amount up to 80% based on a formulaic allocation, only if the unrealized carried interest balance at any period end exceeds the high water mark. This imposes a limitation of the carry pool allocation for such funds based on the amount of cumulative unrealized carried interest income earned subsequent to December 31, 2023.

For funds that closed before December 31, 2023, if the cumulative carried interest subsequent to December 31, 2023 is not sufficient to fund this formulaic allocation, the allocation of carried interest reverts to the carry pool percentage in effect before this modification. As such, upon modification of the carry pool percentage effective on January 2, 2024, the cumulative unrealized carried interest was not sufficient to fund the additional formulaic allocation percentage in excess of the pre-existing 40%, 43% and 65% carry pool percentages, and therefore no incremental expense was recognized as of such date. The carry pool percentage applicable for all funds that closed prior to December 31, 2023 will not be less than their applicable carry pool percentages of 40%, 43% or 65% prior to December 31, 2023, and will not be more than 80%. The intent of this modification is that for all funds that closed prior to January 2, 2024, upon the final liquidation of each fund, realized carried interest distributed will equal the historical fund carry pool allocations up to the high water mark and only distributions of realized carried interest in excess of the high water mark will be distributed at 80 percent if and only if the unrealized carried interest balance at any period end exceeds the high water mark. Under no circumstance would a distribution of carried interest exceed 80% of the total allocable carried interest at any time.

Notes to Financial Statements (Continued)

KKR accounts for the carry pool as a compensatory profit-sharing arrangement in Accrued Expenses and Other Liabilities within the accompanying consolidated statements of financial condition in conjunction with the related carried interest income and it is recorded as compensation expense. The liability that is recorded in each period reflects the legal entitlement of Associates Holdings at each point in time should the total unrealized carried interest be realized at the value recorded at each reporting date. 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.

Adoption of new accounting pronouncements

Fair value measurement of equity securities subject to contractual sale restrictions

In June 2022, the FASB issued ASU 2022–03, ASC Subtopic 820 “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions” ("ASU 2022–03"). According to ASU 2022-03, an entity should not consider the contractual sale restriction when measuring the equity security’s fair value and an entity is not allowed to recognize a contractual sale restriction as a separate unit of account.

ASU 2022–03 is effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. KKR adopted this accounting standard effective January 1, 2024 and its adoption on a prospective basis did not have any material impact on KKR's consolidated financial statements.

Accounting for Investments in Tax Credit Structures

In March 2023, the FASB issued ASU 2023–02 "Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method" ("ASU 2023–02") to expand the population of investments in tax credit structures that may be eligible to apply the proportional amortization method (“PAM”), if certain criteria are met. The election to use the PAM can be made on a tax credit program-by-program basis. Under the new guidance, certain disclosures are required for investments in tax credit programs for which the PAM is elected. The guidance is effective for fiscal years beginning after December 15, 2023. KKR adopted this accounting standard effective January 1, 2024 and its adoption did not have any material impact on KKR's consolidated financial statements.

Future application of accounting standards

Improvements to Reportable Segment Disclosures

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

Scope Application of Profits Interest and Similar Awards

In March 2024, the FASB issued ASU 2024–01, Compensation—Stock Compensation (Topic 718): Scope Application of Profits Interest and Similar Awards (“ASU 2024–01”). ASU 2024–01 amends the guidance in Accounting Standard Codification 718 (“ASC 718”) by adding an illustrative example to demonstrate and clarify how to apply the scope guidance to determine whether profits interests and similar awards should be accounted for as a share-based payment arrangement under ASC 718 or another standard. ASU 2024–01 will be effective for KKR’s reporting period ended March 31, 2025. KKR is currently evaluating the impact of the adoption of this guidance on its consolidated financial statements and disclosures.

Improvements to Income Tax Disclosures

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

Notes to Financial Statements (Continued)

3. REVENUES - ASSET MANAGEMENT AND STRATEGIC HOLDINGS

For the three months ended March 31, 2024 and 2023, respectively, Asset Management and Strategic Holdings revenues consisted of the following:

Three Months Ended March 31,
20242023
Management Fees$486,754$453,093
Fee Credits(94,046)(57,531)
Transaction Fees218,618209,839
Monitoring Fees48,96729,853
Incentive Fees6,6266,413
Expense Reimbursements8,09315,544
Consulting Fees18,51419,805
Total Fees and Other693,526677,016
Carried Interest1,144,928343,070
General Partner Capital Interest118,014105,948
Total Capital Allocation-Based Income (Loss)1,262,942449,018
Total Revenues$1,956,468$1,126,034

Notes to Financial Statements (Continued)

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

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

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

Three Months Ended March 31, 2024
Net Realized Gains (Losses)Net Unrealized Gains (Losses)Total
Private Equity (1)$(12,676)$348,441$335,765
Credit (1)57,430(81,451)(24,021)
Investments of Consolidated CFEs (1)5,00596,973101,978
Real Assets (1)(109,398)(105,223)(214,621)
Equity Method - Other (1)102,90387,540190,443
Other Investments (1)(269,858)345,47875,620
Foreign Exchange Forward Contracts and Options (2)35,139148,203183,342
Securities Sold Short (2)(7,169)(2,093)(9,262)
Other Derivatives (2)872,3632,450
Debt Obligations and Other (3)7,632(11,164)(3,532)
Net Gains (Losses) From Investment Activities$(190,905)$829,067$638,162
Three Months Ended March 31, 2023
Net Realized Gains (Losses)Net Unrealized Gains (Losses)Total
Private Equity (1)$199,081$(36,664)$162,417
Credit (1)(22,963)104,77581,812
Investments of Consolidated CFEs (1)(5,017)317,881312,864
Real Assets (1)9,434(325,909)(316,475)
Equity Method - Other (1)39,21929,50568,724
Other Investments (1)(112,663)(519)(113,182)
Foreign Exchange Forward Contracts and Options (2)(58,635)36,269(22,366)
Securities Sold Short (2)(3,475)2,241(1,234)
Other Derivatives (2)(2,122)14,33012,208
Debt Obligations and Other (3)56,521(400,698)(344,177)
Net Gains (Losses) From Investment Activities$99,380$(258,789)$(159,409)

(1)See Note 7 "Investments."

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

(3)See Note 16 "Debt Obligations."

Notes to Financial Statements (Continued)

5. NET INVESTMENT INCOME - INSURANCE

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

The components of net investment income were as follows:

Three Months Ended March 31,
20242023
Fixed maturity securities – interest and other income$1,327,010$1,050,796
Mortgage and other loan receivables559,682459,146
Investments in transportation and other leased assets78,46076,188
Investments in renewable energy13,59120,583
Investments in real estate45,97936,101
Short-term and other investment income167,33177,616
Income assumed from funds withheld receivable at interest22,23322,101
Policy loans24,50310,277
Income ceded to funds withheld payable at interest(519,999)(301,223)
Gross investment income1,718,7901,451,585
Less investment expenses:
Investment management and administration117,08985,341
Transportation and renewable energy asset depreciation and maintenance50,15149,162
Interest expense on derivative collateral and repurchase agreements31,64816,385
Net investment income$1,519,902$1,300,697

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

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

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

Three Months Ended March 31,
20242023
Realized (losses) gains on available-for-sale fixed maturity debt securities$(28,157)$3,432
Credit loss allowances on available-for-sale securities29,367(76,318)
Credit loss allowances on mortgage and other loan receivables(126,902)(64,111)
Allowances on unfunded commitments(4,578)(8,000)
Impairment of available-for-sale fixed maturity debt securities due to intent to sell—(26,741)
Unrealized (losses) gains on fixed maturity securities classified as trading(99,579)376,290
Unrealized losses on investments recognized under the fair-value option(42,207)(55,773)
Unrealized (losses) gains on real estate investments recognized at fair value under investment company accounting(78,011)63,192
Net gains (losses) on derivative instruments100,968(348,225)
Realized gains on funds withheld payable at interest portfolio24,2873,980
Realized (losses) gains on funds withheld receivable at interest portfolio(2,286)17,733
Other realized losses(14,388)(9,292)
Net investment-related gains (losses)$(241,486)$(123,833)

Notes to Financial Statements (Continued)

Allowance for credit losses

Available-for-sale fixed maturity securities

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

Three Months Ended March 31, 2024Three Months Ended March 31, 2023
CorporateStructuredTotalCorporateStructuredTotal
Balance, as of beginning of period$49,008$219,704$268,712$1,298$127,034$128,332
Initial credit loss allowance recognized on securities with no previously recognized allowance8,6948779,57115145,20045,351
Accretion of initial credit loss allowance on PCD securities—163163—351351
Reductions due to sales (or maturities, pay downs or prepayments) during the period of securities with a previously recognized credit loss allowance(60)(5,859)(5,919)—(3,887)(3,887)
Net additions / reductions for securities with a previously recognized credit loss allowance(5,094)(33,844)(38,938)—30,96730,967
Balances charged off(23,629)—(23,629)———
Balance, as of end of period$28,919$181,041$209,960$1,449$199,665$201,114

Mortgage and other loan receivables

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

Three Months Ended March 31, 2024Three Months Ended March 31, 2023
Commercial Mortgage LoansResidential Mortgage LoansConsumer and Other Loan ReceivablesTotalCommercial Mortgage LoansResidential Mortgage LoansConsumer and Other Loan ReceivablesTotal
Balance, as of beginning of period$319,631$107,204$175,608$602,443$227,315$125,824$207,089$560,228
Net provision (release)57,156(5,141)74,887126,90220,11110,31633,68464,111
Charge-offs(16,379)(639)(41,439)(58,457)—(1,693)(35,372)(37,065)
Recoveries of amounts previously charged-off——5,1085,108——1,8261,826
Balance, as of end of period$360,408$101,424$214,164$675,996$247,426$134,447$207,227$589,100

Proceeds and gross gains and losses from voluntary sales

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

Three Months Ended March 31,
20242023
AFS fixed maturity securities:
Proceeds from voluntary sales$1,999,289$1,406,925
Gross gains$8,359$15,464
Gross losses$(16,544)$(10,044)

Notes to Financial Statements (Continued)

7. INVESTMENTS

Investments consist of the following:

March 31, 2024December 31, 2023
Asset Management and Strategic Holdings
Private Equity$33,672,500$32,742,484
Credit8,401,5138,274,904
Investments of Consolidated CFEs24,961,63524,996,298
Real Assets11,973,03212,000,008
Equity Method - Other8,217,4898,163,831
Equity Method - Capital Allocation-Based Income8,950,5797,877,904
Other Investments4,517,2394,579,372
Investments - Asset Management and Strategic Holdings$100,693,987$98,634,801
Insurance
Fixed maturity securities, available-for-sale, at fair value(1)$74,048,277$69,414,188
Mortgage and other loan receivables41,215,98139,177,927
Fixed maturity securities, trading, at fair value(2)27,984,94918,805,470
Other investments10,241,1619,683,326
Funds withheld receivable at interest2,673,7232,713,645
Policy loans1,561,6081,556,030
Equity securities at fair value21,47119,737
Investments - Insurance$157,747,170$141,370,323
Total Investments$258,441,157$240,005,124

(1)Amortized cost of $83.5 billion and $78.7 billion, net of credit loss allowances of $210.0 million and $268.7 million, respectively.

(2)Amortized cost of $29.8 billion and $20.5 billion, respectively. Trading fixed maturity securities are held to back funds withheld payable at interest. The investment performance on these investments are ceded to third-party reinsurers.

As of March 31, 2024 and December 31, 2023, there were no investments which represented greater than 5% of total investments.

Notes to Financial Statements (Continued)

Fixed maturity securities

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

Cost or amortized costAllowance for Credit Losses (1)(2)Gross unrealizedFair value
As of March 31, 2024gainslosses
AFS fixed maturity securities portfolio by type:
U.S. government and agencies$3,621,287$—$43,351$(81,879)$3,582,759
U.S. state, municipal and political subdivisions5,530,066—23,263(1,011,431)4,541,898
Corporate46,971,213(28,919)163,284(6,850,383)40,255,195
Residential mortgage-backed securities, or “RMBS”10,497,867(122,870)31,290(715,753)9,690,534
Commercial mortgage-backed securities, or “CMBS”7,846,132(35,630)9,321(581,330)7,238,493
Collateralized bond obligations, or “CBOs”2,839,214(1,197)—(142,271)2,695,746
CLOs3,341,591(9,649)10,521(42,526)3,299,937
Asset-backed securities, or “ABSs”2,874,043(11,695)17,654(136,287)2,743,715
Total AFS fixed maturity securities$83,521,413$(209,960)$298,684$(9,561,860)$74,048,277

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

(2)Includes credit loss allowances on purchase-credit deteriorated fixed-maturity securities of $(10.7) million.

Cost or amortized costAllowance for Credit Losses (1)(2)Gross unrealizedFair value
As of December 31, 2023gainslosses
AFS fixed maturity securities portfolio by type:
U.S. government and agencies$1,209,507$—$62,514$(68,929)$1,203,092
U.S. state, municipal and political subdivisions5,562,826—29,699(985,133)4,607,392
Corporate46,378,337(49,008)211,570(6,592,143)39,948,756
RMBS8,734,629(152,067)38,206(674,550)7,946,218
CMBS7,491,743(35,953)4,195(731,358)6,728,627
CBOs2,951,511(1,214)—(143,818)2,806,479
CLOs3,493,731(19,077)6,483(52,365)3,428,772
ABSs2,901,573(11,393)14,358(159,686)2,744,852
Total AFS fixed maturity securities$78,723,857$(268,712)$367,025$(9,407,982)$69,414,188

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

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

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

Notes to Financial Statements (Continued)

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

As of March 31, 2024Cost or amortized cost (net of allowance)Fair value
Due in one year or less$1,582,351$1,527,973
Due after one year through five years14,708,22314,259,600
Due after five years through ten years8,802,8788,289,300
Due after ten years31,000,19524,302,979
Subtotal56,093,64748,379,852
RMBS10,374,9979,690,534
CMBS7,810,5027,238,493
CBOs2,838,0172,695,746
CLOs3,331,9423,299,937
ABSs2,862,3482,743,715
Total AFS fixed maturity securities$83,311,453$74,048,277

Securities in a continuous unrealized loss position

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

Less than 12 months12 months or moreTotal
As of March 31, 2024Fair valueUnrealized lossesFair valueUnrealized lossesFair valueUnrealized losses
AFS fixed maturity securities portfolio by type:
U.S. government and agencies$683,724$(11,291)$194,595$(70,588)$878,319$(81,879)
U.S. state, municipal and political subdivisions158,009(3,405)3,748,828(1,008,026)3,906,837(1,011,431)
Corporate4,496,293(175,062)26,091,489(6,675,321)30,587,782(6,850,383)
RMBS2,844,225(86,123)4,342,132(629,630)7,186,357(715,753)
CMBS271,541(1,838)5,962,927(579,492)6,234,468(581,330)
CBOs1,817(169)2,693,929(142,102)2,695,746(142,271)
CLOs591,577(1,202)619,979(41,324)1,211,556(42,526)
ABSs322,632(8,046)1,789,721(128,241)2,112,353(136,287)
Total AFS fixed maturity securities in a continuous loss position$9,369,818$(287,136)$45,443,600$(9,274,724)$54,813,418$(9,561,860)
Less than 12 months12 months or moreTotal
As of December 31, 2023Fair valueUnrealized lossesFair valueUnrealized lossesFair valueUnrealized losses
AFS fixed maturity securities portfolio by type:
U.S. government and agencies$94,807$(2,512)$198,750$(66,417)$293,557$(68,929)
U.S. state, municipal and political subdivisions112,468(4,140)3,829,447(980,993)3,941,915(985,133)
Corporate4,360,234(189,026)27,108,292(6,403,117)31,468,526(6,592,143)
RMBS1,371,230(66,550)4,354,902(608,000)5,726,132(674,550)
CMBS332,095(4,535)6,031,766(726,823)6,363,861(731,358)
CBOs1,867(118)2,804,612(143,700)2,806,479(143,818)
CLOs246,728(868)1,679,813(51,497)1,926,541(52,365)
ABSs553,438(15,760)1,742,373(143,926)2,295,811(159,686)
Total AFS fixed maturity securities in a continuous loss position$7,072,867$(283,509)$47,749,955$(9,124,473)$54,822,822$(9,407,982)

Notes to Financial Statements (Continued)

Unrealized gains and losses can be created by changing interest rates or several other factors, including changing credit spreads. Global Atlantic had gross unrealized losses on below investment grade AFS fixed maturity securities of $647.8 million and $694.6 million as of March 31, 2024 and December 31, 2023, respectively. The single largest unrealized loss on AFS fixed maturity securities was $53.1 million and $53.4 million as of March 31, 2024 and December 31, 2023, respectively. Global Atlantic had 5,940 and 5,886 securities in an unrealized loss position as of March 31, 2024 and December 31, 2023, respectively.

As of March 31, 2024, AFS fixed maturity securities in an unrealized loss position for 12 months or more consisted of 4,875 debt securities. These debt securities primarily relate to Corporate, RMBS, and U.S. state, municipal and political subdivisions fixed maturity securities, which have depressed values due primarily to an increase in interest rates since the purchase of these securities. Unrealized losses were not recognized in net income on these debt securities since Global Atlantic neither intends to sell the securities nor does it believe that it is more likely than not that it will be required to sell these securities before recovery of their cost or amortized cost basis. For securities with significant declines in value, individual security level analysis was performed utilizing underlying collateral default expectations, market data and industry analyst reports.

Mortgage and other loan receivables

Mortgage and other loan receivables consist of the following:

March 31, 2024December 31, 2023
Commercial mortgage loans(1)$22,159,689$21,861,245
Residential mortgage loans(1)14,728,78212,722,778
Consumer loans4,225,0784,424,882
Other loan receivables(2)778,428771,465
Total mortgage and other loan receivables41,891,97739,780,370
Allowance for credit losses(3)(675,996)(602,443)
Total mortgage and other loan receivables, net of allowance for credit losses$41,215,981$39,177,927

(1)Includes $686.9 million and $697.4 million of loans carried at fair value using the fair value option as of March 31, 2024 and December 31, 2023, respectively. The fair value option was elected for these loans for asset-liability matching purposes. These loans had unpaid principal balances of $779.8 million and $785.2 million as of March 31, 2024 and December 31, 2023, respectively.

(2)As of March 31, 2024 and December 31, 2023, other loan receivables consisted primarily of loans collateralized by aircraft of $337.0 million and $315.4 million, respectively, and loans collateralized by residential mortgages of $200 million.

(3)Includes credit loss allowances on purchase-credit deteriorated mortgage and other loan receivables of $(86.5) million and $(91.7) million as of March 31, 2024 and December 31, 2023, respectively.

The maturity distribution for residential and commercial mortgage loans was as follows as of March 31, 2024:

YearsResidentialCommercialTotal mortgage loans
Remainder of 2024$87,916$2,248,670$2,336,586
202514,6023,780,9193,795,521
2026767,4236,547,2217,314,644
2027802,3493,560,2524,362,601
2028135,2381,448,7071,583,945
202913,882672,159686,041
Thereafter12,907,3723,901,76116,809,133
Total$14,728,782$22,159,689$36,888,471

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

Notes to Financial Statements (Continued)

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

Mortgage loans – carrying value by geographic regionMarch 31, 2024December 31, 2023
Pacific$9,339,08625.3%$8,649,25625.0%
West South Central4,646,65612.6%4,202,50112.2%
South Atlantic10,251,28127.8%9,653,95527.9%
Middle Atlantic4,658,93112.6%4,436,12912.8%
East North Central1,241,3683.4%1,166,4603.4%
Mountain3,390,7239.2%3,262,8019.4%
New England1,510,2634.1%1,470,7414.3%
East South Central791,4292.1%731,0532.1%
West North Central412,5221.1%358,6091.0%
Other regions646,2121.8%652,5181.9%
Total by geographic region$36,888,471100.0%$34,584,023100.0%
Mortgage loans – carrying value by property typeMarch 31, 2024December 31, 2023
Residential$14,728,78239.9%$12,722,77836.8%
Office building4,585,90812.4%4,586,27713.3%
Multi-family11,463,51131.1%11,495,63833.2%
Industrial4,514,19312.2%4,415,81912.8%
Retail493,4021.3%493,5961.4%
Warehouse304,2570.8%291,1160.8%
Other property types798,4182.3%578,7991.7%
Total by property type$36,888,471100.0%$34,584,023100.0%

As of March 31, 2024 and December 31, 2023, Global Atlantic had $586.6 million and $510.9 million of mortgage loans that were 90 days or more past due or are in the process of foreclosure, respectively, and have been classified as non-income producing (non-accrual status). Global Atlantic ceases accrual of interest on loans that are more than 90 days past due or are in the process of foreclosure and recognizes income as cash is received.

Notes to Financial Statements (Continued)

Credit quality indicators

Mortgage and loan receivable performance status

The following table represents the portfolio of mortgage and loan receivables by origination year and performance status as of March 31, 2024 and December 31, 2023:

By year of origination
Performance status as of March 31, 202420242023202220212020PriorTotal
Commercial mortgage loans
Gross charge-offs for the three months ended March 31, 2024$—$—$—$—$—$(16,379)$(16,379)
Current$305,720$3,604,283$6,371,836$6,558,483$624,212$4,291,434$21,755,968
30 to 59 days past due———45,651——45,651
60 to 89 days past due—————9,4949,494
90 days or more past due or in process of foreclosure———225,34536,89086,341348,576
Total commercial mortgage loans$305,720$3,604,283$6,371,836$6,829,479$661,102$4,387,269$22,159,689
Residential mortgage loans
Gross charge-offs for the three months ended March 31, 2024$—$(7)$(47)$(165)$—$(420)$(639)
Current$924,330$3,824,892$1,975,866$4,446,268$1,395,241$1,620,715$14,187,312
30 to 59 days past due—74,90129,10642,5862,62997,015246,237
60 to 89 days past due—7,9564,34113,7651,04230,08257,186
90 days or more past due or in process of foreclosure—7,48622,25172,72212,693122,895238,047
Total residential mortgage loans$924,330$3,915,235$2,031,564$4,575,341$1,411,605$1,870,707$14,728,782
Consumer loans
Gross charge-offs for the three months ended March 31, 2024$—$(468)$(5,390)$(21,344)$(5,878)$(8,296)$(41,376)
Current$352$128,601$470,761$1,638,834$666,875$1,209,943$4,115,366
30 to 59 days past due—8174,10026,1194,21616,35951,611
60 to 89 days past due—2262,63511,7422,3918,60125,595
90 days or more past due or in process of foreclosure—1,0334,16313,2234,00310,08432,506
Total consumer loans$352$130,677$481,659$1,689,918$677,485$1,244,987$4,225,078
Total mortgage and consumer loan receivables$1,230,402$7,650,195$8,885,059$13,094,738$2,750,192$7,502,963$41,113,549

Notes to Financial Statements (Continued)

By year of origination
Performance status as of December 31, 202320232022202120202019PriorTotal
Commercial mortgage loans
Gross charge-offs for the year ended December 31, 2023$—$—$—$—$(14,000)$(7,616)$(21,616)
Current$3,600,652$6,278,419$6,633,293$624,457$1,395,717$2,969,381$21,501,919
30 to 59 days past due———————
60 to 89 days past due—————79,63579,635
90 days or more past due or in process of foreclosure——182,06936,859—60,763279,691
Total commercial mortgage loans$3,600,652$6,278,419$6,815,362$661,316$1,395,717$3,109,779$21,861,245
Residential mortgage loans
Gross charge-offs for the year ended December 31, 2023$(6)$(1,228)$(2,244)$(913)$(1,412)$(2,373)$(8,176)
Current$2,794,600$1,981,373$4,518,357$1,358,200$221,566$1,365,231$12,239,327
30 to 59 days past due43,43222,29137,0823,5545,46184,079195,899
60 to 89 days past due8,4678,5209,9911,4371,38926,56556,369
90 days or more past due or in process of foreclosure2,51819,32672,75312,0489,265115,273231,183
Total residential mortgage loans$2,849,017$2,031,510$4,638,183$1,375,239$237,681$1,591,148$12,722,778
Consumer loans
Gross charge-offs for the year ended December 31, 2023$(185)$(18,117)$(83,147)$(23,273)$(15,740)$(19,783)$(160,245)
Current$109,393$497,113$1,726,280$701,655$610,988$656,270$4,301,699
30 to 59 days past due1,7074,22928,9665,0824,49712,68657,167
60 to 89 days past due1,1932,54814,8723,2982,5616,75631,228
Over 90 days past due2,5973,99113,4614,2813,9076,55134,788
Total consumer loans114,890507,8811,783,579714,316621,953682,2634,424,882
Total mortgage and consumer loan receivables$6,564,559$8,817,810$13,237,124$2,750,871$2,255,351$5,383,190$39,008,905

Loan-to-value ratio on mortgage loans

The loan-to-value ratio is expressed as a percentage of the current amount of the loan relative to the value of the underlying collateral. The following table summarizes Global Atlantic's loan-to-value ratios for its commercial mortgage loans as of March 31, 2024 and December 31, 2023:

Loan-to-value as of March 31, 2024, by year of originationCarrying value loan-to-value 70% and lessCarrying value loan-to-value 71% - 90%Carrying value loan-to-value over 90%Total carrying value
2024$305,720$—$—$305,720
20233,604,283——3,604,283
20226,005,991365,845—6,371,836
20214,832,0691,554,835442,5756,829,479
2020496,24792,78972,066661,102
20191,252,23454,99237,6951,344,921
Prior2,814,72353,510174,1153,042,348
Total commercial mortgage loans$19,311,267$2,121,971$726,451$22,159,689

Notes to Financial Statements (Continued)

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

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

The weighted average loan-to-value ratio for Global Atlantic's residential mortgage loans was 64% and 63% as of March 31, 2024 and December 31, 2023, respectively.

Loan modifications

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

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

The tables below present the carrying value of loans to borrowers experiencing financial difficulty, for which modifications have been granted during the three months ended March 31, 2024 and 2023:

Three months ended March 31, 2024 by loan typeDeferral of Amounts DueInterest Rate ReliefMaturity ExtensionCombination**(1)**TotalPercentage of total carrying value outstanding
Commercial mortgage loans$—$—$—$37,695$37,6950.17%
Residential mortgage loans2,649—8,1505,33416,1330.11%
Consumer loans96552211,9859,03622,5080.53%
Total$3,614$522$20,135$52,065$76,336

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

Three months ended March 31, 2023 by loan typeDeferral of Amounts DueInterest Rate ReliefMaturity ExtensionCombination**(1)**TotalPercentage of total carrying value outstanding
Commercial mortgage loans$—$—$—$66,813$66,8130.35%
Residential mortgage loans72519028,68652230,1230.28%
Consumer loans1,251———1,2510.03%
Total$1,976$190$28,686$67,335$98,187

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

Notes to Financial Statements (Continued)

All of the commercial mortgage loans that had a combination of modifications had both interest rate relief and maturity extensions. For these loans, the interest rate relief generally involved either a change from a floating rate or a decrease in fixed rate to a weighted average rate of 3.0% and 5.5%, for the three months ended March 31, 2024 and 2023, respectively. The maturity extensions for these loans added a weighted-average of 3.0 years and 1.0 year to the life of the loans, for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, Global Atlantic has commitments to lend additional funds of $3.8 million for the modified commercial mortgage loans disclosed above.

The table below presents the performance status of the loans modified during the twelve months ended March 31, 2024:

Performance status as of March 31, 2024 by loan typeCurrent30-59 days past due60-89 days past due90 days or more past due or in process of foreclosureTotal
Commercial mortgage loans$490,584$—$—$—$490,584
Residential mortgage loans21,5812,75882810,66935,836
Consumer loans56,9939,1633,3992,60572,160
Total**(1)**$569,158$11,921$4,227$13,274$598,580

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

Other investments

Other investments consist of the following:

March 31, 2024December 31, 2023
Investments in real estate(1)$4,737,200$4,778,431
Investments in renewable energy(2)1,326,9921,348,080
Investments in transportation and other leased assets(3)3,013,6642,972,469
Other investment funds and partnerships753,742179,469
Federal Home Loan Bank (FHLB) common stock and other investments409,563404,877
Total other investments$10,241,161$9,683,326

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

(2)Net of accumulated depreciation attributed to consolidated renewable energy assets of $163.5 million and $154.1 million as of March 31, 2024 and December 31, 2023, respectively.

(3)Net of accumulated depreciation of $342.9 million and $313.6 million as of March 31, 2024 and December 31, 2023, respectively.

The total amount of other investments accounted for using the equity method of accounting was $762.1 million and $143.3 million as of March 31, 2024 and December 31, 2023, respectively. Global Atlantic's maximum exposure to loss related to these equity method investments is limited to the carrying value of these investments plus unfunded commitments of $23.7 million and $19.7 million as of March 31, 2024 and December 31, 2023, respectively.

In addition, Global Atlantic has investments that would otherwise require the equity method of accounting for which the fair value option has been elected. The carrying amount of these investments was $138.5 million and $175.3 million as of March 31, 2024 and December 31, 2023, respectively.

Repurchase agreement transactions

As of March 31, 2024 and December 31, 2023, Global Atlantic participated in repurchase agreements with a notional value of $843.2 million and $1.4 billion, respectively. As collateral for these transactions, Global Atlantic typically posts AFS fixed maturity securities and residential mortgage loans, which are included in Insurance - Investments in the consolidated statements of financial condition. The gross obligation for repurchase agreements is reported in other liabilities in the consolidated statements of financial condition.

Notes to Financial Statements (Continued)

The carrying value of assets pledged for repurchase agreements by type of collateral and remaining contractual maturity of the repurchase agreements as of March 31, 2024 and December 31, 2023 is presented in the following tables:

As of March 31, 2024Overnight<30 Days30 - 90 Days> 90 DaysTotal
AFS corporate securities$—$—$836,566$979$837,545
Residential mortgage loans—22425,73526,51352,472
Total assets pledged$—$224$862,301$27,492$890,017
As of December 31, 2023Overnight<30 Days30 - 90 Days> 90 DaysTotal
AFS corporate securities$—$—$524,411$849,368$1,373,779
Residential mortgage loans—39,289——39,289
Total assets pledged$—$39,289$524,411$849,368$1,413,068

Other pledges and restrictions

Certain Global Atlantic subsidiaries are members of regional banks in the FHLB system and such membership requires the members to own stock in these FHLBs. Global Atlantic owns an aggregate of $131.7 million (accounted for at cost basis) of stock in FHLBs as of both March 31, 2024 and December 31, 2023. In addition, Global Atlantic insurance company subsidiaries have entered into funding agreements with the FHLB, which require that Global Atlantic pledge eligible assets, such as fixed maturity securities and mortgage loans, as collateral. Assets pledged as collateral for these funding agreements had a carrying value of $3.5 billion and $3.6 billion as of March 31, 2024 and December 31, 2023, respectively.

Insurance – statutory deposits

As of March 31, 2024 and December 31, 2023, the carrying value of the assets on deposit with various state and U.S. governmental authorities were $146.0 million and $148.5 million, respectively.

Notes to Financial Statements (Continued)

8. DERIVATIVES

Asset Management and Strategic Holdings

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

Insurance

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

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

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

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

The restricted cash which was held in connection with open derivative transactions with exchange brokers was $181.7 million and $133.0 million as of March 31, 2024 and December 31, 2023, respectively.

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

Credit Risk

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

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

Notes to Financial Statements (Continued)

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

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

As of March 31, 2024Notional ValueDerivative AssetsDerivative Liabilities
Asset Management and Strategic Holdings
Foreign Exchange Contracts and Options$17,908,773$294,511$321,024
Other Derivatives824,1344,25817
Total Asset Management and Strategic Holdings$18,732,907$298,769$321,041
Insurance
Derivatives designated as hedge accounting instruments:
Interest rate contracts$8,770,500$—$421,859
Foreign currency contracts2,199,01235,57335,332
Total derivatives designated as hedge accounting instruments$10,969,512$35,573$457,191
Derivatives not designated as hedge accounting instruments:
Interest rate contracts$28,140,901$182,268$303,621
Equity market contracts35,709,2201,708,083199,924
Foreign currency contracts1,379,43575,02644,523
Other contracts60,996957514
Total derivatives not designated as hedge accounting instruments$65,290,552$1,966,334$548,582
Impact of netting(2)—(1,973,523)(851,062)
Total Insurance(1)$76,260,064$28,384$154,711
Fair value included within total assets and liabilities$94,992,971$327,153$475,752

(1)Excludes embedded derivatives. The fair value of these embedded derivatives related to assets was $114.0 million and the fair value of these embedded derivatives related to liabilities was $2.0 billion as of March 31, 2024.

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

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

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

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

Notes to Financial Statements (Continued)

Derivatives designated as accounting hedges

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

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

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

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

As of March 31, 2024As of December 31, 2023
Carrying amount of hedged assets/(liabilities)Cumulative amount of fair value hedging adjustments included in the carrying amount of hedged assets/(liabilities)****(1)Carrying amount of hedged assets/(liabilities)Cumulative amount of fair value hedging adjustments included in the carrying amount of hedged assets/(liabilities)****(1)
AFS fixed maturity securities(2)$2,168,807$(45,116)$2,324,364$80,210
Debt(2,307,233)(202,919)(1,608,294)(165,817)
Policy liabilities(5,058,716)(272,648)(4,380,048)(255,308)

(1)Includes $23.4 million and $27.8 million of hedging adjustments on discontinued hedging relationships as of March 31, 2024 and December 31, 2023, respectively.

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

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

As of March 31, 2024 and December 31, 2023, there was a cumulative loss of $(158.2) million and $(126.9) million, respectively, on the currently designated bond forwards recorded in accumulated other comprehensive loss. Amounts deferred in accumulated other comprehensive loss are reclassified to net investment income following the qualifying purchases of AFS securities, as an adjustment to the yield earned over the life of the purchased securities, using the effective interest method.

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

Notes to Financial Statements (Continued)

Derivative results

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

Three Months Ended March 31, 2024
Net Gains (Losses) from Investment ActivitiesNet investment-related gains (losses)Net investment incomeNet policy benefits and claimsInterest expenseChange in AOCI
Derivatives designated as hedge accounting instruments:
Fair value hedges
Gains (losses) on derivatives designated as hedge instruments:
Interest rate contracts$—$—$—$(63,695)$(52,695)$—
Foreign currency contracts—49,541982——(4,690)
Total gains (losses) on derivatives designated as hedge instruments$—$49,541$982$(63,695)$(52,695)$(4,690)
Gains (losses) on hedged items:
Interest rate contracts$—$—$—$63,695$52,695$—
Foreign currency contracts—(45,116)————
Total gains (losses) on hedged items$—$(45,116)$—$63,695$52,695$—
Amortization for gains (losses) excluded from assessment of effectiveness:
Foreign currency contracts$—$6,381$—$—$—$—
Total amortization for gains (losses) excluded from assessment of effectiveness—6,381————
Total gains (losses) on fair value hedges, net of hedged items$—$10,806$982$—$—$(4,690)
Cash flow hedges
Interest rate contracts$—$—$(845)$—$—$(31,288)
Total gains (losses) on cash flow hedges$—$—$(845)$—$—$(31,288)
Derivatives not designated as hedge accounting instruments:
Asset Management and Strategic Holdings
Foreign Exchange Contracts and Options$183,342$—$—$—$—$—
Other Derivatives2,450—————
Total included in Net Gains (Losses) from Investment Activities$185,792$—$—$—$—$—
Insurance
Embedded derivatives - funds withheld receivable$—$25,330$—$—$—$—
Embedded derivatives - funds withheld payable—95,441————
Equity index options—257,103————
Equity future contracts—(63,516)————
Interest rate contracts—(249,295)————
Foreign exchange and other derivative contracts—25,099————
Total gains (losses) on derivatives not designated as hedge accounting instruments from Insurance Activities$—$90,162$—$—$—$—
Total$185,792$100,968$137$—$—$(35,978)

Notes to Financial Statements (Continued)

Three Months Ended March 31, 2023
Net Gains (Losses) from Investment ActivitiesNet investment-related gains (losses)Net investment incomeNet policy benefits and claimsInterest expenseChange in AOCI
Derivatives designated as hedge accounting instruments:
Fair value hedges
Gains (losses) on derivatives designated as hedge instruments:
Interest rate contracts$—$—$—$34,557$20,104$—
Foreign currency contracts—(35,388)———9,280
Total gains (losses) on derivatives designated as hedge instruments$—$(35,388)$—$34,557$20,104$9,280
Gains (losses) on hedged items:
Interest rate contracts$—$—$—$(34,557)$(20,104)$—
Foreign currency contracts—29,624————
Total gains (losses) on hedged items$—$29,624$—$(34,557)$(20,104)$—
Amortization for gains (losses) excluded from assessment of effectiveness:
Foreign currency contracts$—$6,826$—$—$—$—
Total amortization for gains (losses) excluded from assessment of effectiveness$—$6,826$—$—$—$—
Total gains (losses) on fair value hedges, net of hedged items$—$1,062$—$—$—$9,280
Cash flow hedges
Interest rate contracts$—$(268)$—$—$—$57,920
Total gains (losses) on cash flow hedges$—$(268)$—$—$—$57,920
Derivatives not designated as hedge accounting instruments:
Asset Management and Strategic Holdings
Foreign Exchange Contracts and Options$(22,366)$—$—$—$—$—
Other Derivatives12,208—————
Total included in Net Gains (Losses) from Investment Activities$(10,158)$—$—$—$—$—
Insurance
Embedded derivatives - funds withheld receivable$—$(30,767)$—$—$—$—
Embedded derivatives - funds withheld payable—(430,235)————
Equity index options—83,887————
Equity future contracts—(40,825)————
Interest rate and foreign exchange contracts—68,996————
Other contracts—(75)————
Total gains (losses) on derivatives not qualifying as hedge accounting instruments from Insurance Activities$—$(349,019)$—$—$—$—
Total$(10,158)$(348,225)$—$—$—$67,200

Notes to Financial Statements (Continued)

Collateral

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

As of March 31, 2024Gross amount recognizedGross amounts offset in the statements of financial position**(1)**Net amounts presented in the statements of financial conditionCollateral (received) / pledgedNet amount after collateral
Derivative assets (excluding embedded derivatives)$2,001,907$(1,973,523)$28,384$(16,333)$12,051
Derivative liabilities (excluding embedded derivatives)$1,005,773$(851,062)$154,711$198,464$(43,753)

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

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

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

Notes to Financial Statements (Continued)

9. FAIR VALUE MEASUREMENTS

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

Assets, at fair value:

March 31, 2024
Level ILevel IILevel IIITotal
Asset Management and Strategic Holdings
Private Equity$1,356,004$58,353$32,258,143$33,672,500
Credit208,6182,997,9805,194,9158,401,513
Investments of Consolidated CFEs—24,961,635—24,961,635
Real Assets424,91118,57311,529,54811,973,032
Equity Method - Other370,264593,0501,534,0732,497,387
Other Investments239,25773,7804,204,2024,517,239
Total Investments$2,599,054$28,703,371$54,720,881$86,023,306
Foreign Exchange Contracts and Options—294,511—294,511
Other Derivatives—4,258—4,258
Total Assets at Fair Value - Asset Management and Strategic Holdings$2,599,054$29,002,140$54,720,881$86,322,075
Insurance
AFS fixed maturity securities:
U.S. government and agencies$3,461,569$121,190$—$3,582,759
U.S. state, municipal and political subdivisions—4,541,898—4,541,898
Corporate—32,183,6168,071,57940,255,195
Structured securities—23,742,3691,926,05625,668,425
Total AFS fixed maturity securities$3,461,569$60,589,073$9,997,635$74,048,277
Trading fixed maturity securities:
U.S. government and agencies$5,991,106$170,734$—$6,161,840
U.S. state, municipal and political subdivisions—1,266,878—1,266,878
Corporate—14,271,718378,43514,650,153
Structured securities—5,235,935670,1435,906,078
Total trading fixed maturity securities$5,991,106$20,945,265$1,048,578$27,984,949
Equity securities5,648—15,82321,471
Mortgage and other loan receivables——686,938686,938
Other investments——4,897,017(1)4,897,017
Funds withheld receivable at interest——113,991113,991
Reinsurance recoverable——965,877965,877
Derivative assets:
Equity market contracts1,2251,706,858—1,708,083
Interest rate contracts1,577180,691—182,268
Other contracts—957—957
Foreign currency contracts—110,599—110,599
Impact of netting(2,188)(1,971,335)—(2)(1,973,523)
Total derivative assets$614$27,770$—$28,384
Separate account assets4,223,173——4,223,173
Total Assets at Fair Value - Insurance$13,682,110$81,562,108$17,725,859$112,970,077
Total Assets at Fair Value$16,281,164$110,564,248$72,446,740$199,292,152

Notes to Financial Statements (Continued)

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

(1)Other investments excluded from the fair value hierarchy include private equity funds for which fair value is measured at net asset value per share as a practical expedient. As of March 31, 2024 and December 31, 2023, the fair value of these investments was $670.6 million and $138.5 million, respectively. These investments have strategies primarily focused on real assets (including real estate and infrastructure) and are subject to certain restrictions on redemption. As of March 31, 2024, there were $3.1 million of unfunded commitments associated with these investments.

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

Notes to Financial Statements (Continued)

Liabilities, at fair value:

March 31, 2024
Level ILevel IILevel IIITotal
Asset Management and Strategic Holdings
Securities Sold Short$168,262$—$—$168,262
Foreign Exchange Contracts and Options—321,024—321,024
Unfunded Revolver Commitments——95,004(1)95,004
Other Derivatives17——17
Debt Obligations of Consolidated CFEs—25,075,510—25,075,510
Total Liabilities at Fair Value - Asset Management and Strategic Holdings$168,279$25,396,534$95,004$25,659,817
Insurance
Policy liabilities (including market risk benefits)$—$—$1,337,563(3)$1,337,563
Closed block policy liabilities——1,005,6271,005,627
Funds withheld payable at interest——(2,542,744)(2,542,744)
Derivative instruments payable:
Equity market contracts4,069195,855—199,924
Interest rate contracts1,087724,393—725,480
Foreign currency contracts—79,855—79,855
Other contracts—514—514
Impact of netting(2,188)(848,874)—(2)(851,062)
Total derivative instruments payable2,968151,743—154,711
Embedded derivative – interest-sensitive life products——486,199486,199
Embedded derivative – annuity products——4,051,4054,051,405
Total Liabilities at Fair Value - Insurance$2,968$151,743$4,338,050$4,492,761
Total Liabilities at Fair Value$171,247$25,548,277$4,433,054$30,152,578

Notes to Financial Statements (Continued)

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

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

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

(3)Includes market risk benefit of $1.0 billion and $1.1 billion as of March 31, 2024 and December 31, 2023, respectively.

Notes to Financial Statements (Continued)

The following tables summarize changes in assets and liabilities measured and reported at fair value for which Level III inputs have been used to determine fair value for the three months ended March 31, 2024 and 2023, respectively.

Three Months Ended March 31, 2024
Balance, Beg. of PeriodTransfers In / (Out) - Changes in ConsolidationTransfers InTransfers OutNet Purchases/Issuances/Sales/SettlementsNet Unrealized and Realized Gains (Losses)Change in OCIBalance, End of PeriodChanges in Net Unrealized Gains (Losses) Included in Earnings related to Level III Assets and Liabilities still held as of the Reporting DateChanges in Net Unrealized Gains (Losses) Included in OCI related to Level III Assets and Liabilities still held as of the Reporting Date
Assets
Asset Management and Strategic Holdings
Private Equity$30,921,574$—$—$—$741,462$595,107$—$32,258,143$593,507$—
Credit5,452,916—148,072(105,080)(258,589)(42,404)—5,194,915(37,131)—
Real Assets11,295,633———350,333(116,418)—11,529,548(117,618)—
Equity Method - Other1,537,962———623(4,512)—1,534,073(6,115)—
Other Investments4,265,768——(8,106)(122,560)68,9231774,204,20274,729177
Total Assets - Asset Management and Strategic Holdings$53,473,853$—$148,072$(113,186)$711,269$500,696$177$54,720,881$507,372$177
Insurance
AFS fixed maturity securities:
Corporate fixed maturity securities$8,571,003$—$—$(301)$(544,590)$(47,622)$93,089$8,071,579$—$93,046
Structured securities1,830,000—53,014—23,8147,63911,5891,926,056—12,136
Total AFS fixed maturity securities10,401,003—53,014(301)(520,776)(39,983)104,6789,997,635—105,182
Trading fixed maturity securities:
Corporate fixed maturity securities656,923—191—(319,550)40,871—378,43540,396—
Structured securities593,238—91,658—(24,223)9,470—670,14310,428—
Total trading fixed maturity securities1,250,161—91,849—(343,773)50,341—1,048,57850,824—
Equity securities15,522————301—15,823301—
Mortgage and other loan receivables697,402———(5,792)(4,672)—686,938(4,304)—
Other investments4,925,751———51,066(79,800)—4,897,017(78,044)—
Funds withheld receivable at interest88,661————25,330—113,991——
Reinsurance recoverable926,035———(11,668)51,510—965,877——
Total Assets - Insurance$18,304,535$—$144,863$(301)$(830,943)$3,027$104,678$17,725,859$(31,223)$105,182
Total$71,778,388$—$292,935$(113,487)$(119,674)$503,723$104,855$72,446,740$476,149$105,359

Notes to Financial Statements (Continued)

Three Months Ended March 31, 2023
Balance, Beg. of PeriodTransfers In / (Out) - Changes in ConsolidationTransfers InTransfers OutNet Purchases/Issuances/Sales/SettlementsNet Unrealized and Realized Gains (Losses)Change in OCIBalance, End of PeriodChanges in Net Unrealized Gains (Losses) Included in Earnings related to Level III Assets and Liabilities still held as of the Reporting DateChanges in Net Unrealized Gains (Losses) Included in OCI related to Level III Assets and Liabilities still held as of the Reporting Date
Assets
Asset Management and Strategic Holdings
Private Equity$25,336,957$—$—$—$933,427$(80,883)$—$26,189,501$(82,903)$—
Credit5,786,026—17,628(23,758)76,33246,350—5,902,57844,069—
Real Assets17,015,112———2,215,040(283,301)—18,946,851(288,639)—
Equity Method - Other1,624,420———5,644(27,370)—1,602,694(23,357)—
Other Investments3,334,366——(22,376)511,252(84,796)—3,738,446(92,618)—
Other Derivatives————2,153(2,153)————
Total Assets - Asset Management and Strategic Holdings$53,096,881$—$17,628$(46,134)$3,743,848$(432,153)$—$56,380,070$(443,448)$—
Insurance
AFS fixed maturity securities:
Corporate fixed maturity securities$8,310,657$—$—$—$(66,084)$21,265$28,585$8,294,423$—$19,326
Structured securities1,419,441—170,775(3,374)154,983(4,139)33,0991,770,785—32,822
Total AFS fixed maturity securities9,730,098—170,775(3,374)88,89917,12661,68410,065,208—52,148
Trading fixed maturity securities:
Corporate fixed maturity securities672,023———(27,893)(12,260)—631,870(11,841)—
Structured securities643,811—5,890(6,747)14,0174,594—661,5656,060—
Total trading fixed maturity securities1,315,834—5,890(6,747)(13,876)(7,666)—1,293,435(5,781)—
Equity securities16,286————(975)—15,311(975)—
Mortgage and other loan receivables787,515———(10,560)(3,038)—773,917(2,165)—
Other investments4,883,441———110,94214,730—5,009,11324,546—
Funds withheld receivable at interest12,785————(30,767)—(17,982)——
Reinsurance recoverable981,775———(10,654)39,481—1,010,602——
Total Assets - Insurance$17,727,734$—$176,665$(10,121)$164,751$28,891$61,684$18,149,604$15,625$52,148
Total$70,824,615$—$194,293$(56,255)$3,908,599$(403,262)$61,684$74,529,674$(427,823)$52,148

Notes to Financial Statements (Continued)

Three Months Ended March 31, 2024
PurchasesIssuancesSalesSettlementsNet Purchases/ Issuances/ Sales/ Settlements
Assets
Asset Management and Strategic Holdings
Private Equity$986,552$—$(245,090)$—$741,462
Credit322,033—(230,387)(350,235)(258,589)
Real Assets383,467—(33,134)—350,333
Equity Method - Other3,080—(2,457)—623
Other Investments390,664—(448,621)(64,603)(122,560)
Total Assets - Asset Management and Strategic Holdings$2,085,796$—$(959,689)$(414,838)$711,269
Insurance
AFS fixed maturity securities:
Corporate fixed maturity securities$662,876$—$(170,021)$(1,037,445)$(544,590)
Structured securities91,045—(2,002)(65,229)23,814
Total AFS fixed maturity securities753,921—(172,023)(1,102,674)(520,776)
Trading fixed maturity securities:
Corporate fixed maturity securities61,018—(54,206)(326,362)(319,550)
Structured securities237—(6,470)(17,990)(24,223)
Total trading fixed maturity securities61,255—(60,676)(344,352)(343,773)
Mortgage and other loan receivables1,795——(7,587)(5,792)
Other investments54,950—(3,884)—51,066
Reinsurance recoverable———(11,668)(11,668)
Total Assets - Insurance$871,921$—$(236,583)$(1,466,281)$(830,943)
Total$2,957,717$—$(1,196,272)$(1,881,119)$(119,674)
Three Months Ended March 31, 2023
PurchasesIssuancesSalesSettlementsNet Purchases/ Issuances/ Sales/ Settlements
Assets
Asset Management and Strategic Holdings
Private Equity$955,937$—$(22,510)$—$933,427
Credit440,733—(278,981)(85,420)76,332
Real Assets2,291,691—(75,612)(1,039)2,215,040
Equity Method - Other6,472—(828)—5,644
Other Investments592,177—(16,016)(64,909)511,252
Other Derivatives2,153———2,153
Total Assets - Asset Management and Strategic Holdings$4,289,163$—$(393,947)$(151,368)$3,743,848
Insurance
AFS fixed maturity securities:
Corporate fixed maturity securities$235,382$—$(588)$(300,878)$(66,084)
Structured securities176,819——(21,836)154,983
Total AFS fixed maturity securities412,201—(588)(322,714)88,899
Trading fixed maturity securities:
Corporate fixed maturity securities7,717—(1,000)(34,610)(27,893)
Structured securities24,650—(694)(9,939)14,017
Total trading fixed maturity securities32,367—(1,694)(44,549)(13,876)
Mortgage and other loan receivables377—(3,078)(7,859)(10,560)
Other investments118,394—(7,452)—110,942
Reinsurance recoverable———(10,654)(10,654)
Total Assets - Insurance$563,339$—$(12,812)$(385,776)$164,751
Total$4,852,502$—$(406,759)$(537,144)$3,908,599

Notes to Financial Statements (Continued)

Three Months Ended March 31, 2024
Balance, Beg. of PeriodTransfers In / (Out) - Changes in ConsolidationTransfers InTransfers OutNet Purchases/Sales/Settlements/IssuancesNet Unrealized and Realized Gains (Losses)Change in OCIBalance, End of PeriodChanges in Net Unrealized Gains (Losses) Included in Earnings related to Level III Assets and Liabilities still held as of the Reporting Date
Liabilities
Asset Management and Strategic Holdings
Unfunded Revolver Commitments$94,683$—$—$—$—$321$—$95,004$321
Total Liabilities - Asset Management and Strategic Holdings$94,683$—$—$—$—$321$—$95,004$321
Insurance
Policy liabilities$1,474,970$—$—$—$(49)$(142,526)$5,168$1,337,563$—
Closed block policy liabilities968,554———(865)38,529(591)1,005,627—
Funds withheld payable at interest(2,447,303)————(95,441)—(2,542,744)—
Embedded derivative – interest-sensitive life products458,302———(24,478)52,375—486,199—
Embedded derivative – annuity products3,587,371———259,459204,575—4,051,405—
Total Liabilities - Insurance$4,041,894$—$—$—$234,067$57,512$4,577$4,338,050$—
Total$4,136,577$—$—$—$234,067$57,833$4,577$4,433,054$321

Notes to Financial Statements (Continued)

Three Months Ended March 31, 2023
Balance, Beg. of PeriodTransfers In / (Out) - Changes in ConsolidationTransfers InTransfers OutNet Purchases/Sales/Settlements/IssuancesNet Unrealized and Realized Gains (Losses)Change in OCIBalance, End of PeriodChanges in Net Unrealized Gains (Losses) Included in Earnings related to Level III Assets and Liabilities still held as of the Reporting Date
Liabilities
Asset Management and Strategic Holdings
Unfunded Revolver Commitments$137,315$—$—$—$—$(24,781)$—$112,534$(24,781)
Total Liabilities - Asset Management and Strategic Holdings$137,315$—$—$—$—$(24,781)$—$112,534$(24,781)
Insurance
Policy liabilities$1,063,496$—$—$—$(865)$123,163$(52,015)$1,133,779$—
Closed block policy liabilities1,016,313———(5,862)37,258(1,251)1,046,458—
Funds withheld payable at interest(3,487,766)————430,235—(3,057,531)—
Embedded derivative – interest-sensitive life products337,860———(2,948)38,479—373,391—
Embedded derivative – annuity products1,851,381———349,482201,564—2,402,427—
Total Liabilities - Insurance$781,284$—$—$—$339,807$830,699$(53,266)$1,898,524$—
Total$918,599$—$—$—$339,807$805,918$(53,266)$2,011,058$(24,781)

Notes to Financial Statements (Continued)

Three Months Ended March 31, 2024
IssuancesSalesSettlementsNet Issuances/Settlements
Liabilities
Asset Management and Strategic Holdings
Unfunded Revolver Commitments$—$—$—$—
Total Liabilities - Asset Management and Strategic Holdings$—$—$—$—
Insurance
Policy liabilities$3,407$—$(3,456)$(49)
Closed block policy liabilities——(865)(865)
Embedded derivative – interest-sensitive life products——(24,478)(24,478)
Embedded derivative – annuity products318,092—(58,633)259,459
Total Liabilities - Insurance$321,499$—$(87,432)$234,067
Total$321,499$—$(87,432)$234,067
Three Months Ended March 31, 2023
IssuancesSalesSettlementsNet Issuances/Settlements
Liabilities
Asset Management and Strategic Holdings
Unfunded Revolver Commitments$—$—$—$—
Total Liabilities - Asset Management and Strategic Holdings$—$—$—$—
Insurance
Policy liabilities$(45)$—$(820)$(865)
Closed block policy liabilities——(5,862)(5,862)
Embedded derivative – interest-sensitive life products——(2,948)(2,948)
Embedded derivative – annuity products368,898—(19,416)349,482
Total Liabilities - Insurance$368,853$—$(29,046)$339,807
Total$368,853$—$(29,046)$339,807

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

The following table presents additional information about valuation methodologies and significant unobservable inputs used for financial assets and liabilities that are measured and reported at fair value and categorized within Level III as of March 31, 2024. Because input information includes only those items for which information is reasonably available, balances shown below may not equal total amounts reported for such Level III assets and liabilities:

Level III AssetsFair Value March 31, 2024Valuation Methodologies & InputsUnobservable Input(s) (1)Weighted Average (2)RangeImpact to Valuation from an Increase in Input (3)
ASSET MANAGEMENT AND STRATEGIC HOLDINGS
Private Equity$32,258,143
Private Equity$29,294,376Inputs to market comparables, discounted cash flow and transaction priceIlliquidity Discount6.3%5.0% - 15.0%Decrease
Weight Ascribed to Market Comparables27.5%0.0% - 100.0%(4)
Weight Ascribed to Discounted Cash Flow63.0%0.0% - 100.0%(5)
Weight Ascribed to Transaction Price9.5%0.0% - 100.0%(6)
Market comparablesEnterprise Value/LTM EBITDA Multiple18.3x5.5x - 50.2xIncrease
Enterprise Value/Forward EBITDA Multiple16.9x4.4x - 31.4xIncrease
Discounted cash flowWeighted Average Cost of Capital10.1%6.3% - 14.9%Decrease
Enterprise Value/EBITDA Exit Multiple13.1x6.0x - 27.6xIncrease

Notes to Financial Statements (Continued)

Level III AssetsFair Value March 31, 2024Valuation Methodologies & InputsUnobservable Input(s) (1)Weighted Average (2)RangeImpact to Valuation from an Increase in Input (3)
Growth Equity$2,963,767Inputs to market comparables, discounted cash flow and milestonesIlliquidity Discount10.1%10.0% - 15.0%Decrease
Weight Ascribed to Market Comparables45.1%0.0% - 100.0%(4)
Weight Ascribed to Discounted Cash Flow2.3%0.0% - 50.0%(5)
Weight Ascribed to Transaction Price12.2%0.0% - 100.0%(6)
Weight Ascribed to Milestones40.4%0.0% - 100.0%(6)
Scenario WeightingBase69.6%60.0% - 85.0%Increase
Downside8.7%5.0% - 15.0%Decrease
Upside21.7%10.0% - 35.0%Increase
Market ComparablesEnterprise Value/Revenues Multiple9.5x3.4x - 11.7xIncrease
Credit$5,194,915Yield AnalysisYield11.4%0.0% - 21.4%Decrease
Net Leverage5.9x1.7x -20.4xDecrease
EBITDA Multiple12.4x6.8x - 30.0xIncrease
Real Assets$11,529,548
Energy$1,542,876Inputs to market comparables, discounted cash flow and transaction priceWeight Ascribed to Market Comparables44.4%0.0% - 50.0%(4)
Weight Ascribed to Discounted Cash Flow55.6%50.0% - 100.0%(5)
Market comparablesEnterprise Value/LTM EBITDA Multiple4.7x4.7x - 4.7xIncrease
Enterprise Value/Forward EBITDA Multiple7.0x4.6x- 7.8xIncrease
Discounted cash flowWeighted Average Cost of Capital12.1%11.8% - 12.2%Decrease
Average Price Per BOE (8)$48.28$46.55 - $52.47Increase
Infrastructure$1,482,424Inputs to market comparables, discounted cash flow and transaction priceIlliquidity Discount5.9%5.0% - 10.0%Decrease
Weight Ascribed to Market Comparables6.3%0.0% - 25.0%(4)
Weight Ascribed to Discounted Cash Flow56.5%10.0% - 100.0%(5)
Weight Ascribed to Transaction Price37.2%0.0% - 90.0%(6)
Market comparablesEnterprise Value/LTM EBITDA Multiple10.8x10.8x - 10.8xIncrease
Enterprise Value/Forward EBITDA Multiple19.6x10.6x - 23.8xIncrease
Discounted cash flowWeighted Average Cost of Capital7.5%6% - 9.6%Decrease
Enterprise Value/EBITDA Exit Multiple15.2x10.0x - 22.0xIncrease
Real Estate$8,504,248Inputs to direct income capitalization, discounted cash flow and transaction priceWeight Ascribed to Direct Income Capitalization20.5%0.0% - 100.0%(7)
Weight Ascribed to Discounted Cash Flow73.5%0.0% - 100.0%(5)
Weight Ascribed to Transaction Price6.0%0.0% - 100.0%(6)
Direct income capitalizationCurrent Capitalization Rate4.1%1.9% - 7.7%Decrease
Discounted cash flowExit Capitalization Rate5.6%2.9% - 9.0%Decrease
Unlevered Discount Rate6.6%2.6% - 18.0%Decrease
Equity Method - Other$1,534,073Inputs to market comparables, discounted cash flow and transaction priceIlliquidity Discount7.1%5.0% - 15.0%Decrease
Weight Ascribed to Market Comparables47.1%0.0% - 100.0%(4)
Weight Ascribed to Discounted Cash Flow41.5%0.0% - 50.0%(5)
Weight Ascribed to Transaction Price11.4%0.0% - 100.0%(6)
Market comparablesEnterprise Value/LTM EBITDA Multiple13.4x4.7x - 18.7xIncrease
Enterprise Value/Forward EBITDA Multiple12.3x4.6x - 17.4xIncrease
Discounted cash flowWeighted Average Cost of Capital10.6%7.4% - 15.7%Decrease
Enterprise Value/EBITDA Exit Multiple11.0x9.5x - 15.0xIncrease
Other Investments$4,204,202(9)Inputs to market comparables, discounted cash flow and transaction priceIlliquidity Discount8.3%5.0% - 15.0%Decrease
Weight Ascribed to Market Comparables25.9%0.0% - 100.0%(4)
Weight Ascribed to Discounted Cash Flow45.1%0.0% - 100.0%(5)
Weight Ascribed to Transaction Price29.0%0.0% - 100.0%(6)
Market comparablesEnterprise Value/LTM EBITDA Multiple10.4x0.6x - 21.5xIncrease
Enterprise Value/Forward EBITDA Multiple11.9x3.3x - 19.1xIncrease
Discounted cash flowWeighted Average Cost of Capital9.8%7.7% - 38.9%Decrease
Enterprise Value/EBITDA Exit Multiple10.7x7.3x - 15.0xIncrease

Notes to Financial Statements (Continued)

Level III AssetsFair Value March 31, 2024Valuation Methodologies & InputsUnobservable Input(s) (1)Weighted Average (2)RangeImpact to Valuation from an Increase in Input (3)
INSURANCE**(10)**
Corporate fixed maturity securities$8,450,014Discounted cash flowDiscount Spread2.5%0.4% - 5.5%Decrease
Structured securities$2,596,199Discounted cash flowDiscount Spread3.1%2.0% - 5.6%Decrease
Constant Prepayment Rate12.0%10.0% - 15.0%Increase/Decrease
Constant Default Rate0.4%0.0% - 3.0%Decrease
Loss Severity10.1%0.0% - 95.0%Decrease
Other investments$4,897,017Discounted cash flowVacancy rate2.1%0.0% - 2.5%Decrease
Discount rate7.6%6.8% - 8.2%Decrease
Terminal capitalization rate6.1%5.0% - 7.0%Decrease
Reinsurance recoverable$965,877Present value of expenses paid from the open block plus the cost of capital held in support of the liabilities.Expense assumption$17.4The average expense assumption is between $8.2 and $78.0 per policy, increased by inflation. The annual inflation rate was increased by 2.5%.Increase
Unobservable inputs are a market participant’s view of the expenses, a risk margin on the uncertainty of the level of expenses and a cost of capital on the capital held in support of the liabilities.Expense risk margin9.4%Decrease
Cost of capital9.8%3.7% - 13.9%Increase
Discounted cash flowMortality Rate5.5%Increase
Surrender Rate2.0%Increase

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

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

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

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

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

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

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

Notes to Financial Statements (Continued)

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

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

(10)The funds withheld receivable at interest has been excluded from the above table. As discussed in Note 12 – Reinsurance, the funds withheld receivable at interest is created through funds withheld contracts. The assets supporting these receivables were held in trusts for the benefit of Global Atlantic. Accordingly, the unobservable inputs utilized in the valuation of the embedded derivative are a component of the invested assets supporting the funds withheld reinsurance agreements.

Level III LiabilitiesFair Value March 31, 2024Valuation MethodologiesUnobservable Input(s) (1)Weighted Average (2)RangeImpact to Valuation from an Increase in Input (3)
ASSET MANAGEMENT AND STRATEGIC HOLDINGS
Unfunded Revolver Commitments$95,004Yield AnalysisYield9.6%9.1% - 11.3%Decrease
INSURANCE**(4)**
Policy liabilities$1,337,563Policy liabilities under fair value option:
Present value of best estimate liability cash flows. Unobservable inputs include a market participant view of the risk margin included in the discount rate which reflects the variability of the cash flows.Risk Margin Rate0.7%0.5% - 0.9%Decrease
Policyholder behavior is also a significant unobservable input, including lapse, surrender and mortality.Surrender Rate6.3%3.5% - 7.6%Decrease
Mortality Rate4.7%3.5% - 9.1%Increase
Market risk benefit:
Fair value using a non-option and option valuation approachInstrument-specific credit risk (10 and 30 year)0.7% / 0.8%Decrease
Policyholder behavior is also a significant unobservable input, including lapse, surrender, and mortality.Mortality Rate2.4%0.4% - 29.7%Increase
Surrender Rate3.9%0.1% - 39.3%Increase

Notes to Financial Statements (Continued)

Level III LiabilitiesFair Value March 31, 2024Valuation MethodologiesUnobservable Input(s) (1)Weighted Average (2)RangeImpact to Valuation from an Increase in Input (3)
Closed block policy liabilities$1,005,627Present value of expenses paid from the open block plus the cost of capital held in support of the liabilities.Expense assumption$17.4The average expense assumption is between $8.2 and $17.0 per policy, increased by inflation. The annual inflation rate was increased by 2.5%.Increase
Instrument-specific credit risk0.7%0.5% - 0.8%Decrease
Unobservable inputs are a market participant’s view of the expenses, a risk margin on the uncertainty of the level of expenses and a cost of capital on the capital held in support of the liabilities.Expense Risk Margin9.4%Decrease
Cost of Capital9.8%3.7% - 13.9%Increase
Discounted cash flowMortality Rate5.5%Increase
Surrender Rate2.0%Increase
Embedded derivative – interest-sensitive life products$486,199Policy persistency is a significant unobservable input.Lapse Rate3.3%Decrease
Mortality Rate0.8%Decrease
Future costs for options used to hedge the contract obligationsOption Budget Assumption3.8%Increase
Instrument-specific credit risk0.7%0.5% - 0.8%Decrease
Embedded derivative – annuity products$4,051,405Policyholder behavior is a significant unobservable input, including utilization and lapse.Utilization:
Fixed-indexed annuity3.0%Decrease
Surrender Rate:
Retail FIA13.7%Decrease
Institutional FIA16.2%Decrease
Mortality Rate:
Retail FIA2.5%Decrease
Institutional FIA2.1%Decrease
Future costs for options used to hedge the contract obligationsOption Budget Assumption:
Retail FIA2.8%Increase
Institutional FIA3.3%Increase
Instrument-specific credit risk0.7%0.5% - 0.8%Decrease

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

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

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

(4)The fair value of the embedded derivative component of the funds withheld payable at interest has been excluded from the above table. The investments supporting the funds withheld payable at interest balance are held in a trust by Global Atlantic. Accordingly, the unobservable inputs utilized in the valuation of the embedded derivative are a component of the investments supporting the reinsurance cession agreements.

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

Notes to Financial Statements (Continued)

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

Financial Instruments Not Carried At Fair Value

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

The following tables present carrying amounts and fair values of Global Atlantic’s financial instruments which are not carried at fair value as of March 31, 2024 and December 31, 2023:

Fair Value Hierarchy
As of March 31, 2024Carrying ValueLevel ILevel IILevel IIIFair Value
($ in thousands)
Financial assets:
Insurance
Mortgage and other loan receivables$40,529,043$—$—$37,957,161$37,957,161
Policy loans1,561,608——1,587,4771,587,477
FHLB common stock and other investments175,748——175,748175,748
Funds withheld receivables at interest2,559,732—2,559,732—2,559,732
Cash and cash equivalents8,524,9628,524,962——8,524,962
Restricted cash and cash equivalents329,149329,149——329,149
Total financial assets$53,680,242$8,854,111$2,559,732$39,720,386$51,134,229
Financial liabilities:
Insurance
Policy liabilities – policyholder account balances$56,260,216$—$47,544,219$7,642,870$55,187,089
Funds withheld payables at interest45,182,469—45,182,469—45,182,469
Debt obligations3,086,113——2,958,7732,958,773
Securities sold under agreements to repurchase854,710—854,710—854,710
Total financial liabilities$105,383,508$—$93,581,398$10,601,643$104,183,041

Notes to Financial Statements (Continued)

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

Notes to Financial Statements (Continued)

10. FAIR VALUE OPTION

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

March 31, 2024December 31, 2023
Assets
Asset Management and Strategic Holdings
Credit$1,481,048$976,978
Investments of Consolidated CFEs24,961,63524,996,298
Real Assets58,61059,721
Equity Method - Other2,497,3872,283,588
Other Investments141,404153,597
Total Asset Management and Strategic Holdings$29,140,084$28,470,182
Insurance
Mortgage and other loan receivables$686,938$697,402
Other investments196,012232,877
Reinsurance recoverable965,877926,035
Total Insurance$1,848,827$1,856,314
Total Assets$30,988,911$30,326,496
Liabilities
Asset Management and Strategic Holdings
Debt Obligations of Consolidated CFEs$25,075,510$25,276,404
Total Asset Management and Strategic Holdings$25,075,510$25,276,404
Insurance
Policy liabilities$1,320,137$1,322,555
Total Insurance$1,320,137$1,322,555
Total Liabilities$26,395,647$26,598,959

Notes to Financial Statements (Continued)

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

Three Months Ended March 31, 2024
Net Realized Gains (Losses)Net Unrealized Gains (Losses)Total
Assets
Asset Management and Strategic Holdings
Credit$(7,473)$14,856$7,383
Investments of Consolidated CFEs5,00596,973101,978
Real Assets—(1,111)(1,111)
Equity Method - Other15,445(68,243)(52,798)
Other Investments—(123)(123)
Total Asset Management and Strategic Holdings$12,977$42,352$55,329
Insurance
Mortgage and other loan receivables$—$(4,388)$(4,388)
Other investments—(39,679)(39,679)
Total Insurance$—$(44,067)$(44,067)
Total Assets$12,977$(1,715)$11,262
Liabilities
Asset Management and Strategic Holdings
Debt Obligations of Consolidated CFEs$(168)$(78,896)$(79,064)
Total Asset Management and Strategic Holdings$(168)$(78,896)$(79,064)
Insurance
Policy liabilities$—$41,101$41,101
Total Insurance$—$41,101$41,101
Total Liabilities$(168)$(37,795)$(37,963)
Three Months Ended March 31, 2023
Net Realized Gains (Losses)Net Unrealized Gains (Losses)Total
Assets
Asset Management and Strategic Holdings
Credit$(7,753)$(6,971)$(14,724)
Investments of Consolidated CFEs(5,017)317,881312,864
Real Assets—(8,303)(8,303)
Equity Method - Other33,306(75,743)(42,437)
Other Investments1,6362,4784,114
Total Asset Management and Strategic Holdings$22,172$229,342$251,514
Insurance
Mortgage and other loan receivables$—$(6,344)$(6,344)
Other investments—(46,992)(46,992)
Total Insurance$—$(53,336)$(53,336)
Total Assets$22,172$176,006$198,178
Liabilities
Asset Management and Strategic Holdings
Debt Obligations of Consolidated CFEs$—$(376,488)$(376,488)
Total Asset Management and Strategic Holdings$—$(376,488)$(376,488)
Insurance
Policy liabilities$—$594$594
Total Insurance$—$594$594
Total Liabilities$—$(375,894)$(375,894)

Notes to Financial Statements (Continued)

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

The following reflects the reconciliation of the components of insurance intangibles to the total balance reported in the consolidated statements of financial condition as of March 31, 2024 and December 31, 2023:

March 31,December 31,
20242023
Deferred acquisition costs$1,260,724$1,154,697
Value of business acquired1,230,9641,252,984
Cost-of-reinsurance intangibles2,365,2352,043,143
Total insurance intangibles$4,856,923$4,450,824

Deferred acquisition costs

The following tables reflect the deferred acquisition costs roll-forward by product category for the three months ended March 31, 2024 and 2023:

Three months ended March 31, 2024
Fixed rate annuitiesFixed indexed annuitiesInterest sensitive lifeOtherTotal
Balance, as of the beginning of the period$373,863$481,970$132,079$166,785$1,154,697
Capitalizations75,59758,3663,29118,605155,859
Amortization expense(23,718)(19,709)(2,187)(4,218)(49,832)
Balance, as of the end of the period$425,742$520,627$133,183$181,172$1,260,724
Three months ended March 31, 2023
Fixed rate annuitiesFixed indexed annuitiesInterest sensitive lifeOtherTotal
Balance, as of the beginning of the period$221,679$367,813$116,021$115,457$820,970
Capitalizations59,96952,46911,12817,112140,678
Amortization expense(13,607)(12,930)(1,258)(3,385)(31,180)
Balance, as of the end of the period$268,041$407,352$125,891$129,184$930,468

Value of business acquired

The following tables reflect the value of business acquired, or “VOBA” asset roll-forward by product category for the three months ended March 31, 2024 and 2023:

Three months ended March 31, 2024
Fixed rate annuitiesFixed indexed annuitiesInterest sensitive lifeVariable annuitiesOtherTotal
Balance, as of the beginning of the period$44,922$621,372$262,942$245,042$78,706$1,252,984
Amortization expense(939)(10,719)(3,453)(5,201)(1,708)(22,020)
Balance, as of the end of the period$43,983$610,653$259,489$239,841$76,998$1,230,964
Three months ended March 31, 2023
Fixed rate annuitiesFixed indexed annuitiesInterest sensitive lifeVariable annuitiesOtherTotal
Balance, as of the beginning of the period$48,762$663,296$276,795$241,778$85,898$1,316,529
Amortization expense(972)(10,358)(3,048)(6,370)(1,854)(22,602)
Balance, as of the end of the period$47,790$652,938$273,747$235,408$84,044$1,293,927

Notes to Financial Statements (Continued)

The following tables reflect the negative value of business acquired, or “negative VOBA” liability roll-forward by product category for the three months ended March 31, 2024 and 2023:

Three months ended March 31, 2024
Fixed rate annuitiesFixed indexed annuitiesInterest sensitive lifeVariable annuitiesOtherTotal
Balance, as of the beginning of the period$65,966$106,538$421,213$91,295$182,920$867,932
Amortization expense(6,543)(8,849)(9,794)(1,567)(3,401)(30,154)
Balance, as of the end of the period$59,423$97,689$411,419$89,728$179,519$837,778
Three months ended March 31, 2023
Fixed rate annuitiesFixed indexed annuitiesInterest sensitive lifeVariable annuitiesOtherTotal
Balance, as of the beginning of the period$98,342$145,610$461,592$99,776$198,804$1,004,124
Amortization expense(8,720)(10,036)(8,144)(2,423)(5,349)(34,672)
Balance, as of the end of the period$89,622$135,574$453,448$97,353$193,455$969,452

Unearned revenue reserves and unearned front-end loads

Three Months Ended March 31,
20242023
Preneed
Balance, as of the beginning of the period$178,053$118,186
Deferral17,45317,791
Amortized to income during the year(3,725)(2,517)
Balance, as of the end of the period$191,781$133,460

Notes to Financial Statements (Continued)

12. REINSURANCE

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

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

March 31, 2024December 31, 2023
Policy liabilities:
Direct$78,687,136$75,715,857
Assumed94,911,55084,342,414
Total policy liabilities173,598,686160,058,271
Ceded(1)(43,953,900)(35,773,958)
Net policy liabilities$129,644,786$124,284,313

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

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

As of March 31, 2024As of December 31, 2023
A.M. Best Rating**(1)**Reinsurance recoverable and funds withheld receivable at interestCredit enhancements**(2)**Net reinsurance credit exposure**(3)**Reinsurance recoverable and funds withheld receivable at interestCredit enhancements**(2)**Net reinsurance credit exposure**(3)**
A++$44,895$—$44,895$38,857$—$38,857
A+1,779,822—1,779,8221,801,954—1,801,954
A2,223,845—2,223,8452,212,800—2,212,800
A-4,259,0943,728,593530,5014,430,4843,814,976615,508
B++1,065—1,065589—589
B+——————
B——————
B-——————
C++/C+(228)——(228)——
Not rated or private rating(4)38,537,42838,911,132—30,859,06830,210,350648,718
Total$46,845,921$42,639,725$4,580,128$39,343,524$34,025,326$5,318,426

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

(2)Credit enhancements primarily include funds withheld payable at interest.

(3)Includes credit loss allowance of $24.8 million and $21.0 million as of March 31, 2024 and December 31, 2023, respectively, held against reinsurance recoverable and funds withheld receivable at interest.

(4)Includes $38.5 billion and $30.8 billion as of March 31, 2024 and December 31, 2023, respectively, associated with cessions to co-investment vehicles (the "sponsored reinsurance sidecar vehicles") that participate in qualifying reinsurance transactions sourced by Global Atlantic.

As of both March 31, 2024 and December 31, 2023, Global Atlantic had $2.7 billion of funds withheld receivable at interest with six counterparties related to modified coinsurance and funds withheld contracts. The assets supporting the funds withheld receivable at interest balance are held in trusts for the benefit of Global Atlantic.

Notes to Financial Statements (Continued)

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

Three Months Ended March 31,
20242023
Net premiums:
Direct$34,863$32,653
Assumed9,109,378618,730
Ceded(3,107,719)(177,759)
Net premiums$6,036,522$473,624
Three Months Ended March 31,
20242023
Policy fees:
Direct$226,322$227,857
Assumed174,418104,589
Ceded(71,793)(18,644)
Net policy fees$328,947$313,802
Three Months Ended March 31,
20242023
Net policy benefits and claims:
Direct$844,660$948,119
Assumed9,899,9991,016,936
Ceded(3,483,590)(438,001)
Net policy benefits and claims$7,261,069$1,527,054

Global Atlantic holds collateral for and provides collateral to its reinsurance clients. Global Atlantic held $45.1 billion and $36.7 billion of collateral in the form of funds withheld payable at interest on behalf of its reinsurers as of March 31, 2024 and December 31, 2023, respectively. As of both March 31, 2024 and December 31, 2023, reinsurers held collateral of $1.2 billion on behalf of Global Atlantic. A significant portion of the collateral that Global Atlantic provides to its reinsurance clients is provided in the form of assets held in a trust for the benefit of the counterparty. As of March 31, 2024 and December 31, 2023, these trusts held in excess of the $92.9 billion and $81.8 billion of assets they are required to hold in order to support reserves of $90.0 billion and $79.4 billion, respectively. Of the cash held in trust, Global Atlantic classified $75.1 million and $90.8 million as restricted as of March 31, 2024 and December 31, 2023, respectively.

Notes to Financial Statements (Continued)

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

For the three months ended March 31, 2024 and 2023, basic and diluted Net Income (Loss) attributable to KKR & Co. Inc. per share of common stock were calculated as follows:

Three Months Ended March 31,
20242023
Net Income (Loss) Available to KKR & Co. Inc. Common Stockholders - Basic$682,214$322,744
(+) Series C Mandatory Convertible Preferred Dividend (if dilutive) (1)——
Net Income (Loss) Available to KKR & Co. Inc. Common Stockholders - Diluted$682,214$322,744
Basic Net Income (Loss) Per Share of Common Stock
Weighted Average Shares of Common Stock Outstanding - Basic885,005,824861,108,510
Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Common Stock - Basic$0.77$0.37
Diluted Net Income (Loss) Per Share of Common Stock
Weighted Average Shares of Common Stock Outstanding - Basic885,005,824861,108,510
Incremental Common Shares:
Assumed vesting of dilutive equity awards (2)40,135,34226,060,826
Assumed conversion of Series C Mandatory Convertible Preferred Stock (1)——
Weighted Average Shares of Common Stock Outstanding - Diluted925,141,166887,169,336
Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Common Stock - Diluted$0.74$0.36

(1)For the three months ended March 31, 2023, the impact of Series C Mandatory Convertible Preferred Stock calculated under the if-converted method was anti-dilutive, and as such (i) shares of common stock (assuming a conversion ratio based on the average volume weighted average price per share of common stock over each reporting period) were not included in the Weighted Average Shares of Common Stock Outstanding - Diluted and (ii) Series C Mandatory Convertible Preferred dividends were not added back to Net Income (Loss) Available to KKR & Co. Inc. Common Stockholders - Diluted.

(2)For the three months ended March 31, 2024 and 2023, Weighted Average Shares of Common Stock Outstanding – Diluted includes unvested equity awards, including certain equity awards that have met their market price-based vesting condition but have not satisfied their service-based vesting condition. Vesting of these equity awards dilute equity holders of KKR Group Partnership, including KKR & Co. Inc. and holders of exchangeable securities pro rata in accordance with their respective ownership interests in KKR Group Partnership.

Exchangeable Securities

For the three months ended March 31, 2024 and 2023, vested restricted holdings units (as defined in Note 19 "Equity Based Compensation") have been excluded from the calculation of Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Common Stock - Diluted since the exchange of these units would not dilute KKR & Co. Inc.'s ownership interests in KKR Group Partnership. See Note 1 "Organization" in our financial statements.

Three Months Ended March 31,
20242023
Weighted Average Vested Restricted Holdings Units5,739,6162,695,142

Market Condition Awards

For the three months ended March 31, 2024 and 2023, 33.0 million and 22.5 million, respectively, of unvested equity awards that are subject to market price based and service-based vesting conditions were excluded from the calculation of Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Common Stock - Diluted since the market price based vesting condition was not satisfied. See Note 19 "Equity Based Compensation" in our financial statements.

Notes to Financial Statements (Continued)

14. OTHER ASSETS AND ACCRUED EXPENSES AND OTHER LIABILITIES

Other Assets consist of the following:

March 31, 2024December 31, 2023
Asset Management and Strategic Holdings
Unsettled Investment Sales (1)$295,141$271,544
Receivables66,06655,602
Due from Broker (2)81,58576,075
Deferred Tax Assets, net44,47748,580
Interest Receivable380,014351,999
Fixed Assets, net (3)855,621863,096
Foreign Exchange Contracts and Options (4)294,511264,621
Goodwill (5)526,089558,279
Intangible Assets (6)1,514,7971,624,648
Derivative Assets4,2584,792
Prepaid Taxes109,774211,966
Prepaid Expenses51,77556,828
Operating Lease Right of Use Assets (7)341,879358,684
Deferred Financing Costs15,50019,213
Other288,088209,296
Total Asset Management and Strategic Holdings$4,869,575$4,975,223
Insurance
Unsettled Investment Sales(1) and Derivative Collateral Receivables$475,490$27,562
Deferred Tax Assets, net2,439,6362,273,757
Derivative Assets28,38445,694
Accrued Investment Income1,356,9171,220,781
Goodwill501,496501,496
Intangible Assets and Deferred Sales Inducements(8)258,075258,529
Operating Lease Right of Use Assets(7)171,570172,955
Premiums and Other Account Receivables221,851188,136
Other154,501152,486
Prepaid Taxes—42,294
Market Risk Benefit Asset3117
Total Insurance$5,607,951$4,883,707
Total Other Assets$10,477,526$9,858,930

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

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

(3)Net of accumulated depreciation and amortization of $275.3 million and $257.4 million as of March 31, 2024 and December 31, 2023, respectively. Depreciation and amortization expense of $17.9 million and $15.8 million, for the three months ended March 31, 2024 and 2023, respectively, are included in General, Administrative and Other in the accompanying consolidated statements of operations. Additionally, KKR’s fixed assets are predominantly located in the United States.

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

(5)As of March 31, 2024, the carrying value of goodwill is recorded and assessed for impairment at the reporting unit. As of March 31, 2024, there are approximately $(66.4) million of cumulative foreign currency translation adjustments included in AOCI related to the goodwill recorded as result of the acquisition of KJRM.

(6)As of March 31, 2024, there are approximately $(226.4) million of cumulative foreign currency translation adjustments included in AOCI related to the intangible assets recorded as result of the acquisition of KJRM.

(7)For Asset Management, non-cancelable operating leases consist of leases for office space in North America, Europe, Asia and Australia. KKR is the lessee under the terms of the operating leases. The operating lease cost was $16.6 million and $15.7 million for the three months ended March 31, 2024 and 2023, respectively. For Insurance, non-cancelable operating leases consist of leases for office space and land in the U.S. For the three months ended March 31, 2024 and 2023, the operating lease cost was $5.5 million and $6.8 million, respectively.

(8)The definite life intangible assets are amortized using the straight-line method over the useful life of the assets which is an average of 14 years. The indefinite life intangible assets are not subject to amortization. The amortization expense of definite life intangible assets was $4.4 million for both the three months ended March 31, 2024 and 2023.

Notes to Financial Statements (Continued)

Accrued Expenses and Other Liabilities consist of the following:

March 31, 2024December 31, 2023
Asset Management and Strategic Holdings
Amounts Payable to Carry Pool (1)$3,512,458$2,664,694
Unsettled Investment Purchases (2)833,986574,986
Securities Sold Short (3)168,262149,136
Derivative Liabilities172,382
Accrued Compensation and Benefits205,734210,625
Interest Payable486,206492,501
Foreign Exchange Contracts and Options (4)321,024441,608
Accounts Payable and Accrued Expenses285,698221,851
Taxes Payable93,42339,255
Uncertain Tax Positions24,47023,579
Unfunded Revolver Commitments95,00494,683
Operating Lease Liabilities (5)344,646360,852
Deferred Tax Liabilities, net2,412,7372,370,118
Other Liabilities84,70772,145
Total Asset Management and Strategic Holdings$8,868,372$7,718,415
Insurance
Unsettled Investment Purchases(2) and Derivative Collateral Liabilities$1,043,257$205,669
Securities Sold Under Agreements to Repurchase854,7101,358,434
Accrued Expenses629,548607,262
Insurance Operations Balances in Course of Settlement300,490250,367
Operating Lease Liabilities(5)193,212193,566
Derivative Liabilities154,711146,197
Accrued Employee Related Expenses64,340370,984
Interest Payable49,79915,894
Tax Payable to Former Parent Company47,84162,545
Accounts and Commissions Payable26,79732,104
Other Tax Related Liabilities14,31512,984
Current Income Tax Payable5,424—
Total Insurance$3,384,444$3,256,006
Total Accrued Expenses and Other Liabilities$12,252,816$10,974,421

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

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

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

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

(5)For Asset Management, operating leases for office space have remaining lease terms that range from approximately 1 year to 17 years, some of which include options to extend the leases from 5 years to 10 years. The weighted average remaining lease terms were 10.3 years and 10.3 years as of March 31, 2024 and December 31, 2023, respectively. The weighted average discount rates were 2.9% and 2.9% as of March 31, 2024 and December 31, 2023, respectively. For Insurance, operating leases for office space have remaining lease terms that range from approximately 1 year to 11 years, some of which include options to extend the leases for up to 10 years. The weighted average remaining lease terms were 7.5 years and 7.6 years as of March 31, 2024 and December 31, 2023, respectively. The weighted average discount rates were 4.5% and 4.4% as of March 31, 2024 and December 31, 2023, respectively. The weighted average remaining lease terms for land were 42.7 years and 43.7 years as of March 31, 2024 and December 31, 2023, respectively.

Notes to Financial Statements (Continued)

15. VARIABLE INTEREST ENTITIES

Consolidated VIEs

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

Unconsolidated VIEs

KKR holds variable interests in certain VIEs which are not consolidated as it has been determined that KKR is not the primary beneficiary. VIEs that are not consolidated predominantly include certain investment funds sponsored by KKR as well as certain investment partnerships where Global Atlantic retains an economic interest. KKR's investment strategies differ by investment fund; however, the fundamental risks have similar characteristics, including loss of invested capital and loss of management fees and performance income. KKR's maximum exposure to loss as a result of its investments in the unconsolidated investment funds is the carrying value of such investments, including KKR's capital interest and any unrealized carried interest. Accordingly, disaggregation of KKR's involvement by type of unconsolidated investment fund would not provide more useful information. For these unconsolidated investment funds in which KKR is the sponsor, KKR may have an obligation as general partner to provide commitments to such investment funds. As of March 31, 2024, KKR's commitments to these unconsolidated investment funds were $2.6 billion. KKR has not provided any financial support other than its obligated amount as of March 31, 2024. Additionally, Global Atlantic also has unfunded commitments of $26.7 million in relation to other limited partnership interests as of March 31, 2024.

As of March 31, 2024 and December 31, 2023, the maximum exposure to loss, before allocations to the carry pool and noncontrolling interests, if any, for those VIEs in which KKR is determined not to be the primary beneficiary but in which it has a variable interest is as follows:

Asset Management and Strategic HoldingsMarch 31, 2024December 31, 2023
Investments$8,950,579$7,877,904
Due from (to) Affiliates, net1,151,9021,097,939
Maximum Exposure to Loss$10,102,481$8,975,843
Insurance
Other Investment Partnerships$740,835$169,265
Investment in Renewable Energy55,32555,485
Maximum Exposure to Loss$796,160$224,750
Total Maximum Exposure to Loss$10,898,641$9,200,593

Notes to Financial Statements (Continued)

16. DEBT OBLIGATIONS

Asset Management and Strategic Holdings Debt Obligations

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

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

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

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

Notes to Financial Statements (Continued)

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

March 31, 2024December 31, 2023
Financing AvailableBorrowing OutstandingFair ValueFinancing AvailableBorrowing OutstandingFair Value
Revolving Credit Facilities:
Corporate Credit Agreement$1,500,000$—$—$1,500,000$—$—
KCM Credit Facility (1)717,399——736,492——
KCM 364-Day Revolving Credit Facility750,000——750,000——
Notes Issued: (2)
KKR ¥5 billion (or $33.0 million) 0.764% Notes Due 2025(5)—32,92532,963—35,31635,390
KKR ¥36.4 billion (or $240.5 million) 1.054% Notes Due 2027(5)—239,589238,111—257,132255,840
KKR ¥44.7 billion (or $295.3 million) 1.428% Notes Due 2028(5)—294,043293,777—315,599315,217
KKR €650 million (or $701.7 million) 1.625% Notes Due 2029(5)—696,881629,560—712,331646,248
KKR $750 million 3.750% Notes Due 2029 (7)(5)—745,333700,613—726,331684,323
KKR ¥4.9 billion (or $32.4 million) 1.244% Notes Due 2029(5)—31,98631,675—34,33933,985
KKR ¥1.8 billion (or $11.9 million) 1.614% Notes Due 2030(5)—11,58911,673—12,44812,514
KKR $750 million 4.850% Notes Due 2032(5)—742,767725,520—742,545733,163
KKR ¥6.2 billion (or $41.0 million) 1.437% Notes Due 2032(5)—40,47639,392—43,46142,155
KKR ¥1.5 billion (or $9.9 million) 1.939% Notes Due 2033(5)—9,5999,662—10,31610,322
KKR ¥7.5 billion (or $49.6 million) 1.553% Notes Due 2034(5)—48,98046,706—52,59549,937
KKR ¥5.5 billion (or $36.3 million) 1.795% Notes Due 2037(5)—35,79933,446—38,45035,742
KKR ¥10.3 billion (or $68.1 million) 1.595% Notes Due 2038(5)—67,19160,555—72,16164,646
KKR ¥3 billion (or $19.8 million) 2.312% Notes Due 2038(5)—19,42918,912—20,87420,272
KKR $500 million 5.500% Notes Due 2043 (7)(5)—490,783481,993—490,728475,022
KKR ¥4.5 billion (or $29.7 million) 2.574% Notes Due 2043(5)—29,24127,694—31,41329,723
KKR $1 billion 5.125% Notes Due 2044 (7)(5)—963,536896,327—963,674887,286
KKR $500 million 3.625% Notes Due 2050(5)—493,086364,765—493,020358,580
KKR $750 million 3.500% Notes Due 2050 (7)(5)—737,055526,649—734,437527,183
KKR $750 million 3.250% Notes Due 2051(5)—740,272504,210—740,184516,038
KKR ¥6 billion (or $39.6 million) 2.747% Notes Due 2053(5)—39,03034,849—41,92937,801
KKR $500 million 4.625% Notes Due 2061(6)—486,844399,200—486,755377,400
KFN $500 million 5.500% Notes Due 2032(3)—496,118456,201—495,997455,340
KFN $120 million 5.200% Notes Due 2033(3)—118,925106,283—118,895106,030
KFN $70 million 5.400% Notes Due 2033(3)—69,16262,757—69,14062,648
KFN Issued Junior Subordinated Notes (4)(3)—239,133216,175—238,801208,902
2,967,3997,919,7726,949,6682,986,4927,978,8716,981,707
Other Debt Obligations(1)(7)7,255,48137,133,86736,984,3016,618,69236,907,99936,699,920
$10,222,880$45,053,639$43,933,969$9,605,184$44,886,870$43,681,627

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

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

Notes to Financial Statements (Continued)

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

(4)KKR consolidates KFN and reports KFN's outstanding $258.5 million aggregate principal amount of junior subordinated notes. The weighted average interest rate is 8.0% and 8.1% and the weighted average years to maturity is 12.5 years and 12.8 years as of March 31, 2024 and December 31, 2023, respectively.

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

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

(7)As of March 31, 2024 and December 31, 2023, the borrowing outstanding and fair value reflects the elimination for the portion of these debt obligations that are held by Global Atlantic.

KCM 364-Day Revolving Credit Facility

On April 4, 2024, KKR Capital Markets Holdings L.P. and certain other capital markets subsidiaries (the "KCM Borrowers") replaced their existing 364-day revolving credit agreement with a new 364-day revolving credit agreement (the "KCM 364-Day Revolving Credit Facility”) with Mizuho Bank, Ltd., as administrative agent, and one or more lenders party thereto. The KCM 364-Day Revolving Credit Facility replaces the prior 364-day revolving credit facility, dated as of April 7, 2023, between the KCM Borrowers and the administrative agent, and one or more lenders party to the prior facility, which was terminated according to its terms on April 4, 2024. The KCM 364-Day Revolving Credit Facility provides for revolving borrowings up to $750 million, expires on April 3, 2025, and ranks pari passu with the existing $750 million revolving credit facility provided by them for KKR's capital markets business (the "KCM Credit Facility").

If a borrowing is made under the KCM 364-Day Revolving Credit Agreement, the interest rate will vary depending on the type of drawdown requested. If the borrowing is (i) denominated in U.S. dollars and a term rate, it will be based on the term Secured Overnight Financing Rate ("SOFR"), (ii) denominated in euros, it will be based on EURIBOR and (iii) denominated in pounds sterling, it will be based on the Sterling Overnight Interbank Average Rate ("SONIA"), in each case, plus the applicable margin which ranges initially between 1.50% and 2.75%, depending on the duration of the loan. If the borrowing is an ABR Loan, it will be based on the greater of (i) the federal funds rate plus 0.50% and (ii) term SOFR for one-month tenor plus 1.00%, in each case, plus the applicable margin which ranges initially between 0.50% and 1.75% depending on the amount and nature of the loan. Borrowings under the KCM 364-Day Revolving Credit Agreement may only be used to facilitate the settlement of debt transactions syndicated by KKR's capital markets business. Obligations under the KCM 364-Day Revolving Credit Agreement are limited to the KCM Borrowers, which are solely entities involved in KKR's capital markets business, and liabilities under the KCM 364-Day Revolving Credit Agreement are non-recourse to other parts of KKR.

The KCM 364-Day Revolving Credit Facility contains customary representations and warranties, events of default, and affirmative and negative covenants, including a financial covenant providing for a maximum debt to equity ratio for the KCM Borrowers. The KCM Borrowers' obligations under the KCM 364-Day Revolving Credit Facility are secured by certain assets of the KCM Borrowers, including a pledge of equity interests of certain subsidiaries of the KCM Borrowers.

KCM Credit Facility

On April 4, 2024, the KCM Borrowers (as defined above) also entered into a fourth amended and restated 5-year revolving credit agreement (the “KCM Credit Facility”) with Mizuho Bank, Ltd., as administrative agent, and the lenders party thereto. This facility provides for revolving borrowings of up to $750 million with a $750 million sublimit for letters of credit, expires on April 4, 2029 and ranks pari passu with the KCM 364-Day Revolving Credit Facility. The prior facility for the KCM Borrowers, dated as of March 20, 2020 (as amended), between the KCM Borrowers, Mizuho Bank, Ltd., as administrative agent, and the lenders party thereto, was terminated according to its terms on April 4, 2024 and replaced by the KCM Credit Facility.

If a borrowing is made on the KCM Credit Facility, the interest rate will vary depending on the type of drawdown requested. If the borrowing is (i) denominated in U.S. dollars and a term rate, it will be based on term SOFR, (ii) denominated in euros, it will be based on EURIBOR and (iii) denominated in pounds sterling, it will be based on SONIA, in each case, plus the applicable margin which ranges initially between 1.75% and 3.00%, depending on the amount and nature of the loan. If the loan is an ABR Loan, it will be based on the greater of (i) the federal funds rate plus 0.50% and (ii) term SOFR for one-month tenor plus 1.00%, in each case, plus the applicable margin which ranges initially between 0.75% and 2.00% depending on the amount and nature of the loan. Obligations under the KCM Credit Facility may only be used for KKR’s capital markets business, and its only obligors are entities involved in KKR’s capital markets business, and its liabilities are non-recourse to other parts of KKR’s business.

Notes to Financial Statements (Continued)

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

Other Asset Management and Strategic Holdings Debt Obligations

As of March 31, 2024, other debt obligations consisted of the following:

Financing AvailableBorrowing OutstandingFair ValueWeighted Average Interest RateWeighted Average Remaining Maturity in Years
Financing Facilities of Consolidated Funds and Other (1)$7,255,481$12,058,357$11,908,7916.5%4.7
Debt Obligations of Consolidated CLOs—25,075,51025,075,510(2)9.2
$7,255,481$37,133,867$36,984,301

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

(2)The senior notes of the consolidated CLOs had a weighted average interest rate of 6.8%. The subordinated notes of the consolidated CLOs do not have contractual interest rates but instead receive a pro rata amount of the net distributions from the excess cash flows of the respective CLO vehicle. Accordingly, weighted average borrowing rates for the subordinated notes are based on cash distributions during the period, if any.

Debt obligations of consolidated CLOs are collateralized by assets held by each respective CLO vehicle and assets of one CLO vehicle may not be used to satisfy the liabilities of another. As of March 31, 2024, the fair value of the consolidated CLO assets was $27.2 billion. This collateral consisted of Cash and Cash Equivalents, Investments, and Other Assets.

Insurance Debt Obligations

Global Atlantic's debt obligations consisted of the following:

March 31, 2024December 31, 2023
Financing AvailableBorrowing OutstandingFair Value**(2)**Financing AvailableBorrowing OutstandingFair Value**(2)**
Revolving Credit Facilities:
Global Atlantic revolving credit facility, due August 2026$1,000,000$—$—$800,000$200,000$200,000
Notes Issued and Others:
Global Atlantic senior notes, due October 2029500,000465,350500,000460,850
Global Atlantic senior notes, due June 2031650,000538,785650,000533,130
Global Atlantic senior notes, due June 2033650,000722,150650,000721,175
Global Atlantic senior notes, due March 2054750,000770,025——
Global Atlantic subordinated debentures, due October 2051750,000676,350750,000643,575
3,300,000$3,172,6602,750,000$2,558,730
Purchase accounting adjustments(1)39,39540,173
Debt issuance costs, net of accumulated amortization(50,363)(36,499)
Fair value loss of hedged debt obligations, recognized in earnings(202,919)(165,817)
$3,086,113$2,587,857

(1)The amortization of the purchase accounting adjustments was $778 thousand for both the three months ended March 31, 2024 and 2023, respectively.

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

Senior Notes Due 2054

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

In March 2024, GA FinCo issued $750 million aggregate principal amount of 6.750% senior unsecured notes due 2054 (the “GA 2054 Senior Notes”). The GA 2054 Senior Notes were issued pursuant to an indenture, dated October 7, 2019, among GA FinCo, as issuer, GALD, as guarantor, and U.S. Bank National Association, as trustee, and supplemented by the fifth

Notes to Financial Statements (Continued)

supplemental indenture thereto, dated March 15, 2024, among GA FinCo, GALD and the trustee. The GA 2054 Senior Notes are fully and unconditionally guaranteed on a senior unsecured basis by GALD.

The GA 2054 Senior Notes bear interest at a rate of 6.750% per year. Interest on the GA 2054 Senior Notes is payable semi-annually in arrears on March 15 and September 15 of each year, beginning on September 15, 2024. The GA 2054 Senior Notes will mature on March 15, 2054. GA FinCo may, at its option, redeem some or all of the GA 2054 Senior Notes at any time: (i) prior to September 15, 2053 at a redemption price equal to the greater of 100% of the principal amount of the GA 2054 Senior Notes to be redeemed and a make-whole payment plus, in either case, accrued and unpaid interest, if any, to the date of redemption; and (ii) on or after September 15, 2053 at a redemption price equal to 100% of the principal amount of the GA 2054 Senior Notes to be redeemed, plus accrued and unpaid interest to the date of redemption.

Global Atlantic Credit Agreement

In March 2024, GA FinCo repaid $300 million then outstanding indebtedness under the Global Atlantic Credit Agreement with proceeds from the GA 2054 Senior Notes.

In May 2024, subsequent to the end of the quarter, GA FinCo terminated the existing revolving credit facility (“RCF”) and replaced it with a new credit agreement with GA FinCo, as borrower, GALD, as guarantor, and Wells Fargo Bank, N.A., as administrative agent, that (1) provides for up to $1.0 billion of revolving borrowings, including up to $500 million of letters of credit, (2) has a maturity of May 2029, and (3) contains customary events of default, representations and warranties and covenants that are substantially similar to those that were in the terminated RCF, including the consolidated debt to capitalization and net worth covenants. Interest on any funded borrowings accrues at SOFR plus a spread ranging from 1.225% to 1.975%, based on GALD’s long-term issuer credit ratings. The borrower must pay a commitment fee on any unfunded committed balance under the agreement, ranging from 0.125% to 0.300% based on the long-term issuer credit rating.

Debt Covenants

Borrowings of KKR (including Global Atlantic) contain various debt covenants. These covenants do not, in management's opinion, materially restrict KKR's operating business or investment strategies as of March 31, 2024. KKR (including Global Atlantic) was in compliance with such debt covenants in all material respects as of March 31, 2024.

17. POLICY LIABILITIES

The following reflects the reconciliation of the components of policy liabilities to the total balance reported in the consolidated statements of financial condition as of March 31, 2024 and December 31, 2023:

March 31, 2024December 31, 2023
Policyholders’ account balances$129,509,137$125,187,354
Liability for future policy benefits25,410,73317,823,750
Additional liability for annuitization, death, or other insurance benefits7,213,3577,129,785
Market risk benefit liability1,023,0531,120,968
Other policy-related liabilities(1)10,442,4068,796,414
Total policy liabilities$173,598,686$160,058,271

(1)Other policy-related liabilities as of March 31, 2024 and December 31, 2023 primarily consist of negative VOBA ($837.8 million and $867.9 million, respectively), policy liabilities accounted under a fair value option (both $1.2 billion), embedded derivatives associated with contractholder deposit funds ($4.5 billion and $4.0 billion, respectively), cost-of-reinsurance liabilities ($3.0 billion and $1.8 billion, respectively) and outstanding claims ($240.0 million and $235.1 million, respectively).

Notes to Financial Statements (Continued)

Policyholders’ account balances

The following reflects the policyholders’ account balances roll-forward for the three months ended March 31, 2024 and 2023, and the policyholders’ account balances weighted average interest rates, net amount at risk, and cash surrender value as of those dates:

Three months ended March 31, 2024
Fixed rate annuitiesFixed indexed annuitiesInterest sensitive lifeFunding agreementsOther**(1)**Total
Balance as of beginning of period$56,762,736$30,168,445$21,969,053$7,015,998$9,271,122$125,187,354
Issuances and premiums received4,784,2851,549,004312,020695,9331,339,4378,680,679
Benefit payments, surrenders, and withdrawals(2,879,479)(1,294,134)(306,463)(68,159)(411,941)(4,960,176)
Interest(2)498,543165,239177,27569,51974,324984,900
Other activity(3)(102,899)25,879(305,139)(21,815)20,354(383,620)
Balance as of end of period$59,063,186$30,614,433$21,846,746$7,691,476$10,293,296$129,509,137
Less: reinsurance recoverable(10,557,317)(3,189,167)(7,159,910)—(3,830,017)(24,736,411)
Balance as of end of period, net of reinsurance recoverable$48,505,869$27,425,266$14,686,836$7,691,476$6,463,279$104,772,726
Average interest rate3.58%2.30%3.22%3.80%3.47%3.15%
Net amount at risk, gross of reinsurance(4)$—$—$117,008,523$—$1,161,762$118,170,285
Cash surrender value(5)$45,612,785$29,313,985$13,827,297$—$4,604,037$93,358,104

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

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

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

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

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

Three months ended March 31, 2023
Fixed rate annuitiesFixed indexed annuitiesInterest sensitive lifeFunding agreementsOther**(1)**Total
Balance as of beginning of period$48,510,703$29,123,926$17,397,185$7,535,489$9,713,933$112,281,236
Issuances and premiums received3,416,9161,640,745144,797—100,6165,303,074
Benefit payments, surrenders, and withdrawals(2,329,373)(937,627)(230,514)(224,107)(401,156)(4,122,777)
Interest(2)340,106114,739107,29851,42374,209687,775
Other activity(3)(63,346)(45,130)(25,172)86,05778,47430,883
Balance as of end of period$49,875,006$29,896,653$17,393,594$7,448,862$9,566,076$114,180,191
Less: reinsurance recoverable(6,699,771)(3,311,541)(3,467,814)—(3,119,287)(16,598,413)
Balance as of end of period, net of reinsurance recoverable$43,175,235$26,585,112$13,925,780$7,448,862$6,446,789$97,581,778
Average interest rate2.85%1.70%3.09%2.75%2.69%2.53%
Net amount at risk, gross of reinsurance(4)$—$—$84,498,038$—$1,182,896$85,680,934
Cash surrender value(5)$40,420,172$27,236,116$12,948,054$—$4,744,008$85,348,350

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

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

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

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

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

Notes to Financial Statements (Continued)

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

As of March 31, 2024
Account values with adjustable crediting rates subject to guaranteed minimums:
Range of guaranteed minimum crediting rates:At guaranteed minimum1 - 49 bps above guaranteed minimum50 - 99 bps above guaranteed minimum100 - 150 bps above guaranteed minimumGreater than 150 bps above guaranteed minimumTotal
Less than 1.00%$2,894,495$30,211$559,718$2,726,724$28,705,318$34,916,466
1.00% - 1.99%1,443,207939,437914,1461,924,8897,614,74712,836,426
2.00% - 2.99%855,37445,69956,32899,2151,338,5452,395,161
3.00% - 4.00%11,515,5711,472,797391,9421,183,9231,294,19215,858,425
Greater than 4.00%11,888,7501,353,373141,937115,460288,94913,788,469
Total$28,597,397$3,841,517$2,064,071$6,050,211$39,241,751$79,794,947
Percentage of total36%5%3%8%48%100%
As of December 31, 2023
Account values with adjustable crediting rates subject to guaranteed minimums:
Range of guaranteed minimum crediting rates:At guaranteed minimum1 - 49 bps above guaranteed minimum50 - 99 bps above guaranteed minimum100 - 150 bps above guaranteed minimumGreater than 150 bps above guaranteed minimumTotal
Less than 1.00%$2,706,701$25,839$660,189$3,546,450$25,940,436$32,879,615
1.00% - 1.99%1,471,3201,013,423999,8521,968,5196,603,79512,056,909
2.00% - 2.99%896,27644,85055,874109,4111,310,2342,416,645
3.00% - 4.00%12,494,4391,186,572414,111953,5601,067,32516,116,007
Greater than 4.00%12,095,6471,385,538138,112117,561298,49314,035,351
Total$29,664,383$3,656,222$2,268,138$6,695,501$35,220,283$77,504,527
Percentage of total38%5%3%9%45%100%

Liability for future policy benefits

The following tables summarize the balances of, and changes in, the liability for future policy benefits for traditional and limited-payment contracts for the three months ended March 31, 2024 and 2023:

Three Months Ended
March 31, 2024March 31, 2023
Payout annuities**(1)**Other**(2)**TotalPayout annuities**(1)**Other**(2)**Total
Present value of expected net premiums
Balance as of beginning of the period$—$(208,370)$(208,370)$—$(255,401)$(255,401)
Balance at original discount rate$—$(241,058)$(241,058)$—$(303,610)$(303,610)
Effect of actual variances from expected experience—2,4812,481—992992
Adjusted beginning of period balance—(238,577)(238,577)—(302,618)(302,618)
Issuances—(1,138,831)(1,138,831)———
Interest(949)(949)—(1,206)(1,206)
Net premiums collected—8,4168,416—8,2838,283
Ending balance at original discount rate—(1,369,941)(1,369,941)—(295,541)(295,541)
Effect of changes in discount rate assumptions—36,55636,556—43,48943,489
Balance as of the end of the period$—$(1,333,385)$(1,333,385)$—$(252,052)$(252,052)

Notes to Financial Statements (Continued)

Three Months Ended
March 31, 2024March 31, 2023
Payout annuities**(1)**Other**(2)**TotalPayout annuities**(1)**Other**(2)**Total
Present value of expected future policy benefits
Balance as of beginning of the period$17,427,353$604,767$18,032,120$14,021,514$679,807$14,701,321
Balance at original discount rate$20,040,000$701,655$20,741,655$17,180,626$806,555$17,987,181
Effect of actual variances from expected experience(5,403)(4,126)(9,529)(7,777)3,539(4,238)
Adjusted beginning of period balance20,034,597697,52920,732,12617,172,849810,09417,982,943
Issuances521,3848,829,0489,350,432559,42115559,436
Interest145,2652,146147,41193,6542,46796,121
Benefit payments(443,016)(16,726)(459,742)(389,426)(25,861)(415,287)
Ending balance at original discount rate20,258,2309,511,99729,770,22717,436,498786,71518,223,213
Effect of changes in discount rate assumptions(2,934,499)(91,610)(3,026,109)(2,721,312)(115,387)(2,836,699)
Balance as of the end of the period17,323,7319,420,38726,744,11814,715,186671,32815,386,514
Net liability for future policy benefits17,323,7318,087,00225,410,73314,715,186419,27615,134,462
Less: reinsurance recoverable(3)(9,184,956)(6,395,483)(15,580,439)(7,636,570)1,750(7,634,820)
Net liability for future policy benefits, net of reinsurance recoverables$8,138,775$1,691,519$9,830,294$7,078,616$421,026$7,499,642

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

(2)“Other” consists of activity related to long-term care insurance, variable annuities, traditional life insurance, preneed insurance and fixed-rate annuity products. Mortality and morbidity risks associated with the long-term care insurance have been ceded to a third-party reinsurer.

(3)Reinsurance recoverables associated with the liability for future policy benefits is net of the effect of changes in discount rate assumptions of $(141.4) million and $237.1 million for the three months ended March 31, 2024 and 2023, respectively.

The following table summarizes the amount of gross premiums related to traditional and limited-payment contracts recognized in the consolidated statements of operations for the three months ended March 31, 2024 and 2023:

Gross premiums
Three Months Ended March 31,
20242023
Payout annuities$582,588$492,727
Other8,547,65314,391
Total products$9,130,241$507,118

The following table reflects the weighted-average duration and weighted-average interest rates of the future policy benefit liability as of March 31, 2024 and December 31, 2023:

As of March 31, 2024
Payout annuitiesOther
Weighted-average interest rates, original discount rate3.44%4.85%
Weighted-average interest rates, current discount rate5.22%5.29%
Weighted-average liability duration (years, current rates)8.4210.70
As of December 31, 2023
Payout annuitiesOther
Weighted-average interest rates, original discount rate3.37%2.57%
Weighted-average interest rates, current discount rate4.95%4.95%
Weighted-average liability duration (years, current rates)8.589.03

The following reflects the undiscounted ending balance of expected future gross premiums and expected future benefits and payments for traditional and limited-payment contracts, as of March 31, 2024 and December 31, 2023:

Notes to Financial Statements (Continued)

As of March 31, 2024
Payout annuitiesOther
Expected future benefit payments, undiscounted$29,845,573$16,966,712
Expected future benefit payments, discounted (original discount rate)20,258,2309,511,997
Expected future benefit payments, discounted (current discount rate)17,323,7319,420,387
Expected future gross premiums, undiscounted—1,880,510
Expected future gross premiums, discounted (original discount rate)—1,447,508
Expected future gross premiums, discounted (current discount rate)—1,398,867
As of December 31, 2023
Payout annuitiesOther
Expected future benefit payments, undiscounted$29,164,580$832,608
Expected future benefit payments, discounted (original discount rate)19,899,423689,760
Expected future benefit payments, discounted (current discount rate)17,427,352604,768
Expected future gross premiums, undiscounted—377,693
Expected future gross premiums, discounted (original discount rate)—317,710
Expected future gross premiums, discounted (current discount rate)—262,653

Additional liability for annuitization, death, or other insurance benefits

The following tables reflect the additional liability for annuitization, death, or other insurance benefits roll-forward for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,
20242023
Balance as of beginning of period$7,251,266$5,104,810
Effect of changes in cash flow assumptions——
Effect of changes in experience(29,667)(21,177)
Adjusted balance as of beginning of period7,221,5995,083,633
Issuances6,0795,684
Assessments175,43085,683
Benefits paid(136,605)(84,913)
Interest59,36326,296
Balance as of end of period7,325,8665,116,383
Less: impact of unrealized investment gain and losses112,509117,958
Less: reinsurance recoverable, end of period1,460,314—
Balance, end of year, net of reinsurance recoverable and impact of unrealized investment gains and losses$5,753,043$4,998,425

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

The following reflects the amount of gross assessments recognized for the additional liability for annuitization, death, or other insurance benefits in the consolidated statements of operations for the three months ended March 31, 2024 and 2023:

Gross assessments
Three Months Ended March 31,
20242023
Total amount recognized within revenue in the consolidated statements of operations$168,504$146,376

Notes to Financial Statements (Continued)

The following reflects the weighted average duration and weighted average interest rate for the additional liability for annuitization, death, or other insurance benefits as of March 31, 2024 and December 31, 2023:

As of
March 31, 2024December 31, 2023
Weighted-average interest, current discount rate3.27%3.09%
Weighted-average liability duration (years)27.7527.64

Market risk benefits

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

Three months ended
March 31, 2024March 31, 2023
Fixed-indexed annuityVariable- and other annuitiesTotalFixed-indexed annuityVariable- and other annuitiesTotal
Balance as of beginning of period$868,268$252,683$1,120,951$548,536$120,322$668,858
Balance as of beginning of period, before impact of changes in instrument-specific credit risk$790,616$225,593$1,016,209$656,880$150,633$807,513
Issuances3,408(2)3,406(36)(9)(45)
Interest10,9142,92613,8408,8541,95710,811
Attributed fees collected24,66021,87446,53424,14321,09545,238
Benefit payments(1,649)(1,807)(3,456)(802)(18)(820)
Effect of changes in interest rates(68,282)(40,975)(109,257)71,73749,005120,742
Effect of changes in equity markets(12,806)(42,848)(55,654)(3,822)(21,986)(25,808)
Effect of actual experience different from assumptions6,352(5,001)1,351772(12,676)(11,904)
Balance as of end of period before impact of changes in instrument-specific credit risk753,213159,760912,973757,726188,001945,727
Effect of changes in instrument-specific credit risk82,96927,080110,049(146,505)(44,165)(190,670)
Balance as of end of period836,182186,8401,023,022611,221143,836755,057
Less: reinsurance recoverable as of the end of the period—(12,820)(12,820)—(14,913)(14,913)
Balance as of end of period, net of reinsurance recoverable$836,182$174,020$1,010,202$611,221$128,923$740,144
Net amount at risk$4,356,548$1,289,163$5,645,711$3,980,500$1,277,299$5,257,799
Weighted-average attained age of contract holders (years)706970707170

The following reflects the reconciliation of the market risk benefits reflected in the preceding table to the amounts reported in an asset and liability position, respectively, in the consolidated statements of financial condition as of March 31, 2024 and December 31, 2023:

As of March 31, 2024As of December 31, 2023
AssetLiabilityNetAssetLiabilityNet
Fixed-indexed annuities$23$836,205$(836,182)$—$868,268$(868,268)
Variable- and other annuities8186,848(186,840)17252,700(252,683)
Total$31$1,023,053$(1,023,022)$17$1,120,968$(1,120,951)

Notes to Financial Statements (Continued)

Separate account liabilities

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

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

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

March 31, 2024March 31, 2023
Variable annuitiesInterest-sensitive lifeTotalVariable annuitiesInterest-sensitive lifeTotal
Balance as of beginning of period$3,565,029$541,971$4,107,000$3,627,769$503,025$4,130,794
Premiums and deposits6,5193,4449,96310,6553,58114,236
Surrenders, withdrawals and benefit payments(134,786)(5,223)(140,009)(108,408)(3,716)(112,124)
Investment performance241,05644,942285,998141,07131,944173,015
Other(28,267)(11,512)(39,779)(29,652)(11,466)(41,118)
Balance as of end of period$3,649,551$573,622$4,223,173$3,641,435$523,368$4,164,803
Cash surrender value as of end of period(1)$3,649,551$573,622$4,223,173$3,641,435$523,368$4,164,803

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

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

March 31, 2024December 31, 2023
Asset type:
Managed volatility equity/fixed income blended fund$2,152,615$2,131,149
Equity1,688,1191,596,467
Fixed income149,305152,398
Money market232,510226,387
Alternative624599
Total assets supporting separate account liabilities$4,223,173$4,107,000

Notes to Financial Statements (Continued)

18. INCOME TAXES

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

For the three months ended March 31, 2024 and 2023, the effective tax rates were 19.7% and 36.4%, respectively. The effective tax rate differs from the statutory rate primarily due to the portion of the reported net income (loss) before taxes not being attributable to KKR but rather being attributable to (i) third-party limited partner interests in consolidated investment funds and (ii) exchangeable securities representing ownership interests in KKR Group Partnership until they are exchanged for common stock of KKR & Co. Inc.

In 2022, changes in market conditions, including rapidly rising interest rates, impacted the unrealized tax gains and losses in the available for sale securities portfolios of Global Atlantic, resulting in deferred tax assets related to net unrealized tax capital losses for which the carryforward period has not yet begun. As such, when assessing recoverability, Global Atlantic considered its ability and intent to hold the underlying securities to recovery. Global Atlantic concluded that a valuation allowance should be established on a portion of the deferred tax assets related to unrealized tax capital losses that are not more-likely-than-not to be realized, which represents the portion of the portfolio Global Atlantic estimates it would not be able to hold to recovery. As of March 31, 2024, Global Atlantic maintained $89.3 million of valuation allowance associated with the unrealized tax capital losses in the available for sale securities portfolio. The establishment of the valuation allowance was recorded in other comprehensive income. Based on available evidence and various assumptions as to the timing of income, KKR believes it is likely that all other deferred tax assets will be realized. There was no change in the valuation allowance recorded as of March 31, 2024.

During the three months ended March 31, 2024, there were no material changes to KKR's uncertain tax positions and KKR believes there will not be a significant increase or decrease to these uncertain tax positions within 12 months of the reporting date.

On August 16, 2022, the Inflation Reduction Act (the “IRA”) was signed into law. The IRA enacted a new 15% corporate alternative minimum tax ("CAMT") on the "adjusted financial statement income" of certain large corporations, which became effective on January 1, 2023. In addition, the IRA enacted a 1% excise tax on corporate stock repurchases completed after December 31, 2022. KKR reviewed the impact and concluded there was no impact on income taxes for the three months ended March 31, 2024 and will continue to review and monitor the issuance of additional guidance from the U.S. Treasury and the U.S. Internal Revenue Service.

On December 20, 2021, the OECD released Pillar Two Model Rules, which contemplate a global 15% minimum tax rate. The OECD continues to release additional guidance, including administrative guidance on interpretation and application of Pillar Two, and many countries are passing legislation to comply with Pillar Two. The changes contemplated by Pillar Two, when enacted by various countries in which we do business, may increase our taxes in such countries. Based on the available legislation, KKR concluded there was no material impact on income taxes with respect to Pillar Two for the three months ended March 31, 2024. KKR will continue to evaluate the potential future impacts of Pillar Two and will continue to review and monitor the issuance of additional guidance.

On December 27, 2023, the Government of Bermuda enacted the Bermuda Corporate Income Tax (“Bermuda CIT”). Commencing on January 1, 2025, the Bermuda CIT generally will impose a 15% corporate income tax on in-scope entities that are resident in Bermuda or have a Bermuda permanent establishment, without regard to any assurances that been given pursuant to the Exempted Undertakings Tax Protection Act 1966. As a result of the 2024 GA Acquisition, we are now subject to the Bermuda CIT enacted in 2023. Global Atlantic reviewed the potential impact and does not expect that the Bermuda CIT will have a material impact on income taxes for 2024.

Notes to Financial Statements (Continued)

19. EQUITY-BASED COMPENSATION

The following table summarizes the expense associated with equity-based compensation in connection with KKR equity incentive awards and incentive awards under the Global Atlantic Financial Company Book Value Award Plan ("GA Book Value Plan") and the Global Atlantic Senior Management Equity Incentive Plan ("GA Equity Incentive Plan") for the three months ended March 31, 2024 and 2023, respectively.

Three Months Ended March 31,
20242023
Asset Management$154,345$126,290
Insurance29,06657,047
Total$183,411$183,337

KKR Equity Incentive Awards

Under KKR's Equity Incentive Plans, KKR is permitted to grant equity awards representing ownership interests in KKR & Co. Inc. common stock. On March 29, 2019, the 2019 Equity Incentive Plan became effective. Following the effectiveness of the 2019 Equity Incentive Plan, KKR no longer makes further grants under the 2010 Equity Incentive Plan, and the 2019 Equity Incentive Plan became KKR's only plan for providing new equity awards by KKR & Co. Inc. Outstanding awards under the 2010 Equity Incentive Plan will remain outstanding, unchanged and subject to the terms of the 2010 Equity Incentive Plan and their respective equity award agreements, until the vesting, expiration or lapse of such awards in accordance with their terms. The total number of equity awards representing shares of common stock that may be issued under the 2019 Equity Incentive Plan is equivalent to 15% of the aggregate number of the shares of common stock and KKR Group Partnership Units (excluding KKR Group Partnership Units held by KKR & Co. Inc. or its wholly-owned subsidiaries), subject to annual adjustment. As of March 31, 2024, 48,896,121 shares may be issued under the 2019 Equity Incentive Plan. KKR has also issued equity grants in the form of restricted holdings units through KKR Holdings III L.P. ("KKR Holdings III"), which are not issued under the 2019 Equity Incentive Plan and are currently held by certain Global Atlantic employees. Equity awards granted generally consist of (i) restricted stock units that convert into shares of common stock of KKR & Co. Inc. (or cash equivalent) upon vesting and (ii) restricted holdings units that are exchangeable into shares of common stock of KKR & Co. Inc. upon vesting and certain other conditions, including those described below.

Service-Vesting Awards

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

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

As of March 31, 2024, there was approximately $981 million of total estimated unrecognized expense related to unvested Service-Vesting Awards, which is expected to be recognized over the weighted average remaining requisite service period of 2.4 years.

Notes to Financial Statements (Continued)

A summary of the status of unvested Service-Vesting Awards granted from January 1, 2024 through March 31, 2024 is presented below:

Shares (1)Weighted Average Grant Date Fair Value
Balance, January 1, 202423,228,671$53.22
Granted4,098,78776.73
Vested(932,297)74.09
Forfeitures(284,320)55.77
Balance, March 31, 202426,110,841$56.14

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

Market Condition Awards

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

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

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

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

Weighted AverageRange
Grant Date Fair Value$30.57$19.87 - $66.80
Closing KKR share price as of valuation date$51.60$37.93 - $82.85
Risk Free Rate2.21%0.41% - 4.41%
Volatility30.04%28.00% - 38.00%
Dividend Yield1.27%0.71% - 1.53%
Expected Cost of Equity10.74%9.13% - 11.80%

As of March 31, 2024, there was approximately $685 million of total estimated unrecognized expense related to these unvested Market Condition Awards, which is expected to be recognized over the weighted average remaining requisite service period of 3.4 years.

Notes to Financial Statements (Continued)

A summary of the status of unvested Market Condition Awards granted from January 1, 2024 through March 31, 2024 is presented below:

Shares (1)Weighted Average Grant Date Fair Value
Balance, January 1, 202436,497,589$29.59
Granted2,278,83058.59
Vested(170,000)21.29
Forfeitures(280,452)23.67
Balance, March 31, 202438,325,967$31.39

(1)Unvested Market Condition Awards include restricted holdings units granted to Global Atlantic employees.

As of March 31, 2024, 24.1 million units of these Market Condition awards have met their market price based vesting condition.

Co-CEO Awards

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

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

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

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

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

As of March 31, 2024, there was approximately $399 million of total estimated unrecognized expense related to these unvested Co-CEO Awards, which is expected to be recognized ratably from April 1, 2024 to December 31, 2026. As of March 31, 2024, 3.0 million units of these Co-CEO awards have met their market price based vesting condition.

Notes to Financial Statements (Continued)

Modification and Replacement of Book Value Awards - Insurance

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

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

BVAs were accounted for as profit sharing arrangements in accordance with ASC 710. On January 2, 2024, KKR replaced the BVAs with approximately 1.9 million of Service-Vesting Awards granted pursuant to our 2019 Equity Incentive Plan, which are accounted for as equity classified awards in scope of ASC 718. As such, this modification resulted in (i) a change in scope from ASC 710 to ASC 718, (ii) a change in classification from liability to equity and (iii) a corresponding reclassification of $77 million from Accrued Expenses and Other Liabilities to Additional Paid-In Capital in the consolidated statement of financial condition. Accordingly, these awards will no longer be remeasured to fair value after the modification date. No incremental expense recognition was required upon the modification of the BVAs, because no incremental value was transferred to the employees. The service and vesting conditions of the Service-Vesting Awards mirror those of the BVAs.

Modification and Replacement of GA Equity Incentive Plan Awards - Insurance

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

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

On January 2, 2024, KKR replaced the GA Equity Incentive Plan awards with (i) 1.3 million of Service-Vesting Awards with a remaining vesting period of approximately 2 years and approximately 0.9 million of Market Condition Awards, both of which are accounted for as equity classified awards in scope of ASC 718, and (ii) approximately $54 million in vested KKR Holdings III restricted holdings units. As such, this modification resulted in (i) a change in scope from ASC 710 to ASC 718 for a portion of the award, (ii) a change in classification from liability to equity and (iii) a corresponding reclassification of $149 million from Accrued Expenses and Other Liabilities to Additional Paid-In Capital in the consolidated statement of financial condition. No incremental expense recognition was required upon the modification of the GA Equity Incentive Plan awards, because no incremental value was transferred to the employees.

Due to the existence of the service requirement, the vesting period for the Market Condition Awards is explicit, and as such, compensation expense will be recognized on (i) a straight-line basis over the period from the date of grant through the date the award recipient is required to be employed by KKR and (ii) assumes a forfeiture rate of up to 4% annually based upon expected turnover. The fair value of the awards granted are based on a Monte Carlo simulation valuation model.

Notes to Financial Statements (Continued)

20. RELATED PARTY TRANSACTIONS

Due from Affiliates consists of:

March 31, 2024December 31, 2023
Amounts due from unconsolidated investment funds$1,214,045$1,229,308
Amounts due from portfolio companies235,349217,544
Due from Affiliates$1,449,394$1,446,852

Due to Affiliates consists of:

March 31, 2024December 31, 2023
Amounts due to current and former employees under the tax receivable agreement$381,076$406,730
Amounts due to unconsolidated investment funds62,143131,369
Due to Affiliates$443,219$538,099

Notes to Financial Statements (Continued)

21. SEGMENT REPORTING

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

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

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

  • Strategic Holdings - The strategic holdings business initially represents KKR's participation in the core private equity strategy, which was previously presented in the Asset Management segment’s Principal Activities business line. This segment primarily generates income from dividends from these businesses. Dividends are presented net of management fees paid to our Asset Management segment. If KKR were to sell a portion or all of a business reported in Strategic Holdings, the realized gain or loss would be presented as realized investment income reduced by the performance fee paid to our Asset Management segment.

KKR’s segment profitability measure used to make operating decisions and assess performance across KKR’s reportable segments is presented prior to giving effect to the allocation of income (loss) among KKR & Co. Inc. and holders of any exchangeable securities, and the consolidation of the investment funds, vehicles and accounts that KKR advises, manages or sponsors (including CFEs). KKR's segment profitability measure excludes: (i) equity-based compensation charges, (ii) amortization of acquired intangibles, (iii) strategic corporate related charges and (iv) non-recurring items, if any. Strategic corporate related items arise from corporate actions and consist primarily of (i) impairments, (ii) transaction costs from strategic acquisitions, and (iii) depreciation on real estate that KKR owns and occupies. Inter-segment transactions are not eliminated from segment results when management considers those transactions in assessing the results of the respective segments. These transactions include (i) management fees earned by the Asset Management segment as the investment adviser for Global Atlantic insurance companies, (ii) management and performance fees earned by the Asset Management segment from the Strategic Holdings segment, and (iii) interest income and expense based on lending arrangements where the Asset Management segment borrows from the Insurance segment. All these inter-segment transactions are recorded by each segment based on the applicable governing agreements. Total Segment Earnings represents the total segment earnings of KKR’s Asset Management, Insurance and Strategic Holdings segments:

  • Asset Management Segment Earnings is the segment profitability measure used to make operating decisions and to assess the performance of the Asset Management segment. This measure is presented before income taxes 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. The non-operating adjustments made to derive Asset Management Segment Earnings excludes the impact of: (i) unrealized gains (losses) on investments, (ii) unrealized carried interest, and (iii) unrealized carried interest compensation. 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 Strategic Holdings segment, are included in Asset Management Segment Earnings.

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

Notes to Financial Statements (Continued)

  • Strategic Holdings Segment Earnings is the segment profitability measure used to make operating decisions and to assess the performance of the Strategic Holdings segment. This measure is presented before income taxes and is comprised of: Dividends, Net and Net Realized Investment Income. The non-operating adjustment made to derive Strategic Holdings Segment Earnings excludes the impact of unrealized gains (losses) on investments. Strategic Holdings Segment Earnings includes management fees and performance fee expenses that are earned by the Asset Management segment.

Modification of Segment Information

In connection with building and scaling of the core private equity strategy on KKR’s balance sheet and the acquisition of the remaining minority equity interests in Global Atlantic on January 2, 2024, KKR reevaluated the manner in which it makes operational and resource deployment decisions and assesses the overall performance of KKR's business. Effective with the first quarter of 2024, KKR has made changes with respect to the preparation of the reports used by KKR's chief operating decision makers. As a result, KKR has modified the presentation of its segment financial information with retrospective application to all prior periods presented.

The most significant changes between KKR's current segment presentation and its previous segment presentation reported prior to the first quarter of 2024, are as follows:

  • Creating a new business segment, Strategic Holdings - The new segment is currently comprised of KKR’s participation in its core private equity strategy. Our participation in the core private equity strategy has scaled into a business KKR now evaluates separately from its Asset Management segment. Additionally, KKR may also acquire other long-term assets that are not part of the core private equity strategy for this segment. As of the first quarter of 2024, KKR’s participation in its core private equity strategy will no longer be reported as part of the Asset Management segment. The Asset Management segment continues to represent KKR's business separate from its insurance operations and continues to reflect how the chief operating decision makers allocate resources and assess performance in the asset management business, which includes operating collaboratively across its business lines, with predominantly a single expense pool. Effective as of the first quarter of 2024, the results of our Strategic Holdings segment will include a management fee and performance fee that is paid to our Asset Management segment for providing advisory services rather than allocating the costs borne by our Asset Management segment to support our Strategic Holdings segment. The historical amounts presented herein do not include any management or performance fees that will be charged since the governing agreement was not in place prior to the first quarter of 2024.

  • Segment Earnings - Segment Earnings is the performance measure for KKR's segment profitability and is used by management in making operational decisions and to assess performance.

Notes to Financial Statements (Continued)

Segment Presentation

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

Three Months Ended March 31,
20242023
Asset Management
Management Fees (1)(2)$815,327$738,156
Transaction and Monitoring Fees, Net152,084142,179
Fee Related Performance Revenues19,10121,741
Fee Related Compensation(172,640)(203,094)
Other Operating Expenses(145,131)(150,404)
Fee Related Earnings668,741548,578
Realized Performance Income271,545175,398
Realized Performance Income Compensation(193,547)(114,009)
Realized Investment Income (3)134,753194,834
Realized Investment Income Compensation(20,211)(29,714)
Asset Management Segment Earnings$861,281$775,087
Insurance
Net Investment Income (1) (3)$1,486,419$1,271,255
Net Cost of Insurance(1,003,327)(750,612)
General, Administrative and Other(210,252)(196,714)
Pre-tax Operating Earnings272,840323,929
Pre-tax Operating Earnings Attributable to Noncontrolling Interests—(118,817)
Insurance Segment Earnings$272,840$205,112
Strategic Holdings
Dividends, Net (2)$20,720$—
Strategic Holdings Operating Earnings20,720—
Net Realized Investment Income——
Strategic Holdings Segment Earnings$20,720$—
Total Segment Earnings$1,154,841$980,199
(1) Includes intersegment management fees of $112.4 million and $108.3 million between Asset Management and Insurance segments for the three months ended March 31, 2024 and 2023, respectively.
(2) Includes intersegment management fees of $7.5 million between the Asset Management and the Strategic Holdings segments for the three months ended March 31, 2024.
(3) Includes intersegment interest expense of $3.2 million and $44.8 million for the three months ended March 31, 2024 and 2023, respectively.
As of March 31,
20242023
Segment Assets:
Asset Management$24,726,206$24,960,722
Insurance230,645,894174,831,730
Strategic Holdings6,840,5055,700,661
Total Segment Assets$262,212,605$205,493,113
Three Months Ended March 31,
Non-cash expenses excluded from Segment Earnings20242023
Equity Based Compensation and Other
Asset Management$154,345$126,290
Insurance (1)29,06636,393
Total Non-cash expenses$183,411$162,683

(1)Amounts include the portion allocable to KKR & Co. Inc.

Notes to Financial Statements (Continued)

Reconciliations of Total Segment Amounts

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

Three Months Ended March 31,
20242023
Total GAAP Revenues$9,656,738$3,127,482
Impact of Consolidation and Other283,823209,778
Asset Management Adjustments:
Capital Allocation-Based Income (Loss) (GAAP)(1,262,942)(449,018)
Realized Carried Interest250,268172,689
Realized Investment Income - Asset Management134,753194,834
Capstone Fees(18,514)(19,805)
Expense Reimbursements(8,093)(15,544)
Strategic Holdings Adjustments:
Strategic Holdings Segment Management Fees7,484—
Insurance Adjustments:
Net Premiums(6,036,522)(473,624)
Policy Fees(328,947)(313,802)
Other Income(56,385)(37,158)
(Gains) Losses from Investments(1)258,483260,507
Non-operating Changes in Policy Liabilities and Derivatives19,803(112,776)
Total Segment Revenues (2)$2,899,949$2,543,563

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

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

Three Months Ended March 31,
20242023
Income (Loss) Before Tax (GAAP)$1,363,051$408,435
Impact of Consolidation and Other(189,596)99,137
Interest Expense, Net72,80782,240
Asset Management Adjustments:
Unrealized (Gains) Losses(399,078)119,934
Unrealized Carried Interest(946,816)(202,659)
Unrealized Carried Interest Compensation757,45283,830
Strategic Corporate Related Charges and Other61,6756,807
Equity-based compensation73,77759,017
Equity-based compensation - Performance based80,56867,273
Strategic Holdings Adjustments:
Unrealized (Gains) Losses(73,257)(20,607)
Insurance Adjustments:**(1)
(Gains) Losses from Investments(1)(2)246,917131,114
Non-operating Changes in Policy Liabilities and Derivatives(1)73,863106,491
Equity-based and Other Compensation(1)29,06636,393
Amortization of Acquired Intangibles(1)4,4122,794
Total Segment Earnings$1,154,841$980,199

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

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

Notes to Financial Statements (Continued)

As of
March 31, 2024March 31, 2023
Total GAAP Assets$339,773,927$282,610,589
Impact of Consolidation and Reclassifications(74,048,864)(75,160,372)
Carry Pool Reclassifications(3,512,458)(1,957,104)
Total Segment Assets$262,212,605$205,493,113

22. EQUITY

Stockholders' Equity

Common Stock

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

Series I Preferred Stock

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

Share Repurchase Program

The repurchase program does not have an expiration date. Under KKR's repurchase program, shares of common stock of KKR & Co. Inc. may be repurchased from time to time in open market transactions, in privately negotiated transactions or otherwise. The timing, manner, price and amount of any repurchases will be determined by KKR in its discretion and will depend on a variety of factors, including legal requirements, price and economic and market conditions. In addition to the repurchases of common stock, the repurchase program will be used for the retirement (by cash settlement or the payment of tax withholding amounts upon net settlement) of equity awards granted pursuant to our Equity Incentive Plans representing the right to receive common stock. KKR expects that the program, which has no expiration date, will be in effect until the maximum approved dollar amount has been used. The program does not require KKR to repurchase or retire any specific number of shares of common stock or equity awards, respectively, and the program may be suspended, extended, modified or discontinued at any time. As of April 26, 2024, there was approximately $101 million remaining under the program. Subsequent to March 31, 2024, the share repurchase program has been amended such that when the remaining available amount under the share repurchase program becomes $50 million or less, the total available amount under the share repurchase program will automatically add an additional $500 million to the then remaining available amount of $50 million or less.

For the three months ended March 31, 2024 and 2023, no shares of common stock were repurchased, and no equity awards were retired under the repurchase program.

Notes to Financial Statements (Continued)

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

Vesting of restricted holdings units results in a change in ownership in KKR Group Partnership L.P., while KKR retains a controlling interest, and is accounted for as an equity transaction between the controlling and noncontrolling interests.

Noncontrolling Interests

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

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

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

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

(iv)certain third-party investors in Global Atlantic's consolidated renewable energy entities and certain other entities.

The following table presents total noncontrolling interests:

For the Three Months Ended March 31,
20242023
Beginning of Period (as previously reported for the prior period)$34,904,791$35,778,000
Adoption of New Accounting Standard (See Note 2)—632,858
Balance at the beginning of the period (as revised for the prior period)34,904,79136,410,858
Net Income (Loss) Attributable to Noncontrolling Interests378,958(73,003)
Other Comprehensive Income (Loss), net of tax(1,480)367,188
Compensation Modification - Issuance of Holdings III Units (See Note 19)53,623—
Equity-Based Compensation (Non Cash Contribution)103,90776,596
2024 GA Acquisition - Cash consideration (See Note 1)(2,622,230)—
2024 GA Acquisition - Issuance of Holdings III Units (See Note 1)40,789—
Change in KKR & Co. Inc.'s Ownership - 2024 GA Acquisition2,169,300—
Change in KKR & Co. Inc.'s Ownership Interest(165,230)—
Capital Contributions1,438,2022,468,778
Capital Distributions(1,732,066)(1,840,303)
Changes in Consolidation—(93,545)
Balance at the end of the period$34,568,564$37,316,569

Notes to Financial Statements (Continued)

23. REDEEMABLE NONCONTROLLING INTERESTS

Redeemable noncontrolling interests represent:

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

(ii) Global Atlantic has redeemable noncontrolling interests related to renewable energy entities of approximately $47.0 million and $47.8 million as of March 31, 2024 and December 31, 2023, respectively, as determined by the hypothetical liquidation at book value ("HLBV") method. The estimated redemption value of redeemable noncontrolling interests is calculated as the discounted cash flows subsequent to the expected flip date of the respective renewable energy entity. The flip date represents the date at which the allocation of income and cash flows among the investors in the entity is adjusted, pursuant to the redeemable noncontrolling interest investors having achieved an agreed-upon return. The flip date of renewable energy partnerships determines when the redeemable noncontrolling interests are eligible to be redeemed. Eligible redemption dates range from January 1, 2028 to June 30, 2028. For the redeemable noncontrolling interests outstanding as of both March 31, 2024 and December 31, 2023, the estimated redemption value that would be due at the respective redemption dates is $3.2 million.

The following table presents the calculation of Redeemable Noncontrolling Interests:

Three Months Ended March 31,
20242023
Balance at the beginning of the period$615,427$152,065
Net Income (Loss) Attributable to Redeemable Noncontrolling Interests32,678(7,303)
Capital Contributions282,253—
Capital Distributions(8,265)(636)
Balance at the end of the period$922,093$144,126

Notes to Financial Statements (Continued)

24. COMMITMENTS AND CONTINGENCIES

Funding Commitments and Others

As of March 31, 2024, KKR had unfunded commitments consisting of $7.9 billion to its investment funds and vehicles. KKR has also agreed for certain of its investment vehicles to fund or otherwise be liable for a portion of their investment losses (up to a maximum of approximately $61.1 million) and/or to provide them with liquidity upon certain termination events (the maximum amount of which is unknown until the scheduled termination date of the investment vehicle).

In addition to these uncalled commitments and funding obligations to KKR's investment funds and vehicles, KKR has entered into contractual commitments primarily with respect to underwriting transactions, debt financing, revolving credit facilities, and syndications in KKR's Capital Markets business line. As of March 31, 2024, these commitments amounted to $504.0 million. Whether these amounts are actually funded, in whole or in part, depends on the contractual terms of such commitments, including the satisfaction or waiver of any conditions to closing or funding. KKR's capital markets business has arrangements with third parties, which reduce its risk when underwriting certain debt transactions, and thus our unfunded commitments as of March 31, 2024 have been reduced to reflect the amount to be funded by such third parties. As of March 31, 2024, KKR's capital markets business line has entered into such arrangements representing a total notional amount of $4.5 billion. In the case of purchases of investments or assets in our Principal Activities business line, the amount to be funded includes amounts that are intended to be syndicated to third parties, and the actual amounts to be funded may be less.

Global Atlantic has commitments to purchase or fund investments of $3.8 billion as of March 31, 2024. These commitments include those related to mortgage loans, other lending facilities and other investments. For those commitments that represent a contractual obligation to extend credit, Global Atlantic has recorded a liability of $54.0 million for current expected credit losses as of March 31, 2024.

In addition, Global Atlantic has entered into certain forward flow agreements to purchase loans. Global Atlantic's obligations under these agreements are subject to change, curtailment, and cancellation based on various provisions including repricing mechanics, due diligence reviews, and performance or pool quality, among other factors.

Non-cancelable Operating Leases

KKR's non-cancelable operating leases consist of leases of office space around the world. There are no material rent holidays, contingent rent, rent concessions or leasehold improvement incentives associated with any of these property leases. In addition to base rentals, certain lease agreements are subject to escalation provisions and rent expense is recognized on a straight‑line basis over the term of the lease agreement.

Global Atlantic also enters into land leases for its consolidated investments in renewable energy.

Contingent Repayment Guarantees

The partnership documents governing KKR's carry-paying investment funds and vehicles generally include a "clawback" provision that, if triggered, may give rise to a contingent obligation requiring the general partner to return amounts to the fund for distribution to the fund investors at the end of the life of the fund. Under a clawback obligation, upon the liquidation of a fund, the general partner is required to return, typically on an after-tax basis, previously distributed carry to the extent that, due to the diminished performance of later investments, the aggregate amount of carry distributions received by the general partner during the term of the fund exceed the amount to which the general partner was ultimately entitled, including the effects of any performance thresholds. KKR has guaranteed its general partners' clawback obligations.

As of March 31, 2024, approximately $550 million of carried interest was subject to this clawback obligation, assuming that all applicable carry-paying funds and their alternative investment vehicles were liquidated at their March 31, 2024 fair values. Although KKR would be required to remit the entire amount to fund investors that are entitled to receive the clawback payment, KKR would be entitled to seek reimbursement of approximately $223 million of that amount from Associates Holdings, which is not a KKR subsidiary. As of March 31, 2024, Associates Holdings had access to cash reserves sufficient to reimburse the full $223 million that would be due to KKR. If the investments in all carry-paying funds were to be liquidated at zero value, the clawback obligation would have been approximately $3.7 billion, and KKR would be entitled to seek reimbursement of approximately $1.6 billion of that amount from Associates Holdings. KKR will acquire control of Associates Holdings when a subsidiary of KKR becomes its general partner upon the closing of the transactions contemplated to occur on the Sunset Date (as defined in Note 1 "Organization"), which will occur not later than December 31, 2026.

Notes to Financial Statements (Continued)

Carried interest is recognized in the consolidated statements of operations based on the contractual conditions set forth in the agreements governing the fund as if the fund were terminated and liquidated at the reporting date and the fund's investments were realized at the then estimated fair values. Amounts earned pursuant to carried interest are earned by the general partner of those funds to the extent that cumulative investment returns are positive and where applicable, preferred return thresholds have been met. If these investment amounts earned decrease or turn negative in subsequent periods, recognized carried interest will be reversed and to the extent that the aggregate amount of carry distributions received by the general partner during the term of the fund exceed the amount to which the general partner was ultimately entitled, a clawback obligation would be recorded. For funds that are consolidated, this clawback obligation, if any, is reflected as an increase in noncontrolling interests in the consolidated statements of financial condition. For funds that are not consolidated, this clawback obligation, if any, is reflected as a reduction of KKR's investment balance as this is where carried interest is initially recorded.

Indemnifications and Other Guarantees

Asset Management and Strategic Holdings Segment

KKR may incur contingent liabilities for claims that may be made against it in the future. KKR enters into contracts that contain a variety of representations, warranties and covenants, including indemnifications. KKR (including KFN) and certain of KKR's investment funds have provided and provide certain credit support, such as indemnities and guarantees, relating to a variety of matters, including non-recourse carve-out guarantees for fraud, willful misconduct and other wrongful acts in connection with the financing of (i) certain real estate investments that we have made, including KKR's corporate real estate, and (ii) certain investment vehicles that KKR manages or sponsors.

KKR also has provided, and provides, credit support in connection with its businesses, including:

i.to certain of its subsidiaries' obligations in connection with a limited number of investment vehicles that KKR manages,

ii.in connection with repayment and funding obligations to third-party lenders on behalf of certain employees, excluding its executive officers, in connection with their personal investments in KKR investment funds and a levered multi-asset investment vehicle,

iii.to one of its hedge fund partnerships,

iv.through a contingent guarantee of a subsidiary’s loan repayment obligations, which does not become effective unless and until its loan becomes accelerated due to certain specified events of default involving the investment vehicles managed by KJRM,

v.the obligations of our subsidiaries' funding obligations to our investment vehicles, and

vi.certain of our investment vehicles to fund or otherwise be liable for a portion of their investment losses and/or to provide them with liquidity upon certain termination events (the maximum amount of which is unknown until the scheduled termination date of the investment vehicle).

KKR may also become liable for certain fees payable to sellers of businesses or assets if a transaction does not close, subject to certain conditions, if any, specified in the acquisition agreements for such businesses or assets.

Insurance Segment

The Global Atlantic business was formerly owned by The Goldman Sachs Group, Inc. (together with its subsidiaries, "Goldman Sachs"). In connection with the separation of Global Atlantic from Goldman Sachs in 2013, Global Atlantic entered into a tax benefit payment agreement with Goldman Sachs. Under the tax benefit payment agreement, GA FinCo is obligated to make annual payments out of available cash, guaranteed by GAFG, to Goldman Sachs over an approximately 25-year period totaling $214.0 million. As of March 31, 2024, the present value of the remaining amount to be paid is $47.8 million. Although these payments are subordinated and deferrable, deferral of these payments would result in restrictions on distributions by GA FinCo and GAFG.

Unless otherwise stated above, KKR's maximum exposure under the arrangements described under this section “—Indemnifications and Other Guarantees” are currently unknown as there are no stated or notional amounts included in these arrangements and KKR's liabilities for these matters would require a claim to be made against KKR in the future.

Notes to Financial Statements (Continued)

Legal Proceedings

From time to time, KKR (including Global Atlantic) is involved in various legal proceedings, requests for information, lawsuits, arbitration and claims incidental to the conduct of KKR's businesses. KKR's businesses are also subject to extensive regulation, which may result in regulatory or other legal proceedings against them. Moreover, in the ordinary course of business, KKR is and can be both the defendant and the plaintiff in numerous lawsuits with respect to acquisitions, bankruptcy, insolvency and other events. Such lawsuits may involve claims that adversely affect the value of certain investments owned by KKR's funds and Global Atlantic's insurance companies.

Kentucky Matter

In December 2017, KKR & Co. L.P. (which is now KKR Group Co. Inc.) and its then Co-Chief Executive Officers, Henry Kravis and George Roberts, were named as defendants in a lawsuit filed in Kentucky state court (the “2017 Action”) alleging, among other things, the violation of fiduciary and other duties in connection with certain separately managed accounts that Prisma Capital Partners LP, a former subsidiary of KKR, manages for the Kentucky Retirement Systems. Also named as defendants in the lawsuit are certain current and former trustees and officers of the Kentucky Retirement Systems, Prisma Capital Partners LP, and various other service providers to the Kentucky Retirement Systems and their related persons. The 2017 Action was dismissed at the direction of the Supreme Court of Kentucky for lack of Kentucky constitutional standing. This dismissal became final on February 16, 2024.

On July 21, 2020, the Office of the Attorney General, on behalf of the Commonwealth of Kentucky (the "Kentucky AG"), filed a new lawsuit in the same Kentucky state court (the “2020 AG Action”) making essentially the same allegations as those raised in the 2017 Action, including against what was then KKR & Co. Inc. (now KKR Group Co. Inc.) and Messrs. Kravis and Roberts. On May 1, 2024, the trial court denied motions to dismiss the 2020 AG Action filed by KKR & Co. Inc. and Messrs. Kravis and Roberts.

On April 8, 2024, after receiving permission from the Kentucky trial court in the 2020 AG Action, the Kentucky AG amended its complaint in the 2020 AG Action to add a claim for breach of contract. The Kentucky AG also filed an action (the "2024 AG Action") substantially identical to the 2020 AG Action, including the new claim for breach of contract. On April 23, 2024, KKR & Co. Inc., Messrs. Kravis and Roberts and other defendants moved to strike the Kentucky AG's amended complaint in the 2020 AG Action, to stay consideration of the breach of contract claim and the 2024 AG Action until after the trial court's ruling on the motions to dismiss the 2020 AG Action, and to deny a motion by the Kentucky AG to consolidate the 2020 AG Action and the 2024 AG Action.

In January 2021, some of the attorneys for the plaintiffs in the 2017 Action filed a new lawsuit on behalf of a new set of plaintiffs, who claim to be “Tier 3” members of Kentucky Retirement Systems (the “Tier 3 Plaintiffs”), alleging substantially the same allegations as in the 2017 Action. On July 9, 2021, the Tier 3 Plaintiffs served an amended complaint, which purports to assert, on behalf of a class of beneficiaries of Kentucky Retirement Systems, direct claims for breach of fiduciary duty and civil violations under the Racketeer Influenced and Corrupt Organizations Act (“RICO”). This complaint was removed to the U.S. District Court for the Eastern District of Kentucky, which has entered an order staying this case until the completion of the 2020 AG Action. On August 20, 2021, the Tier 3 Plaintiffs and other individual plaintiffs filed a second complaint in Kentucky state court (the “Second Tier 3 Action”), purportedly on behalf of Kentucky Retirement Systems’ funds, alleging the same claims against what was then KKR & Co. Inc. (now KKR Group Co. Inc.) and Messrs. Kravis and Roberts as in the July 9th amended complaint but without the RICO or class action allegations. On May 1, 2024, the trial court denied motions to dismiss the Second Tier 3 Action filed by KKR & Co. Inc. and Messrs. Kravis and Roberts.

On March 24, 2022, in a separate declaratory judgment action brought by the Commonwealth of Kentucky regarding the enforceability of certain indemnification provisions available to what was then KKR & Co. Inc. (now KKR Group Co. Inc.) and Prisma Capital Partners LP, the Kentucky state court concluded that it has personal jurisdiction over KKR & Co. Inc. in that action, and that the indemnification provisions violated the Kentucky Constitution and were therefore unenforceable. On December 1, 2023, the Kentucky Court of Appeals reversed the trial court’s summary judgment on the issue of personal jurisdiction over KKR & Co. Inc., but affirmed the trial court’s rulings that the indemnification provisions violated the Kentucky Constitution and were unenforceable. On February 5, 2024, the Kentucky Court of Appeals denied the petitions of KKR & Co. Inc. and others for rehearing. On April 8, 2024, KKR & Co. Inc. and other defendants in the declaratory judgment case filed motions with the Supreme Court of Kentucky for discretionary review of the Court of Appeals' December 1, 2023 decision.

KKR intends to continue to vigorously defend against these claims against KKR and Messrs. Kravis and Roberts.

Regulatory Matters

Notes to Financial Statements (Continued)

KKR currently is, and expects to continue to become from time to time, subject to various examinations, inquiries and investigations by various U.S. and non-U.S. governmental and regulatory agencies. Such examinations, inquiries and investigations may result in the commencement of civil, criminal or administrative proceedings, or the imposition of fines, penalties, or other remedies, against KKR and its personnel. KKR is subject to periodic examinations of its regulated businesses by various U.S. and non-U.S. governmental and regulatory agencies, including but not limited to the Securities and Exchange Commission ("SEC"), Financial Industry Regulatory Authority ("FINRA"), the U.K. Financial Conduct Authority, Central Bank of Ireland, Monetary Authority of Singapore, U.S. state insurance regulatory authorities, and the Bermuda Monetary Authority. KKR may also become subject to inquiries or investigations (through a request for information, civil investigative demand, subpoena or otherwise) by any of the foregoing governmental and regulatory agencies as well as by any other U.S. or non-U.S. governmental or regulatory agency, including but not limited to the SEC, U.S. Department of Justice ("DOJ"), U.S. state attorney generals, and similar non-U.S. governmental or regulatory agencies. KKR is currently subject to investigations by the Antitrust Division of the DOJ related to antitrust matters, including civil investigative demands and a grand jury subpoena seeking information with respect to the accuracy and completeness of certain filings made by KKR pursuant to the premerger notification requirements under the Hart-Scott-Rodino Act of 1976 for certain transactions in 2021 and 2022. In addition, KKR is currently subject to an investigation by the Antitrust Division of the DOJ related to the restrictions on interlocking directorates under Section 8 of the Clayton Act. KKR is also currently subject to investigations by the SEC related to business-related electronic communications, including with respect to the preservation of text messages and similar communications on electronic messaging applications under the Investment Advisers Act of 1940. KKR is currently cooperating with each of these named investigations.

Loss Contingencies

KKR establishes an accrued liability for legal or regulatory proceedings only when those matters present loss contingencies that are both probable and reasonably estimable. KKR includes in its financial statements the amount of any reserve for regulatory, litigation and related matters that Global Atlantic includes in its financial statements. No loss contingency is recorded for matters where such losses are either not probable or reasonably estimable (or both) at the time of determination. Such matters also have the possibility of resulting in losses in excess of any amounts accrued. To the extent KKR can in any particular period estimate an aggregate range of reasonably possible losses, these decisions involve significant judgment given that it is inherently difficult to determine whether any loss for a matter is probable or even possible or to estimate the amount of any loss in many legal, governmental and regulatory matters.

Estimating an accrued liability or a reasonably possible loss involves significant judgment due to many uncertainties, including among others: (i) the proceeding may be in early stages; (ii) damages sought may be unspecified, unsupportable, unexplained or uncertain; (iii) discovery may not have been started or is incomplete; (iv) there may be uncertainty as to the outcome of pending appeals or motions; (v) there may be significant factual issues to be resolved; (vi) there may be novel legal issues or unsettled legal theories to be presented or a large number of parties; or (vii) the proceeding relates to a regulatory examination, inquiry, or investigation. It is not possible to predict the ultimate outcome of all pending litigations, arbitrations, claims, and governmental or regulatory examinations, inquiries, investigations and proceedings, and some of the matters discussed above seek or may seek potentially large or indeterminate relief. Consequently, management is unable as of the date of filing of this report to estimate an amount or range of reasonably possible losses related to matters pending against KKR. In addition, any amounts accrued as loss contingencies or disclosed as reasonably possible losses may be, in part or in whole, subject to insurance or other payments such as contributions and indemnity, which may reduce any ultimate loss.

As of the date of filing this report, management does not believe, based on currently available information, that the outcomes of the matters pending against KKR will have a material adverse effect upon its financial statements. However, given the potentially large and/or indeterminate relief sought or that may be sought in certain of these matters and the inherent unpredictability of litigations, arbitrations, claims, and governmental or regulatory examinations, inquiries, investigations and proceedings, it is possible that an adverse outcome in certain matters could have a material adverse effect on KKR's financial results in any future period. In addition, there can be no assurance that material losses will not be incurred from claims that have not yet been asserted or those where potential losses have not yet been determined to be probable or possible and reasonably estimable.

Notes to Financial Statements (Continued)

Other Financing Arrangements

Global Atlantic has financing arrangements with unaffiliated third parties to support the reserves of its affiliated special purpose reinsurers. Total fees associated with these financing arrangements were $5.1 million for both the three months ended March 31, 2024 and 2023 and are included in insurance expenses in the consolidated statements of operations. As of both March 31, 2024 and December 31, 2023, the total capacity of the financing arrangements with third parties was $2.3 billion.

Other than the matters disclosed above, there were no outstanding or unpaid balances from the financing arrangements with unaffiliated third parties as of both March 31, 2024 and December 31, 2023.

25. SUBSEQUENT EVENTS

Common Stock Dividend

A dividend of $0.175 per share of common stock of KKR & Co. Inc. has been declared and was announced on May 1, 2024. This dividend will be paid on May 28, 2024 to common stockholders of record as of the close of business on May 13, 2024.

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