KKR & Co. Inc.

Company Overview

Business Model: KKR & Co. Inc. operates as a global investment firm, providing alternative asset management, capital markets, and insurance solutions. The firm aims to generate attractive investment returns through a patient and disciplined investment approach across its diverse strategies.

Market Position: KKR & Co. Inc. maintains a significant global presence, with approximately 93% of its Assets Under Management ("AUM") consisting of capital not subject to redemption for at least 8 years from inception or referred to as perpetual capital. KKR & Co. Inc. and its employees have substantial co-investments in KKR funds and portfolio companies, totaling approximately $28.6 billion as of December 31, 2024. Its insurance business, Global Atlantic, serves over 3.5 million policyholders. The firm faces intense competition across its asset management and insurance businesses from traditional and alternative asset managers, investment banks, and other financial institutions.

Recent Strategic Developments:

• KKR & Co. Inc. completed the acquisition of the remaining minority interests of Global Atlantic on January 2, 2024, for approximately $2.6 billion in cash and $41 million in securities exchangeable for KKR & Co. Inc. common stock.
• Effective with the first quarter of 2024, KKR & Co. Inc. established a new Strategic Holdings segment, comprising its ownership in businesses acquired through its core private equity strategy.
• A Reorganization Agreement is in place to eliminate the Series I preferred stock and establish one vote per share for common stock by December 31, 2026.
• KKR & Co. Inc. expanded its Real Assets segment with a climate-focused investment strategy established in 2023 and the acquisition of KJRM, a Japanese real estate asset manager, on April 28, 2022.

Geographic Footprint: KKR & Co. Inc. operates globally, serving over 2,200 investors from more than 65 countries. Its Asset Management and Strategic Holdings segments generate revenues across the Americas, Europe/Middle East, and Asia-Pacific. Global Atlantic's revenue is sourced entirely from the Americas. KKR & Co. Inc. maintains principal executive offices in New York, New York, and leases additional office space across North America, Europe, the Middle East, and Asia-Pacific.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Operating Margin (Income Before Taxes / Total Revenue): 26.8% (2024)
• Net Margin (Net Income Attributable to KKR & Co. Inc. Common Stockholders / Total Revenue): 14.1% (2024)

Investment in Growth:

• R&D Expenditure: Not explicitly disclosed as a separate line item.
• Capital Expenditures: $141.5 million (2024) for purchases of fixed assets.
• Strategic Investments: The acquisition of the remaining minority interests of Global Atlantic for approximately $2.6 billion in cash and $41 million in exchangeable securities on January 2, 2024. KKR & Co. Inc. also has arrangements to increase ownership in certain core private equity businesses within its Strategic Holdings segment by approximately $1.1 billion, anticipated in the first half of 2025.

Business Segment Analysis

Asset Management

Financial Performance:

• Management Fees: $3.46 billion (+14.2% YoY)
• Transaction and Monitoring Fees, Net: $1.17 billion (+61.8% YoY)
• Fee Related Performance Revenues: $138.0 million (+46.1% YoY)
• Realized Performance Income: $1.82 billion (+71.0% YoY)
• Realized Investment Income: $534.7 million (-17.1% YoY)
• Operating Margin (Fee Related Earnings / Fee Related Revenues): 67.2% (2024)
• Key Growth Drivers: Increased management fees from new capital raised in private equity K-Series vehicles and Ascendant Fund, management fees from the Strategic Holdings segment, higher fees from Global Atlantic, new capital in Global Infrastructure Investors V, and infrastructure K-Series vehicles, increased capital in alternative credit strategy accounts, and higher fees from FS KKR Capital Corp. Capital Markets transaction fees increased due to a higher number of transactions (397 in 2024 vs. 239 in 2023).

Product Portfolio:

• Private Equity: Manages traditional private equity, core private equity, and growth equity investment vehicles (technology, health care, and impact strategies).
• Real Assets: Manages funds and accounts investing in infrastructure, real estate (equity and credit), and energy.
• Credit and Liquid Strategies: Combines KKR & Co. Inc.’s credit and hedge funds platforms, including leveraged credit, asset-based finance, direct lending, Strategic Investments Group strategy, and a hedge fund platform (including a 39.6% interest in Marshall Wace LLP).
• Capital Markets: Provides global capital markets services, including arranging debt and equity financing, placing and underwriting securities offerings.

Market Dynamics:

• Assets Under Management (AUM): $637.6 billion (+15.3% YoY) as of December 31, 2024.
• Fee Paying Assets Under Management (FPAUM): $512.0 billion (+14.7% YoY) as of December 31, 2024.
• Uncalled Commitments: $109.6 billion (+11.2% YoY) as of December 31, 2024.
• Capital Invested: $83.6 billion (+89.9% YoY) in 2024.
• Approximately 13% of Capital Markets transaction fees were earned from unaffiliated third parties in 2024, with 47% generated outside North America.

Sub-segment Breakdown:

• Private Equity: $195.4 billion AUM (+10.7% YoY), $1.38 billion in management fees (+7.0% YoY), $17.1 billion capital invested (+26.7% YoY). Portfolio value increased by 14% (traditional) and 10% (core and growth equity) in 2024.
• Real Assets: $166.0 billion AUM (+26.8% YoY), $992.7 million in management fees (+20.2% YoY), $27.9 billion capital invested (+80.0% YoY). Infrastructure portfolio value increased 14%, and opportunistic real estate equity increased 4% in 2024.
• Credit and Liquid Strategies: $276.2 billion AUM (+12.5% YoY), $1.09 billion in management fees (+18.9% YoY), $38.6 billion capital invested (+157.3% YoY).
• Capital Markets: $1.00 billion in transaction and monitoring fees, net (+73.4% YoY), driven by 397 transactions in 2024.

Insurance

Financial Performance:

• Net Investment Income: $6.33 billion (+17.7% YoY)
• Net Cost of Insurance: $-4.45 billion (+35.5% YoY)
• General, Administrative and Other: $-865.4 million (+7.5% YoY)
• Insurance Operating Earnings: $1.01 billion (+24.2% YoY)
• Key Growth Drivers: The acquisition of the remaining minority interests of Global Atlantic on January 2, 2024, significantly contributed to the increase in operating earnings. Strong new business volumes in both individual and institutional channels also supported growth.

Product Portfolio:

• Individual Markets: Offers fixed-rate annuities, fixed-indexed annuities, and preneed life insurance products.
• Institutional Markets: Provides customized reinsurance solutions, including block, flow, and pension risk transfer transactions, as well as funding agreements.

Market Dynamics:

• Served over 3.5 million policyholders as of December 31, 2024.
• New Business Volumes (2024): Total Retirement Products sales were $14.8 billion (+33.1% YoY), Preneed Life sales were $605 million (+102.3% YoY), and Total Institutional Channel production was $27.1 billion (+20.0% YoY).
• Policy Liabilities: $185.2 billion (+15.7% YoY) as of December 31, 2024, with 41% in individual markets and 59% in institutional markets.
• Investment Portfolio: 95% of Global Atlantic's available-for-sale fixed maturity securities were investment grade by NAIC ratings as of December 31, 2024. KKR & Co. Inc. has been the investment manager of Global Atlantic’s assets since February 2021.

Strategic Holdings

Financial Performance:

• Dividends, Net: $76.2 million (+424.5% YoY)
• Net Realized Investment Income: $87.7 million (vs. $0 in 2023)
• Strategic Holdings Segment Earnings: $163.9 million (+1028.0% YoY)
• Key Growth Drivers: Significant dividend income from portfolio companies including 1-800 Contacts Inc., Exact Holdings B.V., Viridor Limited, FiberCop S.p.A., Arnott's Biscuits Limited, and Atlantic Aviation FBO Inc. Net realized investment income in 2024 included a realized gain from the sale of FiberCop S.p.A.

Product Portfolio:

• This segment comprises KKR & Co. Inc.’s ownership stakes in 18 companies acquired through its core private equity strategy, which targets longer holding periods and lower anticipated risk profiles.

Market Dynamics:

• Geographic location of headquarters (as of December 31, 2024): approximately 66% in the Americas, 28% in Europe, and 6% in the Asia-Pacific.
• Primary business sectors (as of December 31, 2024): approximately 33% in Business Services, 30% in Consumer, 14% in technology-media-telecommunications (TMT), 13% in Healthcare, and 10% in Infrastructure.
• The Asset Management segment charges a management fee ($31.8 million in 2024) and a performance fee ($15.5 million in 2024) from the Strategic Holdings segment for advisory services.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: KKR & Co. Inc. did not repurchase common stock in 2024, but retired 1.17 million equity awards. Since 2015, KKR & Co. Inc. has repurchased or retired equity awards representing 93.1 million shares of common stock for $2.6 billion, at an average price of $28.32 per share.
• Dividend Payments: $612.1 million in common stock dividends were paid in 2024.
• Dividend Yield: KKR & Co. Inc. announced on February 4, 2025, a new dividend policy to pay common stockholders an annualized dividend of $0.74 per share ($0.185 quarterly), beginning with the dividend for the first quarter of 2025.
• Future Capital Return Commitments: The share repurchase program was amended in April 2024 to automatically add an additional $500 million when the remaining available amount becomes $50 million or less. Approximately $69 million remained under the program as of January 31, 2025.

Balance Sheet Position:

• Cash and Equivalents: $15.37 billion as of December 31, 2024.
• Total Debt: $49.65 billion as of December 31, 2024.
• Net Cash Position: $(34.28) billion (net debt) as of December 31, 2024.
• Credit Rating: Global Atlantic’s life insurance operating subsidiaries hold financial strength ratings of “A” (stable outlook) from A.M. Best Company, Inc., “A2” (stable outlook) from Moody’s Investors Service, Inc., “A-” (positive outlook) from S&P Global Ratings, and “A” (stable outlook) from Fitch Ratings, Inc.
• Debt Maturity Profile (Asset Management and Strategic Holdings debt obligations, principal payments as of December 31, 2024): $3.72 billion due in <1 year, $0.50 billion in 1-3 years, $2.95 billion in 3-5 years, and $38.21 billion due >5 years.
• Debt Maturity Profile (Insurance debt obligations, principal payments as of December 31, 2024): $0.07 billion due in 3-5 years, and $3.40 billion due >5 years.

Cash Flow Generation:

• Operating Cash Flow: $6.65 billion (2024).
• Free Cash Flow: $6.51 billion (2024).
• Cash Conversion Metrics: Not explicitly disclosed.

Operational Excellence

Production & Service Model:

• Asset Management: KKR & Co. Inc. manages and sponsors investment vehicles across private equity, real assets, and credit/liquid strategies. Its Capital Markets business provides services including arranging debt and equity financing, and underwriting securities.
• Insurance: Global Atlantic generates income primarily by earning a spread between its net investment income and the cost of policyholder benefits. It offers a range of retirement, life, and reinsurance products.
• Strategic Holdings: This segment manages KKR & Co. Inc.’s balance sheet assets in core private equity, characterized by longer holding periods and lower anticipated risk profiles.

Supply Chain Architecture: Key Suppliers & Partners:

• Hedge Fund Platform: KKR & Co. Inc. holds a 39.6% interest in Marshall Wace LLP.
• Investment Advisory: KKR & Co. Inc. jointly owns FS/KKR Advisor, LLC, which advises several entities.
• Operating Professionals: KKR Capstone operating professionals provide expertise to portfolio companies.
• Investment Management (Insurance): KKR & Co. Inc. has been the investment manager of Global Atlantic’s assets since February 2021, while Global Atlantic retains in-house investment origination and allocation functions.
• Distribution (Insurance): Global Atlantic distributes its products through a network of banks, broker-dealers, independent marketing organizations, and funeral homes.

Facility Network:

• Principal Executive Office: 30 Hudson Yards, New York, New York.
• Other Offices: KKR & Co. Inc. leases space for other offices in North America, Europe, the Middle East, and Asia-Pacific.
• Research & Development: While not having dedicated R&D facilities, KKR & Co. Inc. emphasizes R&D spending within its portfolio companies.

Operational Metrics:

• Assets Under Management (AUM): $637.6 billion (2024).
• Fee Paying Assets Under Management (FPAUM): $512.0 billion (2024).
• Uncalled Commitments: $109.6 billion (2024).
• Capital Invested: $83.6 billion (2024).
• Capital Markets Transactions: 397 transactions (56 equity, 341 debt) in 2024.
• Global Atlantic Policyholders: Over 3.5 million (2024).

Market Access & Customer Relationships

Go-to-Market Strategy:

• Direct Sales: KKR & Co. Inc.’s Global Client Solutions team manages capital raising and investor relations, serving a broad base of over 2,200 investors.
• Channel Partners: Global Atlantic distributes its insurance products through a diverse network including banks, broker-dealers, independent marketing organizations, and approximately 2,400 funeral homes. KKR & Co. Inc. also engages in strategic partnerships with third-party hedge fund managers.
• Digital Platforms: K-Series vehicles are offered for individual private wealth investors, holding $16.4 billion in AUM as of December 31, 2024.

Customer Portfolio: Enterprise Customers:

• Tier 1 Clients: One flagship private equity fund contributed approximately $0.9 billion, representing over 10% of total Asset Management and Strategic Holdings revenues in 2024.
• Strategic Partnerships: KKR & Co. Inc. manages $142.3 billion of credit investments for Global Atlantic insurance companies.
• Customer Concentration: In 2024, one flagship private equity fund and one reinsurance counterparty each contributed over 10% of KKR & Co. Inc.’s total consolidated revenues.

Geographic Revenue Distribution:

• Americas: Contributed $2.2 billion to Total Fees and Other revenues and $2.2 billion to Total Capital Allocation-Based Income (Loss) in 2024. Global Atlantic's revenue is entirely sourced from the Americas.
• Europe/Middle East: Contributed $0.8 billion to Total Fees and Other revenues and $0.4 billion to Total Capital Allocation-Based Income (Loss) in 2024.
• Asia-Pacific: Contributed $0.7 billion to Total Fees and Other revenues and $0.9 billion to Total Capital Allocation-Based Income (Loss) in 2024.
• Growth Markets: KKR & Co. Inc. expanded its infrastructure strategy to Asia-Pacific in January 2020.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: KKR & Co. Inc. operates within a highly competitive global investment and insurance industry. The market is characterized by intense competition from a wide array of participants, including traditional and alternative asset managers, investment banks, and other financial institutions. Competition is primarily driven by investment performance, liquidity, reputation, service quality, pricing, and fund terms. The insurance sector has experienced a substantial increase in competition, particularly from non-traditional firms, including those owned by alternative asset managers.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• Traditional Asset Managers: Firms offering conventional investment products and services.
• Alternative Asset Managers: Other firms specializing in private equity, hedge funds, real assets, and credit strategies.
• Investment Banks: Institutions providing capital markets services, including financing and underwriting.
• Other Financial Institutions: A broad category encompassing various financial service providers.
• Non-traditional Insurance Firms: Including those owned by alternative asset managers, which have increased competition in the insurance sector.

Emerging Competitive Threats: Not explicitly detailed beyond general categories of competitors.

Competitive Response Strategy: KKR & Co. Inc. aims to maintain its competitive advantage by focusing on generating attractive investment returns through a patient and disciplined approach, leveraging its global platform, diverse investment strategies, and significant co-investment. The firm also integrates sustainability and responsible investment practices into its operations.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics:

• Economic Conditions: KKR & Co. Inc. is materially affected by difficult market and economic conditions, including fluctuations in interest rates, inflation, credit availability, trade barriers, commodity prices, and currency exchange rates.
• Geopolitical Developments: Geopolitical events such as trade conflicts, sanctions, civil unrest, war, and terrorism, as well as natural disasters and public health crises, can adversely impact KKR & Co. Inc., its operations, investors, and investments.
• Perpetual Capital AUM: While a significant portion of AUM is long-term, it remains subject to material reduction through withdrawals, redemptions, or termination.
• Earnings Volatility: KKR & Co. Inc.'s earnings and cash flow are highly variable due to the subjective nature of investment valuations, fund returns, and the accrual and payment of carried interest.

Operational & Execution Risks

Supply Chain Vulnerabilities:

• Third-Party Dependency: Significant reliance on third-party service providers exposes KKR & Co. Inc. to operational, reputational, and other risks. Operational Risks:
• Liquidity Requirements: KKR & Co. Inc. has substantial liquidity requirements and depends on access to debt financing.
• Fundraising Challenges: Inability to raise additional or successor funds, or to do so on favorable terms, could adversely affect revenues.
• Clawback Provisions: "Clawback" provisions in carry-paying funds may require KKR & Co. Inc. to return amounts to funds. As of December 31, 2024, approximately $546 million of carried interest was subject to this obligation, which could increase to $4.7 billion if all funds were liquidated at zero value.
• Cybersecurity Failures: Cybersecurity failures and data security breaches pose risks of business disruption and adverse impacts on investments.
• Artificial Intelligence: The rapid development and adoption of artificial intelligence could increase competitive, operational, legal, and regulatory risks.
• Data Privacy: Evolving global privacy and data laws increase compliance costs and enforcement risks.
• Expansion Risks: Expansion into new investment strategies, geographic markets, businesses, or investor types (e.g., individual investors) may introduce additional risks and uncertainties.
• Balance Sheet Commitments: Failure to effectively manage balance sheet commitments, including underwriting and structured transactions, could adversely affect liquidity and financial results.
• Risk Management Effectiveness: KKR & Co. Inc.'s risk management activities may not be fully effective in identifying, monitoring, or managing all potential risks.

Financial & Regulatory Risks

Market & Financial Risks:

• Tax Law Changes: Changes in tax laws, regulations, or treaties (e.g., U.S. tax reform, carried interest taxation, OECD BEPS project, Bermuda corporate tax) or adverse interpretations by tax authorities could significantly impact KKR & Co. Inc.’s effective tax rate and tax liability. Regulatory & Compliance Risks:
• Extensive Regulation: KKR & Co. Inc.'s operations are subject to extensive regulation and supervision in numerous jurisdictions, creating potential for significant liabilities and penalties from bodies such as the SEC, FINRA, DOL, FTC, DOJ, NAIC, CBI, FCA, and BMA.
• Anti-Corruption & Sanctions: Compliance with anti-corruption, economic sanctions, trade controls, and foreign direct investment laws (e.g., FCPA, OFAC, CTA, EU AML Package, CFIUS) presents potential for significant liabilities and penalties.
• Legal Claims: KKR & Co. Inc. faces significant harm from legal claims, litigations, investigations, and negative publicity.
• Investment Company Act Compliance: KKR & Co. Inc. believes it operates as an investment management firm, not an "orthodox" investment company, and monitors compliance with the 40% test. Global Atlantic expects to maintain its exemption under Section 3(c)(6) of the Investment Company Act.

Geopolitical & External Risks

Geopolitical Exposure:

• Geographic Dependencies: Investments outside the United States expose KKR & Co. Inc. to additional risks, including restrictions on foreign direct investment, exchange controls, non-U.S. taxes, corruption, less liquid markets, and political instability.
• Trade Relations: The impact of trade tensions and policy changes can affect business operations and investment performance.
• Sanctions & Export Controls: Compliance with sanctions and export controls, including the U.S. Department of the Treasury's outbound investment screening regime (effective January 2, 2025) for advanced technology sectors in designated "countries of concern," can limit business activities.

Insurance-Specific Risks:

• Market Volatility: Volatile market and economic conditions, including sustained periods of low or high interest rates, may adversely affect the insurance business.
• Distribution Reliance: Global Atlantic relies on third parties to distribute its insurance products, introducing dependency risks.
• Policyholder Behavior Estimates: Differences between Global Atlantic’s estimates for policyholder behavior, reserve assumptions, and actual claims experience may adversely affect KKR & Co. Inc.'s financial results.
• Financial Strength Ratings: Global Atlantic’s actual or perceived financial strength impacts its ability to sell products; a downgrade in ratings could adversely affect competitiveness.
• Reinsurance Risks: KKR & Co. Inc. faces risks associated with the business Global Atlantic reinsures and the business it cedes to reinsurers.
• Accounting Standard Changes: Changes in accounting standards (GAAP, SAP, Bermuda EBS Framework) could adversely impact the insurance business.
• Investment Flexibility: A significant portion of reinsurance assets held in trust restricts investment flexibility.
• Recapture Triggers: Certain reinsurance agreements contain triggers that allow clients to recapture business.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas:

• Technology Investment: KKR & Co. Inc. emphasizes R&D spending within its portfolio companies.
• Proprietary Platforms: Global Atlantic utilizes a proprietary technology platform that incorporates analytic models and a proprietary risk platform to support its insurance operations. Innovation Pipeline: KKR & Co. Inc.'s growth equity strategy involves investments in emerging and less established companies that are developing new technologies.

Intellectual Property Portfolio:

• Patent Strategy: Growth equity companies within KKR & Co. Inc.'s portfolio heavily depend on intellectual property rights.
• Licensing Programs: Not explicitly detailed.
• IP Litigation: Not explicitly detailed.

Technology Partnerships:

• Strategic Alliances: KKR & Co. Inc. engages in strategic partnerships, such as with Capital Group.
• Research Collaborations: KKR & Co. Inc. jointly owns FS/KKR Advisor, LLC, which advises several entities.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: A Reorganization Agreement is in place to eliminate the Series I preferred stock and establish one vote per share for common stock by December 31, 2026 (the "Sunset Date"). KKR & Co. Inc. is currently a "controlled company" under NYSE standards but expects to cease this designation by the Sunset Date.

Board Composition: The Board of Directors consists of 13 directors, with 9 identified as independent. The board demonstrates diversity with 4 women and 3 non-white directors.

• Audit Committee: Chaired by Robert W. Scully, with Matthew R. Cohler, Kimberly A. Ross, and Patricia F. Russo as members. All members are "audit committee financial experts."
• Risk Committee: Chaired by Matthew R. Cohler, with Adriane M. Brown and Mary N. Dillon as members.
• Conflicts Committee: Chaired by Robert W. Scully, with Arturo Gutiérrez Hernández, Mary N. Dillon, and Patricia F. Russo as members.
• Nominating and Corporate Governance Committee: Co-Chaired by Henry R. Kravis and George R. Roberts, with Robert W. Scully as a member.

Human Capital Strategy

Workforce Composition:

• Total Employees: Approximately 4,834 people worldwide as of December 31, 2024.
  • Asset Management: 2,523 employees.
  • Insurance: 1,613 employees.
  • Subsidiary Organizations: 698 employees.
• Skill Mix: KKR & Co. Inc. employs approximately 941 investment professionals and KKR Capstone operating professionals. Global Atlantic's workforce includes professionals in individual channel sales, reinsurance, investment origination and allocation, risk management, actuarial, and business operations support.

Talent Management: Acquisition & Retention:

• Hiring Strategy: KKR & Co. Inc. focuses on attracting, developing, and retaining exceptional talent.
• Retention Metrics: Not explicitly disclosed.
• Employee Value Proposition: The firm emphasizes training, professional development, and fostering a culture of collaboration. KKR & Co. Inc. also supports broad-based employee ownership programs in its portfolio companies.

Diversity & Development:

• Diversity Metrics: The Board of Directors includes 4 women and 3 non-white directors.
• Development Programs: KKR & Co. Inc. provides training and professional development initiatives.
• Culture & Engagement: The firm promotes a culture of collaboration and engagement.

Environmental & Social Impact

Environmental Commitments: Climate Strategy:

• Emissions Targets: Not explicitly detailed.
• Carbon Neutrality: Not explicitly detailed.
• Renewable Energy: KKR & Co. Inc.'s Real Assets segment includes investments in energy transition. Global Atlantic has contingent funding obligations for development-stage renewable energy projects. Supply Chain Sustainability:
• Supplier Engagement: Not explicitly detailed.
• Responsible Sourcing: Not explicitly detailed.

Social Impact Initiatives:

• Community Investment: Not explicitly detailed.
• Product Impact: KKR & Co. Inc.’s Global Impact Funds specifically invest in companies that contribute to the United Nations Sustainable Development Goals. The firm also supports broad-based employee ownership programs in its portfolio companies.

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: No explicit seasonality is mentioned in the filing.
• Economic Sensitivity: KKR & Co. Inc. is materially affected by broader market and economic conditions. In 2024, key economic indicators included U.S. GDP growth of 2.8%, a U.S. effective federal funds rate of 4.33%, and U.S. core consumer price index inflation of 3.2%.
• Industry Cycles: Performance is influenced by global equity markets (S&P 500 +25.5%, MSCI World Index +19.5% in 2024), credit markets (U.S. investment grade corporate bond spreads tightened, S&P/LSTA Leveraged Loan Index +9.0%, BofAML HY Master II Index +8.2% in 2024), commodity markets (3-year forward WTI crude oil and natural gas decreased slightly in 2024), and foreign exchange rates (e.g., Japanese yen -10.3% against the U.S. dollar in 2024).

Planning & Forecasting: Not explicitly detailed in the filing.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations:

• U.S. Regulations: KKR & Co. Inc.'s investment adviser subsidiaries are registered with the SEC. KKR Capital Markets LLC and Global Atlantic Distributors, LLC are SEC-registered broker-dealers and FINRA members. U.S. insurance subsidiaries are domiciled in Massachusetts, Iowa, and Indiana, and licensed across all 50 states, DC, Puerto Rico, and the U.S. Virgin Islands. Operations are subject to the Investment Advisers Act, Investment Company Act, Exchange Act, ERISA, and state insurance laws.
• International Regulations: Subsidiaries are authorized and regulated by the Central Bank of Ireland ("CBI"), the Financial Conduct Authority ("FCA") in the United Kingdom, and the Bermuda Monetary Authority ("BMA") in Bermuda. KKR & Co. Inc. operates in accordance with the EU Alternative Investment Fund Managers Directive ("AIFMD").
• Recent Regulatory Changes: The U.S. Department of Labor’s 2024 Rule redefines "investment advice fiduciary" under ERISA, impacting retirement and life insurance product sales. The SEC’s Private Fund Adviser Rules were vacated in June 2024. The FTC and DOJ have increased antitrust enforcement. The NAIC is reviewing regulatory considerations for private equity-owned insurers and increased the RBC factor for structured security residual tranches. The EU has adopted AIFMD II and is implementing sustainability-related rules (SFDR, CSRD, CSDDD). The U.S. Department of the Treasury established an outbound investment screening regime (effective January 2, 2025) restricting certain investments in advanced technology sectors in designated "countries of concern" (China, Hong Kong, Macau). FinCEN issued a final rule in August 2024 requiring registered and exempt reporting advisers to adopt AML/CFT programs by January 1, 2026.

Trade & Export Controls:

• Export Restrictions: KKR & Co. Inc. is subject to export controls and sanctions laws.
• Sanctions Compliance: The firm must comply with economic sanctions, including those enforced by OFAC.

Legal Proceedings:

• Kentucky Matter: A settlement agreement for the 2020 AG Action and 2024 AG Action was entered on January 8, 2025, resulting in a settlement recovery of $227.5 million (minus the Daniel Boone Fund reserve).
• Shareholder Derivative Litigation: A shareholder derivative litigation was filed on July 30, 2024, with KKR & Co. Inc. filing a motion to dismiss on December 19, 2024.
• Regulatory Matters: The DOJ filed a civil antitrust complaint on January 14, 2025, alleging HSR Act violations. KKR & Co. Inc. reached an SEC settlement on January 13, 2025, for recordkeeping violations under the Advisers Act, paying a civil penalty of $11.0 million.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: KKR & Co. Inc.'s effective income tax rate was 16.3% in 2024.
• Geographic Tax Planning: The firm's tax profile is influenced by its international tax structure and transfer pricing policies.
• Tax Reform Impact: Changes in U.S. tax law, including corporate and individual tax rates, and the taxation of carried interest (requiring investments to be held for more than three years for capital gain treatment), could impact KKR & Co. Inc. The OECD’s BEPS project and Pillar Two (minimum 15% tax rate, effective 2024) may affect KKR & Co. Inc. and its portfolio companies. Bermuda enacted corporate tax legislation in December 2023, effective 2025, which will impact Global Atlantic. The IRS may challenge Global Atlantic Financial Limited’s (prior to January 2, 2024) status as a non-U.S. corporation for U.S. federal income tax purposes. The GAFL Reorganization on April 1, 2016, limits the ability of Global Atlantic’s U.S. holding company and its U.S. affiliates to utilize certain U.S. tax attributes for ten years.

Insurance & Risk Transfer

Risk Management Framework:

• Insurance Coverage: Not explicitly detailed beyond general risk management.
• Risk Transfer Mechanisms: Global Atlantic employs hedging strategies and reinsurance to manage its economic exposure to interest rates and equity markets for products with guaranteed benefits. Global Atlantic Re Limited reinsures substantially all of Global Atlantic's variable annuity business. Global Atlantic also utilizes special purpose financial captive insurance company subsidiaries domiciled in Vermont and Iowa.