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

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

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

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

Overview

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

Our asset management business offers a broad range of investment management services to fund investors around the world. Throughout our history, we have consistently been a leader in the private equity industry, having completed approximately 740 private equity investments in portfolio companies with a total transaction value in excess of $715 billion as of March 31, 2024. Since the inception of our firm in 1976, we have expanded our investment strategies and product offerings from traditional private equity to areas such as leveraged credit, alternative credit, infrastructure, energy, real estate, growth equity, core private equity, and impact investments. We also provide capital markets services for our firm, our portfolio companies and third parties. Our balance sheet provides a significant source of capital in the growth and expansion of our business, and it has allowed us to further align our interests with those of our fund investors. Building on these efforts and leveraging our industry expertise and intellectual capital have allowed us to capitalize on a broader range of the opportunities we source and has also enabled the firm to establish a new reporting segment called Strategic Holdings, which is currently comprised of the firm’s participation in our core private equity strategy.

Our insurance business is operated by Global Atlantic, in which we acquired a majority controlling interest on February 1, 2021 and the remaining equity interests in Global Atlantic that KKR did not already own on January 2, 2024. Global Atlantic is a leading retirement and life insurance company that provides a broad suite of protection, legacy and savings products and reinsurance solutions to clients across individual and institutional markets. Global Atlantic primarily offers individuals fixed-rate annuities, fixed-indexed annuities and targeted life products through a network of banks, broker-dealers and independent marketing organizations. Global Atlantic provides its institutional clients customized reinsurance solutions, including block, flow and pension risk transfer reinsurance, as well as funding agreements. Global Atlantic primarily generates income by earning a spread between its investment income and the cost of policyholder benefits. As of March 31, 2024, Global Atlantic served over three million policyholders.

Asset Management

Our asset management business offers a broad range of investment management services to fund investors around the world. In our asset management business, we have five business lines: (1) Private Equity, (2) Real Assets, (3) Credit and Liquid Strategies, (4) Capital Markets, and (5) Principal Activities. In addition to the overviews of each of these business lines provided in this report, please also refer to our Annual Report. As an asset management firm, we earn fees, including management fees and incentive fees, and carried interest for providing investment management and other services to our funds, vehicles, CLOs, managed accounts and portfolio companies, and we generate transaction fees from capital markets transactions. We earn additional investment income by investing our own capital alongside that of our fund investors and from other assets on our balance sheet. Carried interest we receive from our funds and certain other investment vehicles entitles us to a specified percentage of investment gains that are generated on third-party capital that is invested. The Asset Management segment continues to reflect how the chief operating decision makers allocate resources and assess performance in the asset management business, which includes operating collaboratively across asset management business lines, with predominantly a single expense pool.

Private Equity

Through our Private Equity business line, we manage and sponsor a group of private equity funds that invest capital for long-term appreciation, either through controlling ownership of a company or strategic non-controlling minority positions. In addition to our traditional private equity funds that invest in large and mid-sized companies, we sponsor funds that invest in core private equity, growth equity, and impact investments. Our Private Equity business line includes separately managed accounts that invest in multiple strategies, which may include our credit and real assets strategies, as well as our private equity strategies. These funds and accounts are managed by Kohlberg Kravis Roberts & Co. L.P., an SEC-registered investment adviser. As of March 31, 2024, our Private Equity business line had $182.8 billion of AUM, consisting of $129.5 billion in traditional private equity, $35.2 billion in core private equity and $18.1 billion in growth equity, which includes $4.5 billion of impact investments.

The table below presents information as of March 31, 2024, relating to our current private equity and other vehicles reported in our Private Equity business line for which we have the ability to earn carried interest. This data does not reflect acquisitions or disposals of investments, changes in investment values, or distributions occurring after March 31, 2024.


	Investment Period		Amount ($ in millions)
	Start Date(1)	End Date (2)	Commitment (3)		Uncalled Commitments		Invested		Realized		Remaining Cost (4)		Remaining Fair Value		Gross Accrued Carried Interest
Private Equity Business Line
North America Fund XIII	8/2021	8/2027	$	18,400	$	8,219	$	10,181	$	—	$	10,181	$	11,710	$	155
Americas Fund XII	5/2017	5/2021	13,500		1,616		12,490		9,835		9,301		18,800		1,635
North America Fund XI	11/2012	1/2017	8,718		142		10,055		22,858		2,571		3,356		192
2006 Fund (5)	9/2006	9/2012	17,642		—		17,309		37,423		—		—		—
Millennium Fund (5)	12/2002	12/2008	6,000		—		6,000		14,123		—		4		1
Ascendant Fund	6/2022	6/2028	3,549		3,549		—		—		—		—		—
European Fund VI	6/2022	6/2028	7,431		5,855		1,576		—		1,576		1,153		—
European Fund V	7/2019	2/2022	6,339		658		5,751		922		5,572		7,452		393
European Fund IV	2/2015	3/2019	3,512		21		3,643		5,726		1,621		2,659		202
European Fund III (5)	3/2008	3/2014	5,506		146		5,360		10,625		586		28		29
European Fund II (5)	11/2005	10/2008	5,751		—		5,751		8,507		—		25		5
Asian Fund IV	7/2020	7/2026	14,735		8,322		6,965		552		6,810		9,055		352
Asian Fund III	8/2017	7/2020	9,000		1,329		8,192		6,611		6,624		12,670		1,146
Asian Fund II	10/2013	3/2017	5,825		—		7,494		6,694		2,697		2,073		(346)
Asian Fund (5)	7/2007	4/2013	3,983		—		3,974		8,728		—		—		21
Next Generation Technology Growth Fund III	11/2022	11/2028	2,740		2,321		419		—		419		477		—
Next Generation Technology Growth Fund II	12/2019	5/2022	2,088		104		2,181		548		1,937		3,062		220
Next Generation Technology Growth Fund	3/2016	12/2019	659		4		670		1,148		276		1,017		83
Health Care Strategic Growth Fund II	5/2021	5/2027	3,789		2,812		977		—		977		1,102		—
Health Care Strategic Growth Fund	12/2016	4/2021	1,331		137		1,324		283		1,134		1,861		106
Global Impact Fund II	6/2022	6/2028	2,704		1,888		816		—		816		726		—
Global Impact Fund	2/2019	3/2022	1,242		223		1,195		474		1,018		1,625		118
Co-Investment Vehicles and Other	Various	Various	20,763		3,358		17,973		10,274		12,473		15,419		1,329
Core Investors II	8/2022	8/2027	11,814		8,963		2,851		—		2,851		3,049		6
Core Investors I	2/2018	8/2022	8,500		44		9,311		1,038		8,411		15,951		12
Other Core Vehicles	Various	Various	5,131		1,251		3,951		1,432		3,487		5,894		52
Unallocated Commitments (6)	N/A	N/A	3,989		3,989		—		—		—		—		—

Total Private Equity			$	194,641	$	54,951	$	146,409	$	147,801	$	81,338	$	119,168	$	5,711

(1)The start date represents the start of the fund's investment period as defined in the fund's governing documents and may or may not be the same as the date upon which management fees begin to accrue. For further information on management fee calculations, see "—Critical Accounting Policies and Estimates - Asset Management and Strategic Holdings—Revenues."

(2)The end date represents the end of the fund's investment period as defined in the fund's governing documents and is generally not the date upon which management fees cease to be paid. For further information on management fee calculations, see "—Critical Accounting Policies and Estimates - Asset Management and Strategic Holdings—Revenues."

(3)The commitment represents the aggregate capital commitments to the fund, including capital commitments by third-party fund investors and the general partner. Foreign currency commitments have been converted into U.S. dollars based on the exchange rate that prevailed on March 31, 2024.

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

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

(6)"Unallocated Commitments" represent commitments received from our strategic investor partnerships that have yet to be allocated to a particular investment strategy.

Real Assets

Through our Real Assets business line, we manage and sponsor a group of real assets funds and accounts that invest capital in infrastructure, real estate, or energy. These funds and accounts are managed by Kohlberg Kravis Roberts & Co. L.P. or one of its subsidiaries. As of March 31, 2024, our Real Assets business line had $135.4 billion of AUM, consisting of $70.5 billion in real estate (of which $37.7 billion is real estate credit and $32.8 billion is real estate equity), $61.2 billion in infrastructure, and $3.7 billion in energy.

The table below presents information as of March 31, 2024, relating to our current real asset and other vehicles reported in our Real Assets business line for which we have the ability to earn carried interest. This data does not reflect acquisitions or disposals of investments, changes in investment values, or distributions occurring after March 31, 2024.


	Investment Period		Amount ($ in millions)
	Start Date (1)	End Date (2)	Commitment (3)		Uncalled Commitments		Invested		Realized		Remaining Cost (4)		Remaining Fair Value		Gross Accrued Carried Interest
Real Assets Business Line
Global Infrastructure Investors IV	8/2021	8/2027	$	16,590	$	6,860	$	10,062	$	332	$	9,856	$	11,618	$	284
Global Infrastructure Investors III	7/2018	6/2021	7,166		1,096		6,335		1,993		5,478		7,862		484
Global Infrastructure Investors II	12/2014	6/2018	3,040		130		3,166		5,386		711		1,115		38
Global Infrastructure Investors	9/2010	10/2014	1,040		—		1,050		2,228		—		—		—
Asia Pacific Infrastructure Investors II	9/2022	9/2028	6,348		5,444		904		—		904		963		—
Asia Pacific Infrastructure Investors	1/2020	9/2022	3,792		691		3,385		847		2,879		3,385		135
Diversified Core Infrastructure Fund	12/2020	(5)	9,800		1,073		8,803		639		8,737		9,275		—
Real Estate Partners Americas III	1/2021	1/2025	4,253		1,544		2,818		229		2,655		2,656		—
Real Estate Partners Americas II	5/2017	12/2020	1,921		244		1,960		2,692		444		440		13
Real Estate Partners Americas	5/2013	5/2017	1,229		135		1,024		1,416		54		31		(3)
Real Estate Partners Europe II	3/2020	12/2023	2,061		510		1,755		431		1,451		1,421		—
Real Estate Partners Europe	8/2015	12/2019	707		99		687		775		200		197		(8)
Asia Real Estate Partners	7/2019	7/2023	1,682		401		1,288		23		1,245		1,470		—
Property Partners Americas	12/2019	(5)	2,571		48		2,523		159		2,523		2,250		—
Real Estate Credit Opportunity Partners II	8/2019	6/2023	950		—		976		257		976		938		17
Real Estate Credit Opportunity Partners I	2/2017	4/2019	1,130		122		1,008		531		1,008		992		3
Energy Related Vehicles	Various	Various	4,385		62		4,188		1,929		1,241		1,709		44
Co-Investment Vehicles and Other	Various	Various	11,413		5,147		6,304		1,687		5,893		5,841		28

Total Real Assets			$	80,078	$	23,606	$	58,236	$	21,554	$	46,255	$	52,163	$	1,035

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

(5)Open-ended fund.

Private Equity and Real Asset Performance

The table below presents information as of March 31, 2024, relating to the historical performance of certain of our Private Equity and Real Assets investment vehicles since inception, which we believe illustrates the benefits of our investment approach. This data does not reflect additional capital raised since March 31, 2024, or acquisitions or disposals of investments, changes in investment values, or distributions occurring after that date. The information presented below is not intended to be representative of any past or future performance for any particular period other than the period presented below. Past performance is no guarantee of future results.



Private Equity and Real Assets Business Lines Investment Funds and Other Vehicles	Commitment (2)		Invested		Realized (4)		Unrealized		Total Value		Gross IRR (5)		Net IRR (5)		Gross Multiple of Invested Capital (5)
	($ in millions)
Total Investments
Legacy Funds (1)
1976 Fund	$	31	$	31	$	537	$	—	$	537	39.5	%	35.5	%	17.1
1980 Fund	357		357		1,828		—		1,828		29.0	%	25.8	%	5.1
1982 Fund	328		328		1,291		—		1,291		48.1	%	39.2	%	3.9
1984 Fund	1,000		1,000		5,964		—		5,964		34.5	%	28.9	%	6.0
1986 Fund	672		672		9,081		—		9,081		34.4	%	28.9	%	13.5
1987 Fund	6,130		6,130		14,949		—		14,949		12.1	%	8.9	%	2.4
1993 Fund	1,946		1,946		4,143		—		4,143		23.6	%	16.8	%	2.1
1996 Fund	6,012		6,012		12,477		—		12,477		18.0	%	13.3	%	2.1
Subtotal - Legacy Funds	16,475		16,475		50,269		—		50,269		26.1	%	19.9	%	3.1
Included Funds
European Fund (1999)	3,085		3,085		8,758		—		8,758		26.9	%	20.2	%	2.8
Millennium Fund (2002)	6,000		6,000		14,123		4		14,127		22.0	%	16.1	%	2.4
European Fund II (2005)	5,751		5,751		8,507		25		8,532		6.1	%	4.5	%	1.5
2006 Fund (2006)	17,642		17,309		37,423		—		37,423		11.9	%	9.3	%	2.2
Asian Fund (2007)	3,983		3,974		8,728		—		8,728		18.9	%	13.6	%	2.2
European Fund III (2008)	5,506		5,360		10,625		28		10,653		16.4	%	11.2	%	2.0
E2 Investors (Annex Fund) (2009)	196		196		200		—		200		0.6	%	0.5	%	1.0
China Growth Fund (2010)	1,010		1,010		1,152		19		1,171		3.8	%	(0.2)	%	1.2
Natural Resources Fund (2010)	887		887		168		—		168		(24.3)	%	(25.9)	%	0.2
Global Infrastructure Investors (2010)	1,040		1,050		2,228		—		2,228		17.6	%	15.6	%	2.1
North America Fund XI (2012)	8,718		10,055		22,858		3,356		26,214		23.7	%	19.2	%	2.6
Asian Fund II (2013)	5,825		7,494		6,694		2,073		8,767		4.5	%	2.9	%	1.2
Real Estate Partners Americas (2013)	1,229		1,024		1,416		31		1,447		15.8	%	11.0	%	1.4
Energy Income and Growth Fund (2013)	1,589		1,589		1,221		—		1,221		(6.1)	%	(8.8)	%	0.8
Global Infrastructure Investors II (2014)	3,040		3,166		5,386		1,115		6,501		19.6	%	16.9	%	2.1
European Fund IV (2015)	3,512		3,643		5,726		2,659		8,385		23.4	%	18.2	%	2.3
Real Estate Partners Europe (2015)	707		687		775		197		972		12.0	%	8.9	%	1.4
Next Generation Technology Growth Fund (2016)	659		670		1,148		1,017		2,165		31.1	%	26.6	%	3.2
Health Care Strategic Growth Fund (2016)	1,331		1,324		283		1,861		2,144		18.0	%	12.1	%	1.6
Americas Fund XII (2017)	13,500		12,490		9,835		18,800		28,635		24.9	%	20.5	%	2.3
Real Estate Credit Opportunity Partners (2017)	1,130		1,008		531		992		1,523		9.1	%	7.7	%	1.5
Core Investment Vehicles (2017)	25,445		16,113		2,470		24,894		27,364		17.3	%	16.2	%	1.7
Asian Fund III (2017)	9,000		8,192		6,611		12,670		19,281		29.4	%	23.2	%	2.4
Real Estate Partners Americas II (2017)	1,921		1,960		2,692		440		3,132		25.4	%	20.8	%	1.6
Global Infrastructure Investors III (2018)	7,166		6,335		1,993		7,862		9,855		16.2	%	12.8	%	1.6
Global Impact Fund (2019)	1,242		1,195		474		1,625		2,099		24.4	%	18.2	%	1.8
European Fund V (2019)	6,339		5,751		922		7,452		8,374		15.1	%	11.6	%	1.5
Energy Income and Growth Fund II (2018)	994		1,191		330		1,543		1,873		17.2	%	15.3	%	1.6
Asia Real Estate Partners (2019)	1,682		1,288		23		1,470		1,493		10.4	%	5.4	%	1.2
Next Generation Technology Growth Fund II (2019)	2,088		2,181		548		3,062		3,610		22.6	%	17.7	%	1.7
Real Estate Credit Opportunity Partners II (2019)	950		976		257		938		1,195		10.4	%	7.8	%	1.2
Asia Pacific Infrastructure Investors (2020)	3,792		3,385		847		3,385		4,232		14.8	%	10.4	%	1.3
Asian Fund IV (2020)	14,735		6,965		552		9,055		9,607		19.5	%	12.7	%	1.4
Real Estate Partners Europe II (2020)	2,061		1,755		431		1,421		1,852		3.4	%	0.3	%	1.1
Real Estate Partners Americas III (2021)	4,253		2,818		229		2,656		2,885		1.3	%	(1.2)	%	1.0
Health Care Strategic Growth Fund II (2021)	3,789		977		—		1,102		1,102		12.4	%	(3.4)	%	1.1
North America Fund XIII (2021)	18,400		10,181		—		11,710		11,710		12.9	%	7.9	%	1.2
Global Infrastructure Investors IV (2022) (3)	16,590		10,062		332		11,618		11,950		—		—		—
European Fund VI (2022) (3)	7,431		1,576		—		1,153		1,153		—		—		—
Global Impact Fund II (2022) (3)	2,704		816		—		726		726		—		—		—
Asia Pacific Infrastructure Investors II (2022) (3)	6,348		904		—		963		963		—		—		—
Next Generation Technology Growth Fund III (2022) (3)	2,740		419		—		477		477		—		—		—
Ascendant Fund (2022) (3)	3,549		—		—		—		—		—		—		—
Subtotal - Included Funds	229,559		172,812		166,496		138,399		304,895		16.1	%	12.4	%	1.8

All Funds	$	246,034	$	189,287	$	216,765	$	138,399	$	355,164	25.5	%	18.7	%	1.9

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

(2)Where commitments are not U.S. dollar-denominated, such amounts have been converted into U.S. dollars based on the exchange rate prevailing on March 31, 2024.

(3)The gross IRR, net IRR and gross multiple of invested capital are calculated for our investment funds that made their first investment at least 24 months prior to March 31, 2024. We therefore have not calculated gross IRRs, net IRRs and gross multiples of invested capital with respect to these funds.

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

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

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

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

For more information, see "Risk Factors—Risks Related to Our Investment Activities—Future results of our investments may be different than, and may not achieve the levels of, any of our historical returns" in our Annual Report.

Credit and Liquid Strategies

Through our Credit and Liquid Strategies business line, we report our credit and hedge funds platforms on a combined basis. As of March 31, 2024, our Credit and Liquid Strategies business line had $259.5 billion of AUM, comprised of $130.3 billion of assets managed in our leveraged credit strategies, $92.7 billion of assets managed in our private credit strategy, $9.2 billion of assets managed in our strategic investments group (“SIG”) strategy, and $27.3 billion of assets managed through our hedge fund platform. We manage $137.0 billion of credit investments for our Global Atlantic insurance companies. Our BDCs have approximately $15.3 billion in assets under management, which is reflected in the AUM of our leveraged credit and private credit strategies above. We report all of the assets under management of our BDCs in our AUM, but we report only a pro rata portion of the assets under management of our hedge fund partnerships based on our percentage ownership in them.

Credit

Our credit platform invests capital in a broad range of corporate debt and collateral-backed investments across asset classes and capital structures. Our credit strategies are primarily managed by KKR Credit Advisors (US) LLC, which is an SEC-registered investment adviser, KKR Credit Advisors (Ireland) Unlimited Company, which is regulated by the Central Bank of Ireland (“CBI”), KKR Credit Advisors (EMEA) LLP, which is regulated by the United Kingdom ("UK") Financial Conduct Authority (the "FCA"), and KKR Credit Advisors (Singapore) Pte. Ltd., which is regulated by the Monetary Authority of Singapore and an SEC-registered investment adviser. We also jointly own with a third party FS/KKR Advisor, LLC, an investment adviser registered with the SEC that provides investment advisory services to certain registered investment companies, including FS KKR Capital Corp. (NYSE: FSK), a publicly listed BDC and KKR FS Income Trust, a privately-offered BDC.

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

Our credit business pursues a variety of investment strategies in leveraged credit and alternative credit.

Leveraged Credit. Our leveraged credit strategies seek to primarily invest in leveraged loans (including revolving credit facilities), CLOs, high yield bonds, structured credit, stressed securities and illiquid credits. Within leveraged credit, we manage both single-asset class and multi-asset class pools of capital. Our opportunistic credit strategy seeks to deploy capital across investment themes that seek to take advantage of credit market dislocations, spanning asset types and liquidity profiles. Our multi-asset credit strategy seeks to dynamically allocate across asset types in a broadly diversified strategy. Our revolving credit strategy invests in senior secured revolving credit facilities.

Alternative Credit. Our alternative credit strategy consists of our (i) private credit strategies and (ii) investments overseen by our credit platform’s SIG group:

Private Credit.** Our private credit strategies focus on privately or directly originated and negotiated transactions. These strategies include direct lending typically in the senior part of a company’s capital structure, junior mezzanine debt, and asset-based finance. Through our direct lending strategy, we seek to make investments in primarily senior debt financings for middle-market companies. Through our junior mezzanine debt strategy, investments typically consist of subordinated debt, which generates a current yield, coupled with marginal equity exposure for additional upside potential. Our asset-based finance strategy focuses on portfolios of financial loans and loans backed by hard assets.
Strategic Investments Group.** This strategy seeks to provide strategic capital solutions to high quality, mid-to-large cap companies and assets. The strategy pursues investments in corporate credit as well as asset or real estate-backed credit, where we believe market volatility or other investment themes have created the opportunity to invest opportunistically across the capital structure and through market cycles to generate outsized returns with downside-protected securities. These investments may include stressed or distressed investments (including post-restructuring equity), control-oriented opportunities, rescue financing (debt or equity investments made to address covenant, maturity or liquidity issues), debtor-in-possession or exit financing and other event-driven investments in debt or equity.

Hedge Fund Platform

Our hedge fund platform consists of strategic partnerships with third-party hedge fund managers in which KKR owns a minority stake. This principally consists of a 39.6% interest in Marshall Wace LLP (together with its affiliates, "Marshall Wace"), a global alternative investment manager specializing in long/short equity products. We also own other interests in third-party hedge fund managers, including a 39.9% interest in PAAMCO Prisma Holdings, LLC, an investment manager focused on liquid alternative investment solutions, including hedge fund-of-fund portfolios.

The table below presents information as of March 31, 2024, relating to our current credit and other vehicles reported in our Credit and Liquid Strategies business line for which we have the ability to earn carried interest. This data does not reflect acquisitions or disposals of investments, changes in investment values, or distributions occurring after March 31, 2024.


	Investment Period		Amount ($ in millions)
	Start Date (1)	End Date (2)	Commitment (3)		Uncalled Commitments		Invested		Realized		Remaining Cost (4)		Remaining Fair Value		Gross Accrued Carried Interest
Credit and Liquid Strategies Business Line
Opportunities Fund II	11/2021	1/2026	$	2,336	$	1,627	$	709	$	12	$	709	$	782	$	9
Dislocation Opportunities Fund	8/2019	11/2021	2,967		450		2,517		1,534		1,456		1,618		68
Special Situations Fund II	2/2015	3/2019	3,525		284		3,241		2,412		1,134		1,191		—
Special Situations Fund	1/2013	1/2016	2,274		1		2,273		1,804		426		320		—
Mezzanine Partners	7/2010	3/2015	1,023		33		990		1,166		184		154		(20)
Asset-Based Finance Partners	10/2020	7/2025	2,059		894		1,165		105		1,165		1,266		29
Private Credit Opportunities Partners II	12/2015	12/2020	2,245		354		1,891		902		1,240		1,202		—
Lending Partners IV	3/2022	9/2026	1,150		518		632		43		633		680		6
Lending Partners III	4/2017	11/2021	1,498		540		958		832		701		708		43
Lending Partners II	6/2014	6/2017	1,336		157		1,179		1,198		151		82		—
Lending Partners	12/2011	12/2014	460		40		420		458		23		11		—
Lending Partners Europe II	5/2019	9/2023	837		210		627		280		519		548		6
Lending Partners Europe	3/2015	3/2019	848		184		662		470		184		176		—
Asia Credit Opportunities	1/2021	5/2025	1,084		506		578		24		578		657		14
Other Alternative Credit Vehicles	Various	Various	14,687		8,747		7,798		6,167		4,110		4,459		32

Total Credit and Liquid Strategies			$	38,329	$	14,545	$	25,640	$	17,407	$	13,213	$	13,854	$	187

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

The following table presents information regarding larger leveraged credit strategies managed by KKR from inception to March 31, 2024. The information presented below is not intended to be representative of any past or future performance for any particular period other than the period presented below. Past performance is no guarantee of any future result.


Leveraged Credit Strategy	Inception Date	Gross Returns		Net Returns		Benchmark (1)	Benchmark Gross Returns
Multi-Asset Credit Composite	Jul 2008	7.07	%	6.38	%	50% S&P/LSTA Loan Index, 50% BoAML HY Master II Index (2)	5.67%
Opportunistic Credit (3)	May 2008	10.74	%	9.15	%	50% S&P/LSTA Loan Index, 50% BoAML HY Master II Index (3)	5.86%
Bank Loans	Apr 2011	5.74	%	5.17	%	S&P/LSTA Loan Index (4)	4.65%
High-Yield	Apr 2011	6.04	%	5.46	%	BoAML HY Master II Index (5)	5.35%

European Leveraged Loans (6)	Sep 2009	4.77	%	4.25	%	CS Inst West European Leveraged Loan Index (7)	3.79%

European Credit Opportunities (6)	Sept 2007	6.83	%	5.64	%	S&P European Leveraged Loans (All Loans) (8)	4.32%

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

(2)Performance is based on a blended composite of Bank Loans, High Yield, and Structured Credit strategy accounts. The benchmark used for purposes of comparison for the Multi-Asset Credit Composite strategy is based on 65% S&P/LSTA Loan Index and 35% BoAML HY Master II Index to May 2022, and 50% S&P/LSTA Loan Index, 50% BoAML HY Master II Index, from June 2022.

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

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

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

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

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

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

The following table presents information regarding our alternative credit investment funds where investors have capital commitments from inception to March 31, 2024. The information presented below is not intended to be representative of any past or future performance for any particular period other than the period presented below. Past performance is no guarantee of any future result.


		Amount				Fair Value of Investments
Credit and Liquid Strategies Investment Funds	Investment Period Start Date	Commitment		Invested (1)		Realized (1)		Unrealized		Total Value		Gross IRR (2)		Net IRR (2)		Multiple of Invested Capital (3)
($ in Millions)
Opportunities Fund II	Nov 2021	$	2,336	$	709	$	12	$	782	$	794	18.7	%	12.4	%	1.1
Dislocation Opportunities Fund	Aug 2019	2,967		2,517		1,534		1,618		3,152		11.5	%	9.1	%	1.3
Special Situations Fund II	Feb 2015	3,525		3,241		2,412		1,191		3,603		2.6	%	0.7	%	1.1
Special Situations Fund	Jan 2013	2,274		2,273		1,804		320		2,124		(1.5)	%	(3.2)	%	0.9
Mezzanine Partners	July 2010	1,023		990		1,166		154		1,320		9.1	%	5.9	%	1.3
Asset-Based Finance Partners	Oct 2020	2,059		1,165		105		1,266		1,371		15.3	%	11.1	%	1.2
Private Credit Opportunities Partners II	Dec 2015	2,245		1,891		902		1,202		2,104		3.1	%	1.3	%	1.1
Lending Partners IV	Mar 2022	1,150		632		43		680		723		19.7	%	16.0	%	1.1
Lending Partners III	Apr 2017	1,498		958		832		708		1,540		15.2	%	12.5	%	1.6
Lending Partners II	Jun 2014	1,336		1,179		1,198		82		1,280		2.9	%	1.5	%	1.1
Lending Partners	Dec 2011	460		420		458		11		469		3.5	%	1.8	%	1.1
Lending Partners Europe II	May 2019	837		627		280		548		828		17.0	%	13.3	%	1.3
Lending Partners Europe	Mar 2015	848		662		470		176		646		(0.5)	%	(2.6)	%	1.0
Asia Credit Opportunities	Jan 2021	1,084		578		24		657		681		15.8	%	11.3	%	1.2
Other Alternative Credit Vehicles	Various	14,687		7,798		6,167		4,459		10,626		N/A		N/A		N/A

All Funds		$	38,329	$	25,640	$	17,407	$	13,854	$	31,261

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

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

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

For additional information regarding impact of market conditions on the value and performance of our investments, see "Risk Factors—Risks Related to Our Business—Difficult market and economic conditions can, and periodically do, materially and adversely affect KKR." and "Risk Factors—Risks Related to Our Investment Activities—Future results of our investments may be different than, and may not achieve the levels of, any of our historical returns" in our Annual Report.

The table below presents information as of March 31, 2024, based on the investment funds or other vehicles or accounts offered by our Credit and Liquid Strategies business line. Our funds, vehicles and accounts have been sorted based upon their primary investment strategies. However, the AUM and FPAUM presented for each line in the table includes certain investments from non-primary investment strategies, which are permitted by their investment mandates, for purposes of presenting the fees and other terms for such funds, vehicles and accounts.


($ in millions)	AUM		FPAUM		Typical Management Fee Rate	Incentive Fee / Carried Interest	Preferred Return	Duration of Capital
Leveraged Credit:
Leveraged Credit SMAs/Funds (1)	$	103,865	$	101,493	0.15% - 1.30%	Various (2)	Various (2)	Subject to redemptions
CLOs	26,659		26,659		0.40% - 0.50%	Various (2)	Various (2)	10-14 Years (3)
Total Leveraged Credit	130,524		128,152

Alternative Credit: (4)
Private Credit (1)	77,271		63,353		0.25% - 1.50% (5)	10.00 - 20.00%	5.00 - 8.00%	8-15 Years (3)
SIG	9,059		4,511		0.50% - 1.75%	10.00 - 20.00%	7.00 - 12.00%	7-15 Years (3)
Total Alternative Credit	86,330		67,864

Hedge Funds (6)	27,342		27,342		0.50% - 2.00%	Various (2)	Various (2)	Subject to redemptions
BDCs (7)	15,309		15,309		0.60% - 0.625%	7.00% - 8.00%	7.00%	Indefinite
Total	$	259,505	$	238,667

(1)Includes credit investments we manage for our Global Atlantic insurance companies. This capital is perpetual in nature, not subject to an incentive fee or carried interest, and does not require a preferred return.

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

(3)Duration of capital is measured from inception. Inception dates for CLOs were between 2013 and 2024 and for separately managed accounts and funds investing in alternative credit strategies from 2009 through 2024.

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

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

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

(7)Represents FS KKR Capital Corp. and KKR FS Income Trust. We report all of the assets under management of these BDCs in our AUM and FPAUM.

Capital Markets

Our Capital Markets business line is comprised of our global capital markets business, which is integrated with KKR’s asset management business lines, and serves our firm, our portfolio companies and third-party customers by developing and implementing both traditional and non-traditional capital solutions for investments or companies seeking financing. These services include arranging debt and equity financing, placing and underwriting securities offerings, and providing other types of capital markets services that result in the firm receiving fees, including underwriting, placement, transaction and syndication fees, commissions, underwriting discounts, interest payments and other compensation, which may be payable in cash or securities, in respect of the activities described above. The third-party customers of our capital markets business include multinational corporations, public and private companies, financial sponsors, mutual funds, pension funds, sovereign wealth funds, and hedge funds globally. Our capital markets business provides these third-party clients with differentiated access to capital through our distribution platform.

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

The capital markets business has a global footprint, with local presence and licenses to carry out certain broker-dealer activities in various countries in North America, Europe, Asia-Pacific and the Middle East. Our flagship capital markets subsidiaries include KKR Capital Markets LLC, which is an SEC-registered broker-dealer and a member of the Financial Industry Regulatory Authority ("FINRA"), and KKR Capital Markets Asia Limited, a Hong Kong licensed asset manager and broker dealer licensed by the Securities and Futures Commission in Hong Kong to carry on dealing in securities, advising on securities and asset management regulated activities.

Principal Activities

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

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

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

We also make opportunistic investments through our Principal Activities business line, which include co-investments alongside our Private Equity, Real Assets and Credit and Liquid Strategies funds, as well as Principal Activities investments that do not involve our Private Equity, Real Assets, or Credit and Liquid Strategies funds.

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

Prior to the creation of the Strategic Holdings segment, effective January 2, 2024, the periodic financial operating results of the firm's participation in the core private equity strategy were reported as part of this Principal Activities business line within the Asset Management segment. Beginning with this report, those financial operating results are not reflected in the Asset Management segment. See "Strategic Holdings" for further information regarding our participation in the core private equity strategy.

The chart below presents the holdings of our Principal Activities business line by asset class as of March 31, 2024, excluding our ownership of businesses reported through our Strategic Holdings segment.

Holdings by Asset Class (1)

2783

(1)General partner commitments to our funds are included in the various asset classes shown above. Assets and revenues of other asset managers with which KKR has formed strategic partnerships where KKR does not hold more than 50% ownership interest are not included in our Principal Activities business line but are reported in the financial results of our other business lines.

Insurance

Our insurance business is operated by Global Atlantic, which operates as a separate business with its existing brands and management team. KKR acquired a majority controlling interest in Global Atlantic on February 1, 2021 and the remainder of Global Atlantic on January 2, 2024. Since the first quarter of 2021, we have presented Global Atlantic's financial results as a separate reportable segment.

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

Global Atlantic offers individual customers fixed-rate annuities, fixed-indexed annuities, and targeted life products primarily through a network of banks, broker-dealers, and insurance agencies. Global Atlantic provides its institutional clients customized reinsurance solutions, including block, flow and pension risk transfer ("PRT") reinsurance, as well as funding agreements. Global Atlantic’s assets generally increase when individual market sales and reinsurance transactions exceed run-off of in-force policies. Global Atlantic primarily generates income by earning a spread on assets under management, as the difference between its net investment income and the cost of policyholder benefits. Global Atlantic also earns fees paid by policyholders on certain types of contracts and fees paid by third-party investors, which are reported in the asset management segment. As of March 31, 2024, Global Atlantic served over three million policyholders.

Global Atlantic also sponsors co-investment vehicles (the "sponsored reinsurance sidecar vehicles") to participate alongside Global Atlantic in certain block, flow, PRT and other reinsurance transactions that Global Atlantic enters into during the vehicles’ respective investment period. The sponsored reinsurance sidecar vehicles provide third-party capital to support reinsurance transactions and do not get consolidated into our financial statements. As of March 31, 2024, third parties have committed capital to the sponsored reinsurance sidecar vehicles of approximately $3.5 billion, of which $2.7 billion has been deployed.

The following table represents Global Atlantic’s new business volumes by business and product for the three months ended March 31, 2024 and 2023:


	Three Months Ended March 31,
		2024		2023
($ in millions)
Individual channel:
Fixed-rate annuities		$	2,985	$	2,146
Fixed-indexed annuities		1,264		1,065
Variable annuities		5		4
Total retirement products(1)		$	4,254	$	3,215

Life insurance products		$	—	$	4

Preneed life		69		75

Institutional channel:
Block		10,162		79
Flow & pension risk transfer		2,904		2,430
Funding agreements(2)		700		—
Total institutional market channel(3)(4)		$	13,766	$	2,509

(1)New business volumes in individual markets are referred to as sales. In Global Atlantic's individual market channel, sales of annuities include all money paid into new and existing contracts. Individual market channel sales of life insurance products are based on commissionable premium and individual market channel sales for preneed life are based on the face amount of insurance. Life insurance product sales do not include the recurring premiums that policyholders may pay over time. New business volumes from individual markets channel products typically occurs throughout the year.

(2)Funding agreements new business volumes represent funding agreements issued in connection with the funding agreement backed note ("FABN") program only.

(3)Global Atlantic expects block reinsurance transactions to be episodic rather than steady quarter over quarter. Similarly, funding agreements issued in the FABN program are subject to capital markets conditions and not expected to be consistent quarter over quarter. Flow and pension risk transfer new business volumes typically occurs throughout the year.

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

The table below represents a breakdown of Global Atlantic’s policy liabilities by business and product type as of March 31, 2024, separated by reserves originated through its individual and institutional markets.


	Reserves as of March 31, 2024
	Individual market		Institutional market(4)		Total		Ceded		Total, net		Percentage of total
	($ in thousands, except percentages, if applicable)
Fixed-rate annuity(1)	$	26,821,247	$	32,388,346	$	59,209,593	$	(9,992,394)	$	49,217,199	33.3	%
Fixed-indexed annuity(1)	25,292,677		10,307,055		35,599,732		(3,960,675)		31,639,057		20.0	%
Payout annuities(1)	507,327		20,708,123		21,215,450		(11,382,039)		9,833,411		11.9	%
Variable annuity	2,498,094		5,790,664		8,288,758		(2,337,271)		5,951,487		4.7	%
Interest sensitive life(1)	13,709,438		18,427,886		32,137,324		(8,632,782)		23,504,542		18.1	%

Other life insurance(2)	3,527,954		4,326,395		7,854,349		(3,020,930)		4,833,419		4.4	%
Funding agreements(3)	2,050,080		5,641,396		7,691,476		—		7,691,476		4.3	%
Closed block and other corporate products	—		1,053,753		1,053,753		(1,003,667)		50,086		0.6	%
Other(5)	—		4,771,423		4,771,423		(3,624,142)		1,147,281		2.7	%
Total reserves	$	74,406,817	$	103,415,041	$	177,821,858	$	(43,953,900)	$	133,867,958	100.0	%

Total general account	$	72,182,932	$	101,415,754	$	173,598,686	$	(43,953,900)	$	129,644,786	97.6	%
Total separate account	2,223,885		1,999,287		4,223,172		—		4,223,172		2.4	%
Total reserves	$	74,406,817	$	103,415,041	$	177,821,858	$	(43,953,900)	$	133,867,958	100.0	%

(1)As of March 31, 2024, 79% of the account value in Global Atlantic's general account associated with its fixed-rate and fixed-indexed annuity products, and 39% of account value in its general account associated with universal life products was protected by surrender charges.

(2)"Other life products” includes universal life, term and whole life insurance products.

(3)"Funding agreements” includes funding agreements associated with FHLB borrowings and under Global Atlantic's FABN program.

(4)Institutional market reserves are sourced using customized reinsurance solutions such as block, flow and PRT. As of March 31, 2024, reserves sourced through block, flow and PRT transactions were $66.0 billion, $23.1 billion and $5.6 billion, respectively.

(5)“Other” includes long-term care insurance where we have ceded all mortality and morbidity risk to a third-party reinsurance company.

Strategic Holdings

Starting with the first quarter of 2024, we are reporting a new third segment named Strategic Holdings. Our Strategic Holdings segment is currently comprised of the firm’s ownership in the businesses we acquired through our participation in our core private equity strategy. Our core private equity strategy includes third-party capital in investment funds alongside our firm’s capital. Our Asset Management segment continues to manage the investment funds that invest in our core private equity strategy, the financial results of which are not included in our Strategic Holdings segment.

Our core private equity strategy seeks to make investments in businesses that we anticipate holding for a longer period of time and that we believe have a lower anticipated risk profile than our investments in businesses through the traditional private equity strategy. For example, our core private equity strategy seeks to make investments in companies that, among other things, we believe are more stable, and typically have lower leverage over our holding period, than those companies in which our traditional private equity investments are made.

We may also acquire in the future other long-term assets that are not part of the core private equity strategy for this segment.

As of March 31, 2024, our Strategic Holdings segment consisted of our ownership stakes in 19 companies. Based on certain information made available to management as of March 31, 2024, approximately 65% of these companies are based in the Americas, 29% in Europe, and 5% in the Asia-Pacific (based on the geographic location of their headquarters). In addition, based on such information, these companies are primarily engaged in the following business sectors: approximately 33% in the Business Services sector, 29% in Consumer, 13% in Infrastructure, 13% in technology-media-telecommunications (TMT), and 13% in Healthcare.

Effective as of the first quarter of 2024, our Asset Management segment charges a quarterly management fee based on invested capital in our Strategic Holdings segment. Additionally, our Asset Management segment will charge a performance fee from the sale of our interests in the companies included in our Strategic Holdings segment. The management and performance fees are charged in order to represent the cost of providing advisory services by our Asset Management segment rather than determining the allocable costs borne by our Asset Management segment to support our Strategic Holdings segment.

Business Environment

Our asset management (including the businesses reported in our Strategic Holdings segment) and insurance businesses are affected by the various market and economic conditions of the various countries and regions in which we operate. Market and economic conditions are expected to continue to have a substantial impact on our financial condition, results of operations and our business in various ways that we are unable to control, including our ability to make new investments, the valuations of the investments we manage, the amount of investment proceeds we realize when we exit our investments, the timing for such realization activity, our ability to fundraise or to sell our various investment and insurance products and services, and the level of our capital markets activities, as discussed in the "Risk Factors" section of our Annual Report.

During the first quarter of 2024, the United States experienced economic growth amid elevated but moderating inflation. In Europe, GDP growth in the Eurozone was positive in the first quarter of 2024 for the first time in three quarters, while inflation moderated closer to the European Central Bank’s 2% inflation target. In Asia, the two largest economies continued to experience different economic conditions during the first quarter of 2024. Japan’s economy is expected to have experienced negative growth in the first quarter of 2024 in conjunction with inflation exceeding the Bank of Japan’s inflation targets, which led the Bank of Japan to lift its base rate out of negative territory for the first time since 2013. In China, its economy grew in the first quarter of 2024 but remains subject to various headwinds, including concerns about its property sector, retail sales, and industrial output.

Several key economic indicators in the United States and in other countries and regions in which we operate include:

GDP.** In the United States, real gross domestic product (“GDP”) is estimated to have expanded by 1.6% for the quarter ended March 31, 2024, compared to an expansion of 3.4% for the quarter ended December 31, 2023. Euro Area real GDP is estimated to have increased by 0.1% for the quarter ended March 31, 2024, up from -0.1% for the quarter ended December 31, 2023. In Japan, real GDP is estimated to have decreased by 0.2% for the quarter ended March 31, 2024, down from 0.4% growth for the quarter ended December 31, 2023. Real GDP in China increased by 1.6% for the quarter ended March 31, 2024, compared to growth of 1.2% reported for the quarter ended December 31, 2023.
Interest Rates.** The effective federal funds rate set by the U.S. Federal Reserve Board was 5.33% as of March 31, 2024, unchanged from December 31, 2023. The short-term benchmark interest rate set by the European Central Bank was 4.5% as of March 31, 2024, unchanged from December 31, 2023. The short-term benchmark interest rate set by the Bank of Japan was -0.1% as of March 31, 2024, unchanged from December 31, 2023. The short-term benchmark interest rate set by The People's Bank of China was 3.45% as of March 31, 2024, unchanged from December 31, 2023.
Inflation.** The U.S. core consumer price index rose 3.8% on a year-over-year basis as of March 31, 2024, down from 3.9% on a year-over-year basis as of December 31, 2023. Euro Area core inflation was 2.9% as of March 31, 2024, down from 3.4% as of December 31, 2023. In Japan, core inflation fell to 2.2% on a year-over-year basis as of March 31, 2024, down from 2.8% on a year-over-year basis as of December 31, 2023. Core inflation in China was 0.6% on a year-over-year basis as of March 31, 2024, unchanged from 0.6% as of December 31, 2023.
Unemployment.** The U.S. unemployment rate was 3.8%% as of March 31, 2024, up from 3.7% as of December 31, 2023. Euro Area unemployment was 6.5% as of March 31, 2024, unchanged from 6.5% as of December 31, 2023. The unemployment rate in Japan was 2.6% as of March 31, 2024, up from 2.5% as of December 31, 2023. The unemployment rate in China was 5.1% as of March 31, 2024, down from 5.0% as of December 31, 2023.

Several key financial market indicators in the United States and in other countries and regions in which we operate include:

Equity Markets.** For the quarter ended March 31, 2024, the S&P 500 was up 10.6%, the MSCI Europe Index was up 8.6%, the MSCI Asia Index was up 5.1% and the MSCI World Index was up 9.0% on a total return basis including dividends. Equity market volatility as evidenced by the Chicago Board Options Exchange Market Volatility Index (VIX), a measure of volatility, ended at 13.0 as of March 31, 2024, increasing from 12.5 as of December 31, 2023.
Credit Markets.** During the quarter ended March 31, 2024, U.S. investment grade corporate bond spreads (BofA Merrill Lynch US Corporate Index) tightened by 10 basis points. The non-investment grade credit indices were up during the quarter ended March 31, 2024 with the S&P/LSTA Leveraged Loan Index up 2.5% and the BofAML HY Master II Index up 1.5%. During the quarter ended March 31, 2024, the 10-year government bond yields rose 32 basis points in the United States, rose 27 basis points in Germany, rose 11 basis points in Japan, rose 40 basis points in the UK and fell 27 basis points in China.
Commodity Markets.** During the quarter ended March 31, 2024, the 3-year forward price of WTI crude oil increased approximately 5.7%, and the 3-year forward price of natural gas decreased from approximately $4.44 per MMBtu to $3.82 per MMBtu as of December 31, 2023 and March 31, 2024. The Japan spot LNG import price decreased to approximately $9.45 per MMBtu as of March 31, 2024 from approximately $16.92 per MMBtu as of December 31, 2023.
Foreign Exchange Rates.** For the quarter ended March 31, 2024, the euro fell 2.3%, the British pound fell 0.8%, the Japanese yen fell 6.8%, and the Chinese renminbi fell 1.7%, respectively, relative to the U.S. dollar.

Other Trends, Uncertainties and Risks Related to Our Business

Please refer to the "Risk Factors" section of our Annual Report for important additional detail regarding risks, uncertainties and other conditions that could have a material favorable or unfavorable impact on our businesses, including the impact of market and economic conditions on valuations of investments. These risks, uncertainties and other conditions should be read in conjunction with this Business Environment section and the entire Risk Factor section of our Annual Report. In particular, see "Risks Related to Our Investment Activities—Our valuation methodologies for certain assets can be subjective, and the fair value of assets established pursuant to such subjective methodologies is uncertain and may never be realized” and “Risks Related to Our Investment Activities—Various market and economic conditions and events outside of our control that are difficult to quantify or predict may have a significant impact on the valuation of our investments and, therefore, on our financial results.”

Basis of Accounting and Key Financial Measures under GAAP

We manage our business using certain financial measures and key operating metrics since we believe these metrics measure the productivity of our operating activities. We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”). See Note 2 “ Summary of Significant Accounting Policies” in our financial statements and “—Critical Accounting Policies and Estimates” contained in this section below. Our key Segment and non-GAAP financial measures and operating metrics are discussed below.

Key Segment and Non-GAAP Performance Measures

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

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

Modification of Segment Information and Non-GAAP Measures

In connection with building and scaling of the core private equity strategy on KKR’s balance sheet and the acquisition of all of the remaining 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, the items detailed below have changed 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 our core private equity 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.

Adjusted Net Income

Adjusted Net Income ("ANI") is a performance measure of KKR’s earnings, which is derived from KKR’s reported segment results. ANI is used to assess the performance of KKR’s business operations and measures the earnings potentially available for distribution to its equity holders or reinvestment into its business. ANI is equal to Total Segment Earnings less Interest Expense, Net and Other and Income Taxes on Adjusted Earnings. Interest Expense, Net and Other includes interest expense on debt obligations not attributable to any particular segment net of interest income earned on cash and short-term investments. Income Taxes on Adjusted Earnings represents the (i) amount of income taxes that would be paid assuming that all pre-tax Asset Management and Strategic Holdings segment earnings were allocated to KKR & Co. Inc. and taxed at the same effective rate, which assumes that all securities exchangeable into shares of common stock of KKR & Co. Inc. were exchanged and (ii) amount of income taxes on Insurance Operating Earnings. Income taxes on Insurance Operating Earnings represent the total current and deferred tax expense or benefit on income before taxes adjusted to eliminate the impact of the tax expense or benefit associated with the non-operating adjustments. Equity based compensation expense is excluded from ANI, because (i) KKR believes that the cost of equity awards granted to employees does not contribute to the earnings potentially available for distributions to its equity holders or reinvestment into its business and (ii) excluding this expense makes KKR’s reporting metric more comparable to the corresponding metric presented by other publicly traded companies in KKR’s industry, which KKR believes enhances an investor’s ability to compare KKR’s performance to these other companies. Income Taxes on Adjusted Earnings includes the benefit of tax deductions arising from equity-based compensation, which reduces Income Taxes on Adjusted Earnings during the period. If tax deductions from equity-based compensation were to be excluded from Income Taxes on Adjusted Earnings, KKR’s ANI would be lower and KKR’s effective tax rate would appear to be higher, even though a lower amount of income taxes would have actually been paid or payable during the period. KKR separately discloses the amount of tax deduction from equity-based compensation for the period reported and the effect of its inclusion in ANI for the period. KKR makes these adjustments when calculating ANI in order to more accurately reflect the net realized earnings that are expected to be or become available for distribution to KKR’s equity holders or reinvestment into KKR’s business. However, ANI does not represent and is not used to calculate actual dividends under KKR’s dividend policy, which is a fixed amount per period, and ANI should not be viewed as a measure of KKR’s liquidity.

Total Segment Earnings

Total Segment Earnings is a performance measure that KKR believes is useful to stockholders as it provides a supplemental measure of our operating performance without taking into account items that KKR does not believe arise from or relate directly to KKR's operations. Total Segment Earnings 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 charges 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 our Asset Management segment as the investment adviser for Global Atlantic insurance companies, (ii) management and performance fees earned by our Asset Management segment for acquiring and managing the companies included in our Strategic Holdings segment, and (iii) interest income and expense based on lending arrangements where our Asset Management segment borrows from our 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

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

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.

Strategic Holdings Segment Earnings

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.

Fee Related Earnings

Fee related earnings is a performance measure used to assess the Asset Management segment’s generation of earnings from revenues that are measured and received on a more recurring basis as compared to KKR’s investing earnings. KKR believes this measure is useful to stockholders as it provides additional insight into the profitability of our fee generating asset management and capital markets businesses. FRE equals (i) Management Fees, including fees paid by the Insurance and Strategic Holdings segments to the Asset Management segment and fees paid by certain insurance co-investment vehicles, (ii) Transaction and Monitoring Fees, Net and (iii) Fee Related Performance Revenues, less (x) Fee Related Compensation, and (y) Other Operating Expenses.

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

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

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

Strategic Holdings Operating Earnings

Strategic Holdings Operating Earnings is a performance measure used to assess the firm’s earnings from companies and businesses reported through its Strategic Holdings segment. Strategic Holdings Operating Earnings currently consists of earnings derived from dividends that the firm receives from businesses acquired through the firm’s participation in our core private equity strategy. Strategic Holdings Operating Earnings currently equals dividends less management fees that are earned by our Asset Management segment. This measure is used by management to assess the Strategic Holdings segment’s generation of earnings from revenues that are measured and received on a more recurring basis than, and are not dependent on, realizations from investment activities.

Total Operating Earnings

Total Operating Earnings is a performance measure that represents the sum of (i) FRE, (ii) Insurance Operating Earnings, and (iii) Strategic Holdings Operating Earnings. KKR believes this measure is useful to stockholders as it provides additional insight into the profitability of the most recurring forms of earnings from each of KKR’s segments as compared to investing earnings.

Total Investing Earnings

Total Investing Earnings is a performance measure that represents the sum of (i) Net Realized Performance Income and (ii) Net Realized Investment Income. KKR believes this measure is useful to stockholders as it provides additional insight into the earnings of KKR’s segments from the realization of investments.

Total Asset Management Segment Revenues

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

Other Terms and Capital Metrics

Adjusted Shares

Adjusted shares represents shares of common stock of KKR & Co. Inc. outstanding under GAAP adjusted to include certain securities exchangeable into shares of common stock of KKR & Co. Inc. and excludes equity unvested shares granted in connection with the equity incentive awards.

Assets Under Management

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

Capital Invested

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

Fee Paying AUM

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

Uncalled Commitments

Uncalled commitments is the aggregate amount of unfunded capital commitments that KKR’s investment funds and carry-paying co-investment vehicles (including core private equity) have received from partners to contribute capital to fund future investments, and the amount of uncalled commitments is not reduced by capital invested using borrowings under an investment fund’s subscription facility until capital is called from our fund investors. We believe this measure is useful to stockholders as it provides additional insight into the amount of capital that is available to KKR’s investment funds and carry paying co-investment vehicles to make future investments. Uncalled commitments are not reduced for investments completed using fund-level investment financing arrangements or investments we have committed to make but remain unfunded at the reporting date.

Condensed Consolidated Results of Operations (GAAP Basis - Unaudited)

The following is a discussion of our consolidated results of operations on a GAAP basis for the three months ended March 31, 2024 and 2023. You should read this discussion in conjunction with the financial statements and related notes included elsewhere in this report. For a more detailed discussion of the factors that affected our segment results in these periods, see "—Analysis of Segment Operating Results." See "Risk Factors" in our Annual Report and "—Business Environment" for more information about factors that may impact our business, financial performance, operating results and valuations.


	Three Months Ended
	March 31, 2024		March 31, 2023		Change
	($ in thousands)
Revenues
Asset Management and Strategic Holdings
Fees and Other	$	693,526	$	677,016	$	16,510
Capital Allocation-Based Income (Loss)	1,262,942		449,018		813,924
	1,956,468		1,126,034		830,434
Insurance
Net Premiums	6,036,522		473,624		5,562,898
Policy Fees	328,947		313,802		15,145
Net Investment Income	1,519,902		1,300,697		219,205
Net Investment-Related Gains (Losses)	(241,486)		(123,833)		(117,653)
Other Income	56,385		37,158		19,227
	7,700,270		2,001,448		5,698,822
Total Revenues	9,656,738		3,127,482		6,529,256

Expenses
Asset Management and Strategic Holdings
Compensation and Benefits	1,316,448		575,670		740,778
Occupancy and Related Charges	23,540		22,149		1,391
General, Administrative and Other	277,981		213,689		64,292
	1,617,969		811,508		806,461
Insurance
Net Policy Benefits and Claims (including market risk benefit loss (gain) of $(101,760) and $146,309, respectively.)	7,261,069		1,527,054		5,734,015
Amortization of Policy Acquisition Costs	(3,752)		44,211		(47,963)
Interest Expense	54,567		40,261		14,306
Insurance Expenses	199,236		225,318		(26,082)
General, Administrative and Other	183,855		211,731		(27,876)
	7,694,975		2,048,575		5,646,400
Total Expenses	9,312,944		2,860,083		6,452,861

Investment Income (Loss) - Asset Management and Strategic Holdings
Net Gains (Losses) from Investment Activities	638,162		(159,409)		797,571
Dividend Income	245,057		148,167		96,890
Interest Income	890,102		728,616		161,486
Interest Expense	(754,064)		(576,338)		(177,726)
Total Investment Income (Loss)	1,019,257		141,036		878,221

Income (Loss) Before Taxes	1,363,051		408,435		954,616

Income Tax Expense (Benefit)	269,201		148,747		120,454


	Three Months Ended
	March 31, 2024		March 31, 2023		Change
	($ in thousands)

Net Income (Loss)	1,093,850		259,688		834,162
Net Income (Loss) Attributable to Redeemable Noncontrolling Interests	32,678		(7,303)		39,981
Net Income (Loss) Attributable to Noncontrolling Interests	378,958		(73,003)		451,961
Net Income (Loss) Attributable to KKR & Co. Inc.	682,214		339,994		342,220



Series C Mandatory Convertible Preferred Stock Dividends	—		17,250		(17,250)

Net Income (Loss) Attributable to KKR & Co. Inc. Common Stockholders	$	682,214	$	322,744	$	359,470

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

Revenues

For the three months ended March 31, 2024 and 2023, revenues consisted of the following:


	Three Months Ended
	March 31, 2024		March 31, 2023		Change
	($ in thousands)
Management Fees	$	486,754	$	453,093	$	33,661
Fee Credits	(94,046)		(57,531)		(36,515)
Transaction Fees	218,618		209,839		8,779
Monitoring Fees	48,967		29,853		19,114
Incentive Fees	6,626		6,413		213
Expense Reimbursements	8,093		15,544		(7,451)

Consulting Fees	18,514		19,805		(1,291)
Total Fees and Other	693,526		677,016		16,510

Carried Interest	1,144,928		343,070		801,858
General Partner Capital Interest	118,014		105,948		12,066
Total Capital Allocation-Based Income (Loss)	1,262,942		449,018		813,924

Total Revenues	$	1,956,468	$	1,126,034	$	830,434

Fees and Other

Total Fees and Other for the three months ended March 31, 2024 increased compared to the three months ended March 31, 2023 primarily as a result of the increase in management fees and monitoring fees, partially offset by an increase in fee credits.

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

The increase in management fees was primarily attributable to (i) management fees earned on new capital raised over the past twelve months at Ascendant Fund (a middle market focused traditional private equity strategy), at various vehicles designed for investment by individual private wealth investors, which we refer to as the "K-Series," and our Diversified Core Infrastructure fund. The increase was partially offset by a lower level of management fees from Americas Fund XII due to a step-down in the management fee rate in 2023 and a decrease in invested capital.

Management fees due from consolidated investment funds and other vehicles are eliminated upon consolidation under GAAP. However, because these amounts are funded by, and earned from, noncontrolling interests, upon consolidation under GAAP, KKR's allocated share of the net income from the consolidated investment funds and other vehicles is increased by the amount of fees that are eliminated. Accordingly, net income (loss) attributable to KKR would be unchanged if such investment funds and other vehicles were not consolidated. For a more detailed discussion on the factors that affect our management fees during the period, see "—Analysis of Asset Management Segment Operating Results."

Fee credits increased compared to the prior period as a result of (i) a higher level of transaction fees in our Real Assets and Credit and Liquid Strategies business lines in the current period and (ii) a higher level of monitoring fees primarily due to a termination payment received in connection with the initial public offering of BrightSpring Health Services (NASDAQ: BTSG) in our Americas Fund XII during the current period. These termination payments may occur in the future; however, they are infrequent in nature and are generally correlated with the initial public offering and other realization activity in our private equity portfolio, and are expected to continue to be smaller in size and number compared to this period. Fee credits owed to consolidated investment funds and other vehicles are eliminated upon consolidation under GAAP. However, because these amounts are owed to noncontrolling interests, upon consolidation under GAAP, KKR's allocated share of the net income from the consolidated investment funds and other vehicles is decreased by the amount of fee credits that are eliminated. Accordingly, net income (loss) attributable to KKR would be unchanged if such investment funds and other vehicles were not consolidated. Transaction and monitoring fees earned from our portfolio companies are not eliminated upon consolidation because those fees are earned from companies which are not consolidated. Furthermore, transaction fees earned in our capital markets business are not shared with fund investors. Accordingly, certain transaction fees are reflected in our revenues without a corresponding fee credit.

Capital Allocation-Based Income (Loss)

Capital Allocation-Based Income (Loss) for the three months ended March 31, 2024 was positive primarily due to the net appreciation of the underlying investments at many of our unconsolidated carry earning investment funds, most notably Asian Fund III, Americas Fund XII, and Global Infrastructure Investors IV. Capital Allocation-Based Income (Loss) for the three months ended March 31, 2023 was positive primarily due to the net appreciation of the underlying investments at many of our unconsolidated carry earning investment funds, most notably Americas Fund XII, Global Infrastructure Investors III, and Asian Pacific Infrastructure Investors.

KKR calculates the carried interest that would be due to KKR for each investment fund, pursuant to the fund agreements, as if the fair value of the underlying investments were realized as of the reporting date, irrespective of whether such amounts have been realized. Since the fair value of the underlying investments varies between reporting periods, it is necessary to make adjustments to the amounts recorded as carried interest to reflect either (a) positive performance, resulting in an increase in the carried interest allocated to the general partner or (b) negative performance that would cause the amount due to KKR to be less than the amount previously recognized, resulting in a negative adjustment to carried interest allocated to the general partner. In each case, it is necessary to calculate the carried interest on cumulative results compared to the carried interest recorded to date and to make the required positive or negative adjustments.

Investment Income (Loss)

Net Gains (Losses) from Investment Activities for the three months ended March 31, 2024

The net gains from investment activities for the three months ended March 31, 2024 were comprised of net realized losses of $(190.9) million and net unrealized gains of $829.1 million.

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

Realized Gains and Losses from Investment Activities

For the three months ended March 31, 2024, net realized losses related primarily to the (i) realized losses on the sale of Telepizza SAU (consumer products sector) and (ii) realized losses from the distribution of certain assets to third-party fund investors in certain of our consolidated energy funds. Partially offsetting these realized losses were realized gains at certain consolidated leveraged credit funds and realized gains on certain foreign exchange forward contracts.

Unrealized Gains and Losses from Investment Activities

For the three months ended March 31, 2024, net unrealized gains were driven by (i) mark-to-market gains primarily relating to Söderberg & Partners (financial services sector), 1-800 Contacts, Inc. (health care sector) and foreign exchange forward contracts, and (ii) the reversal of previously recognized unrealized losses relating to the realization activity described above. These unrealized gains were partially offset by mark-to-market losses primarily relating to BridgeBio Pharma, Inc. (NASDAQ: BBIO), Accell Group N.V. (consumer products sector), and certain real estate and credit consolidated funds.

The factors that affect each investment strategy vary depending on the nature of the asset class and the valuation methodology employed. For the three months ended March 31, 2024, net unrealized gains were primarily generated in the following asset classes:

Traditional private equity and core private equity, which were primarily impacted by (i) the positive returns of global equity markets and the related increase of market multiples used in the market comparables methodology for the valuation of Level III investments, and (ii) overall positive operating performance of its portfolio companies;
Credit, which were primarily impacted by the tightening of the credit spreads during the quarter; and
Infrastructure, which primarily benefited from the positive operating performance of certain infrastructure assets and, to a lesser extent, by the positive returns of global equity markets and the related increase of market multiples used in the market comparables methodology for the valuation of Level III investments.

Partially offsetting the gains in the asset classes above, were unrealized losses generated in real estate investments, which, notwithstanding the positive operating performance at certain properties. See "Risk Factors" in our Annual Report and "—Business Environment" for more information about the factors that may impact our business, financial performance, operating results and valuation.

Net Gains (Losses) from Investment Activities for the three months ended March 31, 2023

The net losses from investment activities for the three months ended March 31, 2023 were comprised of net realized gains of $99.4 million and net unrealized losses of $(258.8) million.

Realized Gains and Losses from Investment Activities

For the three months ended March 31, 2023, net realized gains related primarily to the sale of our investment in KnowBe4, Inc. (NASDAQ: KNBE), Flutter Entertainment PLC (LON: FLTR), and US Foods Holding Corp. (NYSE: USFD). Partially offsetting these realized gains were realized losses primarily relating to a realized loss on our alternative credit investment, Chembulk Group (transportation sector) as well as realized losses on certain foreign exchange forward contracts and losses from the sales of revolving credit facilities.

Unrealized Gains and Losses from Investment Activities

For the three months ended March 31, 2023, net unrealized losses were driven by mark-to-market losses primarily relating to (i) certain investments held by our consolidated real estate and energy funds, (ii) GenesisCare Pty Ltd. (health care sector) and Heartland Dental, LLC (health care sector), each of which are held in our consolidated core private equity funds, and (iii) debt obligations of our consolidated CLOs. These unrealized losses were partially offset by mark-to-market gains primarily relating to (i) BridgeBio Pharma, Inc., (ii) Viridor Limited (infrastructure: energy and energy transition sector) and FiberCop S.p.A (infrastructure: telecommunications infrastructure sector) held in our consolidated core private equity funds and (iii) certain investments held in our consolidated CLOs.

For a discussion of other factors that affected KKR's realized investment income, see "—Analysis of Asset Management Segment Operating Results." For additional information about net gains (losses) from investment activities, see Note 4 "Net Gains (Losses) from Investment Activities - Asset Management and Strategic Holdings" in our financial statements.

Dividend Income

During the three months ended March 31, 2024, dividend income was primarily from (i) our investments in Exact Holding B.V. (technology sector) and FiberCop S.p.A. held through our consolidated core vehicles and (ii) certain of our consolidated real estate funds. During the three months ended March 31, 2023, dividend income was primarily from (i) certain investments held in our consolidated open-ended core infrastructure fund, Diversified Core Infrastructure Fund, (ii) certain investments held in our consolidated real estate equity and credit funds and (iii) certain investments held in our consolidated funds by our credit platform's SIG group.

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

Interest Income

The increase in interest income during the three months ended March 31, 2024 compared to the three months ended March 31, 2023 was primarily due to (i) the impact of closing CLOs that are consolidated subsequent to March 31, 2023, (ii) higher interest rates on floating rate investments held in consolidated CLOs and our consolidated private credit funds, and (iii) a higher level of interest income from certain of our consolidated private credit funds, related primarily to an increase in the amount of capital deployed. For a discussion of other factors that affected KKR's interest income, see "—Analysis of Asset Management Segment Operating Results."

Interest Expense

The increase in interest expense during the three months ended March 31, 2024 compared to the three months ended March 31, 2023 was primarily due to (i) the impact of closing CLOs that are consolidated subsequent to March 31, 2023, (ii) an increase in the amount of borrowings outstanding from certain consolidated funds and other vehicles, and (iii) higher interest rates on floating rate debt obligations held in consolidated CLOs. For a discussion of other factors that affected KKR's interest expense, see "—Key Segment and Non-GAAP Performance Measures."

Expenses - Asset Management

Compensation and Benefits Expense

The increase in compensation and benefits expense during the three months ended March 31, 2024 compared to the three months ended March 31, 2023 was primarily due to a higher level of accrued carried interest compensation resulting from (i) a higher level of carried interest from the appreciation in the value of our investment portfolio and (ii) the increase to the carry pool percentage in the current period.

General, Administrative and Other

The increase in general, administrative and other expenses during the three months ended March 31, 2024 compared to the three months ended March 31, 2023 was primarily due to (i) a provision for legal reserve in the current period and (ii) a higher level of expenses from our consolidated investment funds and CLOs due to the impact of consolidating certain new funds and CLOs subsequent to March 31, 2023. The increase was partially offset by a lower level of placement fees.

In periods of increased fundraising and to the extent that we use third parties to assist in our capital raising efforts, our General, Administrative and Other expenses are expected to increase accordingly.

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

Revenues

For the three months ended March 31, 2024 and 2023, revenues consisted of the following:


	Three Months Ended
	March 31, 2024		March 31, 2023		Change
	($ in thousands)
Net Premiums	$	6,036,522	$	473,624	$	5,562,898
Policy Fees	328,947		313,802		15,145
Net Investment Income	1,519,902		1,300,697		219,205
Net Investment-Related Losses	(241,486)		(123,833)		(117,653)
Other Income	56,385		37,158		19,227
Total Insurance Revenues	$	7,700,270	$	2,001,448	$	5,698,822

Net Premiums

Net premiums increased for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 primarily due to an increase in initial premiums assumed from reinsurance transactions with life contingencies or morbidity risk during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. The increase was partially offset by higher retrocessions to third party reinsurers during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. The initial premiums on assumed reinsurance were offset by a comparable increase in policy reserves reported within net policy benefits and claims (as discussed below under “Expenses—Net policy benefits and claims”).

Net investment income

Net investment income increased for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 primarily due to (i) increased average assets under management due to growth in assets in Global Atlantic's institutional market channel as a result of new reinsurance transactions and individual market channel sales and (ii) growth in portfolio yields due to higher market interest rates. The growth in portfolio yields during the three months ended March 31, 2024, was offset in part due to holding higher levels of lower yielding assets, such as cash and corporate fixed maturity securities acquired as part of recent reinsurance transactions, pending deployment into higher yielding asset classes.

Net investment-related (losses) gains

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


	Three Months Ended
	March 31, 2024		March 31, 2023		Change
	($ in thousands)
Funds withheld payable embedded derivatives	$	95,441	$	(430,235)	$	525,676
Equity future contracts	(63,516)		(40,825)		(22,691)

Foreign exchange and other derivative contracts	35,905		719		35,186
Equity index options	257,103		83,887		173,216
Interest rate contracts	(249,295)		68,996		(318,291)
Funds withheld receivable embedded derivatives	25,330		(30,767)		56,097

Net gains on derivative instruments	100,968		(348,225)		449,193
Net other investment (losses) gains	(342,454)		224,392		(566,846)
Net investment-related losses	$	(241,486)	$	(123,833)	$	(117,653)

Net gains on derivative instruments

The increase in the fair value of embedded derivatives on funds withheld at interest payable for the three months ended March 31, 2024 was primarily driven by the change in fair value of the underlying investments in the funds withheld at interest payable portfolio, which is primarily comprised of fixed maturity securities (designated as trading for accounting purposes), mortgage and other loan receivables, and other investments. The underlying investments in the funds withheld at interest payable portfolio decreased in value during the three months ended March 31, 2024, and increased during the three months ended March 31, 2023 due to an increase in market interest rates for the three months ended March 31, 2024 compared to a decrease in the three months ended March 31, 2023.

The increase in the fair value of equity index options was primarily driven by the performance of the indexes upon which these options are based. Global Atlantic purchases equity index options to hedge the market risk of embedded derivatives in indexed universal life and fixed-indexed annuity products (the change in which is accounted for in net policy benefits and claims). The majority of Global Atlantic's equity index options are based on the S&P 500 Index, which had a larger increase during the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

The increase in the fair value of embedded derivatives on funds withheld at interest receivable was primarily due to narrowing of credit spreads during the three months ended March 31, 2024, as compared to a widening of credit spreads during the three months ended March 31, 2023.

The decrease in the fair value of interest rate was primarily driven by an increase in market interest rates during the three months ended March 31, 2024 and a decrease in the three months ended March 31, 2023, resulting in respectively, a loss, and a gain, on interest rate contracts in the respective periods.

The decrease in the fair value of equity futures contracts was driven primarily by the performance of equity markets. Global Atlantic purchases equity futures primarily to hedge the market risk in Global Atlantic's variable annuity products which are accounted for in net policy benefits and claims. The majority of Global Atlantic's equity futures are based on the S&P 500 Index, which increased during both the three months ended March 31, 2024 and three months ended March 31, 2023, resulting in a loss on equity futures contracts in both periods.

Net other investment (losses) gains

The components of net other investment (losses) gains were as follows:


	Three Months Ended
	March 31, 2024		March 31, 2023		Change
	($ in thousands)


Realized (losses) gains on available-for-sale fixed maturity debt securities	$	(28,157)	$	3,432	$	(31,589)
Credit loss allowances	(102,113)		(148,429)		46,316
Impairment of available-for-sale fixed maturity debt securities due to intent to sell	—		(26,741)		26,741
Unrealized (losses) gains on fixed maturity securities classified as trading	(99,579)		376,290		(475,869)
Unrealized losses on investments accounted under a fair-value option	(42,207)		(55,773)		13,566
Unrealized (losses) gains on real estate investments recognized at fair value under investment company accounting	(78,011)		63,192		(141,203)
Realized gains on funds withheld payable at interest portfolio	24,287		3,980		20,307
Realized (losses) gains on funds withheld receivable at interest portfolio	(2,286)		17,733		(20,019)
Other	(14,388)		(9,292)		(5,096)
Net other investment (losses) gains	$	(342,454)	$	224,392	$	(566,846)

The increase in net other investment losses for the three months ended March 31, 2024 as compared to net other investment gains for the three months ended March 31, 2023, were primarily due to (i) an increase in unrealized losses on fixed maturity securities classified as trading primarily as a result of an increase in market interest rates during the three months ended March 31, 2024 as compared to a decrease in market interest rates during the three months ended March 31, 2023, and (ii) an increase in unrealized losses on real estate investments at fair-value under investment company accounting due to higher discount rates and capitalization rates during the three months ended March 31, 2024.

Offsetting these increases in net other investment losses were (i) a decrease in credit loss allowances, and (ii) a decrease in intent-to-sell impairments on available-for-sale fixed maturity securities.

Expenses

Net policy benefits and claims

Net policy benefits and claims increased for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 primarily due to (i) an increase in the value of embedded derivatives in Global Atlantic's fixed indexed annuity products, as a result of higher equity market returns (as discussed above under "Condensed Consolidated Results of Operations (GAAP Basis - Unaudited)—Insurance—Revenues—Net investment-related (losses) gains," Global Atlantic purchases equity index options in order to hedge this risk, the fair value changes of which are accounted for in gains on derivative instruments, and generally offsetting the change in embedded derivative fair value reported in net policy benefits and claims), (ii) an increase in net flows from both individual and institutional market channel sales, (iii) higher initial reserves assumed related to new reinsurance transactions with life contingencies or morbidity risk in the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, and (iv) higher average funding costs due to higher crediting rates and the ordinary-course run-off of older business originated in a lower interest rate environment.

These increases were offset in part by (i) an increase in gains on market risk benefits due to an increase in market interest rates in the three months ended March 31, 2024, as compared to a decrease in market interest rates during the three months ended March 31, 2023, and (ii) a decrease in variable annuity market risk benefit liabilities primarily due to higher equity market returns for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023.

Amortization of policy acquisition costs

Amortization of policy acquisition costs decreased for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 primarily due to the remeasurement of the policy liabilities associated with certain cost-of-reinsurance asset intangibles, resulting in an increase in the cost-of-reinsurance asset and a decrease in amortization.

Interest expense

Interest expense increased for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 primarily due to (i) a net increase in total debt outstanding, and (ii) an increase in interest expense on floating rate debt (i.e., Global Atlantic's fixed-to-floating swaps on its fixed rate debt) due to higher market interest rates during the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

Insurance expenses

Insurance expenses decreased for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 primarily due to a decrease in commission expenses as result of higher proportion of ceded commission expenses.

General, administrative and other

General, administrative and other decreased for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 primarily due to decreased employee compensation and benefits related expenses.

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

Income Tax Expense (Benefit)

For the three months ended March 31, 2024, income tax was an expense of $269.2 million compared to an income tax expense of $148.7 million in the prior period. The increase was primarily driven by the higher level of asset management and strategic holdings income before taxes. For a discussion of factors that impacted KKR's tax provision, see Note 18 "Income Taxes" in our financial statements included elsewhere in this report.

Net Income (Loss) Attributable to Noncontrolling Interests

Net income (loss) attributable to noncontrolling interests for the three months ended March 31, 2024 relates primarily to net income (loss) attributable to: (i) exchangeable securities representing ownership interests in KKR Group Partnership until they are exchanged for common stock of KKR & Co. Inc. and (ii) third-party limited partner interests in consolidated investment funds. Net income (loss) attributable to noncontrolling interests for the three months ended March 31, 2024 was primarily due to net gains from investment activities at our consolidated investment funds.

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

Net income (loss) attributable to KKR & Co. Inc. for the three months ended March 31, 2024 increased primarily due to a higher level of capital allocation-based income and net gains from investment activities in the current period, as described above.

Condensed Consolidated Statements of Financial Condition (GAAP Basis)

The following table provides our condensed consolidated statements of financial condition on a GAAP basis as of March 31, 2024 and December 31, 2023.


(Amounts in thousands, except per share amounts)
	As of		As of
	March 31, 2024		December 31, 2023

Assets
Asset Management and Strategic Holding
Cash and Cash Equivalents	$	7,083,931	$	8,393,892
Investments	100,693,987		98,634,801
Other Assets	6,546,455		6,538,674
	114,324,373		113,567,367
Insurance
Cash and Cash Equivalents	8,524,962		11,954,675
Investments	157,747,170		141,370,323
Other Assets	59,177,422		50,401,829
	225,449,554		203,726,827
Total Assets	$	339,773,927	$	317,294,194

Liabilities and Equity
Asset Management and Strategic Holdings
Debt Obligations	$	45,053,639	$	44,886,870
Other Liabilities	9,311,591		8,256,514
	54,365,230		53,143,384
Insurance
Debt Obligations	3,086,113		2,587,857
Other Liabilities	225,410,734		203,184,041
	228,496,847		205,771,898
Total Liabilities	$	282,862,077	$	258,915,282

Redeemable Noncontrolling Interests	$	922,093	$	615,427

Stockholders' Equity
Stockholders' Equity - Common Stock	$	21,421,193	$	22,858,694
Noncontrolling Interests	34,568,564		34,904,791
Total Equity	55,989,757		57,763,485
Total Liabilities and Equity	$	339,773,927	$	317,294,194

On January 2, 2024, KKR completed the 2024 GA Acquisition. Prior to becoming a wholly-owned subsidiary of KKR in the 2024 GA Acquisition, Global Atlantic was majority owned and controlled by KKR, and KKR already consolidated Global Atlantic in the consolidated financial statements of KKR & Co. Inc. The purchase price paid by KKR was approximately $2.6 billion, including the issuances of approximately $41 million of 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 parties 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, which are included in accumulated other comprehensive income. As such, this transaction resulted in a decrease in KKR & Co. Inc. Stockholders’ Equity. This decrease was partially offset by net income attributable to KKR & Co. Inc. common stockholders.

Consolidated Statements of Cash Flows (GAAP Basis)

The following is a discussion of our consolidated cash flows for the three months ended March 31, 2024 and 2023. You should read this discussion in conjunction with the financial statements and related notes included elsewhere in this report.

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

Net Cash Provided (Used) by Operating Activities

Our net cash provided (used) by operating activities was $1.5 billion and $(1.9) billion during the three months ended March 31, 2024 and 2023, respectively. These amounts primarily included: (i) investments purchased (asset management and strategic holdings), net of proceeds from investments (asset management and strategic holdings) of $(0.7) billion and $(4.7) billion, during the three months ended March 31, 2024 and 2023, respectively, (ii) net realized gains (losses) on asset management and strategic holdings investments of $(0.2) billion and $0.1 billion during the three months ended March 31, 2024 and 2023 respectively, (iii) change in unrealized gains (losses) on investments (asset management and strategic holdings) of $0.8 billion and $(0.3) billion during the three months ended March 31, 2024 and 2023, respectively, (iv) capital allocation-based income (loss) (asset management and strategic holdings) of $1.3 billion and $0.4 billion during the three months ended March 31, 2024 and 2023, respectively, (v) net investment and policy liability-related gains (losses) (insurance) of $(0.6) billion and $(1.0) billion during the three months ended March 31, 2024 and 2023, respectively, and (vi) interest credited to policyholder account balances (net of policy fees) (insurance) of $0.9 billion and $0.6 billion during the three months ended March 31, 2024, and 2023, respectively. Investment funds are investment companies under GAAP and reflect their investments and other financial instruments at fair value.

Net Cash Provided (Used) by Investing Activities

Our net cash provided (used) by investing activities was $(6.2) billion and $(3.8) billion during the three months ended March 31, 2024 and 2023, respectively. Our investing activities included: (i) investments purchased (insurance), net of proceeds from investments (insurance), of $(6.2) billion and $(3.8) billion during the three months ended March 31, 2024 and 2023, respectively, and (ii) the purchase of fixed assets of $(17.3) million and $(23.2) million during the three months ended March 31, 2024 and 2023, respectively.

Net Cash Provided (Used) by Financing Activities

Our net cash provided (used) by financing activities was $45.0 million and $2.1 billion during the three months ended March 31, 2024 and 2023, respectively. Our financing activities primarily included: (i) contributions from, net of distributions to, our noncontrolling and redeemable noncontrolling interests of $(23.8) million and $0.6 billion during the three months ended March 31, 2024 and 2023, respectively, (ii) proceeds received, net of repayment of debt obligations, of $0.8 billion and $1.5 billion during the three months ended March 31, 2024 and 2023, respectively, (iii) additions to, net of withdrawals from, contractholder deposit funds (insurance) of $2.6 billion and $0.5 billion during the three months ended March 31, 2024 and 2023, respectively, (iv) cash consideration for the 2024 GA Acquisition of $(2.6) billion during the three months ended March 31, 2024, (v) reinsurance transactions, net of cash provided (insurance) of $12.2 million and $79.5 million during the three months ended March 31, 2024 and 2023, respectively, (vi) common stock dividends of $(146.0) million and $(133.5) million during the three months ended March 31, 2024 and 2023, respectively, and (vii) Series C Mandatory Convertible Preferred Stock dividends of $(17.3) million during the three months ended March 31, 2023.

Analysis of Segment Operating Results

The following is a discussion of the results of our business on a segment basis for the three months ended March 31, 2024, and 2023. You should read this discussion in conjunction with the information included under "—Key Segment and Non-GAAP Performance Measures" and the financial statements and related notes included elsewhere in this report. See "Risk Factors" in our Annual Report and "—Business Environment" for more information about factors that may impact our business, financial performance, operating results and valuations.

Analysis of Asset Management Segment Operating Results

The following tables set forth information regarding KKR's asset management segment operating results and certain key capital metrics for the three months ended March 31, 2024 and 2023:




	Three Months Ended
	March 31, 2024		March 31, 2023		Change
	($ in thousands)
Management Fees	$	815,327	$	738,156	$	77,171
Transaction and Monitoring Fees, Net	152,084		142,179		9,905
Fee Related Performance Revenues	19,101		21,741		(2,640)
Fee Related Compensation	(172,640)		(203,094)		30,454
Other Operating Expenses	(145,131)		(150,404)		5,273
Fee Related Earnings	668,741		548,578		120,163

Realized Performance Income	271,545		175,398		96,147
Realized Performance Income Compensation	(193,547)		(114,009)		(79,538)


Realized Investment Income	134,753		194,834		(60,081)
Realized Investment Income Compensation	(20,211)		(29,714)		9,503


Asset Management Segment Earnings	$	861,281	$	775,087	$	86,194

Management Fees

The following table presents management fees by business line:


	Three Months Ended
	March 31, 2024		March 31, 2023		Change
	($ in thousands)
Management Fees
Private Equity	$	342,485	$	316,341	$	26,144
Real Assets	220,087		193,365		26,722
Credit and Liquid Strategies	252,755		228,450		24,305
Total Management Fees	$	815,327	$	738,156	$	77,171

The increase in Private Equity management fees was primarily attributable to (i) management fees earned on new capital raised over the past twelve months at Ascendant Fund and private equity vehicles for private wealth investors and (ii) management fees earned from our Strategic Holdings segment in the current period. The increase was partially offset by a lower level of management fees from Americas Fund XII due to a step-down in the management fee rate in 2023 and a decrease in invested capital. During the first quarter of 2024, approximately $12.7 million of management fees were earned on new capital raised that is retroactive to the start of the relevant fund's investment period.

The increase in Real Assets management fees was primarily attributable to (i) a higher level of management fees earned from Global Atlantic due to the growth in assets from inflows, (ii) a higher level of management fees earned from Diversified Core Infrastructure Fund due to an increase in its fee base from capital inflows and investment appreciation year over year, and (iii) management fees earned on new capital raised over the past twelve months at infrastructure vehicles for private wealth investors. During the first quarter of 2024, approximately $0.5 million of management fees were earned on new capital raised that is retroactive to the start of the relevant fund's investment period.

The increase in Credit and Liquid Strategies management fees was primarily attributable to (i) a higher level of management fees earned from Global Atlantic due to the growth in assets from inflows and (ii) a higher level of management fees earned from Marshall Wace. The increase was partially offset by a lower level of management fees from certain SIG funds primarily due to (i) a decrease in the funds' fee base from the sale of investments and (ii) certain SIG funds which no longer pay management fees as a result of an agreement to waive such fees.

Transaction and Monitoring Fees, Net

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


	Three Months Ended
	March 31, 2024		March 31, 2023		Change
	($ in thousands)
Transaction and Monitoring Fees, Net
Private Equity	$	15,805	$	34,274	$	(18,469)
Real Assets	17,373		5,734		11,639
Credit and Liquid Strategies	3,188		284		2,904
Capital Markets	115,718		101,887		13,831
Total Transaction and Monitoring Fees, Net	$	152,084	$	142,179	$	9,905

Our Private Equity, Real Assets and Credit and Liquid Strategies business lines earn transaction and monitoring fees from portfolio companies, and under the terms of the management agreements with certain of our investment funds, we are required to share all or a portion of such fees with our fund investors. For most of our investment funds, transaction and monitoring fees are credited against fund management fees up to 100% of the amount of the transaction and monitoring fees attributable to that investment fund, which results in a decrease of our monitoring and transaction fees. Additionally, transaction fees are generally not earned with respect to energy and real estate investments. Our Capital Markets business line earns transaction fees, which are generally not shared with fund investors.

The increase in transaction and monitoring fees, net is primarily due to a higher level of transaction fees earned in our Capital Markets business line partially offset by a lower level of transaction and monitoring fees, net in our Private Equity business line. The increase in Capital Markets business line transaction fees was primarily due to an increase in the number of capital markets transactions for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. Overall, we completed 85 capital markets transactions for the three months ended March 31, 2024, of which 9 represented equity offerings and 76 represented debt offerings, as compared to 42 capital markets transactions for the three months ended March 31, 2023, of which 9 represented equity offerings and 33 represented debt offerings. We earn fees in connection with underwriting, syndication and other capital markets services. While each of the capital markets transactions that we undertake in this business line is separately negotiated, our fee rates are generally higher with respect to underwriting or syndicating equity offerings than with respect to debt offerings, and the amount of fees that we earn for similar transactions generally correlates with overall transaction sizes.

Our capital markets fees are generated in connection with activity involving our private equity, real assets and credit funds as well as from third-party companies. For the three months ended March 31, 2024, approximately 32% of our transaction fees in our Capital Markets business line were earned from unaffiliated third parties as compared to approximately 14% for the three months ended March 31, 2023. Our transaction fees are comprised of fees earned in North America, Europe, and the Asia-Pacific region. For the three months ended March 31, 2024, approximately 34% of our transaction fees were generated outside of North America as compared to approximately 59% for the three months ended March 31, 2023. Our Capital Markets business line is dependent on the overall capital markets environment, which is influenced by equity prices, credit spreads, and volatility. Our Capital Markets business line does not generate monitoring fees.

Transaction and monitoring fees, net were lower for the three months ended March 31, 2024 compared to the prior period in our Private Equity business line primarily due to the decrease in the level of transaction activity in the current period. See "—Analysis of Asset Management Segment Operating Results—Capital Invested" for more information about capital invested by business line.

Fee Related Performance Revenues

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


	Three Months Ended
	March 31, 2024		March 31, 2023		Change
	($ in thousands)
Fee Related Performance Revenues
Private Equity	$	—	$	—	$	—
Real Assets	1,400		3,704		(2,304)
Credit and Liquid Strategies	17,701		18,037		(336)
Total Fee Related Performance Revenues	$	19,101	$	21,741	$	(2,640)

Fee related performance revenues represent performance fees that are (i) expected to be received from our investment funds, vehicles and accounts on a recurring basis, and (ii) not dependent on a realization event involving investments held by the investment fund, vehicle or account.

These performance fees are primarily earned from (i) FS KKR Capital Corp. (NYSE: FSK) ("FSK") (our business development company) in our Credit and Liquid Strategies business line, and (ii) KKR Real Estate Select Trust Inc. ("KREST") (our registered closed-end real estate equity fund), KKR Real Estate Finance Trust Inc. ("KREF") (our real estate credit investment trust), and KJR Management ("KJRM") (our Japanese real estate investment trust asset manager) in our Real Assets business line.

Fee related performance revenues were lower for the three months ended March 31, 2024 compared to the prior period primarily due to no performance fee being earned from KREF in the current period.

Fee Related Compensation

The decrease in fee related compensation for the three months ended March 31, 2024 compared to the prior period was primarily due to a lower percentage of fee related revenues recorded as compensation in the current period as compared to the prior period. Effective as of the first quarter of 2024, KKR has reduced the compensation range on fee related revenues to a 15% to 20% range.

Other Operating Expenses

The decrease in other operating expenses for the three months ended March 31, 2024 compared to the prior period was primarily due to a lower level of placement fees and general administrative costs compared to the prior period.

Fee Related Earnings

The increase in fee related earnings for the three months ended March 31, 2024 compared to the prior period was primarily due to a (i) higher level of management fees across our Private Equity, Real Assets, and Credit and Liquid Strategies business lines, (ii) a higher level of transaction fees earned in our Capital Markets business line, and (iii) a lower level of fee related compensation and other operating expenses, as described above.

Realized Performance Income

The following table presents realized performance income by business line:


	Three Months Ended
	March 31, 2024		March 31, 2023		Change
	($ in thousands)
Realized Performance Income
Private Equity	$	265,297	$	163,052	$	102,245
Real Assets	624		9,686		(9,062)
Credit and Liquid Strategies	5,624		2,660		2,964
Total Realized Performance Income	$	271,545	$	175,398	$	96,147


	Three Months Ended
	March 31, 2024		March 31, 2023		Change
	($ in thousands)
Private Equity
Americas Fund XII	$	169,386	$	14,714	$	154,672
Core Investment Vehicles	65,846		103,659		(37,813)
Co-Investment Vehicles and Other	6,730		2,292		4,438
Asian Fund III	6,721		—		6,721
2006 Fund	961		4,271		(3,310)
Next Generation Technology Growth Fund	—		17,810		(17,810)
Global Impact Fund	—		20,257		(20,257)












Other	15,653		49		15,604
Total Realized Performance Income	$	265,297	$	163,052	$	102,245



	Three Months Ended
	March 31, 2024		March 31, 2023		Change
	($ in thousands)
Real Assets
Real Estate Partners Americas II	$	624	$	—	$	624
Global Infrastructure Investors II	—		9,686		(9,686)











Total Realized Performance Income	$	624	$	9,686	$	(9,062)

Realized performance income includes (i) realized carried interest from our carry earning funds and (ii) incentive fees not included in Fee Related Performance Revenues. Incentive fees consist of performance fees earned from (i) our hedge fund partnerships, (ii) investment management agreements with KKR sponsored investment vehicles, and (iii) investment management agreements to provide KKR’s investment strategies to funds managed by a UK investment fund manager.

Realized performance income in our Private Equity business line for the three months ended March 31, 2024 consisted primarily of (i) realized proceeds from the sale of our investments in AppLovin Corporation (NASDAQ: APP) held by Americas Fund XII and Australian Venue Co. (consumer products sector) held by Asian Fund III and (ii) performance income from our core investment vehicles.

Realized performance income in our Private Equity business line for the three months ended March 31, 2023 consisted primarily of (i) realized performance income from our core investment vehicles and (ii) realized proceeds from the sale of our investment in KnowBe4, Inc. held by Global Impact Fund and Next Generation Technology Growth Fund.

Realized performance income in our Real Assets business line for the three months ended March 31, 2024 consisted primarily of realized proceeds from dividends received and sales of various investments held by Real Estate Partners Americas II.

Realized performance income in our Real Assets business line for the three months ended March 31, 2023 consisted primarily of realized proceeds from the sale of our investment in Telxius Telecom, S.A.U. (infrastructure: telecommunications infrastructure sector) held by Global Infrastructure Investors II.

Realized Performance Income Compensation

The increase in realized performance income compensation for the three months ended March 31, 2024 compared to the prior period was primarily due to (i) a higher level of compensation recorded in connection with the higher level of realized performance income and (ii) a higher percentage of realized performance income recorded as compensation in the current period as compared to the prior period. Effective as of the first quarter of 2024, KKR has increased the compensation range on realized performance income to a 70% to 80% range.

Realized Investment Income

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


	Three Months Ended
	March 31, 2024		March 31, 2023		Change
	($ in thousands)
Realized Investment Income
Net Realized Gains (Losses)	$	50,555	$	112,042	$	(61,487)
Interest Income and Dividends, Net	84,198		82,792		1,406
Total Realized Investment Income	$	134,753	$	194,834	$	(60,081)

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

For the three months ended March 31, 2024, net realized gains were comprised of realized gains primarily from the sale of our investments in AppLovin Corporation and Australian Venue Co. Partially offsetting these realized gains were realized losses, the most significant of which were (i) a realized loss on our infrastructure investment, Indus Towers Ltd. (NSE: INDUSTOW) and (ii) realized losses from the sales of various revolving credit facilities.

For the three months ended March 31, 2023, net realized gains were comprised of realized gains primarily from the sale of our investments in KnowBe4, Inc. and Flutter Entertainment PLC. Partially offsetting these realized gains were realized losses, the most significant of which was a realized loss on our alternative credit investment, Chembulk Group, and realized losses from the sales of various revolving credit facilities.

For the three months ended March 31, 2024, interest income and dividends, net were comprised of (i) interest income primarily from our investments in CLOs and (ii) dividend income primarily from our investments in Crescent Energy Company (NYSE: CRGY), KREST, and KREF.

For the three months ended March 31, 2023, interest income and dividends, net were comprised of (i) interest income primarily from our investments in CLOs, and (ii) dividend distributions primarily from our Americas real estate credit and equity investments, as well as a dividend distribution received from Resolution Life Holdings L.P. (financial services sector). See "—Analysis of Segment and Non-GAAP Performance Measures" and "—Segment Balance Sheet Measures."

Realized investment income includes the net income (loss) from KKR Capstone. For the three months ended March 31, 2024, total fees attributable to KKR Capstone were $18.5 million and total expenses attributable to KKR Capstone were $18.3 million. For KKR Capstone-related adjustments in reconciling asset management segment revenues to GAAP revenues see "—Segment Balance Sheet Measures—Reconciliations to GAAP Measures."

As of the date of this filing, we have transactions that are pending or that have closed after March 31, 2024, representing at least $400.0 million of realized carried interest and realized investment income, not all of which are expected to be realized in the second quarter 2024. Some of these transactions are not complete, and are subject to the satisfaction of closing conditions, including regulatory approvals; therefore, there can be no assurance if or when such transactions will be completed. In addition, we may realize gains or losses based on transactions or other events that occur after the date of filing this report, which could impact, positively or negatively, the total amount of our realized performance income from carried interest and realized investment income. Therefore, no assurance can be given for what our actual realized carried interest and realized investment income in the second quarter 2024 or future quarters will be.

Realized Investment Income Compensation

The decrease in realized investment income compensation for the three months ended March 31, 2024 compared to the prior period is primarily due to a lower level of compensation recorded in connection with the lower level of realized investment income. The compensation range on realized investment income did not change from the prior year and remains at its current range of 10% to 20%.

Other Operating and Capital Metrics

The following table presents key operating and capital metrics as of March 31, 2024 and December 31, 2023:


	As of
	March 31, 2024		December 31, 2023		Change
	($ in millions)
Assets Under Management	$	577,633	$	552,801	$	24,832
Fee Paying Assets Under Management	$	470,603	$	446,408	$	24,195
Uncalled Commitments	$	97,508	$	98,557	$	(1,049)

The following table presents our key capital metrics for the three months ended March 31, 2024 and 2023:


	Three Months Ended
	March 31, 2024		March 31, 2023		Change
	($ in millions)
Capital Invested	$	14,104	$	9,767	$	4,337

Assets Under Management

Private Equity

The following table reflects the changes in the AUM of our Private Equity business line from December 31, 2023 to March 31, 2024:


	($ in millions)
December 31, 2023	$	176,377
New Capital Raised	3,590

Distributions and Other	(1,917)
Change in Value	4,716
March 31, 2024	$	182,766

AUM of our Private Equity business line was $182.8 billion at March 31, 2024, an increase of $6.4 billion, compared to $176.4 billion at December 31, 2023.

The increase was primarily attributable to (i) appreciation in investment value from Americas Fund XII, Asian Fund III, and North America Fund XIII, and, to a lesser extent, (ii) new capital raised from our private equity K-Series investment vehicle designed for investment by private wealth investors and Ascendant Fund. Partially offsetting the increase were distributions to fund investors primarily as a result of realized proceeds, most notably from Americas Fund XII and Asian Fund III.

For the three months ended March 31, 2024, the value of our traditional private equity investment portfolio increased 5%. This was comprised of a 11% increase in share prices of various publicly held investments and a 4% increase in value of our privately held investments. For the three months ended March 31, 2024, the value of our growth equity investment portfolio increased 4% and our core private equity investment portfolio increased 1%.

The most significant increases in share prices of our publicly held investments were increases in AppLovin Corporation, Kokusai Electric Corporation (TYO: 6525), and BrightView Holdings, Inc. (NYSE: BV). These increases were partially offset by decreases in share prices of other publicly held investments, the most significant of which was BrightSpring Health Services Inc. The prices of publicly held companies may experience volatile changes following the reporting period. See "Risk Factors" in our Annual Report and "—Business Environment" for more information about the factors, such as volatility, that may impact our business, financial performance, operating results and valuations.

The most significant increases in the value of our privately held investments were increases in OneStream Software, LLC (technology sector), Söderberg & Partners, and BMC Software, Inc. (technology sector). These increases in value of our privately held investments were partially offset by decreases in the value of certain other privately held investments, the most significant of which were Accell Group N.V., Covenant Physician Partners, Inc. (health care sector), and Mills Fleet Farm Group LLC (retail sector). The increased valuations of these individual companies in our privately held investments, in the aggregate, generally related to (i) individual company performance and (ii) an increase in the value of market comparables. The decreased valuations of individual companies in our privately held investments, in the aggregate, generally related to an unfavorable business outlook.

Real Assets

The following table reflects the changes in the AUM of our Real Assets business line from December 31, 2023 to March 31, 2024:


	($ in millions)
December 31, 2023	$	130,933
New Capital Raised	5,858

Distributions and Other	(1,730)
Redemptions	(128)
Change in Value	429
March 31, 2024	$	135,362

AUM of our Real Assets business line was $135.4 billion at March 31, 2024, an increase of $4.5 billion, compared to $130.9 billion at December 31, 2023.

The increase was primarily attributable to (i) new capital raised from Global Atlantic and (ii) an increase in assets managed by KJRM, and, to a lesser extent, (iii) appreciation in investment value in Global Infrastructure Investors IV and Global Infrastructure Investors III. Partially offsetting the increase were (i) payments to Global Atlantic policyholders, and (ii) distributions to fund investors as a result of realized proceeds, most notably from Diversified Core Infrastructure Fund and Asia Pacific Infrastructure Investors.

For the three months ended March 31, 2024, the value of our infrastructure investment portfolio increased 5% and the value of our opportunistic real estate equity investment portfolio increased 1%.

The most significant increases in value across our Real Assets portfolio were increases in Global Technical Realty L.P. (infrastructure: telecommunications infrastructure sector), ContourGlobal plc (infrastructure: energy and energy transition sector), and CyrusOne Inc. (infrastructure: telecommunications infrastructure sector). These increases in value of our privately held investments were partially offset by decreases in the value of certain other privately held investments, the most significant of which was Ritchies Transport (infrastructure: transportation sector). The increased valuations of individual companies or assets in the aggregate, generally related to individual company or asset performance. The decreased valuations of individual companies or assets in the aggregate, generally related to an increase in interest rates which increased the cost of capital in our discounted cash flow methodology for certain valuations for certain investments in our infrastructure portfolio.

Credit and Liquid Strategies

The following table reflects the changes in the AUM of our Credit and Liquid Strategies business line from December 31, 2023 to March 31, 2024:


	($ in millions)
December 31, 2023	$	245,491
New Capital Raised	21,158



Distributions and Other	(6,059)
Redemptions	(2,893)
Change in Value	1,808
March 31, 2024	$	259,505

AUM of our Credit and Liquid Strategies business line was $259.5 billion at March 31, 2024, an increase of $14.0 billion compared to $245.5 billion at December 31, 2023.

The increase was primarily attributable to (i) new capital raised from Global Atlantic, various private credit and leveraged credit funds, and, to a lesser extent, (ii) investment value appreciation on assets managed by Marshall Wace. Partially offsetting the increase were (i) payments to Global Atlantic policyholders, (ii) distributions to, and redemptions from, fund investors at certain leveraged credit funds, and (iii) redemptions at Marshall Wace.

See "Risk Factors" in our Annual Report and "—Business Environment" for more information about the factors that may impact our business, financial performance, operating results and valuations.

Fee Paying Assets Under Management

Private Equity

The following table reflects the changes in the FPAUM of our Private Equity business line from December 31, 2023 to March 31, 2024:


	($ in millions)
December 31, 2023	$	107,726
New Capital Raised	9,475

Distributions and Other	(986)

Change in Value	72
March 31, 2024	$	116,287

FPAUM of our Private Equity business line was $116.3 billion at March 31, 2024, an increase of $8.6 billion compared to $107.7 billion at December 31, 2023.

The increase was primarily attributable to (i) assets we manage and earn a fee on from our Strategic Holdings segment beginning with the first quarter of 2024 and (ii) new capital raised from private equity K-Series for private wealth investors and Ascendant Fund. Partially offsetting the increase was distributions to fund investors primarily as a result of realized proceeds, most notably from Asian Fund II and Asian Fund III.

Uncalled capital commitments from private equity funds and other investment vehicles from which KKR is currently not earning management fees amounted to approximately $19.1 billion at March 31, 2024, which includes capital commitments reserved for follow-on investments for funds that have completed their investment periods. This capital will generally begin to earn management fees upon deployment of the capital or upon the commencement of the fund's investment period. The average annual management fee rate associated with this capital is approximately 0.9%. The date on which we begin to earn fees (as specified above) is not guaranteed to occur and may not occur for an extended period of time. If and when such management fees are earned, a portion of existing FPAUM may cease paying fees or pay lower fees, thus offsetting a portion of any new management fees earned.

Real Assets

The following table reflects the changes in the FPAUM of our Real Assets business line from December 31, 2023 to March 31, 2024:


	($ in millions)
December 31, 2023	$	112,254
New Capital Raised	6,277

Distributions and Other	(1,940)
Redemptions	(128)

Change in Value	(814)
March 31, 2024	$	115,649

FPAUM of our Real Assets business line was $115.6 billion at March 31, 2024, an increase of $3.3 billion, compared to $112.3 billion at December 31, 2023.

The increase was primarily attributable to (i) new capital raised from Global Atlantic and Diversified Core Infrastructure Fund and (ii) an increase in assets managed by KJRM. Partially offsetting the increase were (i) payments to Global Atlantic policyholders, (ii) distributions to fund investors as a result of realized proceeds, most notably from Global Infrastructure Investors III and Diversified Core Infrastructure Fund and (iii) a decline in the value of the assets managed by KJRM due to the impact of the decline in the value of the Japanese Yen.

Uncalled capital commitments from real assets investment funds and other investment vehicles from which KKR is currently not earning management fees amounted to approximately $9.8 billion at March 31, 2024, which includes capital commitments reserved for follow-on investments for funds that have completed their investment periods. This capital will generally begin to earn management fees upon deployment of the capital or upon the commencement of the fund's investment period. The average annual management fee rate associated with this capital is approximately 1.2%. The date on which we begin to earn fees (as specified above) is not guaranteed to occur and may not occur for an extended period of time. If and when such management fees are earned, a portion of existing FPAUM may cease paying fees or pay lower fees, thus offsetting a portion of any new management fees earned.

Credit and Liquid Strategies

The following table reflects the changes in the FPAUM of our Credit and Liquid Strategies business line from December 31, 2023 to March 31, 2024:


	($ in millions)
December 31, 2023	$	226,428
New Capital Raised	19,891



Distributions and Other	(6,129)
Redemptions	(2,893)
Change in Value	1,370
March 31, 2024	$	238,667

FPAUM of our Credit and Liquid Strategies business line was $238.7 billion at March 31, 2024, an increase of $12.3 billion, compared to $226.4 billion at December 31, 2023.

Uncalled capital commitments from credit investment funds from which KKR is currently not earning management fees amounted to approximately $14.7 billion at March 31, 2024, which includes capital commitments reserved for follow-on investments for funds that have completed their investment periods. This capital will generally begin to earn management fees upon deployment of the capital or upon the commencement of the fund's investment period. The average annual management fee rate associated with this capital is approximately 0.7%. The date on which we begin to earn fees is not guaranteed to occur and may not occur for an extended period of time. If and when such management fees are earned, a portion of existing FPAUM may cease paying fees or pay lower fees, thus offsetting a portion of any new management fees earned.

See "Risk Factors" in our Annual Report and "—Business Environment" for more information about the factors that may impact our business, financial performance, operating results and valuations.

Uncalled Commitments

Private Equity

As of March 31, 2024, our Private Equity business line had $55.0 billion of remaining uncalled commitments that could be called for investments in new transactions as compared to $57.4 billion as of December 31, 2023. The decrease was primarily attributable to capital called from fund investors to make investments during the period, which was partially offset by new capital commitments from fund investors.

Real Assets

As of March 31, 2024, our Real Assets business line had $24.3 billion of remaining uncalled commitments that could be called for investments in new transactions as compared to $24.7 billion as of December 31, 2023. The decrease was primarily attributable to capital called from fund investors to make investments during the period, which was partially offset by new capital commitments from fund investors.

Credit and Liquid Strategies

As of March 31, 2024, our Credit and Liquid Strategies business line had $18.2 billion of remaining uncalled commitments that could be called for investments in new transactions as compared to $16.5 billion as of December 31, 2023. The increase was primarily attributable to new capital commitments from fund investors, which was partially offset by capital called from fund investors to make investments during the period.

Capital Invested

Private Equity

For the three months ended March 31, 2024, our Private Equity business line had $1.2 billion of capital invested as compared to $2.9 billion for the three months ended March 31, 2023. The decrease was driven primarily by a $1.2 billion decrease in capital invested in our core private equity strategy and a $0.7 billion decrease in capital invested in our traditional private equity strategy. During the three months ended March 31, 2024, 62% of capital deployed in private equity (including core and growth equity investments which includes impact investments) was in transactions in North America, 22% was in the Asia-Pacific region, and 16% was in Europe. The number of large private equity investments made in any quarterly or year-to-date period is volatile and, consequently, a significant amount of capital invested in one period or a few periods may not be indicative of a similar level of capital deployment in future periods.

Real Assets

For the three months ended March 31, 2024, our Real Assets business line had $5.5 billion of capital invested as compared to $4.7 billion for the three months ended March 31, 2023. The increase was driven primarily by a $1.8 billion increase in capital invested in our real estate strategy, partially offset by a $1.0 billion decrease in our infrastructure strategy. During the three months ended March 31, 2024, 42% of capital deployed in real assets was in transactions in the Asia-Pacific region, 35% was in Europe, and 23% was in North America. The number of large real assets investments made in any quarterly or year-to-date period is volatile and, consequently, a significant amount of capital invested in one period or a few periods may not be indicative of a similar level of capital deployment in future periods.

Credit and Liquid Strategies

For the three months ended March 31, 2024, our Credit and Liquid Strategies business line had $7.5 billion of capital invested as compared to $2.2 billion for the three months ended March 31, 2023. The increase was driven primarily by a higher level of capital deployed across our various private credit strategies, most notably direct lending and asset-based finance. During the three months ended March 31, 2024, 89% of capital deployed was in transactions in North America, 9% was in Europe, and 2% was in the Asia-Pacific region.

Analysis of Insurance Segment Operating Results

The following table sets forth information regarding KKR's insurance segment operating results for the three months ended March 31, 2024 and 2023:


	Three Months Ended
	March 31, 2024		March 31, 2023		Change
	($ in thousands)
Net Investment Income	$	1,486,419	$	1,271,255	$	215,164
Net Cost of Insurance	(1,003,327)		(750,612)		(252,715)
General, Administrative and Other	(210,252)		(196,714)		(13,538)
Pre-tax Operating Earnings	272,840		323,929		(51,089)

Pre-tax Operating Earnings Attributable to Noncontrolling Interests	—		(118,817)		118,817
Insurance Operating Earnings	$	272,840	$	205,112	$	67,728

Net Investment Income

Net investment income increased for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 primarily due to (i) increased average assets under management due to growth in assets in the institutional market channel as a result of recent reinsurance transactions and individual market channel sales from new business growth, and (ii) increases in portfolio yields due to higher market interest rates. Investment portfolio yields in the quarter reflect higher levels of cash and more liquid investments, treasuries and investment-grade corporate bonds transferred as part of recent block reinsurance transactions.

Net Cost of Insurance

Net cost of insurance increased for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 primarily due to (i) growth in reserves in the institutional market as a result of recent reinsurance transactions and in the individual market as a result of new business volumes, and (ii) higher average funding costs due to higher crediting rates and the routine run-off of older business originated in a lower interest rate environment.

General, Administrative and Other Expenses

General and administrative expenses increased for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 primarily due to an increase in interest expense on floating rate debt (i.e., Global Atlantic's fixed-to-floating swaps on its fixed rate debt) due to higher market interest rates and a net increase in total debt outstanding.

Insurance Operating Earnings

Insurance operating earnings increased for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023 primarily due to (i) the acquisition of the remaining minority interests not already held by KKR on January 2, 2024, and (ii) higher net investment income, partially offset by higher net cost of insurance, as described above.

Analysis of Strategic Holdings Segment Operating Results

The following table sets forth information regarding KKR's strategic holdings segment operating results for the three months ended March 31, 2024 and 2023:




	Three Months Ended
	March 31, 2024		March 31, 2023		Change
	($ in thousands)
Dividends, Net	$	20,720	$	—	$	20,720

Strategic Holdings Operating Earnings	20,720		—		20,720
Net Realized Investment Income	—		—		—
Strategic Holdings Segment Earnings	$	20,720	$	—	$	20,720

Dividends, Net

For the three months ended March 31, 2024, dividends, net were comprised of dividend income from Exact Holding B.V. and FiberCop S.p.A. For the three months ended March 31, 2023 there were no dividends earned. Dividends earned in our Strategic Holdings segment are reduced by a management fee charged by our Asset Management segment. For the three months ended March 31, 2024, the management fee was $7.5 million.

Net Realized Investment Income

For the three months ended March 31, 2024 and 2023 there was no net realized investment income earned in our Strategic Holdings segment.

Strategic Holdings Segment Earnings

The increase in strategic holdings segment earnings for the three months ended March 31, 2024 compared to the prior period was due to the distribution of dividends by companies owned by the firm through our participation in the core private equity strategy.

Analysis of Segment and Non-GAAP Performance Measures

The following is a discussion of our Segment and Non-GAAP performance measures for the three months ended March 31, 2024 and 2023:



	Three Months Ended
	March 31, 2024		March 31, 2023		Change
	($ in thousands)
Fee Related Earnings	$	668,741	$	548,578	$	120,163
Insurance Operating Earnings	272,840		205,112		67,728
Strategic Holdings Operating Earnings	20,720		—		20,720
Total Operating Earnings	962,301		753,690		208,611

Net Realized Performance Income	77,998		61,389		16,609
Net Realized Investment Income	114,542		165,120		(50,578)
Total Investing Earnings	192,540		226,509		(33,969)

Total Segment Earnings	1,154,841		980,199		174,642
Interest Expense, Net and Other	(74,730)		(87,866)		13,136
Income Taxes on Adjusted Earnings	(216,366)		(173,057)		(43,309)
Adjusted Net Income	$	863,745	$	719,276	$	144,469

Total Operating Earnings

The increase in total operating earnings for the three months ended March 31, 2024 compared to the prior period was primarily due to a higher level of fee related earnings, insurance operating earnings, and strategic holdings operating earnings. For a discussion of fee related earnings, insurance operating earnings, and strategic holdings operating earnings, see "—Analysis of Asset Management Segment Operating Results", "—Analysis of Insurance Segment Operating Results", and "—Analysis of Strategic Holdings Segment Operating Results."

Total Investing Earnings

The decrease in total investing earnings for the three months ended March 31, 2024 compared to the prior period was primarily due to a lower level of net realized investment income, partially offset by an increase in net realized performance income. For a discussion of net realized performance income and net realized investment income, see "—Analysis of Asset Management Segment Operating Results" and "—Analysis of Strategic Holdings Segment Operating Results."

Total Segment Earnings

The increase in total segment earnings for the three months ended March 31, 2024 compared to the prior period was primarily due to an increase in total operating earnings, partially offset by a decrease in total investing earnings.

Adjusted Net Income

The increase in adjusted net income for the three months ended March 31, 2024 compared to the prior period was primarily due to a higher level of total segment earnings and, to a lesser extent, a decrease in interest expense, net, partially offset by an increase in income taxes on adjusted earnings.

Income Taxes on Adjusted Earnings

The increase in income taxes on adjusted earnings for the three months ended March 31, 2024 compared to the prior period was primarily due to a higher level of total segment earnings.

For the three months ended March 31, 2024 and 2023, the amount of the tax benefit from equity-based compensation included in income taxes on adjusted earnings was $26.2 million and $13.7 million, respectively. The inclusion of the tax benefit from equity-based compensation in Adjusted Net Income had the effect of increasing this measure by 3% and 2%, respectively, for three months ended March 31, 2024 and 2023.

Segment Balance Sheet Measures

Asset Management Investment Portfolio

Beginning with the first quarter of 2024, we are reporting our investments from our core private equity strategy in our Strategic Holdings segment, and our investments from the investment strategies that we manage that are reported in the Asset Management segment excludes core private equity. To the extent our investments are realized at values above or below their cost in future periods, adjusted net income would be positively or negatively affected by the amount of any such gain or loss, respectively, during the period in which the realization event occurs. Our investments in Asset Management by asset class as of March 31, 2024 are as follows:


	As of March 31, 2024
	($ in thousands)
Asset Management Investments (1)	Cost		Fair Value		Fair Value as a Percentage of Total Asset Management Investments

Traditional Private Equity	$	1,051,690	$	2,733,070	25.9	%

Growth Equity	298,946		1,157,232		10.9	%

Private Equity Total	1,350,636		3,890,302		36.8	%

Real Estate	1,410,897		1,370,144		13.0	%
Energy	628,712		673,842		6.4	%
Infrastructure	317,411		583,531		5.5	%
Real Assets Total	2,357,020		2,627,517		24.9	%

Leveraged Credit	1,330,151		1,280,302		12.1	%
Alternative Credit	671,996		828,174		7.8	%
Credit Total	2,002,147		2,108,476		19.9	%

Other	2,041,645		1,944,760		18.4	%

Total Asset Management Investments	$	7,751,448	$	10,571,055	100.0	%

(1)Investments is a term used solely for purposes of financial presentation of a portion of KKR's balance sheet and includes majority ownership of subsidiaries that operate KKR's asset management and insurance businesses, including the general partner interests of KKR's investment funds. Investments presented are principally the assets measured at fair value that are held by KKR's asset management segment, which, among other things, does not include the underlying investments held by Global Atlantic and Marshall Wace. This table excludes investments in our Strategic Holdings and Insurance segments, about which additional information is available at Footnote 21 "Segment Reporting" in our financial statements.

Global Atlantic's Investment Portfolio

As of March 31, 2024, 96% and 89% of Global Atlantic's available-for-sale ("AFS") fixed maturity securities were considered investment grade under ratings from the Securities Valuation Office of the NAIC and NRSROs, respectively. As of December 31, 2023, 96% and 88% of Global Atlantic's AFS fixed maturity securities were considered investment grade under ratings from NAIC and NRSROs, respectively. Securities where a rating by an NRSRO was not available are considered investment grade if they have an NAIC designation of “1” or “2.” The three largest asset categories in Global Atlantic's AFS fixed-maturity security portfolio as of March 31, 2024 were Corporate securities, residential mortgage-backed securities ("RMBS") and commercial mortgage-backed securities ("CMBS"), comprising 26%, 6% and 5% of Global Atlantic's investment portfolio, respectively. Within these categories, 96%, 97% and 94% of Global Atlantic's Corporate, RMBS and CMBS securities, respectively, were investment grade according to NAIC ratings and 96%, 69% and 57% of its Corporate, RMBS and CMBS securities, respectively, were investment grade according to NRSRO ratings as of March 31, 2024. The three largest asset categories in Global Atlantic's AFS fixed-maturity security portfolio as of December 31, 2023 were Corporate, RMBS and CMBS securities, comprising 28%, 6% and 5% of Global Atlantic's investment portfolio, respectively. Within these categories, 95%, 96% and 93% of Global Atlantic's Corporate, RMBS and CMBS securities, respectively, were investment grade according to NAIC ratings and 95%, 61% and 56% of its Corporate, RMBS and CMBS securities, respectively, were investment grade according to NRSRO ratings as of December 31, 2023. NRSRO and NAIC ratings have different methodologies. Global Atlantic believes the NAIC ratings methodology, which considers the likelihood of recovery of amortized cost as opposed to the recovery of all contractual payments including the principal at par, as the more appropriate way to view the ratings quality of its AFS fixed maturity portfolio since a large portion of its holdings were purchased at a significant discount to par value. The portion of Global Atlantic's investment portfolio consisting of floating rate assets was 25% and 27% as of March 31, 2024 and December 31, 2023, respectively.

Within the funds withheld receivable at interest portfolio, 96% and 97% of the fixed maturity securities were investment grade by NAIC designation as of both March 31, 2024 and December 31, 2023, respectively.

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

Credit quality of AFS fixed maturity securities

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

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

Substantially all of the AFS fixed maturity securities portfolio, 96% as of both March 31, 2024 and December 31, 2023, respectively, was invested in investment grade assets with a NAIC rating of 1 or 2.

The portion of the AFS fixed maturity securities portfolio that was considered below investment grade by NAIC designation was 4% as of both March 31, 2024 and December 31, 2023. Pursuant to Global Atlantic's investment guidelines, Global Atlantic actively monitors the percentage of its portfolio that is held in investments rated NAIC 3 or lower and must obtain an additional approval from Global Atlantic's management investment committee before making a significant investment in an asset rated NAIC 3 or lower.

Corporate fixed maturity securities

Global Atlantic maintains a diversified portfolio of corporate fixed maturity securities across industries and issuers. As of March 31, 2024 and December 31, 2023, 54% and 58% of the AFS fixed maturity securities portfolio was invested in corporate fixed maturity securities, respectively. As of March 31, 2024 and December 31, 2023, approximately 5% and 6% of the portfolio is denominated in foreign currency, respectively.

As of March 31, 2024 and December 31, 2023, 96% and 95% of the total fair value of corporate fixed maturity securities is rated NAIC investment grade, respectively, and 96% and 95% is rated NRSROs investment grade, respectively.

Residential mortgage-backed securities

As of March 31, 2024 and December 31, 2023, 13% and 11% of the AFS fixed maturity securities portfolio was invested in RMBS, respectively. RMBS are securities constructed from pools of residential mortgages and backed by payments from those pools. Excluding limitations on access to lending and other extraordinary economic conditions, Global Atlantic would expect prepayments of principal on the underlying loans to accelerate with decreases in market interest rates and diminish with increases in market interest rates.

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

As of both March 31, 2024 and December 31, 2023, 89% of RMBS securities that are below investment grade as rated by the NRSRO, carry an NAIC 1 ("highest quality") designation, respectively.

As of March 31, 2024, Alt-A, Agency, Option ARM, Sub-prime and Re-Performing represent 40%, 19%, 17%, 9% and 8% of the total RMBS portfolio ($9.7 billion), respectively. As of December 31, 2023, Alt-A, Option ARM, Re-Performing and Sub-prime represent 45%, 21%, 10% and 10% of the total RMBS portfolio ($7.9 billion), respectively.

Unrealized gains and losses for AFS fixed maturity securities

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

As of March 31, 2024 and December 31, 2023, Global Atlantic had gross unrealized losses on below investment grade AFS fixed maturity securities of $668.6 million and $750.3 million based on NRSRO rating and $220.8 million and $267.2 million based on NAIC ratings, respectively. As of March 31, 2024, 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.

Credit quality of mortgage and other loan receivables

Mortgage and other loan receivables consist of commercial and residential mortgage loans, consumer loans and other loan receivables. As of March 31, 2024 and December 31, 2023, 26% and 28% of Global Atlantic's total investments consisted of mortgage and other loan receivables, respectively.

Global Atlantic invests in U.S. mortgage loans, comprised of first lien and mezzanine commercial mortgage loans and first lien residential mortgage loans. For Global Atlantic’s commercial mortgage loan portfolio, the most prevalent property type is multi-family residential buildings, which represents over half of the portfolio as of both March 31, 2024 and December 31, 2023. Office and retail properties represent approximately 23% of the portfolio as of both March 31, 2024 and December 31, 2023.

Global Atlantic's commercial mortgage loans are assigned NAIC designations, with designations “CM1” and “CM2” considered to be investment grade. As of March 31, 2024 and December 31, 2023, 90% and 89% of the commercial mortgage loan portfolio were rated investment grade based on NAIC designation, respectively. The payment status of over 98% and over 98% of the commercial mortgage loan portfolio is current as of March 31, 2024 and December 31, 2023, respectively.

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. As of March 31, 2024 and December 31, 2023, approximately 87% and 88%, respectively, of the commercial mortgage loans have a loan-to-value ratio of 70% or less and for March 31, 2024 and December 31, 2023, 3% and 2% have loan-to-value ratio over 90%, respectively.

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.

As of March 31, 2024, the payment status of 96% of the residential mortgage loan portfolio is current, and approximately $238.0 million is 90 days or more past due or in process of foreclosure (representing 2% of the total residential mortgage portfolio). As of December 31, 2023, the payment status of 96% of the residential mortgage loan portfolio was current and approximately $231.2 million were 90 days or more past due or in process of foreclosure (representing 2% of the total residential mortgage portfolio).

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

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

Global Atlantic’s consumer loan portfolio is primarily comprised of home improvement loans, residential solar loans, student loans and auto loans. As of March 31, 2024, 97% of the consumer loan portfolio is in current status and approximately $32.5 million is 90 days or more past due or in process of foreclosure (representing 1% of the total consumer loan portfolio).

Additional Information

To provide supplemental information to stockholders about the net assets of KKR on a segment basis, KKR’s book value was $28.3 billion as of March 31, 2024, which included cash and short-term investments of $4.0 billion. This amount includes KKR’s net investment in Global Atlantic, KKR’s investments in the Asset Management and Strategic Holdings segments, and the net impact of KKR’s tax and other assets and liabilities, and it excludes the net assets allocable to investors in KKR’s investment funds and other noncontrolling interest holders.

Reconciliations to GAAP Measures

The following tables reconcile the most directly comparable financial measures calculated and presented in accordance with GAAP to KKR's non-GAAP financial measures:

Revenues


	Three Months Ended
	March 31, 2024		March 31, 2023
	($ in thousands)
Total GAAP Revenues	$	9,656,738	$	3,127,482
Impact of Consolidation and Other	283,823		209,778
Asset Management Adjustments:
Capital Allocation-Based Income (Loss) (GAAP)	(1,262,942)		(449,018)
Realized Carried Interest	250,268		172,689
Realized Investment Income - Asset Management	134,753		194,834
Capstone Fees	(18,514)		(19,805)
Expense Reimbursements	(8,093)		(15,544)
Strategic Holdings Adjustments:
Strategic Holdings Segment Management Fees	7,484		—
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)	258,483		260,507
Non-operating Changes in Policy Liabilities and Derivatives	19,803		(112,776)
Total Segment Revenues (2)	$	2,899,949	$	2,543,563

(1)Includes (gains) 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.

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


	Three Months Ended
	March 31, 2024		March 31, 2023
	($ in thousands)
Net Income (Loss) - KKR Common Stockholders (GAAP)	$	682,214	$	322,744
Preferred Stock Dividends	—		17,250
Net Income (Loss) Attributable to Noncontrolling Interests	411,636		(80,306)
Income Tax Expense (Benefit)	269,201		148,747
Income (Loss) Before Tax (GAAP)	$	1,363,051	$	408,435
Impact of Consolidation and Other	(191,519)		93,511


Income Taxes on Adjusted Earnings	(216,366)		(173,057)
Asset Management Adjustments:
Unrealized (Gains) Losses	(399,078)		119,934
Unrealized Carried Interest	(946,816)		(202,659)
Unrealized Carried Interest Compensation	757,452		83,830
Strategic Corporate Related Charges and Other	61,675		6,807
Equity-based Compensation	73,777		59,017
Equity-based Compensation - Performance based	80,568		67,273

Strategic Holdings Adjustments:
Unrealized (Gains) Losses	(73,257)		(20,607)
Insurance Adjustments:(1)
(Gains) Losses from Investments(1)(2)	246,917		131,114
Non-operating Changes in Policy Liabilities and Derivatives(1)	73,863		106,491

Equity-based and Other Compensation(1)	29,066		36,393
Amortization of Acquired Intangibles(1)	4,412		2,794

Adjusted Net Income	$	863,745	$	719,276
Interest Expense, Net	72,807		82,240

Net Income Attributable to Noncontrolling Interests	1,923		5,626
Income Taxes on Adjusted Earnings	216,366		173,057
Total Segment Earnings	$	1,154,841	$	980,199
Net Realized Performance Income	(77,998)		(61,389)
Net Realized Investment Income	(114,542)		(165,120)
Total Operating Earnings	$	962,301	$	753,690


Total Investing Earnings	192,540		226,509
Depreciation and Amortization	12,503		10,434
Adjusted EBITDA	$	1,167,344	$	990,633

(1)For the three months ended March 31, 2023, amounts represent the portion allocable to KKR & Co. Inc.

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

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


	As of
	March 31, 2024
	($ in thousands)
KKR & Co. Inc. Stockholders' Equity - Common Stock	$	21,421,193
Impact of Consolidation and Other(1)	391,128
Exchangeable Securities	257,664
Accumulated Other Comprehensive Income (AOCI) and Other (Insurance)	6,202,692
Book Value	$	28,272,677

Cash and Cash Equivalents - Asset Management and Strategic Holdings - GAAP


	As of
	March 31, 2024
	($ in thousands)
Cash and Cash Equivalents - Asset Management and Strategic Holdings - GAAP	$	7,083,931
Impact of Consolidation and Other(1)	(3,563,677)
Short-term Investments	494,891
Cash and Short-term Investments	$	4,015,145

Investments - Asset Management and Strategic Holdings - GAAP


	As of
	March 31, 2024
	($ in thousands)
Investments - Asset Management and Strategic Holdings - GAAP	$	100,693,987
Impact of Consolidation and Other(1)	(89,628,041)
Short-term Investments	(494,891)
Investments - Asset Management Segment	$	10,571,055

(1)The purpose of this adjustment is to present these non-GAAP measures without giving effect to the consolidation of the investment vehicles and collateralized financing entities that KKR manages. We believe that providing these non-GAAP measures on a supplemental basis to our GAAP results is helpful to stockholders in assessing the overall financial condition of KKR.

Liquidity

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

See "Risk Factors" in our Annual Report and "—Business Environment" for more information on factors that may impact our business, financial performance, operating results and valuations.

Sources of Liquidity

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

Many of our investment funds like our private equity and real assets funds provide for carried interest. With respect to our carry-paying investment funds, carried interest is eligible to be distributed to the general partner of the fund only after all of the following are met: (i) a realization event has occurred (e.g., sale of a portfolio company, dividend, etc.); (ii) the vehicle has achieved positive overall investment returns since its inception, in excess of performance hurdles where applicable, and is accruing carried interest; and (iii) with respect to investments with a fair value below cost, cost has been returned to fund investors in an amount sufficient to reduce remaining cost to the investments' fair value. Even after all of the preceding conditions are met, the general partner of the fund may, in its sole discretion, decide to defer the distribution of carried interest to it to a later date. In addition, these funds generally include what is called a “clawback” provision, which provides that the general partner must return any carried interest that is paid in excess of what the general partner is entitled to receive at the end of the term of the fund, as discussed further below.

As of March 31, 2024, certain of our investment funds had met the first and second criteria, as described above, but did not meet the third criteria. In these cases, carried interest accrues on the consolidated statement of operations, but will not be distributed in cash to us as the general partner of an investment fund upon a realization event. For a fund that has a fair value above cost, overall, and is otherwise accruing carried interest, but has one or more investments where fair value is below cost, the shortfall between cost and fair value for such investments is referred to as a "netting hole." When netting holes are present, realized gains on individual investments that would otherwise allow the general partner to receive carried interest distributions are instead used to return invested capital to our funds' limited partners in an amount equal to the netting hole. Once netting holes have been filled with either (a) return of capital equal to the netting hole for those investments where fair value is below cost or (b) increases in the fair value of those investments where fair value is below cost, then realized carried interest will be distributed to the general partner upon a realization event. A fund that is in a position to pay cash carry refers to a fund for which carried interest is expected to be paid to the general partner upon the next material realization event, which includes funds with no netting holes as well as funds with a netting hole that is sufficiently small in size such that the next material realization event would be expected to result in the payment of carried interest. Strategic investor partnerships with fund investors may require netting across the various funds in which they invest, which may reduce the carried interest we otherwise would have earned if such fund investors were to have invested in our funds without the existence of the strategic investor partnership.

As of March 31, 2024, netting holes in excess of $50 million existed at European Fund V and Health Care Strategic Growth Fund in the amounts of $102 million, and $72 million, respectively. In accordance with the criteria set forth above, other funds currently have and may in the future develop netting holes, and netting holes for those and other funds may otherwise increase or decrease in the future. There are also investment funds that are not accruing carried interest and do not have a netting hole although they may be in a clawback position. If the investment fund has distributed carried interest, but subsequently does not have sufficient value to provide for the distribution of carried interest at the end of the life of the investment fund, the general partner is typically required to return previously distributed carried interest to the fund investors. Although our current and former employees who received distributions of carried interest subject to clawback are required to return them to KKR, it is KKR’s obligation to return carried interest subject to clawback to the fund investors. 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. As of March 31, 2024, Asian Fund II is the only investment fund with a clawback obligation in excess of $50 million. See Note 24 "Commitments and Contingencies—Contingent Repayment Guarantees" in our financial statements included elsewhere in this report for further information. See also the negative amounts included in the Carried Interest column in the table included in this Item 2 in “Asset Management—Private Equity” for further information on clawback obligations.

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

For a discussion of our debt obligations, including our debt securities, revolving credit agreements and loans, see Note 16 "Debt Obligations" in our financial statements.

Liquidity Needs

We expect that our primary liquidity needs will consist of cash required to meet various obligations, including, without limitation, to:

continue to support and grow our asset management business, including seeding new investment strategies, supporting capital commitments made by our vehicles to existing and future funds, co-investments and any net capital requirements of our capital markets companies and otherwise supporting the investment vehicles that we sponsor;
continue to support and grow our insurance business;
grow and expand our businesses generally, including by acquiring or launching new, complementary or adjacent businesses;
warehouse investments in portfolio companies or other investments for the benefit of one or more of our funds, accounts or CLOs or other investment vehicles pending the contribution of committed capital by the fund investors in such vehicles, and advancing capital to them for operational or other needs;
service debt obligations including the payment of obligations at maturity, on interest payment dates or upon redemption, as well as any contingent liabilities, including from litigation, that may give rise to future cash payments, including funding requirements to levered investment vehicles or structured transactions;
fund cash operating expenses and contingencies, including for litigation matters and guarantees;
pay corporate income taxes and other taxes;
pay policyholders and amounts in our insurance business related to investment, reinvestment, reinsurance or funding agreement activity;
pay amounts that may become due under our tax receivable agreement;
pay cash dividends in accordance with our dividend policy for our common stock or the terms of our preferred stock, if any;
underwrite commitments, advance loan proceeds and fund syndication commitments within our capital markets business;
post or return collateral in respect of derivative contracts;
acquire other assets (including businesses, investments and other assets) for our businesses, some of which may be required to satisfy regulatory requirements for our capital markets business or risk retention requirements for CLOs (to the extent they may apply);
address capital needs of regulated subsidiaries as well as non-regulated subsidiaries; and
repurchase shares of our common stock or retire equity awards pursuant to the share repurchase program or repurchase or redeem other securities issued by us.

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

Capital Commitments

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

The following table presents our uncalled commitments to our active investment funds and other vehicles as of March 31, 2024:


	Uncalled Commitments
Private Equity	($ in millions)
Core Investment Vehicles	$	3,098
Ascendant Fund	312
European Fund VI	126
Health Care Strategic Growth Fund II	89
Asian Fund IV	69
North America Fund XIII	62
Next Generation Technology Growth Fund III	7












Other Private Equity Vehicles	803
Total Private Equity Commitments	4,566

Real Assets
Asia Pacific Infrastructure Investors II	241
Real Estate Partners Americas III	78
Asia Real Estate Partners	54
Real Estate Partners Europe II	53
Global Infrastructure Investors IV	16














Other Real Assets Vehicles	1,779
Total Real Assets Commitments	2,221

Credit and Liquid Strategies
Asia Credit	93
Opportunities Fund II	91
Asset-Based Finance Partners	60
Dislocation Opportunities Fund	60
Lending Partners IV	16
Lending Partners Europe II	16
Private Credit Opportunities Partners II	6






Other Credit and Liquid Strategies Vehicles	819
Total Credit and Liquid Strategies Commitments	1,161

Total Uncalled Commitments	$	7,948

Other Commitments

In addition to the uncalled commitments to our investment funds as shown above, KKR has entered into contractual commitments primarily with respect to underwriting transactions, debt financing, revolving credit facilities, and equity syndications in our Capital Markets business line. As of March 31, 2024, these commitments amounted to $0.5 billion. Whether these amounts are actually funded, in whole or in part, depends on the contractual terms of such commitments, including the satisfaction or waiver of any conditions to closing or funding. From time to time, we fund these various commitments noted above in our capital markets business by drawing all or substantially all of our availability for borrowings under our available credit facilities. We generally expect these borrowings by our capital markets business to be repaid promptly as these commitments are syndicated to third parties or otherwise fulfilled or terminated, although we may in some instances elect to retain a portion of the commitments for our own investment. These arrangements with third parties reduce our risk under certain circumstances when underwriting certain debt transactions. As a result, our unfunded commitments as of March 31, 2024 have been reduced to reflect the amount to be funded by such third parties. For more information about our Capital Markets business line's risks, see "Risk Factors—Risks Related to Our Business—Our capital markets activities expose us to material risks" in our Annual Report.

Tax Receivable Agreement

On May 30, 2022, KKR terminated the tax receivable agreement with KKR Holdings other than with respect to exchanges of KKR Holdings Units completed prior to such date. As of March 31, 2024, an undiscounted payable of $381.1 million has been recorded in due to affiliates in the financial statements representing management's best estimate of the amounts currently expected to be owed for certain exchanges of KKR Holdings Units that took place prior to the termination of the tax receivable agreement. As of March 31, 2024, approximately $103.9 million of cumulative cash payments have been made under the tax receivable agreement since inception.

Dividends and Stock Repurchases

A dividend of $0.175 per share of our common stock has been declared and will be paid on May 28, 2024 to holders of record of our common stock as of the close of business on May 13, 2024.

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

The declaration and payment of dividends to our common stockholders will be at the sole discretion of our Board of Directors, and our dividend policy may be changed at any time. We announced on February 6, 2024 that our current dividend policy will be to pay dividends to holders of our common stock in an annual aggregate amount of $0.70 per share (or a quarterly dividend of $0.175 per share) beginning with the dividend announced with the results of the quarter ended March 31, 2024. The declaration of dividends is subject to the discretion of our Board of Directors based on a number of factors, including KKR’s future financial performance and other considerations that the Board of Directors deems relevant, and compliance with the terms of KKR & Co. Inc.'s certificate of incorporation and applicable law. For U.S. federal income tax purposes, any dividends we pay (including dividends on our preferred stock) generally will be treated as qualified dividend income for U.S. individual stockholders to the extent paid out of our current or accumulated earnings and profits, as determined for U.S. federal income tax purposes. There can be no assurance that future dividends will be made as intended or at all or that any particular dividend policy for our common stock will be maintained. Furthermore, the declaration and payment of distributions by KKR Group Partnership and our other subsidiaries may also be subject to legal, contractual and regulatory restrictions, including restrictions contained in our debt agreements.

Since 2015, KKR has repurchased, or retired equity awards representing, a total of 92.8 million shares of common stock for $2.6 billion, which equates to an average price of $28.05 per share. For further information, see "Part II—Item 2—Unregistered Sales of Equity Securities and Use of Proceeds."

Contractual Obligations, Commitments and Contingencies

In the ordinary course of business, we and our consolidated funds and CFEs enter into contractual arrangements that may require future cash payments. Contractual arrangements include (1) commitments to fund the purchase of investments or other assets (including obligations to fund capital commitments as the general partner of our investment funds) or to fund collateral for derivative transactions or otherwise, (2) obligations arising under our senior notes, subordinated notes, and other indebtedness, (3) commitments by our capital markets business to underwrite transactions or to lend capital, (4) obligations arising under insurance policies written, (5) other contractual obligations, including servicing agreements with third-party administrators for insurance policy administration, and (6) commitments to fund the business, operations or investments of our subsidiaries. In addition, we may incur contingent liabilities for claims that may be made against us in the future. For more information about these contingent liabilities, please see Note 24 "Commitments and Contingencies" in our financial statements.

Off Balance Sheet Arrangements

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

Critical Accounting Policies and Estimates

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

For a further discussion about our critical accounting policies, see Note 2 "Summary of Significant Accounting Policies" in our financial statements included in this report.

Basis of Accounting

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

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

The 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 segment and Global Atlantic enter into transactions with each other, which may include transactions pursuant to their investment management agreements and financing arrangements. The borrowings from these financing arrangements are non-recourse to KKR beyond the assets pledged to support such borrowings. All the investment management and financing arrangements amongst KKR segments are eliminated in consolidation.

All intercompany transactions and balances have been eliminated.

Consolidation

KKR consolidates all entities that it controls either through a majority voting interest or as the primary beneficiary of variable interest entities (“VIEs”). The following discussion is intended to provide supplemental information about how the application of consolidation principles impact our financial results, and management’s process for implementing those principles including areas of significant judgment. For a detailed description of our accounting policy on consolidation, see Note 2 "Summary of Significant Accounting Policies" in our financial statements included in this report.

As part of its consolidation procedures, KKR evaluates: (1) whether it holds a variable interest in an entity, (2) whether the entity is a VIE, and (3) whether the KKR’s involvement would make it the primary beneficiary. The determination that KKR holds a controlling financial interest in an investment vehicle significantly changes the presentation of our consolidated financial statements.

The assessment of whether we consolidate an investment vehicle we manage requires the application of significant judgment. These judgments are applied both at the time we become involved with an investment vehicle and on an ongoing basis and include, but are not limited to:

Determining whether our management fees, carried interests or incentive fees represent variable interests - We make judgments as to whether the fees we earn are commensurate with the level of effort required for those fees and at market rates. In making this judgment, we consider, among other things, the extent of third party investment in the entity and the terms of any other interests we hold in the VIE.
Determining whether a legal entity qualifies as a VIE - For those entities where KKR holds a variable interest, management determines whether each of these entities qualifies as a VIE and, if so, whether or not KKR is the primary beneficiary. The assessment of whether the entity is a VIE is generally performed qualitatively, which requires judgment. These judgments include: (a) determining whether the equity investment at risk is sufficient to permit the entity to finance its activities without additional subordinated financial support, (b) evaluating whether the equity holders, as a group, can make decisions that have a significant effect on the economic performance of the entity, (c) determining whether two or more parties’ equity interests should be aggregated, and (d) determining whether the equity investors have proportionate voting rights to their obligations to absorb losses or rights to receive returns from an entity. Entities that do not qualify as VIEs are generally assessed for consolidation as voting interest entities. Under the voting interest entity model, KKR consolidates those entities it controls through a majority voting interest.
Concluding whether KKR has an obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE - As there is no explicit threshold in GAAP to define “potentially significant,” we must apply judgment and evaluate both quantitative and qualitative factors to conclude whether this threshold is met.

Changes to these judgments could result in a change in the consolidation conclusion for a legal entity.

Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date under current market conditions.

GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of market price observability used in measuring financial instruments at fair value. Investments and other financial instruments measured and reported at fair value are classified and disclosed based on the observability of inputs used in the determination of fair values, as follows:

Level I

Pricing inputs are unadjusted, quoted prices in active markets for identical assets or liabilities as of the measurement date.

Level II

Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the measurement date, and fair value is determined through the use of models or other valuation methodologies.

Level III

Pricing inputs are unobservable for the financial instruments and include situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value require significant management judgment or estimation. The valuation of our Level III investments at March 31, 2024 represents management's best estimate of the amounts that we would anticipate realizing on the sale of these investments in an orderly transaction at such date.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety.

Level III Valuation Methodologies

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

Across the total Level III private equity investment portfolio (including core private equity investments), and including investments in both consolidated and unconsolidated investment funds, approximately 60% of the fair value is derived from investments that are valued based exactly 50% on market comparables and 50% on a discounted cash flow analysis. Less than 2% of the fair value of this Level III private equity investment portfolio (including core private equity investments) is derived from investments that are valued either based 100% on market comparables or 100% on a discounted cash flow analysis. As of March 31, 2024, the overall weights ascribed to the market comparables methodology, the discounted cash flow methodology, and a methodology based on pending sales for this portfolio of Level III private equity investments were 38%, 55%, and 7%, respectively.

There is inherent uncertainty involved in the valuation of Level III investments, and there is no assurance that, upon liquidation, KKR will realize the values reflected in our valuations. Our valuations may differ significantly from the values that would have been used had an active market for the investments existed, and it is reasonably possible that the difference could be material. See "Risk Factors" in our Annual Report and "—Business Environment" for more information on factors that may impact our business, financial performance, operating results and valuations.

Key unobservable inputs that have a significant impact on our Level III valuations as described above are included in Note 9 "Fair Value Measurements" in our financial statements.

Level III Valuation Process

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

For private equity and real asset investments classified as Level III, investment professionals prepare preliminary valuations based on their evaluation of financial and operating data, company specific developments, market valuations of comparable companies and other factors. KKR begins its procedures to determine the fair values of its Level III assets approximately one month prior to the end of a reporting period, and KKR follows additional procedures to ensure that its determinations of fair value for its Level III assets are appropriate as of the relevant reporting date. These preliminary valuations are reviewed by an independent valuation firm engaged by KKR to perform certain procedures in order to assess the reasonableness of KKR's valuations annually for all Level III private equity and real asset investments and quarterly for investments other than certain investments, which have values less than preset value thresholds and which in the aggregate comprise less than 1% of the total value of KKR's Level III private equity and real asset investments. The valuations of certain real asset investments are determined solely by independent valuation firms without the preparation of preliminary valuations by our investment professionals, and instead such independent valuation firms rely on valuation information available to it as a broker or valuation firm. For credit investments, an independent valuation firm is generally engaged by KKR to assist with the valuations of most investments classified as Level III. The valuation firm either provides a value, provides a valuation range from which KKR's investment professionals select a point in the range to determine the valuation, or performs certain procedures in order to assess the reasonableness of KKR's valuations. After reflecting any input from the independent valuation firm, the valuation proposals are submitted for review and approval by KKR's valuation committees. As of March 31, 2024, less than 4% of the total value of our Level III credit investments were not valued with the engagement of an independent valuation firm.

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

Level III investments held by Global Atlantic are valued on the basis of pricing services, broker-dealers or internal models. Global Atlantic performs a quantitative and qualitative analysis and review of the information and prices received from independent pricing services as well as broker-dealers to verify that it represents a reasonable estimate of fair value. As of March 31, 2024, approximately 95% of these investments were priced via external sources, while approximately 5% were valued on the basis of internal models. For all the internally developed models, Global Atlantic seeks to verify the reasonableness of fair values by analyzing the inputs and other assumptions used. These preliminary valuations are reviewed, based on certain thresholds, by an independent valuation firm engaged by Global Atlantic to perform certain procedures in order to assess the reasonableness of Global Atlantic's valuations. When valuations are approved by Global Atlantic's management, the valuations of its Level III investments, as well as the valuations of Level I and Level II investments, are presented to the Audit Committee of the Board of Directors of KKR & Co. Inc. and are then reported to the Board of Directors.

As of March 31, 2024, upon completion by, where applicable, independent valuation firms of certain limited procedures requested to be performed by them on certain Level III investments, the independent valuation firms concluded that the fair values, as determined by KKR (including Global Atlantic), of those investments reviewed by them were reasonable. The limited procedures did not involve an audit, review, compilation or any other form of examination or attestation under generally accepted auditing standards and were not conducted on all Level III investments. We are responsible for determining the fair value of investments in good faith, and the limited procedures performed by an independent valuation firm are supplementary to the inquiries and procedures that we are required to undertake to determine the fair value of the commensurate investments.

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

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

As of March 31, 2024, there were no investments (including in our new Strategic Holdings segment) which represented greater than 5% of total investments on a GAAP basis. Our investment income on a GAAP basis and our asset management segment assets can be impacted by volatility in the public markets related to our holdings of publicly traded securities, including our holdings of equity securities of Crescent Energy Holdings and BridgeBio Pharma, Inc. See "Risk Factors" in our Annual Report and "—Business Environment" for a discussion of factors that may impact the valuations of our investments, financial results, operating results and valuations, and "—Segment Balance Sheet Measures" for additional information regarding our largest holdings on a segment basis.

Business Combinations

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

Management’s determination of fair value of assets acquired and liabilities assumed at the acquisition date is based on the best information available in the circumstances and may incorporate management’s own assumptions and involve a significant degree of judgment. We use our best estimates and assumptions to accurately assign fair value to the tangible and identifiable intangible assets acquired and liabilities assumed at the acquisition date as well as the useful lives of those acquired intangible assets. Examples of critical estimates in valuing certain of the intangible assets we have acquired include, but are not limited to, future expected cash inflows and outflows, future fundraising assumptions, expected useful life, discount rates and income tax rates. Our estimates for future cash flows are based on historical data, various internal estimates and certain external sources, and are based on assumptions that are consistent with the plans and estimates we are using to manage the underlying assets acquired. We estimate the useful lives of the intangible assets based on the expected period over which we anticipate generating economic benefit from the asset. We base our estimates on assumptions we believe to be reasonable but that are unpredictable and inherently uncertain. Unanticipated events and circumstances may occur that could affect the accuracy or validity of such assumptions, estimates or actual result.

Income Taxes

Significant judgment is required in estimating the provision for (benefit from) income taxes, current and deferred tax balances (including valuation allowance), accrued interest or penalties and uncertain tax positions. In evaluating these judgments, we consider, among other items, projections of taxable income (including the character of such income), beginning with historic results and incorporating assumptions of the amount of future pretax operating income. These assumptions about future taxable income require significant judgment and are consistent with the plans and estimates that KKR uses to manage its business. A portion of the deferred tax assets are not considered to be more likely than not to be realized. For that portion of the deferred tax assets for Global Atlantic, a valuation allowance has been recorded. Revisions in estimates or actual costs of a tax assessment may ultimately be materially different from the recorded accruals and unrecognized tax benefits, if any. Please see Note 18 "Income Taxes" in our financial statements in this report for further details.

Critical Accounting Policies and Estimates - Asset Management and Strategic Holdings

Revenues

Fees and Other

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

Transaction fee calculations and management fee calculations based on committed capital or invested capital typically do not require discretion and therefore do not require the use of significant estimates or judgments. Management fee calculations based on net asset value depend on the fair value of the underlying investments within the investment vehicles. Estimates and assumptions are made when determining the fair value of the underlying investments within the funds and could vary depending on the valuation methodology that is used as well as economic conditions.

Capital Allocation-Based Income (Loss)

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

Carried interest is recognized upon appreciation of the funds’ investment values above certain return hurdles set forth in their partnership agreement. KKR recognizes revenues attributable to capital allocation-based income based upon the amount that would be due pursuant to the fund partnership agreement at each period end as if the funds were terminated at that date. Accordingly, the amount recognized reflects KKR’s share of the gains and losses of the associated funds’ underlying investments measured at their then-current fair values relative to the fair values as of the end of the prior period. Because of the inherent uncertainty in measuring the fair value of investments in the absence of observable market prices as previously discussed, these estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and it is reasonably possible that the difference could be material.

Expenses

Compensation and Benefits

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

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

Beginning in 2021, we expect to pay our employees by assigning a percentage range to each component of asset management segment revenues. Prior to January 1, 2024, based on the current components and blend of our asset management segment revenues on an annual basis, we expected to use approximately: (i) 20‐25% of fee related revenues, (ii) 60‐70% of realized carried interest and incentive fees not included in fee related performance revenues or earned from our hedge fund partnerships, and (iii) 10‐20% of realized investment income and hedge fund partnership incentive fees, to pay our asset management employees. Beginning in January 2024, we expect to use approximately: (i) 15%-20% of fee related revenues, (ii) 70%-80% of realized carried interest and incentive fees not included in fee related performance revenues or earned from our hedge fund partnerships, and (iii) 10%-20% of realized investment income and hedge fund partnership incentive fees, to pay our asset management employees. Because these ranges are applied to applicable asset management segment revenue components independently, and on an annual basis, the amount paid as a percentage of total asset management segment revenue will vary and will, for example, likely be higher in a period with relatively higher realized carried interest and lower in a period with relatively lower realized carried interest. We decide whether to pay a discretionary cash bonus and determine the percentage of applicable revenue components to pay compensation only upon the occurrence of the realization event. There is no contractual or other binding obligation that requires us to pay a discretionary cash bonus to the asset management employees, except in limited circumstances.

Carry Pool Allocation

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

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.

As disclosed above, we record compensation for our asset management employees in an amount that equates to 70‐80% of realized carried interest and incentive fees which are not included in fee related performance revenues or earned from our hedge fund partnerships. The amounts recorded as compensation for the three months ended March 31, 2024 and certain prior periods are greater than the amounts allocated to the carry pool for those periods. Any amounts recorded as compensation that are higher than the amounts allocated in accordance with the percentages referenced above represent discretionary cash bonus compensation to our asset management employees. The amounts paid as discretionary cash bonuses, if any, are at our discretion and vary from individual to individual and from period to period, including having no cash bonus at all for certain employees. See "—Revenues—Capital Allocation-Based Income (Loss)" and "—Compensation and Benefits" above.

On the Sunset Date (which will not be later than December 31, 2026), KKR will acquire control of Associates Holdings and will commence making decisions regarding the allocation of the carry proceeds pursuant to the limited partnership agreement of Associates Holdings. Until the Sunset Date, our Co-Founders will continue to make decisions regarding the allocation of the carry proceeds to themselves and others, pursuant to the limited partnership agreement of Associates Holdings, provided that any allocation of carry proceeds to the Co-Founders will be on a percentage basis consistent with past practice. For additional information about the Sunset Date and the Reorganization Agreement, see Note 1 "Organization" in our financial statements included in this report.

Equity-based Compensation

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

Compensation expense relating to the issuance of equity-based awards is measured at fair value on the grant date. In determining the aggregate fair value of any award grants, we make judgments as to the grant-date fair value, particularly for certain restricted units with a vesting condition based upon market conditions, whose grant date fair values are based on a probability distributed Monte-Carlo simulation. See Note 19 "Equity Based Compensation,” in our financial statements included in this report for further discussion and activity of these awards.

Investment Income (Loss) -Net Gains (Losses) from Investment Activities

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

Critical Accounting Policies and Estimates – Insurance

Policy liabilities

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

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

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

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

Market risk benefits

Market risk benefits are contracts or contract features that both provide protection to the policyholder from other-than-nominal capital market risk and expose Global Atlantic to other-than-nominal capital market risk. Market risk benefits include certain contract features on fixed annuity and variable annuity products, including minimum guarantees to policyholders, such as guaranteed minimum death benefits (GMDBs), guaranteed minimum withdrawal benefits (GMWBs), and long-term care benefits (which are capped at the return of account value plus one or two times the account value).

Some of Global Atlantic's variable annuity and fixed-indexed annuity contracts contain a GMDB feature that provides a guarantee that the benefit received at death will be no less than a prescribed minimum amount, even if the account balance is reduced to zero. This amount is based on either the net deposits paid into the contract, the net deposits accumulated at a specified rate, the highest historical account value on a contract anniversary, or sometimes a combination of these values. If the GMDB is higher than the current account value at the time of death, Global Atlantic incurs a cost equal to the difference.

Global Atlantic issues fixed-indexed annuity and variable annuity contracts with a guaranteed minimum withdrawal feature. GMWB are an optional benefit where the contract owner is entitled to withdraw a maximum amount of their benefit base each year.

Once exercised, living benefit features provide annuity policyholders with a minimum guaranteed stream of income for life. A policyholder’s annual income benefit is generally based on an annual withdrawal percentage multiplied by the benefit base. The benefit base is defined in the policy and is generally the initial premium, reduced by any partial withdrawals and increased by a defined percentage, formula or index credits. Any living benefit payments are first deducted from the account value. Global Atlantic is responsible for paying any excess guaranteed living benefits still owed after the account value has reached zero.

The ultimate cost of these benefits will depend on the level of market returns and the level of contractual guarantees, as well as policyholder behavior, including surrenders, withdrawals, and benefit utilization. For Global Atlantic's fixed-indexed annuity products, costs also include certain non-guaranteed terms that impact the ultimate cost, such as caps on crediting rates that Global Atlantic can, in its discretion, reset annually.

See Note 17 — “Policy liabilities” in our financial statements for additional information.

As of March 31, 2024, the net market risk liability balance totaled $1.0 billion. As of March 31, 2024, the liability balances for market risk benefits were $836.2 million for fixed-indexed annuities and $174.0 million for variable and other annuities. The increase (decrease) to the net market risk benefit liability balance as a result of hypothetical changes in interest rates, instrument-specific credit risk, equity market prices, expected mortality, and expected surrenders are summarized in the table below. This sensitivity considers the direct effect of such changes only and not changes in any other assumptions used in or items considered in the measurement of such balances.


	As of March 31, 2024
	Fixed-indexed annuity		Other
($ in thousands)
Balance	$	836,182	$	174,020
Hypothetical change:
+50 bps interest rates	(127,909)		(46,500)
-50 bps interest rates	143,032		51,822
+50 bps instrument-specific credit risk	(122,803)		(23,852)
-50 bps instrument-specific credit risk	136,906		26,283
+10% equity market prices	(50,777)		(48,996)
-10% equity market prices	33,558		55,898
95% of expected mortality	40,248		5,623
105% of expected mortality	(37,938)		(4,967)
90% of expected surrenders	22,943		2,622
110% of expected surrenders	(21,837)		(2,533)

Note: Hypothetical changes to the market risk benefits liability balance do not reflect the impact of related hedges.

Policy liabilities accounted for under a fair value option

Variable annuity contracts offered and assumed by Global Atlantic provide the contractholder with a GMDB. The liabilities for these benefits are included in policy liabilities. Global Atlantic elected the fair value option to measure the liability for certain of these variable annuity contracts valued at $314.5 million as of March 31, 2024. Fair value is calculated as the present value of the estimated death benefits less the present value of the GMDB fees, using 1,000 risk neutral scenarios. Global Atlantic discounts the cash flows using the U.S. Treasury rates plus an adjustment for instrument-specific credit risk in the consolidated statement of financial condition. The change in the liabilities for these benefits is included in policy benefits and claims in the consolidated statement of operations.

As of March 31, 2024, variable annuities accounted for using the fair value option totaled $314.5 million. The increase (decrease) in the reserves for variable annuities accounted for using the fair value option as a result of hypothetical changes in interest rates, instrument-specific credit risk, equity market prices, expected mortality, and expected surrenders are summarized in the table below. This sensitivity considers the direct effect of such changes only and not changes in any other assumptions used in or items considered in the measurement of such balances.


	As of March 31, 2024
	Variable annuities
($ in thousands)
Balance	$	314,510
Hypothetical change:
+50 bps interest rates	(20,606)
-50 bps interest rates	22,343
+50 bps instrument-specific credit risk	(13,312)
-50 bps instrument-specific credit risk	13,809
+10% equity market prices	(16,126)
-10% equity market prices	18,753
95% of expected mortality	(5,231)
105% of expected mortality	4,996
90% of expected surrenders	676
110% of expected surrenders	(670)

Note: Hypothetical changes to the liability balances do not reflect the impact of related hedges.

Liability for future policyholder benefits

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

As of March 31, 2024, the liability for future policy benefits totaled $9.8 billion, net of reinsurance, split between $8.1 billion associated with payout annuity products, and $1.7 billion of life and other insurance products (including assumed long-term care insurance where we retroceded mortality and morbidity risks to a third-party reinsurer.) The increase (decrease) as a result of hypothetical changes in interest rates, credit spreads, expected mortality, and expected surrenders and lapses are summarized in the table below. This sensitivity considers the direct effect of such changes only and not changes in any other assumptions used in or items considered in the measurement of such balances.


	As of March 31, 2024
	Payout annuities		Other
($ in thousands)
Balance	$	8,138,775	$	1,691,519
Hypothetical change:
+50 bps interest rates	(162,767)		(329,112)
-50 bps interest rates	175,488		355,580
+50 bps credit spreads	(135,548)		(331,732)
-50 bps credit spreads	140,878		352,680
95% of expected mortality(1)	61,576		32,312
105% of expected mortality(1)	(58,383)		(30,745)
90% of expected surrenders/lapses	—		(2,132)
110% of expected surrenders/lapses	—		1,728

Note: Hypothetical changes to the liability for future policy benefits balance do not reflect the impact of related hedges.

(1)Includes decrements for terminations of disability insurance

Additional liability for annuitization, death, or other insurance benefits: no-lapse guarantees

Global Atlantic has in-force interest-sensitive life contracts where it provides a secondary guarantee to the policyholder. The policy can remain in-force, even if the base policy account value is zero, as long as contractual secondary guarantee requirements have been met. The primary risk to Global Atlantic is that the premium collected under these policies, together with the investment return Global Atlantic earns on that premium, is ultimately insufficient to pay the policyholder’s benefits and the expenses associated with issuing and administering these policies. Global Atlantic holds an additional reserve in connection with these guarantees.

The additional reserves related to interest-sensitive life products with secondary guarantees are calculated using methods similar to those described above under “—Critical Accounting Policies and Estimates - Insurance—Policy liabilities—Market risk benefits.” The costs related to these secondary guarantees are recognized over the life of the contracts through the accrual and subsequent release of a reserve which is revalued each period. The reserve is calculated based on assessments, over a range of economic scenarios to incorporate the variability in the obligation that may occur under different environments. The change in the reserve is included in policy benefits and claims in the consolidated statements of operations.

As of March 31, 2024, the additional liability balance of primarily interest-sensitive life totaled $5.8 billion, net of reinsurance. The increase (decrease) to the additional liability balance, as a result of hypothetical changes in interest rates, equity market prices, annual equity growth, expected mortality, and expected surrenders are summarized in the table below. This sensitivity considers the direct effect of such changes only and not changes in any other assumptions used in or items considered in the measurement of the interest-sensitive life no-lapse guarantee liability balance.


	As of March 31, 2024
	Interest-sensitive life
($ in thousands)
Balance	$	5,753,043
Hypothetical change:
+50 bps interest rates	488
-50 bps interest rates	(504)
+10% equity market prices	(624)
-10% equity market prices	(54)
1% lower annual equity growth	(3,710)
95% of expected mortality	(33,279)
105% of expected mortality	32,850
90% of expected surrenders	23,913
110% of expected surrenders	(22,763)

Note: Hypothetical changes to the interest-sensitive life additional liability for annuitization, death, or other insurance benefits balance do not reflect the impact of related hedges.

Embedded derivatives in policy liabilities and funds withheld

Global Atlantic's fixed-indexed annuity, variable annuity and indexed universal life products contain equity-indexed features, which are considered embedded derivatives and are required to be measured at fair value.

Global Atlantic calculates the embedded derivative as the present value of future projected benefits in excess of the projected guaranteed benefits, using an option budget as the indexed account value growth rate. In addition, the fair value of the embedded derivative is reduced to reflect instrument specific credit risk on Global Atlantic's obligation (i.e. Global Atlantic's own credit risk).

Changes in interest rates, future index credits, instrument-specific credit risk, projected withdrawal and surrender activity, and mortality on fixed-indexed annuity and interest-sensitive life products can have a significant impact on the value of the embedded derivative.

Valuation of embedded derivatives – Fixed-indexed annuities

Fixed-indexed annuity contracts allow the policyholder to elect a fixed interest rate of return or a market indexed strategy where interest credited is based on the performance of an index, such as the S&P 500 Index, or other indexes. The market indexed strategy is an embedded derivative, similar to a call option. The fair value of the embedded derivative is computed as the present value of benefits attributable to the excess of the projected policy contract values over the projected minimum guaranteed contract values. The projections of policy contract values are based on assumptions for future policy growth, which include assumptions for expected index credits, future equity option costs, volatility, interest rates, and policyholder behavior. The projections of minimum guaranteed contract values include the same assumptions for policyholder behavior as are used to project policy contract values. The embedded derivative cash flows are discounted using a risk-free interest rate increased by instrument-specific credit risk tied to Global Atlantic's own credit rating.

Valuation of embedded derivatives – Interest-sensitive life products

Interest-sensitive life products allow a policyholder’s account value to grow based on the performance of certain equity indexes, which results in an embedded derivative similar to a call option. The embedded derivative related to the index is bifurcated from the host contract and measured at fair value. The valuation of the embedded derivative is the present value of future projected benefits in excess of the projected guaranteed benefits, using the option budget as the indexed account value growth rate and the guaranteed interest rate as the guaranteed account value growth rate. Present values are based on discount rate curves determined at the valuation date or issue date as well as assumed lapse and mortality rates. The discount rate equals the forecast treasury rate increased by instrument-specific credit risk tied to Global Atlantic’s own credit rating. Changes in discount rates and other assumptions such as spreads and/or option budgets can have a substantial impact on the embedded derivative.

Valuation of embedded derivatives in modified coinsurance or funds withheld

Global Atlantic's reinsurance agreements include modified coinsurance and coinsurance with funds withheld arrangements that include terms that require payment by the ceding company of a principal amount plus a return that is based on a proportion of the ceding company’s return on a designated portfolio of assets. Because the return on the funds withheld receivable or payable is not clearly and closely related to the host insurance contract, these contracts are deemed to contain embedded derivatives, which are measured at fair value. Global Atlantic is exposed to both the interest rate and credit risk of the assets. Changes in discount rates and other assumptions can have a significant impact on this embedded derivative. The fair value of the embedded derivatives is included in the funds withheld receivable at interest and funds withheld payable at interest line items on our consolidated statement of financial condition. The change in the fair value of the embedded derivatives is recorded in net investment-related gains (losses) in the consolidated statement of operations.

As of March 31, 2024, the embedded derivative liability balance totaled $4.1 billion for fixed-indexed annuities, and $486.2 million for interest-sensitive life. The increase (decrease) to the embedded derivatives on fixed-indexed annuity and indexed universal life as a result of hypothetical changes in interest rates, credit spreads, and equity market prices are summarized in the table below. This sensitivity considers the direct effect of such changes only and not changes in any other assumptions used in or items considered in the measurement of such balances.


	As of March 31, 2024
	Fixed-indexed annuities		Interest sensitive life
($ in thousands)
Balance	$	4,051,405	$	486,199
Hypothetical change:
+50 bps interest rates	(74,733)		(4,446)
-50 bps interest rates	77,826		4,632
+50 bps credit spreads	(94,256)		(4,446)
-50 bps credit spreads	97,847		4,632
+10% equity market prices	459,728		24,997
-10% equity market prices	(371,267)		(64,568)

Note: Hypothetical changes to the market risk benefits liability balance do not reflect the impact of related hedges.

As of March 31, 2024, the embedded derivative balance for modified coinsurance or funds withheld arrangements was a $2.7 billion net asset ($114.0 million in funds withheld receivables at interest, and $(2.5) billion in funds withheld payable at interest). The increase (decrease) to the embedded derivatives on fixed-indexed annuity and interest-sensitive life products as a result of hypothetical changes in interest rates and investment credit spreads are summarized in the table below. This sensitivity considers the direct effect of such changes only and not changes in any other assumptions used in or items considered in the measurement of such balances.


	As of March 31, 2024
	Embedded derivative on funds withheld receivable		Embedded derivative on funds withheld payable
($ in thousands)
Balance	$	113,991	$	(2,542,744)
Hypothetical change:
+50 bps interest rates	(12,724)		(1,370,569)
-50 bps interest rates	18,214		1,476,541
+50 bps investment credit spreads	(37,395)		(1,043,461)
-50 bps investment credit spreads	37,395		1,149,433

Note: Hypothetical changes to the funds withheld receivable and payable embedded derivative balances do not reflect the impact of related hedges or trading assets which back the funds withheld at interest.

Recently Issued Accounting Pronouncements

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

Previous: Item 1. FINANCIAL STATEMENTS · Next: Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.